FINANCIAL REPORT Transparency 2.

Transcription

1 FINANCIAL REPORT 25 Transparency 2

2 ANNUAL REPORT 25 > FINANCIAL REPORT 25 COMPANY PROFILE Micronas (SWX Swiss Exchange: MASN), a semiconductor designer and manufacturer with worldwide operations, is a leading supplier of cutting-edge IC and sensor system solutions for consumer and automotive electronics. As a market leader in innovative global TV system solutions, Micronas leverages its expertise into new markets emerging through the digitization of audio and video content. Micronas serves all major consumer brands worldwide, many of them in continuous partnerships seeking joint success. While the holding company is headquartered in Zurich (Switzerland), operational headquarters are based in Freiburg (Germany). Currently, the Micronas Group employs about 2 people. In 25 it generated CHF 845 million in sales. investor@micronas.com

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5 3 Contents Financial Report Micronas Group Consolidated profit and loss statement 5 Consolidated balance sheet 6 7 Consolidated cash flow statement 8 9 Changes in equity 1 Notes on the consolidated financial statements Report of the Group auditors to the ordinary Shareholders Meeting of Micronas Semiconductor Holding AG, Zurich 49 Additional information 5 51 Financial Report Micronas Semiconductor Holding AG Profit and loss statement 53 Balance sheet Notes on the financial statements Proposal of the Board of Directors 58 Report of the statutory auditors to the ordinary Shareholders Meeting 59

6 4 Financial Report 25 Micronas Group

7 Consolidated profit and loss statement 5 Note 25 CHF 1 24 CHF 1 Net sales Cost of sales Margin in % of net sales Research and development expenses Marketing expenses Administrative and general expenses Other operating income (+) and expenses ( ), net 7 Operating profit before amortization of goodwill in % of net sales Amortization of goodwill 16 Operating profit in % of net sales Financial income 9 Financial expenses 1 Loss from associates Other income 11 Profit before tax Income taxes 12 Profit for the period in % of net sales Attributable to: Shareholders of the parent Minority interest Weighted average number of issued and outstanding shares Earnings per share in CHF undiluted 34 Weighted average number of issued and outstanding shares for calculation of earnings per share diluted Earnings per share in CHF diluted 34 Earnings per share, adjusted for amortization of goodwill after tax in CHF undiluted 34 diluted

8 6 Financial Report 25 Micronas Group Consolidated balance sheet Assets Note CHF CHF 1 Non-current assets Property, plant and equipment 13 Intangible assets 14 Investments 15 Goodwill 16 Long-term loans receivable Deferred tax asset 17 Total non-current assets Current assets Inventories 18 Accounts receivable trade Other current assets 19 Short-term financial investments 2 Cash and cash equivalents Total current assets Total assets

9 7 Shareholders equity and liabilities Note CHF CHF 1 Shareholders equity Issued capital 21 Additional paid-in capital Reacquired shares 22 Other comprehensive income Retained earnings Equity attributable to shareholders of the parent Minority interest Total equity Long-term liabilities Long-term loans 23 Long-term provisions and liabilities 24, 25, 26 Deferred tax liability 27 Total long-term liabilities Current liabilities Current portion of long-term liabilities Accounts payable trade Short-term provisions 26 Accrued income taxes Other current liabilities 28 Total current liabilities Total liabilities Total shareholders equity and liabilities

10 8 Financial Report 25 Micronas Group Consolidated cash flow statement Operating activities 25 CHF 1 24 CHF 1 Profit before tax Depreciation and amortization (excl. goodwill) Interest expense, net (excl. interest portion of pension expense) Loss/gain on disposal of fixed assets Amortization of goodwill Share compensation expense Foreign exchange gains and losses Share in profit/loss in associates Change in long-term provisions Cash flow before working capital changes Change in inventories Change in accounts receivable trade and other current assets Change in accounts payable trade, short-term provisions and other current liabilities Cash flow from operations Income taxes paid Cash flow from operating activities Investing activities Capital expenditure Long-term loans Investment in other Acquisition of investments, net of cash acquired Short-term financial investments Interest received Proceeds from disposal of fixed assets Cash flow from investing activities

11 9 Financing activities 25 CHF 1 24 CHF 1 Increase in issued capital and additional paid-in capital Acquisition/disposal of own shares Proceeds from long-term borrowings Interest paid Repayment of long-term liabilities Cash flow from financing activities Exchange effect on cash Change in cash and cash equivalents Cash and cash equivalents at end of period Cash and cash equivalents as at January 1 Change in cash and cash equivalents Non cash transaction Capitalization of a license contract as intangible asset

12 1 Financial Report 25 Micronas Group Changes in equity CHF 1 Issued capital Additional paid-in capital Reacquired shares Other comprehensive income Retained earnings Minority interest Total equity Share capital increase Exercise of share options Issue of share options Disposal of reacquired shares, net of tax CHF 215 () Share compensation expense Profit for the period Translation adjustment Share capital increase Exercise of share options Acquisition of reacquired shares Disposal of reacquired shares, net of tax CHF 35 () Share compensation expense Profit for the period Translation adjustment, net of tax CHF 235 () Exercise of share options Acquisition of reacquired shares Share compensation expense Profit for the period Translation adjustment, net of tax CHF 434 ()

13 Notes on the consolidated financial statements General Micronas Semiconductor Holding AG is domiciled in Technopark, Technoparkstrasse 1, CH-85 Zurich (Switzerland). The operative headquarters of the Micronas Group are located in Freiburg im Breisgau (Germany). As an international semiconductor group, Micronas develops, manufactures and markets integrated circuits (ICs) and sensors for applications particular in consumer and automotive electronics. 2. Accounting principles General information The consolidated financial statements of the Micronas Group are expressed in Swiss francs (CHF). They have been prepared in accordance with International Financial Reporting Standards (IFRS). The Board of Directors authorized the financial statements for issue on February 2, 26. Changes in accounting policies Improvement project: The accounting policies and methods of computation used in the Annual Report as at December 31, 24, have been reviewed in regard of the changes arising from the Improvement Project which has been approved by the International Accounting Standards Board (IASB) and put into force for Annual Reports starting January 1, 25. The presentation of the balance sheet and the profit and loss statement has been, including prior year numbers, adjusted according to the revised IAS 1. Share-based payment transactions (IFRS 2): Micronas applied IFRS 2 retrospectively and recorded the share options granted after November 7, 22, at fair value and charges the share compensation expense to personnel expenses. This resulted in a decrease of our profit for 24 from CHF million to CHF million and in an increase of equity from CHF 815. million to CHF million as at January 1, 24, and from CHF million to CHF million as at

