DATACOLOR AG ANNUAL REPORT 2012

Transcription

1 DATACOLOR AG ANNUAL REPORT 2012

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3 DATACOLOR AG ANNUAL REPORT 2012 Financial year from October 1, 2011 through September 30, 2012 Board of Directors Datacolor AG Report of the Board of Directors 3 Datacolor Share Information 4 Key Figures Group 5 Corporate Governance Group Structure 6 Executive Bodies 7 Information for Investors 14 Commentary to the Business Year 2011/12 16 Financial Report Datacolor Group 19 Datacolor AG 45 Addresses 52

4 Analogous translation of the original German version of Geschäftsbericht In case of differences of interpretation arising in comparison to the German version, the wording of the original German version is valid.

5 Report of the Board of Directors Report of the Board of Directors In fiscal 2011/12, Datacolor continued to strengthen its position as one of the world s leading suppliers of innovative color management solutions. The Group increased its market leadership position in the textile sector. The Company also significantly expanded its presence in key markets such as the automotive and plastics industry, as well as with manufacturers of paint and dyes by launching numerous new innovative products and expanding the sales and service organization. The Group invested strongly in the direct sales and service organization in growth markets such as China and India. At the same time, the US distribution channel for the Imaging business was streamlined. In the German speaking countries the service and support functions were insourced. Datacolor intensified cooperation with local distribution partners in important emerging markets such as Turkey and Brazil. Datacolor stepped up its customer orientated marketing activities, especially in the Imaging business where the Group accelerated the efficient market introduction of new products in the year under review. The increased spending in marketing and the distribution process optimization has already showed a positive impact. At the beginning of the reporting period, Datacolor changed its structure from a divisional to a functional organization. This organizational alignment has been accomplished successfully and has led to optimized processes, a significant increase of resource efficiency, and clearly defined management responsibilities. This change has positively impacted the Company s profitability. The management team was further strengthened in key functions with industry-savvy, high-potential employees. Datacolor optimized organizational processes in the research and development department and could thus maintain its high innovation pipeline at a lower cost. The targeted marketing investments as well as optimized processes in sales and research and development has strengthened the Company s international sales and profitability potential. Given the challenging currency and economic environment the consolidated net sales increased only slightly, whereas the profitability increased significantly due to efficiency gains in fiscal 2011/12. Datacolor is debt-free and has a high net cash position and an even stronger, very solid equity ratio. In view of the Company s sound financial position, the Board of Directors is proposing to the shareholder s general meeting that a dividend of CHF 11 (CHF 10) be distributed for fiscal 2011/12. On behalf of the Board of Directors, I would like to thank the Executive Committee and employees for their dedicated efforts in a challenging economic environment. With an optimized sales organization, customer-focused marketing, a strengthened management and an innovative research and development department, Datacolor is well positioned for the challenges ahead. The Company has a strong pipeline of innovative products to be launched in the new fiscal year. Given a reasonably stable economic environment, Datacolor s Board of Directors and the Executive Committee expect to continually increase primarily sales revenues but also its profitability due to its strong market position and efficient global sales and service organization. Werner Dubach Chairman of the Board of Directors 3

6 Datacolor Share Information DATACOLOR SHARE INFORMATION Stock exchange information Expected dividend ex date (subject to approval by AGM) January 14, 2013 Listing SIX Swiss Exchange (Zurich) Security ID ISIN CH Reuters DCN.S Bloomberg DCN Investdata DCN Capital structure Share capital in CHF Conditional share capital in CHF Number of registered shares Nominal value per share in CHF 1 1 Registration restrictions none none Voting restrictions none none Opting out / opting up clauses none none Significant shareholders (in %) Dubach family 51.33% 50.38% Keller family 16.72% 16.72% Corisol Holding AG 7.72% 7.72% Shareholders by category (in %) Significant shareholders 75.77% 74.82% Private investors 80.69% 79.04% Corporate investors 19.31% 20.96% Non-registered shareholders 2.76% 3.33% Share distribution Number of registered shares number of shareholders number of shareholders > * 4* Total *including treasury shares of Datacolor AG Share price data in CHF 2011 / / 2011 First trading day ( ) ( ) Low ( ) ( ) High ( ) ( ) Last trading day ( ) ( ) Average share price Market capitalization in CHF million as of September

7 Key Figures Group KEY FIGURES GROUP in USD million 2011 / / 2011 Net sales Change relative to previous year in % 0.8% -1.2% EBITDA Change relative to previous year in % 14.0% -7.2% as a % of net sales 12.1% 10.7% EBIT Change relative to previous year in % 14.3% -7.2% as a % of net sales 9.7% 8.5% Profit for the year Change relative to previous year in % 11.7% -14.1% as a % of net sales 7.5% 6.8% as a % of average shareholders equity 14.0% 13.7% Cash flow from operating activities Change relative to previous year in % -12.9% -55.6% as a % of net sales 8.1% 9.4% Cash flow from investing activities Change relative to previous year in % 760.7% -69.8% as a % of cash flow from operating activities 37.3% -3.8% Free Cash Flow Change relative to previous year in % -43.3% -54.7% as a % of net sales 5.1% 9.0% Average number of employees Personnel expenses Total assets Shareholders equity as a % of assets 64.1% 60.7% Net liquidity Per share data 1) Average number of shares Earnings per share in USD (non-diluted) Free Cash Flow in USD Shareholders equity in USD Dividend in CHF 2) Share price data as of September 30 in CHF Yield in % 3) 2.8% 2.6% 1) Calculation is based on the weighted average number of shares outstanding (issued shares less treasury shares). 2) According to the proposal of the Board of Directors on November 13, ) Distribution in percentage of the share price as of September 30. 5

