Annual Report 2004/2005

Transcription

1 Annual Report 2004/2005 Infranor Inter AG Schaffhauserstrasse 418 Postfach CH-8050 Zurich Phone +41 (0) Fax +41 (0) Responsible for Investor Relations: Martin Bölsterli, Chief Executive Officer Phone +41 (0) Fax +41 (0)

2 Contents Key Figures for the Infranor Group Infranor Inter Securities Profile 2004 / 2005 Business Year Switzerland Europe excl. Switzerland North America Corporate Governance Operating Companies of the Infranor Group Infranor Group Financial Report Infranor Inter AG Financial Report Addresses

3 Key Figures Infranor Group 1,000 CHF 00 / / / / / 05 Sales 85,979 67,182 63,365 67,827 60,706 Change versus previous year as % Gross margin as % of sales EBIT 8, ,741 3,647 1,122 Change versus previous year as % as % of sales Net profit/(loss) 5,346 8, , Change versus previous year as % Return on sales as % RONOA 1 (Return on net operating assets) as % EVA (Economic Value Added) 2,877 1, Cash flow from operating activities 1, ,910 3,032 2,213 Change versus previous year as % as % of sales Free cash flow 11,875 1, ,190 1,368 as % of sales Total assets 54,977 39,615 45,042 45,627 41,049 Shareholders equity 12,472 3,195 4,292 5,639 4,150 Equity ratio (%) Return on equity (%) Number of employees RONOA = EBIT / (working capital interest-free working capital borrowings) x Restatement in accordance with IFRS requirements 00/01 01/02 02/03 03/04 04/05 00/01 01/02 02/03 03/04 04/05 00/01 01/02 02/03 03/04 04/05 00/01 01/02 * 02/03 03/04 04/05 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Sales in 1,000 CHF Gross margin as % 10,000 8,000 6,000 4,000 2,000 0 EBIT in 1,000 CHF 6,000 4,000 2, ,000 4,000 6,000 8,000 10,000 Net profit in 1,000 CHF * includes a 5.7 million CHF depreciation charge due to embezzlement 2

4 Infranor Inter Securities Key stock figures 00 / / / / / 05 Number of bearer shares as at , , , , ,800 2 Share capital as at millions CHF Dividend per bearer share CHF Payout ratio % Consolidated EBIT per share CHF Consolidated earnings per share CHF Consolidated equity per share CHF P / E ratio In order to enhance comparability, these prior-year figures have been adjusted in line with the IFRS restatement 2 Increase due to conversion of bonds Stock prices CHF 00 / / / / / 05 High Low As at Market capitalization millions CHF 00 / / / / / 05 As at Key convertible bond figures 02 / / / 05 Number of bonds at year-end 900, , ,800 Number of bonds converted in the course of the year 0 3,000 20,200 Prices High in CHF Low in CHF As at Term December 18, 2002 until December 18, 2009; coupon 5 percent p.a.; par value CHF Conversion ratio: 4 bonds may be exchanged for one bearer share with a par value of CHF Share price performance of bearer share in CHF Infranor in comparison with SPI SSELQ Infranor SPI SSELQ 3

5 Profile Infranor Value added with controlled motion Activity Since it was founded in 1941, the Infranor Group has been focused on the automation of mechanical processes in industrial applications. Infranor s automation solutions enable the rapid and precise deployment of machinery, plant and equipment in industrial production, in the packaging industry, in industrial handling, in process engineering for foodstuffs, chemicals, pharmaceuticals, textiles and plastics and paper processing, and in medical and nuclear technology. Widely experienced in a variety of fields of application, Infranor is able to enter markets with new requirements at any time. Infranor sells both individual components and complete systems, and develops solutions tailored to the needs of the customer. For this, it mainly uses its own servomotors, electronics, controls and software to drive the solutions, coordinate several axes, and control motion sequences and entire machines. Infranor aims to provide a high level of value added by positioning itself in promising niche markets and offering applications that require extensive know-how and excellent engineering skills. Core expertise Infranor s core expertise is in intelligent mechatronics: translating electronic signals into controlled motion sequences and then incorporating these sequences into programmable systems. Organizational structure Infranor forms a cohesive, global network of independent operating units, each of which equips its customers in the field of industrial automation with the optimum motion solutions for their specific requirements. The engineering companies offer customized solutions. They have the extensive expertise they require to solve problems independently, using either complete systems or individual components. Their activities span engineering, the sale of Infranor and complementary products. The product companies offer their own highquality, basic products, which can be tailored to the specific requirements of OEMs. As independent suppliers of know-how and optimized products, they have their own strong identity. Their activities span product development, production, sales and service. Their know-how and their presence in various regions allows them to play an important role strengthening the engineering companies. Market Infranor sells to the three main geographical markets for automation, Europe, North America and Asia, where the total market volume for servomotors, servo-amplifiers, controllers, controls and electronic system components comes to several billion Swiss francs. On average, this market grows by more than 5 percent p.a. Within this overall market, Infranor is positioned mainly in niches which demand increased automation, flexibility, modularity and miniaturization in plant and machinery while also requiring customized and complex technical solutions. 4

