Download pdf - Annual Report 2010

Annual Report 2010

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

Sporting GoodsMammut Sports Group: Mountaineering, climbing and winter sports equipment

Foam MaterialsFoamPartner: Foam products for industry and comfort applications

Automation Systemsixmation: Systems for automation of assembly and testing

Glass Processing SystemsBystronic glass: Systems for processing flat glass

Real EstatePlazza Immobilien: Management of the Conzzeta Groups portfolio of properties

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

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

www.conzzeta.ch

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Conzzeta at a glance

2010 2009

Group

Net revenue CHF m 1 051.9 955.2

Operating result CHF m 56.9 1.4

Group result CHF m 51.5 3.3

Free cash flow CHF m 17.6 141.8

Shareholders equity CHF m 982.7 978.3

Total assets CHF m 1 287.6 1 254.8

Shareholders equity as % of total assets % 76.3 78.0

Investments in property, plant and equipment and intangible assets CHF m 21.1 28.0

Number of employees at year-end Number 3 322 3 257

Net revenue per full-time position CHF thousand 324.9 300.4

Conzzeta AG

Net income for the year CHF m 68.7 36.5

Share capital CHF m 46.0 46.0

Total dividend CHF m 18.41 13.8

Number of shares on 12 / 31 bearer Number 406 000 406 000

registered Number 270 000 270 000

Gross dividend per share bearer (par CHF 100) CHF 40.001 30.00

registered (par CHF 20) CHF 8.001 6.00

Market price per share bearer high / low CHF 2 000 / 1 690 1 934 / 1 135

year-end CHF 1 900 1 800

Total capitalization on 12 / 31 CHF m 874 828

Group key figures per share

Group result bearer CHF 111.90 7.10

per share registered CHF 22.40 1.40

Cash flow from operating bearer CHF 164.50 313.30

activities per share registered CHF 32.90 62.70

Shareholders equity bearer CHF 2 136.40 2 126.70

per share registered CHF 427.30 425.30

1 As proposed by the Board of Directors

Se

e p. 84 et seq

. for detailed fiv

e-ye

ar sum

mar

y for Group

There is a noticeable recovery in the Conzzeta Groups business environment.

Consolidated net revenues rise by 10.1 % and the Group result improved significantly.

All industrial business units report growth in sales.

The main source of growth is Asia, where around a quarter of consolidated revenues are generated.

Changes in the exchange rate situation have a negative impact on revenue, result and equity.

The operating result (EBIT) and Group result both show a clear improvement compared with the previous year.

The Group remains very solidly financed, with an equity ratio of 76.3 %.

In view of the improved economic situation, the Board of Directors is proposing a one-third increase in the dividend.

The annual report is published in German and English.

The German version prevails.

Changes in personnel were up-to-date at the editorial deadline of March 17, 2011.

Published on March 30, 2011.

Net revenue (in CHF m)

2006

2007

2008

2009

2010

1 27

3.6

1 50

7 .0

1 47

2.5

955.2

1 051.9

1 500

1 750

2 000

1 250

1 000

750

500

250

0

2006

2007

2008

2009

2010

EBIT and Group result (in CHF m)

Ordinary result Extraordinary result Operating result (EBIT)

150

175

125

100

75

50

25

0

25

Free cash flow (in CHF m)

70.1

195.9

30

.8

141.8

17.6

250

300

200

150

100

50

0

50

2006

2007

2008

2009

2010

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

31.8

49.0

56.0

28.0

21.1

60

70

50

40

30

20

10

0

2006

2007

2008

2009

2010

Publication details

Publisher Conzzeta AG, Zurich

Concept and design Prime, Zurich

Photography Jolanda Flubacher Derungs, Sebastian Derungs, Eric Leleu et al.

Translation Hill Johnson Associates GmbH, Zollikon

Printing Staffel Druck AG, Zurich

Publishing system Multimedia Solutions AG, Zurich

Key figures

Key facts 2010

6 Foreword

9 Businessoverview10 BoardofDirectors11 GroupExecutiveBoardandCorporateStaff12 Overviewofthe2010businessyear18 InterviewwiththeGroupCEO20 Businessunits

27 Corporategovernance

39 Financialreport

81 Furtherinformation82 EmployeepensionfundsinSwitzerland84 Five-yearsummary86 Informationandcalendarforinvestors

Tableofcontents

ConzzetaAnnualreport2010

JacobSchmidheiny,ChairmanoftheBoardofDirectors(atleft)andRobertSuter,GroupChiefExecutiveOfficer(atright)

6


6

Foreword

toovercomethedramaticslumpandrespondtochangesinthemarketbecauseofthesetwinstrengths.Wehavethatinmindinexpressingourrecognitionandgratitudetoouremployeesallovertheworld.

The Conzzeta Group has emerged strengthenedfromthefinancialcrisis,withtheorderbooksshowingasustainedupwardtrend.Thisenablesustomoveforwardwithconfidence.

JacobSchmidheinyChairmanoftheBoardofDirectors

RobertSuterGroupChiefExecutiveOfficer

LadiesandGentlemen

Thingsare lookingup!Thisshortsentenceneatlysumsupthe2010businessyear.Thedramaticslumphasgivenwaytoamarkedandcontinuingrecovery.Theeconomicupturn is being fuelledbydemand inAsia,where theConzzetaGrouphasconsiderablystrengtheneditspres-enceinrecentyearsandnowgeneratesalmostaquarterofitsrevenues(23%).

Howeverwelcomethisupwardtrendmaybe,itmustbeconsideredoveranextendedperiod.Consolidatednetrevenuesarestillsignificantlylower(30%)thaninthepeakyears,anditmaybesometimebeforethatlevelisreachedagain.Measurestostrengthencompetitivenessandreduceoperatingcosts,whichprovednecessary,ledto amarked improvement in the result.However, it isnotyetenoughfortheGrouptosustainvigorousdevel-opment.

In other words, we must continue the efforts toincrease our competitiveness, including continuousrenewalandimprovementofproductsandservicesandconstant reduction of costs. This is also necessarybecausethestrengthoftheSwissfranchashadastrongimpact on our export-oriented Group, with its strongbase inSwitzerland.Theshift towardsgrowthmarketssuch as those in Asia creates opportunities for theGroup,but italsoposeschallenges.Theneedtokeeppace with the competition places great demands intheareasofmarketing,management,developmentandproductpricing.

Despitenumerouschallengesandeconomicuncer-tainties,includinggeopoliticalinstability,welooktothefuturewithadoseofoptimism.Thepressureofconstantrenewalandadaptationisanintegralpartofindustrialactivity,andtheConzzetaGroupiswellequippedtodealwith it.On theonehand, theGrouphasa committedand loyalworkforce; andon theother, it hasmaterialresourcesintheformofcapitalwhichmakeitpossibletoadoptalong-termapproach.TheGroupwasonlyable

Conzzetahasemergedstrengthenedandismovingforward.


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Foreword

8ConzzetaAnnualreport2010

8

Group10 BoardofDirectors11 GroupExecutiveBoardandCorporateStaff12 Overviewofthe2010businessyear18 InterviewwiththeGroupCEO

Businessunits20 SheetMetalProcessingSystems21 GlassProcessingSystems22 AutomationSystems23 FoamMaterials24 SportingGoods25 GraphicCoatings26 RealEstate

Businessoverview

PhilipMosimann,MemberoftheBoardsince2007

RobertF.Spoerry,MemberoftheBoardsince1996

WernerDubach,MemberoftheBoardsince1993

JacobSchmidheiny,Chairmansince1977

ThomasW.Bechtler,MemberoftheBoardsince1987

MatthiasAuer,MemberoftheBoardsince1996

AllBoardmembersareelecteduntilthe2011OrdinaryGeneralMeeting.

>FordetailedinformationontheBoardofDirectors,seepage30etseq.

BoardofDirectors

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


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Businessoverview/Group

CarloMenotti,HeadofCorporateServicesandSecretaryoftheBoardofDirectorssince2008

FerdiTngi,HeadoftheSheetMetalProcessingSystemsbusinessunitsince2002

KasparW.Kelterborn,GroupChiefFinancialOfficersince2006

RobertSuter,GroupChiefExecutiveOfficersince2009

RichardJakob,HeadoftheGlassProcessingSystemsbusinessunitsince2007

BarbaraSenn,GeneralCounselsinceFebruary2010

RolfG.Schmid,HeadoftheSportingGoodsbusinessunitsince2004

SergeEntleitner,HeadoftheGraphicCoatingsbusinessunitsince2009

RalphSiegle,HeadoftheRealEstatebusinessunitsince2003

BartJ.tenBrink,HeadoftheFoamMaterialsbusinessunitsince2009

MartinPfister,HeadoftheAutomationSystemsbusinessunitsince2005

>FordetailedinformationontheGroupExecutiveBoard,seepage33etseq.

GroupExecutiveBoardandCorporateStaff

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


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For the Conzzeta Group, 2010 brought a tangibleimprovementintheeconomicenvironmentfollowingthefinancialandeconomiccrisis.Theupwardtrendindemandled to a recovery in themarkets for capital goods andindustrialproducts.However,thedemandtrendsshowedregionalvariations.InEuropeandtheUSA,therecoverywasmostly slow and to some extent variable over thecourseoftheyear.InAsiaandothergrowthmarkets,ontheotherhand,thebusinessunitsbenefitedfromarapideconomic recovery and an early return tohighgrowthdynamics.TheoutdoormarketandtheSwissresidentialpropertymarketremainedstable.

TheConzzetaGrouprecordsasignificantimprovementintheresultandstrongsalesgrowthinAsia.

Further important economic factors included thetrend in rawmaterial prices and the exchange rate sit-uation. Higher rawmaterial prices as a result of risingdemandand increasedcrudeoilpriceshadaparticularimpactonthe industrialproductsmarket.TheGroupseconomic environment was also affected by changesintheexchangeratesituation.TheparityoftheSwissfrancagainsttheweakeuroandUSdollarwasaparticu-lardisadvantageforcompaniesexportingfromaSwissbase, with a negative overall impact on consolidatedrevenuesandtheGroupresult.

Thanks to the growth in Asia and the improvedcoststructure,theGroupwasabletopostasignificantlyimprovedresult.

