ANNUAL REPORT 2021

Notes to the Consolidated Financial Statements

as at December 31, 2021

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, 2021, 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 2 478. At its various locations, Feintool provides training for 89 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, 2021, 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 section 19 of the Notes. As of December, 31st 2021, all the covenants had been met.

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

Property, plant and equipment are stated 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 section 17.2 of the Notes.

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 uses the instrument of the “patent box”, which results in a slight tax relief.

Further information is given in sections 9 and 10 of the Notes.

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 section 17.1 of the Notes.

    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 section 22 of the Notes. 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 section 23 of the Notes.

    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 section 19 of the Notes.

    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. In the Financial Year 2021, Feintool adopted the following new Standards and Interpretations:

  • IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest Rate Benchmark Reform – Phase 2 (January 1, 2021)
  • IFRS 16 – COVID-19-Related Rent Concessions (January 1, 2021)
  • 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:

  • IAS 37 – Onerous Contracts – Cost of Fulfilling a Contract (January 1, 2022)
  • Annual Improvements to IFRS Standards 2018-2020 (January 1, 2022)
  • IAS 16 – Property, Plant and Equipment (January 1, 2022)
  • IFRS 3 – Reference to the Conceptual Framework (January 1, 2022)
  • IFRS 17 – Insurance Contracts (January 1, 2023)
  • IAS 1 – Classification of Liabilities as Current or Non-current (January 1, 2023)
  • IAS 8 – Definition of Accounting Estimate (January 1, 2023)
  • IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies (January 1, 2023)
  • IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to IAS 12 (January 1, 2023)
  • 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 in section 6 of the Notes to the Financial Statement of Feintool International Holding AG.

    On November 22, 2019, Jela Immobilien GmbH purchased a 90 % interest in Vireo Verwaltungsgesellschaft mbH from HL Holding AG. On May 6, 2020, Jela Immobilien GmbH acquired the remaining 10 % interest in Vireo Verwaltungsgesellschaft mbH from HL Holding AG. Effective October 16, 2020, Jela Immobilien GmbH (absorbing entity) and Vireo Verwaltungsgesellschaft mbH (absorbed entity) were merged.

    As of January 1st 2021 HL Holding AG was absorbed by System Parts Lyss AG.

    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:

    2021

    2020

    Closing rate

    Average rate

    Closing rate

    Average rate

    China

    CNY 100

    14.3219

    14.2153

    13.4471

    13.5168

    Eurozone

    EUR 1

    1.0331

    1.0796

    1.0802

    1.0717

    Japan

    JPY 100

    0.7924

    0.8260

    0.8540

    0.8890

    Czech Republic

    CZK 100

    4.1560

    4.2114

    4.1163

    4.0388

    USA

    USD 1

    0.9121

    0.9152

    0.8803

    0.9316

    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.

    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 15 497, the Feintool Group’s European subsidiaries sold receivables valued at kCHF 12 786 (previous year kCHF 9 034) as of December 31, 2021, of which kCHF 1 428 (previous year kCHF 3 787) 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 242, 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 in chapter “Net Sales”.

    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. Funds that are not related to a specific asset are capitalized and amortized on a straight-line basis over the period of the associated stipulations/conditions. 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 section 5, 16 and 19 of the Notes.

    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.

    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.

    Material expenses

    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 2021 in CHF 1 000

    Fineblanking Technology

    System Parts

    Total segments

    Finance/Other

    Eliminations

    Total Group

    Net sales

    37 662

    559 825

    597 487

    -9 429

    588 058

    - Intercompany income

    -4 918

    -4 511

    -9 429

    9 429

    Total net sales – Group 1)

    32 744

    555 314

    588 058

    588 058

    EBITDA before extraordinary effects

    -2 489

    95 275

    92 786

    -7 273

    39

    85 552

    One-off effects Covid support in the financial year 2)

    3 928

    7 649

    11 577

    11 577

    EBITDA after extraordinary effects

    1 439

    102 924

    104 363

    -7 273

    39

    97 129

    Depreciation and amortization

    -1 816

    -49 029

    -50 845

    -2 438

    2 180

    -51 103

    Impairment of tangible assets 3)

    -12 103

    -12 103

    -12 103

    Operating profit (EBIT) before amendments

    -4 305

    46 246

    41 941

    -9 711

    2 219

    34 450

    One-off effects in the financial year 2)3)

    3 928

    -4 454

    -526

    -526

    Operating profit (EBIT) after amendments

    -377

    41 792

    41 415

    -9 711

    2 219

    33 923

    Financial expenses

    -17 317

    Financial income

    12 725

    Income taxes

    -10 120

    Net income attributable to Feintool Holding shareholders

    19 211

    Assets

    51 413

    607 834

    659 247

    257 168

    -232 018

    684 397

    Net working capital 4)

    10 061

    87 807

    97 868

    17 295

    -30 781

    84 382

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

    1 333

    55 055

    56 388

    1 430

    -385

    57 433

    Number of employees

    137

    2 307

    2 444

    34

    2 478

    1.2 Geographical areas 2021

    Switzerland

    Europe excl. Switzerland

    America

    Asia

    Total

    Total net sales – Group 5)

    5 658

    308 828

    174 770

    98 802

    588 058

    thereof Germany

    220 223

    thereof USA

    122 304

    thereof Japan

    27 314

    thereof China

    65 220

    Fixed and intangible assets

    33 789

    229 542

    63 400

    90 362

    417 093

    1.3 Products and services 2020 in CHF 1 000

    Fineblanking Technology

    System Parts

    Total segments

    Finance/Other

    Eliminations

    Total Group

    Net sales

    44 176

    464 285

    508 461

    -16 496

    491 965

    - Intercompany income

    -12 603

    -3 893

    -16 496

    16 496

    Total net sales – Group 1)

    31 573

    460 392

    491 965

    491 965

    EBITDA

    -3 270

    64 570

    61 300

    -6 002

    -2 052

    53 245

    One-off effects IAS 19 in the financial year 2)

    2 189

    3 314

    5 503

    750

    6 253

    EBITDA after extraordinary effects

    -1 081

    67 884

    66 803

    -5 252

    -2 052

    59 499

    Depreciation and amortization

    -1 668

    -47 822

    -49 490

    -2 986

    2 222

    -50 254

    Impairment of tangible assets 3)