6 World customer market Development and manufacturing companies Infranor sales system Engineering and sales companies (Centers of competence) Other suppliers Strategy Infranor addresses its potential customers and their specific needs directly, and presents its offering on the Internet and at trade fairs. Infranor puts its core expertise to optimum use by placing an emphasis on working in partnership with each and every one of its customers, and differentiates itself from its competitors by providing better value added. Through close working partnerships with its customers, Infranor updates its own industrial expertise, which it routinely applies in developing new products and systems tailored to customers specific needs. Wherever possible, Infranor supplies servomotors with intelligent servo-amplifiers and master controls developed and produced in-house. Financial targets Infranor s growth strategy is aimed mainly at improving its financial results. Over the medium term, Infranor targets an EBIT margin of more than 10 percent. As well as focusing on generating the necessary sales growth, it places an emphasis on conscientiously maintaining margins and carefully managing costs and finances. Sustainability Human resources Infranor actively promotes the continuing development of employees across the company through knowledge exchange and internal and external training. Each product company runs several courses a year for the engineering companies. By assigning a considerable amount of responsibility at all levels, Infranor requires and encourages its employees to be dedicated and self-sufficient. Environment Infranor is guided in its business activities by the principle that, in meeting today s needs, we should not jeopardize those of future generations. At product level, the pressure for miniaturization encourages careful and economic use of natural resources. At operating level, the rational use of energy is driven by ecological considerations. Using environmentally friendly packaging at every factory is one of Infranor s priorities. There are plans to introduce ISO standard across the Group. 5

7 2004 / 2005 Business Year Decentralized strategy proves its worth Thanks to its decentralized structure, the Infranor Group has a strong local foothold in the markets it serves. In Europe, and increasingly in the USA too, we make use of our close contacts with a broad base of OEM customers. Despite a relatively modest sales force headcount, the number of interesting customer projects was measurably increased again last year. This was achieved with the help of a refined screening system in regular use across the Group, which ensures that our specialists concentrate on projects that show promise. Last year saw sharp monthly fluctuations in incoming orders, and Infranor was not immune to the general reluctance to invest which prevails in the manufacturing sector. Nevertheless, we are convinced that we are pursuing the right strategy for the long term. The Best Solution principle In collaborating with our current and potential customers, we work on the Best Solution principle. We intend to offer every customer the best possible solution for their needs. In doing so, we use our own products wherever possible rather than as a hard and fast rule. We consider the main criteria for a best solution to be the best technical solution, service friendliness and the price. When it comes to the technology, we seek not the most ingenious or the cheapest solution, but that which provides the best combination of reliability, longevity and value for money. Birth of a new product Since its acquisition of Cybelec SA, the Infranor Group had been predicting that an additional market for complete systems would open up. And now we do indeed have a situation in Europe and the USA where customers increasingly wish to source systems as well as individual components from a single supplier. This puts suppliers with integrated systems at an advantage. Infranor is able to benefit from this trend, as our twenty years experience of designing, developing and supplying drive and control systems for bending presses enables us to apply the same know-how to general mechanical engineering. The last business year saw the birth of the new ELITE control system, which was developed by Cybelec SA, Yverdon. Since it is freely programmable and compatible with generally well-known programming systems and Infranor s drive components, this state-of-the-art instrument has a broad range of uses. As several drive units controllers and servomotors 6

8 Breakdown of sales by product Servomotors and sensors 32,4% Controllers and servo-amplifiers 28,0% Numerical controls 26,9% Service, repairs, spare parts 6,0% Traded products 6,7% Geographical breakdown of sales as % Switzerland 12,9% Europe excl. Switzerland 70,2% North America 13,0% Asia 3,9% are always required at the same time when a control system is applied, we predict not only appreciable growth but also a more secure future for our components business. We will, of course, continue to sell motors, servo-amplifiers, controllers and controls as individual components. Market focus Europe and the USA will continue to be the largest markets for controlled motion and drive systems, at least for the next five years. During this time, considerably higher volumes will be generated in Europe and the USA than in the Asian markets, primarily China, which are forecast to grow at an incredible rate. During the current business year, Infranor will build up a branch in China, thereby pursuing three aims: 1. to support our western customers when they relocate to China 2. to supply new Chinese OEMs and 3. to guarantee servicing for plant and machinery that has been fitted with Infranor systems and shipped to China. However, we will continue to focus our marketing on our western markets. Given that our market shares are still small, we see the greatest growth potential in these markets. Switch to IFRS Infranor s financial statements have until now been prepared in accordance with Swiss GAAP ARR (Accounting and Reporting Recommendations). For the 2004/05 business year, financial statements have for the first time been prepared in full compliance with International Financial Reporting Standards (IFRS). The switch was made with retroactive effect from May 1, 2003, i.e. figures for 2003/04 have been restated. They are therefore comparable with this year s annual statements. Consolidated Income Statement At 60.7 million CHF, consolidated sales were 10.5 percent down on the previous year (67.8 million CHF). This difference of 7.1 million CHF is attributable to just four business events. The main factors were the absence of the majority of a non-group one-off item (4.3 million CHF), the loss of a customer in the USA (0.7 million CHF) and the temporary loss of two Swiss customers (3.1 million CHF). Apart from these exceptional events, business was stable year on year. Although the sales trend was nevertheless disappointing, based on the results for the first six months, Infranor was able to forecast year-on-year sales growth in the region of 10 percent for 2004/05 as a whole. However, the general slowdown in the economy from November 2004 onwards had the opposite effect. The net loss for the year is due mainly to this drop in sales. The geographical breakdown of sales remained practically unchanged compared with the previous year, with Europe excluding Switzerland merely taking two percentage points from Switzerland. 7