Overviewofthebusinessyear

Netrevenuebybusinessunit2010 2009 Change

CHFm CHFm in%

SheetMetalProcessingSystems 410.9 356.1 15.4

GlassProcessingSystems 167.5 145.6 15.0

AutomationSystems 56.4 56.1 0.4

FoamMaterials 127.9 116.8 9.5

SportingGoods 221.2 215.3 2.8

GraphicCoatings 46.6 43.2 7.9

RealEstateandmiscellaneousrevenue 21.4 22.1 3.2

Total 1051.9 955.2 10.1


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Businessoverview/Overviewofthebusinessyear

DevelopmentofGrouprevenues

In the reporting year, the Conzzeta Group increasedconsolidatednetrevenuestoCHF1051.9million,ariseof10.1%overthepreviousyear(CHF955.2million).Afteradjustmentfornegativecurrencytranslationeffectsof 3.6% and divestment effects of 1%, the growthamountedto14.7%.

All the industrial businesses generated increasedsales.TheRealEstatebusinessunitproducedastableresult,takingaccountofthesaleoftwopropertiesinthepreviousyear.Thestrongestsalesgrowthwas recordedin themachinery and systemsengineeringbusinesses,whichwerehardesthitinthepreviousyearbytheslumpindemandduetotheeconomiccrisis.

Right fromthebeginningof theyear, salesof in-dustrialproducts(FoamMaterialsandGraphicCoatingsbusinessunits)wereonanrisingtrend,comparedwiththelevelayearago.Bycontrast,thethreebusinessunitsinthemachineryandsystemsengineeringsectorbegan2010withloworderbooks.Thissituationimprovedoverthecourseoftheyear,withanincreasinglypositiveeffectonsalesfigures.TheSportingGoodsbusinessunitalsoprogressedoverthecourseoftheyear,withsalesgrowingby2.8%,despitethedivestmentoftheTokobusiness(ski wax and care products) and currency translationeffects.

The share of machinery and systems engineeringinGroup revenuesagain rose slightly to60.4% (pre-vious year: 58.4%). In terms of geographic markets,Asias importance for the Group increased further inthereportingyear.ThankstotheGroupslong-termcom-mitmentandexpansionofitspresenceinAsia,salesintheAsiaandPacificmarketregionincreasedby53.9%toCHF242.1million.TheregionsshareinoverallGrouprevenuesgrewasaresultto23%(previousyear:16.5%).

Businessunits

SheetMetalProcessingSystemsThe Sheet Metal Processing Systems business unit(Bystronic) increased net revenues by 15.4% to CHF410.9million (previousyear:CHF356.1million).Ad-justedforcurrencytranslationeffects,theincreasewas19.3%.WhileAsiaexperienceda stronggrowth trendearlyintheyear,therecoveryinEuropeandtheUSAwashesitantanddidnotgainmomentumuntil the secondhalfof2010.Thegainswereparticularlymarkedinthegrowthmarkets ofAsia and SouthAmerica, in whosedevelopmentBystronichasinvestedinrecentyearsandwhich generate an increasing portion of the businessunitssales.Thankstotheimprovedordersituation,allBystronicGroupcompanieswereabletoendshort-time

Netrevenuebygeographicarea2010 2009 Change

CHFm CHFm in%

Switzerland 160.3 156.0 2.8

Euroarea 360.2 386.3 6.8

RestofEurope 140.5 130.7 7.5

TotalEurope 661.0 673.0 1.8

NorthandSouthAmerica 143.9 119.4 20.5

AsiaandPacific 242.1 157.3 53.9

Africa 4.9 5.5 10.9

Total 1051.9 955.2 10.1


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working. Bystronic launched important product inno-vations,suchasthefirstlaser-cuttingsystemwithfiberlaser technology (BySprint Fiber 3015), which wasawardedaprizeat theEuroBLECHtradefair.BystronicalsopresentedanewmachineaimedattheChinesemar-ket,whichwasdevelopedlargelyinChina.Inadditiontoproductdevelopment,thebusinessunitalsoinvestedinanewprocessingcenterforlargeparts,anewsalesofficeinSaigon(Vietnam)anditsmarketingplatform.TheBestchoice.campaign, running in40countries, increasedawarenessofBystronicasasupplierofcompletesystemswho is close to the customer, strengthening both thebrandandemployeemotivation.

GlassProcessingSystemsTheGlassProcessingSystemsbusiness unit (Bystronicglass) increased sales by 15% to CHF 167.5 million(previousyear:CHF145.6million).Adjustedforcurrencytranslationeffects, the increasewas21.1%comparedwiththepreviousyear.ThegrowthwasgeneratedlargelyintheAsianmarket,wheremajorordersboostedsalesinthearchitecturalglasssegment.Demandforvehicleglassprocessingmachineryfromtheautomotiveindustryalsorecovered. But there was little growth impetus fromtheEuropeanandAmericanmarkets,wherebusinesswaspartlyaffectedbytheadverseexchangeratesituation.In the Middle East and Eastern Europe, customersfinancing problems prevented the realization of someprojects.InEurope,demandbegantopickuptowardstheendoftheyear.Therecoverywasparticularlyappar-entintheserviceandsparepartsbusiness.Onthewhole,competitivepressureinthemarketisstillatahighlevel.Thebusinessunittightenedcostsandinvestedinprod-uctdevelopmentin2010.Bystronicglassdemonstratedthestrengthofitsinnovationpotentialbypresentinganumberofnewdevelopmentsatglasstec,theindustryslargesttradeshow.Theseincludedanewgenerationofmachineryforprocessingautomotiveglassandamachinefor uninterruptedproductionof triple-layer insulatingglassunitswithflexiblespacers.

AutomationSystemsTheAutomationSystemsbusinessunit(ixmation)closedthereportingyearwithsalesofCHF56.4million(pre-viousyear:CHF56.1million).Whencurrencytranslationeffects and the divestment of production automationactivitiesthepreviousyeararetaken intoaccount,thisequates to salesgrowthof13.9%. In the firsthalfof2010, customers, particularly in the automotive sectorandtheUSA,werereticentaboutcommittingtoinvest-

ments,butthesituationimprovedinthesecondhalf.IntheUSA,orderswerereceivedaboveall inthemedicaltechnologyandalternativeenergysegments.ixmationsinternationalpresenceenabledittoexecuteanincreasingnumberofrepeatordersforgloballyactivecompanies.CapacitywaswellutilizedattheplantinMalaysia,whereanewproduction andofficebuildingwas inauguratedinSeptember2010.Thebuildingisequippedwithsolarcellsmanufacturedbyanixmationcustomer.TheplantinChinaexecutedanumberoforders for theautomotiveindustry which came through the intermediary of theEuropeansubsidiaryinSwitzerland.InEurope,ixmationenteredthemarketwithaheliumleakdetectionsystemwhichcanbeusedforvariouspartsandcomponentsindifferentindustries.ThesystemwasdevelopedfromstarttofinishinMalaysia,whereitisalsoproduced.

FoamMaterialsThe Foam Materials business unit (FoamPartner) in-creasedsalestoCHF127.9millionin2010,anincreaseof9.5%comparedwiththepreviousyear(CHF116.8million).Adjustedfornegativecurrencytranslationef-fects, thebusinessunitposteda13.8%increasecom-paredwiththepreviousyear.Technicalfoams(industry,packaging and automotive) generated marked salesgrowth,althoughtheperformance inthefirsthalfyearwasbetter than in the second. InEurope, theGermanmarket recovered well. There was also clear volumegrowthinChinaandtheUSA,wherethecustomerbasewasexpandedinthereportingyear.Thecomfortproductsegment(mattressandpillowcores)closed2010atthesamelevelasthepreviousyear.ThestrengthoftheSwissfranchinderedexportsfromSwitzerlandandintensifiedthecompetitivestruggleontheSwissmarket,particularlyin the case of simpler products. On the procurementfront,FoamPartnerhadtoabsorbapriceriseonkeyrawmaterialsforfoamproduction,resultingfromincreaseddemand on the one hand and higher crude oil priceson theother.The reporting year sawnewproducts in-troducedandimprovementsinlogistics.Inthecomfortsegment, theentire foammaterialsofferingwasgivena major overhaul. In the technical foams segment, anewsealantfoamwaspresentedand introducedtothemarket.

SportingGoodsThe Sporting Goods business unit (Mammut SportsGroup)increasedsalesinthereportingyearby2.8%toCHF221.2million(previousyear:CHF215.3million).After adjustments to account for the sale of theToko


14


skiwax and careproducts business to theNorwegianSwixSportASwitheffectfromSeptember1,2010,aswellastheeffectsofcurrencytranslation,thegrowthinsalesequatedto6.7%.TheMammutSportsGroup,nowfocusedontheMammutbrand,wasabletoholditsowninthegrowingoutdoormarket.Thecompanyrecordedparticularly strong gains in the Japanese and Koreanmarkets,aswellasinGermanyandItaly.Mammutcon-tinuedtoinvestinitssalesnetwork,althoughinsomeplacesitisachallengetofindsuitablemarketingpart-ners and affordable, well-positioned locations for theMammutstores.Sales in thehomemarketofSwitzer-land,whereMammuthasaveryhighmarketshare,couldnotbemaintainedatthepreviousyearslevel.Thefoot-wearproductgroup,thenewbackpackcollection,climb-ing harnesses and the clothing lines all developedwell.ApatentdisputewithOrtovoxSportartikelGmbHrelating to avalanche rescue transceivers was settledamicably.Theretailtradereactedpositivelytothepres-entationofthenewEigerExtremecollection,whichgoeson sale in autumn 2011, aswell as to the companyscommitmenttotheincreasinglyimportantissueofcor-poratesocialresponsibility,inwhichMammutisplayingapioneeringroleinitsindustry.

