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EMS-CHEMIE HOLDING AGDomat/Ems Switzerland
38th ANNUAL REPORT 2000/2001
1
Contents
Chairman’s Statement 2
The EMS Group
Spotlight on share performance 3Key Figures 1996–2000 4Corporate GovernanceManagement Organization 6General Information on the 2000 Fiscal Yearat the EMS Group 7
Review of Business at the Individual
Business areas in 2000
Performance Polymers Business area 8Fine Chemicals Business area 8Engineering Business area 8
Financial Statements
EMS Group Consolidated Income Statement 9consolidated data Consolidated Balance Sheet 10for the calendar year Consolidated Changes in Shareholders’ Equity 11
Consolidated Cash Flow Statement 12Notes to the Consolidated Financial Statements 13Report of the group Auditors 35
EMS-CHEMIE HOLDING AG Income Statement 38data for the fiscal year from Balance Sheet as of April 30 39May 1, 2000 to April 30, 2001 Notes to the Financial Statements 40
Proposals of the Board of Directors 44Report of the Auditors 44
Addresses of EMS Companies, Switzerland 45Addresses of EMS Companies, Worldwide 46
2
In the 2000 fiscal year,EMS Group exceeded expecta-tions by posting an operatingresult of CHF 213 million (up fromCHF 199 million in the previousyear). We achieved this goodresult by focusing on high-valueproducts and avoiding less profit-able lines. The economic recoveryin Asia also had a beneficialeffect during the financial year.Over the year as a whole, thecurrency influence was neutral forEMS.
The new products were launchedsuccessfully, which helped to liftoperating results above budgetedlevels. Customers showed par-ticular interest in Grivory, a high-quality alternative to expensivelight metals, and Primid, an envi-ronmentally friendly hardeningagent for powder coating. Amarked improvement in the eco-nomic climate in Asia gave asubstantial boost to the engineer-ing business.
The spiraling cost of the principalraw materials, which could notbe passed on immediately tocustomers, meant that the encou-raging rise in sales volumesfor many products was not fullyreflected in earnings growth.Consequently, the business resultwould have declined if new,
higher-margin products had notbeen launched.
The EMS-TOGO Business Unit,which is focused purely on theautomotive industry, was hardesthit by the rise in raw materialsprices. In the year under review,this unit took over Wagner Auto-mobilsysteme, a company head-quartered in Markdorf, Germany.With this move, EMS-TOGO hascontinued to strengthen its marketposition as a one-stop supplierof bonding, corrosion protectionand sealing systems to the auto-motive industry.
To improve competitiveness andachieve a flatter managementhierarchy, EMS-CHEMIE – theGroup's largest profit center,comprising thermoplastics, tech-nical fibers and adhesives –was split into three autonomousBusiness Units, EMS-GRIVORY,EMS-GRILTECH and EMS-SERVICES.
Axantis, a company acquiredat the beginning of 2001, will spe-cialize in refined cellulose andbiochemical derivative products.These activities ideally comple-ment the EMS Group's business.The reorientation of Axantis, themain component of which is Atis-holz, is just the start of a long-
term process. Since it was onlyacquired on 15 March 2001 ithas not been included in the con-solidated accounts for fiscal2000.
The good operating result couldnot have been achieved withoutstrict cost discipline in all units.This is to the credit of our dynamicteam. Thanks are therefore due tothe Group's employees for theirdedicated work. The new, flattermanagement structure introducedin the year under review willhelp improve the motivation ofthe workforce.
For EMS, the current year, 2001,has seen a worsening of thebusiness climate in the USA, againweaker economic growth in Asiaand a marked deterioration inconditions in the automotive andcellulose industries. Nevertheless,EMS will be able to increaseits sales and maintain its goodoperating result.
Christoph BlocherChairman of the Board
of Directors
Spotlight on share performance
Share capital on December 31
2000 1999 1998 1997 1996
Number of shares as per articles of incorporation
Bearer shares (par value CHF 50) 376 000 376 000 376 000 400 000 454 140
Registered shares (par value CHF 10) 729 300 729 300 729 300 729 300 729 300
Conditional capital – – – – –
Authorized capital – – – – –
Number of shares entitled to dividend
Bearer shares 376 000 376 000 376 000 400 000 454 140
Registered shares 729 300 729 300 729 300 729 300 729 300
Treasury shares – – – – –
Information per bearer share:Dividend proposal per share in CHF – – – 1) – 2) 150.00 3)
Equity per share entitled to dividend in CHF 2 242.05 1 764.50 1 347.30 1 680.10 1 585.35
Cash flow per share entitled to dividend in CHF 606.25 522.60 410.90 647.55 465.85
Earnings per share entitled to dividend in CHF
Weighted average of shares, undiluted* 485.39 401.50 303.09 581.00 –
Weighted average of shares, diluted* 485.39 401.50 303.09 581.00 –
Number of shares on December 31 484.30 401.50 307.74 549.75 381.85
Stock prices of bearer shares in CHF
High 7 815 8 500 9 100 7 275 5 650
Low 7 050 6 900 7 100 4 930 4 510
Market capitalization on December 31 (CHF millions) 3 914.0 3 833.1 4 253.2 3 919.3 3 000.0
Bearer shares are quoted on the Swiss Exchange (“SWX”) and are part of the Swiss Market Index (SMI).
Security number Reuters identification Investdata identificationEMS-CHEMIE 158.703 EMS CHOZ
* calculated according to IAS 33
1) Reduction of the share capital by repurchase of 24 000 bearer shares at CHF 8 400 (nominal KCHF 1200, premium KCHF 200 400)2) Reduction of the share capital by repurchase of 40 000 bearer shares at CHF 6 000 and 14 140 bearer shares at CHF 6100
(nominal KCHF 2 707, premium KCHF 323 547)3) Dividend payment (KCHF 94 108) and repurchase of 27 385 bearer shares at CHF 5 050
(nominal KCHF 1369, premium and premium for option KCHF 142 705)
3
4
Key Figures 1996–2000
Calendar years, CHF millions
2000 1999 1998 1997 1996
Net sales revenue 1 160.3 1 086.7 1 063.8 1 025.9 945.2
Change in % against previous year +6.8% +2.2% +3.7% +8.5% +2.3%
Change in local currencies +2.5% +1.1% +7.2% +2.6% +1.2%
Change with identical scope of consolidation +6.8% –0.9% +4.3% +9.9% +2.3%
of which in Switzerland 8.8% 7.0% 10.9% 10.8% 9.6%
Operating income 1 218.1 1 117.0 1 101.0 1 115.8 986.9
Change in % against previous year +9.0% +1.5% –1.3% +13.1% –0.5%
Net operating income 212.9 198.8 189.2 188.3 152.1
Change in % against previous year +7.1% +5.1% +0.5% +23.8% +10.4%
in % of net sales revenue 18.4% 18.3% 17.8% 18.4% 16.1%
Net financial income 102.2 59.2 4.6 175.0 126.1
Change in % against previous year +72.6% +1 182.0% –97.4% +38.8% +12.8%
Net income before taxes and minority interest 315.2 258.0 193.8 363.2 278.2
Change in % against previous year +22.2% +33.1% –46.7% +30.6% +11.5%
Income taxes 56.7 43.2 29.5 62.0 48.7
Change in % against previous year +31.1% +46.5% –52.4% +27.5% +8.3%
Net income 252.7 209.5 160.6 300.1 229.1
Change in % against previous year +20.6% +30.5% –46.5% +31.0% +12.2%
in % of total operating income 20.7% 18.8% 14.6% 26.9% 23.2%
Investments 98.8 100.1 102.6 70.1 71.8
in % of total cash flow 31.2% 36.7% 47.8% 19.8% 25.7%
Research and development cost
in % of net sales revenue 5.1% 5.1% 5.1% 5.1% 5.3%
Cash flow 316.4 272.7 214.4 353.5 279.5
Change in % against previous year +16.0% +27.2% –39.4% +26.5% +11.7%
in % of total operating income 26.0% 24.4% 19.5% 31.7% 28.3%
Depreciation of fixed assets 63.6 63.2 53.8 53.4 50.4
5
Calendar years, CHF millions
2000 1999 1998 1997 1996
Balance sheet total 2 617.5 2 163.6 1 912.5 1 593.8 1 415.7
Assets
Current assets 1 022.4 818.7 548.1 881.9 722.2
Fixed assets 1 595.1 1 344.9 1 364.4 711.9 693.6
Liabilities
Short-term liabilities 488.7 461.7 895.8 525.8 342.5
Long-term liabilities 931.3 758.6 293.7 138.8 117.9
Minority interests 27.5 22.5 19.9 12.0 4.2
Shareholders’ equity 1 170.0 920.8 703.1 917.1 951.2
Balance sheet equity ratio 44.7% 42.6% 36.8% 57.5% 67.2%
Return on equity 21.6% 22.8% 22.8% 32.7% 24.1%
Number of employees on December 31* 2 751 2 713 2 633 2 565 2 658
Fire insurance value of fixed assets 1 839.2 1 892.5 1 802.4 1 810.4 1 799.2
* Excluding apprentices (2000: 144; 1999: 140; 1998: 142; 1997: 144; 1996: 137)
6
Corporate Governance
Management Organization
Term expires
Christoph Blocher, Herrliberg, Chairman and Chief Executive Officer 2001
Albert Sommerauer, Schattdorf, Vice Chairmann 2001
Peter Matter, Sissach 2001
Ulrich Widmer, Trogen 2001
Robert Brütsch, Swiss Certified Public Accountant, ZurichPricewaterhouseCoopers AG, Zurich
Board of Directors ofEMS-CHEMIE HOLDING AG
Auditors ofEMS-CHEMIE HOLDING AG
EMS GROUP
Performance Polymers
EMS-GRIVORY Albert Reich
EMS-GRILTECH Reto Fintschin
EMS-SERVICES Ludwig Locher
EMS-TOGO Hans M. Feix
ATISHOLZ Beat Lorétan
Fine Chemicals
EMS-PRIMID René Berri
EMS-DOTTIKON Hans Rudolf Wittmer
Engineering
EMS-PATVAG Peter Hartmann
INVENTA-FISCHER Alfred Betschart
POWER STATIONS Heinz Fuhrer
EMS-REAL ESTATE Felix Weber
Financial services Joos Zulauf
Accounting/Controlling Ralph Moor
General secretariat Walter Eberle
7
Business trend
The year under review 2000 sawgrowth in both sales and earnings.After EMS had discontinued lessprofitable products in 1999 andincorporated new products intoits range, and with the 4th quarterof 1999 bringing signs of a slow-down in the US economy in par-ticular, EMS had not anticipatedsuch growth. The unexpectedimprovement in the operating re-sult is attributable first and foremostto the successful launch of newproducts – in particular GRIVORY,a high-quality alternative to expen-sive light metal, and PRIMID, anenvironment-friendly hardeningagent for powder coating –as well as to the much healthierengineering business in Asia.The financial result also improved.As a result, net profits rose20.6% to 253 million Swiss francs(210 million Swiss francs).Net sales increased by 6.8%to 1160 million Swiss francs(1 087 million Swiss francs) whileEBIT climbed 7.1% to 213 millionSwiss francs (199 million Swissfrancs).