8 Corporate Governance GROUP STRUCTURE Introduction Datacolor endorses a state of the art Corporate Governance with high transparency for all stakeholders. Professional processes and individual accountability on all levels of the organization are the foundation. The following information meets the requirements of the Directive on Information Relating to Corporate Governance (Corporate Governance Directive, DCG) of the SIX Swiss Exchange. Datacolor is further orientated to the Swiss Code of Best Practice for Corporate Governance. If not mentioned differently all information are made for the closing date September 30, The information on Corporate Governance can also be retrieved electronically under the following link: Roles and duties of Datacolor AG Datacolor AG as top holding company of the Datacolor Group manages its business by means of objectives, it is involved in the planning process and monitors adherence to the budget. Once the three-year plan and the budget have been approved by the Board of Directors, the Executive Committee acts on its own authority within the limits of the budget and the rules of competence. The Executive Committee is responsible for consolidation, financing, controlling, asset management and investor relations. Datacolor AG is a Swiss public limited company with its head office in Lucerne. Refer to note 28 for a disclosure of controlled subsidiaries, the market capitalization is disclosed on page 4. Strategy Datacolor provides worldwide products and services to industrial as well as professional and hobby applications in the area of color measurement, management, communication and calibration. Datacolor s debtfree balance sheet enables it to achieve long-term growth targets with continuing organic growth and targeted acquisitions. It aims to achieve significant growth by providing innovative hardware and software products, increasing market penetration, developing new markets, alliances and acquisitions. Its range comprises products and systems solutions that are competitive in terms of quality, performance and ease of use. The products are tailored to customer requirements and able to offer a large potential for generating added value. Providing services for its products is a growing core activity. Datacolor aims for market leadership in defined customer segments as well as geographical markets. Corporate performance is achieved by a flexible, lean and customer-oriented organization. The production depth is restricted to what is strategically necessary. While meeting the requirements of a publicly listed company, the stable shareholder basis is a key driver of Datacolor s attainment of its long-term goals. 6

9 Corporate Governance EXECUTIVE BODIES Board of Directors of Datacolor AG Werner Dubach, 1943, CH Chairman, Board member since 1981, elected until AGM 2013 Dipl. Ing. Chem. ETH Zurich, MBA Wharton University of Pennsylvania Until January 2009, CEO and Chairman of Eichhof Holding AG Until 1981, Director of the Eichhof Group s Beverages division Technical Director of the Eichhof Brewery Management Assistant of the Eichhof Brewery Conzzeta AG, Zurich, Member of the Board Peter Beglinger, 1945, CH Board member since 1992, elected until AGM 2014 Dr. iur. University of Zurich Until 2007 law office in Zurich, Counsel own law office in Zurich legal adviser to the executive management of Jacobs AG law office Wenger & Vieli, Zurich 1974 admitted to the bar Würth Finance International B.V., NL, Member of the Board Anne Keller Dubach, 1956, CH Board member since 2012, elected until AGM 2015 Lic. Phil. I, University Zurich, SEP Stanford Graduate School of Business Since 2007 Head Corporate Citizenship, Swiss Re, Zurich Head Corporate Sponsorship / Head Brand Communication, Swiss Re, Zurich Project Lead Marketing Services / Head Cultural Sponsoring Credit Suisse Project Lead Media / Marketing Analysis, Dr. Thomas Held, Zurich Product Management Magazines/ Head Marketing/ Promotions Rincovision, Ringier Hans Peter Wehrli, 1952, CH Board member since 2001, elected until AGM 2015 Dr. oec. publ. University of Zurich Professor of Business Administration, University of Zurich Belimo Holding AG, Wetzikon, Chairman of the Board Swiss Prime Site AG, Olten, Chairman of the Board Fritz Gantert, 1958, CH Board member since 2004, elected until AGM 2013 Dr. sc. techn., Dipl. Masch.Ing. ETH Zurich Since 2012 Enterpreneur, Independent Board Member General Manager Security Communication Division, Member of the Executive Board, Ascom Holding AG CEO of Schaffner Group Sarna Kunststoff Holding AG, Ascom Fritz Gantert, Peter Beglinger, Werner Dubach, Anne Keller Dubach, Hans Peter Wehrli 7

