Annual Report 2009 by Conzzeta

Conzzeta at a glance Conzzeta is an internationally active Swiss holding company with broadly diversified businesses. Its activities are in the areas of machinery and systems engineering, foam materials, sporting goods, graphic coatings and real estate. In the interests of customers, employees and shareholders, Conzzeta develops its businesses with a long-term perspective.

Sheet Metal Processing Systems Bystronic: Solutions for the processing of sheet metal and other sheet materials

Glass Processing Systems Bystronic glass: Systems for processing flat glass

Automation Systems ixmation: Systems for automation of assembly and testing

Foam Materials FoamPartner: Foam products for industry and comfort applications

Sporting Goods Mammut Sports Group: Mountaineering, climbing and winter sports equipment

Graphic Coatings Schmid Rhyner: Print varnishes and laminating adhesives for the graphical industry

Conzzeta

www.conzzeta.ch

Annual Report 2009

Real Estate Plazza Immobilien: Management of the Conzzeta Groupâ&#x20AC;&#x2122;s portfolio of properties

Conzzeta at a glance Conzzeta is an internationally active Swiss holding company with broadly diversified businesses. Its activities are in the areas of machinery and systems engineering, foam materials, sporting goods, graphic coatings and real estate. In the interests of cus tomers, employees and shareholders, Conzzeta develops its businesses with a long-term perspective.

Sheet Metal Processing Systems Bystronic: Solutions for the processing of sheet metal and other sheet materials

Glass Processing Systems Bystronic glass: Systems for processing flat glass

Automation Systems ixmation: Systems for automation of assembly and testing

Foam Materials FoamPartner: Foam products for industry and comfort applications

Sporting Goods Mammut Sports Group: Mountaineering, climbing and winter sports equipment

Graphic Coatings Schmid Rhyner: Print varnishes and laminating adhesives for the graphical industry

Real Estate Plazza Immobilien: Management of the Conzzeta Group’s portfolio of properties

955.2

Operating result

CHF m

– 1.4

97.8

1 250

100

Group result

CHF m

3.3

78.8

1 000

Free cash flow

CHF m

141.8

– 30.8 750

50 25

250

78.0

75.1 0

– 25

CHF m

13.81

27.6

Number

406 000

Number

270 000

29.7

Number of shares on 12 / 31 bearer registered

05 20

200

150

100

(par CHF 20)

CHF

6.001

12.00

bearer

high / low

1 934 / 1 135

2 850 / 1 450

– 50

CHF

year-end

CHF

1 800

1 540

CHF m

828

708

Total capitalization on 12 / 31

60.00

registered

30.001

CHF

(par CHF 100)

bearer

Market price per share

250

Gross dividend per share

28.0

Total dividend

300

46.0

56.0

CHF m

Share capital

139.6

49.0

36.5

Conzzeta AG

CHF m

Free cash flow (in CHF m)

Net income for the year

Investments in property, plant and equipment and intangible assets (in CHF m) 31.8

411.2

28.5

269.0

141.8

CHF thousand

Net revenue per employee

– 30.8

56.0 3 718

195.9

28.0 3 225

70.1

CHF m Number

Number of employees at year-end

Investments in property, plant and equipment and intangible assets

500

1 332.9

1 000.9

1 254.8

978.3

CHF m

Total assets

Shareholders’ equity

p. 84 et seq. for detailed five-year summary for Group

125

Æ See

1 500

1 472.5

955.2

CHF m

150

1 750

175

2 000

Net revenue

Shareholders’ equity as % of total assets

Extraordinary result

Operating result (EBIT)

1 472.5

Ordinary result

Group

EBIT and Group result (in CHF m)

1 507.0

2008

1 273.6

2009

1 153.4

Net revenue (in CHF m)

Key figures

Publication details

Key facts 2009

Group key figures per share

Publisher Conzzeta AG, Zurich Group result

bearer

CHF

7.10

171.20

per share

registered

CHF

1.40

34.20

Cash flow from operating

bearer

CHF

304.20

141.70

activities per share

registered

CHF

60.80

28.30

Shareholders’ equity

bearer

CHF

2 126.70

2 175.80

per share

registered

CHF

425.30

435.20

As proposed by the Board of Directors

Concept and design Prime, Zurich

– Consolidated net revenues fall by 35.1 % as a result of the economic crisis. The machinery and systems engineering business units are hardest hit by the downturn. – Rapid adjustments are made to production capacity in response to the weaker market environment. The number of employees fell by 13.3 % compared with the end of 2008. – The steps taken to secure the Group’s liquidity are successful. – The high degree of self-financing and the diversifica-

tion of the Group’s businesses prove their worth. The Sporting Goods and Real Estate business units contribute to stabilizing the Group.

Photography Jolanda Flubacher Derungs, Sebastian Derungs, Daniel Gerber, et al. Translation Peter Thomas Hill, Stäfa ZH Printing Staffel Druck AG, Zurich Publishing System Multimedia Solutions AG, Zurich

– The Group maintains its geographic market coverage and continues to invest in innovation and developing its presence in growth markets.

The annual report is published in German and English. The German version prevails.

– The consolidated operating result shows a small loss. It contains non-recurring costs for capacity adjustments. – The Group result is just on the positive side, owing to the extraordinary result.

Changes in personnel were up-to-date at the editorial deadline of March 18, 2010.

955.2

Operating result

CHF m

– 1.4

97.8

1 250

100

Group result

CHF m

3.3

78.8

1 000

Free cash flow

CHF m

141.8

– 30.8 750

50 25

250

78.0

75.1 0

– 25

CHF m

13.81

27.6

Number

406 000

Number

270 000

29.7

Number of shares on 12 / 31 bearer registered

05 20

200

150

100

(par CHF 20)

CHF

6.001

12.00

bearer

high / low

1 934 / 1 135

2 850 / 1 450

– 50

CHF

year-end

CHF

1 800

1 540

CHF m

828

708

Total capitalization on 12 / 31

60.00

registered

30.001

CHF

(par CHF 100)

bearer

Market price per share

250

Gross dividend per share

28.0

Total dividend

300

46.0

56.0

CHF m

Share capital

139.6

49.0

36.5

Conzzeta AG

CHF m

Free cash flow (in CHF m)

Net income for the year

Investments in property, plant and equipment and intangible assets (in CHF m) 31.8

411.2

28.5

269.0

141.8

CHF thousand

Net revenue per employee

– 30.8

56.0 3 718

195.9

28.0 3 225

70.1

CHF m Number

Number of employees at year-end

Investments in property, plant and equipment and intangible assets

500

1 332.9

1 000.9

1 254.8

978.3

CHF m

Total assets

Shareholders’ equity

p. 84 et seq. for detailed five-year summary for Group

125

Æ See

1 500

1 472.5

955.2

CHF m

150

1 750

175

2 000

Net revenue

Shareholders’ equity as % of total assets

Extraordinary result

Operating result (EBIT)

1 472.5

Ordinary result

Group

EBIT and Group result (in CHF m)

1 507.0

2008

1 273.6

2009

1 153.4

Net revenue (in CHF m)

Key figures

Publication details

Key facts 2009

Group key figures per share

Publisher Conzzeta AG, Zurich Group result

bearer

CHF

7.10

171.20

per share

registered

CHF

1.40

34.20

Cash flow from operating

bearer

CHF

304.20

141.70

activities per share

registered

CHF

60.80

28.30

Shareholders’ equity

bearer

CHF

2 126.70

2 175.80

per share

registered

CHF

425.30

435.20

As proposed by the Board of Directors

Concept and design Prime, Zurich

tion of the Group’s businesses prove their worth. The Sporting Goods and Real Estate business units contribute to stabilizing the Group.

– The Group maintains its geographic market coverage and continues to invest in innovation and developing its presence in growth markets.

The annual report is published in German and English. The German version prevails.

Changes in personnel were up-to-date at the editorial deadline of March 18, 2010.

Table of contents 6

Foreword Business overview

9 10 11 12 18 20

Board of Directors Group Executive Board and Corporate Staff Overview of the business year 2009 Interview with the Group CEO Business units

Corporate governance

Financial report

81 82 84 86

Employee pension funds in Switzerland Five-year summary Information and calendar for investors

Further information

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Foreword

Jacob Schmidheiny, Chairman of the Board of Directors, and Robert Suter, Group Chief Executive Officer (from right to left) 6

Conzzeta – Annual report 2009 Foreword

goal remains to “Our emerge from the crisis stronger.

Ladies and Gentlemen This report covers the most difficult business year in decades. The Group Executive Board, under its new leadership, and the whole of management faced great challenges. For many employees, the situation was a strain, and in objective terms the financial result is poor. The sober figures give an impression of just how difficult a period it was: Group revenue fell by 35 %, while the order intake in machinery and systems engineering slumped by almost a half, and the operating result shows a small loss. The Group result was just on the positive side, boosted by extraordinary income from the sale of properties. Following the massive slump in orders since autumn 2008, the focus of the Board of Directors and management was less on optimizing profits and more on longterm maintenance of competitiveness. Our goal remains to emerge from the crisis stronger. We therefore decided to continue developing products and building our market presence, while on the operational level we have taken steps to adjust costs only where this was unavoidable. Even so, the adjustments made have had far-reaching consequences for the business units and employees concerned. The restructuring charges totaled CHF 22 million. The headcount across the Group showed a fall of 13 % over the year. It would be one-sided to speak only of the difficulties in this annual report and to ignore all the work that has gone into developing our businesses. The Sporting Goods business unit continued to produce gratifying results, recording another increase in sales. Less visible are the many measures taken to secure competitiveness in the years ahead. Our machinery and systems engineering businesses succeeded in developing cost-effective systems in record time and responded to the new market requirements with innovative products and services. In addition, current assets were successfully adjusted in line with the lower volume of business, resulting in a cash flow from operating activities of CHF 140 million. The slump during the previous year provided a reminder of the importance of a sound financing policy. Thanks to our excellent equity ratio, we were able to

”

make a measured response to the crisis. As a result, the Board of Directors considers it appropriate to propose halving the previous dividend, despite the fact that the retained earnings and liquidity position would permit the payout of a higher dividend. The outlook in the capital goods sector, which contributes a good half of our Group revenues, is still very difficult to gauge. Although there was a slight recovery towards the end of 2009, orders were still about 40 % below the level of two years ago. We therefore expect another difficult year, with a succession of upswings and setbacks. Overall, however, we expect a perceptible improvement in the situation, which, together with the efficiency measures adopted, should bring us back into the black. Difficult situations often result in everyone pulling together – which is just what happened at Conzzeta in the past year. It was impressive to see the understanding and courage with which serious problems were tackled, and how morale was maintained despite the strained situation. This is the best possible basis for measuring up to whatever challenges the future holds, and we wish to thank everyone for showing such a positive spirit.

Jacob Schmidheiny Chairman of the Board of Directors

Robert Suter Group Chief Executive Officer

Conzzeta â&#x20AC;&#x201C; Annual report 2009

Business overview Group 10 11 12 18

Board of Directors Group Executive Board and Corporate Staff Overview of the business year 2009 Interview with the Group CEO

20 21 22 23 24 25 26

Sheet Metal Processing Systems Glass Processing Systems Automation Systems Foam Materials Sporting Goods Graphic Coatings Real Estate

Business units

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Business overview / Group

Board of Directors

Names and functions from left to right as in the listing below.

Philip Mosimann, Member of the Board since 2007 Robert F. Spoerry, Member of the Board since 1996 Werner Dubach, Member of the Board since 1993 Jacob Schmidheiny, Chairman since 1977 Thomas W. Bechtler, Member of the Board since 1987 Matthias Auer, Member of the Board since 1996

All Board members are elected until the 2011 Ordinary General Meeting.

> For detailed information on the Board of Directors, see page 30 et seq. 10

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Business overview / Group

Group Executive Board and Corporate Staff

Names and functions from left to right as in the listing below.

Carlo Menotti, Head of Corporate Services and Secretary of the Board of Directors since 2008 Ferdi TĂśngi, Head of the Sheet Metal Processing Systems business unit since 2002 Kaspar W. Kelterborn, Group Chief Financial Officer since 2006 Robert Suter, Group Chief Executive Officer since April 2009 Richard Jakob, Head of the Glass Processing Systems business unit since 2007 Barbara Senn, General Counsel since February 2010 Rolf G. Schmid, Head of the Sporting Goods business unit since 2004 Serge Entleitner, Head of the Graphic Coatings business unit since 2009 Ralph Siegle, Head of the Real Estate business unit since 2003 Bart J. ten Brink, Head of the Foam Materials business unit since October 2009 Martin Pfister, Head of the Automation Systems business unit since 2005

> For detailed information on the Group Executive Board, see page 33 et seq. 11

Conzzeta – Annual report 2009 Business overview / Group

Overview of the business year The Conzzeta Group experiences one of the most difficult years ever and adjusts capacities in line with the market environment. Competitiveness is secured.

The Conzzeta Group was strongly affected by the economic crisis in the 2009 business year. The Sporting Goods business unit alone was able to continue on its growth path. The machinery and systems engineering businesses were the first to feel the impact of the abrupt downturn in the world economy in autumn 2008. It was not long before the Foam Materials and Graphic Coatings business units also faced declining orders. Despite the still healthy state of order books from the previous year, the machinery and systems engineering business units had to introduce short-time working in early 2009. The slump in orders was at times as much as 60 % and recovery was slow. Given the downturn in the economy and the lower volume of orders expected, the Group decided

to adjust its capacities in response to the market environment. This resulted in job losses in the Sheet Metal Processing Systems, Glass Processing Systems, Automation Systems and Foam Materials business units. The Group’s solid financial basis enabled it to make a measured response to the dramatic slump in the markets, adjusting capacities only where this was unavoidable. In order to secure our future market position, we made sure that our geographic market coverage and innovation projects were maintained in all business units. In addition, we further strengthened our presence in growth markets. At the end of the second third of 2009, demand stabilized, though still at a very low level.

Net revenue by business unit 2009

2008

Change

CHF m

in %

Sheet Metal Processing Systems

356.1

745.1

– 52.2

Glass Processing Systems

145.6

244.6

– 40.5

Automation Systems

56.1

73.6

– 23.7

Foam Materials

116.8

146.3

– 20.1

Sporting Goods

215.3

192.6

11.8

Graphic Coatings

43.2

47.5

– 9.2

Real Estate and miscellaneous revenue

22.1

22.8

– 3.1

955.2

1 472.5

– 35.1

Total

Conzzeta – Annual report 2009 Business overview / Group

Development of Group revenues

Business units

In the 2009 business year, the Group recorded consolidated net revenues of CHF 955.2 million, representing a decline of 35.1 % over the previous year (CHF 1 472.5 million). The fall in revenues contains negative currency translation effects of 2.4 %, as well as minor effects due to changes in the scope of consolidation. In organic terms, the decline was 32.6 %. The Sporting Goods business unit achieved a gratifying increase in revenues, generating sales growth of 11.8 %. All other businesses reported declining revenues. The three business units operating in the machinery and systems engineering sector were hardest hit by the crisis, with sales down between 23.7 % and 52.2 %. As a result, there was a shift in the share of the various business units in consolidated net revenues. The share of the three machinery and systems engineering units was 58.5 % of overall revenues (previous year: 72.2 %). Sporting Goods increased to 22.5 % (previous year: 13.1 %). In terms of geographic markets, Switzerland and Asia / Pacific held their ground best, with revenues declining by 14.9 % and 16.7 % respectively. The other market regions reported slumps of between 31.9 % and 57.5 %. Worst affected by the crisis were the markets of Eastern Europe and North and South America.

