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2014Geschäftsbericht

THE WAY TO MAKE IT

Annual Report

2015

KOMAX GROUP ANNUAL REPORT

2015 1

CONTENTS

ANNUAL REPORT

In brief

2Shareholders’ letter

6Locations

8Business model and strategy

10Board of Directors and Executive Committee

18Business Unit Wire

20Business Unit Medtech

28Sustainability and social responsibility

36Information for investors

42Vocational training

47

CORPORATE GOVERNANCE

55COMPENSATION REPORT

69

FINANCIAL REPORT

Consolidated financialstatements

84Financial statements of Komax Holding AG

145Corporate structure

154

FURTHER INFORMATION

Glossary

158Five-year overview

159

1


20152

COMPANYIN BRIEF

The Komax Group is a globally active tech-nology company specializing in automation solutions for selected processes. With its innovative and high-quality solutions for the wire-processing industry and systems for the assembly of self-medication devices, Komax helps its customers implement eco-nomical and safe manufacturing processes, especially in the automotive supply and pharmaceutical sectors.

e Komax Wire offers a comprehensive range of automated, intelligent processing solutions for all wire-processing applica-tions. Standard and customer-specific systems are supplemented by an exten-sive range of quality assurance modules, testing devices, and networking solutions for the reliable and efficient production of wire harnesses. Moreover, a sophisti-cated service offering supports customers around the world after their systems have been commissioned, thereby ensuring high availability and low impairment for their investment.

e Komax Medtech develops complex customer-specific systems for the automatic assembly of medical devices for self-medication, such as inhalers and insulin delivery or injection systems. It offers its customers solutions at all development levels of a project, from the concept phase through to large-volume line production. Integral validation con-cepts that are geared to internationally accepted standards and a wide range of service options complete the offering.


2015 3

COMPANYIN BRIEFOrder intake

+20.4%368.5mRevenues in CHF

+1.4%Share priceCHF 194.90

+35%Dividend yield

2.8%

FA

CT

S

AN

DF

IGU

RE

S23% North- / South America

48%Europe

3%Switzerland

Net salesby region

8%Africa

18% Asia ��75% Automotive

12%Medtech

13%Others

Net salesby industry

��


20154

2015 2014 +/− in %

in TCHF

Order intake 442 836 367 702 20.4

Revenues1 368 462 363 338 1.4

Gross profit 236 116 220 188 7.2

in % of revenues 64.1 60.6

EBITD 56 708 57 663 –1.7


Operating profit (EBIT) 46 732 48 102 –2.8


Group profit after taxes from continuing operations 32 087 43 660 –26.5


Group profit after taxes (EAT) 29 215 27 743 5.3


Cash flow from operating activities 49 612 30 295 63.8

Investments in non-current assets 18 850 15 566 21.1

Free cash flow 24 519 14 412 70.1

Research and development 26 669 25 776 3.5


Basic earnings per share in CHF 8.00 7.64 4.7

Headcount (at year-end) No. 1 580 1 498 5.5

Total assets 398 967 388 052 2.8

Non-current assets 160 940 145 562 10.6

Current assets 238 027 242 490 –1.8

Intangible assets 49 454 47 368 4.4

Net cash 34 365 29 211 17.6

Shareholders’ equity2 283 134 284 168 –0.4

in % of total assets 71.0 73.2

1 Revenues: net sales + other operating income. 2 Equity attributable to equity holders of the parent company.

Key figures

COMPANYIN BRIEF


2015 5

Operating profit (EBIT)in TCHF

02

0 0

00

40

00

0

0%

7%1

4%

20

11

20

12

20

13

20

14

20

15

Group profit after taxes (EAT)in TCHF

02

0 0

00

40

00

0

0%

5%

10

%

20

11

2012

20

13

20

14

20

15

Shareholders’ equityin TCHF

01

00

00

02

00

00

0

0%

30%

60%

20

11

20

12

20

13

20

14

20

15

Net working capital (NWC)in TCHF

07

5 0

00

15

0 0

00

0%

30

%6

0%

20

11

20

12

20

13

20

14

20

15

1 Revenues: net sales + other operating income. 2 Equity attributable to equity holders of the parent company. 3 Net working capital: receivables + inventories ./. current liabilities.

COMPANYIN BRIEF

EBIT EBIT in % of revenues1

Shareholders’ equity2

Equity in % of total assets

EAT EAT in % of revenues1

NWC3

NWC in % of revenues1

6 2015KOMAX GROUP ANNUAL REPORT

ANNUAL REPORTSHAREHOLDERS’ LETTER

The decision by the Swiss National Bank to abandon the minimum euro/franc exchange rate got 2015 off to a tumultuous start. It forced our entire organization to analyze the new param-eters and then formulate and implement prompt damage limitation measures. We believe we did this very well. Despite the hostile environment, we can once again look back on a very success-ful year.Moreover, we have set a new direction for the Komax Group. After reviewing all the strategic options for Komax Medtech, the focus is now on the sale of this business unit. As a result, the Komax Group will concentrate on its core business in the future. This will present numerous oppor-tunities, which we will seize with the aim of gen-erating further profitable growth. Order intake increased by 20.4% to CHF 442.8 million and consolidated revenues increased by 1.4% to CHF 368.5 million (2014: CHF 363.3 million). Currency influences weighed on growth to the tune of –3.0 percent. Operating profit (EBIT) reached CHF 46.7 million (2014: CHF 48.1 million). The EBIT margin was 12.7%. Cur-rency influences here amounted to –1.5 percent-age points. The removal of the cap on the mini-mum euro-franc exchange rate also left its mark on the financial result: As a result of one-off, non-cash currency losses, particularly on loans, financial expenses rose to CHF 7.7 million (2014: CHF 1.3 million). Group profit after taxes from continuing operations nevertheless amounted to CHF 32.1 million (2014: CHF 43.7 million). Earn-ings from discontinued operations amounted to CHF –2.9 million (2014: CHF –15.9 million). This figure essentially comprises non-cash charg-es for valuation adjustments. Group profit after taxes reached CHF 29.2 million (2014: CHF 27.7 million), resulting in an increase in basic earnings per share to CHF 8.00 (2014: CHF 7.64). The Komax Group remains in extremely robust finan-cial health. On the balance sheet date, sharehold-ers’ equity stood at CHF 283.1 million (2014:

CHF 284.2 million) while the equity ratio stood at 71.0% (2014: 73.2%). Free cash flow amounted to a high CHF 24.5 million (2014: CHF 14.4 million). Net cash increased to CHF 34.4 million (2014: CHF 29.2 million). In view of the pleasing growth in earnings, the comfortable equity base and positive outlook, the Board of Directors is proposing to the Annual General Meeting an in-crease in the distribution to shareholders from CHF 5.00 to CHF 6.00 per share, of which CHF 4.50 will be paid out as a dividend and CHF 1.50 distributed from capital contribution reserves. The payout ratio is therefore 75%. The dividend yield on the date of the Board resolution stood at an attractive 2.8%. Dividend payments from the capital contribution reserves are tax-free for natural persons living in Switzerland who hold shares as part of their private assets.

Komax WireAfter a very positive first half of the year, momen-tum picked up further in the second half. Ac-cordingly, Komax Wire was again able to exceed the previous year’s impressive performance, despite the strength of the franc. The Europe and North/South America regions generated the strongest growth in 2015. The key drivers of this pleasing development were the persistently robust health of the automotive industry and the continuing trend to further automate manual processes and enhance processing quality in wire- processing. In addition, the preference for higher-quality, complex processing solutions was confirmed. Order intake increased by 15.1% to CHF 348.4 million (2014: CHF 302.6 million). Net sales rose by 6.2% to CHF 313.3 million (2014: CHF 295.0 million). Internal growth amounted to more than 10%. EBIT came in at CHF 59.7 million (2014: CHF 55.3 million). Following the acquisition of a minority stake in Laselec, the takeover of Thonauer Group, and the establishment of affiliates in Romania and Mexico, Komax Wire has further strengthened its technological and geographic base. Moreover, it has redefined the industry benchmark with its new generation of fully automatic crimping machines. On the operational side, the focus is on delivering improvements through continuous scrutiny and further optimization of established processes.In view of the successes it has achieved, Komax Wire intends to adhere to its chosen growth-

Dear Shareholders,

72015 KOMAX GROUP ANNUAL REPORT

ANNUAL REPORTSHAREHOLDERS’ LETTER

generating course. At the beginning of 2016, it further consolidated its leading market position by acquiring Ondal Tape Processing and the business of SLE Electronics USA.