10 Corporate Governance Elections and term of office Members of the Board of Directors are elected by the Annual General Meeting of Shareholders for an individual term of office of three years. Newly elected members complete the terms of their predecessors. There are no limitations on terms of office. Internal organization The Board of Directors is self-constituting. It appoints committee members and the secretariat. Duties The Board of Directors is the supreme executive body of the Holding company. It adopts resolutions which determine the company s fundamental direction and oversees the work of senior management. Committees The Board of Directors has established committees to support its work. The primary role of these committees is to prepare business affairs and oversee the implementation of Board resolutions. Furthermore, the Board of Directors may delegate the final handling of certain affairs to the committees, provided that delegation of such tasks is not prohibited by law. The Board of Directors has established two committees: the Finance Committee as well as the Human Resources and Compensation Committee. Furthermore, the Steering Committee acts as a supervisory and control instrument (refer to page 15). The Finance Committee prepares the financial plan, the budgets and the statements for submission to the Board of Directors. Among other things, it issues instructions and monitors the appropriation of liquidity and the execution of asset management operations. The Human Resources and Compensation Committee drafts proposals for the remuneration of the Board of Directors. It also submits proposals to the Board for appointments to the position of CEO and CFO. The Committee sets the fixed and variable components of remuneration for the top levels of management, taking into account the situation on the labor market, performance and achievement of the targets that have been set. If the Committee deliberates on the remuneration of a member of the Human Resources and Compensation Committee, this member shall withdraw from the proceedings. Finance Committee: Werner Dubach, Albert Busch (CEO), Dr. Mark Leuchtmann (CFO) Human Resources and Compensation Committee: Dr. Peter Beglinger, Dr. Fritz Gantert Principles of operation of the Board of Directors and its committees The Board of Directors meets as often as business requires, but at least four times a year. Committee meetings are held in addition to Board meetings. Board meetings usually last for between half a day and a day. In 2011 / 12, the following number of meetings were held: Board of Directors 4 Finance Committee 10 Human Resources and Compensation Committee 4 8

11 Corporate Governance Areas of competency Board of Directors The Board of Directors represents the company externally and manages all company activities unless responsibility for these has been transferred to another company body in accordance with the law, the Articles of Association or other policies. The non-transferable and inalienable duties are governed in Art. 716a of the Swiss Code of Obligations. Unless the law, the Articles of Association or the directives issued by the Board of Directors stipulate otherwise, the Board of Directors delegate the operational management of the company to the CEO, together with the authority to delegate associated tasks onwards. The company s Organization Regulation governs the breakdown of responsibility between the Board of Directors and the Executive Committee and can be obtained on the following website: Executive Committee Executive Committee members are appointed by the Board of Directors and the Human Resources and Compensation Committee, respectively. Information and control instruments vis-à-vis the Executive Committee The Executive Committee informs the Board of Directors about the current status of the business, the consolidated balance sheet, the income statement and deviations to the budget on a monthly basis. On the occasion of the four meetings of the Board of Directors during the year, the Executive Committee reports on significant business transactions and on the results of the group-wide management of financial and operating risks. Findings of the following bodies also contribute to the regular decision-making process: External auditor KPMG AG, Root/Lucerne (auditor for Datacolor AG), which conducts its audit in accordance with Swiss law and Swiss auditing standards. Internal Audit and Risk Management, which monitors the existence and adequacy and permanently seeks improvements to the internal control system. Further, a systematic process captures strategic, operational and financial risk and develops and executes measures to mitigate and eliminate risks. 9

12 Corporate Governance Executive Committee of the Datacolor Group Albert Busch, 1967, NL / USA CEO BS / MS in Electrical Engineering MS in Industrial Management Since 2008 with Datacolor Since January 2009 CEO NV Bekaert SA, management roles Mark Leuchtmann, 1972, DE / CH CFO Dr. rer. pol. TU Munich Swiss Certified Accountant Since 2009 with Datacolor Private Equity Fund, Director / Senior Investment Manager Zurich Insurance Group, Head Financial & Transaction Analysis PricewaterhouseCoopers, Manager Brian Levey, 1957, USA Sales and Support BS in Chemistry Since 1996 with Datacolor Beckmann Instruments, management roles Ross McGovern, 1978, GB Human Resources MSc in Human Resources Management BS English and Politics Since 2012 with Datacolor General Electric Company, management roles Tae Park, 1963, USA Technology BS in Electrical Engineering / Biomedical Engineering Since 2010 with Datacolor Power Medical Interventions, Sr. VP of Engineering-Operations Kovio Inc., Program / IP Manager Osirix Inc., CTO Trans-Lite Inc., Director of Engineering Charm Bioengineering, Sr. Biomedical Engineer Rico Sauerborn, 1970, DE / IT Global Operations Business Administration & Engineering (Dipl. Wirtschafts-Ingenieur) Since 2009 with Datacolor Rieter Textile Instruments, Changzhou, China, Supply Chain Manager Spindelfabrik Suessen, Germany, management roles ebm Werke, Germany, management roles Albert Busch, Brian Levey, Rico Sauerborn, Ross McGovern, Mark Leuchtmann, Tae Park 10