Sheet Metal Processing Systems The Sheet Metal Processing Systems business unit (Bystronic) had to cope with a 52.2 % slump in sales, which came in at CHF 356.1 million (previous year: CHF 745.1 million). Although the 2009 business year began with wellfilled order books, short-time working had to be brought in from February onwards. The slump affected the laser and waterjet cutting systems as well as pressbrakes. Demand fell steeply in markets such as Scandinavia, as well as Southern and Eastern Europe. The fall-off was less marked in Central Europe and Great Britain. In Asia, China showed an upward trend, returning to growth. Despite the difficult business environment, Bystronic maintained, and in some cases strengthened, its market presence. The sales and service network, with dedicated companies in over 20 countries, was further developed through the opening of a subsidiary in Russia. In Germany and Korea, the sales and services companies moved into their own newly built complexes. The past year also saw development of the business with used machinery. Bystronic systems are overhauled by specially trained personnel at the subsidiary in Romania and sold on through the Bystronic sales network.

Net revenue by geographical area 2009

2008

Change

CHF m

in %

Switzerland

156.0

183.5

– 14.9

Euro area

386.3

567.1

– 31.9

Rest of Europe

130.7

307.3

– 57.5

Total Europe

673.0

1 057.9

– 36.4

North and South America

119.4

214.9

– 44.4

Asia and Pacific

157.3

188.8

– 16.7

Africa

5.5

10.9

– 49.5

Total

955.2

1 472.5

– 35.1

Conzzeta – Annual report 2009 Business overview / Group

There were notable achievements on the development side, as well. Bystronic introduced the BySprint Pro 3015 laser cutting system, which offers impressive top-performance cutting speeds on thin sheets. Another highlight was the launch of the ByJet Classic 3015 waterjet cutting system, after a development lead time of only six months. Bystronic aims to conquer new markets with the ByJet Classic 3015, thanks to an attractive purchase price and comparatively low running costs. Glass Processing Systems The Glass Processing Systems business unit (Bystronic glass) generated sales of CHF 145.6 million (previous year: CHF 244.6 million) in the reporting year, which represents a decline of 40.5 %. The global recession brought a slump in demand for glass and glass-processing machinery. Investment in new systems was very cautious. With systems for glass processing operating on a reduced schedule at many customers, the service and spare-parts business also declined. Bystronic glass had to deal with falling demand in all product groups and market regions. Worst-affected was the machinery for automotive applications, but the situation in the architectural glass segment was also difficult. The tense market situation increased the competitive pressure on all suppliers. In addition, many customers were confronted with financing problems. In regional terms, the markets hardest hit by the crisis were Great Britain and the USA. However, the reporting year also produced some positive results. In the Middle East, Bystronic glass won further major orders for turnkey manufacturing installations. The first automated production line for Sashlite PVC windows was launched in the USA, offering window manufacturers significant cost and quality advantages. The production site in China, which was started up in 2008, made pleasing progress. A new machine for the manufacture of insulating glass, using TPS® technology, was presented at the leading Asian glass trade show “China Glass”. Automation Systems The Automation Systems business unit (ixmation) closed the reporting year with sales of CHF 56.1 million (previous year: CHF 73.6 million). Almost half the 23.7 % decline in sales was due to a divestment. ixmation is concentrating its activities in Switzerland on sales and servicing of systems for automation of assembly lines and testing, based at a new site in Burgdorf. The business with production automation systems at the Pieterlen site was sold in a management buyout. 14

In a demanding market environment, the ixmation companies in the USA and Asia succeeded in gaining high-profile new customers. As a result, the strategic business segments of medical technology and alternative energies increased their share of overall revenues. The reporting year again saw numerous projects for international customers, involving cross-border collaboration across several ixmation sites. The uncertain economic situation also left its mark on the ixmation businesses, with customers very cautious about committing to investments, often postponing projects. The business in Malaysia received a welcome boost from major contracts for the electronics industry in 2009. Construction started on a new production and office building in Penang. Foam Materials The Foam Materials business unit (FoamPartner) generated sales of CHF 116.8 million in 2009, a decline of 20.1 % compared with the previous year (CHF 146.3 million). Sales volumes were down in the technical foams (industry, packaging and automotive) and comfort (mattress and pillow cores) business segments. Customers generally kept inventories at a low level owing to the economic crisis. The crisis had a greater impact on the technical foams, specifically for automotive applications, than on the consumer-oriented comfort segment. On the whole, FoamPartner was able to maintain market share. As a result of the fall in demand overall, there was a tangible increase in competitive pressure in the foam materials market. FoamPartner achieved an important intermediate goal in foam materials development. Initial customer tests with the new sealant foam RegiSealAqua were a great success. In the comfort segment, the novel AventO2 mattress core material, which is enriched with lavender, was successfully launched. The plant in Changzhou (China), which was opened in 2008, succeeded in significantly increasing output in the reporting year. As a result, local production of important foam types for the Asian growth market is possible. That means FoamPartner is now represented on three continents (Europe, North America and Asia). Sporting Goods The Sporting Goods business unit (Mammut Sports Group) increased sales in the reporting year by 11.8 % to CHF 215.3 million (previous year: CHF 192.6 million). This result is very pleasing, even in the context of a

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Business overview / Group

robust outdoor market. Two product groups made important contributions to the revenue growth. In the clothing segment, the snow and alpine / mountain collections were in particular demand; while in technical products, the avalanche rescue device Barryvox and the headlamp made good progress. The new Mammut shoe collection, with Raichle technology, was well received by customers. The Toko brand was unable to match 2008 sales levels, due particularly to the clothing segment. There was vigorous sales growth in the markets of Germany, Switzerland, Italy and Great Britain, as well as in important new markets such as Japan and Korea, where the business unit targeted investments at an expansion of the sales network. Mammut also succeeded in expanding in the USA, against the market trend. The development of sales in Eastern Europe failed to meet expectations, above all because of the adverse exchange rate situation. In 2009, Mammut further improved logistics and delivery performance, to the benefit of specialist retailers and end-customers. The newly opened Mammut Stores made pleasing progress, as did numerous shopsin-shop, run in collaboration with specialist retailers. Graphic Coatings The Graphic Coatings business unit (Schmid Rhyner) reported sales of CHF 43.2 million (previous year: CHF 47.5 million), representing a fall of 9.2 %. As a result of the economic crisis, demand in the printing industry (commercial and packaging printing) declined. Despite the increase in competitive pressure, Schmid Rhyner succeeded in maintaining its market position, and increasing both market share and sales in some sales markets. The sales company in the USA, established in 2008, also achieved advances in the market. In the reporting year, a number of new product lines were introduced. For packaging printing, a special line was developed for food, beverages and tobacco packaging. The introduction of an extra-matt product line for luxury packaging also met with great success. The laboratory and application technology teams were strengthened. Real Estate The Real Estate business unit (Plazza Immobilien) generated revenues of CHF 21.4 million (previous year: CHF 22.0 million) in 2009. The decrease of 2.5 % is largely due to lower rental incomes, following the sale of a property. In the reporting year, two properties not essential to business operations were sold, bringing an extraordinary result of CHF 11.0 million. The Swiss residential

property market proved largely crisis-proof in 2009. Accordingly, rental income remained at a constant level. As expected, the situation in the commercial property market deteriorated. In the case of terminations, it is generally difficult to relet properties without interruption. There was also an increase in the number of tenants defaulting on payments, although the impact on Plazza Immobilien was only minor. For a former industrial site in Wallisellen, Plazza Immobilien launched a planning project for a high-end development with a strong residential element. A modern development with around 190 apartments is planned.

Earnings situation In the reporting year, the Conzzeta Group recorded an operating result (EBIT) of CHF â&#x20AC;&#x201C; 1.4 million (previous year: CHF 97.8 million). The negative operating result is due primarily to the steep fall in demand due to the global economic crisis, most notably affecting business units in the machinery and systems engineering sector. The operating result contains non-recurring costs of CHF 22.3 million for capacity adjustments to take account of the changed market environment. In the reporting year, personnel costs and other operating expenses were reduced by short-time working and further cost-saving measures. The Group result was just on the positive side at CHF 3.3 million (previous year: CHF 78.8 million). This figure contains an extraordinary result of CHF 11.0 million from the divestment of properties not essential to business operations.

Investments and acquisitions The investments in property, plant and equipment and intangible assets were adjusted in line with economic developments, falling by half to CHF 28.0 million (previous year: CHF 56.0 million). The biggest investments during the reporting year were in Switzerland and Germany. The Sheet Metal Processing Systems business unit completed construction of the new assembly and warehouse facility in Gotha (Germany), and a new building for the sales company was realized in Heimsheim (Germany). In NiederĂśnz (Switzerland), a parcel of land for a planned assembly building was purchased. The Glass Processing Systems business unit completed the extension of its production plant in Gunzenhausen (Germany) 15

Conzzeta – Annual report 2009 Business overview / Group

and invested in the ERP system. The Sporting Goods business unit also invested in its ERP system. At the Seon (Switzerland) location, land was purchased for a planned storage facility. There were no acquisitions in the reporting year.

equity ratio increased to 78.0 % (previous year: 75.1 %). Even in a difficult economic environment, the Group remains on a very solid financial footing.

Dividends Free cash flow, financing and liquidity In 2009, the Conzzeta Group recorded a cash flow from operating and investment activities (free cash flow) of CHF 141.8 million (previous year: CHF – 30.8 million). Two factors are mainly responsible for the positive free cash flow. In the first place, it was possible to reduce net working capital, particularly through a decrease in accounts receivable and inventories. Apart from systematic management of net working capital, this effect is due to the decrease in the volume of business. Secondly, the investment activity in fixed assets was cut by about a half and adapted to the business environment. The positive cash flow led to an increase in cash, cash equivalents and fixed-interest securities, which reached CHF 456.0 million (previous year: CHF 347.3 million). As a result of the reduction in the balance sheet total, the

Continuing the flexible dividend policy, the Board of Directors proposes to adjust the dividend to the changed economic situation. It is proposing a dividend of CHF 30.00 (60.00) per bearer share and CHF 6.00 (12.00) per registered share.

Employees At the end of 2009, the worldwide workforce of the Conzzeta Group stood at 3 225 employees (previous year: 3 718). In view of the negative economic development, jobs had to be cut in the Sheet Metal Processing Systems, Glass Processing Systems and Automation Systems and Foam Materials business units.

Staff changes

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At the beginning of April 2009, Robert Suter took over as Group CEO from Heinrich M. Lanz, who stood down after seven years in office. Foam Materials also saw a change at the top: in November 2009, Bart J. ten Brink took over as head of the business unit from Heinz Dürrenberger, who retired at the end of 2009 after 18 years’ service with the Group. The Board of Directors and Group Executive Board would like to thank Heinrich M. Lanz and Heinz Dürrenberger for their great commitment and wishes them all the best for the future. In February 2010, Barbara Senn joined the Group. She takes over as General Counsel from Thomas Emch, who is retiring at the end of June 2010.

Trends and outlook

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It is still difficult to make predictions about business developments in 2010. There are increasing signs of a slow recovery in the world economy, raising hopes of an improvement in the market environment of the Conzzeta Group businesses. In the capital goods sector, there are emerging signs of a slow upturn, but the pick-up in incoming orders is still uneven. Furthermore, the machin-

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Business overview / Group

ery and systems engineering businesses are beginning the 2010 business year with their order books at a much lower level than in the previous year. It can be expected that 2010 will be another challenging year, with a succession of advances and setbacks. As a result, the machinery and systems engineering sector will not return to its previous position of strength. In the consumer goods sector, we may have to live with the fact that it will no longer be possible to achieve the growth rates seen in previous years. The Groupâ&#x20AC;&#x2122;s goal for 2010 is to get back into the profit zone. The sound financial structure, as well as the capacity adjustments made in 2009 in response to the changing market situation, will contribute to achieving that goal. In the current year, the Group will focus on positioning the business units to take full advantage of the next upswing, with the goal of emerging from the crisis stronger.

Conzzeta – Annual report 2009 Business overview / Group

“Rapid and appropriate action in a difficult business year” Conzzeta took appropriate action in 2009, focusing on capacity adjustments, innovation and strengthening the Group’s presence in Asia. The personal assessment of the new Group CEO, Robert Suter, is a positive one – despite an unsatisfactory financial result.

Robert Suter, you took over the leadership of Conzzeta in a difficult economic situation. What is your personal assessment of the first year? Robert Suter: In operational terms, the 2009 business year was one of the most difficult ever. The financial result is unsatisfactory. However, in this challenging situation, we were able to respond with rapid and appropriate action. Seen from today’s economic perspective, we are well prepared for what lies ahead. My personal assessment is a very positive one. I am well supported by those around me and feel that I can make a valid contribution to Conzzeta, taking advantage of my international experience in different industries. It is an exciting opportunity to use these abilities to good effect at Conzzeta. What has given you greatest satisfaction? Without doubt, the strong identification of employees with the companies and the possibility, even in difficult situations, of conducting an open dialogue. I always had the feeling that our people stand together and pull their weight. This commitment, in such a difficult year, is particularly valuable and very gratifying to see. What has Conzzeta done to maintain its competitiveness? Overall, there were three packages of measures which took effect in 2009. First of all, we intensified our innovation programs, which produced tangible results. For example, Bystronic’s launch of a new waterjet cutting machine, after only six months in development. Secondly, we adjusted our cost base to the volume of business, above all in machinery and systems engineering, and took 18

additional measures, such as reducing manufacturing costs. On the basis of careful market and demand analysis, we also managed to make significant reductions in production costs on certain machines. The third set of measures involved strengthening Conzzeta’s presence in the growth markets. This has enabled us to achieve above-average success rates in key Asian markets. A long perspective and solidity are core values for Conzzeta. What does that mean in real terms? To have a long-term perspective, as Conzzeta does, is doubly valuable in a difficult market environment. Thanks to our solid capital base, we are in a position to act with a long-term perspective, despite the turbulent environment. The reliability and stability that grow out of that are of great benefit to our customers, business partners and suppliers. It also enables us to take advantage of opportunities. Where do you see the greatest growth potential for the Group? The focus of our business units’ activities is currently on Europe. But important growth markets are in regions such as Asia. Companies should site their production where the growth markets are. That’s why almost all our businesses have established a foothold in Asia in the form of production facilities or even through the placement of top management. The growth potential for the Group lies in China and Southeast Asia, and also, increasingly, in other emerging markets. Our European parent companies will also benefit from the growth of these new markets.