Komax MedtechAfter a subdued start to 2015, Komax Medtech witnessed a powerful increase in its order intake as the year developed, with the cumulative order intake amounting to an exceptional CHF 94.5 million (2014: CHF 65.1 million). In addition to repeat business, which in some cases is released over a period of several years, numerous com-mercially interesting projects involving existing applications and processes were acquired from new customers. However, since these orders were placed relatively late in 2015 and some of them have lead times of several months, this pleasing development has not yet fed through into the income statement. Indeed, the volatile devel-opment of business had the effect of weighing on capacity utilization at the business unit’s three locations. Net sales revenue reached CHF 54.7 million (2014: CHF 68.6 million). Given the rela-tively high proportion of value creation in Swit-zerland, Komax Medtech also suffered from the strength of the franc. EBIT accordingly amount-ed to CHF –2.6 million (2014: CHF 1.2 million).

Relations with our shareholders and thanksBy maintaining an intensive dialogue, the Board of Directors builds up an ever-evolving picture of the multifaceted opinions of shareholders and proxies on issues of importance to the future of the company. These include the debate sur-rounding the controversial issues of voting right restrictions and the compensation paid to the senior management bodies of companies. The Board of Directors takes the views put forward by shareholders very seriously, and takes them into account in its deliberations. Accordingly, the agenda of the upcoming Annual General Meeting will include a proposal to increase the registration and voting rights restriction from 5 to 15%, and an advisory vote on the compensation paid to senior managers last year.The pleasing business result, which surpasses that of last year, was better than we anticipated. A powerful contributory factor here was the high motivation and great dedication of all Komax Group employees, who deserve our thanks for their exemplary performance. The spirit shown

by the entire workforce on a day-to-day basis is truly impressive. We would also like to thank our customers and business partners for their confi-dence and constructive partnership. Last but not least, we thank you, our valued shareholders, for your ongoing commitment to our company.

OutlookThe current macroeconomic environment remains characterized by wide-ranging uncertainty. Against this backdrop, Komax is focusing on the factors that it can directly influence itself, and is therefore looking to its clear strengths such as its innovative drive and customer orientation. Based on these foundations, Komax will further enhance its profile and continue to seize – after careful scrutiny – opportunities to further ad-vance the company. From today’s standpoint, we envisage another good result for 2016.

Dr. Beat KälinChairman of the Board of Directors

Matijas MeyerChief Executive Officer


20158

ANNUAL REPORTLOCATIONS

e Komax produces in Europe, North and South America, Asia and Africa, and provides sales and service support in some 60 countries through its subsidiaries and independent agents.

The Komax Group has a presence in all key production centres of its customers. It has its finger on the pulse of industry andunderstands its needs. Komax developsappropriate, high-value and innovative auto-mation solutions for local requirements in global markets by drawing on its 40 years’ experience.


2015 9

ANNUAL REPORTLOCATIONS

AR

OU

ND

TH

E

WO

RL

D

Komax production, sales and service

Komax sales and service Sales representative Participation

16production sites

30Komax companies worldwide

Sales and service support in

60countries

Headquarters:Komax Holding AGDierikon, Switzerland


201510

ANNUAL REPORTBUSINESS MODEL AND STRATEGY

Komax pursues a strategy aimed at delivering above-average profitability and ongoing sus- tainable growth. This strategy goes hand in hand with environmentally conscious, socially aware and responsible conduct towards all stake-holder groups. The Group’s strategy provides the framework in which its business units, which are largely autonomous and active in a number of different markets, operate.


2015 11

ANNUAL REPORTBUSINESS MODEL AND STRATEGYTechnology

leader

Highly

profitable

BU

SIN

ES

S

MO

DE

L A

ND

S

TR

AT

EG

Y

15%Medtech

85%Wire

Net salesby segment

��

Highly

innovative


e Komax Wire – benchmark for the wire-processing industry

Komax Wire specializes in innovative solutions for all wire-processing applications and for the testing of wire harnesses. The emphasis is on processes such as measuring, cutting, stripping and fitting contacts and connector housings to cables, and on the testing of wire harnesses. Standard and customer-specific systems are supplemented by an extensive range of quality assurance modules and networking solutions for the reliable and efficient production of wire harnesses. The business unit also supplies testing systems. These systems test the functions of mechatro nic assemblies, such as doors, seats and cockpits, measuring not only electrical parameters but also a wide range of physical properties.Komax Wire offers its customers a comprehensive range of efficient and reliable automation solutions. Here the business unit relies not only on proprietary developments, but also on the expertise of established partners that may be acquired or incorporated into a select specialist network. This enables Komax Wire to continuously expand its leading market position.Komax Wire differentiates itself from its competitors through its leading technologies, unmatched innovativeness, comprehensive range of wire-processing solutions and test systems, and a glob-al service and distribution network. Komax Wire is the global leader in its field, with a market share more than twice that of its nearest competitor.Komax Wire pursues four key strategic priorities. First, it is continuing to develop its existing business along the value chain. This involves fully automatic and semi-automatic solutions with integrated quality assurance. Solutions for increasing availability and testing the productivity of installed systems are as much a part of this as new intelligent software interfaces and expanded quality testing capabilities. In the development of innovative manufacturing concepts, the second strategic priority, Komax Wire focuses on new solutions for the customer- and application-spe-cific demands of wire-processing industries, and on optimizing the product portfolio by means of a clear product platform strategy. The third strategic priority of Komax Wire is to further expand its global reach. Fourthly, it will continue to advance into areas of application outside the auto-motive industry. These include areas such as the aerospace industry, telecoms, data communi-cation and additional industrial applications, particularly control cabinet manufacturing. All stra-tegic priorities are pursued with the aim of continuously increasing the operational effectiveness and efficiency of Komax Wire, and achieving above-average, profitable growth.Komax Wire’s offering covers the most capital-intensive and critical processes of its customers’ value creation chains. Customers receive single-source solutions for the key wire-processing applications from Komax Wire – a feature that makes Komax unique in the world. In the future, the diverse competencies that Komax Wire unites under a single roof will give rise to new innovative production concepts that will further simplify wire harness producers’ processes and drive forward automation in the targeted industries.



e Komax Medtech

Komax Medtech develops customer-specific machine sys-tems for the automatic assembly of medical products such as inhalers or insulin administration and injection systems. Komax Medtech also produces systems for the efficient mass production of inkjet printer cartridges and the assem-bly of vehicle transmissions. The sales price of such systems ranges between a few hundred thousand and several million Swiss francs, depending on their complexity.Medical devices in particular are subject to especially rigor-ous cleanliness, quality and safety requirements. Komax Medtech has many years of experience in this field, and has standardized and certified validation processes in place to ensure that its systems comply with all relevant standards. It also complies with the requirements of Good Automated Manufacturing Practice, an internationally recognized set of guidelines. Komax Medtech’s top priority is to stabilize profitability, which depends very heavily on careful project selection, the development of a well-balanced portfolio, and efficient execution. A well-structured project portfolio contains a sub-stantial proportion of projects providing repeat business, plus some new projects with the potential for repeat busi-

ness. Komax Medtech is endeavouring to continue to reduce its dependency on individual large projects and to distribute its capacity across a bigger number of orders.As the principal focus of the Komax Group is the wire business, all strategic options are being reviewed for Komax Medtech. The primary focus of this review is on the sale of this business unit.

e Sales growth and EBIT margin targets

As part of its transparent information policy, Komax has announced measurable medium-term net sales growth and EBIT margin targets for the two business units. These should be viewed as guides for internal performance management purposes and for the financial markets.The two business units have different targets. These take into account the different growth momentum of the corresponding end-customer markets, as well as differences in market pos-itioning, business model and capital employed.Komax Wire has an annual sales growth target of 3 to 5%. With an average annual growth rate of around 10% (CAGR) since 2010, this target has been significantly exceeded. Despite the high growth, the EBIT margin has remained within the target range of around 20% or higher.No growth target was defined for Komax Medtech, as the development of sales and profitability depends almost entirely on projects for sophisticated customer-specific systems. The decisive criterion for success here is the ability to select the right projects and implement them efficiently. The target EBIT margin for this business unit is 5%. Komax Medtech has not succeeded in reach-ing this target in recent years.

The markets served by Komax enjoy a profile of structural growth. The global need for automation solutions will further increase.