GraphicCoatingsThe Graphic Coatings business unit (Schmid Rhyner)increasednetrevenuesinthereportingyearby7.9%toCHF46.6million(previousyear:CH43.2million).SchmidRhynerreturnedtogrowthinalmostallitskeymarkets,withjustafewremainingatthepreviousyearslevel.Thebusinessunitrecordedabove-averagegainsinAsiaandSouthAmerica,aswellassomeEuropeanmarkets.TherewasalsohealthygrowthinNorthAmerica.SchmidRhynergainedaboveallfromthelaunchofnewproductsandgeographicexpansionin2010,althoughdemandincom-mercial and packaging printing remained well belowthelevelpriortothecrisis.Oneofthebigchallengesinthereportingyearwastheshortageofprimarymaterialsforvarnishmanufacture,resultinginamassiveincreaseinmaterialpricesandcorrespondingadjustmentstosalesprices. Despite these developments, Schmid Rhynerwasabletomaintainsecurityofsupplyanddelivertoallcustomersontime.NewproductsweresuccessfullyintroducedinthedispersionvarnishesaswellastheUV-hardening line.Production capacity for thedispersionsproductlinewasexpandedin2010.

RealEstateTheRealEstatebusinessunit(PlazzaImmobilien)gener-atedrevenueofCHF20.9millionin2010(previousyear:CHF21.4million).Thedeclineof2.3%waslargelydueto lowerrental income,followingthesaleoftwoprop-ertiesthepreviousyear.Rentalincomeremainedstablein the Swiss residential propertymarket.There is stillanacuteshortageofapartments,particularlynearlargeconurbationssuchasZurich.Thedevelopmentplanfora residential estatewith around200 apartments on aformerindustrialsitebelongingtoConzzetainWallisellenwasmadeavailableforpublicinspection.Themunicipal-itywillprobablyvoteontheplanduring2011.

Earningssituation

Thecombinedeffectofvolumegrowthandthecapacityadjustments undertaken theprevious year enabled theConzzetaGroup tomakea clear return toprofit, alsoonanoperationallevel.Theoperatingresult(EBIT)im-provedbyCHF58.3million toCHF56.9million (pre-vious year: CHF 1.4 million). Operating profit rosein the second half of the year on the strength ofthehighervolumeofdeliveries.Overall,theresultwassignificantlyaffectedbynegativecurrencyeffects.Theoperatingmarginfortheyearasawholewas5.3%,sig-nificantlyhigherthanin2009,thoughitdidnotreturntothepre-crisislevel(8.8%in2007).TheGroupresultincludes an extraordinary profit of CHF 5.4 millionfromthesaleofbusinessactivitiesandproperties.TheConzzeta Group closed the 2010 business year with aGroupresultofCHF51.5million(previousyear:CHF3.3million).

Investmentsanddivestments

Investment activity in 2010wasmarkedby caution inviewofthepartlyuncertaineconomicenvironment.In-vestments in property, plant and equipment and in-tangibleassetsamountedtoCHF21.1million(previousyear:CHF28.0million).Themostsignificantinvestmentsinfixedassetswereanewproductionandofficebuildingfor the Automation Systems business unit in Penang(Malaysia) and a processing center for large parts attheSheetMetalProcessingSystemsfacilityinNiedernz(Switzerland).Investmentsinintangibleassetsincludedfurther development of the ERP systems within thevariousbusinessunits.TheSportingGoodsbusinessunit


15


sold the business activities of Toko, specialist in skiwaxandcareproducts,witheffectfromSeptember1,2010.

Freecashflow,financingandliquidity

In2010,theConzzetaGrouprecordedacashflowfromoperatingactivitiesofCHF75.7million(previousyear:CHF144.1million).Theincreaseinvolumeagaintiedupmorecapitalinthereportingyear.However,itwaspos-sibletomaintainsystematicmanagementofnetworkingcapital.The cash flow from operating and investmentactivities (free cash flow) generated by the ConzzetaGroupwasCHF17.6million(previousyear:CHF141.8million).Apart from investments inproperty,plantandequipment and intangible assets of CHF21.1million,there were net investments in securities of CHF 54.9million, as well as divestments of business activitiesamountingtoCHF9.7million.

Cash, cash equivalents and securities held by theGroupincreasedbyCHF54.9milliontoCHF510.9mil-lion(previousyear:CHF456.0million).

TheGroupissolidlyfinanced,withanequityratioof76.3%(previousyear:78.0%).

Dividends

Continuingtheflexibledividendpolicy,andinviewoftheimprovedeconomicsituation,theBoardofDirectors isproposing an increase in thedividend. Its proposal totheAnnualGeneralMeetingofShareholderswillbeforadividendofCHF40.00(previousyear:CHF30.00)perbearershareandCHF8.00(previousyear:CHF6.00)perregisteredshare.

Employees

In2010,theConzzetaGroupcreated65newposts.Attheendoftheyear, theworldwideworkforcestoodat3322employees(previousyear:3257).MostofthenewjobswerecreatedinAsia.

Staffchanges

In February 2010, Barbara Senn joined the Group asGeneral Counsel. She succeeded Thomas Emch whoretiredattheendofJune2010.TheBoardofDirectorsandGroupExecutiveBoardwouldliketothankThomasEmchforhiswork indevelopingthepostoverthelastfouryearsandwishhimallthebestforthefuture.

Trendsandoutlook

In spite of the prevailing uncertainties in the businessenvironment,Conzzetacan lookforwardto2011withsome confidence, partly thanks to the sustained levelofdemandfromcustomers.Therisksanduncertaintiesincludethemonetary imbalancesandhigh levelof in-debtedness affecting various countries, aswell as thepoliticalinstabilityinkeyregions.Theeconomicimpactof the devastating earthquake in Japan onMarch 11,2011,arestillunclear.Regardingthecurrencysituation,itistobeexpectedthattheSwissfrancwillmaintainitsstrengthagainsttheeuroandUSdollarin2011.

Employeesbygeographicarea2010

Switzerland1145

Germany875

RestofEurope344

NorthandSouthAmerica323

AsiaandPacific635

TotalEurope2364

TotalGroup3322


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Overall, there has been a significant recovery intheGroupsmarketenvironment.Thisappliestoindustrialproductsaswellasmachineryandsystemsengineering,whereincomingorderscontinuedtoriseoverthecourseof the2010businessyear, creatinga stronger startingposition for 2011.The outdoormarket and the Swissresidentialpropertymarketarealsoexpectedtobenefitfromafavorabledevelopmentinthecurrentyear.

Conzzeta aims to take advantage of growth op-portunities.However,despiteallthepositivesigns,theeconomic environment is still fragile and Conzzetawillcontinuetoproceedwithcautionwhenitcomestocosts and investments inexpansionprojects.Thegoalistoincreasethecompetitiveness in internationalmar-ketsandstrengthen theGroupspresence inemergingmarkets.


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Conzzetasuccessfullyovercametheeffectsofthefinancialcrisisinthe2010businessyearandisbackinoperatingprofit.Inthisinterview,GroupChiefExecutiveOfficerRobertSuterexplainswhyConzzetaisinbettershapetofacethefuture.

Mr. Suter, where does the Conzzeta Group stand today, compared with a year ago?Weareinmuchbettershapenow.Wehavecomethroughthefinancialcrisis.Revenuesareattheplannedlevelandwearebackinoperatingprofit.Thereareseveralreasonsforthispositiveturnofevents:first,theglobaleconomicsituationhasimproved;andsecond,ouremployeeshaveshown tremendous commitment in seizing whateveropportunitiespresentedthemselves.

How have the Groups main markets developed?The economic recovery has been variable with oneexception,Asia,wherewewereabletoachievedouble-digitgrowthinallareasofactivity.ConzzetaestablishedafootholdinAsiaearlyon,sowecannowreaptheben-efitsofthisdevelopment.Ontheotherhand,AmericaandourmainmarketinEuroperemainveryimportantforusandtherecovery intheseregions isonly justtakingoff.

What impact has the weaker euro and US dollar had on the run of business?Like many export-oriented businesses, the ConzzetaGrouphasbeenhardhitby theweaknessof thedollarandtheeuroagainsttheSwissfrancasignificantpor-tionofourproductionandvalue-creatingactivitiesarelocated in Switzerland. But there have always beenperiodsofcurrencyfluctuationinthepast;theyforceustobeevenmore innovative andproductive inSwitzer-land.That isnt such a bad thing. However, the speedwithwhichcompetitivenesshastoberampedupisverydemanding.

Conzzeta resolved to emerge stronger from the crisis. Did you achieve that goal?Yes,wedid.WeexpandedourbusinessesinAsia,care-fullyplannedourcapacitiesanddevelopedandlaunchednumerousnewproducts.Oneexampleisanewmachineforcuttingflatsheetmetalwithafiberlaser,forwhichwewonahigh-profileinnovationprize.Otherimportantinnovations are anew sealant foamandamachine foruninterruptedproductionoftriple-layerinsulatingglassunits with flexible spacers.We also used last year tostrengthenothercompetitivestrengths,suchassoftfac-tors,forexampletheBystronic:Bestchoice.programlaunchedbyBystronic(SheetMetalProcessingSystems)withtheaimofstrengtheningthebrandinternationally.Finally, I should again mention the strong growth oftheAsianbusiness.Duringthecrisis,wehavetakenonpersonnel, built up the first development center inChina,openedanewfactoryinMalaysia,andmadeclearprogresswithourSportingGoodsbusinessinJapanandKorea.

Conzzeta employees know you for your question: Why do people buy from us? Now a question in return: What added value does Conzzeta offer its business units? It is thepeople inacompany that reallymake thedif-ference. Conzzeta has a big influence in this respect,becauseitdeterminesthebasicvaluesandcultureoftheGroup. Innovation isoneofourbasicvalues.Asarule,goodideaswillalwaysgetbacking inourcompany.Wewant toofferemployeesanenvironment inwhich theyfeelateaseandabletodeveloptheirpotential.Ourbasicvaluesalso include reliabilityanda long-termperspec-

Significantgainsininnovation


18


tive.Thatbuildstrustwithemployees,managerialstaffand,ultimately,withourcustomersandbusinesspart-ners,too.

What are your goals for 2011?Myprimaryobjective is to securehealthyprofitabilityforthecompany.Toachievethat,Iwanttoensurethatthestrategiesofourbusinessunitsaremorefocusedandbuilding on existing strengths. We want to continuedeveloping our business in Asia and also to pursue amore active strategy in the Real Estate business unit.More generally, balancing risks and diversifying ourportfolioremain important.Andafurthercentralcon-cernistheneedtosecureskilledpersonnelandmanage-rialtalent.