Conzzeta – Annual report 2009 Business overview / Group

“

Our reliability and stability are of great benefit to customers, partners and suppliers.

”

machinery and systems engineering plummeted by up to a half, the Real Estate and Sporting Goods businesses remained stable or actually grew, helping to shore up results. What are your main goals for the current business year? The crisis is not over yet. So it’s important that we continue to have an accurate assessment of market trends and to respond quickly, professionally and with flair. In which areas is Conzzeta particularly innovative? In many areas! Mammut is very active and innovative at the moment. It won the coveted marketing prize of the Swiss Marketing Association (GfM). Mammut has also demonstrated its commitment to corporate social responsibility through its membership of the Fair Wear Foundation, a non-profit organization which campaigns for good working conditions in the clothing industry. Other interesting innovations have come from the likes of Bystronic glass, with a new production line for bonded windows with PVC frames, making it possible to achieve a very high insulation efficiency on buildings, at low cost. FoamPartner has developed a trend-setting core material for mattresses with properties that enhance well-being. And Schmid Rhyner has significantly expanded its UV print varnish range for food packaging.

Could you sum up the outlook for the current business year? We are working on the assumption that most business units will not see a tangible recovery before 2011. We expect a modest pick-up in the markets during 2010; but we will continue to face challenges. Whatever the future holds, we will do everything in our power to ensure that Conzzeta emerges from the crisis stronger and in pole position to take advantage of the next upswing.

How do you explain to an outsider the purpose and objectives of Conzzeta’s portfolio of equity holdings? The past year has shown the value of a broadly diversified portfolio, with holdings in industry, consumer-oriented goods and real estate. While the volume of demand in 19

Conzzeta – Annual report 2009 Business overview / Business units

Sheet Metal Processing Systems − Bystronic Bystronic is a world-leading supplier of solutions for the processing of sheet metal and other sheet materials. Important events in 2009 – Bystronic gets back on its growth path in China, demonstrating the value of a long-standing commitment and local presence. An Asia / Pacific division is created to underline the importance of Asian markets for the business unit. – Under the motto “simply economical”, Bystronic showcases impressive new products in the areas of waterjet cutting, bending and automation at leading trade fairs in Germany, China and the USA.

Net revenue in CHF m

2007

Overview Bystronic – Head: Ferdi Töngi – Presence: worldwide, over 20 sales and service companies; 3 development and production sites in Switzerland, Germany and China www.bystronic.com

Investments in property, plant and equipment and intangible assets in CHF m 793.5

14.0

745.1

2008 2009

– The new production building at the Gotha (Germany) location greatly increases the productivity of pressbrake manufacture.

356.1

1 524 26.9

11.7

Number of employees

1 627 1 389

Conzzeta – Annual report 2009 Business overview / Business units

Glass Processing Systems – Bystronic glass Bystronic glass offers high-quality system solutions for the processing of architectural and automotive glass. Important events in 2009 – With the growing importance of energy efficiency around the world, ordinary glazing is increasingly being replaced by insulating glass. Following the launch of the world’s first fully automated assembly line for bonded PVC windows in Atlanta, Bystronic glass can offer window manufacturers tangible advantages: higher output, better quality and lower manufacturing costs.

– Bystronic glass puts 45 years of experience in glass processing to work in the solar industry: the first systems for preprocessing in the front- and back-end segment are successfully realized. Overview Bystronic glass – Head: Richard Jakob – Presence: worldwide sales and service network, with 6 subsidiaries and several representative offices; 3 technology centers (development and production) in Germany and Switzerland; 1 production site in China www.bystronic-glass.com

– The production center in Shanghai, opened in 2008, looks back on a successful first year, delivering the first compact insulating-glass production line to be made entirely in China.

Net revenue in CHF m

2007

237.3

2008 2009

Investments in property, plant and equipment and intangible assets in CHF m 7.5

727 11.0

244.6 145.6

Number of employees

4.4

801 668

Conzzeta – Annual report 2009 Business overview / Business units

Automation Systems – ixmation ixmation is an international supplier of systems for the automation of assembly lines and quality assurance for mass products. Important events in 2009 – ixmation focuses in Switzerland on automation of assembly lines and testing systems. The production automation segment continues operations in a management buyout as an independent company outside the Group. – In Malaysia, ixmation has developed a system for the assembly of electronic components, with an innovative machine design which cuts down by as much as 50 % the costly floor space required for production. – The second ixmation location in China, Tianjing, is extended by the addition of a production plant.

2007

76.7

2008

Overview ixmation – Head: Martin Pfister – Presence: 5 locations in China, Malaysia, the USA and Switzerland www.ixmation.com

Investments in property, plant and equipment and intangible assets in CHF m

Net revenue in CHF m

2009

– ixmation gains major new customers in promising growth sectors such as medical technology and alternative energy.

357

0.6 1.0

73.6 56.1

Number of employees

0.9

399 305

Conzzeta – Annual report 2009 Business overview / Business units

Foam Materials – FoamPartner FoamPartner manufactures high-quality foam materials and offers customized solutions for the industry and comfort business segments. Important events in 2009 – FoamPartner launches the AventO2 mattress core material, enriched with lavender, positioning itself as an innovative specialist in foam materials for the mattress market. – The plant opened in Changzhou (China) in 2008 increases output. Local foam production and processing enable FoamPartner to target expansion in the Asian growth market. – At the end of the year, Bart J. ten Brink takes over as head of FoamPartner. He has long years of international experience in the foam materials industry.

Net revenue in CHF m

Overview FoamPartner – Head: Bart J. ten Brink – Presence: 9 production, processing and sales locations in Europe, Asia and the USA; worldwide marketing through a partner sales network www.foampartner.com

Investments in property, plant and equipment and intangible assets in CHF m

2007

156.5

2008 2009

– The foam-processing specialist Kureta is successfully integrated, following acquisition at the end of 2008.

19.9

146.3 116.8

9.6 2.3

Number of employees

470 495 444

Conzzeta – Annual report 2009 Business overview / Business units

Sporting Goods – Mammut Sports Group Mammut Sports Group develops, manufactures and markets innovative mountaineering, climbing and winter sports equipment. Important events in 2009 – Mammut demonstrates its strong commitment to corporate social responsibility by joining the Fair Wear Foundation, a non-profit organization that campaigns for good working conditions in emerging economies. – Further Mammut Stores are opened, in collaboration with specialist retailers, in Switzerland (Zurich, Lucerne and Bern), Germany (Berlin and Regensburg) and Japan (Sapporo, Kobe and Sendai). – The company presents a completely revamped collection of backpacks to the retail trade. The new models, in the alpine, backpacking, hiking and climbing product groups, are in stores from summer 2010.

Net revenue in CHF m

2007 2008 2009

– Mammut wins the renowned marketing prize of the Swiss Marketing Association (GfM).

Overview Mammut Sports Group – Head: Rolf G. Schmid – Presence: worldwide sales network in over 80 countries; head offices, product development and rope manufacture in Seon (Switzerland); numerous production partners in Europe and Asia www.mammut.ch

Investments in property, plant and equipment and intangible assets in CHF m 177.1

6.1

192.6 215.3

5.4 4.5

Number of employees

308 331 348

Conzzeta – Annual report 2009 Business overview / Business units

Graphic Coatings – Schmid Rhyner Schmid Rhyner develops and manufactures environmentally friendly print varnishes and laminating adhesives for the graphical industry. Important events in 2009 – In record time, Schmid Rhyner develops a special product range for printing packaging used for food, beverages and tobacco products.

– Advances are made in the drive to develop markets in the USA, the Middle East and Asia.

– The laboratory and application technology teams are strengthened, enhancing the company’s expertise in innovation and consultancy. – The introduction of new extra-matt UV varnishes for luxury packaging is a great success.

Net revenue in CHF m

2007 2008 2009

Overview Schmid Rhyner – Head: Serge Entleitner – Presence: worldwide sales network in over 90 countries; 1 production site in Adliswil (Switzerland); 1 subsidiary in New Jersey (USA) www.schmid-rhyner.ch

Investments in property, plant and equipment and intangible assets in CHF m 44.1 47.5 43.2

0.8

Number of employees

33 1.0 1.1

39 45

Conzzeta – Annual report 2009 Business overview / Business units

Real Estate – Plazza Immobilien Plazza Immobilien manages the Conzzeta Group’s portfolio of properties. Important events in 2009 – The planning process for an industrial site in Wallisellen is launched. The aim is to realize a modern development on the site, with around 190 apartments. – Plazza Immobilien succeeds in selling a major property in Döttingen and a parcel of land in Rafz.

Overview Plazza Immobilien – Head: Ralph Siegle – Presence: properties throughout Switzerland www.plazza-immobilien.ch

Net revenue in CHF m

2007 2008 2009

Investments in property, plant and equipment and intangible assets in CHF m 21.0 22.0 21.4

0.1

Number of employees

11 1.0

11 3.0

Corporate governance 28 29 30 33 35 35 36 36 37

Group structure and shareholders Capital structure Board of Directors Group Executive Board Content and method of determining compensation Shareholdersâ&#x20AC;&#x2122; participation rights Change of control and defensive measures Auditors Information policy

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Corporate governance

Corporate Governance The Conzzeta Group attaches importance to a transparent management structure and open dialogue. The Group is guided by the principles of the Swiss Code of Best Practice for Corporate Governance, which it implements in accordance with its size and structure. It always acts in compliance with legal requirements and urges its employees to do likewise.

1 Group structure and shareholders Group structure Financially, the Group is controlled by Conzzeta AG. It is organized in seven business units: Sheet Metal Processing Systems, Glass Processing Systems, Automation Systems, Foam Materials, Sporting Goods, Graphic Coatings and Real Estate. At Group level, Corporate Staff supports the activities of the holding company and the operational units. Conzzeta AG has direct or indirect equity holdings in the companies listed on page 66 et seq. Conzzeta AG, which is headquartered in Zurich, is the only company that is listed. The Conzzeta bearer share (Swiss security number 265 798, ISIN CH0002657986) is listed on the SIX Swiss Exchange. The market capitalization (bearer shares) as of 12 / 31 / 2009, was CHF 731 million; the total capitalization (registered and bearer shares) amounts to CHF 828 million.

Significant shareholders

TEGULA AG, Zurich

Percentage of shares represented

Percentage of nominal capital

in %

81.8

74.2

No disclosures were received in the reporting year.

This corporate governance report summarizes all the available information relating to Conzzeta AG and reports it in accordance with the SIX Swiss Exchange directive. Any points not applicable to Conzzeta or which correspond to legal norms are not listed. In certain selected cases, so-called negative declarations are given. 28

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Corporate governance

2 Capital structure Capital and shares The share capital is fully paid-up. There was no approved or conditional capital as of 12 / 31 / 2009. Number of bearer shares Number of registered shares par CHF 100 par CHF 20

Share capital

Total nominal capital

Number

CHF

406 000

270 000

46 000 000

Each share has a single vote at the Annual General Meeting of Shareholders. The dividend rights of the registered and bearer shares are proportional to the par value of the two share categories. Changes in share capital The year-by-year changes in the capital structure are explained in the notes to the annual financial statement of Conzzeta AG in the relevant annual reports.

Share capital as of 12 / 31 / 2006

Share capital

Reserves

Retained earnings

Total equity

CHF

46 000 000

263 406 325

76 676 515

386 082 840

10 000 000

122 900 873

132 900 873

46 000 000

273 406 325

199 577 388

518 983 713

60 000 000

47 442 637

107 442 637

46 000 000

333 406 325

247 020 025

626 426 350

50 000 000

â&#x20AC;&#x201C; 41 125 416

8 874 584

46 000 000

383 406 325

205 894 609

635 300 934

Change 2007 Share capital as of 12 / 31 / 2007 Change 2008 Share capital as of 12 / 31 / 2008 Change 2009 Share capital as of 12 / 31 / 2009

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Corporate governance

3 Board of Directors

Guiding principle The Board of Directors provides a personnel and organizational framework for the companyâ&#x20AC;&#x2122;s leadership to exercise its responsibilities. The Board of Directors assesses the progress made toward achieving targets as well as the financial results. In strategic decisions, it seeks

to strike a balance between opportunities and risks in the context of financial sustainability. It delegates the responsibility for management, with comprehensive powers, to the Group Executive Board, enabling the executives to strive proactively for business success.

Conzzeta – Annual report 2009 Corporate governance

Members of the Board of Directors 1 Jacob Schmidheiny – Lic. oec. publ. – born 1943 – Chairman of the Board of Directors – Member of the Board of Directors since 1977 – In 1976, he became a member of the Executive Board of Zürcher Ziegeleien, today Conzzeta AG. From 1978 to 2001 he was President and Chief Executive Officer. The transition from construction materials group to the present-day industrial holding company took place under his leadership. – Jacob Schmidheiny has been Chairman of the Board of Directors of TEGULA AG, Zurich, since 1984. 2 Matthias Auer – Dr. iur. – born 1953 – Member of the Board of Directors since 1996 – He has practiced as a lawyer and notary public in Glarus since 1981. He is a member of the Cantonal Council in Glarus and the Municipal Council in Netstal. – Matthias Auer is a member of the Board of Directors of TEGULA AG, Zurich. 3 Thomas W. Bechtler – Dr. iur., LL.M. – born 1949 – Member of the Board of Directors since 1987 – Since 1982 he has been CEO of Hesta AG, Zug. From 1975 to 1982, he held various managerial positions at Luwa AG. – Thomas W. Bechtler is Vice-President of the Board of Directors of Sika AG, Baar, and a member of the Board of Directors of Bucher Industries, Niederweningen.

5 Philip Mosimann – Dipl. Ing. ETH – born 1954 – Member of the Board of Directors since 2007 – He joined Bucher Industries AG, Niederwenigen, in 2001, becoming Chief Executive Officer in 2002. Between 1980 and 2001, Philip Mosimann held a number of managerial positions with the Sulzer Group, Winterthur, including Sulzer Innotec AG (1980 – 1992), as Head of Division at Sulzer Thermtec (1992 – 1996) and as Head of Division at Sulzer Textil, Rüti (1997 – 2000). 6 Robert F. Spoerry – Dipl. Masch.-Ing. ETH, MBA – born 1955 – Member of the Board of Directors since 1996 – He is Chairman of the Board of Directors of Mettler-Toledo International Inc., Greifensee, which he also led as CEO from 1993 to 2007. – Robert F. Spoerry is a member of the Board of Directors of Holcim Ltd, Jona, Sonova Holding AG, Stäfa, Geberit AG, Jona, and Schaffner Holding AG, Luterbach. All members of the Board of Directors are Swiss nationals. No member is actively involved in the executive management of the Conzzeta Group, nor has been in the last three years. Apart from the role of shareholder, no member has significant business relations with the Group.