Around

20%EBIT margin at Komax Wire



e Selective acquisitions

Komax’s main focus is on internal growth. In addition, poten-tial candidates and opportunities for acquisitions are careful-ly examined as part of a clearly defined acquisition strategy. Komax Wire intends to consolidate its leading market pos-ition with further strategy-compliant acquisitions and partici-pations.

e Global production, local distribution and service network

Komax has 16 production sites worldwide. Komax Wire pro-duces standardized (off-the-shelf) products for wire process-ing at two locations in Switzerland, as well as in Germany, China and Japan. The TSK brand of test systems is manufac-tured in Germany, Turkey, the US, Brazil, China and Tunisia in order to ensure short supply times for test adapters. The business segment, which encompasses customer-specific systems (value-added business), has centres in Switzerland, Germany, the US and China.Komax Medtech produces its systems in Switzerland, the US and Malaysia. With three production sites in the most import-ant market regions of the world, the business unit is well po-sitioned to meet the expectations of its customers, who are increasingly demanding that suppliers have a local presence.Furthermore, the Group provides sales and service support in around 60 countries through subsidiaries and independent agents. It can therefore provide efficient and competent support to its customers, most of whom operate globally, at all times. Komax is steadily expanding its presence in the emerging economies in line with the rise in de-mand from these markets, as customer proximity is a decisive factor. This allows Komax to keep its finger on the pulse of industry and develop needs-driven, high-value and innovative automa-tion solutions for local requirements in global markets by drawing on 40 years’ experience. More-over, with its global sales and service organization, Komax guarantees short supply and response times.This global orientation reduces the impact of currency fluctuations. Moreover, Komax’s hedging strategy ensures that costs and sales are incurred in the same currencies to the greatest extent possible.

Acquisitions complement the activities of Komax Wire perfectly and open up interesting growth opportunities.

R&D expenses

7.2% of revenues

406employees in R&D and engineering



e High degree of innovation

Innovations play a key role in Komax’s success as a market leader. For many years now, the Group has been continuously investing in innovations to optimize its existing product range, as well as in new developments that aim to increase the efficiency and safety of customer pro-cesses. All activities are systematically geared to customer needs and expectations. That is why Komax typically employs interdisciplinary teams – consisting of marketing experts, product man-agers and development engineers – on innovation projects. For example, skilfully combining dif-ferent processes and technologies reduces interfaces and lead times. At the same time, process-ing reliability is increased. In recent years, Komax has invested more than 7% of revenues in research and development, and employed no less than 146 staff in this area in 2015. In addition, some 260 engineers make a substantial contribution to innovation at Komax by developing customer-specific applications. University partnerships and knowledge transfer activities also play their part in keeping the Komax Group at the forefront of technological progress.

e Markets and customers

Komax Wire currently generates around 90% of its sales through customers in the automotive industry. Market estimates indicate that some 60% of globally processed wiring is used in auto-motive manufacturing. This high proportion is explained by the fact that the automotive industry is peerless when it comes to standardization and automation. The high volume of wires needed for large-batch processing and the stringent requirements in place with regard to finish quality make automated solutions the favoured option for this sector. Over the last five years, Komax Wire has benefited from the overall boom in the automotive in-dustry. Thanks to its global presence, it has been able to balance out the differences in regional cycles to achieve average growth of some 10% – over a third more than the industry itself. Fore-casts for global automotive demand indicate average annual growth of 3 to 4% over the next few years. However, the demand for automation solutions to process the individual wires and wire harnesses installed in vehicles is only partly determined by the number of cars produced and sold. Other key growth drivers include increasingly complex functionalities as well as optimized or new drive systems. Driver assistance, security, and monitoring systems are quickly becoming more commonplace, and it is only a matter of time until autonomous vehicles start to appear. At the same time, the ongoing process of miniaturization is leading to demand for ever thinner or lighter wires and smaller housings, which remain difficult to process and insert by hand. New materials such as aluminium, for example, offer further growth potential. Developments of this kind, together with the ongoing rise in quality demands from automotive manufacturers, are driv-ing supplier companies’ investments in automation solutions even more strongly than vehicle manufacturing volume growth. Komax Wire is benefiting from these developments.




Furthermore, the increasingly widespread principle of zero-error tolerance is driving up demand for testing systems capable of ensuring that the wire harnesses and assemblies installed in ve-hicles work perfectly. This is understandable, as defective wire harnesses and components re-quire considerable time and expense – at the cost of productivity and profitability – to repair or replace once they have been fitted in a vehicle. Furthermore, functional defects in the electronic systems of delivered vehicles can result in serious reputational damage.The other markets serviced by Komax Wire, such as the aerospace industry, telecoms, data com-munication and industrial appliances (control cabinet manufacturing) today account for a rela-tively small proportion of the unit’s sales. However, Komax Wire is seeking to increase penetra-tion in these markets, as they offer attractive growth opportunities in the longer term. A further step in this direction was taken in January 2015 with the acquisition of a 20% stake in the French company Laselec. Laselec develops laser-assisted cable stripping and marking solutions as well as intelligent interactive wire harness layout boards for wire harness production, which are cur-rently used primarily in the aerospace industry.

Komax Medtech primarily advises and supplies customers from the pharmaceutical industry, i.e. pharmaceutical companies and their suppliers. Demand for medical devices is benefiting from a long-term rising trend. This is due partly to general demographic developments, and partly to the increasing trend towards the injection of medications and self-medication. Demand for automa-tion solutions for the assembly of devices is linked to the investment behaviour of the pharma-ceutical industry. However, demand does not grow in a linear fashion, and is therefore difficult to predict. As a rule, new projects are awarded as part of invitations to tender. In the majority of cases, these are for solutions that are developed for a specific customer or product.



Net sales by region 2015 2014 +/− in %

in TCHF

Switzerland 10 747 10 314 4.2

Europe (incl. Africa) 205 947 200 455 2.7

North / South America 83 390 70 274 18.7

Asia 66 961 81 810 –18.2

Total 367 045 362 853 1.2

Sales growth target Target

in %

Komax Wire ~3–5 6.2 15.1

Komax Medtech –1 –20.3 0.7

EBIT margin target

in %

Komax Wire ~20 19.0 18.7

Komax Medtech ~5 –4.7 1.7

1 The Medtech business unit is in the systems business, i.e. it mainly manufactures complex, customer-specific systems. In this business, targeted selection of the projects to be acquired is more important than sales growth per se. For that reason, no sales growth target has been defined for this unit.


Beat Kälin (1957)

Non-executive, dependent member

and Chairman of the Board of

Directors since 2015, elected until

2016, Swiss national, resident in

Birmensdorf, Chairman of the Board

of Directors of listed company

Huber + Suhner AG, Pfäffikon (ZH).

Beat Kälin holds a master’s degree and a doctorate in engineering from ETH Zurich. He also holds an MBA from INSEAD. Up until 1999, he held various management positions in the Elektrowatt Group, from 1999 to 2004 he was a member of the Group Executive Board of SIG Schweizerische Industrie- Gesellschaft Holding AG, Neuhausen, from 2004 to 2006 he was a member of the Board of Management responsible for the Packaging Technology Division at Robert Bosch GmbH, Stuttgart (DE), and from 2007 until 8 May 2015 he was CEO of the Komax Group.

Daniel Hirschi (1956)

Non-executive, independent member

of the Board of Directors since 2005,

Vice-Chairman since 2014, elected

until 2016, Swiss national, resident in

Biel, Chairman of the Board of

Directors of listed company Schaffner

Holding AG, Luterbach, and member

of the Board of Directors of listed

company Gavazzi Holding AG, Stein-

hausen, as well as the privately owned

company Benninger AG, Uzwil.

Daniel Hirschi holds a degree in engin-eering. From 1983 to 2005 he held various management functions at Saia- Burgess in Murten, where he was CEO from 2001, and Delegate of the Board of Directors from 2003. From 2006 to 2009, Daniel Hirschi was CEO and Dele-gate of the Board of Directors of Benninger AG in Uzwil, and he has been a member of the Board of Directors of the same company since March 2009. In the last three years, Daniel Hirschi has not been a member of the Executive Committee or had any material business relationships with the Komax Group.

David Dean (1959)



elected until 2016, Swiss national,

resident in Meilen, member of the

Board of Directors of Agta Record AG

in Fehraltorf and of Trumpf AG in

Baar, as well as member of the Indus-

try Executive Advisory Board of

the Executive MBA in Supply Chain

Management at ETH Zurich.