    -5 932

    -5 932

    -5 932

    Operating profit (EBIT) before amendments

    -4 938

    16 748

    11 810

    -8 988

    170

    2 992

    One-off effects in the financial year 2)3)

    2 189

    -2 618

    -429

    750

    321

    Operating profit (EBIT) after amendments

    -2 749

    14 130

    11 381

    -8 238

    170

    3 313

    Financial expenses

    -16 270

    Financial income

    11 002

    Income taxes

    -1 994

    Net income attributable to Feintool Holding shareholders

    -3 949

    Assets

    56 034

    585 248

    641 282

    256 213

    -220 444

    677 051

    Net working capital 4)

    13 634

    56 664

    70 298

    9 409

    -10 813

    68 894

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

    1 181

    44 689

    45 870

    1 459

    -3 987

    43 342

    Number of employees

    152

    2 385

    2 537

    33

    2 570

    1.4 Geographical areas 2020

    Switzerland

    Europe excl. Switzerland

    America

    Asia

    Total

    Total net sales – Group 5)

    5 706

    268 687

    134 706

    82 866

    491 965

    thereof Germany

    186 429

    thereof USA

    96 795

    thereof Japan

    26 917

    thereof China

    53 187

    Fixed and intangible assets

    46 692

    225 635

    66 818

    87 174

    426 319

    The following footnotes are applicable to the 2021 and 2020 financial years.

    1) Total Net Sales include “Sales from products transferred over time” about kCHF 12 515 (previous year kCHF 14 078). 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) In the 2020 financial year, Feintool received a loan of USD 8.4 million under the PPP program in the United States to mitigate the impact of the COVID-19 pandemic. In the first half of 2021, the government assured the company that this loan would not have to be repaid. Feintool also received kCHF 3 928 in immediate aid from the Swiss government in the year 2021 to mitigate the effects of the COVID-19 pandemic. In addition, in the 2020 financial year, the company agreed to a change in benefits in the Swiss pension plan and a curtailment due to the staff reduction measures, which had a positive one-off effect of kCHF 6 253 on comprehensive income for the period in accordance with IAS 19. Please refer to section 4 of the Notes.

    3) Due to capacities no longer required at one plant, an impairment loss on manufacturing equipment totaling kCHF 12 103 was recognized in the 2021 financial year (in the prior year an impairement loss of kCHF 5 932 was related to two plants). In addition, please refer to sections 16.2 and 16.3 of the Notes.

    Segment reporting is in accordance with internal reporting, and the one-time effects demonstrated have thus been factored into the group performance assessment by the Board of Directors and the management.

    4) 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”.

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

    The following explanations on the segment information apply to the financial years 2021 and 2020.

    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.

    “Finances/Other” essentially comprises the figures for Feintool International Holding AG and the German sub-holding company Feintool Holding GmbH.

    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 20.4 % (previous year 18.3 %) of consolidated sales with one customer. Income is generated in all segments. With the other customers, the share is less than 12.4 % (previous year 12.1 %) 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 Net sales

    2021

    2020

    in CHF 1 000

    in CHF 1 000

    Gross sales 1)

    595 509

    492 755

    Sales deductions

    -7 451

    -790

    Total net sales

    588 058

    491 965

    1) Total gross sales include “sales generated over a period” of kCHF 12 515 (previous year kCHF 14 078). These sales were generated in the Fineblanking Technology segment. For a further breakdown of sales, see Section 1.1 Segment information.

    3 capitalized Self-generated assets

    2021

    2020

    in CHF 1 000

    in CHF 1 000

    Self-generated presses

    131

    262

    Self-generated tools

    387

    1 455

    Capitalized development costs

    919

    1 307

    Other capitalized self-generated assets

    5

    19

    Capitalized self-generated assets

    1 442

    3 043

    4 Personnel expenses

    2021

    2020

    in CHF 1 000

    in CHF 1 000

    Salaries and wages 1)

    146 765

    129 600

    Social security contribution

    23 487

    18 464

    Other personnel expenses

    8 938

    4 667

    Total personnel expenses

    179 190

    152 731

    of which direct personnel expenses 2)3)

    88 080

    76 331

    of which indirect personnel expenses 3)

    91 110

    76 400

    1) In the 2020 financial year, a change in benefits was adopted in the Swiss pension plan, which entails a gradual reduction in the conversion rate from 5.2 % to 4.4 %. In addition, a curtailment was implemented due to the staff reduction measures. These changes had a positive one-off effect of kCHF 5 388 and kCHF 865, respectively, on the Statement of Comprehensive Income for the previous year. The one-time effect is reported under wages and salaries. See also sections 1 and 27 in the Notes.

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

    3) With respect to the change in benefits adopted in the Swiss pension plan, kCHF 2 454 is reported under direct labor costs and kCHF 2 934 under indirect labor costs in the previous year.

    In the 2020 financial year, various Feintool Group companies received short-time work compensation totaling CHF 2 million (previous year: CHF 7.5 million), which was deducted directly from labor costs. At the end of the financial year, the Feintool Group had 2 478 employees (previous year: 2 570) and 89 vocational trainees (previous year: 100).

    5 Other operating expenses

    2021

    2020

    in CHF 1 000

    in CHF 1 000

    Repair and maintenance

    51 119

    48 700

    IT costs

    5 176

    4 340

    Rental and leasing expenses

    1 564

    1 290

    thereof expenses for short-term leases

    509

    512

    thereof expenses for low-value assets

    634

    448

    thereof miscellaneous

    420

    330

    Sales and marketing expenses

    1 897

    1 588

    Administration and distribution expenses

    7 892

    6 999

    Loss on the disposal of property, plant and equipment

    1 056

    398

    Taxes and duties (not including income taxes)

    1 143

    1 163

    Other expenses

    1 324

    2 056

    Total other operating expenses

    71 171

    66 534

    6 Other operating income

    2021

    2020

    in CHF 1 000

    in CHF 1 000

    Gain on the disposal of property, plant and equipment

    111

    258

    Other income 1)

    13 256

    1 011

    Total other operating income

    13 367

    1 269

    1) “Other income” includes the immediate aids from governments to mitigate the effects of the COVID-19 pandemic totaling kCHF 11 577 as well as income from staff restaurants and subletting.