For EMS, the main features of2001 are a deterioration inthe US economic climate, weakereconomic growth in Asia andmuch tougher conditions in theautomotive and cellulose indus-tries. Despite this situation, EMSwill be able to boost its salesand maintain its high operatingincome.
In February 2001, EMS-CHEMIEHOLDING AG successfullyconcluded a public offer for theshares of AXANTIS HOLDINGAG, Riedholz (“AXANTIS”). TheEMS Group owns 99.52% of theAXANTIS share package andconsequently in the 2001 financialyear will complete the legal inte-
gration of AXANTIS into EMSand its delisting. The manage-ment of AXANTIS was taken overwith effect from March 15, 2001.Consequently, the company isnot consolidated in the financialstatements for 2000.
Investments
In anticipation of a cooling-off inthe economy, EMS curbed itsinvestment plans. Consequently,at 99 million Swiss francs, invest-ments were below the previousyear’s high of 100 million Swissfrancs. With a cash flow of316 million Swiss francs (273 mil-lion) EMS was able to financeits investments without recourse toborrowings.
Investments by type:
Expansion of capacity 58.8%
Renewal/rationalization 16.2%
Quality-relatedand technologicalimprovements 12.2%
Environmental protection/safety 12.8%
Investments by region:
Switzerland 70.1%
USA 15.3%
Asia 8.9%
Europe 5.7%
Management structure
The last financial year was markedon the one hand by a reductionin both the average age andthe size of the Board of Directors
and on the other by a furtherleveling out of the managementstructure.The number of members of theBoard of Directors was reducedfrom five to four. Three directorsare full-time members of theBoard while one is a part-timemember. With effect from the2000 General Meeting, AlfredGilgen, Karl Imhof, Karl Janjöriand Max Kühne retired from theBoard of Directors, to be replacedby Albert Sommerauer(Vice Chairman), Peter Matterand Ulrich Widmer.
To achieve a flatter managementhierarchy, the existing EMS-CHEMIE profit center was splitinto three autonomous BusinessUnits, EMS-GRIVORY, EMS-GRILTECH and EMS-SERVICES,while the FINANCE Business Areawas split into two autonomousBusiness Units, Accounting/Controlling and Financial Services.The managers of the five newBusiness Units were recruitedfrom within the Group. The ex-ecutive bodies and the organiza-tional structure of managementare set out on page 6.
Personnel
At the end of the review period,the Business Areas forming theEMS Group employed a total of2 751 (2 713) persons and144 apprentices. Of the totalworkforce, 1 873 (1 886) wereemployed in Switzerland, 577(551) elsewhere in Europe, 125(114) in the USA and 176 (162)in the Far East. The apprenticescover 12 different vocationalfields. A total of 40 apprenticessuccessfully completed their train-ing in the year under review.
8
Research and development
Research and development expen-diture amounted to 5.1% (5.1%) ofsales in the year under review.
Breakdown of EMS Groupsales by region
Germany 25.0%
USA 11.7%
Switzerland 8.8%
France 7.3%
Great Britain 7.2%
China 5.1%
Italy 5.1%
Japan 4.1%
Spain 2.8%
Belgium 2.4%
Sweden 2.4%
Austria 1.8%
Holland 1.5%
Taiwan 1.5%
Finland 1.0%
Rest of Europe 4.4%
Other countries 7.9%
Breakdown of productionby region
Switzerland 72.4%
Germany 8.8%
USA 5.2%
Sweden 5.1%
Belgium 3.8%
Great Britain 1.4%
Taiwan 1.4%
Other countries 1.9%
Business areas:
Performance Polymers
EMS’s business area PerformancePolymers produces top-quality,custom-made polymers. In theEMS-GRIVORY Business Unit,these are the fast-growing high-performance polymers, i.e.materials which, thanks to theiroptimum price/performanceratio and economical processingproperties, replace metal in auto-motive construction and in theelectronic industry. The EMS-GRILTECH Business Unit manufac-tures technological thermoplasticadhesives and fibers for the cloth-ing industry and for technologicalapplications such as papermak-ing felt, car interiors, filters andlaminates. The EMS-TOGO Busi-ness Unit specializes in materialsused for bonding, corrosion pro-tection and sealing in the auto-motive industry and manufacturesplastisols, polyurethane adhesivesand anti-corrosion waxes. Theacquisition of AXANTIS togetherwith its principal company,ATISHOLZ, complements theEMS Group’s existing materialsoperations. Whereas EMS mate-rials are based on polyamidesand polyester, the ATISHOLZBusiness Unit will concentrate onrefined cellulose and biochemicalderivative products. The EMS-SERVICES Business Unit is oper-ated as a service provider onbehalf of the Business Unitslocated at the Domat/Ems site.
In 2000, this business area gen-erated net sales of 842.1 millionSwiss francs and an operatingresult of 130.1 million Swiss francs.
Fine Chemicals
In addition to EMS-DOTTIKON,Fine Chemicals now also com-prises the EMS-PRIMID BusinessUnit. The EMS-DOTTIKONBusiness Unit manufactures high-grade intermediates and activesubstances, primarily for thepharmaceuticals, animal healthand plant protection industries.EMS-PRIMID concentrates onadditives for surface treatmentand produces hardening agentsfor powder coating, bondingagents for the tyre industry andepoxy compounds for the manu-facture of building protectionproducts.
This business area generatednet sales of 206.7 million Swissfrancs and an operating resultof 52.3 million Swiss francs.
Engineering
The EMS-PATVAG Business Unitdevelops and manufactures high-performance electrical detonatorsand specializes in airbag squibs.INVENTA-FISCHER plans andbuilds high-quality polymer andsynthetic fiber plants basedon either its own or selected third-party processes. The POWERSTATIONS Business Unit comprisesfive power plants of PATVAGKRAFTWERKE AG, KRAFTWERKEFRISAL AG and KRAFTWERKEREICHENAU AG. The EMS-REALESTATE Business Unit managesthe company’s own property andreal estate.
This business area generated netsales of 120.1 million Swissfrancs and an operating resultof 30.6 million Swiss francs.
9
Consolidated Income Statement of the EMS Group
2000 1999Notes (CHF ’000) (CHF ’000)
Net sales revenue from goods and services 1 1 160 291 1 086 656
Inventory changes, semi-finished and finished goods 19 522 (10 222)
Capitalized costs and other operating income 2 38 297 40 613
Operating income 1 218 110 1 117 047
Material expenses 3 592 258 500 630
Personnel expenses 4 249 278 238 417
Depreciation and amortization 9, 23 63 648 63 184
Other operating expenses 5 99 983 116 037
Operating expenses 1 005 167 918 268
NET OPERATING INCOME (EBIT) 212 943 198 779
Income from equity-valuation of associated companies 3 533 4 887
Financial income 6 139 336 85 511
Financial expenses 7 40 628 31 158
NET FINANCIAL INCOME 102 241 59 240
NET INCOME BEFORE TAXES AND MINORITY INTERESTS 315 184 258 019
Income taxes 8 56 715 43 245
NET INCOME BEFORE MINORITY INTERESTS 258 469 214 774
Minority interests 5 731 5 246
NET INCOME 252 738 209 528
Earnings per bearer share entitled to dividend (CHF) 27 485.39 401.50
Earnings per registered share entitled to dividend (CHF) 27 97.08 80.30
Earnings per bearer share (fully diluted) (CHF) 27 485.39 401.50
Earnings per registered share (fully diluted) (CHF) 27 97.08 80.30
Earnings per bearer share as per 31.12. (in CHF) 27 484.30 401.50
Earnings per registered share as per 31.12. (in CHF) 27 96.86 80.30
Notes to the Consolidated Financial Statements see on pages 18–34.
10
Consolidated Balance Sheet of the EMS Group
31.12. 00 31.12. 99Notes (CHF ’000) (CHF ’000)
FIXED ASSETS 1 595 115 1 344 943
Intangible assets 9 39 726 32 581
Tangible assets 9 789 956 767 001
Financial assets
Investments in associated companies 9 48 880 39 527
Other investments 9 690 907 483 064
Long-term interest-bearing financial assets 9 25 646 22 770
CURRENT ASSETS 1 022 415 818 673
Inventories 10 248 170 242 599
Accounts receivable
Trade accounts receivable 11 215 806 230 035
Other receivables 12 102 782 47 465
Securities 13 242 481 249 017
Cash and cash equivalents 14 213 176 49 557
TOTAL ASSETS 2 617 530 2 163 616
SHAREHOLDERS’ EQUITY 1 170 040 920 831
Share capital 15 26 093 26 093
Retained earnings and reserves 891 209 685 210
Net income 252 738 209 528
MINORITY INTERESTS 16 27 527 22 536
LIABILITIES 1 419 963 1 220 249
Long-term liabilities 931 245 758 608
Bonds 17 50 000 50 000
Bank loans 18 629 628 462 184
Other long-term liabilities 19 23 528 22 875
Deferred income taxes 20 199 834 193 713
Provisions 20 28 255 29 836
Short-term liabilities 488 718 461 641
Bank loans 211 425 200 567
Trade accounts payable 113 006 81 196
Income tax liabilities 58 137 50 280
Other short-term liabilities 21 106 150 129 598
TOTAL LIABILITIES 2 617 530 2 163 616
Notes to the Consolidated Financial Statements see on pages 18–34.The consolidated financial statements were approved by the Board of Directors on March 1, 2001.