9 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Breakdown of sales in sectors 00/01 Industrial manufacturing 52% Industrial handling/ assembly 13% Processing industry 7% Packaging 5% Service, repairs, spare parts 6% Others 17% 01/02 02/03 Research and development in 1,000 CHF 03/04 04/05 At 12.0 million CHF, the volume of orders on hand at year-end was slightly higher than it was at the beginning of the year (11.2 million CHF). The gross margin of 55.5 percent was sharply up on the previous year (53.4%). It would have been better even leaving aside the previous year s one-off item, which reduced the margin. Operating costs were held stable year on year. The personnel costs included in this item were 0.2 million CHF lower overall. As sales were too low, EBIT were an unsatisfactory 1.8 percent, resulting in a net loss of 0.7 million CHF, compared with the previous year s profit of 1.6 million CHF. The loss also includes the negative impact of currencies to the tune of 0.4 million CHF. Infranor was at least able to cushion the blow of lower sales with improved margins and strict cost management. All development projects (6.9 percent of sales) continued according to plan, unaffected by the increased cost pressure. Cash flow from operating activities reached 2.2 million CHF (3.0 million CHF). Free cash flow amounted to 1.3 million CHF (2.2 million) and served to reduce financial liabilities. Consolidated Balance Sheet Balance sheet total declined by 10 percent or 4.6 million CHF. On the assets side, all items under current assets were affected, especially cash and cash equivalents (1.5 million CHF) and trade accounts receivable (2.3 million CHF). The main items of note on the liabilities side included a 1.7 million CHF reduction in financial liabilities, a reduction in trade accounts payable (0.8 million CHF) and a 1.5 million CHF reduction in shareholders equity. Together with the subordinated convertible bond of 8.4 million CHF, capital and reserves continue to stand at 30 percent. Product segments Among the Infranor Group s product segments, motors and servo-amplifiers represented the same percentage of total sales as they did in the previous year. In contrast, Cybelec s controls increased sharply in percentage and absolute terms. They grew by 18 percent to reach 27 percent of total sales. Traded products declined from 13 to 7 percent in the absence of the previous year s one-off item. Organizational structure At the end of April/beginning of May 2005, the Infranor Group completed its organizational restructuring project. All former foreign branches have now been converted or incorporated into independent subsidiaries, with the exception of the Spanish branch, which will not be converted into a subsidiary until the time of its planned move. The European operating subsidiaries, with the exception of Cybelec SA and its subsidiaries in Italy and France and Mavilor Motors SA, have been brought together within Infranor Holding SA, which has its registered office in Coppet. This brings advantages from a management, legal and financial perspective. 8

10 Servomotor BLP 190 by Mavilor Motors SA Infranor securities Bearer shares At the beginning of the business year, the share price stood at CHF. It hit two intrayear highs of and CHF. Reflecting the general stock market trend and the trading statements we issued, it was fluctuating around the CHF-mark towards the end of the business year. The company does not influence the share price directly. Subordinated convertible bond At the end of the business year, the bid price stood at CHF. Use was made of the conversion options in comparatively few cases. (20,200 bonds converted into 5,050 shares). Annual Shareholders Meeting 2005 Due to the loss posted in 2004/05 and with an eye towards a flexible dividend policy, the Board of Directors will propose that no dividend be paid. Outlook The company started the new year with a slightly higher volume of orders on hand. On the basis of the detailed assessment of the demand situation, the Group has set itself the target of increasing sales by 10 percent in the current business year and generating a net profit of over 1 million CHF. By the time this report went to press, around half of all Group companies had increased incoming orders year on year. Consolidated incoming orders are also higher year on year. Both the number of projects and our product range are sufficient to meet the targets set. Firmer demand for our customers products is still lacking at the present time, but experience shows that the situation can turn around within a few months. The Group Management is sticking to its targets and projections. A word of thanks We would like to sincerely thank all our employees for their input, all our customers for their loyalty, all our business partners for their constructive cooperation and all our shareholders for the trust they have placed in us. Nicolas Eichenberger Chairman of the Board of Directors Martin Bölsterli Chief Executive Officer 9

11 Networked technology increases reliability and flexibility Suitable for a wide range of applications, our customer s looms produce all types of thickly woven tape (pictured) along with strong straps for fastening purposes, fire hoses and even artificial arteries. By using Infranor s servo technology networked via field buses with modern touch-panel controls, the customer substantially improved the ease-of-use and reliability of its looms. For this Swiss weaving machine manufacturer, proximity to the customer, technical expertise and value for money were also key factors in its decision to choose Infranor.