    7 Financial expenses

    2021

    2020

    in CHF 1 000

    in CHF 1 000

    Interest expense

    3 891

    3 739

    Other financial expenses 1)

    1 888

    1 169

    Foreign exchange losses

    11 538

    11 362

    Total financial expenses

    17 317

    16 270

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

    8 Financial income

    2021

    2020

    in CHF 1 000

    in CHF 1 000

    Interest income

    98

    76

    Other financial income

    7

    17

    Foreign exchange gains

    12 620

    10 909

    Total financial income

    12 725

    11 002

    9 Income taxes

    2021

    2020

    9.1 Analysis of income taxes

    in CHF 1 000

    in CHF 1 000

    Tax credits/charges for the reporting period

    10 349

    2 968

    Tax credits/charges from previous years

    -700

    50

    Deferred income taxes

    471

    -1 024

    Total income taxes

    10 120

    1 994

    2021

    2020

    9.2 Analysis of tax charge

    in CHF 1 000

    in CHF 1 000

    Earnings before taxes

    29 331

    -1 955

    Weighted tax rate as % 1)

    25.1 %

    23.5 %

    Expected overall tax expense / income

    7 362

    -459

    Effect of tax rates in foreign jurisdictions

    1 391

    667

    Non tax-deductible expense

    215

    146

    Non-taxable income

    -1 757

    -429

    Unrecognized tax loss carryforwards from the current year 2)

    2 633

    2 337

    Use of unrecognized loss carryforwards from previous years

    -279

    -15

    Tax credits/charges from previous years

    -700

    50

    Effect of changes in tax rates

    -299

    135

    Reassessment of prior year

    635

    54

    Tax benefit on equity investments

    -298

    -110

    Other effects

    1 217

    -382

    Effective income tax expense

    10 120

    1 994

    Effective income tax expense as %

    34.5 %

    -102.0 %

    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 Segment System Parts

    10 Deferred taxes

    12/31/2021

    12/31/2020

    10.1 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

    1 837

    848

    3 365

    729

    Non-current assets

    3 815

    25 572

    3 472

    28 995

    Provisions and other liabilities

    2 634

    643

    2 045

    774

    Employee benefit plans

    4 387

    792

    10 296

    792

    Loss carryforwards

    7 024

    9 868

    Total gross values

    19 696

    27 855

    29 046

    31 291

    Netting

    -10 370

    -10 370

    -14 413

    -14 413

    Total carrying amounts

    9 326

    17 485

    14 633

    16 878

    of which recognized in the balance sheet as deferred tax assets

    9 326

    14 633

    of which recognized in the balance sheet as deferred tax liabilities

    17 485

    16 878

    Net deferred tax assets/liabilities

    8 159

    2 245

    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.

    12/31/2021

    12/31/2020

    10.2 Statement of net deferred taxes assets/liabilities

    in CHF 1 000

    in CHF 1 000

    Start of period

    -2 245

    -1 860

    Recognition and reversal of temporary differences

    -770

    1 159

    Temporary differences arising on tax rate changes

    299

    -135

    Temporary differences recognized directly in equity

    -5 326

    -1 875

    Translation differences

    -117

    466

    End of period

    -8 159

    -2 245

    10.3 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.

    12/31/2021

    12/31/2020

    10.4 Tax loss carryforwards

    in CHF 1 000

    in CHF 1 000

    Total tax loss carryforwards

    96 324

    87 557

    of which recognized loss carryforwards

    30 321

    42 370

    Total unrecognized tax loss carryforwards

    66 003

    45 187

    of which expiring within 1 year

    1 135

    2 068

    of which expiring in one to five years

    35 432

    22 337

    of which expiring in more than five years

    29 438

    20 782

    Tax effects of unrecognized tax loss carryforwards

    15 520

    11 241

    Income taxes and information regarding the tax charge are shown in Note 9.

    11 Consolidated earnings per share

    2021

    2020

    11.1 Average number of shares outstanding

    Number

    Number

    Average number of shares outstanding

    4 914 842

    4 914 842

    Less number of treasury shares (weighted)

    -8 501

    -7 273

    Average number of shares outstanding – undiluted

    4 906 341

    4 907 569

    Average number of shares outstanding – diluted

    4 906 341

    4 907 569

    2021

    2020

    11.2 Net income Feintool Group

    in CHF 1 000

    in CHF 1 000

    Net income of the Feintool Group – undiluted

    19 211

    -3 949

    Net income of the Feintool Group – diluted

    19 211

    -3 949

    No dilution effects were recognized in the financial year.

    2021

    2020

    11.3 Earnings per share

    in CHF

    in CHF

    Undiluted earnings per share

    3.92

    -0.80

    Diluted earnings per share

    3.92

    -0.80

    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.

    12 Receivables

    12.1 Trade and other receivables

    12/31/2021

    12/31/2020

    in CHF 1 000

    in CHF 1 000

    Trade receivables

    82 374

    63 916

    Valuation allowances

    -635

    -810

    Total trade receivables (net)

    81 739

    63 106

    Bills receivable

    2 944

    5 211

    Outstanding VAT credits

    3 933

    5 414

    Receivables from ABS program 1)

    1 401

    3 787

    Other receivables

    2 908

    4 589

    Total trade and other receivables

    92 925

    82 107

    1) As of December 31, 2021, trade receivables with a value of kCHF 17 820 were sold under factoring and ABS programs (previous year kCHF 15 743).

    12.2 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

    12/31/2021

    Trade receivables

    82 374

    69 714

    7 393

    2 461

    1 342

    1 464

    Valuation allowances

    -635

    0

    -27

    -25

    -583

    Total receivables (net)

    81 739

    12/31/2020

    Trade receivables

    63 916

    51 054

    5 633

    3 304

    2 008

    1 917

    Valuation allowances

    -810

    -1

    -46

    -121

    -62

    -580

    Total receivables (net)

    63 106

    2021

    2020

    12.3 Valuation allowance on receivables

    in CHF 1 000

    in CHF 1 000

    Start of period

    -810

    -976

    Recognized

    -398

    -213

    Reversed

    570

    -56

    Used

    3

    435

    End of period

    -635

    -810

    13 Inventories

    12/31/2021

    12/31/2020

    in CHF 1 000

    in CHF 1 000

    Raw material 1)

    29 761

    35 750

    Tool spare elements

    21 006

    Finished and semi-finished goods

    53 604

    44 209

    Work in progress

    18 846

    11 887

    Valuation allowances on inventories

    -24 291

    -22 331

    Total inventories

    98 926

    69 515

    1) In the previous year the tool spare elements have been reported in raw material.