4 Werner Dubach – Dipl. Ing. Chem. ETH, MBA – born 1943 – Member of the Board of Directors since 1993 – Since the sale of the beverages and real estate segments of Eichhof Group in 2008, he has headed Datacolor AG, Lucerne (formerly Eichhof Holding AG) as Chairman of the Board. From 1998 to 2008, he was Chief Executive Officer and a member of the Board of Directors of Eichhof Holding AG, Lucerne. In 1983 he became a member of the board of Brauerei Eichhof. Between 1970 and 1983, he held various managerial posts within the Eichhof Group. – Werner Dubach is a board member of a number of start-up enterprises.

Conzzeta – Annual report 2009 Corporate governance

Election and term of office In accordance with the Articles of Incorporation, the Board of Directors comprises at least four and no more than eight members. It is elected for a term of three fiscal years. The next complete re-election is due to be held at the Ordinary General Meeting of Shareholders in 2011. The Board of Directors is customarily elected in its entirety. Internal organization The Board of Directors acts as an integral body and does not appoint special committees. The Chairman is involved in and supervises the preparation of the bases for decision of the Board of Directors and the implementation of its decisions. The substantive preparation and operational implementation of the Board’s decisions are the responsibility of the Group Executive Board. This applies in matters of strategy, financing, personnel appointments and important individual transactions. The Group Chief Executive Officer, the Group Chief Financial Officer, the General Counsel and the Secretary of the Board usually take part in Board meetings. In addition, heads of business units, senior executives from Group companies, and, on occasions, external consultants are also called upon to take part in Board meetings, depending on the specific topic to be discussed. Annually, the Board of Directors holds four or five ordinary half- to full-day sessions. Four such meetings were held in 2009. Risk assessment: The company has methodical procedures which serve the Board of Directors as a basis for its risk assessment of the business situation and risks. In addition to the financial reports and analyses (see “Information”), these include the internal control system as well as strategic and operative risk management. Competences The Board of Directors has delegated responsibility for management of the Group’s business to the Group Executive Board, in accordance with the powers set forth in the Articles of Incorporation. The Group Executive Board and the managements of the individual business units have extensive competences in regard to the strategic and operational management of the units assigned to them. It is their task, through the careful development of human, material and organizational resources, to deliver a competitive performance in future-oriented industries as well as robust financial results. Decision-making competences are graded according to their significance and financial magnitude. 32

The Board of Directors has the following responsibilities: – determination of the corporate organization – appointment of the corporate agents – supervision of Group management and evaluation of prospects and results – determination of the Group’s strategic and financial goals – ratification of the main features of the business unit strategies – decisions on important investments, divestments, acquisitions and cooperative ventures – determination of the principles of accounting, financial planning, internal auditing and reporting – assessment of the risk situation of the Group, evaluating the opportunities and the sustainability in terms of human and financial resources Information The Conzzeta Group has a well-developed planning and information system. It is built from the base up, becoming increasingly concentrated towards the top. The Board of Directors is oriented verbally and in writing about the strategies, plans and results of all business units. The Board of Directors receives monthly written reports comprising the key figures and a commentary on important events. Every four months, the Board of Directors receives a detailed report with the complete financial statements of the business units and the Group, a preview and comprehensive management reports. On an annual basis, the Board of Directors is presented with the medium-term, annual and financial planning as a basis for its decisions on these matters. The Board of Directors also receives a report on the risk situation, the employee pension fund and the management letter of the auditors. The Board of Directors meets in a rotating cycle for an in-depth review of key strategic questions at corporate and business unit level. At the invitation of the Board of Directors, the individual business units present their situation and plans. A special documentation is produced for important individual transactions and presented at Board meetings by those responsible.

Conzzeta – Annual report 2009 Corporate governance

4 Group Executive Board

1 Robert Suter – Dipl. Ing. ETH, MBA – born 1958 – Group Chief Executive Officer since April 2009 – Starting in 1995, Robert Suter worked for ABB in a number of management positions. Most recently, as a member of management in the Transformers business unit, with worldwide responsibility for the Small Power and Traction Transformers product group. Between 2000 and 2005, he was head of the High Voltage Products business unit and also served as head of ABB operations in Korea. From 1995 to 1999, Robert Suter was CEO at Micafil. Before 1995 he worked at Cellpack AG (as division head in Canada and Switzerland) and at Oerlikon Contraves AG as a development engineer in the aerospace field.

2 Bart J. ten Brink – Dipl. Ing. VAT Tilburg, Netherlands – born 1964 – Head of the Foam Materials business unit since November 2009 – From 1991, he served in various management and senior management positions within the international foam manufacturing group Recticel N. V., for the last ten years as head of two strategic business units, composite foams and acoustical products, with worldwide responsibility. From 1995 to 1998, he was Technical Director and Industrial Manager for the Nordflex Group Scandinavia (joint venture of Recticel Int. and Shell Scandinavia). Between 1992 and 1995, he served as Plant Manager of Recticel Industry Buren. Bart J. ten Brink is a Dutch citizen.

Conzzeta – Annual report 2009 Corporate governance

3 Serge Entleitner – Mag. rer. soc. oec. – born 1964 – Head of the Graphic Coatings business unit – He joined Schmid Rhyner AG as chief executive in 2005. Since 2009 an autonomous business unit of the Conzzeta Group, the company was previously managed as Other Industrial Activities. From 2000 to 2005, he was a member of divisional management of Sefar AG in Thal. As Assistant Vice-President, he was responsible for distribution, marketing and the branches in Europe, Latin America and Africa. Prior to that, he held various management positions in the textile machinery industry. Serge Entleitner is an Austrian citizen. 4 Richard Jakob – Dipl. El.-Ing. ETH – born 1950 – Head of the Glass Processing Systems business unit since 2007 – He served in various positions within the Schindler Group, most recently heading the corporate task force. From 2000 to 2005, he was Senior Vice-President in charge of the Eastern Europe market region and later Northern Europe. Before that, as a member of executive management of Schindler Switzerland, he was responsible for new installations and assembly, the home-market business at Schindler France as well as various market regions in Switzerland. 5 Kaspar W. Kelterborn – Lic. oec. HSG – born 1964 – Group Chief Financial Officer since 2006 – From 2003 until mid-2005, he was CFO and a member of Executive Board of Unaxis Group. From 1996 to 2002, he held various international senior management positions in the area of finance at Clariant Group; between 1992 and 1995, he worked for Sandoz International AG in Switzerland and abroad. 6 Martin Pﬁster – Engineer FH, BSc in economics, MBA – born 1966 – Head of the Automation Systems business unit since 2005 – He joined the Conzzeta Group in 2004 as CEO of the former Seckler AG. From 2002 to 2004, he was CEO of Feintool Automation AG, Aarberg. Between 1996 and 2001, he served in various leading and management functions in the engineering industry.

7 Rolf G. Schmid – Lic. oec. HSG – born 1959 – Head of the Sporting Goods business unit – He joined the Conzzeta Group in 1996 as Head of the sports division of Arova Mammut AG. He took over as CEO of today’s Mammut Sports Group AG in 2000. Between 1985 and 1995, he held leading positions in the pharmaceutical industry as well as in the watch and tourist industries. Rolf G. Schmid is a member of the Executive Board of economiesuisse. 8 Ralph Siegle – Fed. dipl. in real estate management – born 1959 – Head of the Real Estate business unit since 2003 – From 2002 to 2003, he was in charge of portfolio management at Mobimo AG, Zollikon. Between 1993 and 1998, he was a team leader at Livit Immobilien Management AG, Zurich, becoming head of property management and a member of management in 1999. 9 Ferdi Töngi – Engineer HTL, MBA – born 1951 – Head of the Sheet Metal Processing Systems business unit since 2002 – He joined the Conzzeta Group in 2000 as Head of the Machinery and Systems Engineering business unit. From 1997 until 1999, he was Head of division Europe North and a member of management at AGIE Charmilles Group, Losone and Geneva. Between 1992 and 1996, he was a member of management at AGIE Group, Losone, with responsibility for marketing, sales and customer services. From 1974 to 1989, he held various management positions in the precision instrument and engineering industry. With the exception of Serge Entleitner and Bart J. ten Brink, all members of the Group Executive Board are Swiss nationals. The following members left the Group Executive Board in the reporting year: Heinrich M. Lanz, Group Chief Executive Officer from 2002 to March 2009. Heinz Dürrenberger, Head of the Foam Materials business unit from 1993 to November 2009.

Conzzeta – Annual report 2009 Corporate governance

5 Content and method of determining compensation In accordance with the Articles of Incorporation, the members of the Board of Directors determine their own compensation on an annual basis, taking account of the personal contribution that each has made and the financial situation of the company. The compensation received by the members of the Board of Directors is reported in the notes to the financial statements of Conzzeta AG. The members of the Group Executive Board receive a salary comprising a fixed and a variable part. The variable part is between a quarter and a third of the gross compensation and is based on the achievement of the management targets agreed annually. The variable part (bonus) reflects the extent to which objectives have been achieved, is determined by fair consideration after the annual closing and is paid out in a single cash sum. A proposal regarding the compensation packages for the members of the Group Executive Board is submitted by the Group Chief Executive Officer to the Chairman of the Board of Directors for approval. The Chairman of the Board of Directors determines the compensation to be paid to the Group Chief Executive Officer and informs the full Board of Directors once a year about all compensation packages. No formalized calculation models are used to determine compensation packages, as appropriate appraisal is considered to be a management responsibility. The details of the individual compensation received by the members of the Group management are reported in the notes to the financial statements of Conzzeta AG. There are no share or option participation programs.

6 Shareholders’ participation rights Statutory quora (Article 10 of the Articles of Incorporation) A resolution of the General Meeting of Shareholders which carries at least two-thirds of the represented votes and an absolute majority of the par value of the represented votes is required for: 1 – changes to the Articles of Incorporation 2 – changes to the share capital 3 – the limitation or annulment of subscription rights 4 – the liquidation of the Company Convocation of the General Meeting of Shareholders (Article 7 of the Articles of Incorporation) There is nothing in the rules which differs from applicable legal provisions. The invitation to Ordinary and Extraordinary General Meetings is issued by the Board of Directors, or by the auditors as the case may be, no later than 20 days before the date of the meeting. The invitation, which sets out an agenda of matters for discussion, the proposals of the Board of Directors and – where applicable – of shareholders who have demanded the convocation of the General Meeting or the tabling of an item on the agenda, is published in the Swiss Official Gazette of Commerce. Agenda (Article 7 of the Articles of Incorporation) Shareholders who represent shares with a par value of at least CHF 1 million can demand the inclusion of an item on the agenda. The request must be submitted to the Company at least 40 days before the General Meeting of Shareholders. Registrations in the share register (Article 4 of the Articles of Incorporation) From the date of invitation to a General Meeting of Shareholders up to the day after the General Meeting itself, no registrations will be accepted in the share register.

Conzzeta – Annual report 2009 Corporate governance

7 Change of control and defensive measures Duty to make an offer (Article 5 of the Articles of Incorporation) Opting out: persons or companies acquiring shares in the company are not under obligation to make an offer in accordance with the Stock Exchanges and Securities Trading Act.

8 Auditors Duration of the mandate and term of office of the auditor in charge The statutory auditors of Conzzeta AG since 1939 are KPMG AG in Zurich, or its legal predecessor. The auditor in charge, Herbert Bussmann, has held this position since 2003. Auditing fees and additional fees In the reporting year, the auditors responsible for the Group’s annual financial statements and some of the Group companies’ annual financial statements submitted accounts for the following fees: Auditing fees: CHF 374 500 Additional fees: CHF 0 Supervisory and control instruments vis-à-vis the auditors The Chairman represents the Board of Directors vis-à-vis the statutory auditors. After hearing the auditors and the Group Chief Financial Officer, the Chairman determines the main points the Company wishes to be covered by the audit. He discusses the audit results with the auditors, along with the Group Chief Executive Officer and the Group Chief Financial Officer, and assesses the results after hearing the Group Executive Board. The Group Chief Financial Officer adopts the recommended improvements. The Board of Directors takes note of the auditors’ reports which are commented upon by the head auditor at a Board meeting. The Chairman and the Group Chief Financial Officer brief the Board meeting about their assessment and the measures adopted. They inform the Board of Directors about the auditing costs and give their opinion of the quality of the audit services provided. Unless there is a compelling reason to do so, the Board of Directors makes no further assessment.

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Corporate governance

9 Information policy Up to 2009, the company published an annual business report as of December 31 and interim reports as of April 30 and August 31. Starting 2010, the company will publish an annual business report as of December 31 and an interim report as of June 30. Interested parties are informed about the financial statements in writing. A separate presentation is held for the media and the financial analysts in conjunction with the publication of the annual business report as of December 31. The consolidated financial statements in accordance with Swiss GAAP FER give a true and fair view of the actual circumstances. This and other information about the Company, calendar dates and contacts can be found at www.conzzeta.ch

Conzzeta â&#x20AC;&#x201C; Annual report 2009

Financial report Consolidated financial statements 41 42 43 44 45 66 68

Income statement Balance sheet Cash flow statement Statement of changes in shareholdersâ&#x20AC;&#x2122; equity Notes to the consolidated financial statements List of consolidated companies by business unit Statutory auditorâ&#x20AC;&#x2122;s report

70 71 72 75 77 78

Income statement Balance sheet Notes to the financial statements Additional information on the financial statements Proposed appropriation of available earnings Statutory auditorâ&#x20AC;&#x2122;s report

Financial statements of Conzzeta AG

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Financial report

Conzzeta – Annual report 2009 Financial report

Consolidated income statement – Group 2009

2008

Notes

CHF m

Net revenue

955.166

1 472.497

Changes in inventory and own work capitalized

– 50.675

17.020

904.491

1 489.517

Total revenue Cost of materials

– 421.391

– 757.303

Personnel expenses

– 286.691

– 337.112

Other operating expenses

– 159.704

– 245.806

16, 17

– 32.386

– 39.199

– 5.674

– 12.309

– 1.355

97.788 4.920

Depreciation on property, plant and equipment, and financial assets Depreciation on intangible assets Operating result Financial result

0.608

Result from unconsolidated investments

0.150

0.040

– 0.597

102.748

Ordinary result before taxes Extraordinary result

Result before taxes Taxes Minority interests Group result

10.138

3.925

9.541

106.673

– 6.199

– 27.890

– 0.071

– 0.030

3.271

78.753

Conzzeta – Annual report 2009 Financial report

Consolidated balance sheet at December 31 – Group

Notes

2009

2008

CHF m

403.284

286.192

Assets Cash and cash equivalents Securities

52.700

61.083

Trade receivables

166.030

233.718

4.282

7.442

14.668

26.397

7.829

11.449

204.967

288.175

853.760

914.456

Prepayments to suppliers Other receivables Prepaid expenses and accrued income Inventories Current assets Property, plant and equipment

349.886

362.169

Financial assets

44.075

45.754

Intangible assets

7.084

10.474

Fixed assets

401.045

418.397

Total assets

1 254.805

1 332.853

59.170

76.880

24.995

34.886

5.484

3.701

Liabilities and shareholders’ equity Trade payables Advance payments from customers