14 12 Financial Report 25 Micronas Group Notes on the consolidated financial statements December 31, 24. The revised accounting policy for share-based payment transactions is described in a separate section. Business combinations (IFRS 3) and impairment of assets (IAS 36): In accordance with the transitional provisions of IFRS 3, which superseded IAS 22, the net book value of goodwill is no longer amortized on a straight-line basis beginning January 1, 25. The provisions of IFRS 3 and IAS 36 require that all goodwill must be reviewed for impairment annually, or whenever circumstances and situations arise as to indicate that the carrying value of goodwill may not be recoverable. Hedge accounting: Micronas adopted in 25 hedge accounting for the first time. Hedge derivatives are identified according to the nature of the underlying either as a cash flow hedge or as a fair value hedge, and are valued at cost on trade date. During subsequent reassessments, the change in value compared with the fair value is either recognized in the income statement (fair value hedge) or against equity (cash flow hedge). Significant accounting estimates In the process of applying the Group s accounting policies the Management has made estimates for the determination of key assumptions concerning the future and key sources of uncertainty at the balance sheet date. Areas where such estimates have a significant impact on the carrying amounts are the measurement of fair values and the mandatory annual impairment tests on goodwill. Principles of consolidation The consolidated financial statements include the parent company and all companies in which the parent company has the power to govern the company s financial and operating policies. The results of companies acquired are included in the Group accounts from the date of acquisition. Acquisitions of operations are accounted for using the purchase method. The fair values of identifiable assets and liabilities acquired are determined by reference to their intended use by the Micronas Group. Goodwill, the difference between the fair values of the net assets acquired and the higher purchase price, is recorded as an asset and must be reviewed for impairment annually, or whenever circumstances and situations arise as to indicate that the carrying value of goodwill may not be recoverable. Goodwill is tested for impairment in the fourth quarter of the fiscal year and also upon the occurrence of significant events or indicators that an impairment of goodwill may exist. According to IAS 36, Micronas determines the recoverable amount of the cash-generating units to which goodwill could be definitely allocated and compares that recoverable amount to the cashgenerating unit s carrying value. Micronas has determined the recoverable amount using the value-in-use method.

15 13 Companies in which Micronas owns between 2 percent and 5 percent of the voting rights or has significant influence by other means (associates) are accounted for under the equity method. Companies in which Micronas has no significant influence are recorded at fair value. If the fair value cannot be determined reliably, they are recorded at cost. All intercompany transactions are eliminated. Net sales Net sales represent the invoiced value of goods sold and services provided, less sales taxes and certain sales-related expenses. Revenue is recognized when the Company has transferred to the customer the significant risks and rewards of ownership of the goods statement. Transaction differences of equity loans are recorded directly in shareholders equity. The reporting currency of the Micronas Group is the Swiss franc. Assets and liabilities of subsidiaries, which are denominated in foreign currencies, are translated to Swiss francs using the exchange rates of the balance sheet date. For translation of the profit and loss statement the average exchange rates for the year are used. Translation differences resulting from the consolidation of foreign currency-denominated financial statements are recorded directly in shareholders equity. Any goodwill and fair value adjustments to the carrying amounts of assets and liabilities arising on an acquisition are translated at the exchange rates of the balance sheet date. Short-term financial investments Foreign currency translation The functional currency of Group companies in Euroland is the Euro. For most other Group companies the functional currency is the local currency. Transactions in foreign currencies are recorded in the functional currency at the exchange rate prevailing on the dates of the transaction. Financial assets and liabilities in foreign currencies are valued in the functional currency at the exchange rates of the balance sheet date. Transaction differences, except for transaction differences of equity loans, are recognized in the profit and loss Available-for-sale financial assets are measured at fair value subsequent to initial recognition. Gains and losses on remeasurement to fair value are included in profit or loss for the period in which they arise. Treasury stock Treasury stock is carried at cost in shareholders equity. Gains and losses resulting from transactions with treasury stock are recorded directly in additional paid-in capital.

16 14 Financial Report 25 Micronas Group Notes on the consolidated financial statements Inventories Borrowing costs Raw materials are carried at the lower of cost or net realizable value. Cost is determined by the first-in first-out method. Work in progress and finished goods of own production are carried at the lower of production cost or net realizable value. Production costs include direct labor costs, material costs and the allocable portion of production overhead. Resale finished goods are carried at the lower of purchase cost or net realizable value. Obsolete or slow-moving items are adequately provided for. Accounts receivable Accounts receivable are carried at initial cost adjusted for expected losses. Cash and cash equivalents Cash and cash equivalents comprise cash on hand, current accounts with banks and short-term deposits with an initial maturity of less than three months. Fixed assets Borrowing costs that arise in connection with acquisition, construction or production of a qualifying asset, are recognized as an expense in the period in which they are incurred. Intangible assets Micronas capitalizes development costs if all of the following can be demonstrated: the technical feasibility of completing the intangible asset so that it will be available for use or sale; the intention to complete the intangible asset and use or sell it; the ability to use or sell the intangible asset; the ability to generate probable future economic benefits; the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; the ability to measure the expenditure attributable to the intangible asset during its development reliably. Fixed assets (property, plant and equipment) are valued at their historical acquisition cost, less accumulated depreciation. Depreciation is calculated on a straight-line basis over the expected useful lives.

17 15 The capitalized development costs are carried at their cost, less accumulated amortization and any accumulated impairment losses. Amortization is calculated on a straight-line basis over the expected useful lives and commences when the asset is available for use. Other intangible assets are valued at their historical acquisition cost, less accumulated amortization and any accumulated impairment losses. Amortization is calculated on a straightline basis over the expected useful lives. The amortization rates are 2 percent for computer software and 15 to 2 percent for other licenses. Long-term loans Financial liabilities are measured at their amortized cost. Leases Finance leases are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. Capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognized as an expense in the income statement. Pension benefit plans Pension benefit plans exist in the form of state-run pension plans and various additional pension schemes of the Group companies. Unfunded defined benefit plans exist for the German Group companies for employees that have joined the company prior to January 1, 23. Accordingly, they are not affected by the volatility of the stock markets. The annual pension costs of the defined benefit plans are charged to personnel expenses with exception of the interest portion. The interest portion is charged to financial expenses. Actuarial gains and losses exceeding ten percent of the present value of the obligation are amortized in the income statement over the remaining working lives of the participating employees. Changes in liabilities for unfunded defined benefit plans are based on actuarial valuations using the projected unit credit method. The annual pension costs of the Group s defined contribution plans are charged to personnel expenses.