David Dean has been CEO of the Bossard Group since 2005. He was the company’s CFO from 1998 to 2004, and its Corporate Controller before that. David Dean is an expert in accounting and controlling. He holds a federal diploma and is a certified accountant. Furthermore, he has also completed management training at Harvard Business School and IMD Lausanne. In the last three years, David Dean has not been a member of the Executive Committee or had any material business relationships with the Komax Group.

Kurt Haerri (1962)


of the Board of Directors since

2012, elected until 2016, Swiss national,

resident in Birrwil.

Kurt Haerri holds a degree in mechani-cal engineering from Lucerne University of Applied Sciences and graduated from the University of St. Gallen with an Executive MBA HSG. He has been working for Schindler since 1987, and was based in China from 1996 to 2003. Today, he is responsible for Global Installation & Fulfillment at Schindler Management AG. From 2006 to 2013, Kurt Haerri was the President of the Swiss-Chinese Chamber of Commerce. He is also a lecturer at ETH Zurich, where he is responsible for the Asia module of an executive MBA pro-gramme. In the last three years, Kurt Haerri has not been a member of the Executive Committee or had any material business relationships with the Komax Group.

Board of Directors

ANNUAL REPORTBOARD OF DIRECTORS


ANNUAL REPORTEXECUTIVE COMMITTEE

Executive Committee

Matijas Meyer (1970)

Chief Executive Officer (CEO) since

11 May 2015 and Head Business Unit

Wire since 2010, at Komax since

2007, Swiss national, resident in

Ebikon.

Matijas Meyer holds a degree in engineering from ETH Zurich and an MBA from Cranfield University (UK). Prior to his current position, he was Head of the site in Rousset (FR). Before joining Komax, he worked at Tornos SA in Moutier and OC Oerlikon / ESECin Cham.

Andreas Wolfisberg (1958)

Chief Financial Officer (CFO) since

1996, at Komax since 1991, Swiss

national, resident in Adligenswil,

Chairman of the Board of Directors

of Kowema Beteiligungs AG, Baar.

Andreas Wolfisberg is a Swiss Certified Expert in Accounting and Controlling. Before joining Komax, he worked at von Moos Stahl in Lucerne.

René Ronchetti (1968)

Head Business Unit Medtech and at

Komax since 2012, Swiss national,

resident in Murten.

René Ronchetti holds a degree in engin-eering (computer science) from Berne University of Applied Sciences. He is also a qualified industrial engineer and holds an MBA from Strathclyde University (UK). His most important positions before joining Komax were at RUAG in Berne and Geneva, Oerlikon Balzers in Paris, and Ascom Autelca in Berne and Paris.

Leo Steiner holds a degree in engineer-ing from ETH Zurich. Before joining Komax, he worked at Hayek Engineering & Management Consulting, Zurich, Landis & Gyr, Zug, and Sulzer-Escher Wyss, Zurich. From 1992 to 2007 he was CEO of the Komax Group. In the last three years, Leo Steiner has not been a member of the Executive Committee or had any material business relation-ships with the Komax Group.

Roland Siegwart (1959)



elected until 2016, Swiss national,

resident in Schwyz. Board member of

Evatec, Trübbach, and Alstom Ins-

pection Robotics, Zurich.

Roland Siegwart has been Professor of Robotics at ETH Zurich since July 2006 and Co-Director of the newly-founded Wyss Translational Center Zurich, a joint research centre of ETH Zurich and the University of Zurich, since 2015. He

holds a master’s degree in mechanical engineering and a doctorate from ETH Zurich. He was professor at EPFL Lausanne from 1996 to 2006, and Vice-President of Research and Corpo-rate Relations at ETH Zurich from 2010 to 2014. In the last three years, Roland Siegwart has not been a member of the Executive Committee or had any ma-terial business relationships with the Komax Group.

Leo Steiner (1943)



Chairman of the Board of Directors from

2007 to 2015, elected until 2016,

Swiss national, resident in Steinhausen.


201520

ANNUAL REPORTBUSINESS UNIT WIRE

Thanks to its unique market position, KomaxWire was once again able to surpass theprevious year’s ambitious targets in 2015,overcoming the strength of the franc todeliver another excellent set of results backed up by strong profitability. The EBIT marginof 19.0% remained in the target range while exceeding the prior-year level.


2015 21

ANNUAL REPORTBUSINESS UNIT WIRE348.4m

order intake in CHF

+15.1%

313.3mNet sales in CHF

Headcount

1332B

US

INE

SS

UN

IT

WIR

E

Net salesby region

2%Switzerland

48%Europe

10%Africa

21%North /South America

19%Asia ��


e Market trends and business performance

In 2015, Komax Wire shrugged off the challenge posed by the strong franc and once again gen-erated growth in excess of the previous year’s ambitious targets. The drivers of this pleasing development were the persistently robust state of the automotive industry together with the un-broken trend in wire processing towards the automation of manual processes and improved processing quality. Demand proved particularly strong in the Europe and North/South America regions. The order intake of CHF 348.4 million again exceeded the prior-year level significantly (2014: CHF 302.6 million), while net sales increased by 6.2% to CHF 313.3 million (2014: CHF 295.0 million). Internal growth (i.e. adjusted for acquisition and currency effects) amounted to around 10%. The book-to-bill ratio at the end of the year was a high 1.1. The business unit closed the year with its order book at a record level.There was a broad-based spread of business with respect to both the product spectrum and the customer mix. The standard business with crimp-to-crimp machines and the associated acces-sories proved strong as usual. Furthermore, the recently emerged trend towards higher-quality and complex processing solutions became stronger. Thanks to the large installed base of ma-chinery, both the spare parts business and the service business again performed strongly. The business with value-added projects likewise developed very pleasingly. A substantial number of interesting orders were acquired and processed. These involve the development of tailor-made solutions based on either standard machinery or fully and semi-automatic processing cells. In the year under review, Komax Wire acquired its first-ever orders from the aerospace industry, par-ticularly for systems with integrated laser technologies. EBIT in the year under review rose to CHF 59.7 million (2014: CHF 55.3 million). The EBIT margin increased to 19.0% (2014: 18.7%) and was therefore still within target range. The high EBIT mar-gin is a reflection of the business unit’s strong innovativeness, competitive product range, and high productivity. The result is all the more impressive given that the euro conversion rate dete-riorated significantly during 2015, while Komax Wire was simultaneously dealing with strong growth and investments in further market expansion.

e Operations

Komax Wire drove forward the continuing expansion of its global production network in response to the emerging global demand trend. Projects to expand the available production capacity were initiated at seven sites. In Mexico, work commenced on the construction of a new plant to aug-ment the existing sites. Moreover, Komax Wire’s production network now includes several refer-ence plants for wire-testing systems. Further measures to increase operating efficiency were systematically implemented at all locations.Due to the very healthy order book, capacity utilization was generally high at all locations in the year under review.



e Marketing and sales

Proximity to its customers, a rigorous focus on their needs, and ongoing commitment to improving their satisfaction lev-els are core values of Komax Wire. As such, they remained at the forefront of efforts in 2015. Activities in this area included an enhancement of e-commerce solutions and an expan sion of the training programme for customer employees. The business unit’s direct service and distribution network in the fast-growing central and eastern Europe regions was ex-panded significantly by the acquisition of Vienna-based Thonauer Group and the establishment of a distribution com-pany for testing systems in Romania.Initiatives to position Komax Wire as a professional and effi-cient partner to companies outside the automotive industry were further refined. At Productronica in Munich, the world’s largest trade fair for the wire-processing industry, the busi-ness unit presented its solutions for the first time under a new identity divided up by market segment. In addition to its solutions for the automotive industry, Komax Wire exhibited its ideas for the industrial applications, telecom/datacom, and aerospace market segments. Moreover, it expanded its network of partner companies. By taking a stake in Laselec, a company specializing in laser-assisted cable stripping and

marking solutions as well as intelligent forming boards for wire harness production, Komax has gained a foothold in the aerospace industry and can offer its customers access to pioneering technologies. Komax Wire was present at all the major trade fairs worldwide, giving a convincing demonstra-tion of its extensive competencies and the strength of its network.

e Innovation

Komax Wire is keen to maintain and expand its innovation leadership by continuously bringing new, unique solutions to the market. These innovations are based on a clear understanding of customer needs, partnerships with other market players, extensive expertise and collaboration with customers, and interdisciplinary idea sharing among employees working in very different areas and locations.Research and development expenditure in 2015 amounted to more than 7% of net sales. In the year under review, Komax Wire employed some 143 staff worldwide in this area, which once again came up with a number of pioneering innovations such as the Alpha 530/550. This new generation of automatic crimping machines sets new benchmarks with respect to productivity, flexibility and precision. Its novel features have been very positively received by customers and industry circles alike.Komax Wire also obtains input from the systematic analysis of customer feedback and regular experience sharing with specialist industry groups and tertiary education institutions. Another major contribution to innovation within the business unit is made by the 161 engineers working on application development for customer-specific systems, since these people work directly with customers.