And personally?Iamfullycommitted,withhead,handsandheart,tomyworkand likeeverybodyelse Ihavetomakesure Igetthework-lifebalanceright.ThatswhyIengageinsportsonaregularbasisandattachgreatimportancetorelaxeddaysonvacation.Veryimportanttomeisopencoopera-

tionwithemployeesandwithcolleaguesintheExecutiveBoardandtheBoardofDirectors.Workisonlyfunifyougetthehumaninteractionright!

Workisonlyfunifyougetthehumaninteractionright!


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Importanteventsin2010

Bystronic launches its first cutting system based onfiber laser technology, forwhich it receives aEuro-BLECH award.The system achieves perfect cuttingresults andmaximumpart yield, especiallywith thinsheets.

Bystronic advertisinghasanew taglineadded to itsname:Bestchoice.This representsthecompanyscommitmenttobeingthepartnerofchoiceforcustom-ers.Thecampaignstrengthenstheinternationalbrandaswellasthemotivationofemployees.

2008

2009

2010

NetrevenueinCHFm

745.1

356.1

410.9

Investmentsinproperty,plantandequipmentandintangibleassetsinCHFm

26.9

11.7

5.8

Numberofemployees

1627

1389

1393

Bystronicisaworld-leadingsupplierofsolutionsfortheprocessingofsheetmetalandothersheetmaterials.

The first laser cutting machine developed for themostpartinChinaispresentedinBeijing,indicatingBystronicsfocusontherequirementsofthegrowingAsianmarkets.

SheetMetalProcessingSystemsBystronic

OverviewBystronic Head:FerdiTngi Presence:worldwide,over20salesandservice

companies;threedevelopmentandproductionsitesinSwitzerland,GermanyandChina

www.bystronic.com

20

ConzzetaAnnualreport2010Businessoverview/Businessunits


Bystronic glass receives the Crystal AchievementAward of the American glass industry magazineWindow&Door for the most innovative machinein the glass processing category.The awardwent tothe sashline assembly system, a line for the fullyautomatedmanufactureofglazedcasements.

Bystronic glass launches the champspeed line ontothemarket,acompletelynewgenerationofmachinesforprocessingautomotiveglass.Thelineofferscutting,breaking,polishinganddrillingofautomotiveglass,withthegreatestprecisionandflexibility.

Bystronicglassoffershigh-qualitysystemsolutionsfortheprocessingofarchitecturalandautomotiveglass.

2008

2009

2010

NetrevenueinCHFm

244.6

145.6

167.5

Investmentsinproperty,plantandequipmentandintangibleassetsinCHFm

11.0

4.4

1.7

Numberofemployees

801

675

670

Deliveryofthe1000thinsulatingglasspressunder-lines the companys longyearsofexperience in thefieldofinsulatingglassmanufacture.

GlassProcessingSystemsBystronicglass

OverviewBystronicglass Head:RichardJakob Presence:worldwidesalesandservicenet-

work,withsixsubsidiariesandseveralrepre-sentativeoffices;threetechnologycenters(developmentandproduction)inGermanyandSwitzerland;oneproductionsiteinChina

www.bystronic-glass.com

21



ixmationenters themarket inEuropewithaheliumleakdetectionsystemmadeinAsia.Thesystemcanbeusedforleakdetectiononawidevarietyofpartsandcomponents(forexample,condensers,evaporatorsandcompressors).

InMalaysia, ixmation inauguratesanewproductionandofficebuildingwithasurfaceareaof4000m2.Theflatroofisfittedwithsolarcellswhichwereassembledbyacustomeronanixmationsystem.

ixmationisaninternationalsupplierofcustomizedautomationsystemsforassemblyandqualityassuranceinmassproduction.

2008

2009

2010

73.6

56.1

56.4

1.0

0.9

4.4

399

305

353

Globallyactivecustomersbenefitfromtheadvantagesof ixmations international presence. For example,technical consultation isprovided inEuropeand thesolutionsdevelopedareinstalledatproductioncentersintheUSAorinAsia.

NetrevenueinCHFm Investmentsinproperty,plantandequipmentandintangibleassetsinCHFm

Numberofemployees

AutomationSystemsixmation

Overviewixmation Leitung:MartinPfister Presence:fivelocationsinChina,Malaysia,

theUSAandinSwitzerlandwww.ixmation.com

22



In themattress coreproduct segment,FoamPartnerreplacesallcoldfoamswithanewgenerationoffoammaterial which is both highly elastic and climate-resistant.Yet again, FoamPartner setsmilestones infoammaterialtechnology.

FoamPartner introduces a new sealant foam to themarket.Thismaterialhaswinningcharacteristicswhichincludealowcompressionratio,remarkablehydrolyticstabilityandexcellentdensity.

FoamPartnermanufactureshigh-qualityfoammaterialsandofferscustomizedsolutionsfortheIndustryandComfortbusinesssegments.

2008

2009

2010

146.3

116.8

127.9

9.6

2.3

3.4

495

444

450

NewcustomersweregainedinChina,whilesalestre-bledcomparedwiththepreviousyear.


Numberofemployees

FoamMaterialsFoamPartner

OverviewFoamPartner Head:BartJ.tenBrink Presence:nineproduction,processingand

saleslocationsinEurope,AsiaandtheUSA;worldwidemarketingthroughapartnersalesnetwork

www.foampartner.com

23



MammutsellstheTokobusinesstotheNorwegianskiwaxmanufacturerSwix,allowingittoconcentrateonthe strongMammut brand and the growing outdoorsportsbusiness.

Ananalysisof76companiesaspartoftheCleanClothesCampaignconfirmsMammuts roleasapioneer in itsindustryontheissuesofcorporatesocialresponsibility.

200keyaccountcustomersandjournaliststestthenewEigerExtremecollectioninrealalpineconditionsoveratwo-dayperiod.Theprogramprovesagreatsuccessandrangesfromspendingthenightinasleepingbagat3600mtoabseilingfromthenorthwalloftheEiger.

MammutSportsGroupdevelops,manufacturesandmarketsinnovativemountaineering,climbingandwintersportsequipment.

2008

2009

2010

192.6

215.3

221.2

5.4

4.5

3.7

368

369

376

MammutAlpineUnderwear, the functional lineofunderwear introduced in2008,takesfirstplace inatestonKassensturz,SwissTelevisionspopularcon-sumeraffairsprogram.


Numberofemployees

SportingGoodsMammutSportsGroup

OverviewMammutSportsGroup Head:RolfG.Schmid Presence:worldwidesalesnetworkinover80

countries;headoffices,productdevelopmentandropemanufactureinSeon(Switzerland);numerousproductionpartnersinEuropeandAsia

www.mammut.ch

24



SchmidRhynerintensifiesitsbusinessactivitiesinAsiaandtheUSA,achievingaboveaveragegrowthinbothmarkets.

At thebeginningof theyear, there is a shortageofmain raw materials for the manufacture of varnish,leadingtosupplybottlenecks.SchmidRhynerisabletoguaranteesecurityofsupplyforitscustomersanddeliverontime.

SchmidRhynerdevelopsandmanufacturesenviron-mentallyfriendlyprintvarnishesandlaminatingadhesivesforthegraphicalindustry.

2008

2009

2010

47.5

43.2

46.6

1.0

1.1

1.5

39

45

47

Schmid Rhyner launches a new generation of user-friendlydispersionsofconsistentlyreliablequalityanddoublesitsproductioncapacityforwater-baseddisper-sionvarnishes.


Numberofemployees

GraphicCoatingsSchmidRhyner

OverviewSchmidRhyner Head:SergeEntleitner Presence:worldwidesalesnetworkinover

100countries;oneproductionsiteinAdliswil(Switzerland);onesubsidiaryinNewJersey(USA)

www.schmid-rhyner.ch

25



All Plazza Immobiliens residential properties arefullylet.

TheplansfortheredevelopmentofanindustrialsiteinWallisellenaremadeavailableforpublicinspection.Itisplannedtobuildaround200attractiveapartmentsonthisurbansite.Thenextmilestoneintheprojectisthevoteontheplanatthemunicipalassembly,prob-ablyduringthecourseof2011.

PlazzaImmobilienmanagestheConzzetaGroupsportfolioofproperties.

2008

2009

2010

22.0

21.4

20.9

1.0

3.0

0.1

16

15

16

In Brunnenthal (canton Solothurn) approximately42500 m2 of recultivated agricultural land is soldtotheformerleaseholders.


Numberofemployees

RealEstatePlazzaImmobilien

OverviewPlazzaImmobilien Head:RalphSiegle Presence:propertiesthroughoutSwitzerlandwww.plazza-immobilien.ch

26


28 Groupstructureandshareholders29 Capitalstructure30 BoardofDirectors33 GroupExecutiveBoard35 Contentandmethodofdetermining

compensation35 Shareholdersparticipationrights36 Changeofcontrolanddefensivemeasures36 Auditors37 Informationpolicy37 Significanteventssincethebalancesheetdate

Corporategovernance

1 Groupstructureandshareholders

GroupstructureThe Conzzeta Group is organized in seven businessunits:SheetMetalProcessingSystems,GlassProcessingSystems,AutomationSystems,FoamMaterials,SportingGoods,GraphicCoatingsandRealEstate.AtGrouplevel,Corporate Staff supports the activities of the holdingcompany, Conzzeta AG, and the operational units.ConzzetaAG, with its registered offices in Zurich, hasdirectorindirectequityholdingsinthecompanieslistedonpage66etseq.ConzzetaAGistheonlycompanythatis listed. The Conzzeta bearer share (Swiss securitynumber265798,ISINCH0002657986)islistedontheSIXSwissExchangeAG.Themarketcapitalization(bearershares)asofDecember31,2010,wasCHF771400000;the total capitalization (registered and bearer shares)amountedtoCHF874000000.

TheConzzetaGroupattachesimportancetoatransparentmanagementstructureandopendialogue.TheGroupisguidedbytheprinciplesoftheSwissCodeofBestPracticeforCorporateGovernance,whichitimplementsinaccordancewithitssizeandstructure.Italwaysactsincompliancewithlegalrequirementsandurgesitsemployeestodolikewise.ThefollowingreportisbasedontheSIXSwissExchangeAGDirectiveonInformationrelatingtoCorporateGovernance,validonDecember31,2010,insofarasapplicabletoConzzetaAG.