11
Consolidated Changes in Shareholders’ Equity of the EMS Group
Share Legal Free Retained Net Shareholders’(CHF ’000) capital reserves reserves earnings income equity
At 1. 1. 1999 26 093 70 000 10 000 436 408 160 597 703 098
Distribution of net income 160 597 (160 597) 0
Net income 209 528 209 528
Currency translation differences 8 205 8 205
At 31. 12. 1999 26 093 70 000 10 000 605 210 209 528 920 831
Distribution of net income 209 528 (209 528) 0
Net income 252 738 252 738
Transactions with treasury shares 100 100
Currency translation differences (3 629) (3 629)
At 31. 12. 2000 26 093 70 000 10 000 811 209 252 738 1 170 040
2000 1999
Balance sheet equity ratio 44.7% 42.6%
Legal reserves include KCHF 5 219 not being allowed to be distributed.The proposal of the Board of Directors for the profit distribution of EMS-CHEMIE HOLDING AG, whose financial year will be closed on April 30, 2001, will be communicated after said date.
For further information and data refer to page 3, “Spotlight on share performance”.
12
Consolidated Cash Flow Statement of the EMS Group
2000 1999Notes (CHF ’000) (CHF ’000)
Net income 252 738 209 528Minority interests 5 731 5 246Depreciation and amortization of intangible and tangible fixed assets 9, 23 63 648 63 184Capitalized costs 2 (14 880) (17 210)(Profit)/loss from disposal of tangible fixed assets 2, 5 4 501 3 412Increase/(decrease) of other long-term provisions 20 1 001 800Increase/(decrease) of other long-term liabilities 19 879 (5 506)(Gain)/loss from sale of group companies 2 0 (6 227)(Gain)/loss from sale of financial participations 6 (330) 0(Income)/expenses from the equity-valuation of associated companies, net after dividends (3 533) (4 887)Value adjustments financial assets/Goodwill amortization associated companies 9, 23 354 0Unrealized currency translation differences (1 992) 2 235Interests, net 6, 7 11 911 17 627Dividends from securities in current assets 6 (68 353) (14 655)Dividends from associated companies and other companies 6 (6 576) (106)Income from sale of securities 6 (49 908) (68 082)Expenses for income taxes 8 56 715 43 245
OPERATING PROFIT BEFORE CHANGES IN WORKING CAPITAL 251 906 228 604Cash flow from changes in working capital excluding cash and cash equivalents (39 106) (43 765)Taxes paid 8 (42 943) (68 878)Interests received 8 987 3 407Interests paid (29 215) (15 374)Dividends received 74 929 14 761Provisions used 20 (1 922) (1 860)
CASH FLOW FROM OPERATING ACTIVITIES A 222 636 116 895(Purchase) of intangible and tangible fixed assets 2, 9 (83 886) (82 870)Disposal of intangible and tangible fixed assets 2, 5, 9 1 849 1 739Disposal/(purchase) of financial assets 9 (210 178) (257 526)Disposal/(purchase) of marketable securities 56 305 191 835(Purchase)/sale of fully consolidated companies 24 (506) (2 991)(Purchase)/sale of associated companies 9 (5 623) 0
CASH FLOW FROM INVESTING ACTIVITIES B (242 039) (149 813)Dividends paid to minorities 16 (1 303) (663)Minority share in change of share capital 16 1 444 (2 250)(Purchase)/sale of treasury shares 100 0(Increase)/decrease of interest-bearing assets (2 859) 17 086Increase/(decrease) of interest-bearing liabilities 22 178 420 26 392
CASH FLOW FROM FINANCING ACTIVITIES C 175 802 40 565
CHANGE OF CURRENCY TRANSLATION D 4 431 (11 999)
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C+D) 160 830 (4 352)Cash and cash equivalents at beginning of the year 49 557 53 909(Decrease)/increase of cash and cash equivalents 160 830 (4 352)Cash and cash equivalents at year-end 14 210 387 49 557Notes to the Consolidated Financial Statements see on pages 18–34.
13
Notes to the Consolidated Financial Statements of the EMS Group
Consolidated accountingprinciples
General
The consolidated financial state-ments give a true and fair view ofthe financial position, the resultsof operations and the cash flowsof the EMS Group in accordancewith the International AccountingStandards (IAS) as issued by theInternational Accounting Stand-ards Committee (IASC). They alsocomply with the law.
Scope of consolidation
The scope of consolidation in-cludes all companies in and out-side Switzerland which arecontrolled – directly or indirectly –by EMS-CHEMIE HOLDING AG,holding more than 50% of thevoting rights, or by contracts orother agreements (see list ofsubsidiaries and minority interest,pages 31 and 32). Not includedare companies with a charitablecharacter (such as housing co-operatives). Joint ventures where the partieshave joint control are included atthe equity method of accounting.This method is also applied forthe associated companies, whichare not directly or indirectly con-trolled by EMS-CHEMIE HOLD-ING AG (shareholding normallybetween 20% and 50% of votingrights). Shares in other companies(less than 20% of voting rights)are valued at purchase priceless economically required valueadjustments.
Method of consolidation
The financial statements of major-ity-owned companies are fullyconsolidated. Assets and liabili-ties, income and expenses areincorporated in full and theminority interests in shareholders’equity and net income areseparately disclosed in the con-solidated balance sheet andconsolidated income statement.Capital consolidation is effectedusing the Anglo-Saxon purchasemethod, under which all assetsand liabilities of the acquiredcompany are valued accordingto the accounting principlesof the EMS Group at the time ofacquisition. Any positive differ-ence between the resulting share-holders’ equity and the cost ofacquisition is capitalized asgoodwill and amortized over itsexpected useful life using thestraight-line method. Results foracquired companies are includedin consolidation as from the dateof acquisition. In case of disposal of companies,the deconsolidation is effectedthrough the income statement atthe date of the disposal, whereasthe companies’ results are includedin the consolidation up to this date.Intercompany transactions andrelations have been eliminated inthe course of consolidation.Unrealized profits from intragroupdeliveries are eliminated in theincome statement.
Balance sheet date
The balance sheet date isDecember 31. Subsidiaries witha different year-end closingnot exceeding three months areincluded in the consolidationbased on this closing. If the year-end differs more thanthree months, an interim closing isprepared as of December 31.
Valuation principles
Valuation principles remainedunchanged from previous year.Uniform principles of valuationhave been applied throughoutthe group. Consolidated financialstatements are prepared underthe historical cost convention.Value adjustments and provisionsare set up for all known andquantifiable decreases in valueand liabilities at the balancesheet date.
Intangible fixed assets
This item mainly consists of good-will acquired in acquisitions sinceJanuary 1, 1995. Amortizationperiods have been determinedindividually, with due regard forthe benefit. The maximum usefullife applied is 20 years. If good-will is amortized over more thanfive years, this policy is supportedby detailed business plans fromthe companies concerned. Orga-nization and foundation costs arenot capitalized. Amortization ofintangible fixed assets is calcu-lated on a straight-line method.
14
Tangible fixed assets
Tangible fixed assets are shownat purchase price or manufactur-ing cost less economicallyrequired depreciation. Assets aredepreciated using the straight-line method over their estimateduseful lives and up to the dateof transfer of ownership to theGovernment for power stationsrespectively. Useful lives areestimated in terms of the asset’sphysical life expectancy, corpo-rate policy on asset renewalsand technological and commer-cial obsolescence. The value of the capitalized fixedassets is periodically reviewedand a provision is set up for per-manent impairment, if considerednecessary.
Repairs and maintenance areexpensed as incurred. Investmentsin improvements or renewals ofassets are capitalized if theysignificantly extend service life,increase capacity or provide asubstantial improvement of thequality of production performance.
Assets held under leasing agree-ments which may be consideredas an asset purchase in economicterms (finance leases) are capital-ized as tangible fixed assets attheir estimated present value ofthe underlying lease paymentsand depreciated over their usefullives or the shorter leasing period.Leasing commitments are shownunder financial liabilities. Financ-ing costs are charged to theincome statement over the leasingperiod in such a manner that theperiodic costs are correct.
Payments on leased assets definedas “operating leases” and havinga rental character are expensedover the lease period.
Depreciation periods are asfollows:Land normally not
depreciated
Plant underconstruction normally not
depreciated
Buildings 25–50 years
Technical plantand machinery 7–25 years
Other tangiblefixed assets 5–15 years
Power stations including land areincluded in “Technical plant andmachines” and are depreciatedaccording to the operating life orup to the date of transfer of owner-ship to the Government.
Financial assets
Shares in associated companiesare included using the equitymethod. Shares in other compa-nies are included at the lower ofpurchase price or current marketvalue.
Inventories
Inventories used for productionare valued at their historical pur-chase or production cost (includ-ing attributable manufacturingoverheads) or at their realizablemarket value, whichever is lower.Inventories are valued using the“fifo” method (first-in, first-out).Long-term contract work-in-pro-gress is valued using the “per-centage-of-completion” method(PoC).
Accounts receivable and accruedincome
This item is valued at its nominalvalue less provisions for baddebts. Provisions are either basedon specifically known risks or onhistorical default rates.
Cash and cash equivalents
Liquid assets include cash onhand, bank account balancesand short or medium-termdeposits maturing within twelvemonths. Securities include market-able securities traded on stockexchanges being held with theintention of short-term disposal. Liquid assets are valued at theirnominal value, securities at thelower of cost or market value.Accrued interest on securities iscapitalized. In case of disposalof securities, the profit or loss iscalculated using the averagemethod. Cash and cash equivalents dis-closed in the cash flow statementinclude liquid assets with a matur-ity of less than three months.
Provisions
Provisions are set up for legal orother liabilities if these liabilitieswill most probably bring along acash outflow and if the amountscan be reliably estimated.
Liabilities and deferred income
This item includes short and long-term debts, valued at the amountof repayment, and deferredincome.