Measures are continuously being implemented to boost both productivity and efficiency.

Book-to-bill ratio

1.1EBIT margin remained within target area.



e Trends

Global megatrends such as the rise in environmental aware-ness among consumers, increasing interconnectivity in everyday life and automotive products, and the need for greater safety and affordability in automotive transport will help to bolster Komax Wire’s business in the long term. In general, these trends are resulting in the further “electrifica-tion” of vehicles, which in turn increases demand for prefab-ricated cables. The development trends that have emerged in recent years are therefore likely to speed up and intensify in the future.The automotive industry is increasingly demanding subsys-tems and components that deliver more, weigh less, take up less space, and operate extremely reliably, while at the same time being cheap to procure. These demands are not only confronting direct suppliers to the automotive industry but also upstream suppliers and business partners. For a group like Komax, which continually operates at the forefront of technological development, these increasing demands first and foremost represent opportunities and potential growth drivers. The electrical systems in today’s premium passenger cars are made up of as many as 1 000 cables, with a good 2 000 crimp contacts. Developments in vehicle construction, new functionalities, and an ever-rising fit-out level in all vehicle classes are leading to a further steady increase in demand for cables and crimp contacts. Fur-thermore, the individual subsystems and assemblies, particularly harnesses, are becoming ever more complex. At the same time, given the growing trend towards miniaturization with a view to reducing manufacturing costs, weight and fuel consumption, the individual components to be processed are becoming ever smaller, which makes manual processing more difficult – or even impossible.A large part of the cable harness manufacturing process is still done by hand, but inexorably rising wage costs are making it worthwhile to invest in automation solutions. As systems become increasingly complex, the potential sources of error in manual wire processing and assembly become more numerous. Manual processes are becoming less capable of meeting these de-mands. Intelligent automation solutions, quality assurance tools, and systems for testing har-nesses before they are installed in assemblies and vehicles help to guarantee and increase the efficiency and reliability of the production process. This has been recognized by automotive manu facturers, who are increasingly calling on their suppliers to further automate their produc-tion processes.Furthermore, wire-processing is required in numerous other sectors of industry. Particularly in sectors that use largely standardized, high-volume processes, the challenges are similar to those faced by the automotive industry. With its know-how, the market proximity of its product range, and its marketing expertise, Komax Wire is extremely well positioned to make further inroads into these markets.

Developments in vehicle construction are leading to a lasting increase in demand for automation solutions.

Internal growth of around

10%

Market leaderMarket share is more than twice that of its nearest competitor.



e Outlook

Supported by the dynamic momentum of the automotive industry, as well as the ongoing global trend towards the further automation of manual processes in wire processing and increased pro-cessing quality, we expect demand to remain strong from today’s perspective. Komax Wire has started the year with a strong order book. Given this backdrop, the business unit can be expect-ed to post another good result for the first half of 2016.

Key figures 2015 2014 +/− in %

in TCHF

Order intake 348 386 302 610 15.1

Net sales 313 316 294 964 6.2

Operating profit (EBIT) 59 652 55 292 7.9

in %

EBIT margin 19.0 18.7

As at 31 Dec.

Headcount 1 332 1 177 13.2



Measuring / cutting

Twisting Connector insertion Harness sub-assemblyStripping

The way to make the best connection

Komax Wire systems

t t

Measuring/cutting

Stripping

Crimping

Twisting

Connector insertion

Harness

sub-assembly

e e

Wires Contacts Housings

Cutting Preprocessing

Final assembly

eComponent manufacturer Wire harness manufacturer

Crimping



e Wires, contact parts and housings (connectors) are vendor parts for wire harness manufacturers. The latter are specialized companies (typically sup-pliers) that serially process individual wires to create wire harnesses for vehicle electrical systems, elec-tronic devices and applica-tions for a host of different industries, sectors and end-users. Komax Wire supplies these companies with systems for automat-ed and efficient wire pro-cessing, as well as with systems for testing wire harnesses and mechatron-ic assemblies prior to final installation. Komax solu-tions are used in custom-ers’ value creation chains for preprocessing, final as-sembly and testing. The wire harness manufacturer then supplies the OEM (original equipment manu-facturer), which integrates the wire harness into the final product.

Machinery descriptionLow order volumes and just-in-time pro-duction are hallmarks of today’s wire manu facturing industry. Fully automated solutions therefore have to deliver – and will have to continue to deliver – high pro-ductivity and flexibility combined with max-imum precision. The latest generation of Komax’s Alpha 530/550 – fully automatic machines for single-sided and double- sided seal insertion – sets a new bench-mark: maximum unit cost efficiency and flexible production output paired with out-standing quality.

QualityKomax possesses a wide range of innova-tive monitoring solutions that test the quality of crimp connections during pro-duction and document the corresponding test results. In addition, TSK brand testing systems test the reliability of wire har-nesses and mechatronic assemblies such as seats, bumpers and cockpits.

t

Harness test systems

Modul test systems

e e e

Testing WarehouseShipping

Installation Assembly

eOriginal Equipment Manufacturer (OEM)



201528

ANNUAL REPORTBUSINESS UNIT MEDTECH

Although 2015 was another challenging yearfor Komax Medtech, it nonetheless ended with an exceptionally high order intake. However, the unpredictable and erratic devel-opment of new orders had negative capacityrepercussions at all sites. Furthermore, thestrong Swiss franc undermined the competi-tiveness of the La Chaux-de-Fonds sitevis-à-vis its international rivals.


2015 29


BU

SIN

ES

SU

NIT

ME

DT

EC

H

94.5morder intake in CHF

+45.1%

54.7mnet sales in CHF

Headcount

237

Net salesby region

11%Switzerland

41%Europe 36%

North /South America

12%Asia

��


e Market trends and business performance

The modest order intake in the first months of 2015 and the strength of the franc presented major challenges for Komax Medtech right from the start of the year. The predicted orders then duly materialized in the second half of the year, so that Komax Medtech actually ended the year with an extraordinarily high order intake of CHF 94.5 million. In addition to repeat business, which in some cases is released over a period of several years, numerous commercially interesting pro-jects involving existing applications and processes were acquired from new customers.However, since these orders were placed late in 2015 and some of them have lead times of several months, this pleasing development has not yet fed through into the income statement. Instead, the volatile order intake and uneven capacity utilization weighed on all sites’ results.Net sales declined to CHF 54.7 million (2014: CHF 68.6 million). Given the relatively high propor-tion of value creation in Switzerland, Komax Medtech also suffered from the strength of the Swiss franc. EBIT accordingly amounted to CHF –2.6 million (2014: CHF 1.2 million).

e Operations

Having concluded in March that the planned sales and income targets could not be achieved, management took action to adjust structures at the La Chaux-de-Fonds site and reduce costs. The measures initiated in previous years to increase efficiency were systematically continued in 2015. The key areas of focus included important project and risk management activities in the systems business, cost transparency and controlling, and improvements to internal processes.In the spring of 2015, the US operation moved into new premises in Rockford. This means that assembly space in the US has now approximately doubled. Enhancing medtech expertise and expanding the site brought rewards in the second half of 2015 in the form of a major order involv-ing a series of assembly lines for patch pumps for the delivery of insulin. Given the stagnating demand for printer cartridge assembly systems, the Penang site was in-creasingly used as an internal subsupplier of modules, particularly by La Chaux-de-Fonds. This had the effect of optimizing cost structures and capacity utilization at the various sites.

e Marketing and sales

Komax Medtech was present at six trade fairs and numerous medical technology conferences in 2015. Its service offering was further differentiated and expanded to meet customers’ specific needs. Moreover, numerous measures such as the launch of a dialogue-oriented customer mag-azine were implemented.



e Innovation

In the customer-specific systems business, a significant pro-portion of value is created by engineering services that model handling and process solutions in a variety of combi-nations. Efficiency and reliability in both implementation and operational use are crucially important to customer and manu facturer alike. For this reason, Komax Medtech analy-ses its handling and processing solutions on a continuous basis, and channels the results of ongoing customer feed-back into solutions. Accordingly, Komax Medtech took ac-count of the increasing need for flexible systems for small volumes by further consolidating its expertise as a systems integrator. It succeeded in further reducing lead times by in-creasingly integrating third-party technologies, modules, and platforms into its own systems. For customers, this results in increased flexibility when it comes to selecting the configura-tion of their production lines.Thanks to the introduction of new concepts and technol-ogies, assembly lines were further developed and improved. Here the focus was on increasing standardization, reducing complexity, and improving ease of maintenance.