12 Switzerland Breakdown of sales in the key sectors for Infranor SA (excl. Cybelec) Industrial manufacturing 62,2% Industrial handling 8,0% Processing industry 3,5% Packaging 2,3% Repairs and spare parts 4,4% Others 19,6% Geographical breakdown of sales Cybelec Switzerland 3% Europe excl. Switzerland 84% North America 3% Asia 10% The segment comprises: Infranor SA, an engineering company headquartered in Coppet and with a branch in Zurich Cybelec SA, a product company in Yverdonles-Bains with the following subsidiaries Cybelec Srl, Milan (I) Cynum Industrie SA, Linas-Paris (F) Cybelec, Shanghai (representative office) Of all the subsidiaries, Infranor SA has implemented the Group strategy involving the best solution principle and the system approach most widely. Several systems solutions, consisting of the controls, their programming, a field bus system, drives and servomotors, have already been delivered. Infranor products are used in around 80 percent of cases on average and occasionally supplemented with third-party products for the purposes of optimizing a solution. Infranor SA suffered a temporary slump in sales as a result of sharply reduced demand from two OEM customers in the CD/DVD sector. Despite an almost 20 percent reduction in costs, the company was forced to post a loss in 2004/05. However, since the start of the current business year, the trend in incoming orders has been encouraging. Segment report Segment 1,000 CHF Switzerland Year 03 / / 05 Net sales 24,859 24,163 of which between segments 1,382 1,276 Depreciation and amortization EBIT 1, as % of net sales 4.2 Number of employees Total assets 13,056 12,364 Total liabilities 24,078 18,939 Cybelec SA, with its numerical controls for sheet-metal forming machinery, had to cope with a sharp increase in demand. Its sales efforts were very successful, mainly in China, Turkey and Italy, but unfortunately could not be translated into an equally successful result. Work carried out under warranties or free of charge depressed the margin, and sales and personnel costs were higher. The latter increased as a result of efforts to ensure the development of two future products, one of which is the aforementioned ELITE system. The launch of this PC-based system represents a strategic step aimed at building up a second business line alongside the successful but one-sided business of supplying the global market with control systems for bending presses and other forming machinery. ELITE 065 PLC Touch-Screen-Panel and Control by Cybelec SA 11

13 Meeting the specifications to a T The mobile telephone shown here is representative of countless devices and machines that incorporate printed circuit boards. These come in a variety of sizes and contain printed circuits that connect up a huge number of electronic components. The electronic components are inserted on the printed circuit boards using automated machinery, which picks up the individual components at high speed and places them on the printed circuit board with huge precision. Infranor SA in Rotterdam has been working together with one of the world s leading manufacturers of these insertion machines for many years. The customer values Infranor s adaptability and the extreme reliability of the MESA controllers and Mavilor motors.

14 Europe excl. Switzerland Breakdown of sales among the key sectors Industrial manufacturing 24% Industrial handling 25% Processing industry 10% Packaging 10% Repairs and spare parts 6% Others 25% This segment continues to generate the highest sales revenues, contributing around 50 percent of the total. It comprises eight companies. Engineering companies: Infranor SAS, Linas-Paris (F) Infranor SA, Badalona (E), foreign branch Infranor GmbH, Hanau (D) Infranor B.V., Oud-Beijerland-Rotterdam (NL) Infranor Ltd., Lincoln (UK) Product companies: Infranor Electronics SAS, Lourdes (F) Mavilor Motors SA, Barcelona (E) MESA Automation GmbH, Berlin (D) The engineering companies saw sales decline by between 8 and 33 percent. The largest fall was reported at the UK company, which was consequently given an overhaul (change of managing director, reduction in headcount) and equipped with a new sales plan. The first two months of the current year went well. At Infranor Badalona, sales remained constant (adjusted for the previous year s one-off item) thanks to the robust Spanish market. There was only a slight decline in EBIT. Segment report Segment 1,000 CHF Europe excl. Switzerland Year 03 / / 05 Net sales 53,263* 45,399 of which between segments 17,817 15,501 Depreciation and amortization EBIT 2,045 1,280 as % of net sales Number of employees Total assets 29,322 26,143 Total borrowings 14,388 16,947 * The figures include the aforementioned one-off item in Spain in the amount of 4.3 million CHF. The product companies supply to all Infranor engineering companies at arms-length prices as well as to third-party enterprises in countries where Infranor does not have its own companies. Mavilor has started to build up representative offices in other markets, mainly overseas, and was therefore the only company in this segment able to increase sales (by around 25 percent). In particular, MESA and Infranor Electronics felt the effects of the drop in incoming orders at the engineering companies, but like Mavilor, they were nevertheless able to end the year in positive territory. Due to the double margin system applied, the operating result (EBIT) in this segment is higher, as the margins of the engineering and product companies are added together. CD1-p 400 / 14 Drive by Infranor Electronics SA 13

15 Bending presses for improving global agricultural performance Agricultural machinery incorporates a large number of bent sheetmetal parts, all of which vary considerably in their size and complexity. Cybelec is the leading supplier of bending press controls. Its solutions comprise complete control systems, including all electric drive components. Cybelec produces a wide range, from small controls through to highly complex, multi-axis, fully programmable controls all featuring the same level of technical sophistication and developed to the same high standard. Cybelec controls are used worldwide by customers who also receive the support of the Cybelec service system.