Thiscorporategovernancereportdoesnotincludeissueswhichcorrespondtolegalnorms.Incertainselectedcases,so-callednegativedeclarationsaregiven.

Significantshareholders

Percentageofsharesrepresented

Percentageofnominalcapital

in% in%

TEGULAAG,Zurich 81.8 74.2

Nodisclosureswerereceivedinthereportingyear.

Corporategovernance


28

Corporategovernance

2 Capitalstructure

CapitalandsharesThesharecapitalisfullypaid-up.TherewasnoauthorizedorconditionalcapitalasofDecember31,2010.

BearersharesparCHF100

RegisteredsharesparCHF20 Total

Numberofshares 406000 270000 676000

SharecapitalinCHF 40600000 5400000 46000000

EachsharehasonevoteattheGeneralMeetingofShareholders.Thedividendrightsoftheregisteredandbearersharesareproportionaltotheparvalueofthetwosharecategories.

ChangesinsharecapitalThesharecapitalofConzzetaAGhasnotchangedinthelastthreereportingyears.

LimitationsontransferabilityandnomineeregistrationsTheregisteredsharesarenotsubjecttoanytransferabilitylimitations.Accordingly,nomineesarelistedintheshareregister.


29

Corporategovernance

3 BoardofDirectors

1 2 3

4 5 6

GuidingprincipleThe Board of Directors provides a personnel and or-ganizational framework for the companys leadershipto exercise its responsibilities.The Board of Directorsassessestheprogressmadetowardachievingtargetsaswellasthefinancialresults.Instrategicdecisions,itseeks

to strikeabalancebetweenopportunitiesand risks inthecontextoffinancialsustainability. Itdelegatestheresponsibilityformanagement,withcomprehensivepow-ers,tothemembersoftheGroupExecutiveBoard,en-ablingtheexecutivestostriveproactivelyforbusinesssuccess.


30

Corporategovernance

MembersoftheBoardofDirectors1 JacobSchmidheinyLic.oec.publ.born1943

ChairmanoftheBoardofDirectorsMemberoftheBoardofDirectorssince1977In1976,hebecameamemberoftheExecutiveBoardofZrcherZie-geleien,todayConzzetaAG.From1978to2001,hewasPresidentandChiefExecutiveOfficer.Thetransitionfromtheconstructionmaterialsgrouptothepresent-dayindustrialholdingcompanytookplaceunderhisleadership.JacobSchmidheinyhasbeenChairmanoftheBoardofDirectorsofTEGULAAG,Zurich,since1984.

2 MatthiasAuerDr.iur.born1953MemberoftheBoardofDirectorssince1996Hehasprac-ticedasalawyerandnotarypublicinGlarussince1981.HeisamemberoftheCantonalCouncilinGlarus.MatthiasAuerisamemberoftheBoardofDirectorsofTEGULAAG,Zurich.

3 ThomasW.BechtlerDr.iur.,LL.M.born1949MemberoftheBoardofDirectorssince1987Since1982,hehasbeenamemberoftheBoardofDirectorsandCEOofHestaAG,Zug.From1975to1982,heheldvariousmanagerialpositionsatLuwaAG.ThomasW.BechtlerisVice-ChairmanoftheBoardofDirectorsofSikaAG,Baar,andamemberoftheBoardofDirectorsofBucherIndus-triesAG,Niederweningen.

4 WernerDubachDipl.Ing.Chem.ETH,MBAborn1943MemberoftheBoardofDirectorssince1993SincethesaleofthebeveragesandrealestatesegmentsofEichhofGroupin2008,hehasheadedDatacolorAG,Lucerne(formerlyEichhofHoldingAG)asChairmanoftheBoard.From1998to2008,hewasChairmanoftheBoardofDirectorsandChiefExecutiveOfficerofEichhofHoldingAG,Lucerne.In1983hebecameCEOandamemberoftheboardofBrauereiEichhof.Between1970and1983,heheldvariousmanagerialpostswithintheEichhofGroup.WernerDubachisaboardmemberofanumberofstart-upenterprises.

5 PhilipMosimannDipl.Ing.ETHborn1954MemberoftheBoardofDirectorssince2007HejoinedBucherIndustriesAG,Niederweningen,in2001,becomingChiefExecutiveOfficerin2002.Between1980and2001,PhilipMosimannheldanumberofmanagerialpositionswiththeSulzerGroup,Winterthur,includingSulzerInnotecAG(19801992),asHeadofDivisionSulzerThermtec(19921996)andasHeadofDivisionSulzerTextil,Rti(19972000).

6 RobertF.SpoerryDipl.Masch.-Ing.ETH,MBAborn1955MemberoftheBoardofDirectorssince1996HeisChairmanoftheBoardofDirectorsofMettler-ToledoInternationalInc.,Greifen-see,whichhealsoledasCEOfrom1993to2007.RobertF.SpoerryisamemberoftheBoardofDirectorsofHolcimLtd,Jona,SonovaHoldingAG,Stfa,GeberitAG,Jona,andSchaffnerHoldingAG,Luterbach.

AllmembersoftheBoardofDirectorsareSwissnationals.Nomember is actively involved in the executiveman-agementoftheConzzetaGroup,norhasbeeninthelastthreeyears.Apartfromtheroleofshareholder,nomem-berhassignificantbusinessrelationswiththeGroup.


31

Corporategovernance

ElectionandtermofofficeIn accordance with the Articles of Incorporation, theBoardofDirectorscomprisesat leastfourandnomorethaneightmembers.Itiselectedforatermofthreeyears.ThenexttotalrenewalisduetotakeplaceattheAnnualGeneralMeetingofShareholdersin2011.Therearenolimitationsontermsofoffice.

InternalorganizationTheBoardofDirectorsactsasanintegralbodyanddoesnotappointspecialcommittees.TheChairmanisinvolvedinandsupervisesthepreparationofthebasesfordeci-sionof theBoardofDirectors and the implementationofitsdecisions.Thesubstantivepreparationandopera-tional implementationof theBoardsdecisionsare theresponsibilityoftheGroupChiefExecutiveOfficer.Thisapplies in matters of strategy, financing, personnelappointmentsandimportantindividualtransactions.

TheGroupChiefExecutiveOfficer,theGroupChiefFinancialOfficer,theGeneralCounselandtheSecretaryoftheBoardattendBoardmeetings,unlesstheBoardofDirectorsdecidesotherwise.Inaddition,headsofbusi-nessunits,seniorexecutivesfromGroupcompanies,and,onoccasions,externalconsultantsarealsocalledupontotakepartinBoardmeetings,dependingonthespecifictopictobediscussed.Annually,theBoardofDirectorsholdsfourorfiveordinaryhalf-tofull-daysessions.Fivesuchmeetingswereheldin2010.

Risk assessment: theGrouphasmethodical proce-dureswhichservetheBoardofDirectorsasabasisforitsassessmentofthebusinesssituation,aswellasstrategic,financialandoperationalrisks.Inadditiontothefinancialreports and analyses (see Instruments of informationandcontrol),theseincludetheinternalcontrolsystemaswellasstrategicandoperativeriskmanagement.

CompetencesTheBoardofDirectorshasdelegatedresponsibilityformanagementoftheGroupsbusinesstothemembersoftheGroupExecutiveBoard,inaccordancewiththepow-erssetforthintheArticlesofIncorporation.

ThemembersoftheGroupExecutiveBoardandthemanagementsoftheindividualbusinessunitshaveexten-sivecompetencesinregardtothestrategicandoperationalmanagementoftheunitsassignedtothem.Itistheirtask,throughthecarefuldevelopmentofhuman,materialandorganizational resources, to deliver a competitive per-formanceinfuture-orientedindustriesaswellasrobustfinancialresults.Decision-makingcompetencesaregradedaccordingtotheirsignificanceandfinancialmagnitude.

TheBoardofDirectorshasthefollowingmainresponsi-bilities: determinationoftheGrouporganization appointmentofthemembersoftheGroupExecutiveBoard

supervisionofGroupmanagementandevaluationofprospectsandresults

determinationof theGroups strategic and financialgoals ratificationofthemainfeaturesofthebusinessunitstrategies

decisionsonimportantinvestments,divestments,proj-ects and financial obligations, the decision-makingcompetencebeing limitedtosumsexceedingthresh-oldsbetweenCHF3millionandCHF10million

determinationoftheprinciplesofaccounting,financialplanning,internalcontrollingandreporting

assessmentoftherisksituationoftheGroup,evaluat-ingtheopportunitiesandthesustainabilityintermsofhumanandfinancialresources.

InstrumentsofinformationandcontrolTheConzzetaGrouphasawell-developedplanningandinformationsystem.Itisbuiltfromthebaseup,becomingincreasinglyconcentratedtowardsthetop.

The Board of Directors is oriented verbally and inwritingaboutthestrategies,plansandresultsofallbusi-nessunits.TheBoardofDirectorsreceivesmonthlywrit-tenreportscomprisingthemainkeyfiguresandacom-mentaryonimportantevents.Everythreemonths,theBoard ofDirectors receives a detailed reportwith thecompletefinancialstatementsofthebusinessunitsandtheGroupandcomprehensivemanagementreports.Onanannualbasis,theBoardofDirectorsispresentedwiththemedium-termandannualplanningasabasisforitsdecisionsonthesematters.TheBoardofDirectorsalsoreceivesareportontherisksituation(seealsopage65),themanagementletteroftheauditorsandthereportontheemployeepensionfunds.

TheBoardofDirectorsmeetsinarotatingcycleforan in-depth reviewofkeystrategicquestionsatGroupand business unit level.At the invitation of the BoardofDirectors, the individualbusinessunitspresent theirsituationandplans.Aspecialdocumentationisproducedfor important individual transactions and presented atBoardmeetingsbythoseresponsible.

TheChairmanoftheBoardofDirectorstakespartinthestrategymeetingsofthebusinessunits,aswellasinsomeclosingdiscussionsandprojectmeetings.