18 16 Financial Report 25 Micronas Group Notes on the consolidated financial statements Provisions Government grants Provisions are recognized as either long-term or short-term if Micronas has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Long-term provisions are discounted to reflect the present value, using a pre-tax discount rate that reflects current market assessment of time value of money. From time to time, we may be involved in demands, claims and threatened litigation that arise in the normal course of our business. Micronas Group recognizes a provision for asserted intellectual property rights infringements based on the probable outcome of each case as of each balance sheet date. Liabilities Liabilities are recognized as long-term and shortterm liabilities. Long-term liabilities are discounted to reflect the present value using a pre-tax discount rate that reflects the current market assessment of time value of money. Government grants related to assets are recorded as deferred income and recognized as nonoperating income over the life of the respective assets. Grants related to income or expense items are presented as a credit in the profit and loss statement under non-operating income. Income taxes The consolidated financial statements include income taxes, which are based on the taxable result of the Group companies, calculated according to local tax rules, and deferred taxes. Deferred taxes are provided on all temporary differences between the tax base and accounting base of assets and liabilities included in the Group accounts. Deferred taxes are calculated under the liability method at the rates of tax expected to prevail when the temporary differences reverse. Any changes of the tax rates are recognized in the income statement. Deferred tax liabilities are recognized on all taxable temporary differences. Deferred tax assets are recognized on all deductible temporary differences provided that it is probable that sufficient future taxable income will be available.

19 17 Segments Micronas Group s primary segments are the business divisions Consumer and Automotive. The Consumer division develops, manufactures and markets ICs for audio, video, text and graphics used in consumer electronics and multimedia products. The Automotive division develops, manufactures and markets ICs and sensors used in the automotive industry. The secondary segments are defined by geographical regions of net sales. The basis for attributing revenues to individual geographical regions is defined by the shipping destination of the revenues. Share-based payments The Group issues equity-settled share-based payments to the Board of Directors, certain members of Management and certain key employees. In accordance with the provisions of IFRS 2, effective January 1, 25, Micronas recorded for the first time the fair value of options granted after November 7, 22. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value is expensed on a straight-line basis over the vesting period, based on the Group s estimate of the shares that will eventually vest and adjusted for the effect of non market-based vesting conditions. The fair value of the options is determined by the Enhanced American Model, a binomial model, which includes the Modified Grant Date Method as requested by IFRS 2. The expected volatility has been calculated based on a historic and long-term volatility. The expected life used in the model has been adjusted, based on the Management s best estimate, for the effects of non-transferability, exercise restrictions and behavioral considerations. Financial risk management policy The Micronas Group s principal financial instruments mainly comprise cash and cash equivalents. The main purpose of these financial instruments is to supply sufficient financial means for the Group s operations. Significant financial risks are hedged on a case-by-case basis. The Group has various other financial instruments such as trade debtors and trade creditors, which arise directly from its operations. The main risks arising from the Group s financial instruments are liquidity risk, risk of losses from bad debts and foreign currency risk. Interest rate risk As there are no major bank loans and short-term deposits, there is no interest rate risk.

20 18 Financial Report 25 Micronas Group Notes on the consolidated financial statements Liquidity risk Presently a liquidity risk does not exist for Micronas Group owing to the high amount of cash and cash equivalents. Furthermore, an unused short-term revolving credit facility is available to cover peaks of working capital requirements. Risk of losses from bad debts The risk of losses from bad debts is covered by a defined securing strategy. Most of the receivables with our customers are secured through letter of credit or credit insurance. In addition, credit limits and constant monitoring minimize risk of losses from bad debts. recognized in the income statement (fair value hedge) or against equity (cash flow hedge). When option contracts are identified as cash flow hedges, a distinction is made between the contract s time value and its intrinsic value. At the valuation date, the change in the time value is recognized in the income statement and the change in the intrinsic value against equity. As soon as the underlying becomes operative and the hedge can be considered as effective, the fair values of the underlying and the hedge are determined and the change in value is recognized in the income statement. In the case of cash flow hedges the change in value recognized in equity for the prior period is transferred to the income statement. Foreign currency risk / hedge accounting The foreign currency risk mainly results from a transactional currency exposure arising from sales or purchases in currencies other than the units functional currency. These are mainly in USD. Micronas uses financial instruments including swaps, currency forwards and currency options to hedge up to two-third of the expected net currency exposure for up to one year. Hedge derivatives are identified according to the nature of the underlying either as a cash flow hedge or as a fair value hedge, and are valued at cost on the trade date. During subsequent reassessments, the change in fair value is either

21 19 3. Group structure In 23 Micronas Group entered a joint venture and took a 5 percent stake in ikonvergenz PTE Ltd. in Singapore and accounted for the investment using the equity method. In April 24 Micronas Group acquired the other 5 percent of ikonvergenz PTE Ltd., Singapore, and the investment is fully consolidated from that date. ikonvergenz is focused on developing designs for analog LCD televisions and LCD/CRT-based integrated digital televisions and employed about 2 engineers at the acquisition date. Micronas Group acquired LINX Electronics, Inc., a fabless semiconductor company that develops innovative digital-television solutions for improved reception of high-definition television signals in June 24. Chicago-based LINX Electronics employed a highly acclaimed HDTV technology team of about 2 engineers at the acquisition date and has been merged with Micronas Semiconductors Inc., San Jose, USA. For further details please refer to note 33. As the Micronas Group did not participate in a share capital increase of Nanotron Technologies in January 25, the Micronas share reduced to 3.8 percent. Micronas Semiconductor R&D (Shanghai) Co. Ltd. was established on March 8, 25, in Shanghai, PRC. Micronas Semiconductor R&D (Shanghai) Co. Ltd. is focused on development of IC s and systems for the terrestrial digital TV market in China and employed about 2 highly qualified engineers at the date of foundation. In December 25, Micronas Group acquired fabless semiconductor company WISchip International Ltd. (subsequently renamed to Micronas USA Inc.) and subsidiaries. With operational headquarters in Santa Clara, CA., USA, WISchip is focused on the development of advanced audio and video system-on-chip IC and software solutions, implementing the latest generation MPEG1/2/4, H.264 and VC-1 HDTV standards. WISchip will complement Micronas s team by adding the in-depth expertise of 14 additional staff members, including 78 experienced video and computer engineers, 32 of which are based in the company s Shanghai R&D facility. For further details of the transaction please refer to note 33.