Short-term financial liabilities Other short-term liabilities

10.533

20.665

Accrued expenses and deferred income

69.028

80.685

Short-term provisions

28.905

30.911

198.115

247.728

Short-term liabilities Long-term financial liabilities

8.510

7.114

Other long-term liabilities

0.126

0.766

Pension fund liabilities

0.860

0.532

68.925

75.853

78.421

84.265

46.000

Long-term provisions

Long-term liabilities Share capital Capital reserves

1.600

Retained earnings

930.491

953.146

Shareholders’ equity excluding minority interests

978.091

1 000.746

Minority interests Shareholders’ equity including minority interests Total liabilities and shareholders’ equity

0.178

0.114

978.269

1 000.860

1 254.805

1 332.853

Conzzeta – Annual report 2009 Financial report

Consolidated cash flow statement – Group 2009 Notes

Group result Minority interests in net income Depreciation Gain on disposal of fixed assets and business activities

2008

CHF m

3.271

78.753

0.071

0.030

38.060

51.508

– 14.323

– 5.601

Change in provisions and pension fund liabilities

– 4.843

6.657

Non-liquidity-related currency and valuation influences

– 2.483

11.488

Cash flow from operating activities before change in working capital

19.753

142.835

Change in inventories

82.807

– 34.582

Change in receivables, prepaid expenses and accrued income

82.504

14.938

3.121

0.473

– 38.970

– 43.036

– 9.301

– 15.458

Cash flow from operating activities

139.914

65.170

Investment in fixed assets

– 35.203

– 73.984

Change in prepayments to suppliers Change in liabilities, accrued expenses and deferred income Change in advance payments from customers

Proceeds from sale of fixed assets Purchase of securities Sale and redemption of securities Acquisition of business activities

Divestment of business activities

Cash flow from investing activities Cash flow from operating and investing activities (free cash flow) Dividend paid to holding company shareholders Change in short-term financial liabilities Change in long-term financial liabilities

28.368

17.919

– 26.066

– 34.498

34.774

4.925 – 11.363 1.000

1.873

– 96.001

141.787

– 30.831

– 27.600

– 32.200

2.000

1.317

1.355

6.984

Change in other long-term liabilities

– 0.691

– 0.135

Cash flow from financing activities

– 24.936

– 24.034

Effect of currency translation on cash and cash equivalents

0.241

– 5.458

Change in cash and cash equivalents

117.092

– 60.323

Cash and cash equivalents at 1 / 1

286.192

346.515

Cash and cash equivalents at 12 / 31

403.284

286.192

Conzzeta – Annual report 2009 Financial report

Consolidated statement of changes in shareholders’ equity at December 31 – Group Share capital

Agio / capital reserves

Retained earnings Currency translation effects

At 12 / 31 / 2007

Total excl. minority interests

Other retained earnings

Minority interests

Total incl. minority interests

Value fluctuation financial instruments

CHF m

46.000

1.600

– 8.493

951.676

0.074

990.857

0.071

990.928

0.030

78.783

Group result 2008

78.753

Dividend payment

– 32.200

1.953

– 38.617

0.013

– 38.604

2.027

1 000.746

0.114

1 000.860

0.071

3.342

Change to market value of financial instruments Currency translation effects At 12 / 31 / 2008

– 38.617 46.000

1.600

– 47.110

998.229

Group result 2009

3.271

Dividend payment

– 27.600

– 1.223

2.897

– 0.007

2.890

0.804

978.091

0.178

978.269

Change to market value of financial instruments Currency translation effects At 12 / 31 / 2009

2.897 46.000

1.600

– 44.213

973.900

Conzzeta – Annual report 2009 Financial report

Notes to the consolidated financial statements General principles The consolidated financial statements comprise the audited financial statements of the Group companies of Conzzeta AG at December 31, using accounting policies which are consistent throughout the Group and in accordance with Swiss GAAP FER. For the 2009 consolidated financial statements, the historical costs have been reported using the same valuation policies and basis as in the previous year. The principle of individual valuation has been applied to assets and liabilities.

Consolidation principles Scope and method of consolidation The consolidated financial statements include the financial statements of Conzzeta AG and of all companies directly or indirectly controlled by Conzzeta AG, through investments with more than 50 % of the votes or by another means, and uniformly managed. These investments are fully consolidated. The share of the minority shareholders in the net assets and net result is disclosed separately. Investments with 50 % of the voting rights are consolidated on a pro rata basis in accordance with the share in the capital. Intragroup receivables and payables as well as expenses and income are offset against each other, and intragroup profits have been eliminated. The assets and liabilities of companies included in the consolidation for the first time are valued and disclosed in accordance with Group accounting policies. Goodwill arising from this revaluation is capitalized and amortized to the income statement. Firsttime consolidations are included from the date on which control is acquired; deconsolidations from the date on which control is relinquished. Investments in associates (at least 20 %, but less than 50 % of the voting rights) are accounted for under the equity method. Other minority interests are valued at acquisition cost, less any necessary provisions for diminution in value. A list of the consolidated companies and the associated companies can be found on page 66 et seq.

Foreign currency translation The financial statements of foreign Group companies are prepared in their respective functional currencies and translated into CHF as follows: – balance sheets at year-end exchange rates – income statements at annual average rates – cash flow statements at annual average rates The resulting translation differences as well as foreign currency gains and losses on long-term, equitylike loans to Group companies are taken directly to the consolidated shareholders’ equity. All gains and losses resulting from transactions in foreign currencies as well as adjustments to foreign currency balances at the balance sheet date are recognized in the income statement.

Conzzeta – Annual report 2009 Financial report

Accounting and valuation policies Cash and cash equivalents Cash and cash equivalents include cash on hand, postal checking and bank account balances as well as fixed-term deposits with a maximum residual term of 90 days.

Securities The securities are marketable, readily realizable monetary and capital investments (including structured financial products). They are shown at market value.

Receivables Trade receivables and other receivables are shown at invoiced amounts, less appropriate provisions for debtors’ risks. Specific provisions for bad debts are accounted for where required.

Inventories Inventories are shown at the lower of acquisition or production cost and fair value less cost to sell. Production cost is calculated without imputed interest. Discounts are recognized as purchase price reductions. Provisions are made for inventories that are difficult to realize or slow-moving.

Property, plant and equipment Land has been valued at acquisition cost less impairment adjustments. Other tangible fixed assets are valued at acquisition or production cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful life of the asset. Estimated useful lives are as follows:

Properties for rent

30 to 45 years

Factory buildings

30 to 40 years

Plant and machinery

5 to 12 years

Tools, fixtures and fittings, vehicles

2 to 8 years

IT hardware and office machinery

3 to 5 years

As a result of the Group’s diversified business activities, it has a broad range of fixed assets, and the useful lives of property, plant and equipment vary. In the estimated useful lives of properties for rent and factory buildings, the loss in value of short-lived components is also taken into account.

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Financial report

Financial assets Financial assets are valued at acquisition cost, less appropriate provisions for value adjustments. Also recognized in the financial assets are employer contribution reserves not subject to renounced use.

Intangible assets Intangible assets include goodwill arising from the acquisition of business activities as well as of formulas, licenses, trademarks and software. Goodwill and other intangible assets are generally amortized to the income statement over their estimated useful life using the straight-line method. Normally, this is five years for goodwill and between three and five years for software and licenses.

Impairment of assets The value of assets is assessed at regular intervals. Where there are signs of loss of value, the realizable value is reassessed. If the book value exceeds the realizable value, an additional depreciation adjustment is made.

Liabilities Liabilities are usually recognized in the balance sheet at invoiced amounts.

Provisions Provisions are formed when an event likely to give rise to an obligation occurs prior to the balance sheet date, and the amount involved and / or the settlement date are uncertain, but can be estimated. This obligation can have legal or factual grounds. In the case of land which contains waste or noxious materials, there is a legal obligation to undertake measures for remediation or decontamination. An appropriate provision is made for such cases.

Deferred taxes Deferred income tax is provided for all temporary differences arising between the tax bases of assets and liabilities and their carrying value for reporting purposes, using the currently enacted tax rates on an entity level. Movements in the deferred tax provision are included in the tax position in the income statement. Deferred taxes for loss carry-forwards are only capitalized when in all probability future taxes on profits can be offset.

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Financial report

Employee pensions The pension obligations of Group companies in respect of retirement, death and disability benefits are based on local rules and customs in each country. Regular contributions are paid to government bodies, autonomous pension funds or insurance companies. The pension and benefit payments and outstanding benefits during the accounting period and the regular contributions to the various pension funds are charged to the income statement. The private pension plans in Switzerland are defined contribution schemes for the creation of retirement assets for conversion into fixed pensions, with additional risk benefits. Certain foreign Group companies have defined benefit schemes. These are valued and presented in accordance with the standards of Swiss GAAP FER 16. Any actual economic impact of the pension funds on the company is calculated at the balance sheet date. An economic benefit is only capitalized when this is to be used for the future service cost of the company. An economic obligation is recognized as a liability when the requirements for the formation of a provision are met. Freely available employer contribution reserves are shown as assets. The difference between the annually determined economic benefits and obligations and the change in the employer contribution reserves are included in the income statement. The summarized statement for the autonomous pension funds in Switzerland is valued in accordance with Swiss GAAP FER 26 and shown on page 82 et seq. Actuarial reviews are undertaken on a regular basis.

Research and development Research and development costs are fully charged to the income statement.

Derivative financial instruments Forward exchange contracts and options are used to hedge against some currency risks arising from business operations. Hedge transactions, like the underlying transactions, are shown at market value and recognized in the balance sheet as accrued income or expense. Value changes on hedge transactions against future currency risks will be shown directly in equity until completion of the underlying transaction.

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Financial report

Additional notes to the consolidated financial statements 1 Changes in the scope of consolidation Sale of investments and business activities: In mid-2009, the Automation Systems business unit announced that it was to shut down the manufacture of production automation systems in Switzerland. As a result, ixmation AG in Pieterlen (Switzerland) was divested in a management buyout, with effect from September 1, 2009. The company is continuing operations under the name of Seckler AG. Internal merger: With effect from July 1, 2009, Neutex AG in DĂśttingen (Switzerland) was merged with Fritz Nauer AG in Wolfhausen (Switzerland). The present structure of the Group companies is shown on page 66 et seq.

2 Currency translation rates Year-end exchange rates 2009

Year-end exchange rates 2008

Annual average rates 2009

Annual average rates 2008

CHF

Euro area

1 EUR

1.48

1.49

1.51

1.59

USA

1 USD

1.03

1.04

1.08

Great Britain

1 GBP

1.67

1.53

1.69

2.00

Sweden

100

SEK

14.50

13.30

14.20

16.50

China

100 CNY

15.10

15.30

15.90

15.60

South Korea

100 KRW

0.09

0.08

0.09

0.10

Japan

100

JPY

1.11

1.15

1.16

1.05

1 SGD

0.73

0.75

0.76

Singapore

Conzzeta – Annual report 2009 Financial report

Consolidated income statement 3 Net revenue CHF m

1 472.5

100.0

– 35.0

– 2.4

– divestments

– 8.4

– 0.6

– acquisitions

6.7

0.5

– changes in quantity and price

– 480.6

– 32.6

Total change

– 517.3

– 35.1

Net revenue 2008 Changes in Group revenue 2009 due to: – currency translation effects

Net revenue 2009

955.2

The divestment effect is due to the disposal of ixmation AG, Pieterlen (Switzerland), with effect from September 1, 2009. The acquisition effect stems from the purchase of Kureta GmbH, Stadtallendorf (Germany), with effect from December 31, 2008, and Mammut UK Ltd, Macclesfield (Great Britain), with effect from March 31, 2008. 2009

2009

2008

CHF m

Sheet Metal Processing Systems

356.1

37.3

745.1

50.6

Glass Processing Systems

145.6

15.3

244.6

16.6

56.1

5.9

73.6

5.0

Foam Materials

116.8

12.2

146.3

9.9

Sporting Goods

215.3

22.5

192.6

13.1

Graphic Coatings

43.2

4.5

47.5

3.2

Real Estate and miscellaneous revenue

22.1

2.3

22.8

1.6

955.2

100.0

1 472.5

100.0

Net revenue by business unit

Automation Systems

Total

2009

2008

CHF m

Switzerland

156.0

16.3

183.5

12.5

Euro area

386.3

40.4

567.1

38.5

Rest of Europe

130.7

13.7

307.3

20.9

Total Europe

673.0

70.4

1 057.9

71.9

North and South America

119.4

12.5

214.9

14.6

Asia and Pacific

157.3

16.5

188.8

12.8

Africa

5.5

0.6

10.9

0.7

Total

955.2

100.0

1 472.5

100.0

Net revenue by geographical area

Conzzeta – Annual report 2009 Financial report

4 Changes in inventory and own work capitalized

Change in inventory Own work capitalized Total

2009

2008

CHF m

– 50.7

16.7

0.3

– 50.7

17.0

The change in inventory is due to the change in inventories of semifinished products, work in progress and finished products.

5 Cost of materials Cost of materials summarizes the overall cost of raw materials, intermediates and supplies, as well as merchandise held for resale and expenses for third-party manufacturing, handling or processing of the Group’s products (external services).

6 Personnel expenses

Wages and salaries Social security benefits Other personnel expenses Total

2009

2008

CHF m

233.2

279.8

45.3

50.6

8.2

6.7

286.7

337.1

In addition to contributions to state pension plans, social security benefits include the contributions to pension funds described in note 27.

7 Other operating expenses Other operating expenses include the cost of repairs and maintenance on property, plant and equipment, sales provisions, expenses for guarantees, assembly, transport and energy, as well as sundry expenses for production, development, sales and administration.

Conzzeta – Annual report 2009 Financial report

8 Financial result

Financial income Financial expenses Total

2009

2008

CHF m

4.2

8.3

– 3.6

– 3.4

0.6

4.9

Financial income from liquid assets was down owing to the marked fall in interest rates. The lower interest income was partly offset by income from securities arising from the CHF bonds and a gain on the investments of the employer contribution reserves. Financial expenses comprise currency losses on the valuation of liquid assets, on short-term and repaid loans between Group companies, and on other financial assets, as well as interest expense arising, inter alia, from the financing of a production site abroad.

9 Result from unconsolidated investments The result from unconsolidated investments comprises gains and losses from associated companies.

10 Extraordinary result The extraordinary result amounting to CHF 10.1 million is due to the sale of land in Rafz (Switzerland) and a factory building in Döttingen (Switzerland). The divestment of a company by the Automation Systems business unit through a management buyout resulted in a loss of CHF 0.9 million. The previous year’s figure included proceeds from the sale of land and buildings in Switzerland, Germany and the USA amounting to CHF 2.9 million. It also included CHF 1.0 million from the sale of the protective packaging business by the Foam Materials business unit.