32

Corporategovernance

4 GroupExecutiveBoard

1 RobertSuterDipl.Ing.ETH,MBAborn1958GroupChiefExecutiveOfficersince2009Startingin1995,RobertSuterworkedforABBinanumberofmanagementpositions.Mostrecently,asamemberofmanagementintheTransformers-businessunit,withworldwideresponsibilityfortheSmallPowerandTractionTransformersproductgroup.Between2000and2005,hewasheadoftheHighVoltageProductsbusinessunitandalsoservedasheadofABBoperationsinKorea.From1995to1999,RobertSuterwasCEOatMicafil.Before1995,heworkedatCellpackAG(asdivisionheadinCanadaandSwitzerland)andatOerlikonContravesAGasadevelopmentengineerintheaerospacefield.

2 BartJ.tenBrinkDipl.Ing.VATTilburg,Nether-landsborn1964HeadoftheFoamMaterialsbusinessunitsince2009From1991,heservedinvariousmanagementandseniormanagementpositionswithintheinternationalfoammanufac-turinggroupRecticelN.V.,forthelasttenyearsasheadoftwostrategicbusinessunits,compositefoamsandacousticalproducts,withworldwideresponsibility.From1995to1998,hewasasTech-nicalDirectorandIndustrialManagerresponsiblefortheNordflexGroupScandinavia(jointventureofRecticelInt.andShellScandinavia).Between1992and1995,heservedasPlantManagerofRecticelIndustryBuren.BartJ.tenBrinkisaDutchcitizen.

1 2 3

4 5 6

7 8 9


33

Corporategovernance

3 SergeEntleitnerMag.rer.soc.oec.born1964HeadoftheGraphicCoatingsbusinessunitHejoinedSchmidRhynerAGaschiefexecutivein2005.Since2009anautonomousbusinessunitoftheConzzetaGroup,thecompanywaspreviouslyman-agedasOtherIndustrialActivities.From2000to2005,hewasamemberofdivisionalmanagementofSefarAGinThal.AsAssistantVice-President,hewasresponsiblefordistribution,marketingandthebranchesinEurope,LatinAmericaandAfrica.Priortothat,heheldvariousmanagementpositionsinthetextilemachineryindustry.SergeEntleitnerisanAustriancitizen.

4 RichardJakobDipl.El.-Ing.ETHborn1950HeadoftheGlassProcessingSystemsbusinessunitsince2007Heservedinvariouspositionswith-intheSchindlerGroup,mostrecentlyheadingthecorporatetaskforce.From2000to2005,hewasSeniorVice-PresidentinchargeoftheEasternEuropemarketregionandlaterNorthernEurope.Beforethat,asamemberofexecutivemanagementofSchindlerSwitzerland,hewasresponsiblefortheprofitcenternewinstallationsandassembly,atSchindlerFranceforthehomemarketbusinessandasGeneralManagerforvariousmarketregionsinSwitzerland.

5 KasparW.KelterbornLic.oec.HSGborn1964GroupChiefFinancialOfficersince2006From2003untilmid-2005,hewasCFOandamemberoftheExecutiveBoardofUnaxisGroup.From1996to2002,heheldvariousinternationalseniorman-agementpositionsintheareaoffinanceatClariantGroup;between1992and1995,heworkedforSandozInternationalAGinSwitzerlandandabroad.KasparW.KelterbornisamemberoftheBoardofDirectorsofSimilasanHoldingAG,Sarnen.

6 MartinPsterEngineerFH,BScineconomics,MBAborn1966HeadoftheAutomationSystemsbusinessunitsince2005HejoinedtheConzzetaGroupin2004asCEOoftheformerSecklerAG.From2002to2004,hewasCEOofFeintoolAuto-mationAG,Aarberg.Between1996and2001,heservedinvariousleadingandmanagementfunctionsinthemachineindustry.

7 RolfG.SchmidLic.oec.HSGborn1959HeadoftheSportingGoodsbusinessunitHejoinedtheConzzetaGroupin1996asHeadofthesportsdivisionofArovaMammutAG.HetookoverasCEOoftodaysMammutSportsGroupAGin2000.Between1985and1995,heheldleadingpositionsinthepharmaceuticalindustryaswellasinthewatchandtouristindustries.RolfG.SchmidisamemberoftheExecutiveBoardofeconomiesuisseandamemberoftheBoardofDirectorsofCFHoldingAG,St.Gallen,andKuhnRikonAG,Zell.

8 RalphSiegleFed.dipl.inrealestatemanagementborn1959HeadoftheRealEstatebusinessunitsince2003From2002to2003,hewasinchargeofportfoliomanagementatMobimoAG,Zollikon.Between1993and1998,hewasateamleaderatLivitImmobilienManagementAG,Zurich,becomingheadofpropertymanagementandamemberofmanagementin1999.

9 FerdiTngiEngineerFH,MBAborn1951HeadoftheSheetMetalProcessingSystemsbusi-nessunitsince2002HejoinedtheConzzetaGroupin2000asHeadoftheMachineryandSys-temsEngineeringbusinessunit.From1997until1999,hewasHeadofdivisionEuropeNorthandamemberofGroupmanagementatAGIECharmillesGroup,LosoneandGeneva.Between1992and1996,hewasamemberofGroupmanagementatAGIEGroup,Losone,withresponsibilityformar-keting,salesandcustomerservices.From1974to1989,heheldvariousmanagementpositionsintheprecisioninstrumentandmachineindustry.

With the exceptionof SergeEntleitner andBart J. tenBrink,allmembersoftheGroupExecutiveBoardareSwissnationals.


34

Corporategovernance

5 Contentandmethodofdeterminingcompensation

Theamountofcompensationreceivedbythemembersof the Board of Directors and of the Group ExecutiveBoardisreportedinthenotestothefinancialstatementsofConzzetaAG(page73).

InaccordancewiththeArticlesofIncorporation,themembersoftheBoardofDirectorsdeterminetheirowncompensationonanannualbasis,takingaccountofthepersonalcontributionthateachhasmadeandthefinan-cialsituationofthecompany.

ThemembersoftheGroupExecutiveBoardreceiveasalarycomprisingafixedandavariablepart.Indeter-miningthefixedsalary,theindividualresponsibilityandexperience of the person concerned is taken into con-sideration.Thevariablepart(bonus)isbetween15and45% of the gross compensation and is based on theachievementoftheindividualmanagementtargetswhichare reviewed and agreed annually and which containquantitativeaswellasqualitativeelements.Thebonusreflects the overall situation and the extent to whichobjectiveshavebeenachieved;itisdeterminedbyfairconsiderationat theendof the financialyearandpaidoutinasinglecashsum.

A proposal regarding the compensation packagesforthemembersoftheGroupExecutiveBoardissubmit-tedbytheGroupChiefExecutiveOfficertotheChairmanoftheBoardofDirectorsforapproval.TheChairmanoftheBoardofDirectorsdeterminesthecompensationtobepaidtotheGroupChiefExecutiveOfficerandinformstheBoardofDirectorsonceayearaboutallcompensationpackages.Noformalizedcalculationmodelsareusedtodetermine compensationpackages, as appropriate ap-praisalofperformanceisconsideredtobeamanagementresponsibility.

TherearenoshareoroptionparticipationprogramsfororloanstomembersoftheBoardofDirectorsortheGroupExecutiveBoard.

6 Shareholdersparticipationrights

RestrictionofvotingrightsandrepresentationEvery bearer share and every registered share has onevoteattheGeneralMeetingofShareholders.Theregis-teredsharesofConzzetaAGarenotsubject to restric-tionsofvotingrights.

Statutoryquora(Article10oftheArticlesofIncorporation)A resolution of the General Meeting of Shareholderswhichcarriesatleasttwo-thirdsoftherepresentedvotesandanabsolutemajorityoftheparvalueoftherepre-sentedvotesisrequiredfor:1changestotheArticlesofIncorporation2changestothesharecapital3thelimitationorannulmentofsubscriptionrights4theliquidationoftheCompany

SubjecttoArticle704CO,theGeneralMeetingofShare-holderspassesallotherresolutionsanddecidesitselec-tionsbyanabsolutemajorityofthevotescast,excludingblankandinvalidballots.

ConvocationoftheGeneralMeetingofShareholders(Article7oftheArticlesofIncorporation)TheArticlesofIncorporationhavenorulewhichdiffersfromapplicablelegalstandards.TheinvitationtoAnnualand Extraordinary General Meetings is issued by theBoardofDirectors,orbytheauditorsasthecasemaybe,nolaterthan20daysbeforethedateofthemeeting.Theinvitation,whichsetsoutanagendaofmattersfordis-cussion, theproposalsof theBoardofDirectorsandwhereapplicableofshareholderswhohavedemandedtheconvocationoftheGeneralMeetingorthetablingofanitemontheagenda,ispublishedintheSwissOfficialGazetteofCommerce.

Agenda(Article7oftheArticlesofIncorporation)ShareholderswhorepresentshareswithaparvalueofatleastCHF1millioncandemandtheinclusionofanitemon the agenda.The requestmust be submitted to theCompanyatleast40daysbeforetheGeneralMeetingofShareholders.


35

Corporategovernance

Registrationsintheshareregister(Article4oftheArticlesofIncorporation)From the date of invitation to a General Meeting ofShareholdersup to thedayafter theGeneralMeetingitself,noregistrationswillbeacceptedinthesharereg-ister.

7 Changeofcontrolanddefensivemeasures

Dutytomakeanoffer(Article5oftheArticlesofIncorporation)Optingout:personsorcompaniesacquiringsharesintheCompany are not under obligation tomake anoffer inaccordancewiththeFederalActonStockExchangesandSecuritiesTrading.

8 Auditors

DurationofthemandateandtermofofficeoftheauditorinchargeThestatutoryauditorsofConzzetaAGandgroupauditorssince1939areKPMGAGinZurich,oritslegalpredeces-sor.Theauditor incharge,HanspeterStocker,hasheldthispositionsincethe2010businessyear.