15
Pension funds
All subsidiaries in Switzerlanddispose of their own, legally inde-pendent pension plans, beingindependently managed. Theyare financed through contribu-tions from employers andemployees. Present and formeremployees (or their survivingdependants) will receive benefitsupon reaching the age limitand/or in the event of invalidityor death. For the purposes of theconsolidated financial statements,future pension obligations arecalculated on the basis of actuarialmethods complying with IAS. Inthe case of defined-benefit obli-gations, the present value of theprojected benefit obligation isassessed using the projected unitcredit method on the basis ofcompleted and expected yearsof service, the expected pay trendand the adjustment of pensions.Cost for this provision (“ExpenseRecognized in the Income State-ment”) are calculated annuallyand carried to income statement.In case of changes in pensionplans or corrections due to newactuarial assumptions, the changesare spread forward over theremaining service life of employ-ees. Employees of subsidiariesabroad are insured by govern-mental institutions or independentdefined-contribution pensionplans.
Derivative financial transactions
The EMS Group uses derivativefinancial instruments in the usualcourse of business to cover therisks. Different risk positions, com-posed of assets and liabilitiesand future engagements, arejudged and managed by thetreasury for the whole Group.Additionally, the liquidity requiredfor the day-to-day operationshas to be available at all times.Derivative financial instrumentsare only used with parties with ahigh credit rating. The hedging policy of the EMSGroup is written down and super-vised. The results of the hedgeprogram are continuously re-ported to management.The treasury management isauthorized to entirely or partiallyhedge exposures. The EMSGroup does hedge positions ifthe costs in relation to the risksare justified. The EMS Group mostly uses for-ward currency and option con-tracts to hedge against the riskconnected with value losses incash flow terms resulting from bal-ance sheet and income statementitems held in foreign currencies. Profits and losses arising on instru-ments regarded under IASstandards as hedges on existingassets and liabilities, on firmfuture contractual liabilities andon liabilities likely to arise frompossible future commitments, areaccrued and deferred as appro-priate and taken to income state-ment together with the transactionto which they refer. Profits andlosses on instruments which donot qualify as hedges under IASstandards are shown as otherfinancial income and expenses.
Net sales revenue
Net sales revenue includes theinvoiced amounts for suppliedgoods and services less dimin-ished proceeds and the amountof profits as defined by theprogress accomplished on long-term construction contracts. Theamount of profit is determinedon a pro rata basis of overallengineering estimates accordingto the “percentage-of-completion”method (PoC), on which the profitrealized is calculated with regardto the progress achieved. Suchcosts cover all direct and indirectcosts incurred for the projects.Only the Group’s own addedvalue is taken into account.Income is defined as being real-ized on delivery and services ren-dered respectively.
Research and development costs
With the exception of thosedevelopment projects capitalizedin accordance with IAS 9, researchand development costs arecharged to the income statementfor the year in which they originateunder the following headings:wages and salaries, material ex-penses, amortization on researchand development assets andresearch and development over-heads. Research and developmentassets being used over a longperiod of time are classified under“plant and machinery” andare amortized over the estimatedperiod of economic use.
16
Foreign currencytranslation
Financial statements in foreigncurrencies are translated intoGroup currency as follows: cur-rent assets, fixed assets andliabilities at year-end exchangerates, equity at historical ex-change rates. All items in the in-come statement and the netincome are translated using theaverage exchange rate of theyear. These exchange rate differ-ences are carried to equity with-out affecting net income (trans-lation adjustment).In case of disposal of a subsid-iary abroad, the translationdifference, accumulated duringthe period the subsidiary was aconsolidated company, is addedto profit (or loss) from sale of thiscompany. The foreign currencypositions in the financial state-ments of the consolidated com-panies are translated as follows:foreign currency transactions withthe exchange rate of the trans-action day. At year-end the bal-ances of foreign currencies aretranslated with the exchange rateprevailing at year-end. The differ-ences are recognized in the in-come statement (transaction gainsand losses).
Income taxes
Provisions for deferred incometaxes pay due regard to theimpact in income tax terms of thedifferences in the valuation ofassets and liabilities for Groupconsolidation purposes and forlocal taxation purposes. Theseprovisions are continuouslyadjusted to take account of anychanges to local fiscal law. Provi-sions for deferred taxation areset up using the comprehensiveliability method, under whichprovisions are set up for all tempo-rary differences. Tax losses car-ried forward are not deductedfrom deferred income taxesunless it can be shown with suffi-cient certainty that the futuretaxable profit is adequate to off-set such a loss.Taxes on income from foreignGroup companies which isexpected to be distributed to theparent company have been pro-vided for. Provisions have notbeen set up for non-repatriatedincome invested for an unlimitedperiod of time, or for income thatcan largely be transferred tax-freeto the parent company. Tax ex-penses include income taxes onthe profits of companies consoli-dated using the equity method.
Earnings per share
The “earnings per share” figureis based on the consolidatedannual result divided by theweighted average number ofshares.
Consistency
The principles of valuation,consolidation and classificationremained unchanged from pre-vious year.
Segment reporting
Segment reports are primarilypresented by division and secon-darily by geographical region.For the divisional assignment ofGroup companies, refer to the“List of subsidiaries and minorityholdings” on pages 31 to 32.
The most important exchange rates are:
Average exchange rates Year-end exchange rates
Unit 2000 1999 2000 1999
US dollar USD 1 1.689 1.503 1.637 1.598
Euro EUR 1 1.558 1.601 1.520 1.605
German mark DEM 100 79.66 81.87 77.72 82.06
French franc FRF 100 23.75 24.41 23.17 24.47
Pound sterling GBP 1 2.558 2.431 2.443 2.581
Japanese yen JPY 100 1.567 1.327 1.428 1.562
Swedish krona SEK 100 18.44 18.17 17.17 18.73
Taiwan dollar TWD 1 0.05391 0.04662 0.0494 0.05088
17
Breakdown by Business area
(CHF ’000)
Net sales revenue Operating profitPrimary segment Net sales with other segments Net sales from external customers Total net sales (EBIT) Segment assets1)
2000 1999 2000 1999 2000 1999 2000 1999 2000 1999
PERFORMANCE POLYMERS 0 1 299 842 093 764 518 842 093 765 817 130 104 121 408 811 252 770 961
FINE CHEMICALS 119 45 206 546 223 817 206 665 223 862 52 254 58 651 400 605 393 864
ENGINEERING 8 496 8 552 111 652 98 321 120 148 106 873 30 585 18 720 1 143 617 909 707
Subtotal segments 8 615 9 896 1 160 291 1 086 656 1 168 906 1 096 552 212 943 198 779 2 355 474 2 074 532
– Internal net sales (8 615) (9 896) (8 615) (9 896)
Total EMS Group 0 0 1 160 291 1 086 656 1 160 291 1 086 656 212 943 198 779 2 355 474 2 074 532
Share of net profit/ Book value of Investments DepreciationSegment loss on equity-valued equity-valued in intangible and tangible intangible and tangible
Primary segment liabilities 2) companies companies fixed assets fixed assets
2000 1999 2000 1999 2000 1999 2000 1999 2000 1999
PERFORMANCE POLYMERS 139 011 115 004 3 533 4 887 45 892 39 527 70 156 60 120 37 809 35 689
FINE CHEMICALS 17 350 22 925 0 0 0 0 19 362 24 221 14 786 14 573
ENGINEERING 62 795 72 865 0 0 0 0 9 248 15 739 11 053 12 922
Total EMS Group 219 156 210 794 3 533 4 887 45 892 39 527 98 766 100 080 63 648 63 184
Breakdown by geographical region
(CHF ’000)
InvestmentsTotal net sales revenue Total net sales revenue Operating profit in intangible and tangible
Secondary segment (customers) (production) (EBIT) Segment assets1) fixed assets
2000 1999 2000 1999 2000 1999 2000 1999 2000 1999
Switzerland 102 657 76 310 839 528 792 138 173 694 165 295 1 973 433 1 748 373 69 189 78 719
European Union (EU) 672 403 680 044 239 713 221 456 25 243 27 298 211 580 192 958 5 597 9 475
North America 140 112 142 612 60 874 55 204 3 019 –494 94 064 77 009 15 137 9 467
Far East 3) 171 238 140 539 20 176 17 858 10 987 6 680 76 397 56 192 8 843 2 419
Others 73 881 47 151 0 0 0 0 0 0 0 0
Total EMS Group 1 160 291 1 086 656 1 160 291 1 086 656 212 943 198 779 2 355 474 2 074 532 98 766 100 080
Invoicing and cost attribution between segments uses the same conditions as with third parties.The Business Unit EMS-PRIMID, shown last year under Performance Polymers, is stated under Fine Chemicals in the current year. Previous-year figures have been amended accordingly.
1) Without cash and cash equivalents and investments in associated companies.2) Trade accounts payable, advances from customers, liabilities to related parties and associated companies,
liabilities to social benefit institutions, other short-term liabilities, prepaid expenses and deferred income.3) Mainly China, Japan and Taiwan.
18
Consolidated Income Statement
2000 1999Notes (CHF ’000) (CHF ’000)
1 Net sales revenue from goods and services
Within plant construction, only the Group’s own added value is taken into account. Revenue and cost of sales would be higher by 25 571 63 656if the entire value of third-party purchases wereto be included.
2 Capitalized costs and other operating income
Capitalized costs 14 880 17 210Other operating income 16 723 12 580Real estate income 3 968 1 222Operating interest 1 420 1 870 Income from disposal of Group companies 0 6 227Income from disposal of fixed assets 1 306 1 504
Total capitalized costs and other operating income 38 297 40 613
3 Material expenses
Material and warehouse expenses 569 364 480 287Subcontractor salaries 9 133 8 005Energy expenses 13 761 12 338
Total material expenses 592 258 500 630
4 Personnel expenses
Wages and salaries 208 298 202 553Legal/contractual social insurance 40 980 35 864
Total personnel expenses 249 278 238 417
19
2000 1999Notes (CHF ’000) (CHF ’000)
Pensions schemes:
Some Group companies have their own personnel pension plans, which all comply with national regulations and requirements. Normally, the assets are held in independent trusts. In cases in which a Group company does not have its own personnel pension plans, long-term provisions have been set up in the consolidated balance sheet. The trusts are normally financed through contributions from employers and employees. The future obligations and the corresponding plan assets which are qualified as defined-benefit plans under IAS are periodically verified by qualified actuaries, for the last time as per January 1, 1999.The following figures give an overview over the pension plans:
1.1.2000 1. 1. 1999
Individual defined-benefit plans
a. Plans with funding surplus– Actuarial value of all benefit entitlements of
former and current employees (161 868) (147 222)– Market value of plan assets 211 295 189 009– Actuarial profits, not accounted for (30 037) (27 221)– Total surplus, included in assets 19 390 14 566
b. Plans with funding deficit– Actuarial value of all benefit entitlements of
former and current employees (311 014) (290 025)– Market value of plan assets 314 094 282 122– Actuarial profits, not accounted for (10 388) (7 503)– Total deficit, included in liabilities (7 308) (15 406)
Surplus and deficit respectively are included in long-terminterest-bearing financial assets and other long-term liabilitiesrespectively.