    14 contract assets

    12/31/2021

    12/31/2020

    in CHF 1 000

    in CHF 1 000

    Contract assets

    6 553

    10 793

    Prepayments received

    -2 085

    -1 902

    Valuation allowances on construction contracts

    -712

    -450

    Total net contract assets

    3 756

    8 441

    The gross margin recorded under contract assets as at the closing date amounted to 21.5 % (previous year 37.4 %).

    15 Prepaid expenses and accrued income

    12/31/2021

    12/31/2020

    in CHF 1 000

    in CHF 1 000

    Prepaid expenses for customer orders 1)

    1 859

    2 480

    Issue costs of promissory note and syndicated loan

    406

    760

    Scrap and material income

    663

    1 235

    Other prepaid expenses and accrued income

    524

    3 750

    Total prepaid expenses and accrued income

    3 452

    8 225

    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.

    16 Property, plant and equipment

    2021

    2020

    16.1 Overview assets

    in CHF 1 000

    in CHF 1 000

    Own property, plant and equipment

    285 264

    294 727

    Right-of-use from leased assets

    45 919

    40 130

    Total carrying amounts

    331 183

    334 857

    16.2 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 01/01/2020

    141 821

    347 671

    63 973

    553 465

    Additions

    875

    4 981

    34 656

    40 512

    Disposals

    -4 295

    -7 310

    -2 118

    -13 723

    Reclassifications 1)

    1 457

    28 360

    -30 628

    -811

    Translation differences

    -3 812

    -15 765

    -1 911

    -21 488

    As at 12/31/2020

    136 046

    357 937

    63 972

    557 955

    Additions

    629

    10 450

    40 346

    51 425

    Disposals

    -700

    -10 001

    -1 014

    -11 715

    Reclassifications 1)

    5 933

    27 182

    -48 038

    -14 923

    Translation differences

    -1 462

    2 070

    -348

    260

    As at 12/31/2021

    140 446

    387 638

    54 918

    583 002

    Accumulated depreciation as at 01/01/2020

    -43 258

    -190 913

    -12 625

    -246 796

    Additions 3)

    -5 047

    -27 208

    -2 394

    -34 649

    Disposals

    2 742

    6 918

    1 909

    11 569

    Impairments 4)

    -4 015

    -39

    -4 054

    Reclassifications

    17

    -67

    -50

    Translation differences

    1 196

    9 238

    318

    10 752

    As at 12/31/2020

    -44 367

    -205 963

    -12 898

    -263 228

    Additions

    -4 497

    -27 915

    -2 913

    -35 325

    Disposals

    382

    8 195

    702

    9 279

    Impairments 2)

    -3 288

    -6 457

    -623

    -10 368

    Reclassifications

    -133

    -133

    Translation differences

    1 022

    828

    187

    2 037

    As at 12/31/2021

    -50 748

    -231 445

    -15 545

    -297 738

    Net carrying amounts

    As at 12/31/2020

    91 679

    151 974

    51 074

    294 727

    As at 12/31/2021

    89 698

    156 193

    39 373

    285 264

    1) Reclassifications include positions of immaterial assets amounting to kCHF -3 (previous year kCHF -69), of assets in leasing amounting to kCHF -14 871 (previous year kCHF -989) and a revaluation of assets in leasing amounting to kCHF 114.

    2) In the financial year 2021, System Parts Europe recognized impairment losses on machinery & buildings of kCHF 12 030 and Software of kCHF 73 totaling kCHF 12 103. Of the impairment losses, kCHF 1 662 relate to leased machinery.

    3) Depreciation and amortization of real estate increased by kCHF 606 in the previous year due to the unscheduled depreciation of a property not required for operational purposes to its market value.

    4) In the previous year, 2 entities of System Parts Europe recognized impairment losses on machinery totaling kCHF 5 932. Of the impairment losses kCHF 1 878 relate to leased machinery (see section 16.3).

    Other property, plant and equipment includes installations, vehicles and assets under construction. Assets under construction amounted to kCHF 29 446 in the year under review (previous year kCHF 39 790). Gains on asset disposals are recognized as other operating income (Note 6). A gain of kCHF 111 (previous year kCHF 258) was generated in the reporting year. Losses on asset disposals are stated as other operating expenses (Note 5). In the year under review, this loss totaled kCHF 1 056 (previous year kCHF 398). As at December 31, 2021, the Feintool Group had entered into purchase commitments for the purchase of property, plant and equipment totaling approx. CHF 27.7 million (previous year CHF 33.1 million).

    16.3 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 01/01/2020

    9 134

    75 909

    2 489

    87 532

    Additions

    62

    599

    562

    1 223

    Disposals

    -54

    -724

    -477

    -1 255

    Reclassifications

    611

    611

    Translation differences

    -146

    -541

    -11

    -698

    As at 12/31/2020

    8 996

    75 854

    2 563

    87 413

    Additions

    3 168

    94

    1 175

    4 437

    Disposals

    -620

    -182

    -619

    -1 421

    Reclassifications

    -114

    14 871

    14 757

    Translation differences

    39

    -3 870

    -41

    -3 872

    As at 12/31/2021

    11 469

    86 767

    3 078

    101 314

    Accumulated depreciation as at 01/01/2020

    -1 742

    -33 638

    -929

    -36 309

    Additions

    -1 711

    -7 818

    -931

    -10 460

    Disposals

    49

    602

    377

    1 028

    Reclassifications

    28

    28

    Impairments 2)

    -1 878

    -1 878

    Translation differences

    71

    235

    2

    308

    As at 12/31/2020

    -3 333

    -42 469

    -1 481

    -47 283

    Additions

    -1 726

    -7 988

    -855

    -10 569

    Disposals

    1 182

    182

    507

    1 871

    Reclassifications

    119

    119

    Impairments 1)

    -1 662

    -1 662

    Translation differences

    -37

    2 138

    28

    2 129

    As at 12/31/2021

    -3 914

    -49 680

    -1 801

    -55 395

    Net carrying amounts

    As at 12/31/2020

    5 663

    33 385

    1 082

    40 130

    As at 12/31/2021

    7 555

    37 087

    1 277

    45 919

    1) In the financial year 2021, System Parts Europe recognized impairment losses on machinery and buildings totaling kCHF 12 103. Of the impairment losses, TCHF 1 662 relate to leased machinery.