AuditingfeesandadditionalfeesIn the reporting year, the auditors responsible for theGroups annual financial statements and some of theGroupcompaniesannualfinancialstatementssubmittedaccountsforthefollowingfees:Auditingfees:CHF384108Additionalfees:CHF159228

InformationalinstrumentspertainingtotheauditorsTheChairmanrepresentstheBoardofDirectorsvis--vistheauditors.Afterhearing theauditors and theGroupChiefFinancialOfficer,theChairmandeterminesthemainpointstheCompanywishestobecoveredbytheaudit.He discusses the audit resultswith the auditors, alongwith theGroupChiefExecutiveOfficerandtheGroupChief Financial Officer, and assesses the results. TheGroupChiefFinancialOfficeradoptstherecommendedimprovements.TheBoardofDirectorstakesnoteoftheauditorsreportswhicharecommenteduponbytheheadauditoratanordinarymeetingoftheBoardofDirectors.TheChairmanandtheGroupChiefFinancialOfficerbrieftheBoardofDirectors about their assessment and themeasuresadopted.They informtheBoardofDirectorsabouttheauditingcostsandgivetheiropinionofthequalityoftheauditservicesprovided.Unlessthereisacompellingreasontodoso,theBoardofDirectorsmakesnofurtherassessment.


36

Corporategovernance

9 Informationpolicy

TheCompanypublishesanannualreportasofDecember31andaninterimreportasofJune30.Interestedpartiesare informed about the financial statements and otherimportant events in writing. A conference is held formedia representatives and financial analysts in con-junctionwiththepublicationoftheannualreportasofDecember31.Theconsolidated financial statements inaccordancewithSwissGAAPFERgiveatrueandfairviewoftheactualcircumstances.

ThisandotherinformationabouttheCompany,calendardatesandcontactscanbefoundathttp://www.conzzeta.ch

10 Significanteventssincethebalancesheetdate

SergeEntleitner,HeadoftheGraphicCoatingsbusinessunit, hasgivennotice andwill leave theGroup in July2011.


37

Corporategovernance

38


38

Consolidatedfinancialstatements41 Incomestatement42 Balancesheet43 Cashflowstatement44 Statementofchangesinshareholdersequity45 Notestotheconsolidatedfinancialstatements66 Listofconsolidatedcompaniesbybusinessunit68 Statutoryauditorsreport

FinancialstatementsofConzzetaAG70 Incomestatement71 Balancesheet72 Notestothefinancialstatements75 Additionalinformationonthefinancialstatements77 Proposedappropriationofavailableearnings78 Statutoryauditorsreport

Financialreport

Conzzeta Annual report 2010 Financial report

2010 2009

Notes CHF m CHF m

Net revenue 3 1 051.943 955.166

Changes in inventory and own work capitalized 4 25.916 50.675

Total revenue 1 077.859 904.491

Cost of materials 5 531.674 421.391

Personnel expenses 6 269.216 286.691

Other operating expenses 7 185.539 159.704

Depreciation on property, plant and equipment, and financial assets 16, 17 31.524 32.386

Depreciation on intangible assets 18 3.020 5.674

Operating result 56.886 1.355

Financial result 8 2.605 0.608

Result from unconsolidated investments 9 0.123 0.150

Ordinary result before taxes 54.404 0.597

Extraordinary result 10 5.400 10.138

Result before taxes 59.804 9.541

Taxes 11 8.228 6.199

Minority interests 0.117 0.071

Group result 51.459 3.271

Consolidated income statement Group

Conzzeta Annual report 2010

41

Financial report

Consolidated balance sheet at December 31 Group

2010 2009

Notes CHF m CHF m

Assets

Cash and cash equivalents 404.008 403.284

Securities 12 106.903 52.700

Trade receivables 13 167.704 166.030

Prepayments to suppliers 5.088 4.282

Other receivables 14 18.109 14.668

Prepaid expenses and accrued income 8.799 7.829

Inventories 15 204.430 204.967

Current assets 915.041 853.760

Property, plant and equipment 16 320.330 349.886

Financial assets 17 45.044 44.075

Intangible assets 18 7.152 7.084

Fixed assets 372.526 401.045

Total assets 1 287.567 1 254.805

Liabilities and shareholders equity

Trade payables 89.386 59.170

Advance payments from customers 19 34.293 24.995

Short-term financial liabilities 6.592 5.484

Other short-term liabilities 20 10.433 10.533

Accrued expenses and deferred income 21 66.232 69.028

Short-term provisions 22 24.532 28.905

Short-term liabilities 231.468 198.115

Long-term financial liabilities 23 8.876 8.510

Other long-term liabilities 0.084 0.126

Pension fund liabilities 0.435 0.860

Long-term provisions 22 63.973 68.925

Long-term liabilities 73.368 78.421

Share capital 24 46.000 46.000

Capital reserves 1.600 1.600

Retained earnings 934.834 930.491

Shareholders equity excluding minority interests 982.434 978.091

Minority interests 0.297 0.178

Shareholders equity including minority interests 982.731 978.269

Total liabilities and shareholders equity 1 287.567 1 254.805


42

Financial report

2010 2009

Notes CHF m CHF m

Group result 51.459 3.271

Minority interests in net income 0.117 0.071

Depreciation 32.817 36.969

Impairments 1.727 1.091

Gain on disposal of fixed assets and business activities 7.389 14.323

Change in provisions and pension fund liabilities 7.462 4.843

Other non-liquidity-related positions 2.189 1.717

Cash flow from operating activities before change in working capital 69.080 23.953

Change in inventories 18.036 82.807

Change in trade receivables 15.638 67.159

Change in prepayments to suppliers 0.906 3.121

Change in other receivables, prepaid expenses and accrued income 5.659 15.345

Change in trade payables 33.161 17.475

Change in advance payments from customers 12.198 9.301

Change in other liabilities, accrued expenses and deferred income 1.470 21.495

Cash flow from operating activities 75.670 144.114

Investment in property, plant and equipment 18.034 25.878

Divestment of property, plant and equipment 2.367 20.362

Investment in financial assets and securities 72.978 32.711

Divestment of financial assets and securities 23.896 38.060

Investment in intangible assets 3.097 2.160

Divestment of business activities 25 9.748

Cash flow from investing activities 58.098 2.327

Cash flow from operating and investing activities (free cash flow) 26 17.572 141.787

Dividend paid to holding company shareholders 13.800 27.600

Change in short-term financial liabilities 1.035 2.000

Change in long-term financial liabilities 0.614 1.355

Change in other long-term liabilities 0.038 0.691

Cash flow from financing activities 12.189 24.936

Effect of currency translation on cash and cash equivalents 4.659 0.241

Change in cash and cash equivalents 0.724 117.092

Cash and cash equivalents at 1 / 1 403.284 286.192

Cash and cash equivalents at 12 / 31 404.008 403.284

Consolidated cash flow statement Group


43

Financial report

Consolidated statement of changes in shareholders equityat December 31 Group

Share capital

Agio / capital

reserves Retained earnings

Total excl. minority interests

Minority interests

Total incl. minority interests

Currency translation

effects

Other retained earnings

Value fluctuation

financial instruments

CHF m CHF m CHF m CHF m CHF m CHF m CHF m CHF m

At 12 / 31 / 2008 46.000 1.600 47.110 998.229 2.027 1 000.746 0.114 1 000.860

Group result 2009 3.271 3.271 0.071 3.342

Dividend payment 27.600 27.600 27.600

Change to market value of financial instruments 1.223 1.223 1.223

Currency translation effects 2.897 2.897 0.007 2.890

At 12 / 31 / 2009 46.000 1.600 44.213 973.900 0.804 978.091 0.178 978.269

Group result 2010 51.459 51.459 0.117 51.576

Dividend payment 13.800 13.800 13.800

Change to market value of financial instruments 1.362 1.362 1.362

Currency translation effects 34.678 34.678 0.002 34.676

At 12 / 31 / 2010 46.000 1.600 78.891 1 011.559 2.166 982.434 0.297 982.731


44

Financial report

General principles

The consolidated financial statements comprise the audited financial statements of the Group compa-

nies of Conzzeta AG at December 31, using accounting policies which are consistent throughout the

Group and in accordance with Swiss GAAP FER. For the 2010 consolidated financial statements, the

historical costs have been reported using the same valuation policies and basis as in the previous year.

The principle of individual valuation has been applied to assets and liabilities.

Consolidation principles

Scope and method of consolidation The consolidated financial statements include the financial statements of Conzzeta AG and of all com-

panies directly or indirectly controlled by Conzzeta AG, through investments with more than 50 % of

the votes or by another means, and uniformly managed. These investments are fully consolidated. The

share of the minority shareholders in the net assets and net result is disclosed separately. Investments

with 50 % of the voting rights are consolidated on a pro rata basis in accordance with the share in the

capital. Intragroup receivables and payables as well as expenses and income are offset against each

other, and intragroup profits have been eliminated. The assets and liabilities of companies included in

the consolidation for the first time are valued at current values. Goodwill arising from this revaluation

is capitalized and amortized to the income statement. First-time consolidations are included from the

date on which control is acquired; deconsolidations from the date on which control is relinquished. In-

vestments in associates (at least 20 %, but less than 50 % of the voting rights) are accounted for under

the equity method. Other minority interests are valued at acquisition cost, less any necessary provi-

sions for diminution in value.

A list of the consolidated companies and the associated companies can be found on page 66 et seq.

Foreign currency translationThe financial statements of foreign Group companies are prepared in their respective functional curren-

cies and translated into CHF as follows:

balance sheets at year-end exchange rates

income statements at annual average rates

cash flow statements at annual average rates

The resulting translation differences, as well as foreign currency gains and losses on long-term, equity-

like loans to Group companies, are taken directly to the consolidated shareholders equity.

All gains and losses resulting from transactions in foreign currencies as well as adjustments to foreign

currency balances at the balance sheet date are recognized in the income statement.

Notes to the consolidated financial statements


45

Financial report

Accounting and valuation policies

Cash and cash equivalentsCash and cash equivalents include cash on hand, postal checking and bank account balances as well as

fixed-term deposits with a maximum residual term of 90 days.

SecuritiesThe securities are marketable, readily realizable monetary and capital investments (including struc-

tured financial products). They are shown at market value.

ReceivablesTrade receivables and other receivables are shown at invoiced amounts, less appropriate provisions for

debtors risks. Specific provisions for bad debts are accounted for where required.