13 Corporate Governance Executive Committee Other activities and and interest groups The Executive Committee members have no permanent management and consulting functions for significant interest groups and do not hold either administrative or political offices. Management contracts There are no management contracts. Compensation, shareholdings and loans Content and process in regard to compensation and share option programs Competence and process determining compensation and share option program On an annual basis the Human Resources and Compensation Committee provides a proposal for the fixed and variable compensation to the Board of Directors. If the compensation of an individual member of the Human Resources and Compensation Committee is affected, this member withdraws from the proceedings. The Board of Directors annually determines the fixed and variable compensations to its members on the basis of the proposal by the Human Resources and Compensation Committee. In the decision process about the compensation of an individual Board member, this member keeps his / her participation and voting rights. The Human Resources and Compensation Committee annually determines the fixed and variable compensation for the Executive Committee members and informs the Board of Directors accordingly. For the arrangement of the compensation and share option programs, Datacolor AG does not employ any external advisors. General principles and elements of the compensation Board of Directors The members of the Board of Directors (all are non-executive) are remunerated with a fixed cash compensation, as well as a variable compensation, which can also be paid in cash, or on request, to the extent defined annually at the discretion of the Board of Directors, remunerated in the form of options on registered shares of Datacolor AG. The fixed compensation is determined at the sole discretion of the Board of Directors. The variable compensation depends on the company s financial success, reflected in the organic growth of sales as well as the operating profit EBIT. However, the weighting of the latter is at the discretion of the Board of Directors. The Board of Directors decisions are not based on benchmarks. For further terms and conditions relating to the options on shares of Datacolor AG, which Board members may opt for as their variable compensation component (see above), refer to note 21 to the consolidated financial statements. In the year under review, the Board s variable compensation amounted to 27% of the fixed compensation. For more information on this as well as on the specific composition of the Board s compensation in the reporting year, refer to note 22 to the consolidated financial statements. Executive Committee The compensation of the Executive Committee consists of a fixed base salary in cash, a variable performance-based bonus in cash that can be used to purchase stock options, plus contributions to the pension fund and social insurances. The fixed base salary is mainly determined by the task to be executed, the responsibility to be assumed, the person s qualifications and experience, as well as the market environment. Human Resources and the Compensation Committee primarily refer to the findings of renowned studies relevant to the labor market of the US- American technology sector to determine salary bandwidths. Using this as a guideline, the Human Resources and Compensation Committee then defines the fixed salaries at their discretion for the Executive Commission. 11

14 Corporate Governance The criteria for determining the variable compensation (performance-related bonus) are defined in the regulations adopted by the Human Resources and Compensation Committee; these criteria are valid for several years and were last reviewed by the Human Resources and Compensation Committee in The performance-related bonus depends on the fulfillment of individual performance objectives and the financial success of the company. Initially, the pool available for performance-related bonuses is determined based on the two financial value drivers, organic growth in sales (without acquisitions or divestitures) compared to previous year figures and budget (60% weighting; previous year: 20%) as well as the operating EBIT compared to budget (40% weighting; previous year: 80%). The Board of Directors sets these targets during the budgeting procedure for a period of one year. The pool may reach a maximum of 200% of the budgeted target value of the variable compensation. The members of the Executive Committee (other employees might also be entitled to a bonus) receive individual performance-related bonuses based on the achievement of their individual performance goals from this pool. The pool depends on the company s financial success. Measurable individual goals are agreed during the Management by Objectives process at the beginning of the year between the Chairman of the Board of Directors and the CEO as well as between the CEO and the members of the Executive Committee. After the end of the fiscal year, the Human Resource and Compensation Committee assesses the fulfillment of these goals by the CEO and the other members of the Executive Committee. If the actual EBIT achieved falls below the target set by the Board of Directors by more than 50% (minimum threshold), the payment of variable performance-related bonuses is subject to approval by the Human Resources and Compensation Committee. No minimum threshold is determined for the achievement of the organic sales growth component. If actual EBIT realized exceeds budgeted target, 25% of the exceeding amount is allocated to the variable compensation pool. The additional contribution to the variable compensation pool in case of overachievement is limited to 200% of the total budgeted variable compensation pool for all employees (maximum threshold). The performance-related bonus is determined at 100% by the attainment of the individual targets (previous year: 80% individual target; 20% company success). For the CEO, the performance-related bonus may be a maximum of 82% and for the other members of the Executive Committee a maximum of 71% to 78% of the annual target salary. The target salary is made up of the fixed compensation plus the variable amount. To define the performance-related bonus of the Executive Committee, the Human Resources and Compensation Committee does not consult benchmarks. In the year under review, the performance-related bonus for the members of the Executive Committee amounted between 20% and 52% of the fixed base salary. The weighting of the individual goals and the financial success was the same for all members of the Executive Committee, with 80% for the individual goals and 20% for the financial success. The members of the Executive Committee will have the possibility to use a portion of their variable compensation (performance-related bonus) as determined by the Human Resources and Compensation Committee to purchase options on registered shares of Datacolor. A three-year blocking period is ensuring that the company s long-term success is rewarded. For further parameters of the share option plan, please refer to note 21 (management share option plan). For details on the Executive Committee s compensation in the year under review, please refer to note 22 to the consolidated financial statements. 12