22 2 Financial Report 25 Micronas Group Notes on the consolidated financial statements Information about the Group companies is listed below: Micronas Semiconductor Holding AG Zurich, Switzerland Activity: management of participations Micronas Finance Ltd. Guernsey, Great Britain Ordinary capital: EUR 1 4 Activity: financing of Group companies % of shares: 1 Micronas Holland B.V. Nijmegen, The Netherlands Ordinary capital: EUR Activity: development % of shares: 1 Micronas Holding GmbH Freiburg, Germany Ordinary capital: EUR 5 Activity: management of participations and consolidated sub-group management % of shares: 1 Micronas Mantel1 GmbH Freiburg, Germany Ordinary capital: EUR 25 % of shares: 1 Micronas Semiconductors Inc. San Jose, USA Ordinary capital: USD 2 Activity: development, sales % of shares: 1 Micronas GmbH Freiburg, Germany Ordinary capital: EUR Activity: development, production, sales % of shares: 1 Micronas Villach Halbleiterentwicklungs GmbH Villach, Austria Ordinary capital: EUR 35 Activity: development % of shares: 1 Micronas Japan K.K. Tokyo, Japan Ordinary capital: JPY 1 Activity: sales % of shares: 1 Micronas Ltd. Glenrothes, Scotland Ordinary capital: GBP 2 Activity: production, sales % of shares: 1 Micronas Holland Holding B.V. Nijmegen, The Netherlands Ordinary capital: EUR Activity: management of participation % of shares: 1 Micronas Korea Ltd. Seoul, Korea Ordinary capital: KRW 24 Activity: sales % of shares: 1 Micronas Hong Kong & China Ltd. Hong Kong, China Ordinary capital: HKD 1 Activity: sales % of shares: 1

23 21 ikonvergenz PTE Ltd. Singapore Ordinary capital: SGD 1 5 Activity: development % of shares: 1 Bionas GmbH Rostock, Germany Ordinary capital: EUR 25 Activity: development, production and marketing of bioelectronical and chemical systems % of shares: 24.9 Micronas Singapore PTE Ltd. Singapore Ordinary capital: SGD 2 Activity: sales % of shares: 1 MicronasNIT Novi Sad, Serbia and Montenegro Ordinary capital: USD Activity: development % of shares: 52 Nanotron GmbH Berlin, Germany Ordinary capital: EUR Activity: development % of shares: 3.8 Micronas Mantel2 GmbH Freiburg, Germany Ordinary capital: EUR 25 % of shares: 1 Micronas Semiconductor (Shanghai) Co. Ltd. Shanghai, PRC Ordinary capital: USD 1 4 Activity: development % of shares: 1 Micronas USA Inc. Santa Clara, USA Ordinary capital: USD 1 Activity: development, production, sales % of shares: 1 Micronas Taiwan Ltd. Taipei, Taiwan Ordinary capital: NTD 2 Activity: sales % of shares: 1 WIS Technologies (Shanghai) Ltd. Shanghai, PRC Ordinary capital: USD 2 Activity: development % of shares: 1 WIS Technologies Holdings LLC Santa Clara, USA Ordinary capital: USD 1 Activity: management of participation % of shares: 1 WIS Technologies China Holdings Ltd. Cayman Islands Ordinary capital: USD 5 Activity: management of participation % of shares: 1

24 22 Financial Report 25 Micronas Group Notes on the consolidated financial statements 4. Currency exchange rates Average rates Consolidated profit and loss statement, consolidated cash flow statement EUR 1 GBP 1 USD 1 JPY 1 KRW 1 HKD 1 SGD 1 CNY 1 TWD Year-end rates Consolidated balance sheet 1 EUR 1 GBP 1 USD 1 JPY 1 KRW 1 HKD 1 SGD 1 CNY 1 TWD Profit and loss statement 5. Personnel expenses 25 CHF 1 24 CHF 1 Wages and salaries Social expenses Share compensation expense Pension expenses for defined benefit plans excluding interest expense Pension expenses for defined contribution plans Other Total personnel expenses The compensation of the Management is disclosed in the corporate governance reporting on page 3 of the Annual Report.

25 23 6. Number of employees Production Research and development Administration and general Marketing and sales Quality management Number of employees at year-end Average number of employees Average number of employees at year-end 25 includes a ten-month average for Micronas Semiconductor R&D (Shanghai) Co. Ltd. and one month for WISchip. Average number of employees at year-end 24 includes an eight-month average for ikonvergenz and a seven-month average for former LINX Electronics, Inc. 7. Other operating income (+) and expenses ( ), net 25 CHF 1 24 CHF 1 Foreign exchange gain Income from development services and license agreement Income from services to Vishay General Semiconductor GmbH, Freiburg Sale of patent Release of reserve for bad debt Release of prepayment All other Total other operating income Expenses for hedging instruments Compensation of Board of Directors Foreign exchange loss Capital tax All other Total other operating expenses Total other operating income (+) and expenses (-), net

26 24 Financial Report 25 Micronas Group Notes on the consolidated financial statements 8. Depreciation and amortization (excl. goodwill) 25 CHF 1 24 CHF 1 Land and buildings Machinery and equipment Other fixtures, fittings, tools and office equipment Other intangible assets (mainly included in cost of sales) Total depreciation and amortization Financial income Interest income Other financial income Total financial income Financial expenses Interest expenses (excl. interest portion of pension expense, partial retirement and jubilee expense) Interest portion of pension, partial retirement and jubilee expense Other financial expenses Total financial expenses Other income Grants related to assets Grants related to income Total other income

27 Income taxes Accrued tax current year (current income tax) Accrued tax prior-year adjustments other 1 Deferred income taxes 2 Total income taxes 2 Detail of deferred income taxes: Loss carry forwards capitalized Loss carry forwards used Temporary differences Prior-year adjustments Tax rate changes Total deferred income taxes Profit before income taxes Applicable tax rate in % 3 Applicable income tax charge Tax on non-deductible interest expenses Tax on other non-deductible or non-taxable items Tax rate changes on deferred taxes Prior-year adjustments Total income taxes Effective tax rate in % 25 CHF CHF Includes a provision for an expected settlement with tax authorities. 3 The applicable income tax rate is the weighted average of the tax rates of the respective individual tax jurisdictions. Due to the different weights of the respective local tax rates, the applicable income tax rate has varied from 24 to 25.

28 26 Financial Report 25 Micronas Group Notes on the consolidated financial statements Balance sheet 13. Property, plant and equipment Gross amount Land and buildings Machinery and equipment Other fixtures, fittings, tools and office equipment 25 CHF 1 Total 24 CHF 1 Total Balance, beginning of year Additions Transfers Disposals and retirements Business combinations Translation adjustments Balance, end of year Accumulated depreciation Balance, beginning of year Additions Transfers Disposals and retirements Translation adjustments Balance, end of year Balance net, end of year Fire insurance value Above balances include buildings, machinery and equipment in the course of construction in the amount of Expected useful lifetime in years: Buildings Fixtures Machinery Other fixed assets to to to to 7

29 Intangible assets Gross amount Capitalized development cost Acquired licenses and software 25 CHF 1 Total 24 CHF 1 Total Balance, beginning of year Additions Transfers Disposals and retirements Business combinations Translation adjustments Balance, end of year Accumulated amortization Balance, beginning of year Additions Disposals and retirements Translation adjustments Balance, end of year Balance net, end of year Investments Micronas does not have significant influence over the investments. The investments are recorded at cost less any impairments, as no active market exists and the fair value cannot be measured reliably.