16 North America Breakdown of sales among the key sectors Industrial manufacturing 40% Industrial handling 5% Processing industry 16% Packaging 2% Repairs and spare parts 15% Others 22% This segment includes Infranor, Inc., an engineering company in Naugatuck (CT) Automotion, Inc., a product company in Ann Arbor (MI) Infranor, Inc. grew sales by 20 percent year on year. The company benefited mainly from an upturn in business in the semiconductor industry and increasing demand among companies that equip printing plants, as well as from a general revival of the American capital goods market. Although the unfavourable rate of exchange between the dollar and the euro led to a slightly reduced gross margin, the company was able to more than triple EBIT. At Automotion, Inc., the loss of a major, longstanding customer had a severe impact. As Automotion s business is of a very longterm nature, meaning that it takes one to two years to win a new customer, it did not even come close to making up for this loss despite all its efforts. The company ended the year on a loss. Automation is currently in a transitional phase, during which it is introducing successor products and new customer-friendly programming software while at the same time extending its sales efforts to customers with a smaller number of units in order to reduce its dependence on a handful of large customers. The company aims to at least break even again in the current year. Segment report Segment North America 1,000 CHF Year 03 / / 05 Net sales 8,945 7,923 of which between segments 41 2 Depreciation and amortization EBIT as % of net sales Number of employees Total assets 3,250 2,541 Total borrowings 1,522 1,013 ISS Drive by Automotion, Inc. 15

17 Corporate Governance Transparency The chapter on corporate governance shows how Infranor Inter AG has organized the management and control functions within the Group. The corporate governance disclosures are fully compliant with the SWX Swiss Exchange directive on information relating to corporate governance. 1. Group structure and significant shareholders 1.1 Group structure The Infranor Group is divided into engineering and product companies (see page 22). These companies are not listed on the stock market. Infranor Inter AG s stake in these companies is shown on page 32, section 1.4. Infranor Inter AG shares are traded on the local caps segment of the SWX Swiss Exchange under securities number (Telekurs: INI, Reuters: IFNZ. See page 3 for further information on the shares and the market capitalization). Registered office of the company: Infranor Inter AG Schaffhauserstrasse 418 Postfach CH-8050 Zurich Tel. +41 (0) Fax +41 (0) Significant shareholders As at April 30, 2005, Perrot Duval Holding SA, Genf, which is listed on the SWX Swiss Exchange, held 78.5 percent of the shares in Infranor Inter AG. The Board of Directors is unaware of any other shareholders holding more than 5 percent of the share capital. 1.3 Cross-shareholdings There are no cross-shareholdings. 2. Capital structure 2.1 Share capital Infranor Inter AG has had a unitary share structure since The share capital amounts to 12.8 million CHF, divided into 640,800 bearer shares with a par value of 20 CHF. All the shares issued by the company are entitled to dividend payments. The share capital is fully paid up. As at April 30, 2005, the Infranor Group held 5,175 of its own shares (treasury shares), which, at the time of a dividend payout, are not entitled to a dividend. 2.2 Authorized and conditional capital At the Annual Shareholders Meeting of Infranor Inter AG held on October 31, 2002, a motion was passed to raise conditional capital of no more than 6,350,000 CHF, consisting of no more than 317,500 bearer shares, each with a par value of 20 CHF. According to article 5a of the Articles of Association, the company s share capital may be increased through the exercise of options or conversion rights which have been granted in connection with bonds or loans of the company or one of its subsidiaries. These shares are ex shareholders subscription right. 2.3 Changes in the capital of Infranor Inter AG as at April Share capital Statutory reserve Unappropriated retained earnings Total Last year, the share capital increased by 101,000 CHF to 12,816,000 CHF (previous year: increase of 15,000 CHF) as a result of bonds being converted. 16

18 2.4 Shares and participation certificates Infranor Inter AG has only bearer shares with a par value of 20 CHF. There are no votingrights restrictions of any kind applicable to these shares. 2.5 Profit-sharing certificates There are no profit-sharing certificates 2.6 Limitations on transferability and nominee registrations There are no restrictions of any kind applicable to the transfer or ownership of Infranor Inter AG bearer shares. 2.7 Convertible bonds and warrants/options Convertible bonds On December 18, 2002, the company issued a subordinated convertible bond of a maximum of 12.7 million CHF, carrying a 5 percent coupon. Four bonds, each with a par value of 10 CHF, may be converted into one new bearer share of 20 CHF between June 16, 2003 and December 11, 2009 or up to 10 calendar days prior to early redemption of the convertible bond. The convertible bonds have been traded over the counter at Valiant Bank, Berne and Bondpartners AG, Lausanne since March 18, Shareholders subscribed for 9 million CHF of the convertible bond issue. The listing of the maximum of 317,500 new bearer shares on the local caps segment of the SWX Swiss Exchange was approved on June 16, Options There are only employee options (see section 5.6). 3. Board of Directors 3.1 Members of the Board of Directors The Board of Directors consists of three executive and two non-executive members (see overview on page 18). The two nonexecutive members have never held an executive position within the Infranor Group. Neither do they have a significant business relationship with the Group. 3.2 Other activities and vested interests The members of the Board of Directors do not carry out any other activities and have no vested interests that would be of significance for the Infranor Group and are not mentioned in the overview on page Cross-involvement There is no cross-involvement among the boards of directors of listed companies. 3.4 Elections and terms of office The Annual Shareholders Meeting elects the Board members for a term of three years. Members may be re-elected. 3.5 Internal organizational structure and committees The Board of Directors is responsible for defining the Group s strategy. It also checks the company s basic plans and targets, and identifies external risks and opportunities. Proposals for the compensation and shareholdings of the members of the Group Management are submitted by the remuneration committee (Nicolas Eichenberger, Martin Bölsterli and Richard Müller) to the Board of Directors, which then approves these proposals. 17