InventoriesInventories are shown at the lower of acquisition or production cost and fair value less cost to sell.

Production cost is calculated without imputed interest. Discounts are recognized as purchase price

reductions. Provisions are made for inventories that are difficult to realize or slow-moving.

Property, plant and equipmentLand has been valued at acquisition cost less impairment adjustments. Other tangible fixed assets are

valued at acquisition or production cost less accumulated depreciation. Depreciation is calculated using

the straight-line method over the estimated useful life of the asset. Estimated useful lives are as

follows:

Properties for rent 30 to 45 years

Factory buildings 30 to 40 years

Plant and machinery 5 to 12 years

Tools, fixtures and fittings, vehicles 2 to 8 years

IT hardware and office machinery 3 to 5 years

As a result of the Groups diversified business activities, it has a broad range of fixed assets, and the

useful lives of property, plant and equipment vary. In the estimated useful lives of properties for rent

and factory buildings, the loss in value of short-lived components is also taken into account.


46

Financial report

Financial assetsFinancial assets are valued at acquisition cost, less appropriate provisions for value adjustments. Also

recognized in the financial assets are employer contribution reserves not subject to renounced use.

Intangible assetsIntangible assets include goodwill arising from the acquisition of business activities as well as of formu-

las, licenses, trademarks and software. Goodwill and other intangible assets are generally amortized

to the income statement over their estimated useful life using the straight-line method. Normally, this

is five years for goodwill and between three and five years for software and licenses.

Impairment of assetsThe value of assets is assessed at regular intervals. Where there are signs of loss of value, the realizable

value is reassessed. If the book value exceeds the realizable value, an additional depreciation adjust-

ment is made.

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

ProvisionsProvisions are formed when an event likely to give rise to an obligation occurs prior to the balance sheet

date, and the amount involved and / or the settlement date are uncertain, but can be estimated. This

obligation can have legal or factual grounds. In the case of land which contains waste or noxious mate-

rials, there is a legal obligation to undertake measures for remediation or decontamination. An appro-

priate provision is made for such cases.

Deferred taxesDeferred income tax is provided for all temporary differences arising between the tax bases of assets

and liabilities and their carrying value for reporting purposes, using the currently enacted tax rates on

an entity level. Movements in the deferred tax provision are included in the tax position in the income

statement. Deferred taxes for loss carry-forwards are only capitalized when in all probability future

taxes on profits can be offset.


47

Financial report

Employee pensionsThe pension obligations of Group companies in respect of retirement, death and disability benefits are

based on local rules and customs in each country. Regular contributions are paid to government bodies,

autonomous pension funds or insurance companies. The pension and benefit payments and outstand-

ing benefits during the accounting period and the regular contributions to the various pension funds

are charged to the income statement. The private pension plans in Switzerland are defined contribution

schemes for the creation of retirement assets for conversion into fixed pensions, with additional risk

benefits. Certain foreign Group companies have defined benefit schemes. These are valued and pre-

sented in accordance with the standards of Swiss GAAP FER 16. Any actual economic impact of the

pension funds on the company is calculated at the balance sheet date. An economic benefit is only

capitalized when this is to be used for the future service cost of the company. An economic obligation

is recognized as a liability when the requirements for the formation of a provision are met. Freely avail-

able employer contribution reserves are shown as assets. The difference between the annually deter-

mined economic benefits and obligations and the change in the employer contribution reserves are

included in the income statement.

The summarized statement for the autonomous pension funds in Switzerland is valued in accordance

with Swiss GAAP FER 26 and shown on page 82 et seq. Actuarial reviews are undertaken on a regular

basis.

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

Derivative financial instrumentsForward exchange contracts and options are used to hedge against some currency risks arising from

business operations. Hedge transactions, like the underlying transactions, are shown at market value

and recognized in the balance sheet as accrued income or expense. Value changes on hedge trans-

actions against future currency risks will be shown directly in equity until completion of the underlying

transaction.


48

Financial report

Additional notes to the consolidated financial statements

1 Changes in the scope of consolidationCompany closures and internal mergers:

Bystronic Slovakia s.r.o. in Bratislava (Slovakia) was liquidated with effect from March 12, 2010.

Bystronic Solution Centre Inc. in Ottawa (Canada) was liquidated with effect from December 31, 2010.

Swilac Immobilien AG and Prebe AG in Zurich (Switzerland) were merged with Plazza Immobilien AG in

Zurich (Switzerland) with effect from January 1, 2010.

The present structure of the Group companies is shown on page 66 et seq.

2 Currency translation rates

Year-end

exchange rates Year-end

exchange rates Annual

average rates Annual

average rates

2010 2009 2010 2009

CHF CHF CHF CHF

Euro area 1 EUR 1.25 1.48 1.38 1.51

USA 1 USD 0.94 1.03 1.04 1.08

Great Britain 1 GBP 1.45 1.67 1.61 1.69

Sweden 100 SEK 13.95 14.50 14.48 14.20

China 100 CNY 14.17 15.10 15.39 15.90

South Korea 100 KRW 0.08 0.09 0.09 0.09

Japan 100 JPY 1.15 1.11 1.19 1.16

Malaysia 100 MYR 30.53 30.10 32.35 30.80


49

Financial report

Consolidated income statement

3 Net revenue

CHF m %

Net revenue 2009 955.2 100.0

Changes in Group revenue 2010 due to:

currency translation effects 34.3 3.6

divestments 9.5 1.0

acquisitions

changes in quantity and price 140.5 14.7

Total change 96.7 10.1

Net revenue 2010 1 051.9

The divestment effect is due to the disposal of the Toko product line, with effect from September 1, 2010,

and the disposal of ixmation AG, Pieterlen (Switzerland), with effect from September 1, 2009.

2010 2010 2009 2009

CHF m % CHF m %

Net revenue by business unit

Sheet Metal Processing Systems 410.9 39.1 356.1 37.3

Glass Processing Systems 167.5 15.9 145.6 15.3

Automation Systems 56.4 5.4 56.1 5.9

Foam Materials 127.9 12.2 116.8 12.2

Sporting Goods 221.2 21.0 215.3 22.5

Graphic Coatings 46.6 4.4 43.2 4.5

Real Estate and miscellaneous revenue 21.4 2.0 22.1 2.3

Total 1 051.9 100.0 955.2 100.0

2010 2010 2009 2009

CHF m % CHF m %

Net revenue by geographic area

Switzerland 160.3 15.2 156.0 16.3

Euro area 360.2 34.2 386.3 40.4

Rest of Europe 140.5 13.4 130.7 13.7

Total Europe 661.0 62.8 673.0 70.4

North and South America 143.9 13.7 119.4 12.5

Asia and Pacific 242.1 23.0 157.3 16.5

Africa 4.9 0.5 5.5 0.6

Total 1 051.9 100.0 955.2 100.0


50

Financial report

4 Changes in inventory and own work capitalized 2010 2009

CHF m CHF m

Change in inventory 25.6 50.7

Own work capitalized 0.3 -

Total 25.9 50.7

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

and finished products.

5 Cost of materialsCost of materials summarizes the overall cost of raw materials, intermediates and supplies, as well as

merchandise held for resale and expenses for third-party manufacturing, handling or processing of the

Groups products (external services).

Changes in inventories of semifinished products, work in progress and finished products have a sig-

nificant influence on the cost of materials in relation to total revenue.

6 Personnel expenses 2010 2009

CHF m CHF m

Wages and salaries 224.7 233.2

Social security benefits 41.3 45.3

Other personnel expenses 3.2 8.2

Total 269.2 286.7

In addition to contributions to state pension plans, social security benefits include the contributions to

pension funds described in note 27 on page 63.

7 Other operating expensesOther operating expenses include the cost of repairs and maintenance on property, plant and equip-

ment, sales provisions, expenses for guarantees, assembly, transport and energy, as well as sundry

expenses for production, development, sales and administration.


51

Financial report

8 Financial result 2010 2009

CHF m CHF m

Financial income 3.2 4.2

Financial expenses 5.8 3.6

Total 2.6 0.6

Income from securities fell by CHF 0.6 million. Interest income rose owing to the increased level of

CHF bond holdings, though it was not quite sufficient to offset the currency losses. The gain on the

investments of the employer contribution reserves also showed a decrease, being CHF 0.4 million low-

er. Financial expenses comprise the interest expense arising, inter alia, from the financing of sites

abroad, currency losses on the valuation of liquid assets, on short-term or repaid loans between Group

companies, and on other financial assets.

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

10 Extraordinary resultThe extraordinary result amounting to CHF 5.4 million comprises CHF 4.3 million from the sale of a

product line in the Sporting Goods business unit and CHF 1.1 million from the sale of land as well as of

production buildings no longer required for production. The previous years figure of CHF 10.1 million

included proceeds from the sale of land and a production building in Switzerland, as well as a loss on

the divestment of a company by the Automation Systems business unit.

11 Taxes 2010 2009

CHF m CHF m

Current taxes on income 8.8 8.8

Deferred taxes 0.6 2.6

Total 8.2 6.2

Current taxes on income include taxes paid and owed on taxable income of the individual companies in

accordance with local tax laws. The taxable results of subsidiaries belonging to the tax group in Germany

are transferred to the controlling company, Conzzeta Holding Deutschland AG. Deferred taxes are cal-

culated individually per tax subject using the actual expected tax rate. The deferred tax income is due

to the net reversal of temporary differences. Current taxes on income were reduced by CHF 4.4 million

by recognizing tax-loss carryforwards to offset taxable income


52

Financial report

Consolidated balance sheet

12 SecuritiesThe securities are fixed-interest bonds denominated in CHF and shares in a CHF money-market fond.

13 Trade receivables 2010 2009

CHF m CHF m

Trade receivables 186.6 187.5

Provision 18.9 21.5

Total 167.7 166.0

For doubtful accounts, individual and overall value adjustments have been deducted. The overall provi-

sion is based on the experience of the respective company.

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

15 Inventories 2010 2009

CHF m CHF m

Raw materials and supplies 69.0 64.7

Merchandise for resale 33.3 52.3

Semifinished products and work in progress 46.5 38.3

Finished products 55.6 49.7

Total 204.4 205.0

Most of the decrea