11 Taxes

Current taxes on income Deferred taxes Total

2009

2008

CHF m

8.8

22.3

– 2.6

5.6

6.2

27.9

Current taxes on income include taxes paid and owed on taxable income of the individual companies in accordance with local tax laws. The taxable results of subsidiaries belonging to the tax group in Germany are transferred to the controlling company, Conzzeta Holding Deutschland AG. Deferred taxes are calculated individually per tax subject using the actual expected tax rate. The deferred tax income is due to the net reversal of temporary differences.

Conzzeta – Annual report 2009 Financial report

Consolidated balance sheet 12 Securities The securities are fixed-interest bonds denominated in CHF.

13 Trade receivables 2009

2008

CHF m

Trade receivables

187.5

255.6

Provision

– 21.5

– 21.9

Total

166.0

233.7

For doubtful accounts, individual and overall value adjustments have been deducted. The overall provision is based on the experience of the respective company.

14 Other receivables Other receivables consist mainly of recoverable value-added tax and other tax credits.

15 Inventories 2009

2008

CHF m

Raw materials and supplies

64.7

88.5

Merchandise for resale

52.3

57.4

Semifinished products and work in progress

38.3

56.8

Finished products Total

49.7

85.5

205.0

288.2

The decrease in inventories, particularly of raw materials and supplies as well as finished products, is due to the low level of orders in Machinery and Systems Engineering. Overall, the value adjustments on inventories amounted to CHF 41.2 million (previous year: CHF 30.4 million).

Conzzeta – Annual report 2009 Financial report

16 Property, plant and equipment Assets under construction, Total property, plant and payments equipment on account

Undeveloped real estate

Properties for rent

Factory buildings

Plant and machinery

Fixtures and fittings, vehicles

CHF m

9.4

220.0

263.0

189.7

57.6

8.7

748.4

– 9.8

– 6.8

– 3.9

– 0.2

– 20.8

5.5

52.5

CHF m

Cost At 12 / 31 / 2007 Currency translation effects

– 0.1

Changes in scope of consolidation

4.7

3.5

0.6

Additions

0.8

1.0

24.2

11.4

9.6

Disposals

– 0.2

– 0.1

– 12.8

– 4.4

– 6.9

Reclassifications

– 0.7

9.1

– 7.6

4.6

0.4

– 5.8

9.2

230.0

261.7

198.0

57.4

8.2

764.5

– 0.4

– 0.9

0.1

0.3

– 0.9

– 0.5

– 1.4

Cost at 12 / 31 / 2008 Currency translation effects Changes in scope of consolidation Additions

5.5

Disposals

– 0.5

Reclassifications Cost at 12 / 31 / 2009

0.2

9.3

3.2

6.0

– 4.0

– 28.9

– 3.6

8.8 – 24.4

– 1.9 1.6

25.8 – 37.0

1.0

4.7

– 6.7

10.3

– 0.7

– 8.7

– 0.1

15.2

234.9

259.9

181.2

57.8

1.4

750.4

2.1

102.5

114.2

130.1

40.6

389.5

– 2.6

– 4.4

– 2.5

1.5

2.5

0.5

4.5

7.3

12.5

6.9

32.2

6.6

0.2

6.8

– 4.0

– 6.8

– 21.2

Accumulated depreciation At 12 / 31 / 2007 Currency translation effects Changes in scope of consolidation Ordinary depreciation

5.5

Extraordinary depreciation Disposals

– 10.4

Reclassifications Accumulated depreciation at 12 / 31 / 2008

2.1

8.4

– 8.4

116.4

101.6

143.3

– 0.2

– 0.4

Currency translation effects Changes in scope of consolidation Ordinary depreciation

5.6

Extraordinary depreciation Disposals

38.9

402.3 – 0.6

– 0.4

– 1.2

– 1.6

11.4

7.0

31.3

0.8

0.1

– 1.1

– 27.2

– 3.1

– 31.7

1.9

– 1.9

0.6

– 0.7

– 0.1

– 0.3

Reclassifications

7.3

– 9.5

0.9

Accumulated depreciation at 12 / 31 / 2009

1.8

123.9

106.5

127.4

40.9

400.5

Net book value of property, plant and equipment at 12 / 31 / 2008

7.1

113.6

160.1

54.7

18.5

8.2

362.2

Net book value of property, plant and equipment at 12 / 31 / 2009

13.4

111.0

153.4

53.8

16.9

1.4

349.9

Conzzeta – Annual report 2009 Financial report

The fire insurance value of property, plant and equipment amounts to CHF 950.8 million (previous year: CHF 950.9 million). Of this, CHF 653.9 million comprises building insurance values (CHF 640.4 million). Additions under undeveloped real estate include two land purchases in Niederönz and Seon (Switzerland), to facilitate future construction by the Sheet Metal Processing Systems and Sporting Goods business units. Under factory buildings, the completion of the new assembly and storage building in Gotha (Germany) and a new building for the sales company in Heimsheim (Germany), both in the Sheet Metal Processing Systems business unit, and the extension of the production building in Gunzenhausen (Germany) by the Glass Processing Systems business unit, led to further additions. The other investments in plant and machinery, fittings, fixtures and vehicles are mostly replacement investments. Following the start-up of the facility for production and processing of polyurethane foams in Changzhou (China), the assets under construction have been reclassified as plant and machinery. The disposals are in large measure due to the shutdown of latex-foam production and the sale of the corresponding property in Döttingen (Switzerland). Extraordinary depreciation contains planning costs for unrealized building projects, totaling CHF 0.7 million. In the previous year, the closure of the latex-foam facility in Döttingen (Switzerland) resulted in extraordinary depreciation of CHF 6.5 million.

Conzzeta – Annual report 2009 Financial report

17 Financial assets Nonconsolidated investments

Long-term receivables and loans

Securities held as fixed assets

Employer contribution reserves held as assets

Active deferred taxes

Total financial assets

CHF m

10.7

0.4

24.1

Cost At 12 / 31 / 2007

0.6

Currency translation effects

– 0.8

Additions Disposals Cost at 12 / 31 / 2008

8.9

9.0

1.4

19.3

– 3.6

– 6.8

– 2.8

– 13.4

0.4

15.2

26.3

4.9

47.2

6.6

0.5

1.1

8.3

– 3.3

– 4.7

– 2.0

– 10.0

0.4

0.1 0.1

Disposals Cost at 12 / 31 / 2009

42.6 – 1.3

– 0.2

Currency translation effects Additions

6.8 – 0.5

0.1

0.5

18.6

0.4

22.1

4.0

45.6

0.1

1.2

0.3

1.6

Accumulated depreciation At 12 / 31 / 2007 Currency translation effects

– 0.1

Ordinary depreciation Disposals Accumulated depreciation at 12 / 31 / 2008

– 0.1

0.2

– 0.1

– 0.2

– 0.3

1.1

0.3

1.4

Currency translation effects Ordinary depreciation Disposals Accumulated depreciation at 12 / 31 / 2009

0.2

– 0.1

1.2

0.3

1.5

Net book value of financial assets at 12 / 31 / 2008

0.4

14.1

0.1

26.3

4.9

45.8

Net book value of financial assets at 12 / 31 / 2009

0.5

17.4

0.1

22.1

4.0

44.1

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Financial report

The additions and disposals in long-term receivables and loans are due to long-term hire-purchase business with customers, loans to third parties and deposits for rents and securities for old environmental liabilities. The addition in the employer contribution reserves includes the financial gain of CHF 0.5 million (previous year: CHF â&#x20AC;&#x201C; 1.8 million). The disposal comprises the debited employer contributions amounting to CHF 4.7 million (CHF 3.5 million) in favor of Group companies. The evaluation of active deferred taxes using current income tax rates is based on temporary differences in individual companies. The active deferred taxes from recognized loss carry-forwards as well as temporary valuation differences amount to CHF 4.0 million (CHF 4.9 million). As a precautionary measure and because of uncertainties regarding the future scope for offsetting, the tax effects from loss carry-forwards amounting to CHF 16.8 million (CHF 10.7 million) were not capitalized. This evaluation is based on the average projected Group tax rate of 20.5 % (21.9 %).

Conzzeta – Annual report 2009 Financial report

18 Intangible assets Goodwill

Software and licenses

Total intangible assets

CHF m

Cost At 12 / 31 / 2007

78.6

28.4

107.0

Currency translation effects

– 8.0

– 1.0

– 9.0

Changes in scope of consolidation

6.4

Additions

3.6

Disposals

– 0.2

77.0

30.8

107.8

1.8

– 0.1

1.7

– 0.8

Cost at 12 / 31 / 2008 Currency translation effects Changes in scope of consolidation Additions

2.2

Disposals

– 0.4

Reclassifications Adjustment of goodwill Cost at 12 / 31 / 2009

0.1

– 51.7

0.1

– 51.6

27.1

31.9

59.0

Accumulated depreciation At 12 / 31 / 2007

73.8

19.4

93.2

Currency translation effects

– 7.3

– 0.7

– 8.0

Ordinary depreciation

2.6

3.9

6.5

Extraordinary depreciation

5.8 – 0.2

– 0.2

74.9

22.4

97.3

1.7

– 0.1

1.6

– 0.8

3.8

5.5

Disposals Accumulated depreciation at 12 / 31 / 2008 Currency translation effects Changes in scope of consolidation Ordinary depreciation

1.7

Extraordinary depreciation Disposals Reclassifications

0.2

– 0.4

0.1

– 51.7

0.1

– 51.6

26.6

25.3

51.9

Net book value of intangible assets at 12 / 31 / 2008

2.1

8.4

10.5

Net book value of intangible assets at 12 / 31 / 2009

0.5

6.6

7.1

Adjustment of goodwill Accumulated depreciation at 12 / 31 / 2009

5.8

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Financial report

All goodwill under historical acquisition costs and accumulated depreciation was previously included in the asset overview. To improve readability, the overview was revised in 2009. Fully depreciated goodwill values, which can no longer be assigned a measurable value, are no longer listed in the asset overview. They are removed the year following complete write-off, usually after expiry of the useful life of five years. Additions in asset values for software and licenses include costs for significant investments in the further development and rollout of new, unit-specific ERP solutions in the Glass Processing Systems and Sporting Goods business units. On the basis of a revaluation of the expected business development of investments acquired in the Foam Materials and Sporting Goods business units, extraordinary depreciation of CHF 5.8 million was charged in the previous year to goodwill positions.

19 Advance payments from customers Customer payments on account originate from the companies in the Machinery and Systems Engineering business area.

20 Other short-term liabilities The other short-term liabilities consist mainly of taxes owed and social security contributions.

21 Accrued expenses and deferred income 2009

2008

CHF m

15.2

14.6

Accruals and deferrals for personnel expenses

20.1

29.8

Other accruals and deferrals

33.7

36.3

Total

69.0

80.7

Accruals and deferrals for taxes

Accrued expenses and deferred income shows all expenses and income determined on an accrual basis. Other accruals and deferrals contain commissions, volume discounts, assembly and maintenance services, as well as goods and services obtained from third parties and not yet invoiced.

Conzzeta – Annual report 2009 Financial report

22 Provisions Deferred taxes

Environmental commitments

Guarantees

Restructuring

Other provisions

Total provisions

CHF m

28.5

0.6

Short-term provisions At 12 / 31 / 2007 Currency translation effects

– 2.2

Changes in scope of consolidation

3.6

32.7

– 0.3

– 2.5

0.1

Additions

0.1 3.0

23.0

Amounts used

– 0.7

– 20.4

20.0 – 0.2

– 0.1

– 21.4

Amounts reversed

– 0.2

– 3.1

– 0.2

– 2.6

– 6.1

0.9

4.0

0.2

5.1

26.9

0.2

3.8

30.9

0.3

– 0.1

0.2

– 0.1

– 2.8

– 2.9

Reclassifications Short-term provisions at 12 / 31 / 2008

Currency translation effects Changes in scope of consolidation Additions

1.0

Amounts used Amounts reversed Reclassifications Short-term provisions at 12 / 31 / 2009

1.0

At 12 / 31 / 2007

18.6

29.5

Currency translation effects

– 0.1

11.1

13.3

0.5

25.9

– 24.3

– 0.2

– 0.8

– 25.3

– 2.7

– 2.4

– 5.1

4.9

0.3

5.2

1.4

28.9

16.1

10.4

Long-term provisions

Additions

5.1

0.6

– 1.2

Reclassifications Long-term provisions at 12 / 31 / 2008

22.4

4.0

15.8

– 0.4

– 1.4

– 0.5

– 0.4

– 1.8

– 3.9

– 0.9

– 4.2

28.7

6.5

Changes in scope of consolidation 2.8

Amounts used

– 0.6

Amounts reversed

– 5.9

0.7 – 0.2

Reclassifications Long-term provisions at 12 / 31 / 2009

18.7

71.7 – 1.2

6.1

Currency translation effects Additions

17.0 – 0.5

– 1.0

Amounts used Amounts reversed

6.6 – 0.6

29.2

– 5.1 -

18.3

75.9

0.1

– 0.3

2.7

1.9

8.1

– 1.1

– 1.7

– 0.2

– 1.7

– 8.0

– 4.9

– 0.3

– 5.2

17.1

68.9

3.9

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Financial report

The expected timing of the outflow of funds is the basis for the separate disclosure of short- and longterm provisions. Provisions are classified as short-term when the payment of the liability covered is likely to arise within a year. Deferred taxes are evaluated using current income tax rates on the basis of the formation and reversal of temporary differences between the tax bases of assets and liabilities and their carrying value for reporting purposes in the individual companies. There are land holdings from previous operating activities and landfill sites which contain waste or noxious materials and are shown in the register of polluted sites. The liability status and the necessary measures were assessed by an expert, but uncertainties attach to some of the findings regarding the nature and extent of the liability. Where liability-related, future-based costs arise on legal or factual grounds, an appropriate provision is formed to cover the estimated costs. Provisions of CHF 1.7 million for environmental commitments were booked for monitoring and removal of newly identified residual liabilities relating to divested and existing industrial sites. The remediation measures carried out were minor and the reversal of CHF 0.2 million relates to the expiry of residual pollution risks. More detailed investigations and remediation measures are in progress at these sites. The guarantee provisions are held mainly in the Sheet Metal Processing Systems and Glass Processing Systems business units. The reduction in the guarantee provisions is attributable to the decline in sales. Provisions of CHF 13.3 million were added for future expenses relating to restructuring measures affecting certain business units, as announced in mid-year.

23 Long-term financial liabilities A Group company has continued to extend a long-term bank loan for financing to a foreign production facility.

24 Share capital The share capital of CHF 46.0 million is divided into 406 000 bearer shares with a nominal value of CHF 100 each and 270 000 registered shares with a nominal value of CHF 20 each.