    2) In the previous year, 2 entities of System Parts Europe recognized impairment losses on machinery totaling kCHF 5 932. Of the impairment losses kCHF 1 878 relate to leased machinery (see section 16.2).

    In the 2021 financial year, interest expenses from lease liabilities were incurred in the amount of kCHF 525 (previous year kCHF 516).

    17 Intangible assets

    17.1 Summary of intangible assets

    in CHF 1 000

    Goodwill

    Capitalized development costs 1)

    Software

    Other intangible assets 2)

    Total

    Cost of acquisition as at 01/01/2020

    63 772

    10 810

    8 701

    34 639

    117 922

    Additions

    1 423

    184

    1 607

    Disposals

    -14

    -86

    -2 069

    -2 169

    Reclassifications

    69

    69

    Translation differences

    -574

    -131

    -377

    -1 082

    As at 12/31/2020

    63 198

    12 219

    8 737

    32 193

    116 347

    Additions

    1 130

    346

    94

    1 570

    Disposals

    -2 795

    -177

    -1

    -2 973

    Reclassifications

    3

    3

    Translation differences

    -1 569

    -170

    -449

    -2 188

    As at 12/31/2021

    61 629

    10 554

    8 739

    31 837

    112 759

    Accumulated depreciation as at 01/01/2020

    -5 706

    -6 551

    -9 822

    -22 079

    Additions

    -1 836

    -816

    -2 494

    -5 146

    Disposals

    18

    2 068

    2 086

    Reclassifications

    50

    50

    Impairments

    18

    18

    Translation differences

    108

    78

    186

    As at 12/31/2020

    -7 542

    -7 173

    -10 170

    -24 885

    Additions

    -1 917

    -741

    -2 551

    -5 209

    Disposals

    2 795

    170

    2 965

    Reclassifications

    0

    Impairments

    -73

    -73

    Translation differences

    160

    193

    353

    As at 12/31/2021

    -6 664

    -7 657

    -12 528

    -26 849

    Net carrying amounts

    As at 12/31/2020

    63 198

    4 677

    1 564

    22 023

    91 462

    As at 12/31/2021

    61 629

    3 890

    1 082

    19 309

    85 910

    1) Research and development expenses amounting to kCHF 4 455 (previous year kCHF 4 369) 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.

    12/31/2021

    12/31/2020

    17.2 Other information – Goodwill

    in CHF 1 000

    in CHF 1 000

    Cash-generating unit System Parts China

    11 622

    10 912

    Cash-generating unit System Parts Fineblanking Europe

    3 132

    3 275

    Cash-generating unit System Parts Forming Europe

    6 607

    6 908

    Cash-generating unit System Parts Stamping Europe

    40 268

    42 103

    Total carrying amounts

    61 629

    63 198

    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 and compared with the carrying amount. The values in use were calculated using the DCF method (discounted cash flow method). The Feintool Group uses the results from the respective current business plan with the assumptions contained therein regarding price, market and market share development. The first 3 plan years are approved by the Board of Directors, the further plan years by the Group CFO. The growth rates are based on the forecasts of established institutions and on the Group’s own past experience of price and market share development. A discount rate based on the weighted average cost of capital of the Feintool Group is used to discount future cash flows.

    .

    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 six years.

    2021

    2020

    17.3 Parameter for Discount rate

    System Parts China

    System Parts Europe (Fineblanking / Forming)

    System Parts Europe (Stamping)

    System Parts China

    System Parts Europe (Fineblanking / Forming)

    System Parts Europe (Stamping)

    Discount rate after taxes

    9.4

    7.6

    7.6

    8.8

    7.3

    7.3

    Discount rate before taxes

    9.9

    7.9

    7.9

    9.7

    8.0

    8.0

    Terminal growth rate

    3.6

    0.8

    1.7

    3.6

    0.8

    1.7

    The cash-generating units System Parts Fineblanking Europe and Forming 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 1 168 (previous year kCHF 966). An increase in the weighted average cost of capital after taxes to 9.5 % (previous year 8.9 %) as well as a decrease in the growth rate to 3.5 % lead to a situation where the value in use equates the net carrying amount. In the impairment test, the first 3 years are approved by the Board of Directors on the basis of the business plan and the further extrapolation years are approved by the Group CFO. For the cash-generating unit Stamping Europe the recoverable amount exceeded the net carrying amount by kCHF 7 783 (previous year kCHF 769). An increase in the weighted average cost of capital after taxes to 8.0 % (previous year 7.4 %) as well as a decrease of the growth rate to 1.1 % lead to a situation where the value in use equates the net carrying amount. A shortening of the plan years from 6 to 5 years for the cash-generating unit Stamping Europe would result in the recoverable amount falling short of the net carrying amount by kCHF 11 123.

    18 Financial assets

    12/31/2021

    12/31/2020

    in CHF 1 000

    in CHF 1 000

    Loans to third parties

    79

    94

    Non-current receivables

    4 288

    3 565

    Rental deposit accounts

    558

    574

    Financial assets

    4 925

    4 234

    The weighted average interest rate in the reporting period was 0.14 % (previous year 0.2 %). Loans to third parties consist of marketable securities and loans to staff. Non-current receivables 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.

    19 Financial liabilities

    12/31/2021

    12/31/2020

    19.1 Current financial liabilities

    in CHF 1 000

    in CHF 1 000

    Current liabilities to banks

    9 161

    27 876

    Current portion of non-current liabilities to banks

    961

    977

    Current portion of lease liabilities

    10 581

    11 132

    Current liabilities from promissory note

    27 005

    Total current financial liabilities

    20 703

    66 990

    The weighted average interest rate in the reporting period was 1.5 % (previous year 1.9 %).

    12/31/2021

    12/31/2020

    19.2 Non-current financial liabilities

    in CHF 1 000

    in CHF 1 000

    Non-current promissory note

    77 418

    43 208

    Non-current liabilities to banks

    43 569

    77 306

    Non-current lease liabilities

    30 821

    20 711

    Total non-current financial liabilities

    151 808

    141 225

    The weighted average interest rate in the year under review was 1.7 % (previous year 0.8 %).