20
2000 1999Notes (CHF ’000) (CHF ’000)
The income statement shows the following:
Current service cost 25 656 23 846Interest cost 18 685 17 291Expected return on plan assets (29 887) (26 727)Actuarial gains/losses 0 0Employees’ contribution (6 417) (6 616)ERIS (Expense Recognized in the Income Statement) 8 037 7 794
The reconciliation to the balance sheet is as follows:
ERIS (Expense Recognized in the Income Statement) 8 037 7 794Employer’s contribution (8 040) (8 341)Surplus of effective employer’s contribution, net (3) (547)
Benefits for pension plan members coveredby defined-benefit plans are calculated using the following average actuarial assumptions:
Expected future service life of the employees 12 years 12 yearsDiscount rate 3.75% 3.75%Expected long-term return on capital 6.00% 6.00%Annual salary development 2.75% 2.75%Adaptation of pension benefits 1.50% 1.50%
5 Other operating expenses
Rents, repairs and maintenance and generaladministration costs 94 176 111 121Losses on disposal of fixed assets 5 807 4 916
Total other operating expenses 99 983 116 037
6 Financial income
Interest on interest-bearing assetsInterest from related parties and associated companies 6 265 614Other interest income 7 904 2 054
Dividends on securities in working capital 68 353 14 655Dividends on investments in associated and other companies 6 576 106Income from sale of securities 49 908 68 082Income from sale of financial participations 330 0
Total financial income 139 336 85 511
Dividends on securities in working capital have to be seen in the light of themerger between Canadian aluminium producer Alcan and algroup.They mainly consist of the special dividend received of CHF 135 per shareand the reduction in par value of CHF 90 per share.
21
2000 1999Notes (CHF ’000) (CHF ’000)
7 Financial expenses
Interest to related parties and associated companies 97 2 842Other interest 25 983 17 453Expenses out of sale/valuation of securities in working capital 134 0Foreign exchange losses, net 12 880 10 863Costs of transactions/Amortization of issue costs 1 221 0Goodwill amortization of associated companies 313 0
Total financial expenses 40 628 31 158
In 1999, “Costs of transactions/Amortization of issue costs”are stated within the interest expenses.
8 Income taxes
Current income taxes 50 234 46 242Deferred income taxes (see note 20) 6 481 (2 997)
Total income taxes 56 715 43 245
The ultimate holding company is incorporated in Switzerland. The subsidiaries operate in different countries with different tax laws and tax rates. The effective income tax expenses were different from the expected income tax expenses. The expected income tax expenses are calculated on the basis of the local profit and tax rate. This difference is as follows:
Breakdown of the income tax expenses:
Net income before income taxes 315 184 258 019Expected income tax rate 26.5% 26.5%Expected income taxes 83 524 68 375
Effect of different income tax rates (14 908) (10 486)Use of losses carried forward (583) (574)Income with special income tax rates (5 757) (1 031)Tax holidays and corrections from previous years (2 771) (8 783)Other (see below) (2 790) (4 256)
Effective income taxes 56 715 43 245Effective income tax rate 18.0% 16.8%
Deferred income taxes are calculated using the “Comprehensive LiabilityMethod”, under which provisions are set up for all temporary differences.Tax losses carried forward are only carried to accrued income if it is certainthat the future taxable profit is sufficient to offset such a loss.The expected income tax rate is 26.5%. Due to changes in the tax law ofthe Canton of Aargau to comply with the Federal Harmonization Act forDirect Cantonal and Municipal Taxes (StHG) and the switch from prior-yearto current-year-based taxation that this alignment entails, the net income of EMS-DOTTIKON AG is only taxed at one third (in position “Other”).As a result, taxes paid by the EMS Group are lower than they would be under normal circumstances.
22
Notes
9 Intangible fixed assets, tangible fixed assets, financial assets
I. Intangible fixed assetsChange in Reclassific.
At scope of cons./ and value At1. 1. 00 transl. diff. Additions Disposals adjustments 31. 12. 00
(CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000)
Goodwill Cost 36 256 (1 181) 506 (1 093) 34 488Amortization 18 092 (282) 2 298 (1 093) 19 015Book value 18 164 (899) (1 792) 0 15 473
Patents, Cost 17 106 (629) 6 938 6 984 (460) 15 971trade marks Amortization 8 474 (45) 1 353 6 981 (310) 2 491
Book value 8 632 (584) 5 585 3 (150) 13 480
Others, Cost 9 738 (331) 3 100 1 233 7 252 18 526incl. advances Amortization 3 953 (184) 2 316 1 040 2 708 7 753
Book value 5 785 (147) 784 193 4 544 10 773
Total Cost 63 100 (2 141) 10 544 8 217 5 699 68 985intangible Amortization 30 519 (511) 5 967 8 021 1 305 29 259fixed assets Book value 32 581 (1 630) 4 577 196 4 394 39 726
The change in goodwill is due to the purchase of the 30% minorities in EMS-CHEMIE (Japan). EMS Group held accordingly 100% inEMS-CHEMIE (Japan) before the merger with Showa Denko K.K. took place. Now EMS Group holds 70% in the merged company EC-SHOWADENKO K.K. Therefore, additions of intangible fixed assets – less the increase in participation – amount to KCHF 10 038.
IIa. Operating fixed assetsChange in Reclassific.
At scope of cons./ and value At1. 1. 00 transl. diff. Additions Disposals adjustments 31. 12. 00
(CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000)
Land incl. Cost 23 291 (302) 110 783 23 882development Depreciation 1 152 (4) 43 (8) 1 183cost Book value 22 139 (298) 67 791 22 699
Buildings Cost 289 649 (1 599) 7 731 1 992 6 455 300 244Depreciation 127 954 (539) 6 801 884 1 380 134 712Book value 161 695 (1 060) 930 1 108 5 075 165 532
Technical plant, Cost 890 429 (2 647) 23 940 18 252 29 671 923 141machinery, Depreciation 434 659 (1 580) 42 668 14 606 (10 040) 451 101R&D plants Book value 455 770 (1 067) (18 728) 3 646 39 711 472 040
Furniture, Cost 92 176 (1 469) 3 950 9 674 (7 860) 77 123EDP equipment, Depreciation 60 616 (957) 7 088 8 526 (7 065) 51 156vehicles Book value 31 560 (512) (3 138) 1 148 (795) 25 967
Plant under Cost 84 432 192 52 132 (47 736) 89 020construction and Depreciation 2 897 929 (3 826) 0payments in advance Book value 81 535 192 51 203 (43 910) 89 020
Total operating Cost 1 379 977 (5 825) 87 863 29 918 (18 687) 1 413 410fixed assets Depreciation 627 278 (3 080) 57 529 24 016 (19 559) 638 152
Book value 752 699 (2 745) 30 334 5 902 872 775 258
Consolidated Balance Sheet as of December 31
23
Notes
IIb. Non-operating fixed assetsChange in Reclassific.
At scope of cons./ and value At1. 1. 00 transl. diff. Additions Disposals adjustments 31. 12. 00
(CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000)
Land incl. Cost 9 571 (19) 836 243 14 10 159development cost Depreciation 0 0
Book value 9 571 (19) 836 243 14 10 159
Buildings Cost 6 907 (89) 29 152 6 695Depreciation 2 301 (33) 124 143 2 249Book value 4 606 (56) (95) 9 4 446
Furniture Cost 1 071 (49) 72 1 951Depreciation 946 (44) 28 72 858Book value 125 (5) (28) 0 1 93
Total Cost 17 549 (157) 865 467 15 17 805non-operating Depreciation 3 247 (77) 152 215 0 3 107fixed assets Book value 14 302 (80) 713 252 15 14 698
Total tangible Cost 1 397 526 (5 982) 88 728 30 385 (18 672) 1 431 215fixed assets Depreciation 630 525 (3 157) 57 681 24 231 (19 559) 641 259
Book value 767 001 (2 825) 31 047 6 154 887 789 956
In most Group companies, the fixed asset register was revised in 1999 in order to standardize the classification and the useful lives. For theremaining Group companies this revision has been made in the year under review, resulting in a net increase in book values of KCHF 5 281.
III. Financial assets
Associated companiesChange in Reclassific.
At scope of cons./ and value At1. 1. 00 transl. diff. Additions Disposals adjustments 31. 12. 00
(CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000)
Participations Cost 39 527 523 5 842 45 892Depreciation 0 0Book value 39 527 523 5 842 45 892
Goodwill Cost 0 (14) 3 314 3 300Amortization 0 (1) 313 312Book value 0 (13) 3 001 2 988
Total Cost 39 527 509 9 156 0 0 49 192associated Depreciation/Amortization 0 (1) 313 0 0 312companies Book value 39 527 510 8 843 0 0 48 880
Other participations
Cost 483 064 (8) 207 964 101 25 690 944Depreciation 0 37 37Book value 483 064 (8) 207 927 101 25 690 907
24
Notes
Long-term interest-bearing financial assetsChange in Reclassific.