15 Corporate Governance The pension and social insurance expenses include employer contributions to social security as well as the mandatory and non-mandatory occupational benefits. The expense regulations for the members of the Executive Board are basically the same as those for all other employees of the respective group company. Additional rules apply on lump-sum compensation of representatives and petty expenses for the members of the Executive Committee in Switzerland. These have been approved by the relevant cantonal tax authorities. The employment contract of members of the Executive Committee does not foresee a company car for their use. Share allotment in the year under review No shares were allotted during the reporting period. Shareholdings and options Holdings of shares and options as at September 30, 2012 are disclosed in note 22 to the consolidated financial statements. The purpose of the option plan is to promote investment by Executive Committee members in Datacolor AG in order to achieve greater identification with company goals and to align the interests of management with those of shareholders. The stock options are blocked for three years and entitle the holder to purchase registered shares at a ratio of 1:1. For detailed information refer to note 21 to the consolidated financial statements. Loans granted to executive bodies There are no outstanding loans granted to members of the governing bodies. Compensation for former members of governing bodies No compensation was paid to former members of governing bodies. Additional fees and remunerations Generally, additional fees and remunerations are not paid to members of the Board of Directors, Executive Committee members or related parties in an amount equal to or greater than half of the regular compensation for the given member. 13

16 Information for investors INFORMATION FOR INVESTORS Share capital The share capital amounts to CHF consisting of registered shares with a nominal value of CHF 1 each. The registered shares entitle the holder to one vote at the General Meeting, provided that the shareholder is recorded with voting rights in the Datacolor AG share register. Authorized capital There is no authorized capital. Conditional capital The share capital can be increased by a maximum amount of CHF (previous year: CHF 4 580) by issuing registered shares with a nominal value of CHF 1 each. This conditional capital increase was implemented to enable the exercise of option rights by the members of the Board of Directors and the Executive Committee. Shareholders are excluded from this purchasing right. Changes in capital Regarding capital changes caused by exercised options refer to note 21 and statement of changes in equity. Participation certificates There are no participation certificates. Limitations on transferability and nominee registrations There are no limitations with regard to transferability and nominee registrations. Convertible bonds and options Datacolor AG has no outstanding convertible bonds. Regarding options, refer to information on compensation above, notes 2 and 21 to the consolidated financial statements. Share listing Datacolor AG s shares are listed on SIX Swiss Exchange Zurich under security number Refer to Datacolor Share Information on page 4 for an overview of the stock market listing and details of the market capitalization. Legal status of shareholders Shareholders in Swiss public limited companies are granted extensive statutory participation and protection rights by law. These participation rights are further supplemented by the company Articles of Association. These ensure that, pursuant to the Code of Obligations, the Annual General Meeting of Shareholders is convened by placing a one-time announcement in the Swiss Official Gazette of Commerce (Schweizerisches Handelsamtsblatt) and by sending a written invitation to the registered shareholders. An item is added to the agenda of the Annual General Meeting of Shareholders if the corresponding request is received no later than 40 days before the date of the meeting. Every shareholder may, besides the independent proxy provided for by law, allow his or her shares to be represented at the Annual General Meeting by a shareholder with a written proxy form. Voting rights limitations Every shareholder entered with voting rights in the share register is entitled to vote. No new entries in the share register are made during the 22 days before the Annual General Meeting of Shareholders. There are no limitations on voting rights. Entry in the share register The entry of purchasers in Datacolor AG s share register is not subject to any conditions. Cross-shareholdings There are no cross-shareholdings. 14

17 Information for investors Shareholdings in companies There are no shareholdings in listed companies. Percentage shareholdings in unlisted companies are disclosed in note 28 to the consolidated financial statements. Significant shareholders Refer to Datacolor Share Information on page 4. Duty to make an offer The company s Articles contain no provisions regarding a duty to make an offer. Clauses on changes of control There are no clauses on changes of control. Auditors Duration of the mandate and term of office of the lead auditor Datacolor AG has appointed KPMG AG, Root / Lucerne as auditor. The mandate is granted by Datacolor AG s Annual General Meeting of Shareholders for a period of one year. The mandate was first given to KPMG in Thomas Studhalter has been auditor in charge since financial year 2007 / 08. Audit fee KPMG received an audit fee of TUSD 221 for the reporting year 2011 / Additional fees In addition to the audit fee, KPMG provided other services for TUSD 25 relating solely to tax consultancy services. Supervisory and control instruments vis-à-vis the auditors The Board of Directors holds at least two meetings a year with the auditor in charge of the mandate. The matters dealt with at these meetings include the planning and conduct of audits, the focus points of the audits and the findings thereof, the main points arising from management letters, the reports on special audits and the reports of the auditor and the group auditor. The Board of Directors has appointed a steering committee to manage the audits and to monitor implementation of the auditors proposals. This committee is made up of the Chairman, the CEO and the CFO of Datacolor AG and the auditor in charge of the mandate and meets regularly while audit work is being carried out. Information policy Publications Datacolor AG publishes a semi-annual report and an annual report in accordance with Swiss GAAP FER. Additionally, shareholders and the capital market are kept informed of current changes and developments through press releases. As a company listed on SIX Swiss Exchange, Datacolor AG is aware of its duty to disclose events relevant to its share price (ad hoc disclosure of price-sensitive information). Information of the periodical financial reporting as well as ad-hoc news releases and further information on the Datacolor Group can be accessed through website under the following link: Key dates Shareholders meeting: January 10, 2013 Semi-annual report: May 2, 2013 Press release: November 1, 2013 Press conference: November 28, 2013 Shareholders meeting: January 9,