Record figurefor order intake

Interesting projectsfrom new customers

Book-to-bill ratio

1.7



e Trends

The markets in which Komax Medtech is active are primar-ily driven by two growth factors. On the one hand, an in-creasing number of medications are delivered by injection, while on the other, the number of cases of diabetes and the number of asthma patients will unfortunately continue to rise over the coming years. The World Health Organization (WHO) estimates that 347 million individuals worldwide are now affected by the former condition, with a further 6 mil-lion new cases occurring every year. The main drivers of this trend are high-fat diets, obesity and a lack of physical activity. The number of asthma sufferers, which is currently around 235 million, is also set to rise.Diabetes and asthma patients are already able to treat their conditions themselves, and the trend towards self-medication is set to continue, as new applica-tions and treatments make this form of administration ever simpler and safer. The unrelenting pressure to contain health care costs and efforts to increase the quality of life of the affected individuals are driving forward the development of new applications for administering treatments, which is in turn increasing the demand for medical product assembly systems. The global market for automation solutions for self-medication applications is therefore likely to grow further. In-vestment volumes can fluctuate heavily from year to year, however, as these are dependent on the rate of innovation in end products, the approval processes of national authorities, and the need to renew existing assembly lines.With its many years of experience and strong technical expertise, Komax Medtech is one of the recognized global market leaders in systems for the manufacture of insulin delivery applications and inhalers. Komax Medtech is determined to preserve this position. In order to smooth out market fluctuations more effectively, the business unit will increasingly be using existing plat-forms, processes and competencies to target further niche markets.Stabilizing profitability is Komax Medtech’s top priority. This cannot be achieved through sales growth alone, however, because in the customer-specific systems business, an increasing num-ber of projects has the effect of adding rather than diversifying risks unless sufficient care is ex-ercised in project selection. Commercial success therefore hinges on selecting the projects to be acquired with utmost care and processing them efficiently.

Trend towards self- medication is set to continue.

Komax Medtech is

a global leaderin its niche.



e Outlook

The commercial environment facing Komax Medtech remains challenging. However, given its strong order book at the start of the year, with its numerous repeat projects and highly promising orders from new customers, Komax Medtech is confident that net sales will increase in 2016 on the back of better balanced capacity utilization and that profitability will increase beyond the target range.

Key figures 2015 2014 +/− in %

in TCHF

Order intake 94 450 65 092 45.1

Net sales 54 681 68 640 –20.3

Operating profit (EBIT) –2 589 1 200 n.s.

in %

EBIT margin –4.7 1.7

As at 31 Dec.

Headcount 237 307 –22.8



Komax Medtech systems

t t t

Pre-assembly of devices

– Aligning and

placing

– Gluing

– Welding

– Printing

– ...

Final assembly and insertion of drug

– Flow test

– Density test

– Visual controls

– …

Pre-assembly Final assembly Testing

e eRaw material for device assembly Drug

qDevice development

qDrug development

The way to make engineered solutions for medical device projects



t

Packaging Final product

e Medical devices are products used in treatment and therapy. Many of these devices contain active substances or medicinal products that patients with certain conditions or symptoms can self-administer or inject. Before a new medical product that is combined with a medical instrument can be launched, it has to undergo preclinical and clinical trials and gain approval from the relevant regulatory authority. Komax Medtech plays an important role in this process: The business unit plans and builds systems that integrate various combin-ations of handling and process solutions so that they can semi-automatically or fully auto-matically assemble the components of medical products (individual parts and pre-filled medi-cines) in several steps. Komax Medtech’s systems then test and package the fully assembled final product (device plus active substance) and prepare it for shipping. By using standard-ized and certified validation processes, Komax Medtech also ensures that its systems fulfil all standards, and that the expected results are delivered at the end of the process.



201536

ANNUAL REPORTSUSTAINABILITY AND SOCIAL RESPONSIBILITY

The Komax Group upholds its responsibi-lities towards its stakeholder groups.This is expressed through the products and services it provides on the one hand, and through the objectives and approach the company adopts on the other. Komax regards sustain-ability and social responsibility as an integral part of its corporate strategy. The basic tenets underlying the Komax Group’s busi-ness practices are set out in its guiding principles and in its code of conduct. It exer-cises responsibility towards people and the environment,and is keen to continuously develop its competencies in matters relating to sustain ability and social responsibility.


2015 37

SU

STA

INA

BIL

ITY

A

ND

SO

CIA

L R

ES

PO

NS

IBIL

ITY

ANNUAL REPORTSUSTAINABILITY AND SOCIAL RESPONSIBILITYHeadcount

1 580

Employees by area of activity

38%Production

9%Research and development

17%Engineering

28%Marketing and sales

8%Administration

��Employees by region

41%Switzerland

25%Europe

5%Africa

14%North /South America

15%Asia ��


e Group-wide code of conduct

The way Komax is perceived by customers and suppliers, other business partners, shareholders and the general public, and the respect for and confidence in the company that these groups feel, are dependent to a significant degree on the conduct of Komax’s employees. Komax therefore has a code of conduct which applies to all Group employees. These principles are periodically reviewed to ensure that they are up to date. The code of conduct defines general ethical rules of behaviour and guidelines on how to act towards the Group’s business partners and competitors. All employees are given training on the code of conduct when they join the company. The same applies to the employees of any acquired companies.

e Product sustainability

The systems developed by Komax are characterized by their exceptionally high quality and lon-gevity. The Group’s own global service network and its collaboration with partners ensure that these systems are professionally maintained. This has a positive impact on their performance, value retention and lifespan, as well as saving resources generally. Komax also ensures servicing and the availability of upgrades and replacement parts years beyond its contractual obligations. Thanks to their modular construction, the systems can usually be adapted to new technological developments or changing needs.The Wire business unit supplies solutions for wire-processing applications, in particular for the automotive supply industry. These solutions are also used to process wiring for new fuel-saving propulsion concepts such as electric and hybrid vehicles. Moreover, the innovative technologies of Komax mean that ever-smaller wire crosssections and innovative materials such as aluminium can be machine-processed, thereby contributing to a reduction in vehicle weight and, as a result, fuel consumption. The Medtech business unit, which develops systems for medical device manu-facturing, is indirectly helping to reduce health care costs, improve access to medicines and thereby increase people’s quality of life.Komax’s products do not contain any ecologically harmful components.The attainment of customers’ expectations and the extent of their loyalty are measured by means of regular satisfaction analyses conducted in conjunction with external partners. Komax sets particular store by customer feedback on improvement potential.

e Sustainability in procurement

The company believes in long-term partnerships, and selects suppliers which demonstrate an environmentally aware approach and whose products conform to sustainability criteria. This is ascertained with the assistance of a supplier evaluation questionnaire, which evaluates new as well as existing partners on the basis of uniform criteria. These criteria include the status that suppliers attach to sustainability, quality, price, supply chain, delivery reliability, and production technology. Furthermore, in a code of conduct drawn up specially for suppliers, Komax obliges its suppliers to comply with legislation and to act in an environmentally aware and ethical way. Compliance with agreed guidelines and indicators is reviewed in annual supplier audits. If viola-tions are uncovered, a supplier partnership may be immediately terminated as a result.In addition to the investment volume, key criteria when evaluating and selecting new production systems include energy efficiency, environmental friendliness and the economical use of resources.