19 Executive members of the Board of Directors Nicolas Eichenberger (1958), citizen of Geneva and Trub residing in Mies (CH) Responsible for sub-tasks within Infranor s Group Management Member since 1992 Chairman since 1999 Elected until 2005 Martin Bölsterli (1942), citizen of Baden and Winterthur residing in Ennetbaden (CH) Chief Executive Officer of Infranor Inter AG Member since 1991 CEO and Vice-Chairman since 1998 Elected until 2005 Francesc Cruellas (1947), Spanish citizen residing in Tiana (Barcelona/ E) Member of Infranor s Group Management and Head of Mavilor Motors SA Member since 1987 Elected until 2005 Nicolas Eichenberger trained in law and holds a chemistry degree (lic.chem.). Between 1992 and 1998, he was Chief Executive Officer of Infranor Inter AG. Since 1989, he has also worked for other Perrot Duval Group companies. He was previously employed at Sapal in Lausanne. Nicolas Eichenberger is Chief Executive Officer of Perrot Duval Holding SA and a member of the Board of Directors at other, unlisted companies. Martin Bölsterli graduated in mechanical engineering from ETH and has an extensive knowledge of business administration. During the course of his career prior to joining Infranor, he held senior management positions at large mechanical engineering companies in Switzerland and abroad, namely Maag Zahnräder AG, Bühler- Uzwil and Heberlein. He is also a member of the Board of Directors at other, unlisted companies. Francesc Cruellas studied mechanical engineering at the Technical University of Catalonia (Barcelona). He was already employed at Mavilor Motors SA (E) before the company was taken over by Infranor in He previously held a senior management position at a food company in Spain. Francesc Cruellas sits on the Board of Directors at other companies. Non-executive members of the Board of Directors Dr. Richard Müller (1949), citizen of Lenzburg (CH) residing in Oberlunkhofen (CH) Attorney-at-law Member since 1992 Elected until 2005 François Jaquier (1962), citizen of Villars-le-Comte (CH) residing in Monaco (MC) Independent investment adviser Member since 2001 Elected until 2005 Richard Müller is a graduate of the University of Zurich with a PhD in law. He worked as an attorney-at-law in Zurich from 1987 until he moved to Zug in He is a member of the Board of Directors of several unlisted companies. He was previously a legal adviser to banks and industrial enterprises. François Jaquier graduated in law from the University of Lausanne. He worked for Credit Suisse Group as head of its San Francisco office for four years and in Monaco for a further four years. He has been an independent investment adviser since He sits on the Board of Directors at other, unlisted companies. Maurice Eichenberger Honorary Chairman 18

20 Group Management Martin Bölsterli Chief Executive Officer Francesc Cruellas Mechanical components Pius Bernet (1957), citizen of Egolzwil, residing in Egolzwil (CH) Chief Financial Officer of Infranor Group since December 2002 Nicolas Eichenberger Special Tasks Pius Bernet completed basic business training in banking and holds degrees in business economics and accountancy. He has held senior financial positions at Mövenpick and Swissair Group and served as CFO at Schweiter, Motorola Schweiz and most recently at the EMEA/ASIA division of K-Tron International (USA). Pius Bernet has been the Infranor Group s Chief Financial Officer since December He does not sit on any Boards of Directors. In order to strengthen the Group Management until it is extended to include further members. Due to the size of the company and the fact that three executive members sit on the five-member Board of Directors, the Board does not currently appoint other committees. All tasks within the Board s area of responsibility are completed by the Board as a whole. The Board of Directors has a quorum if at least half of its members are present. It passes its resolutions with the majority of the votes cast. In the event of a tied vote, the Chairman has the casting vote. The Board of Directors met four times during the 2004/05 business year. 3.6 Definition of areas of responsibility The powers and responsibilities of the Board of Directors and the definition of the areas of responsibility of the Board of Directors and the Group Management are stipulated in the rules of organization. This can be inspected at the company s registered office. 3.7 Information and control instruments visà-vis the senior management Each month, the Board of Directors receives written reports detailing the sales, incoming orders and volume of orders of all Group units. Four times a year, it receives the units quarterly accounts, the consolidated accounts (income statement and balance sheet) and an overview of the key figures and the changes to these figures. These quarterly reports contain comparisons with the previous year, the budget and the latest year-end forecasts. Special events are always reported immediately. 4. Group Management 4.1 Members of Group Management (as at May 1, 2005) See descriptions above. For background information on Nicolas Eichenberger, Martin Bölsterli and Francesc Cruellas, please see the section above on the Board of Diretors. 19