18 Commentary to the Business Year 2011 / 12 DATACOLOR IN FISCAL 2011/12 Continued increase in net sales and double-digit profit growth In fiscal 2011/12, Datacolor s net sales increased in local currency by 3% to USD 55.9 million (FY 2010/11: USD 55.5 million). EBITDA rose by 14.0% to USD 6.8 million (USD 6.0 million) and EBIT by 14.3% to USD 5.4 million (USD 4.7 million). Net income significantly surpassed the previous year s result with an increase of 11.7% to USD 4.2 million (USD 3.8 million). Datacolor remains debt-free. The Company has a substantial net cash position of USD 24 million and a robust balance sheet with a solid equity ratio of 64.1% (September 30, 2011: 60.7%). Growth markets gain further in importance During the period under review, the share of sales generated by the Asia Pacific region increased to 31.3% (30.4%). Above all in China, Datacolor recorded pleasing growth due to the significant expansion of the direct sales organization in the reporting period. The North and South American markets also lifted their share of sales from 28.2% to 30.2%. Under the impact of the euro crisis, Europe s share of Group sales decreased slightly, but the region remains Datacolor's largest market, accounting for 38.5% (41.4%). Strategic investments in the expansion of the sales and service organization Datacolor is one of the world s leading suppliers of software and hardware systems for color management and measurement. The Group is the global market leader in the textile industry and in the color calibration of displays and printers. In the year under review, Datacolor further expanded its strong market position in key markets such as the automotive and plastics industries as well as manufacturers of paints and dyes. In the growth markets of China and India, the sales and service organization was substantially strengthened by more than doubling personnel from 20 to 45 employees. Datacolor intensified cooperation with local distribution partners in important emerging markets such as Turkey and Brazil. In the USA, the distribution channel for the Spyder product family was streamlined, which essentially simplified and intensified Datacolor s direct communication with its end customers. As a result, the average headcount increased by 12% to 311 fulltime equivalents, due mainly to the expansion of the sales organization in Asia. Numerous new product launches Datacolor continued to invest substantially in research and development to keep up a high pace of innovation and to increase the number of new product launches. The Group has a well-filled product pipeline with innovative instruments and software solutions for the measurement and communication of color. As a result of the optimized processes in the research and development department, the share of net sales decreased slightly to 10% (FY 2010/11: 12%), while the high innovation rate was maintained. During the year under review, Datacolor launched a significant number of new, innovative solutions such as the 45G portable spectrophotometer with integrated gloss measurement. The solution excels in color appearance evaluation of painted surfaces, plastic parts, package prints, automotive parts, and furniture. Measurements made with the 45G capture the effect of base color, gloss and surface texture on overall visual appearance. Ahiba QuickDose complements the innovative series of lab instruments for the textile industry. The patented solution allows an efficient and more precise chemical dosing in the dyeing process, accelerating the lab-to-production reproducibility. Datacolor also introduced MatchPigment 2.2, which is designed for the plastics sector as well as the paint and coatings industry. The innovative Smart Match technology significantly improves the prediction accuracy for color recipes and, thanks to its patented method, simplifies pigmented wood stain matching. Moreover, the fully upgraded fourth generation of the Spyder product range was successfully launched. The sophisticated technology of the innovative and easy-to-use Spyder4 family allows the precise calibration of monitors, laptops, projectors, TVs, ipads and iphones. The year under review also saw the launch of the innovative microchip-based Europa mini-sensor. This color sensor integrates seamlessly with OEM applications and is intended for the accurate color calibration of TVs, monitors and laptops. 16

19 Commentary to the Business Year 2011 / 12 Solid balance sheet and increased profitability On the back of continued process optimizations, Datacolor increased its gross profit margin by one percentage point from the satisfactory year-back figure of 64.4% to 65.4%. Mainly as a result of the newly introduced functional organization, the operating result (EBIT) developed positively with an increase of 14.3% to USD 5.4 million (USD 4.7 million). The EBITDA margin came to 12.1% (10.7%) and the EBIT margin to 9.7% (8.5%). Datacolor again utilized tax loss carry-forwards during the year under review. Tax expenses amounted to USD 0.7 million (USD 0.8 million), resulting in a tax ratio of around 15% (18%). Total assets amounted to USD 49.2 million (FY 2010/11: USD 47.3 million). At USD 24.4 million (USD 24.1 million), cash and cash equivalents together with financial assets accounted for approximately 49% of this figure. Datacolor remains debt-free and has a strong balance sheet with a substantial net cash position of USD 24 million and a solid equity ratio, which showed a further improvement to 64.1% (September 30, 2011: 60.7%). Datacolor AG (Holding) As in the previous fiscal year, Datacolor AG (holding company for Datacolor investments in subsidiaries) posted a balanced result at the level of the separate statutory financial statements in fiscal 2011/12. As a result of the distribution of a dividend of CHF 10 for fiscal 2010/11 (43% of that year's consolidated profit), the shareholders' equity of Datacolor AG (Holding) decreased to CHF 24.4 million (CHF 25.9 million). Outlook Datacolor aims to continuously raise sales by launching new products and increasing market penetration. The Group has a successful range of products and services, a well-filled development pipeline and a powerful, customer-orientated sales organization which will actively enter the market to ensure the systematic realization of the long-term growth potential. Given a continued reasonable economic trend, Datacolor is well positioned to achieve its ambitious medium-term objectives for growth and profitability through organic growth and targeted acquisitions. 17