30 28 Financial Report 25 Micronas Group Notes on the consolidated financial statements 16. Goodwill Gross amount, beginning of year Business combinations Reclassification of amortization accumulated prior to the adoption of IFRS 3 Translation adjustments Gross amount, balance end of year 25 CHF CHF Accumulated amortization Balance, beginning of year Additions Reclassification of amortization accumulated prior to the adoption of IFRS 3 Translation adjustments Accumulated amortization, balance end of year Balance net, end of year The useful lifetime of the goodwill of the Image and Video acquisition has been estimated at the date of acquisition, October 1, 2, to be 15 years. According to the transitional provisions of IFRS 3 the amortization of goodwill is charged ultimately to profit and loss statement in 24. As at January 1, 25, the gross amount of goodwill was charged with the accumulated amortization and no longer amortized in subsequent years. As the allocation of the purchase price to the fair value of identified assets and liabilities of the WISchip acquisition in 25 is still in process caused by the proximity of the transaction closing to the Group s fiscal year end, the difference between the purchase price and the carrying value of net assets acquired is reflected in goodwill. The allocation of the purchase price of the LINX acquisition was finally determined in the second quarter of 25 resulting in a reduction of goodwill in the amount of CHF 1.6 million. The comparative figures have been adjusted respectively according to IFRS 3.

31 29 Impairment on goodwill All goodwill acquired through business combinations have been allocated for impairment testing purposes to the Consumer segment as the relevant cash-generating unit. All goodwill capitalized relates to acquisitions which contribute to the technological development of the entire segment. The impairment test is based on October 1, 25. The recoverable amount of the Consumer segment has been determined based on a value-in-use calculation using cash flow projections based on Management s financial budgets and business plans approved by the Board of Directors covering a five-year period ending in 21. The discount rate applied to cash flow projections is a pre-tax rate of 16.2 percent. Cash flows beyond the five-year period are extrapolated using a two percent growth rate. This growth rate does not exceed the long-term average growth rate for the markets in which the Consumer segment operates. Carrying amount of goodwill Consumer segment CHF 1 CHF 1 Total 25 CHF 1 24 CHF 1 Image and Video business LINX Electronics ikonvergenz Goodwill subject to impairment test Goodwill from acquisition 25 Total goodwill Goodwill acquired in 25 and not yet finally determined is not subject to an impairment test in accordance with IFRS 3 and IAS 36.

32 3 Financial Report 25 Micronas Group Notes on the consolidated financial statements Key assumptions The calculation of the value-in-use for the Consumer segment is most sensitive to the following assumptions during the planning period: Net sales: Net sales are forecasted on a product basis considering expected market shares and related impacts on sales volumes and prices. Net sales are expected to grow at an average compound annual growth rate of 15 percent. The value-in-use significantly exceeds the carrying amount of net assets and goodwill of the Consumer segment. Management therefore concluded that goodwill is not impaired as at December 31, 25. Management and the Board of Directors believe that assumptions and forecasts are realistic. Nevertheless, significant unexpected adverse future developments may cause changes to the planning assumptions and may lead to a future impairment of goodwill. Gross margins: Gross margins are expected to settle at a long-term expected level of 38 to 4 percent. R&D expense: In recent years, R&D expenses have been around 12 to 14 percent of net sales. The expected longterm level of R&D expenses will be in the range of 15 to 16 percent of net sales. EBIT: The EBIT is expected to reach a long-term sustainable level of 15 percent. Capital spending: Capital spending is expected to remain relatively steady. Exchange rate: EUR to CHF exchange rate based on the exchange rate in effect during the business plan preparation. Discount rate (WACC): Cost of equity was calculated using the ten-year German government bond yield as of October 25 as the risk-free rate and a five percent market risk premium on shares. The Beta-factor applied represents the average peer group raw beta based on two-year regression. As Micronas is in a net cash position the WACC equals cost of equity.

33 Deferred tax asset Amount, beginning of year Reductions/additions Business combinations Balance sheet reclassification Translation adjustments Balance, end of year Thereof: Temporary differences on Tangible fixed assets Long-term provisions and liabilities Other current liabilities Loss carry forward Balance, end of year 25 CHF CHF As at December 31, 24, and December 31, 25, the Company had approximately CHF 4.4 million in net operating loss carry forwards in Germany for which deferred tax assets have not been recorded.

34 32 Financial Report 25 Micronas Group Notes on the consolidated financial statements 18. Inventories 25 CHF 1 24 CHF 1 Materials and supplies at cost at net realizable value Work in progress at cost at net realizable value Finished goods of own production at cost at net realizable value Resale finished goods at cost at net realizable value Total inventories The amount of inventories recognized as an expense during the period is CHF (). The amount of any write-down of inventories recognized as an expense during the period is CHF (). The amount of any reversal of any write-down that is recognized as a reduction in the amount of inventories recognized as expense in the period is CHF 57 (). 19. Other current assets Tax receivables (mainly VAT) Prepaid expenses and accrued income Deposits Research premium Other Total other current assets Short-term financial investments Short-term deposits with an initial maturity of three months and more Total short-term financial investments available for sale

35 Share capital The issued and fully paid share capital of Micronas Semiconductor Holding AG comprises: Number CHF Number CHF 1 Opening balance Exercise of share options Share capital increase Balance, end of year Authorized capital The Company has no authorized capital. The existing authorized capital lapsed without being used on November 2, 25. Conditional capital The articles of incorporation provide for a conditional capital (according to Art. 653 of the Swiss Code of Obligations) of a maximum of CHF (as per March 2, 25) through the issuance of a maximum of registered shares with a nominal value of CHF 1 each by the exercise of option rights to be granted to the members of the Board of Directors, to certain members of the Management and certain key personnel of the Company or Group companies. In 25, 22 9 options have been exercised. The conditional capital as per December 31, 25, amounts to CHF As at December 31, 25, the Company is aware of the following shareholders holding more than 5 percent or more of the capital and/or voting rights of the Company: AXA SA, Paris, France Nordea Investment Funds SA, Luxembourg Arnhold and S. Bleichroeder Advisers, LLC, New York, USA Fidelity International Limited, Hamilton, Bermuda The Capital Group Companies, Los Angeles, USA 1.3% 5.4% 5.3% n.a. n.a. 8.3% n.a. n.a. 7.1% 5.% The above figures (numbers and percentages) conform to the figures contained in the respective notifications to the Company and the Disclosure Office of the SWX Swiss Exchange; they may not be accurate as at December 31, 25.

36 34 Financial Report 25 Micronas Group Notes on the consolidated financial statements 22. Reacquired shares Opening balance Purchases Disposals Addition to additional paid-in capital (pre taxes) Balance, end of year 25 Number CHF Number CHF The 24 reacquired shares were purchased and disposed in connection with the acquisition of LINX Electronics, Inc., to partly settle the share portion of the purchase price.