    On July 15, 2016 and July 15, 2021 promissory notes in the amount of EUR 75 million were issued. The issuer, with a guarantee from Feintool International Holding AG, is Feintool Holding GmbH based in Germany. The loan is divided into the following tranches:

    – EUR 25.0 million, term until fiscal year 2023 

    – EUR 14.5 million, term until fiscal year 2024

    – EUR 29.5 million, term until fiscal year 2026

    – EUR 6.0 million, term until fiscal year 2028

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

    – Equity ratio > 25 %

    As of December 31, 2021, all the covenants relating to the promissory note 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

    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. 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.

    As of December, 31st 2021, CHF 27.9 million of the syndicated loan had been used (previous period CHF 63.7 million) and all the covenants – both the modified and the original covenants – had been met. In accordance with the principle of substance over form, the syndicated loan is 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, that are largely equivalent to those of the syndicated loan. As of December, 31st 2021, 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, 31st 2021, Feintool has CHF 110.8 million (previous year CHF 65.6 million) in unused, confirmed creditlines at the bank.

    2021

    2020

    19.3 Reconciliation of financial liabilities

    in CHF 1 000

    in CHF 1 000

    Start of period

    208 215

    184 241

    Cash flows net 1)

    -42 378

    25 053

    Non-cash changes

    9 559

    3 090

    thereof new leases

    9 559

    3 090

    Translation differences

    -2 885

    -4 169

    End of period

    172 511

    208 215

    1) This item includes the borrowing of interest-bearing debt of kCHF 15 916 (previous year kCHF 67 958), the repayment of interest-bearing lease liabilities of kCHF 8 332 (previous year repayment kCHF 15 854) and the repayment of interest-bearing debt of kCHF 49 961 (previous year kCHF 27 051).

    20 Trade and other payables

    12/31/2021

    12/31/2020

    in CHF 1 000

    in CHF 1 000

    Trade payables

    66 017

    47 704

    Prepayments from third parties

    4 636

    2 512

    Notes payable

    2 423

    3 917

    Liabilities from factoring and ABS 1)

    5 359

    7 662

    Social security liabilities

    1 068

    1 627

    Outstanding VAT liabilities

    1 743

    378

    Other liabilities

    1 883

    942

    Total trade and other payables

    83 129

    64 742

    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 in the notes to the financial statements, section “financial assets and liabilities”.

    21 Accrued expenses and deferred income

    12/31/2021

    12/31/2020

    in CHF 1 000

    in CHF 1 000

    Accruals for salary, bonus, overtime, additional hours

    13 282

    8 674

    Outstanding accounts payable

    8 021

    7 816

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

    7 779

    11 958

    Accruals for environmental risks

    303

    340

    Other accrued expenses and deferred income

    1 566

    2 025

    Total accrued expenses and deferred income

    30 951

    30 813

    22 Provisions

    in CHF 1 000

    Warranties

    Other provisions

    Total

    Total provisions as at 01/01/2020

    3 697

    7 486

    11 183

    Recognized

    442

    8 136

    8 578

    Used

    -685

    -7 466

    -8 151

    Reversed

    -334

    -2 608

    -2 942

    Translation differences

    -2

    -99

    -101

    Total provisions as at 12/31/2020

    3 118

    5 449

    8 567

    of which current provisions

    1 253

    4 926

    6 179

    of which non-current provisions

    1 865

    523

    2 388

    Recognized

    703

    5 575

    6 278

    Used

    -474

    -743

    -1 217

    Reversed

    -449

    -404

    -853

    Translation differences

    -14

    -318

    -332

    Total provisions as at 12/31/2021

    2 885

    9 535

    12 420

    of which current provisions

    1 178

    8 799

    9 977

    of which non-current provisions

    1 707

    736

    2 443

    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.

    23 Employee benefit plans

    12/31/2021

    12/31/2020

    23.1 Overview of net employee benefit liabilities (assets)

    in CHF 1 000

    in CHF 1 000

    Net defined benefit liability (asset)

    21 293

    47 791

    Jubilee benefits

    1 453

    2 287

    Other benefit obligations

    137

    21

    Total net employee benefit liabilities (assets)

    22 883

    50 099

    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 4 500 (previous year kCHF 6 000). 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 12 170 (previous year kCHF 36 551), the German plan to kCHF 8 390 (previous year kCHF 10 384) and the Japanese plan to kCHF 733 (previous year kCHF 856). On account of the materiality of the figures, only the Swiss and German plans are shown in Note 23.3 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 3.0 %–16.5 % of the insured salary for credits to individual retirement assets. The typical retirement age is 65 for men and 64 for women (until December 31, 2020 5.5 %–14.0 %). 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 5.2 % (previous year 5.4 %). Afterwards, it will fall by 0.2 % each year until it reaches 4.4 % in financial year 2025. The amendment to the regulations of the Swiss pension fund until the financial year 2021 has been agreed on in financial year 2016. In the reporting year, the company decided to adjust the conversion rate in subsequent years as well. 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 108.7 % as at December 31, 2021 (previous year 99.8 %). 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. Furthermore, during the reporting year, the pension trust made a one-off additional payment of CHF 2.0 million toward accelerating the restructuring of the Feintool Group’s pension fund.

    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)

    2021

    2020

    2021

    2020

    2021

    2020

    23.2 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

    185 400

    194 464

    -137 609

    -131 950

    47 791

    62 514

    Recognized in income statement

    Current service cost

    4 558

    5 165

    4 558

    5 165

    Interest expenses (income)

    357

    524

    -243

    -324

    114

    200

    General and administrative expenses

    226

    241

    226

    241

    Impact of plan amendment in Previous Year 1)

    0

    -5 388

    0

    -5 388

    Impact of curtailment in Previous Year 2)

    0

    -838

    0

    -838

    Total

    4 915

    -537

    -17

    -83

    4 898

    -620

    Recognized in other comprehensive income

    Expense/(income) from remeasurement of

    Actuarial loss/(gain) due to:

    Change in demographic assumptions 3)

    -8 787

    -8 787

    Change in financial assumptions

    -3 226

    1 111

    -3 226

    1 111

    Experience adjustment

    -3 291

    -1 000

    -3 291

    -1 000

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

    -8 433

    -5 252

    -8 433

    -5 252

    Translation differences

    -681

    -180

    239

    96

    -442

    -84

    Total

    -15 985

    -69

    -8 194

    -5 156

    -24 179

    -5 225

    Other

    Contributions from employer 4)

    -287

    -504

    -6 926

    -8 374

    -7 213

    -8 878

    Contributions from employees

    2 887

    2 897

    -2 887

    -2 897

    Benefits paid out

    -11 869

    -10 851

    11 865

    10 851

    -4

    Total

    -9 269

    -8 458

    2 052

    -420

    -7 217

    -8 878

    As at December 31

    165 061

    185 400

    -143 768

    -137 609

    21 293

    47 791

    of which Swiss plans

    152 097

    170 445

    -139 927

    -133 894

    12 170

    36 551

    of which German plans

    10 079

    11 956

    -1 689

    -1 572

    8 390

    10 384

    of which Japanese plans

    2 885

    2 999

    -2 152

    -2 143

    733

    856

    1) In the previous year, the Swiss pension fund approved an amendment to the regulations, which will result in a gradual reduction of the conversion rate from 5.2 % to 4.4 %. This amendment had a positive one-time effect of kCHF 5 388 on the statement of comprehensive income in the previous year.