Conzzeta – Annual report 2009 Financial report

Consolidated cash flow statement 25 Acquisition and divestment of business activities 2009 Purchase

2009 Disposal

2008 Purchase

2008 Disposal

CHF m

6.2

– 5.3

0.3

– 4.3

– 5.3

2.8

Current assets Fixed assets Short-term liabilities Long-term liabilities Net assets acquired or divested

– 0.3 -

Plus cash and cash equivalents Subtotal

0.9

– 6.8

1.8

0.9

– 5.0

Goodwill

– 6.4

Result from disposal of business activities Net cash flow

– 0.9 -

1.0 – 11.4

1.0

26 Operational free cash flow 2009

2008

CHF m

Cash flow from operating activities

139.9

65.2

Investment in fixed assets

– 35.2

– 74.0

28.4

17.9

Operational free cash flow

133.1

9.1

Purchase of securities

– 26.1

– 34.5

Proceeds from sale of fixed assets

Sale and redemption of securities

4.9

Acquisition of business activities

– 11.4

Divestment of business activities

1.0

Free cash flow

34.8

141.8

– 30.8

Conzzeta – Annual report 2009 Financial report

Further information 27 Employee pension funds Balance sheet 12 / 31 / 2008

Result in personnel expenses 2009

Result in personnel expenses 2008

Result in financial income 2009

Result in financial income 2008

CHF m

22.1

26.3

– 4.7

– 5.0

0.5

– 1.8

Change to prior year Contributions affecting result in to be allocated to reporting reporting period period

Current service cost in personnel expenses 2009

Current service cost in personnel expenses 2008

CHF m

11.0

Nominal value 12 / 31 / 2009

Renounced use 12 / 31 / 2009

Balance sheet 12 / 31 / 2009

CHF m

26.2

– 4.1

Employer contribution reserves Employer’s pension fund

In the previous year, the nominal value of the employer contribution reserves was CHF 30.4 million and the renounced use amounted to CHF 4.1 million. The result in personnel expenses comprises the debited employer contributions amounting to CHF 4.7 million (previous year: CHF 3.5 million) in favor of the Group companies. In 2008, the settlement of a deficit of CHF 1.5 million was charged and an allocation of CHF 9.0 million for the addition of assets from the employer contribution reserves was booked. The financial result amounted to CHF 0.5 million (CHF – 1.8 million).

Surplus / deficit 12 / 31 / 2009

Economic benefit / obligation 12 / 31 / 2009

Economic benefit / obligation 12 / 31 / 2008

CHF m

9.5

0.5

1.0

0.5

10.0

10.5

Economic benefit / obligation and current service cost Employer’s pension fund

3.5

Pension funds without surplus / deficit Pension funds with deficit

– 0.3

0.2

Pension funds without own assets

– 0.5

2.7

– 0.8

– 0.3

Total

11.0

In the previous year, the surpluses amounted to CHF 3.4 million, the year-on-year change affecting result was CHF – 0.5 million and the contributions to be allocated to the reporting period were CHF 11.5 million. It is not planned to use the free reserves of the employer’s pension fund for the economic benefit of the Group. The economic obligation in relation to the pension funds with deficit concerns a defined benefit scheme abroad. This was calculated using a dynamic model in accordance with international accounting standards. The increase in the economic obligation of CHF 0.5 million was recognized in the income statement under personnel expenses.

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Financial report

28 Contingent liabilities In connection with customer financing, there are repurchase obligations against leasing companies for machinery amounting to CHF 41.4 million (previous year: CHF 43.1 million). Assets to the value of CHF 7.5 million (CHF 6.3 million) are held with retention of title as security for remediation of residual environmental liabilities and for loans.

29 Other commitments Commitments not recognized in the balance sheet comprise operational leasing contracts with a period of notice longer than one year. Maturity of operational leasing contracts at 12 / 31

2009

2008

CHF m

Under 1 year

7.1

6.4

1 to 5 years

12.0

8.5

Over 5 years

1.9

0.4

21.0

15.3

Total

In addition, there are long-term purchase commitments of CHF 1.4 million (CHF 6.4 million) to secure exclusive supplies.

30 Derivative financial instruments Values at 12 / 31

2009

2008

CHF m

28.0

52.4

Replacement value, positive

0.7

2.4

Replacement value, negative

0.1

Contract values

The contracts were entered into as a hedge against exchange risks on future cash flows in USD, EUR and GBP. The change in value of derivative instruments still outstanding as of the balance sheet date is recognized in the shareholdersâ&#x20AC;&#x2122; equity.

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Financial report

31 Related-party transactions Transactions with related parties consist of normal business transactions under normal market conditions, with associated companies acting as commercial agents and distributors. 2009

2008

CHF m

Trade receivables

2.2

1.8

Financial assets

0.1

Trade payables

1.7

1.5

Net revenue

4.7

5.9

Commission expenses

3.5

4.2

32 Risk assessment In addition to assessing strategies, projects and monitoring the course of business on an ongoing basis, the Board of Directors has conducted a comprehensive risk assessment. This is based on detailed management reporting and a separate Group risk report, describing the risk management process and the top-level risks. The risk management process has been implemented throughout the Group and encompasses the identification, evaluation and qualitative appraisal of operational, financial and strategic risks. It is supported by risk monitoring, a plan of action and standardized risk reporting. The control and management of risks is considered a management responsibility.

33 Compensation and shareholdings The compensation paid to members of the Board of Directors and the Group Executive Board, as well as their investments in Conzzeta AG, are reported in the notes to the financial statements of Conzzeta AG.

Conzzeta – Annual report 2009 Financial report

List of consolidated companies by business unit Company, domicile

Company capital in local currency

Investments in % direct

CHF

50 000

100

Notes Country

Investments in % indirect

Sheet Metal Processing Systems Bystronic Laser AG, Niederönz

Bystronic Maschinenbau GmbH, Gotha

EUR

3 400 100

100

Bystronic (Tianjin) Machinery Co. Ltd, Tianjin

USD

6 095 600

100

Bystronic, Inc., Hauppauge NY

USD

250 000

100

Bystronic Scandinavia AB, Arlandastad

SEK

200 000

100

Bystronic France SAS, Les Ulis

EUR

2 500 000

100

Bystronic Italia S.r.l., Bovisio Masciago

EUR

900 000

100

Regional sales and service companies:

Bystronic Deutschland GmbH, Heimsheim

EUR

52 000

100

Bystronic Co. Ltd, Shanghai

USD

1 000 000

100

Bystronic Iberica S.A., San Sebastián de los Reyes

EUR

262 000

100

MXN

2 500 000

100

Bystronic Austria GmbH, Linz

EUR

300 000

100

Bystronic do Brasil Ltda., São José dos Pinhais PR

BRL

5 000 000

100

Bystronic Pte. Ltd, Singapore

SGD

2 500 000

100

Bystronic Benelux B.V., Hardinxveld-Giessendam

EUR

18 151

100

Bystronic UK Ltd, Coventry

GBP

1 200 000

100

Bystronic Sales AG, Niederönz

CHF

2 000 000

100

Bystronic Korea Ltd, Anyang-si

KRW

6 000 000 000

100

Bystronic Polska Sp. z o.o., Raszyn

PLN

1 000 000

100

Bystronic Slovakia s.r.o., Bratislava

EUR

66 000

100

Bystronic Czech Republic s.r.o., Brno

CZK

6 000 000

100

Bystronic Laser India Private Ltd, Pune

INR

34 130 000

100

Bystronic Turkey, Istanbul

TRY

660 000

100

Bystronic Mexico S.A. de C.V., Guadalajara

Hämmerle Ltd, Ichikawa City

JPY

10 000 000

100

Bystronic Canada Ltd, Mississauga ON

CAD

100 000

100

OOO Bystronic Laser, Moscow

RUB

30 000 000

100

RON

1 000 000

100

S.C. Bystronic Laser S.R.L., Brasov

Glass Processing Systems Bystronic Maschinen AG, Bützberg

CHF

100 000

Bystronic Lenhardt GmbH, Neuhausen-Hamberg

EUR

2 045 168

100 100

Bystronic Armatec GmbH, Gunzenhausen

EUR

300 000

100

Bystronic Solution Centre Inc., Ottawa

CAD

2 000 000

100

Bystronic Glass Machinery (Shanghai) Co. Ltd, Shanghai

EUR

1 500 000

100

Regional sales and service companies: Bystronic Glass UK Ltd, Telford

GBP

3 400 000

100

Bystronic Asia Pte. Ltd, Singapore

SGD

1 000 000

100

Bystronic Glass do Brasil Ltda., Indaiatuba SP

BRL

3 494 779

100

OOO Bystronic Steklo RUS, Moscow

RUB

64 975 930

100

Bystronic Glass (Shanghai) Co. Ltd, Shanghai

USD

1 900 000

100

Bystronic Glass, Inc., Aurora CO

USD

250 000

100

Conzzeta – Annual report 2009 Financial report

Company, domicile

Notes Country

Company capital in local currency

Investments in % direct

Investments in % indirect

Automation Systems ixmation AG, Pieterlen

ixmation AG, Burgdorf

CHF

100 000

100

ixmation, Inc., Bloomingdale IL

USD

100

ixmation (Asia) Sdn. Bhd., Penang

MYR

900 003

100

ixmation (Suzhou) Co. Ltd, Suzhou

USD

750 000

100

CNY

1 000 000

100

Fritz Nauer AG, Wolfhausen

CHF

5 000 000

Reisgies Schaumstoffe GmbH, Leverkusen

EUR

1 000 000

100

Frina Mousse France S.à r.l., Wittenheim

EUR

117 386

100

CHF

250 000

100

Swisstex, Inc., Greenville SC

USD

2 023 640

100

Foampartner-Bock AG, Zug

CHF

1 000 000

Foampartner-Bock Trading (Shanghai) Ltd, Shanghai

USD

600 000

Foampartner-Bock Polyurethane Materials (Changzhou) Co. Ltd, Changzhou

USD

11 500 000

Woodbridge FoamPartner Company, Chattanooga TN

USD

2 000 000

Kureta GmbH, Stadtallendorf

EUR

100 000

100

ixmation (Tianjin) Co. Ltd, Tianjin

Foam Materials

Neutex AG, Döttingen

Büttikofer AG, Gontenschwil

100

Sporting Goods Mammut Sports Group AG, Seon

CHF

25 000 000

Mammut Sports Group GmbH, Memmingen

EUR

500 000

100 100

Mammut Sports Group, Inc., Shelburne VT

USD

100

Ajungilak AS, Oslo

100

NOK

2 000 000

Mammut Sports Group Japan Inc., Tokyo

JPY

30 000 000

Mammut UK Ltd, Macclesfield

GBP

1 000

100

Graphic Coatings Schmid Rhyner AG, Adliswil

CHF

1 200 000

Schmid Rhyner (USA), Inc., Marlton NJ

USD

50 000

100

Plazza Immobilien AG, Zurich

CHF

5 000 000

100

Swilac Immobilien AG, Zurich

CHF

600 000

100

Prebe AG, Zurich

CHF

7 500 000

100

Conzzeta Holding Deutschland AG, Leverkusen

EUR

6 000 000

100

Conzzeta Grundstücksverwaltungs GmbH, Leverkusen

EUR

50 000

Conzzeta Management AG, Zurich

CHF

100 000

Mammut Sports Group Austria GmbH, Steyr

EUR

363 400

25.1

Mammut Nederland B.V., Benthuizen

EUR

18 000

100

Real Estate

Holding and Management Companies 100 100

Associated Companies

Notes: 1 Incorporation at 1 / 5 / 2009

4 Incorporation at 4 / 17 / 2009

2 Divestment at 9 / 1 / 2009

5 Merger with Fritz Nauer AG at 7 / 1 / 2009

3 Incorporation at 10 / 13 / 2009

Conzzeta – Annual report 2009 Financial report

Statutory auditor’s report Report of the Statutory Auditor on the Consolidated Financial Statements to the General Meeting of Conzzeta AG, Zurich As statutory auditor, we have audited the consolidated financial statements of Conzzeta AG on pages 41 to 67, which comprise the balance sheet, income statement, cash flow statement, statement of changes in equity and notes for the year ended December 31, 2009. Board of Directors’ Responsibility The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Swiss GAAP FER and the requirements of Swiss law. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements for the year ended December 31, 2009, give a true and fair view of the financial position, the results of operations and the cash flows in accordance with Swiss GAAP FER and comply with Swiss law. Report on Other Legal Requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Financial report

In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors. We recommend that the consolidated financial statements submitted to you be approved. KPMG AG Herbert Bussmann

Markus Ackermann

Licensed Audit Expert

Auditor in Charge

Zurich, March 18, 2010

Conzzeta – Annual report 2009 Financial report

Income statement – Conzzeta AG 2009

2008

CHF m

31.449

142.000

Income Income from investments Interest income and income from securities

10.187

18.425

Total income

41.636

160.425

Personnel expenses

– 0.708

– 0.535

Operating expenses

– 2.641

– 2.674

Financial expenses

– 1.408

– 2.302

Taxes

– 0.404

Expenses

Depreciation

– 1.153 – 14.118

Total expenses

– 5.161

– 20.782

Net income

36.475

139.643

Conzzeta – Annual report 2009 Financial report

Balance sheet at December 31 – Conzzeta AG 2009

2008

CHF m

352.842

226.824

Assets Cash and cash equivalents Securities

52.700

61.083

Accounts receivable

0.176

0.395

Prepaid expenses and accrued income

0.853

3.241

Current assets

406.571

291.543

Investments

176.710

180.000

Receivables from Group companies

152.316

200.701

Fixed assets

329.026

380.701

Total assets

735.597

672.244

Short-term payables

0.023

0.034

Accrued expenses and deferred income

0.799

4.218

Short-term liabilities

0.822

4.252

Payables to Group companies

79.124

21.216

Provisions

20.350

Long-term liabilities

99.474

41.566

Share capital

46.000

Legal reserves

33.406

Special reserve

350.000

300.000

Retained earnings

205.895

247.020

Shareholders’ equity

635.301

626.426

Total liabilities and shareholders’ equity

735.597

672.244

Liabilities and shareholders’ equity

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Financial report

Notes to the financial statements â&#x20AC;&#x201C; Conzzeta AG Contingent liabilities

Sureties and guarantee obligations for subsidiaries Effective obligations

2009

2008

CHF m

117.829

116.395

27.505

28.158

2009

2008

Investments See overview on page 66 et seq.