e Sustainability in production

The Komax Group’s business focuses mainly on the produc-tion of machines and systems, as well as provision of the corresponding maintenance services. A large proportion of the company’s value creation consists of engineering ser-vices. The majority of components are manufactured and supplied by third parties, which means that actual produc-tion at Komax primarily comprises the assembly of compo-nents. Accordingly, Komax generates relatively few emis-sions compared to other industrial companies. Highly automated, state-of-the-art production systems are used for strategically important components that Komax manufactures inhouse. These are based on lean manage-ment concepts, the aims of which include the avoidance of errors and minimization of rejects. The careful and efficient use of resources has top priority: wherever possible, waste materials and wastewater are recycled or disposed of appro-priately. Waste volumes are continuously reduced as part of optimization programmes. Wherever possible, Komax uses

renewable energies such as solar or hydroelectric power. For example, the Group obtains green power from Central Switzerland’s RegioMix scheme and has its own photovoltaic power plant on the roof of its production building in Rotkreuz. The key sites of the Komax Group, which are located in Switzerland, the US, Germany, Turkey, Brazil, and China, are all ISO 9001-certified. Furthermore, Komax AG’s two sites in Dierikon and Rotkreuz, TSK in Porta Westfalica, and SLE quality engineering in Grafenau have all obtained ISO 14001 certification. These four sites employ around 730 people. All have integrated management systems that encompass all company processes, the environment, health care protection, and workplace safety. Furthermore, in collaboration with the Energy Agency for the Economy (Ener-gie-Agentur der Wirtschaft, EnAW), Komax has established resource and energy savings targets for 2017 and 2020 for the Dierikon and Rotkreuz sites. For example, the target is to reduce en-ergy consumption by a further 5% by 2017 (basis: 2014). EnAW pursues a systematic approach to help some 3 000 manufacturing firms, industrial plants and service companies increase energy efficiency and reduce their CO2 emissions.

e Contribution to regional development

Komax has been firmly rooted in the Canton of Lucerne since 1975, and is one of the canton’s biggest employers. The Group is committed to Switzerland as a business location because it offers a good environment and facilitates very high productivity. Its other operating facilities worldwide have also been based at the same sites since their establishment, and this has gener-ated a strong sense of identification with the local area. Among other things, this manifests itself in the fact that a large number of employees can be recruited regionally and preference can be given to local suppliers wherever this is feasible and makes commercial sense.

The environment, health protection, and occupa-tional safety are all viewed as a holistic system.

Power consumption is targeted to be reduced by a further 5% by 2017 in collaboration with the Energy Agency for Economy.

Staff turnover rateless than

7%



e Attractive employer

At the end of 2015, Komax employed 1580 staff worldwide (2014: 1 498). This increase is essen-tially attributable to new appointments at the Group’s sites in Central Switzerland, Turkey, Tu-nisia and Germany, which in turn were prompted by the further expansion of Komax Wire’s or-ganization in response to persistently strong business development. Personnel expenses in the year under review amounted to CHF 131.0 million (2014: CHF 118.5 million). The companies of the Komax Group ensure that their employees enjoy equal opportunities, equal treatment and fair employment conditions, receive pay that is in line with the market, and benefits that are in line with national and industry standards. Participation in the pay comparison survey conducted by industry association Swissmem showed that pay at both of the Wire business unit’s Swiss pro-duction sites is in line with market averages and that men and women receive equal pay. The proportion of women in the Group’s global workforce stood at around 17% in 2015 (2014: 16%). Komax is not alone within the industry in having a relatively low proportion of women in its work-force. The main reason for this phenomenon is the large number of technical positions within the company, for which the recruitment potential among women is limited.The Group’s staff turnover rate has been gratifyingly low for many years and amounted to less than 7% in 2015 (2014: less than 9%). Komax has a very good reputation as an attractive em-ployer. Among other things, this is highlighted by the fact that vacancies can be filled quickly, even in the tight market for management and skilled staff. As part of an active staff development policy, Komax organizes regular management seminars and training for its employees, as well as providing financial support for individual training activities. Komax also encourages international exchanges to allow its staff to gain new experiences and career perspectives. At the same time, Komax is a firm believer in the importance of targeted investment in tomorrow’s workforce. In 2015, 47 apprentices were undergoing training in eight professions at the Swiss locations (2014: 45). Furthermore, 26 apprentices were undergoing training in Porta Westfalica and Grafenau (2014: 26). Employee satisfaction is systematically measured and evaluated in the course of an-nual performance review meetings. Komax uses the results of regular employee surveys as a valuable basis for developing and implementing improvement measures. The results of the surveys conducted in conjunction with external partners were very positive, and far above the industry average. It goes without saying that Komax satisfies all legal requirements with respect to working conditions in the countries it operates in. Komax management attaches great import ance to employee health and safety, and internal processes are regularly examined for health and safety risks. As in previous years, reported absences due to accidents in 2015 were mainly the result of accidents suffered by employees while engaging in leisure activities. Komax actively encourages employees at site level to pursue a healthy lifestyle through initiatives such as sport and exercise offerings.

e Certification status Komax Group

Country Company Certification

Switzerland Komax AG ISO 9001 ISO 14001 OHSAS 18001

Komax Systems LCF SA ISO 9001

China Komax Shanghai Co. Ltd. ISO 9001

USA Komax Corporation ISO 9001

TSK Innovations Co. ISO 9001

Germany TSK Prüfsysteme GmbH ISO 9001 ISO 14001

SLE quality engineering GmbH & Co. KG ISO 9001 ISO 14001 DE AEOC 104360

Brazil TSK do Brasil Ltda. ISO 9001

Turkey TSK Test Sistemleri Ltd. Sti. ISO 9001

Tunesia TSK Tunisia s.a.l. ISO 9001



Environmental indicators1 2015 2014

Electric power consumption in MWh 2 859 2 822

Electric power consumption per head in MWh 5.4 5.9

Water consumption (potable and industrial water) in m3 2 958 5 007

Water consumption (potable and industrial water) per head in m3 5.6 10.5

Employees by business unit

Komax Wire 1 332 1 177

Komax Medtech 237 307

Corporate 11 14

Total 1 580 1 498

Employees by area of activity

Production 606 597

Research and development 146 150

Engineering 260 246

Marketing and sales 435 376

Administration 133 129

Total 1 580 1 498

Employees by region

Switzerland 645 622

Europe 407 345

Africa 78 58

North / South America 220 210

Asia 230 263

Total 1 580 1 498

1 Covering the production sites in Dierikon (CH) and Rotkreuz (CH).



201542

After a positive start, the Swiss National Bank surprised the stock market on 15 January2015 by announcing that it was scrapping the guaranteed minimum exchange rate ofCHF 1.20 against the euro with immediateeffect. Both the foreign exchange markets andthe stock markets reacted immediatelyand dramatically.

ANNUAL REPORTINFORMATION FOR INVESTORS


2015 43

INF

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INV

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RS

719.5mmarket capitalization in CHF

Payout ratio

75%

ANNUAL REPORTINFORMATION FOR INVESTORSHigh

free float

95%Attractive dividend yield

2.8%

25% Cleared shares

10%Other countries

65%Switzerland

Geographical distribution of shareholdings�

��



Foreign investors in particular chose to realize their currency gains and abruptly became mass sellers of Swiss stocks. Komax’s share price slumped temporarily by around 20%. The panic then subsided as early as February. Prices rebounded rapidly, partly due to an absence of any alternative asset class capable of offering similar appealing returns to equities in the prevailing low-interest environment, but also as a result of the strong annual results and remarkably robust outlooks issued by companies for the year under review. Towards mid-year, however, the latest episode in the Greek debt saga temporarily poured cold water on the euphoria. As additional factors, the feared turnaround in the interest rate cycle in the US and doubts as to the strength of the Chinese economy led to huge fluctuations in the equity markets.

e Share price development

Despite this challenging backdrop, Komax’s share price continued to rise, closing 2015 some 35% up at CHF 194.90. It has therefore more than doubled in value over the last four years.

e Listing

Komax is listed on SIX Swiss Exchange. Market capitalization at the end of 2015 was CHF 719.5 million.

in CHF

250

200

150

100

50

Komax Vontobel Small Cap Index

2011 2012 2013 2014 2015

ISIN CH0010702154

Security number 1070215

Bloomberg code KOMN SW

Thomson Reuters code KOMN.S



e Geographical distribution of shareholdings

The majority of shares not held in Switzerland are held in the United Kingdom, Luxembourg and the United States.

e Significant shareholders

Information on significant shareholders can be found on page 56 of this report.

e Breakdown of shareholders by number of registered shares held

e Free float

The free float as defined by SIX Swiss Exchange stands at 95%.

e Dividends

The Board of Directors is keen to adhere to its attractive dividend policy, and will propose to the Annual General Meeting a distribution of CHF 6.00 per share, of which CHF 1.50 will be distribut-ed from capital contribution reserves. The payout ratio is therefore 75%. The dividend yield on the date of the Board resolution stood at an attractive 2.8%. Distributions from the capital con-tribution reserves are tax-free for natural persons living in Switzerland who hold shares as part of their private assets.

e Information on the Komax registered share

Further information on the Komax registered share can be found on the Internet at www.komaxgroup.com.