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21 Datacolor Group FINANCIAL REPORT Financial year from October 1, 2011 through September 30, 2012 Datacolor Group Consolidated Income Statement 20 Consolidated Balance Sheet 21 Consolidated Cash Flow Statement 22 Consolidated Statement of Changes in Equity 23 Notes to the Consolidated Financial Statements 24 Report of the Statutory Auditor on the Consolidated Financial Statements 43 19

22 Datacolor Group CONSOLIDATED INCOME STATEMENT in TUSD 2011 / / 2011 Gross sales Sales deductions Net sales % % Cost of goods sold Gross profit % % Sales and marketing expenses Administrative expenses Research and development expenses Other operating income EBIT % % Financial income Financial expenses Profit before income taxes % % Income taxes Profit for the year % % USD USD Earnings per share 4 non-diluted diluted CHF CHF Earnings per share 1) non-diluted diluted ) The earnings per share in CHF has been calculated from USD to CHF by using the corresponding average rate of the period. 20

23 Datacolor Group CONSOLIDATED BALANCE SHEET in TUSD Assets Cash and cash equivalents Current financial assets Trade receivables Other receivables Inventories Current tax assets Prepaid expenses Current assets % % Property, plant and equipment Intangible assets Non-current financial assets Deferred tax assets Non-current assets % % Assets % % Liabilities and shareholders equity Financial liabilities Trade payables Current tax liabilities Other liabilities Accrued liabilities Short term provisions Current liabilities % % Other liabilities Long term provisions Deferred tax liabilities Non-current liabilities % % Liabilities % % Share capital Treasury shares Capital reserves Retained earnings Shareholders equity % % Liabilities and shareholders equity % % 21

24 Datacolor Group CONSOLIDATED CASH FLOW STATEMENT in TUSD 2011 / / 2011 Profit before income taxes Depreciation of property, plant and equipment Amortization of intangible assets Result from the disposal of non-current assets Changes in provisions Other non-cash positions Interest expense / income net Income from securities and dividends, net Interest paid Change in fair value of derivatives Income taxes paid / received Cash flow before changes in working capital Changes in trade receivables Changes in other receivables and prepaid expenses Changes in inventories Changes in trade payables Changes in other and accrued liabilities 17/ Cash flow from operating activities Investments in property, plant and equipment Divestments of property, plant and equipment Investments in intangible assets Divestments of financial assets Interest and dividends received Cash flow from investing activities Increase of financial liabilities Decrease of financial liabilities Purchase of treasury shares Exercise of stock options Consideration received for issue of stock options 35 0 Repurchase of stock options Dividends paid Cash flow from financing activities Increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Translation differences on cash and cash equivalents Cash and cash equivalents at end of the year

25 Datacolor Group CONSOLIDATED STATEMENT OF CHANGES IN EQUITY in TUSD Share capital 1) Treasury shares 2) Capital reserves 3) Accumulated Retained translation earnings 4) differences Total retained earnings Total share - holders equity Balance as of Dividends paid 5) Purchase of treasury shares 0 0 Translation differences Profit for the year Balance as of Balance as of Dividends paid 5) Reclassification of capital contribution reserve Exercise of stock options 6) Purchase of treasury shares Translation differences Profit for the year Balance as of ) The share capital as of September 30, 2012 consists of (previous year: ) registered shares with a nominal value of CHF 1 each, translated to CHF / USD with the closing rate as of September 30, ) Equals the historical purchase value of treasury shares (previous year: ). Shares purchased before October 1, 2008 were translated at the CHF / USD closing rate as of September 30, In the period ended September 30, 2012 Datacolor purchased 923 registered shares at an average share price of CHF for a total amount of TUSD ) The capital reserve comprises reserves from capital contributions confirmed by Swiss tax authorities (refer to the statutory financial statements of Datacolor AG) and the result of the execution of stock options. 4) The retained earnings contain legal reserves that are subject to certain legal restrictions with regard to their distribution. 5) A dividend of CHF 10 (previous year: CHF 12) per share was distributed in the reporting period. 6) For further information regarding the exercise of stock options refer to note 21 to the consolidated financial statements. 23