Significant shareholders

TEGULA AG, Zurich

Capital

74.2

73.8

Votes

81.8

81.5

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Financial report

Compensation for members of the Board of Directors and the Group Executive Board

Gross compensation 2009

Gross compensation 2008

Benefits in kind / social security benefits 2009

Benefits in kind / social security benefits 2008

Total compensation 2009

Total compensation 2008

CHF thousands

Board of Directors J. Schmidheiny, Chairman

518.8

783.0

47.2

46.7

566.0

829.7

M. Auer, Member

53.2

68.1

2.2

2.9

55.4

71.0

Th. W. Bechtler, Member

53.2

68.1

2.2

2.9

55.4

71.0

W. Dubach, Member

51.8

68.1

51.8

68.1

Ph. Mosimann, Member

53.2

68.1

2.2

2.9

55.4

71.0

R. F. Spoerry, Member

53.2

68.1

2.2

2.9

55.4

71.0

783.4

1 123.6

56.0

58.2

839.4

1 181.8

Gross compensation 2009

Gross compensation 2008

Benefits in kind / social security benefits 2009

Benefits in kind / social security benefits 2008

Total compensation 2009

Total compensation 2008

CHF thousands

5 899.2

4 482.3

706.2

562.3

6 605.4

5 044.5

Total

Group Executive Board Total Highest single amount: R. Suter, CEO Highest single amount: F. TĂśngi, CEO Bystronic

826.7

94.1 931.0

920.8 111.7

1 042.7

Gross compensation includes the fixed and variable compensation paid in the 2009 calendar year. See corporate governance, page 35, for details of the method of determination. Total compensation relates to all members of the Group Executive Board active in the 2009 business year. Owing to organizational changes and overlaps in some positions, the number people involved increased from 8 to 11 compared with 2008. There were also one-off payments during the period. Benefits in kind and social security benefits comprise employer contributions to state and private schemes (Swiss AHV and company pension plans) to establish or augment benefit provisions, as well as private usage of a company car. There are no share or option plans for members of the Board of Directors and the Group Executive Board.

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Financial report

Shareholdings of the members of the Board of Directors and the Group Executive Board in Conzzeta AG Bearer shares 12 / 31 / 2009

Bearer shares 12 / 31 / 2008

Registered shares 12 / 31 / 2009

Registered shares 12 / 31 / 2008

Number

230

Board of Directors J. Schmidheiny, Chairman M. Auer, Member Th. W. Bechtler, Member W. Dubach, Member

140

J. Schmidheiny and M. Auer sit as shareholders on the Board of TEGULA AG. The shareholding of TEGULA AG in Conzzeta AG comprises 288 302 bearer shares with a par value of CHF 100 each and 264 874 registered shares with a par value of CHF 20 each.

Bearer shares 12 / 31 / 2009

Bearer shares 12 / 31 / 2008

Registered shares 12 / 31 / 2009

Registered shares 12 / 31 / 2008

Number

Group Executive Board R. Jakob

Risk assessment The Board of Directors has conducted a comprehensive risk assessment for the Group. This is based on detailed management reporting and a separate Group risk report, describing the risk management process and the top-level risks. The risk management process has been implemented throughout the Group and encompasses the identification, evaluation and qualitative appraisal of operational, financial and strategic risks. It is supported by risk monitoring, a plan of action and standardized risk reporting. Conzzeta AG is an integral part of this process.

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Financial report

Additional information on the financial statements â&#x20AC;&#x201C; Conzzeta AG Income statement Income The investment income for the year amounted to CHF 31.4 million (previous year: CHF 142.0 million). This sum comprises CHF 34.8 million (CHF 142.0 million) in dividends and a loss CHF 3.4 million on the divestment of the ixmation AG company in Pieterlen (Switzerland). This company had previously paid an in-substance dividend of CHF 2.8 million. The dividend payments by the Group companies were determined in relation to available retained earnings and liquidity requirements. The interest income and interest on securities amounted to CHF 10.2 million (CHF 18.4 million). They comprise the interest income on accounts receivable from Group companies of CHF 7.7 million (CHF 10.7 million), the interest income from third parties amounting to CHF 0.7 million (CHF 5.9 million) and a gain on securities from the CHF bond portfolio of CHF 1.8 million (CHF 1.8 million).

Expenses Personnel and operating expenses include current administration expenses, the cost of organizing the Annual General Meeting, producing the annual report, project costs, taxes on capital, as well as fees to the Board of Directors and further personnel expenses. The financial expenses of CHF 1.4 million (CHF 2.3 million) result from interest on intragroup payables of CHF 0.8 million (CHF 1.0 million) and currency losses on liquid assets and on receivables from Group companies of CHF 0.6 million (CHF 1.3 million). Taxes comprise income taxes for the fiscal year.

Conzzeta – Annual report 2009 Financial report

Balance sheet Current assets The liquid assets of CHF 352.8 million (previous year: CHF 226.8 million) consist of bank balances in CHF, EUR, USD and GBP, as well as fixed-term deposits in CHF. Securities of CHF 52.7 million (CHF 61.1 million) comprise fixed-interest investments in CHF. Accounts receivable are made up exclusively of withholding tax claims on interest income. Prepaid expenses and accrued income comprise accrued interest of CHF 0.8 million (CHF 1.1 million), as well as accruals for balances from exchange rate hedges of CHF 0.1 million (CHF 2.1 million).

Fixed assets The figure for investments in the balance sheet is CHF 176.7 million (CHF 180.0 million). In the reporting year, ixmation AG in Pieterlen (Switzerland) was sold and ixmation AG in Burgdorf (Switzerland) was newly incorporated. Most Group ﬁnancing is handled by the holding company. Accounts receivable from Group companies decreased in the reporting year by CHF 48.4 million and now amount to CHF 152.3 million.

Liabilities The short-term liabilities consist of unpaid dividends. Accrued expenses and deferred income consists of outstanding taxes of CHF 0.7 million (CHF 2.1 million) and liabilities arising from exchange rate hedges of CHF 0.1 million (CHF 2.1 million). Long-term liabilities of CHF 99.5 million (CHF 41.6 million) include CHF 79.1 million (CHF 21.2 million) in outstanding payables to subsidiaries and provisions of CHF 20.4 million (CHF 20.4 million).

Shareholders’ equity The share capital of CHF 46.0 million consists of 270 000 registered shares and 406 000 bearer shares. As the result of a transfer to the special reserves, the special reserves balance sheet item increased in the reporting year by CHF 50.0 million to CHF 350.0 million.

Conzzeta – Annual report 2009 Financial report

Proposed appropriation of available earnings – Conzzeta AG 2009

2008

CHF

The Board of Directors proposes to the Annual General Meeting on April 28, 2010, that the retained earnings at December 31, 2009, consisting of: Net income for the year

36 474 584

139 642 637

Retained earnings carried forward from previous year

169 420 025

107 377 388

Available retained earnings

205 894 609

247 020 025

12 180 000

24 360 000

be appropriated as follows: Dividend of CHF 30.00 per bearer share (previous year: CHF 60.00) Dividend of CHF 6.00 per registered share (previous year: CHF 12.00) Transfer to the special reserve Retained earnings to be carried forward

1 620 000

3 240 000

50 000 000

142 094 609

169 420 025

If this proposal is approved, the dividend distribution for the 2009 reporting year will be:

Gross dividend

35 % withholding tax

CHF

30.00

10.50

19.50

6.00

2.10

3.90

per bearer share per registered share

Net dividend

The dividend on bearer shares will be paid out against submission of Coupon No. 11. The registered shareholders or their custodian banks will be sent a dividend credit or dividend order, according to their instructions. Coupon No. 11 and the dividend order can be redeemed free of charge from May 5, 2010, at all Swiss branches of the banks listed below: CREDIT SUISSE UBS AG Zürcher Kantonalbank

Conzzeta – Annual report 2009 Financial report

Statutory auditor’s report – Conzzeta AG Report of the Statutory Auditor on the Financial Statements to the General Meeting of Conzzeta AG, Zurich As statutory auditor, we have audited the financial statements of Conzzeta AG on pages 70 to 76, which comprise the balance sheet, income statement and notes for the year ended December 31, 2009. Board of Directors’ Responsibility The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the company’s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reason ableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements for the year ended December 31, 2009, comply with Swiss law and the company’s articles of incorporation. Report on Other Legal Requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Financial report

In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial statements according to the instructions of the Board of Directors. We further confirm that the proposed appropriation of available earnings complies with Swiss law and the companyâ&#x20AC;&#x2122;s articles of incorporation. We recommend that the financial statements submitted to you be approved. KPMG AG Herbert Bussmann

Markus Ackermann

Licensed Audit Expert

Auditor in Charge

Zurich, March 18, 2010

Conzzeta â&#x20AC;&#x201C; Annual report 2009

Further information 82 84 86

Employee pension funds in Switzerland Five-year summary Information and calendar for investors

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Further information

Employee pension funds in Switzerland The number of currently employed fund participants decreased in the reporting year from 1 390 to 1 164, while the number of persons drawing retirement benefits fell from 893 to 886. The proportion of pensioners to overall fund participants increased to 43 % (previous year: 39 %). The dedicated fund capital decreased by 3.0 % to CHF 363.7 million, of which 52.1 % comprised annuities, 45.0 % fund capital and 2.9 % technical provisions. The decrease in the number of fund participants is due to job cuts in the business units affected by the financial crisis. The fund capital decreased in the reporting period by 6.5 % from CHF 174.8 million to CHF 163.5 million. The financial situation of the autonomous and organizationally independent Conzzeta pension funds improved considerably thanks to the upward trend in the financial markets. In contrast with a fall in asset values of 8.6 % in 2008, the reporting year saw a return on assets of 8.3 %. The asset value fluctuation reserves increased by CHF 27.8 million to CHF 42.4 million, which is 71 % of the defined target value. The consolidated funding ratio, not including the employer contribution reserves, increased from 104.9 % to 112.6 %. This computation is based on a technical interest rate of 3 %.

Marc Sutter Manager of employee pension funds in Switzerland

Conzzeta – Annual report 2009 Further information

2009

2008

CHF m

374.911

373.451

Fluctuation reserves

14.625

59.382

Employer contribution reserves

30.350

28.196

Net fund assets at 1 / 1 Fund capital

Free reserves

3.680

4.095

423.566

465.124

– 0.556

Company contributions

9.967

10.759

Employee contributions

6.746

6.611

Departure benefits brought into the fund

5.530

10.924

Investment income

35.659

– 39.696

Contributions and income

57.902

– 11.402

– 39.407

– 32.188

Total net fund assets at 1 / 1 Inclusion and exclusion of companies

Payments to insured persons Provisions / valuation adjustments

– 5.502

3.397

Administrative expenses

– 0.766

– 0.807

Payments and expenses

– 45.675

– 29.598

Net fund assets at 12 / 31 Fund capital

363.706

374.911

Fluctuation reserves

42.391

14.625

Employer contribution reserves

26.149

30.350

3.547

3.680

435.793

423.566

Free reserves Total net fund assets at 12 / 31

Conzzeta – Annual report 2009 Further information

Five-year summary 2009

2008

2007

2006

2005

356.1

745.1

793.5

632.0

490.0

Net revenue by business unit Sheet Metal Processing Systems

CHF m %

37.3

50.6

52.7

49.6

42.5

Glass Processing Systems

CHF m

145.6

244.6

237.3

219.2

196.5

15.3

16.6

15.7

17.2

17.0

Automation Systems

CHF m

56.1

73.6

76.7

49.6

32.0

5.9

5.0

5.1

3.9

2.8

Foam Materials

CHF m

116.8

146.3

156.5

147.5

135.2

12.2

9.9

10.4

11.6

11.7

Sporting Goods

CHF m

215.3

192.6

177.1

164.7

145.0

22.5

13.1

11.7

12.9

12.6

Graphic Coatings

CHF m

43.2

47.5

44.1

36.5

31.6

4.5

3.2

2.9

2.7

Real Estate and miscellaneous revenue

CHF m

22.1

22.8

21.8

21.9

20.3

2.3

1.6

1.5

1.7

1.8

Revenue from discontinued activities

CHF m

2.2

102.8

0.2

8.9

Total

CHF m

955.2

1 472.5

1 507.0

1 273.6

1 153.4

Net revenue

CHF m

955.2

1 472.5

1 507.0

1 273.6

1 153.4

Operating result

CHF m

– 1.4

97.8

132.1

80.6

66.8

Extraordinary result

CHF m

10.1

3.9

56.5

9.6

Group result

CHF m

3.3

78.8

161.4

71.1

63.6

Current assets

CHF m

853.8

914.5

970.0

799.0

683.6

Fixed assets

CHF m

401.0

418.4

413.7

418.2

443.7

Short-term liabilities

CHF m

198.1

247.7

318.3

286.2

232.7

Long-term liabilities

CHF m

78.4

84.3

74.5

78.2

95.3

Shareholders’ equity

CHF m

978.3

1 000.9

990.9

852.8

799.3

Total assets

CHF m

1 254.8

1 332.9

1 383.7

1 217.2

1 127.3

78.0

75.1

71.6

70.1

70.9

Consolidated income statement

Consolidated balance sheet

Shareholders’ equity as % of total assets Investment in fixed assets / employees Investments in property, plant and equipment and intangible assets Employees at year-end Employees, average

CHF m

28.0

56.0

49.0

31.8

28.5

Number

3 225

3 718

3 444

3 273

3 280

Number

3 551

3 581

3 356

3 086

3 069

Net revenue per employee

CHF thousand

269.0

411.2

449.0

412.7

375.8

Personnel expenses per employee

CHF thousand

80.7

94.1

97.1

96.7

93.0

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Further information

2009

2008

2007

2006

2005

CHF m

46.0

Bearer shares (par CHF 100)

Number

406 000

Registered shares (par CHF 20)

Number

270 000

High / low

CHF

1 934 / 1 135

2 850 / 1 450

2 925 / 2 170

2 349 / 1 650

1 750 / 1 300

Year-end

CHF

1 800

1 540

2 777

2 165

1 700

13.81

27.6

32.2

20.7

18.4

Share information Share capital Number of shares issued at 12 / 31

Market prices of the bearer shares

Total dividend

CHF m

Key indicators per share (on capital entitled to dividend) Group result

per bearer share

CHF

7.10

171.20

350.90

154.60

138.30

per registered share

CHF

1.40

34.20

70.20

30.90

27.70

Cash flow from

per bearer share

CHF

304.20

141.70

370.20

121.20

154.00

operating activities

per registered share

CHF

60.80

28.30

74.00

24.20

30.80

Shareholdersâ&#x20AC;&#x2122; equity per bearer share

Gross dividend

CHF

2 126.70

2 175.80

2 154.20

1 853.80

1 737.60

per registered share

CHF

425.30

435.20

430.80

370.80

347.50

per bearer share

CHF

30.001

60.00

70.00

45.00

40.00

per registered share

CHF

6.001

12.00

14.00

9.00

8.00

As proposed by the Board of Directors

Conzzeta â&#x20AC;&#x201C; Annual report 2009 Further information

Information and calendar for investors 2010

Wednesday, April 28

Ordinary General Meeting at the Lake Side, Zurich

Wednesday, May 5

Payment of dividends

Wednesday, August 18

Interim report as at June 30, 2010

2011

Wednesday, March 30

Year-end results as at December 31, 2010

Thursday, April 28

Ordinary General Meeting at the Lake Side, Zurich

Changes in interim reporting As a result of a change in the listing regulations of the SIX Swiss Exchange, Conzzeta will publish an interim report as at June 30, from the 2010 business year onwards. Interim reporting in four-month periods will be discontinued.

Investor Relations

Ticker Symbols

Carlo Menotti

Swiss security

Further information about the company,

Phone + 41 44 468 24 84

no. 265 798

calendar dates and contacts can be found

Fax

ISIN CH0002657986

at www.conzzeta.ch.

+ 41 44 468 24 81

investor@conzzeta.ch

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