At scope of cons./ and value At1. 1. 00 transl. diff. Additions Disposals adjustments 31. 12. 00
(CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000)
Cost 22 833 (146) 4 324 1 679 374 25 706Depreciation 63 (3) 4 4 60Book value 22 770 (143) 4 320 1 675 374 25 646
The change of participations in associated companies relates to the purchase of a 50% participation in the Czech D PLAST-EFTEC a.s. and the pur-chase of a 49% participation in the Indian EFTEC Shroff India Ltd. In addition, it contains the valuation of all companies valued at equity(KCHF 3 533). The change in other participations is mainly due to the acquisition of Lonza and AXANTIS shares.In the book value of other participations, the shareholding in Lonza is included with KCHF 526 785 (580 000 registered shares with an averagepurchase price of CHF 908.25) and the shareholding in AXANTIS with KCHF 163 463 (501 813 registered shares with an average purchase priceof CHF 325.75). The long-term interest-bearing financial assets contain receivables out of the application of IAS 19 (rev.) of KCHF 18 914.
2000 1999(CHF ’000) (CHF ’000)
Fire insurance value
Property, plant and equipment 1 839 224 1 892 536The insurance of fixed assets is at replacement values.
10 Inventories
Raw materials and supplies 49 662 55 955Semi-finished goods, work in progress 30 135 43 048Finished products 167 031 143 239Advance payments on goods 1 342 357
Total inventories 248 170 242 599
11 Trade accounts receivable
Accounts receivable from long-term production orders 8 620 26 720Trade accounts receivable from associated companies 1 263 0Trade accounts receivable 213 386 211 712Provision for bad debts (7 463) (8 397)
Total trade accounts receivable 215 806 230 035
12 Other receivables
Receivables from related parties 0 44Receivables from associated companies 664 310Other receivables 53 717 34 990Prepayments and accrued income 48 401 12 121
Total other receivables 102 782 47 465
Receivables from related parties bear interest at commercial rates(see notes 21, 32).
25
2000 1999Notes (CHF ’000) (CHF ’000)
13 Securities
Market value of marketable securities included in “current assets” at the end of the year amounts to 309 857 424 813
14 Cash and cash equivalents
Deposits 198 778 16 783Cash and cash equivalents 14 398 32 774
Total cash and cash equivalents 213 176 49 557
Maturity < 3 months 210 387 49 557Maturity > 3 months 2 789 0
15 Share capitalSummary Par value Number
2000
voting rightsPercentage of
capital
Registered shares CHF 10 729 300 65.98% 27.95% 7 293 7 293Bearer shares CHF 50 376 000 34.02% 72.05% 18 800 18 800
Share capital 26 093 26 093
16 Minority interests
This item reflects the minority interests in capital and profit and loss for the year respectively.Minorities own significant shares in EC-SHOWA DENKO K.K., EFTEC Europe Holding AG, KRAFTWERKE FRISAL AG and KRAFTWERKE REICHENAU AG. Minority interests in net income amount to KCHF 5 731.During the year under review, dividends of KCHF 1 303 were paid.Due to the capital increase of EC-SHOWA DENKO K.K.,the minority interests in share capital increased by KCHF 1 444.
17 Bonds
KRAFTWERKE REICHENAU AG43⁄8% debenture bond 1995–1.12.2005 50 000 50 000
Total bonds 50 000 50 000
18 Bank loans
The long-term bank loans are composed as follows:CHF: Average interest rate in 2000: 2.71% (1999: 1.79%) 520 000 400 000JPY: Average interest rate in 2000: 1.69% (1999: 1.45%) 102 602 62 184USD: Average interest rate in 2000: 7.09% (1999: –) 6 548 0SGD: Average interest rate in 2000: 4.56% (1999: –) 478 0
Total bank loans 629 628 462 184
Maturity 1–5 years 622 602 455 936Maturity > 5 years 7 026 6 248
26
2000 1999Notes (CHF ’000) (CHF ’000)
19 Other long-term liabilities
Other long-term liabilities 3 970 4 869Leasing liabilities 355 429Liabilities out of application of IAS 19 (rev.) 19 203 17 577
Total other long-term liabilities 23 528 22 875
20 Provisions
Change in Increase/scope of cons./ decrease via
At currency transl. Income Amounts At1. 1. 00 differences Statement used Reclassification 31. 12. 00
(CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000)
Pension liabilities 1 883 (116) 233 (45) (29) 1 926Other provisions 27 953 (565) 768 (1 877) 50 26 329
Subtotal 29 836 (681) 1 001 (1 922) 21 28 255Provisions for deferred income taxes 193 713 (360) 6 481 199 834
Total provisions 223 549 (1 041) 7 482 (1 922) 21 228 089
Warranty provisions are included within other provisions.
2000 1999Note to the provision for deferred income taxes (CHF ’000) (CHF ’000)
Calculation according to the “Comprehensive Liability Method”Total temporary differences 779 171 701 366
Provision for deferred income taxes basedon temporary differences 199 834 193 713
Losses carried forward, accepted by fiscal authorities
Total not considered losses carried forward 16 928 14 515
Not considered deferred income tax assets basedon not considered losses carried forward 6 263 5 080
Of which to be carried forward at the longest:1 year 20 02 years 138 03 years 144 64 years 0 1535 years 0 648More than 5 years 5 961 4 273
27
2000 1999Notes (CHF ’000) (CHF ’000)
21 Other short-term liabilities
Advances from customers for long-term manufacturing contracts 22 839 49 600Work in progress (long-term manufacturing contracts) (5 778) (8 682)
17 061 40 918Other advances 522 1 075Prepaid expenses and deferred income 50 727 40 510Liabilities to related parties 471 152Dividend obligations 0 328Liabilities to social security institutions 12 134 12 110Other short-term liabilities 25 235 34 505
Total other short-term liabilities 106 150 129 598
Interest on liabilities to related parties is in conformity with market conditions(see notes 12, 32).
22 Liabilities, net
43⁄8% debenture bond 1995–2005 (see note 17) 50 000 50 000Long-term bank loans (see note 18) 629 628 462 184Pension liabilities (see note 20) 1 926 1 883Long-term liabilities to retirement plans 1 999 2 147Short-term bank loans: Average interest rate 2000: 2.25% 211 425 200 567Leasing obligations (see note 19) 355 429Liabilities to related parties (see note 21) 471 152
Interest-bearing liabilities 895 804 717 362
lessReceivables from related parties (see note 12) 0 44Receivables from associated companies (see note 12) 664 310Securities (see note 13) 242 481 249 017Deposits (see note 14) 198 778 16 783
Interest-bearing liabilities, net 453 881 451 208
lessCash and cash equivalents (see note 14) 14 398 32 774
Liabilities, net 439 483 418 434
28
2000 1999Notes (CHF ’000) (CHF ’000)
23 Depreciation of intangible and tangible fixed assets and financial assets
Amortization intangible fixed assets 5 967 5 798Depreciation tangible fixed assets 57 681 57 386Subtotal amortization intangible/depreciation tangible fixed assets 63 648 63 184Value adjustment to financial assets 41 0
Total depreciation intangible and tangible fixed assets and financial assets 63 689 63 184
For the breakdown of the depreciation of tangible fixed assets refer to note 9.The goodwill amortization from associated companies of KCHF 313 isincluded within the financial expenses (see note 7).
24 Purchase/disposal of consolidated companies
Additions Disposals
Tangible fixed assets 0 33 489Long-term liabilities 0 (4 232)Goodwill paid 506 – 506 9 391Working capital, excluding cash and cash equivalents 0 2 387Subtotal 506 0 506 41 035Purchase price (paid)/received (506) (506) (2 909)Cash and cash equivalents 0 (82)
Cash flow from (purchase)/disposal of participations (506) 0 (506) (2 991)
The purchase of the 30% minorities in EMS-CHEMIE (Japan) Ltd. and thedisposal of 30% in the merged company EC-SHOWA DENKO K.K.(see also note 33 “Change in scope of consolidation”) have been shownon a net basis as a change in the minorities.Therefore, only the goodwill paid of KCHF 506 is shown in this note.
Further Details
25 Contingent liabilities
Commitments and contingent liabilities at the end of the year amount to 58 320 64 701No legal proceedings are known to be in progress within the Groupwhich could have a significant impact on the financial position of the Group.
Consolidated Cash Flow Statement
29
2000 1999Notes (CHF ’000) (CHF ’000)
26 Open derivative financial transactions
The following summary shows the most important open derivative financial transactions:
SWAPS JPY/CHF Notional amount CHF 238 090 204 246Positive replacement value CHF 15 223 9 403Negative replacement value CHF 3 199 11 335
USD/CHF Notional amount CHF 272 046 27 477Positive replacement value CHF 17 268 11Negative replacement value CHF 2 712
EUR/CHF Notional amount CHF 28 093 16 899Positive replacement value CHF 64 132Negative replacement value CHF 60 15
DEM/CHF Notional amount CHF 0 4 126Positive replacement value CHF 0 0Negative replacement value CHF 0 8
GBP/CHF Notional amount CHF 36 098 3 612Positive replacement value CHF 1 820 0Negative replacement value CHF 0 75
SEK/CHF Notional amount CHF 11 780 1 873Positive replacement value CHF 311 0Negative replacement value CHF 124 6
Interest Swaption CHF Notional amount CHF 100 000 –Positive replacement value CHF 0 –Negative replacement value CHF 1 134 –
Total Notional amount CHF 686 107 258 233Positive replacement value CHF 34 686 9 546Negative replacement value CHF 4 519 12 151
Securities in the amount of KCHF 176 713 were sold as of 2001.
Maximum risk equals the sum of the positive replacement values. This risk is considered being minimal, as the counterparties are first-rate financing institutions.
Credit risks
The short and medium-term deposits are placed with institutions having high credit standings. Trade accounts receivable are shown after deducting provisions for bad debts.
Risks of changes of interest rate
The EMS Group uses various instruments to secure financial costs and to hedge changes in interest rates. For the interest rate of bonds, short and medium-term bank liabilities refer to notes17, 18 and 22.
30
2000 1999Notes (CHF ’000) (CHF ’000)
27 Earnings per share – EPS
Earnings per share are calculated by dividing the Group’s net income (net of minority interests) by the weighted average of shares entitledto dividend (excluding treasury shares). “Fully diluted earnings per share” pays due regard to any dilution which may be caused by the exercising of warrant and conversion rights on outstanding bond issues.