37 Long-term loans December 31, 25 December 31, 24 Long-term loans mature as follows (in CHF 1): Thereafter Total Thereafter Total Long-term loans grouped by effective interest rates: Effective interest rates EUR % EUR % EUR % EUR % EUR % EUR 6 1.5% Total Effective interest rates EUR % EUR % EUR % Total Long-term provisions and liabilities 25 CHF 1 24 CHF 1 Pension obligations Provisions Liabilities Total long-term provisions and liabilities

38 36 Financial Report 25 Micronas Group Notes on the consolidated financial statements 25. Unfunded defined benefit obligations 25 CHF 1 24 CHF 1 Present value of obligations, beginning of year Interest cost Current service cost Benefits paid Actuarial losses/gains on obligation Translation adjustments Present value of obligations, end of year Unrecognized actuarial gains (+)/ losses ( ) Net liability recognized in the balance sheet Pension costs are included in personnel and interest expenses and consist of: Interest expense Change of unfunded defined benefit obligations excluding interest expenses (service cost) Total pension cost Movements in the net amount recognized in the balance sheet Amount, beginning of year Payments to pensioners Addition to reserve Translation adjustments Amount, end of year Principal actuarial assumptions used 25 Germany 24 Germany Discount rate per annum Salary increase per annum Post-retirement pension increases Investment yield per annum 4.25% 2.% 1.35% n.a. 5.25% 2.% 1.35% n.a. Staff turnover and retirement rates: Mortality and ill health: Based on the experience of similar retirement schemes The Heubeck 25 G mortality tables have been used (Prior year: Heubeck 1998 mortality tables)

39 Provisions CHF 1 Balance, beginning of year Net charge to costs and expenses Usage, payment Other Translation adjustments Balance, end of year Restructuring Jubilee Warranty Loss on pending business Partial retirement Other Total provisions Thereof short-term provisions Thereof long-term provisions The restructuring provision as at December 25 relates to restructuring within the normal course of business. Jubilee provision is set up for anniversary payments to employees. The recorded liability is determined based on the valuation performed by an external party. The valuation has been calculated using a discount rate of 4.25 percent in 25 and 5.25 percent in 24 and the Heubeck 25 G mortality tables. The employees receive a fixed anniversary payment from the Company on their 25th and 4th anniversary. The charge to costs and expenses includes CHF 74 () interest expense. The warranty provision relates to estimated costs to be incurred to repair or replace faulty products. The estimate is determined based on the actual sales volume and past experience. It is expected that the warranty reserve is used in the next year. The partial retirement provision is based on legal regulations, agreements with workers council and past experience. The long-term portion is discounted over five years at a discount rate of three percent. The provision is expected to be used pro rata up to the year 29. The charge to costs and expenses includes CHF 33 () interest expense. The column Charge to costs and expenses includes the following reversals of provisions: Partial retirement CHF 143 (), Warranty CHF 567 (), and Other CHF 31 (). As at December 31, 25, Micronas Group companies are not a party to any legal proceedings. In the opinion and to the actual knowledge of the Management, the outcome of any settlement and resulting liabilities in excess of what has been provided for are not likely to be material. The provision for loss on pending business is recorded due to customer orders below cost as per year-end and risks out of acceptance of contractual obligations. The provision is expected to be used in the next year.

40 38 Financial Report 25 Micronas Group Notes on the consolidated financial statements 27. Deferred tax liability Amount, beginning of year Reductions/additions Business combinations Balance sheet reclassification Translation adjustments Balance, end of year Thereof: Temporary differences on Tangible fixed assets Intangible assets Long-term provisions and liabilities Other current liabilities Loss carry forward Balance, end of year 25 CHF CHF

41 Other current liabilities Accrued expenses Accrued social expenses Deferred compensation Current portion of capital lease obligations Advances from customers VAT payable Other Total other current liabilities 25 CHF CHF

42 4 Financial Report 25 Micronas Group Notes on the consolidated financial statements Other disclosures 29. Segment reporting Business areas Consumer Automotive Corporate 4 Reconciliation Group 25 CHF 1 Net sales in % of total net sales EBITDA in % of sales Depreciation and amortization Operating profit in % of sales Capital expenditures 1 Segment assets 2 EBITDA in % of segment assets Segment liabilities 3 Headcount Regions Europe Asia Americas Other Reconciliation Group Net sales in % of total net sales

43 41 Business areas Consumer Automotive Corporate 4 Reconciliation Group 24 CHF 1 Net sales in % of total net sales EBITDA in % of sales Depreciation and amortization Operating profit in % of sales Capital expenditures 1 Segment assets 2 EBITDA in % of segment assets Segment liabilities 3 Headcount Regions Europe Asia Americas Other Reconciliation Group Net sales in % of total net sales Certain overhead costs are allocated mainly based on sales, and certain assets and liabilities are allocated mainly based on cost of goods sold. Segment assets 25 refer to 83 percent to Europe, 17 percent to all other regions. Segment assets 24 refer to 95 percent to Europe, 5 percent to all other regions. Segment capital expenditures refer to 96 percent to Europe, 4 percent to all other regions. EBITDA: operating profit before depreciation and amortization of goodwill. 1 Capital expenditures = investments in tangible and intangible assets and capitalized development costs. 2 Segment assets = tangible assets, intangible assets, goodwill, inventories and receivables. 3 Segment liabilities = accounts payable trade. 4 Mainly Holding company costs.

44 42 Financial Report 25 Micronas Group Notes on the consolidated financial statements 3. Operating leases The actual leasing payments and future commitments for non-cancelable operating lease contracts are as follows (CHF 1): Leasing payments during period Future lease commitments Thereafter Thereafter Total future lease commitments At the Freiburg facility a lease contract for parts of the manufacturing, warehouse and office buildings exists. The lease expires at the end of 29. A renewal option exists. The extension of the lease term for another five years up to the end of 214 may be requested at the end of 27 at the latest. At the Munich facility a lease contract for the office building exists. The lease expires in May 212. Two consecutive renewal options of five years each exist. The extension of the lease term for another five years may be requested up to nine months prior to the expiration date of term. At the Freiburg facility a lease contract for an on-site nitrogen generator exists. The lease expires in September 211. A renewal option exists. The extension of the lease renews for another two years each, if the contract will not be terminated six months prior to the expiration date of the lease term. At the Freiburg facility several lease contracts for software tools exist. The leases expire between 26 and 28. No renewal or purchase options exist.