26 Datacolor Group NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1 General policies for the consolidated financial statements General Datacolor AG is a Swiss limited company, domiciled in Lucerne and is the parent company of the Datacolor Group, a worldwide leading provider of solutions for color measurement, management, communication and calibration. Basis of preparation The consolidated financial statements were prepared in accordance with Swiss GAAP FER and comply with Swiss law. The consolidated financial statements have been prepared in US Dollar (USD) and were rounded to the nearest thousand unit. The consolidated financial statements are prepared on a historical cost basis, except for financial current assets and derivative financial instruments which are recorded at market value. The preparation of consolidated financial statements in accordance with Swiss GAAP FER requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the financial statements. Such estimates and assumptions are based on management s best judgement at the date of the financial statements. In case such estimates deviate in the future from the actual circumstances, the original estimates and assumptions will be modified as appropriate for the year in which the circumstances change. Scope of consolidation The consolidated financial statements include the financial statements of Datacolor AG and its subsidiaries that are controlled by Datacolor AG. Control is presumed to exist when Datacolor AG owns, directly or indirectly through subsidiaries, more than one half of the voting power of an enterprise or otherwise exercises management control. Refer to note 28 to the consolidated financial statements for a listing of all Group entities that are included in the consolidation. The closing date for the financial statements of Datacolor AG and all its subsidiaries is September 30, with the exception of Datacolor Technology (Suzhou) Co., Ltd. and Datacolor Trading (Shanghai) Co., Ltd. (both as of December 31) as well as Datacolor Solutions Private Limited, domiciled in Mumbai (March 31) for which interim financial statements as of September 30 are prepared for consolidation purposes. There were no changes in the scope of consolidation during the fiscal year 2011/12 and previous year. As of October 1, 2011 the Belgian Branch of Datacolor International Ltd. was transferred into a new independent legal entity (Datacolor Belgium BVBA). This change did not imply any change to the scope of consolidation. Principles of consolidation The assets and liabilities included in the consolidated financial statements are measured according to uniform principles. Intragroup balances, intragroup transactions and material unrealized profits resulting from intragroup transactions are eliminated in the course of consolidation. Acquired (disposed) subsidiaries are consolidated (deconsolidated) upon the date of change of control. Foreign currency translation The financial statements of Datacolor AG and its subsidiaries are translated into US Dollar (reporting currency) for consolidation purposes. Assets and liabilities of subsidiaries denominated in foreign currency are translated at the exchange rate prevailing at the balance sheet date, the income statement is translated into the reporting currency at average exchange rate of the respective reporting period. Foreign currency differences deriving from the translation of equity and results of subsidiaries are recorded directly in retained earnings. 24

27 Datacolor Group In the financial statements of the individual subsidiaries transactions in foreign currencies are recorded at the exchange rate prevailing at the date of transaction. Assets and liabilities denominated in foreign currencies are translated at the rate of exchange at the balance sheet date. All resulting differences are recognized as exchange gains or losses in the income statement of the individual subsidiary. Segment reporting Segment information is presented following different geographic areas and disclosing segment net sales, assets and average number of employees. 2 Accounting principles Net sales and revenue recognition Net sales include all invoiced sales and services to third parties. Net sales is considered realized when the economic benefits and risks associated with the ownership and legal title of sold products or rendered services are transferred to the transacting third party. The major portion of net sales is made by selling hardware products and software. Revenue resulting from such transactions is recognized based on the underlying incoterms. As a result of the global customer base and various international distribution channels different incoterms are applied. Most maintenance contracts of the service business have a term of 12 months. Therefore, these sales are recognized on a proportioned basis over the contract period. Datacolor AG and its subsidiaries are not undertaking project business that would require an estimate of the project realization. Stock option plan As part of the performance oriented, variable compensation for members of the Executive Committee and the Board of Directors, a portion of the variable compensation can be used for the purchase of stock options for obtaining Datacolor registered shares. The maximum number of stock options is determined by the Human Resource and Compensation Committee and depends on the attainment of individual performance objectives within the past period and the operating performance of the Datacolor Group. The option premium is fixed and the strike price is valuated using the Black-Scholes-formula. The options are not linked to any further conditions. After allotment, the stock options have a blocking period of three years. Subsequent to the three year blocking period the options can be exercised within the following seven years. On execution of the stock option a settlement with Datacolor shares is intended. The option premium of the expected option allocation is recorded under payroll expenses in the period in which the service has been rendered. For options which can already be exercised or for which the blocking period expires within one year, the fair value of the personal expense at the date of allotment is recorded under accrued liability. For stock options with a remaining blocking period of at least one year the equivalent value of payroll expenses recorded at granting of options is disclosed under other non-current liabilities. In case of a termination of the employment relationship during the blocking period, the fair value of the option can be paid out in cash in exceptional cases. The option holder receives at the minimum the initially paid option premium. At the date of termination of an employment relationship of an option holder and when a cash settlement becomes apparent, the Group records the expected fair value compensation less the initial payroll expense. If the termination of the employment relationship incurs after the balance sheet date but before the external reporting date, material transactions will be disclosed as post balance sheet events. Deferred income taxes Deferred income taxes are provided following the comprehensive balance sheet liability-method and reflect in general all future temporary differences. The measurement of the deferred taxes is based on current tax rates applicable for the respective taxable entity. Deferred tax assets deriving from tax losses carried forward are only capitalized when the likelihood of recoverability is high and future taxable profits are sufficient to recover tax benefits stemming from the tax losses. 25