Earnings per share details are as follows:
Net income 252 738 209 528Weighted average of bearer shares entitled to dividend 374 833 376 000Weighted average of registered shares entitled to dividend 729 300 729 300Weighted average of bearer shares (fully diluted) 374 833 376 000Weighted average of registered shares (fully diluted) 729 300 729 300Earnings per bearer share entitled to dividend (CHF) 485.39 401.50Earnings per registered share entitled to dividend (CHF) 97.08 80.30Earnings per bearer share (fully diluted) (CHF) 485.39 401.50Earnings per registered share (fully diluted) (CHF) 97.08 80.30Earnings per bearer share as of 31.12. (CHF) 484.30 401.50Earnings per registered share as of 31.12. (CHF) 96.86 80.30
There are no facts with a dilutive effect on earnings per sharecalculation.
28 Significant shareholders
Holders of registered shares:Emesta Holding AG, Zug/Ch. Blocher, 728 829 registered shares
Percentage of capital held (CHF 7 288 290 of CHF 26 093 000) 27.93% 27.93%Percentage of voting rights held (728 829 of 1105 300 votes) 65.94% 65.94%
Holders of bearer shares:Emesta Holding AG, Zug/Ch. Blocher, 195 080 bearer shares
Percentage of capital held (CHF 9 754 000 of CHF 26 093 000) 37.38% 36.12%Percentage of voting rights held (195 080 of 1105 300 votes) 17.65% 17.05%
A representation of other significant shareholders is not known to the Board of Directors.Emesta Holding AG is controlled by the Chairman ofEMS-CHEMIE HOLDING AG (see note 32).
29 Transactions with related parties
Transactions with related parties (see note 32)are done at arm’s length conditions.
31
Notes
30 Subsequent events
On December 6, 2000, EMS issued a public purchase offer for CHF 330 per share to the share-holders of AXANTIS with a January 31, 2001, deadline. Based on the shares having been tenderedby the close of the specified offer period, EMS therefore declared on January 31, 2001 – based onthe offer prospectus – that the public offer has been successful. EMS will hence also assume manage-ment responsibility for AXANTIS. The Board of Directors of AXANTIS has in the meantime announcedthat it will hold an extraordinary general meeting on March 15, 2001, to reappoint the Board ofDirectors.Now, the focus is on the legal integration of AXANTIS by EMS and on its delisting.
31 List of subsidiaries and minority holdings (at 31.12.00)
Name Domicile Holding Category Consoli-Group direct dation
EMS-CHEMIE HOLDING AG Domat/Ems D K
BUSINESS AREA PERFORMANCE POLYMERS
Business Units EMS-GRIVORY/ EMS-GRILTECH/EMS-SERVICES
EMS-CHEMIE AG * Domat/Ems 100.00% 100.00% P,V KEMS-CHEMIE (France) S.A. Boulogne 100.00% 100.00% V KEMS-CHEMIE (UK) Ltd. Stafford 100.00% 100.00% V KEC-SHOWA DENKO K.K. Tokyo 70.00% 70.00% V KEMS-UBE Ltd. ** Ube 49.00% 49.00% P E
EMS-CHEMIE (Asia) Ltd. Taipei 100.00% 100.00% P,V KEMS-CHEMIE (Deutschland) GmbH Gross-Umstadt 100.00% 100.00% P,V KEMS-GRILON HOLDING INC. Wilmington 100.00% 95.87% D K
EMS-CHEMIE (North America) Inc. Sumter 100.00% 100.00% P,V K
Business Unit EMS-TOGO
EFTEC Europe Holding AG Zug 70.00% 70.00% D KEFTEC AG Romanshorn 70.00% 100.00% P,V K
EFTEC Sàrl Le Vésinet 70.00% 100.00% V KEFTEC AB Hässleholm 70.00% 100.00% P,V KEFTEC Ltd. Rhigos 70.00% 100.00% P,V KEFTEC NV Genk 70.00% 100.00% P,V KEFTEC S. A. Zaragoza 70.00% 100.00% P,V KEFTEC Asia Pte. Ltd. Singapore 42.00% 60.00% D,V K
EFTEC (Thailand) Co. Ltd. Rayoung 42.00% 100.00% P,V KShanghai EFTEC Chemical Products Ltd. Shanghai 25.20% 60.00% P,V KEFTEC Shroff India Ltd. Mumbai 20.58% 49.00% P,V E
EFTEC GmbH Lügde 70.00% 100.00% P,V KD PLAST-EFTEC a.s. Zlín 35.00% 50.00% P,V E
EMS-TOGO Corp. Taylor 100.00% 100.00% D KEFTEC North America, L.L.C. Madison Heights 30.00% 30.00% P,V E
DINOL Holding AB Hässleholm 100.00% 100.00% D KDINOL AB Hässleholm 100.00% 100.00% P,V KDINOL (U.S.) Inc. Redmond 100.00% 100.00% V KDINOL Pyrmo GmbH Lügde 100.00% 100.00% P,V KSEGURO Corp. Detroit 100.00% 100.00% D K
32
Notes
Name Domicile Holding Category Consoli-Group direct dation
BUSINESS AREA FINE CHEMICALS
Business Units EMS-DOTTIKON/EMS-PRIMID *
EMS-DOTTIKON AG Dottikon 100.00% 100.00% P,V K
BUSINESS AREA ENGINEERING
Business Unit INVENTA-FISCHER
INVENTA-FISCHER AG Zurich 100.00% 100.00% P,V KGRIVELA AG Zurich 100.00% 100.00% D K
EMS-INVENTA ANLAGENBAU (Holding) GmbH Berlin 100.00% 79.77% D KEMS-INVENTA ANLAGENBAU (Berlin) GmbH Berlin 100.00% 100.00% D KINVENTA-FISCHER GmbH & Co. KG Berlin 100.00% 100.00% P,V K
Business Unit EMS-PATVAG
EMS-PATVAG AG Domat/Ems 100.00% 100.00% P,V K
Business Unit POWER STATIONS
KRAFTWERKE FRISAL AG Breil/Brigels 80.60% 80.60% P,V KKRAFTWERKE REICHENAU AG Tamins 75.00% 75.00% P,V KPATVAG KRAFTWERKE AG Domat/Ems 100.00% 100.00% P,V K
OTHERS
AXANTIS HOLDING AG Riedholz 29.04% 29.04% D BLonza Group AG Zurich 9.01% 9.01% D BEMS-SYNTECH GmbH Grenzach 20.00% 20.00% P,V B
Category: Consolidation:P = Production K = Fully consolidated * EMS-PRIMID is a reporting unitV = Trade, sale E = Equity valuation within EMS-CHEMIE AGD = Financing, various B = Book value ** Joint venture with joint control
32 Related parties
Name Domicile Country
Emesta Holding AG Zug Switzerland
33
Notes
33 Change in scope of consolidation
Fully consolidated:Additions:
EC-SHOWA DENKO K.K.On March 16, 2000, EMS-CHEMIE AG purchased the 30% minorities in EMS-CHEMIE (Japan) Ltd.After that, EMS-CHEMIE (Japan) Ltd. merged with SHOWA DENKO K.K. into EC-SHOWADENKO K.K. EMS-CHEMIE AG also holds 70% in the merged company.This transaction did not have an impact on the scope of consolidation; minority interests how-ever changed.
EMS-TOGO CORP./DINOL Int. Inc. USAPer December 31, 2000, these two companies merged under the name of EMS-TOGO CORP.
Disposals:Pyrmofix Verwaltungsgesellschaft mbH/Pyrmo Chemie Verwaltungsgesellschaft mbH
These two companies were liquidated per September 30, 2000.Due to their inactivity, no impact on the scope of consolidation occurred.
Valuation at equity:Additions:
D PLAST-EFTEC a.s.On April 17, 2000, 50% in the Czech company D PLAST a.s. were acquired retroactively perJanuary 1, 2000, and the company renamed into D PLAST-EFTEC a.s.
EFTEC Shroff India Ltd.On September 29, 2000, 49% in the Indian company Dinitrol Shroff were acquired and thecompany renamed into EFTEC Shroff India Ltd.
Valuation at book value:Additions:
AXANTIS HOLDING AGEnd of November/beginning of December 2000, 501 813 registered shares ofAXANTIS HOLDING AG were acquired.
34
Notes
34 Significant associated companies
EMS-UBE Ltd.Domicile Ube, JapanPercentage of holding 49.00%Financial year April 1, 1999–March 31, 2000Category ProductionCurrency JPYRevenue p.a. KCHF 158 095Fixed assets KCHF 18 468Current assets KCHF 28 691Shareholders’ equity KCHF 24 591Liabilities KCHF 22 568Net income KCHF 2 789
Between April 1, 2000 and December 31, 2000, no events occurred that materially influenced shareholders’ equity.
EFTEC North America, L.L.C.Domicile Madison Heights, USAPercentage of holding 30.00%Financial year December 1, 1999–November 30, 2000Category Production, SaleCurrency USDRevenue KCHF 169 689Fixed assets KCHF 63 199Current assets KCHF 55 341Shareholders’ equity KCHF 102 015Minority interests KCHF (4)Liabilities KCHF 16 529Net income KCHF 10 473
Between December 1, 2000 and December 31, 2000, no events occurred that materially influenced shareholders’ equity.
D PLAST-EFTEC a.s.Domicile Zlín, Czech RepublicPercentage of holding 50.00%Financial year January 1, 2000–December 31, 2000Category Production, SaleCurrency CZKRevenue KCHF 14 342Fixed assets KCHF 3 800Current assets KCHF 3 964Shareholders’ equity KCHF 3 963Liabilities KCHF 3 801Net income KCHF 1 047
35
Report of the Group Auditorsto the General Meeting ofEMS-CHEMIE HOLDING AGDomat/Ems
As auditors of the Group, wehave audited the consolidatedfinancial statements (balancesheet, income statement, changesin consolidated shareholders’equity, cash flow statement andnotes/pages 9 to 34) of EMS-CHEMIE HOLDING AG for theyear ended December 31, 2000.
These consolidated financialstatements are the responsibilityof the Board of Directors. Ourresponsibility is to express anopinion on these consolidatedfinancial statements based on ouraudit. We confirm that we meetthe legal requirements concern-ing professional qualification andindependence.
