notes to the half-year report
as at June 30, 2021
General principles
This unaudited, consolidated half-yearly financial statement of the Feintool Group is based on the individual financial statements of the Group companies as of June 30, 2021, which were prepared in accordance with uniform accounting policies, and released for publication by the Board of Directors on August 17, 2021.
With the exception of the changes to the accounting principles outlined below, the consolidated half-year result has been created according to the same valuation guidelines as the annual financial statement of December 31, 2020 and corresponds to the International Financial Reporting Standards (IFRS) in accordance with IAS 34 Interim Financial Reporting and the requirements of SIX Swiss Exchange. This half-year report does not include all the information and disclosures that are disclosed in the annual report of the Feintool Group as of December 31, 2020, and for that reason should be read in conjunction with it.
The consolidated half-yearly financial statement is shown in Swiss francs (CHF), rounded to the nearest thousand. It is produced in German and English. The half-yearly financial statement in German is the authoritative version.
CHANGES TO THE ACCOUNTING PRINCIPLES
With the exception of newly issued or revised Standards and Interpretations, which are applicable or have been modified in the reporting year, essentially the same accounting policies were applied as in the previous year.
On January 1, 2021, Feintool introduced the following new (adapted) Standards and Interpretations:
Feintool is either unaffected by these changes, or the changes have no material effect on its financial position, results of operations or cash flows.
FUTURE CHANGES TO ACCOUNTING PRINCIPLES
Feintool constantly examines the effects of newly published accounting principles on the Group’s financial position, results of operations or cash flows.
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.
key estimates
The preparation of the consolidated half-yearly financial statements requires that the management makes assessments and assumptions which influence the amounts of assets and liabilities, the statement of contingent receivables and liabilities, as well as income and expenditure. Areas in which estimates have a significant influence on the carrying amount include the calculation of provisions, the economic useful life of the fixed assets, the assumptions of the “value in use” calculation for goodwill, the expected future cash flow from capitalized development costs, the valuation of long-term construction contracts, the assessment of expected and deferred taxes, and the actuarial assumptions in the calculation of pension obligations. These estimates may differ from the actual results and hence have a significant impact on the Group’s financial position, results of operations or cash flows.
Management and Board of Directors believe that the planning principles and assumptions are realistic.
CONTINGENT LIABILITIES/PURCHASE COMMITMENTS
The contingent liabilities arising from received funding, which has certain conditions attached, amount to CHF 3.8 million (previous year CHF 3.0 million).
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.
The Feintool Group has undertaken to purchase property, plant and equipment amounting to CHF 31.8 million (previous year CHF 36.7 million).
BASIS OF CONSOLIDATION
The consolidated half-yearly financial statements encompass the half yearly financial statement of Feintool International Holding AG, Lyss (Switzerland), in addition to the half-yearly financial statements of all Group companies in which Feintool International Holding AG directly or indirectly owns more than 50 % of the voting rights or which it controls in any other way. A list of all the subsidiaries is contained in the Annual Financial Report of December 31, 2020, page 90.
FINANCIAL COVENANTS
Feintool has a syndicated loan of CHF 120 million (previous year CHF 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 the Annual Financial Report of December 31, 2020 note 19). On June 30, 2021, the company had utilized CHF 68.6 million of the syndicated loan.
The syndicated loan, the promissory note loan, and the bilateral loan agreements contain covenants customary in the market, in particular:
In the event that the group or individual companies fail to comply with these covenants, the banks would have the right to terminate the loans at short notice. As of June 30, 2021, all of the covenants were met. As of June 30, 2021, Feintool had CHF 67.4 million (previous year: CHF 68.0 million) of unused, confirmed lines of credit with banks.
Seasonality
The business segments of Feintool are subject to no significant seasonal fluctuations. The earnings arising from contract assets recognized over a specific period of time are distributed over the period.
The Feintool Group used the following exchange rates in the half-years:
1 Segment information
The following footnotes are applicable to the 2021 and 2020 half-year periods.
1) Total Net Sales include “Sales from products transferred over time” about CHF 9.4 million (prior year CHF 7.5 million). The net sales have been recognized in the Fineblanking Technology Segment. The remaining net sales in this segment mainly consist of tool sales and services.
2) 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 CHF 3.0 million in immediate aid from the Swiss government in the first half of 2021 to mitigate the effects of the COVID-19 pandemic.
3) Due to capacities no longer required at a plant, an impairment loss on manufacturing equipment totaling CHF 8.3 million was recognized in the first half of 2021.
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 electro lamination 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, the German sub-holding company Feintool Holding GmbH and in the previous year the sub-holding company HL Holding AG.
The operating profit/loss comprises all operating income and expenses directly attributable to the individual segments. This includes all cross-segment expenses, which are charged directly. Feintool’s financing is undertaken at the Group level. Financial expenses and income, financial liabilities as well as taxes, are therefore reported only at the Group level and do not appear in the segment reports.
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 Financial result and derivative financial instruments
1) Besides bank charges, other financial expenses include annual amortization of establishing cost for the promissory note/syndicated loan, market making costs and valuation expenses from hedging.
2.3 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. These include currency forwards.
Currency instruments primarily relate to the hedging of foreign-currency risks in euros. The life of the foreign exchange futures is a few months.
2.5 Fair Values
The carrying amounts of the financial assets and liabilities do not differ materially from their fair values.
3 equity
1) 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.
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 %.
4 dividend
A dividend was not distributed for the 2020 financial year (previous year: CHF 0).
5 Events after the balance sheet date
Feintool issued a promissory note of EUR 35 million with maturities of three, five and seven years. On the one hand, the technology group thus secures the refinancing of the EUR 25 million tranche expiring in July 15, 2021 and on the other hand it enables Feintool to secure a part of the investments for its growth strategy in the coming years at favorable conditions.
addresses of our operating companies
as at June 30, 2021