45 Other financial commitments Orders for machinery and equipment Orders for R&D projects Obligations to suppliers 1 25 CHF CHF Mainly obligations for finished wafers and finished goods. Forward exchange contracts: As at December 31, 25, and December 31, 24, no commitments from forward exchange contracts existed. 32. Borrowing facilities Unused Total borrowing facilities

46 44 Financial Report 25 Micronas Group Notes on the consolidated financial statements 33. Acquisition of subsidiaries Assets and liabilities acquired: Fixed assets Intangible assets Deferred tax assets Cash and cash equivalents Other assets Total assets 25 CHF 1 Recognized at acquisition CHF 1 Carrying value CHF 1 Recognized at acquisition Long-term liabilities Deferred tax liabilities Other current liabilities Total liabilities Fair value of net assets Share of ikonvergenz previously owned Fair value of net assets acquired

47 45 On December 8, 25, Micronas Group acquired 1 percent of the voting shares of WISchip International Ltd. (WISchip), a fabless semiconductor company with operational headquarters in Santa Clara, CA (USA). The purchase price of CHF 11 7 () was paid in cash at closing. Costs incurred as a direct result of the transaction amounted to CHF (). An additional CHF 16 6 () may become payable to certain employees of WISchip based upon continuing service to the Micronas Group and will be recognized as compensation expense over the required service period of two years. As the allocation of the purchase price to the fair value of identified assets and liabilities is still in process caused by the proximity of the transaction closing to the Group s fiscal year-end, the difference between the purchase price and the carrying value of net assets acquired is reflected in goodwill. In accordance with IFRS 3 Business Combinations, the results of WISchip have been included in Micronas Group s results since the acquisition date. WISchip contributed a loss of CHF 1 81 () to the 25 Group results. Had the business combination been effected at the beginning of 25, net sales and profit for the combined Group would have been CHF () and CHF (), respectively. Micronas Group acquired 1 percent of the voting shares of LINX Electronics, Inc. (LINX), on June 7, 24. The purchase price of CHF 3 63 () consists of CHF () cash paid at closing, CHF 3 55 () deferred cash payable over a three-year period and Micronas Group shares valued at the acquisition date closing price of CHF 6.5 per share. Transaction-related costs amounted to CHF 53 (). An additional CHF () in unearned compensation payable to employee shareholders of LINX, based on continuing service to the Micronas Group, is being recognized as compensation expense over the required service period. From the date of acquisition, LINX s loss of CHF () is included in the profit 24 of the Group. The 24 amounts presented in the table of note 33 reflect adjustments made in the second quarter of 25 to other assets and deferred taxes. On April 22, 24, Micronas Group acquired the remaining 5 percent share in its Singapore joint venture ikonvergenz PTE Ltd. (ikonvergenz) for a cash purchase price including transaction-related costs of CHF 792 (). At the date of acquisition, ikonvergenz became fully consolidated and has contributed a loss of CHF () to profit 24 of the Group. Had LINX and ikonvergenz been fully consolidated from January 1, 24, net sales for the Group would have remained unchanged in 24 while profit would have been CHF 2 99 () lower.

48 46 Financial Report 25 Micronas Group Notes on the consolidated financial statements 34. Earnings per share The key figures of the earnings per share are determined as follows: 25 CHF 1 24 CHF 1 Earnings per share in CHF undiluted Profit for the period attributable to the shareholders of the parent Weighted average number of issued and outstanding shares Earnings per share in CHF undiluted Earnings per share in CHF diluted Profit for the period attributable to the shareholders of the parent Weighted average number of issued and outstanding shares for calculation of earnings per share undiluted Dilution: share options Weighted average number of issued and outstanding shares for calculation of earnings per share diluted Earnings per share in CHF diluted Earnings per share, adjusted for amortization of goodwill after tax in CHF undiluted Profit for the period attributable to the shareholders of the parent Amortization of goodwill after tax Profit for the period attributable to the shareholders of the parent adjusted for amortization of goodwill after tax Weighted average number of issued and outstanding shares Earnings per share, adjusted for amortization of goodwill after tax in CHF undiluted Earnings per share, adjusted for amortization of goodwill after tax in CHF diluted Profit for the period attributable to the shareholders of the parent Amortization of goodwill after tax Profit for the period attributable to the shareholders of the parent adjusted for amortization of goodwill after tax Weighted average number of issued and outstanding shares diluted Earnings per share, adjusted for amortization of goodwill after tax in CHF diluted The computation of diluted earnings per share excluded 587 shares related to share options at December 31, 25, as their inclusion would have been undilutive.

49 Share-based payments The Company has a share option scheme for the members of the Board of Directors, certain members of the Management and certain key personnel. Options are exercisable at a price equal to the quoted market price of the Company s shares on the date of grant. Under the plans, options vest based on continued service over one, two or three years and have a contractual life of approximately four years. Options are forfeited if the employee leaves the Group before the options vest. Details of the share options outstanding are as follows: Number of share options 25 Weighted average exercise price 24 Number of share options Weighted average exercise price Outstanding at the beginning of the year Issued Exercised Lapsed Outstanding at the end of the year Exercisable at the end of the year The weighted average share price at the date of exercise for share options exercised during the year was CHF The options outstanding at the end of the year have a weighted average remaining contractual life of 3.5 years (24: 3.3 years). In 25, options were granted on January 3 and April 7. The estimated fair values of the options granted on those dates are CHF 2.57 and CHF 19.2 respectively. In 24, options were granted on January 5. The estimated fair value of the options granted on that date is CHF 2.33.

50 48 Financial Report 25 Micronas Group Notes on the consolidated financial statements Used actuarial assumptions: Expected option life in years Expected forfeitures per year after vesting Expected volatility Share price at the grant date in CHF Risk-free interest rate Expected dividend % 6.% % % 6.% % The expected life used in the model has been adjusted, based on the Management s best estimate, for the effects of nontransferability, exercise restrictions and behavioral considerations. The Group recognized total expenses of CHF () (24: CHF ()) related to equity-settled share-based payment transactions during the year. 36. Transactions with related parties 25 CHF 1 24 CHF 1 Sales to related parties Loans to related parties Receivables from related parties Micronas Group has a 24.9 percent share in Bionas GmbH. Sales to related parties are made at market prices. The interest rate of the loans to related parties is at market. 37. Subsequent events In January 26, options were issued to the members of the Board of Directors, to certain members of Management and certain key personnel at an exercise price of CHF each. The options are exercisable between January 1, 28, and December 31, 211.