21 4.2 Other activities and vested interests The members of the Group Management do not carry out any activities other than those mentioned in the overview and have no vested interests that would be of significance for the Infranor Group. 4.3 Management contracts ISA Management SA and Infranor Holding SA have a management contract in place with a company of the Perrot Duval Group. In the year under review, this company charged 315,569 CHF for management services. The same company was billed 62,900 CHF by ISA Management SA for services. The management contracts have been concluded for an indefinite period and may be terminated annually. 5. Compensations, shareholdings and loans 5.1 Content and method of determining the compensation The compensation of the non-executive members of the Board of Directors comprises a fixed fee and fixed expense allowances. This compensation is decided upon by the Board of Directors on the basis of proposals put forward by the remuneration committee. The compensation of the executive Board members is included in the pay they receive as members of the Group Management. As is the case with the compensation and shareholdings of the members of the Group Management, proposals for the amount of compensation are submitted by the remuneration committee to the Board of Directors, which then approves these proposals. 5.2 Compensations for acting members of governing bodies The compensation paid out during the year under review by one or more Group units directly or indirectly to governing body members who were fully or partly active during the 2004/05 business year came to 862,801 CHF in total. The compensation paid to nonexecutive members of the Board of Directors came to 30,000 CHF. No member of a governing body gave up their position in the year under review. 5.3 Compensations for former members of governing bodies The compensation paid out during the year under review by one or more Group units directly or indirectly to two former executive members of governing bodies came to 82,420 CHF in total. 5.4 Share allotment in the year under review None. 5.5 Share ownership The executive members of the Board of Directors and the members of the Group Management hold a total of 2,958 Infranor Inter AG shares. We would like to point out that the Chairman of the Board of Directors, Nicolas Eichenberger, is also Chief Executive Officer of Perrot Duval Holding SA. The non-executive members of the Board of Directors and parties closely linked to these members hold 500 Infranor Inter AG shares. Due to the fact the Infranor Inter shares 20

22 are bearer shares, it was not possible to ascertain the number of shares held by parties closely linked to Board members. 5.6 Options Since the 1998/99 business year, an active member of a governing body has been sold non-tradable options to purchase Infranor Inter shares. The number of options is determined based on the consolidated net profit. These options may be exercised at the earliest after three years and have a life of 8 years. One option entitles the holder to purchase one share. The strike price is the share price in the month prior to the grant date. A total of 4,910 options are held at the present time. Apart from these, no options have been granted. 5.7 Additional fees and remunerations Board member Dr. iur. Richard Müller charged a fee of 7,388 CHF for legal services. Members of the Board of Directors and Group Management have not billed Infranor for any other fees or remunerations. 5.8 Loans granted by governing bodies No loans were granted by governing bodies. 5.9 Highest total compensation The highest total compensation paid to a member of the Board of Directors during the year under review was 290,000 CHF. 6. Shareholders participation 6.1 Voting-rights and representation restrictions The company s Articles of Association do not contain any restrictions applicable to voting rights. 6.3 Convocation of the Annual Shareholders Meeting and Agenda The Annual Shareholders Meeting is called by the Board of Directors or by the governing bodies and persons designated in law. One or more shareholders who together represent at least 10 percent of the share capital may request that a Shareholders Meeting be called or an item be added to the agenda. Shareholders whose shares represent a par value of 1 million CHF may also request that an item be added to the agenda. 7. Changes of control and defence measures 7.1 Duty to make an offer The Articles of Association of Infranor Inter AG include an opting out clause. 7.2 Clauses on changes of control There are no clauses on changes of control benefiting the Board of Directors and/or members of Group Management and other key personnel. 8. Auditors 8.1 Duration of the mandate and term of office of the lead auditor Deloitte & Touche AG, Zurich has been the Infranor Group s auditor since 2003/04. Gerhard Ammann, as lead auditor, has been responsible for the mandate since 2003/04. BDO Visura, Zurich has been Infranor Inter AG s auditor since 1994/95. Lead auditor Andreas Wyss has held this position since 2003/ Statutory quorums The quorums stipulated in the Articles of Association for resolutions carried at the Annual Shareholders Meeting are in line with the legal quorums. 21