    2) Triggered by the global economic slowdown, the number of employees in Switzerland fell by 34 in the previous year. This resulted in a curtailment in the Swiss pension fund that had a positive one-off effect of kCHF 838 and is reported on the Statement of Comprehensive Income of the previous year.

    3) As at December 31, 2021, the weighted-average duration of pension benefit obligations was 13.8 years for the Swiss plan (previous year 14.8 years) and 18.6 – 19.1 years for the German plans (previous year 19.2 – 19.7 years). Feintool uses the BVG 2020 G mortality table (prior year BVG 2015 G) in Switzerland and Heubeck RT 2018 G (same as last year) in Germany for the hypothetical life expectancy.

    4) In the financial year, the pension trust made contributions of CHF 3.2 million to restructure the Feintool Group’s Swiss pension fund (previous year 4.8 million). Restructuring contributions of CHF 1.2 million annually have been committed until a coverage ratio of 100 % has been reached, CHF 2.0 million are a one-time special payment to accelerate the restructuring process.

    The expected contributions made to the employee benefit plans for the following financial year amount to CHF 4.0 million in the case of employer contributions and CHF 2.9 million in the case of employee contributions.

    2021

    2020

    23.3 Plan assets of defined benefit plans

    in %

    in %

    Equities

    31.4

    29.9

    Bonds

    39.2

    39.3

    Real estate (including real estate funds)

    20.7

    23.8

    Other

    3.2

    1.6

    Cash

    5.5

    5.4

    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.

    2021

    2020

    23.4 Defined benefit plan obligations – actuarial assumptions

    in %

    in %

    Swiss plan

    Discount rate

    0.3

    0.2

    Future increase in wages and salaries

    1.0

    0.8

    German plans

    Discount rate

    1.0

    0.6

    Future increase in wages and salaries

    0.0

    0.0

    Future increase in pensions

    1.8 - 2.0

    1.8 - 2.0

    2021

    2020

    23.5 Defined benefit plan obligations – actuarial assumptions

    in years

    in years

    Swiss plan

    Life expectancy at age 65 for newly retired persons

    Men

    22.6

    22.7

    Women

    24.4

    24.8

    Life expectancy at age 65 for employees currently aged 45

    Men

    24.9

    24.5

    Women

    26.4

    26.5

    German plans

    Life expectancy at age 65 for newly retired persons

    Men

    20.7

    20.5

    Women

    24.1

    24.0

    Life expectancy at age 65 for employees currently aged 45

    Men

    23.4

    23.3

    Women

    26.4

    26.2

    2021

    2020

    23.6 Defined benefit plan obligations – sensitivity analysis

    in CHF 1 000

    in CHF 1 000

    Swiss plan

    Change in discount rate -0.25 %

    5 165

    6 192

    Change in discount rate +0.25 %

    -4 840

    -5 787

    Change in wages and salaries -0.25 %

    -217

    -288

    Change in wages and salaries +0.25 %

    209

    273

    German plans

    Change in discount rate -0.25 %

    509

    587

    Change in discount rate +0.25 %

    -477

    -547

    Change in wages and salaries -0.25 %

    n/a

    n/a

    Change in wages and salaries +0.25 %

    n/a

    n/a

    24 Equity

    12/31/2021

    12/31/2020

    24.1 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

    12/31/2021

    12/31/2020

    24.2 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.

    12/31/2021

    12/31/2020

    24.3 Authorized capital

    in CHF 1 000

    in CHF 1 000

    Start of period

    1 482

    Expired

    -1 482

    Created

    10 000

    Used

    End of period

    10 000

    According to the decision of the Annual General Meeting of April 20, 2021, the Board of Directors is authorized to create capital up to a maximum amount of CHF 10 000 000 as required through the issue of up to 1 000 000 new shares, each having a nominal value of CHF 10. The new shares are to be paid up in full. The Board of Directors is authorized to restrict or exclude subscription rights under certain circumstances. The new shares can be issued in one or more stages. The approval is limited to a period of two years. The authorized capital will expire on April 19, 2023.

    12/31/2021

    12/31/2020

    24.4 Treasury shares – changes

    Number

    in CHF 1 000

    Number

    in CHF 1 000

    Start of period

    10 172

    615

    9 694

    852

    Bought

    10 000

    12 650

    Sale/transfer

    -12 803

    -12 172

    End of period

    7 369

    475

    10 172

    615

    of which trading portfolio

    7 369

    10 172

    In the 2020 financial year, 10 000 shares were purchased at an average price of CHF 66.63 (previous year 12 650 shares at an average price of CHF 50.23) and 12 803 shares transfered at an average price of CHF 56.44 (previous year 12 172 shares at an average price of CHF 55.43) for the share-based management remuneration. Treasury shares are reserved primarily for management remuneration.

    25 shared based payment plans

    As a component of the bonus, 12 803 shares (previous year 12 172) were allocated to the Board of Directors, the Group Management and other managers in the financial year at a transaction value of kCHF 747 (previous year kCHF 652). Of this amount, 5 000 shares have been distributed in January 2022, 7 803 shares in December 2021. All shares were transferred from treasury shares and were transferred directly to the ownership of the recipient.

    26 Off-balance sheet transactions, contingent liabilities

    12/31/2021

    12/31/2020

    in CHF 1 000

    in CHF 1 000

    Contingent obligations

    473

    2 055

    Contingent liabilities

    473

    2 055

    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 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.