51 Report of the group auditors to the ordinary Shareholders Meeting of Micronas Semiconductor Holding AG, Zurich 49 As group auditors, we have audited the consolidated financial statements (profit and loss statement, balance sheet, cash flow statement, changes in equity and notes) of Micronas Semiconductor Holding AG for the year ended December 31, 25. These consolidated financial statements are the responsibility of the board of directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with Swiss Auditing Standards and with International Standards on Auditing, which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also assessed the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance with International Financial Reporting Standards and comply with Swiss law. We recommend that the consolidated financial statements submitted to you be approved. Zurich, February 2, 26 Ernst & Young Ltd Willi Holdener Reto Fierz Swiss Certified Accountant Swiss Certified Accountant (in charge of the audit)

52 5 Financial Report 25 Micronas Group Additional information Orders on hand 25 CHF 1 24 CHF 1 Orders on hand, beginning of year Net sales Order intake Translation adjustments Orders on hand, end of year Book-to-bill

53 51 Number of shares and options held by the Board of Directors and Group Management Name Position Number of shares Number of options 1 Number of options 2 Number of options 3 Number of options 4 Dr. Franz Betschon Chairman of the Board of Directors Dr. Thomas Lustenberger Vice Chairman, Secretary of the Board of Directors Dr. Rudolf W. Hug Member of the Board of Directors Alfred M. Niederer Member of the Board of Directors Harald Stanzer Member of the Board of Directors Dr. Wolfgang Kalsbach Chief Executive Officer Manfred Häner Chief Financial Officer Hans-Jürgen Désor Vice President Marketing and R&D Consumer Klaus Heberle Vice President Automotive Nikolaus-Viktor Kaeppeler Vice President Operations Wolfgang Kühn Vice President Sales Consumer Wilfried Lowinski Vice President Operations Backend Dr. Ulrich Sieben Vice President Technology Nicholas Ververis Vice President Quality Dirk Wieberneit Vice President Product Development Consumer One option entitles to draw of a registered share of Micronas Semiconductor Holding AG, Zurich, with an exercise price of CHF each until December 31, 28. The options were granted on January 1, One option entitles to draw of a registered share of Micronas Semiconductor Holding AG, Zurich, with an exercise price of CHF 54. each until December 31, 29. The options were granted on January 5, One option entitles to draw of a registered share of Micronas Semiconductor Holding AG, Zurich, with an exercise price of CHF 55. each until December 31, 21. The options were granted on January 3, 25 (exception: options H. Stanzer granted on April 7 until December 31, 28). 4 One option entitles to draw of a registered share of Micronas Semiconductor Holding AG, Zurich, with an exercise price of CHF each until December 31, 211. The options were granted on January 3, 26.

54 52 Financial Report 25 Micronas Semiconductor Holding AG

55 Profit and loss statement 53 Income 25 CHF 1 24 CHF 1 Interest income from Group companies Dividend income from Group companies License fees from Group companies Disposal of reacquired shares Disposal of assets Gain on valuation of reacquired shares Financial income Gain on release of unused reserve Total income Expenses Operating expenses Amortization and valuation adjustments Interest expense Group companies Financial expenses Income taxes Total expenses Profit for the period

56 54 Financial Report 25 Micronas Semiconductor Holding AG Balance sheet Assets CHF CHF 1 Non-current assets Machinery and equipment Investments in Group companies Long-term loans receivable from Group companies Total non-current assets Current assets Accounts receivable from Group companies Other accounts receivable Accrued income and prepaid expenses Reacquired shares Cash and cash equivalents Total current assets Total assets

57 55 Shareholders equity and liabilities CHF CHF 1 Shareholders equity Share capital General legal reserve Reserve for reacquired shares Unappropriated retained earnings, beginning of year Profit for the period Unappropriated retained earnings, end of year Total shareholders equity Long-term liabilities Long-term loans payable to Group companies Reserve for unrealized gains Total long-term liabilities Current liabilities Accounts payable to Group companies Other accounts payable Short-term liabilities and accrued expenses Total current liabilities Total liabilities Total shareholders equity and liabilities

58 56 Financial Report 25 Micronas Semiconductor Holding AG Notes on the financial statements Share capital The issued and fully paid share capital of Micronas Semiconductor Holding AG comprises: CHF CHF registered shares of CHF 1 nominal each registered shares of CHF 1 nominal each Total share capital Authorized capital The Company has no authorized capital. The existing authorized capital lapsed without being used on November 2, 25. Conditional capital The articles of incorporation provide for a conditional capital (according to Art. 653 of the Swiss Code of Obligations) of a maximum of CHF (as at March 2, 25) through the issuance of a maximum of registered shares with a nominal value of CHF 1 each by the exercise of option rights to be granted to the members of the Board of Directors, to certain members of the Management and certain key personnel of the Company or Group companies. In 25, 22 9 options have been exercised. The conditional capital as at December 31, 25, amounts to CHF Fire insurance value of fixed assets Machinery and equipment CHF CHF 1 3 Information on Group companies Information on Group companies: please refer to note 3 of the consolidated financial statements. Major shareholders Information on major shareholders: please refer to note 21 of the consolidated financial statements.

59 57 Reacquired shares Opening balance Purchases Disposals Gain on reacquired shares Balance, end of year 25 Number CHF Number CHF Reacquired shares are carried at the market value at the balance sheet date. The 24 reacquired shares were purchased and disposed in connection with the acquisition of LINX Electronics, Inc., to partly settle the share portion of the purchase price. Reserve for reacquired shares CHF CHF 1 Opening balance Addition Balance, end of year The reserve for reacquired shares is carried at average purchase price.

60 58 Financial Report 25 Micronas Semiconductor Holding AG Proposal of the Board of Directors Appropriation of the unappropriated retained earnings Unappropriated retained earnings, beginning of year Profit for the period Unappropriated retained earnings, end of year CHF CHF The Board of Directors is proposing not to pay a dividend for the financial year 25 and to carry forward the profit to retained earnings. The Board of Directors is proposing a nominal value reduction of CHF.95 per share, i.e. from CHF 1. to CHF.5. Based on the issued shares as at the end of the financial year 25 the share capital reduction amounts to CHF The amount of the repayment of the nominal value of CHF.95 per share (total CHF ) will be distributed to the shareholders in cash and without deduction of a withholding tax, after the legally required call for filing of claims has been executed and the share capital reduction has been filed in the Commercial Register. This is expected to occur at the beginning of June 26. In addition, the Board of Directors has resolved a share repurchase program up to CHF 1 million through a second trading line.

61 Report of the statutory auditors to the ordinary Shareholders Meeting of Micronas Semiconductor Holding AG, Zurich 59 As statutory auditors, we have audited the accounting records and the financial statements (balance sheet, income statement and notes) of Micronas Semiconductor Holding AG for the year ended December 31, 25. These financial statements are the responsibility of the board of directors. Our responsibility is to express an opinion on these financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with Swiss Auditing Standards, which require that an audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the accounting records and financial statements and the proposed appropriation of available earnings comply with Swiss law and the company s articles of incorporation. We recommend that the financial statements submitted to you be approved. Zurich, February 2, 26 Ernst & Young Ltd Willy Holdener Reto Fierz Swiss Certified Accountant Swiss Certified Accountant (in charge of the audit)

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