23 The group auditor and the auditor are each elected by the Annual Shareholders Meeting for one year. The external auditors conduct their work in accordance with legal provisions and the principles of the profession. 8.2 Auditing fees The auditing fees paid to Deloitte & Touche AG for auditing the consolidated financial statements of the Infranor Group and the Swiss companies excluding Infranor Inter AG and for auditing the restatements prepared as part of the switch to IFRS came to 110,000 CHF. BDO Visura Zurich charged 10,000 CHF for auditing the accounts of Infranor Inter AG. The foreign auditors charged a total of 179,441 CHF. 8.3 Additional fees No additional fees were paid out to the auditors alongside those mentioned above. 8.4 Supervisory and control instruments pertaining to the audit The auditor produces a written report for the Board of Directors (management letter). The Board discusses this report with the lead auditor. 9. Information policy We provide shareholders, financial analysts and financial journalists with clear and transparent information by means of our annual report, half-year report, annual media conference and Annual Shareholders Meeting. Quarterly figures and commentaries are distributed to the media and those shareholders whose addresses we have, and we brief the media on current events. The Infranor website ( contains a special section called For Investors. Infranor Inter AG reports on events that may affect the share price in accordance with Article 72 of the Listing Rules of the SWX Swiss Exchange regarding ad-hoc disclosures. Contact Our CEO and CFO are also available to answer questions personally: Martin Bölsterli Chief Executive Officer Telephone +41 (0) boelsterli@infrainter.ch Pius Bernet Chief Financial Officer Telephone +41 (0) bernet@infrainter.ch Forthcoming events October 6, 2005 Annual Shareholders Meeting December 20, 2005 Half-year results 22

24 Operating Companies of the Infranor Group As at Number of Company Activities Manager employees Engineering companies Infranor SA Engineering, sales and service Raymond Käser 9 CH-Coppet, Sales office: Zurich raymond.kaeser@infranor.ch Infranor SAS, Engineering, sales and service Patrice Delattre 10 F-Linas, Sales offices: Molsheim, Annecy delattre@infranorfrance.com Infranor SA Engineering, sales and service Josep Barbeta 18 E-Badalona (Barcelona) barbeta@infranor.es Sales office: San Sebastian Infranor B.V. Engineering, sales and service Robert Vermaase 5 NL-Oud-Beijerland r.vermaase@infranor.nl Infranor GmbH Engineering, sales and service Peter Fritsch 9 D-Hanau p.fritsch@infranor.de Infranor Ltd. Engineering, sales and service Adrian Hazelwood 5 UK-Lincoln, Sales office: Cranleigh a_hazelwood@infranor.ltd.uk Infranor, Inc. Engineering, sales and service, John Carbone 7 USA-Naugatuck, CT incl. Cybelec products jcarbone@infranorusa.com Product companies Automotion, Inc. Development, manufacture and sale Dean De Galan 20 USA-Ann Arbor, MI of intelligent drives ddegalan@automotioninc.com Infranor Electronics SA Development, manufacture and sale Gilles Lanquetin 36 F-Lourdes of intelligent drives g.lanquetin@infranor.fr Mavilor Motors SA Development, manufacture and sale of AC and Francesc Cruellas 74 E-Sta. Perpètua de Mogoda (Barcelona) DC servomotors as well as tacho generators fcruellas@mavilor.es MESA Automation GmbH Development, manufacture and sale Bernd Eberding 14 D-Berlin of intelligent drives eb@mesa-berlin.de Cybelec Companies Cybelec SA Development, manufacture and sale of controls, Dr. Jean-Pierre van Griethuysen 59 CH-Yverdon-les-Bains in particular for metal forming machines jpvangriethuysen@cybelec.ch Cybelec Srl Sales and service of Cybelec products Ing. Luigi Lionetti 4 I-Milano llionetti@cybelec.it Cynum Industrie SA Sales and service of Cybelec products Dr. Jean-Pierre van Griethuysen 1 F-Linas jpvangriethuysen@cybelec.ch Cybelec Sales and service of Cybelec products Yi Wan Li 3 CN-Shanghai yiwanli@cybelec.cn 23

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26 Infranor Group Financial Report 26 Consolidated Balance Sheets 27 Consolidated Income Statements 28 Consolidated Cash Flow Statements 29 Consolidated Statements of Changes in Equity Notes to the Consolidated Financial Statements: 30 Reconciliations from Swiss GAAP ARR to IFRS 32 Segment Reports 34 Consolidation Principles and Accounting Policies 40 Explanatory Notes on the Consolidated Financial Statements 50 Report of the Group Auditors 25

27 Consolidated Balance Sheets 1,000 CHF Note % % Assets Current assets Cash, cash equivalents and securities 5 5, , Trade accounts receivable 1, 6 13, , Other receivables , Inventories 1, 8 12, , Deferred charges 1, , Total current assets 4 33, , Non-current assets Financial assets Property, plant and equipment 9 4, , Intangible assets Deferred tax assets 1, 11 2, , Total non-current assets 4 7, , Total assets 41, , Liabilities Current liabilities Current financial liabilities 12 4, , Trade accounts payable 6, , Other current liabilities , Accruals and deferred income 14 3, , Short-term provisions Provisions for income taxes Total current liabilities 4 16, , Non-current liabilities Non-current financial liabilities 16 10, , Subordinated convertible bond , 17 8, , Long-term provisions 1, 18, Deferred tax liabilities 1, Total non-current liabilities 20, , Total liabilities 36, , Shareholders equity Share capital 22 12, , Capital reserves 8, , Revenue reserves Treasury shares Currency translation differences Profit /(loss) for the year , Total shareholders equity 4, , Total liabilities and shareholders equity 41, ,