    27 Assets pledged as security for own liabilities

    12/31/2021

    12/31/2020

    in CHF 1 000

    in CHF 1 000

    Real estate

    5 106

    5 624

    Machinery and equipment

    37 088

    33 386

    Assets pledged as security for own liabilities

    42 194

    39 010

    28 Economic risks

    The COVID-19 pandemic had a significant impact on economic development in the reporting year. At the present time, it is impossible to assess the further impact of the pandemic on global economic development.

    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 120 million (previous year EUR 120 million), a promissory note in the amount of EUR 75 million (previous year EUR 65 million), bilateral credit loans and several leasing and rental contracts (more details in note 19).

    These contracts contain standard covenants, particularly

  • equity ratio > 30 %
  • net senior debt / EBITDA < 3.0 x
  • 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 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. 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.

    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, 2021, all covenants – both the modified and the original covenants – had been met. As at December 31, 2021, Feintool had CHF 110.8 million (previous year CHF 65.6 million) in unused, confirmed credit lines at the bank.

    Financial liabilities – carrying amounts and cash outflows

    in CHF 1 000

    Carrying amount

    Due within 1 year

    Due within 3 years

    Due within 5 years

    Due in more than 5 years

    Total

    12/31/2021

    Liabilities 1)

    75 682

    75 682

    75 682

    Accrued expenses and deferred income 2)

    9 890

    9 890

    9 890

    Current liabilities to banks

    9 161

    9 161

    9 161

    Lease liabilities

    41 402

    10 785

    11 839

    7 546

    12 042

    42 212

    Other liabilities to banks

    121 948

    1 940

    84 751

    32 475

    6 338

    125 504

    Total

    258 083

    107 458

    96 590

    40 021

    18 380

    262 449

    Foreign exchange futures 3)

    Cash inflows

    86

    86

    86

    Cash outflows

    1 306

    1 306

    1 306

    12/31/2020

    Liabilities

    60 225

    60 225

    60 225

    Accrued expenses and deferred income

    9 664

    9 664

    9 664

    Current liabilities to banks

    27 876

    27 876

    27 876

    Lease liabilities

    31 843

    11 237

    14 281

    3 997

    2 734

    32 249

    Other liabilities to banks/bonds

    148 496

    28 670

    96 011

    2 559

    16 338

    143 578

    Total

    266 258

    122 904

    94 462

    33 748

    18 953

    273 592

    Foreign exchange futures 3)

    Cash inflows

    2

    2

    2

    Cash outflows

    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, 2021, the contractual values of the forward exchange deals amounted to kCHF 125 620 (previous year kCHF 202).

    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 933.

    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.

    2021

    2020

    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

    10 083

    -375

    -5 483

    233

    USD – Comprehensive Income

    3 657

    -57

    3 133

    -76

    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 (chapter “Consolidated Balance Sheet”). 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, 2021, the overall default risk amounts to kCHF 146 750 (previous year kCHF 142 584). Feintool generates more than 20.4 % (previous year 18.3 %) of consolidated sales for one customer. Income is generated in all segments. With the other customers, the share is less than 12.4 % (previous year 12.1 %) 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.

    29 Financial instruments

    29.1 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

    51 763

    51 763

    Prepaid expenses and accrued income 1)

    984

    86

    1 070

    Receivables

    88 992

    88 992

    Financial assets

    4 925

    4 925

    Total carrying amounts as at 12/31/2021

    146 664

    86

    146 750

    Cash and cash equivalents

    61 276

    61 276

    Prepaid expenses and accrued income 1)

    1 659

    2

    1 661

    Receivables

    76 693

    76 693

    Financial assets

    4 234

    4 234

    Total carrying amounts as at 12/31/2020

    143 862

    2

    143 864

    29.2 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)

    9 890

    9 890

    Trade payables

    75 682

    75 682

    Current financial liabilities

    20 703

    20 703

    Non-current financial liabilities

    151 808

    151 808

    Total carrying amounts as at 12/31/2021

    258 083

    258 083

    Accrued expenses and deferred income 2)

    10 066

    10 066

    Trade payables

    71 951

    71 951

    Current financial liabilities

    39 919

    39 919

    Non-current financial liabilities

    144 322

    144 322

    Total carrying amounts as at 12/31/2020

    266 258

    266 258

    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.

    29.3 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 -1 220 net (previous year kCHF 2).

    29.4 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 12/31/2021

    51 763

    -1 220

    93 917

    258 083

    Interest income/expenses

    98

    -3 891

    -3 793

    Other financial income/expenses

    -994

    -830

    -57

    -1 881

    Change in valuation allowances on customer receivables and bad debt losses

    -27

    -27

    Total net gain/loss 2021

    -994

    -759

    -3 948

    -5 701

    Carrying amounts as at 12/31/2020

    61 276

    2

    80 927

    278 104

    Interest income/expenses

    76

    -3 739

    -3 663

    Other financial income/expenses

    -720

    -420

    -12

    -1 152

    Change in valuation allowances on customer receivables and bad debt losses

    -49

    -49

    Total net gain/loss 2020

    -720

    -393

    -3 751

    -4 864

    Fair values

    Contract volumes

    29.5 Derivative financial instruments outstanding

    in CHF 1 000

    positive

    negative

    Futures contracts

    86

    1 306

    125 620

    Foreign currency instruments

    86

    1 306

    125 620

    Total derivative financial instruments as at 12/31/2021

    86

    1 306

    125 620

    Futures contracts

    2

    202

    Foreign currency instruments

    2

    202

    Total derivative financial instruments as at 12/31/2020

    2

    202

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

    30 Related parties

    30.1 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 3 209 (previous year kCHF 2 431).

    2021

    2020

    in CHF 1 000

    in CHF 1 000

    Wages (including cash bonuses), fees 1)

    2 157

    1 485

    Contributions to pension plans

    582

    515

    Share-based payment 2)

    470

    431

    Total

    3 209

    2 431

    1) Incl. benefits in kind (Provision of company cars, etc.).

    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 2021 financial year, the shares were transferred on January 4, 2022. 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.

    2021

    2020

    30.2 Other related parties

    in CHF 1 000

    in CHF 1 000

    Balance Sheet

    Other payables

    203

    31 Major shareholders

    12/31/2021

    12/31/2020

    Date of notification

    Number of shares

    Share of capital

    Number of shares

    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 %.

    32 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.

    33 Approval of the consolidated financial statements

    The consolidated financial statements were authorized for issue by the Board of Directors on March 1, 2022 and will be submitted to the Annual General Meeting for approval on April 28, 2022.

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