Switzerland 65%

Other countries 10%

Cleared shares 25%

1–100 1 426

101–1 000 1 135

1 001–10 000 195

10 001–50 000 36

> 50 000 9


e Disclosure of shareholdings

With effect from 1 January 2016, under Art. 110 of the Federal Act on Financial Market Infrastruc-tures (Financial Market Infrastructure Act, FinMIA), anyone who acquires or sells equity securities on their own account and thereby attains, falls below or exceeds the threshold of 3, 5, 10, 15, 20, 25, 331/3, 50 or 662/3% of the voting rights in a company (whether or not such rights may be ex-ercised), is subject to a reporting obligation. This obligation applies to anyone who directly, indir-ectly or in concert with third parties acquires or disposes of shares in a company incorporated in Switzerland whose equity securities are listed in whole or in part in Switzerland. It also applies to anyone who can exercise the voting rights attached to such equity securities at their own discre-tion. Disclosure must be made to the company and stock exchanges on which the equity securi-ties in question are listed.

e Financial calendar

Annual General Meeting 12 May 2016

Dividend payment 19 May 2016

Half-year results for 2016 23 August 2016

Preview of full-year results for 2016 17 January 2017

Media briefing/presentation to analysts of 2016 financial statements 21 March 2017

Annual General Meeting 12 May 2017

e Key data Komax registered share

2015 2014 2013 2012 2011

Share capital as at 31 Dec. in TCHF 369 361 352 344 340

Number of shares as at 31 Dec. No. 3 691 651 3 605 101 3 523 780 3 443 789 3 400 880

Average number of outstanding shares No. 3 652 728 3 552 840 3 458 379 3 404 850 3 375 217

Par value per share CHF 0.10 0.10 0.10 0.10 0.10

Basic earnings per share CHF 8.00 7.64 7.33 2.81 11.68

EBITD per share CHF 15.52 15.99 14.92 6.44 16.14

EBIT per share CHF 12.79 13.34 12.29 3.95 13.98

Shareholders’ equity per share CHF 76.70 78.82 74.92 68.56 72.63

Distribution per share CHF 6.001 5.00 4.50 2.00 4.00

High CHF 194.90 152.40 138.00 97.10 120.00

Low CHF 122.90 124.60 72.35 61.25 59.00

Closing price as at 31 Dec. CHF 194.90 144.50 135.30 71.00 68.75

Average daily trading volume No. 7 881 8 613 9 999 6 608 8 383

P/E (price-earnings ratio) as at 31 Dec. 24.4 18.9 18.5 25.3 5.9

Dividend yield as at 31 Dec. % 2.81 3.5 3.3 2.8 5.8

1 Proposal of the Board of Directors of Komax Holding AG: distribution of CHF 6.00 per registered share.


KOMAX GROUPANNUAL REPORT

2015 47

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ANNNUAL REPORTVOCATIONAL TRAINING235

specialists trained since company was founded

47apprentices and 8 vocational profiles in Switzerland

26apprentices and 9 vocational profiles in Germany


201548

ANNNUAL REPORTVOCATIONAL TRAINING

Komax currently has 47 apprentices in training in Switzerland as well as 26 in Germany. Since the company was founded, 235 appren-tices have completed their vocational training with Komax in Switzerland. The Komax Group regards training appren tices as a ben-efit to the company and to Switzerland as a centre of production. Apprentice positions are offered for multi-skilled mechanics, IT specialists, electronics technicians, design engineers, automation technicians, logist- icians, operational maintenance specialists, and business-related occupations.


2015 49


e Komax is the global market leader in wire-processing solutions. To ensure this remains unchanged, the company is actively committed to training the professionals of tomorrow and strengthening the dual education system. The passion, sense of responsibility, and dedication of the company’s workforce play a crucial role in its success. This in turn is supported by the Komax culture, which is characterized by mutual respect, specialist expertise, and a strong quality mindset. Komax offers its apprentices a wide-ranging training experience. The young professionals are right at the heart of the action, actively following every step of a machine’s development from inception through to production readiness. During their training, they get an insight into the vari-ous departments’ activities and thus gain an understanding of the numerous processes that take place in a company. Komax has state-of-the-art workstations as well as well-equipped mechan-ical workshops and assembly areas for the specific apprenticeship subjects. The budding profes-sionals are supervised by a motivated team of trainers who not only possess strong technical and teaching skills, but also sensitivity to the social needs of the young people in their charge.In addition to professional training, Komax also offers apprentices a number of interesting bene-fits such as language courses, cultural events, preventive health measures, and its own team-building events. Once apprentices have completed their training, Komax helps them make the transition into full professional life, either at the site where they trained or at one of the com-pany’s locations abroad. Moreover, the company supports the people it has trained in their pro-fessional development and further vocational training.

An IT apprenticeship at Komax is hugely varied and very interesting.

What I like most is being able to quickly sort out people’s problems and

seeing their satisfaction.

Swiss certificate of competence, third year of apprenticeship

IT specialist

Ivo Wiegenbröker



Automation technician

Joël Iselin

I’m benefiting from a truly wide-ranging training scheme.

I’m gaining insights into what goes on in the workshop

and the electrical and mechanical aspects of pre-assembly

and final assembly. I really enjoy testing assemblies and

helping to set up systems ready for operation.




Design engineer

Flavio PalombellaI love the variety of the work at Komax. As a design

engineer, I get to put together the parts I design on a PC,

which means I’m constantly gaining experience.


The work may be wide-ranging and challenging, but there’s

no shortage of fun. Learning is fun when you do it in a relaxed

working atmosphere as part of a friendly team.


Business specialist

Caroline Züsli



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Multi-skilled mechanic

Daniel WymannIn addition to helping to assemble machines,

my main tasks include working as part

of a team and getting to know what various

assemblies do. I enjoy these activities,

which is why I decided to major in assembly

technology.

Major in assembly technology, Swiss certificate of competence, fourth year of apprenticeship



Multi-skilled mechanic

Pascal LudinI particularly like the friendly atmosphere at work. Working with various

specialists from different departments means you build up a broad professional

knowledge that you can make use of in any situation.

Major in CNC manufacturing, Swiss certificate of competence,third year of apprenticeship



Electronics technician

Nathanael BirrerI gain a lot of valuable experience when I help the special-

ists to develop a machine which then actually goes into

service. Being able to work alongside experienced profes-

sionals in a hands-on environment is a huge advantage

that other training facilities don’t offer.



2015 55

CORPORATE GOVERNANCECONTENTS

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Corporate structure and shareholders

56Capital structure

57Board of Directors

59Executive Committee

63Compensations, shareholdings and loans

64Shareholder participation rights

64Changes of control and defence measures

66Auditors

67Information policy

68

Ensuring good corporate governance is very important to Komax. Objectives in this area include safeguarding company value and suc-cess in the interest of customers, shareholders, staff, creditors, suppliers and the public, as well as the provision of transparent, rapid and simultaneous information to all stakeholder groups. Komax takes as its starting point the principles and regulations of the Swiss Code of Best Practice of economiesuisse and the Directive on Information Relating to Corporate Governance (Directive Corporate Governance, DCG) of SIX Exchange Regulation, and gives account of developments in this area each year in the Annual Report. The key elements are laid down in the Articles of Association, theOrganizational Regulations, and the Regulations on the Remuneration Committee and the Audit Committee. In addition, the Board of Direc-tors regularly looks at the issue of corporate governance and initiates the corresponding adjustments where appropriate.


ANNUAL REPORTCORPORATE GOVERNANCE

Corporate Governance

On 20 November 2013, the Federal Council issued the Ordinance against Excessive Remuner-ation in Listed Companies Limited by Shares (ERCO). ERCO introduced the core elements of the Minder initiative, which was accepted by the Swiss electorate on 3 March 2013 and aimed to strengthen shareholder rights. It also imposes on listed Swiss companies requirements in connection with the compensation of the Board of Directors and the Executive Board. ERCO entered into force on 1 January 2014 and gave companies a transitional period of two years in which to adjust their Articles of Association. Komax decided to implement these requirements rapidly, submitting the proposed amendments to its Articles of Asso

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