Our audit was conducted in accordance with auditingstandards promulgated by theSwiss profession and with theInternational Standards on Audit-ing issued by the InternationalFederation of Accountants (IFAC),which require that an audit beplanned and performed toobtain reasonable assuranceabout whether the consolidatedfinancial statements are free from material misstatement. Wehave examined on a test basisevidence supporting the amountsand disclosures in the consoli-dated financial statements. Wehave also assessed the account-ing principles used, significantestimates made and the overallconsolidated financial statementpresentation. We believe that ouraudit provides a reasonablebasis for our opinion.
In our opinion, the consoli-dated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance withthe International AccountingStandards (IAS) and comply with Swiss law.
We recommend that the consolidated financial statementssubmitted to you be approved.
Zurich, March 1, 2001
PricewaterhouseCoopers AG
Willi Grau Matthias von Moos
Report of the Group Auditors
EMS-CHEMIE HOLDING AGDomat/Ems Switzerland
Annual Accounts
EMS-CHEMIE HOLDING AG
(for Fiscal Year May 1, 2000–April 30, 2001)
38
Income Statement May 1, 2000, to April 30, 2001der EMS-CHEMIE HOLDING AG
2000/2001 1999/2000Notes (CHF ’000) (CHF ’000)
INCOME
Financial income
Interest income from third parties 8 593 2 836
Interest income from group companies and related parties 1 24 077 13 045
Foreign exchange differences, net 3 16 438 0
Income from securities 118 656 124 190
Income from participations 115 337 122 534
Other operating income 119 119
Extraordinary income 1 100
Total income 283 221 262 824
EXPENSES
Financial expenses
Interest expenses to third parties 28 432 14 328
Interest expenses to group companies and related parties 2 5 511 5 513
Foreign exchange differences, net 3 0 10 676
Bank charges, duties, fees 2 847 566
Office and administration expenses
Consultancy fees and professional fees 1 156 409
Office and administration expenses 1 1
Extraordinary expenses 47 176
Total expenses 37 994 31 669
Net income before taxes 245 227 231 155
Taxes 7 328 6 548
Net income 237 899 224 607
39
Balance Sheet as of April 30, 2001
30.4.01 30.4.00Notes (CHF ’000) (CHF ’000)
Fixed assets 1 592 485 817 077
Investments 4 1 245 002 603 587
Loans to group companies 347 483 213 490
Current assets 378 176 301 854
Prepayments and accrued income 4 269 44 026
Securities 5 207 044 212 053
Accounts receivable
from third parties 20 281 42 838
from group companies 2 160 2 718
Cash and cash equivalents 6 144 422 219
TOTAL ASSETS 1 970 661 1118 931
Shareholders’ equity 7 680 091 442 190
Share capital 8–10 26 093 26 093
Legal reserves 70 000 70 000
Other reserves 10 000 10 000
Retained earnings 11
Balance brought forward 336 099 111 490
Net income 237 899 224 607
Liabilities 1 290 570 676 741
Long-term liabilities 672 106 528 441
Loans from group companies 49 802 56 922
Bank loans 608 569 457 784
Provisions 12 13 735 13 735
Short-term liabilities 618 464 148 300
Accruals and deferred income 4 177 2 023
Accounts payable to third parties 13 122 389 144 842
Accounts payable to group companies and related parties 14 491 898 1 435
TOTAL LIABILITIES 1 970 661 1 118 931
Balance sheet equity ratio 34.5% 39.5%
40
Notes to the Financial Statements 2000/2001
Accounting principles
1. General
The financial statements ofEMS-CHEMIE HOLDING AGhave been prepared under thehistorical cost convention, and arein accordance with the provisionsof Swiss law. Assets, liabilitiesand shareholders‘ equity continueto be valued using conservativeaccounting principles.The financial year differs fromthe calendar year (closing perApril 30, 2001). Companies in whichEMS-CHEMIE HOLDING AG’sshareholding is in excess of50% (voting rights) are designat-ed as group companies.
2. Foreign currency translation
Revenue and expenditure in for-eign currencies are translated intoSwiss francs for the profit andloss account at the average rates
for the month in which they arose.Financial assets and currentassets are translated at the year-end rate, as are current liabilities.
3. Current assets
Appropriate value adjustmentshave been effected for balancessubject to risk.Securities are shown at the lowerof cost or market value.
4. Fixed assets
Investments in group companiesand other companies are shownat purchase value less any valueadjustments required.
5. Liabilities
Non-current liabilities are shownat their redemption value. All out-standing expenditure items overCHF 5 000 in the current year areincluded in the profit and lossaccount and appear on thebalance sheet as accruals anddeferred income.
41
1 Interest income from group companies and related partiesInterest income from group companies 17 000 11 672 Interest income from related parties 7 077 1373
Interest income from group companies and related parties 24 077 13045
2 Interest expenses to group companies and related partiesInterest expenses to group companies 5 430 2 844 Interest expenses to related parties 81 2 669
Interest expenses to group companies and related parties 5 511 5513
3 Foreign exchange differences, netForeign exchange gains 24 168 175 Foreign exchange losses 7 730 10 851
Foreign exchange differences, net 16 438 (10 676)
Balance Sheet as of April 30, 2001
4 InvestmentsOn April 30, 2001, the direct participations of EMS-CHEMIE HOLDING AG were as follows:
Companies Share Interestcapital in capital
in thousands held Purpose
EMS-CHEMIE AG, Domat/Ems CHF 4000 100.00 ProductionEMS-CHEMIE (Asia) Ltd., Taipei TWD 280000 100.00 ProductionEMS-CHEMIE (Deutschland) GmbH, Gross-Umstadt DEM 5 000 100.00 Production
EMS-GRILON HOLDING INC., Wilmington USD 2420 95.87 FinancingEFTEC Europe Holding AG, Zug CHF 8000 70.00 FinancingEMS-TOGO Corp., Taylor USD 7287 100.00 FinancingDINOL Holding AB, Hässleholm SEK 100 100.00 FinancingEMS-DOTTIKON AG, Dottikon CHF 600 100.00 ProductionINVENTA-FISCHER AG, Zurich CHF 500 100.00 ProductionEMS-INVENTA ANLAGENBAU (Holding) GmbH,Berlin DEM 6 268 79.77 Financing
EMS-PATVAG AG, Domat/Ems CHF 200 100.00 ProductionKRAFTWERKE FRISAL AG, Breil/Brigels CHF 2 000 80.60 ProductionKRAFTWERKE REICHENAU AG, Tamins CHF 1000 75.00 ProductionPATVAG KRAFTWERKE AG, Domat/Ems CHF 2200 100.00 ProductionLonza Group AG, Zurich CHF 64340 10.10 FinancingAXANTIS HOLDING AG, Riedholz CHF 34 560 99.52 FinancingEMS-SYNTECH GmbH, Grenzach DEM 600 20.00 Production
Book value 1 245 002 603587 The voting rights held correspond to the interest in capital held.
2000/2001 1999/2000Notes (CHF ’000) (CHF ’000)
Income Statement 2000/2001
42
5 Securities Book value 207 044 212053 Market value per April 30 214 434 323735
6 Cash and cash equivalentsInterest-bearing deposits placed with banks 144 422 219
7 Shareholders’ equityBalance per May1 442 190 217583 Miscellaneous 2 0Net income (see note11) 237 899 224607
Balance per April 30 680 091 442190
8 Share capitalComposition 2000/2001
Percentage ofPar value Number voting rights capital
Registered shares CHF 10 729300 65.98% 27.95% 7293 7293 Bearer shares CHF 50 376 000 34.02% 72.05% 18 800 18800
Share capital 26093 26093
Registered shares are not traded on the stock exchange.
9 Treasury sharesBearer shares Number
2000/2001 1999/2000
Balance per May1 0 0Purchase at CHF 7400 2 000 0 Sale at CHF 7450 (2 000) 0
Balance per April 30 0 0 0 0
2000/2001 1999/2000Notes (CHF ’000) (CHF ’000)
43
2000/2001 1999/2000Notes (CHF ’000) (CHF ’000)
10 Significant shareholdersHolders of registered shares:Emesta Holding AG, Zug/Ch. Blocher, 728 979 registered shares
Percentage of capital held (CHF 7 289 790 of CHF 26 093 000) 27.94% 27.93%Percentage of voting rights held (728 979 of1105 300 votes) 65.95% 65.94%
Holders of bearer shares:Emesta Holding AG, Zug/Ch. Blocher, 206 698 bearer shares
Percentage of capital held (CHF 10 334 900 of CHF 26 093 000) 39.61% 37.02%Percentage of voting rights held (206 698 of 1105 300 votes) 18.70% 17.48%
A representation of other significant shareholders is not knownto the Board of Directors.Emesta Holding AG is controlled by the Chairmanof EMS-CHEMIE HOLDING AG, Ch. Blocher.Transactions between EMS-CHEMIE HOLDING AGand Emesta Holding AG are shown as transactions with related parties and are carried out at arm’s length.
11 Retained earningsBalance brought forward 336 097 111 490 Miscellaneous 2 0Net income 237 899 224 607
Retained earnings 573 998 336 097
12 Provisions Provisions for general risks 13 735 13 735
13 Accounts payable to third partiesAccounts payable to third parties 6 710 14 Income tax liabilities 4 692 4 369 Fixed advances from banks 110 987 140 459
Accounts payable to third parties 122 389 144 842
14 Accounts payable to group companies and related partiesAccounts payable to group companies 491 658 1 435 Accounts payable to related parties 240 0
Accounts payable to group companies and related parties 491 898 1 435
15 Contingent liabilitiesGuarantees (maximum liability) 14 633 15 547
44
The Board of Directors will present to the Ordinary Shareholders’ Meeting of August 18, 2001, the followingproposals regarding the 2000/2001 financial year:
1. approval of the Annual Report and the consolidated financial statements per December 31, 2000, andthe financial statements for the year ended April 30, 2001;
2. discharge of the Board of Directors from its responsibilities for the conduct of the business;
3. distribution of available retained earnings consisting of:
2000/2001 1999/2000
Net income 237 899 232.28 224 607 441.04Miscellaneous 1 365.00 178.75Balance brought forward 336 097 882.80 111 490 263.01
Retained earnings 573 998 480.08 336097882.80
to be appropriated as follows:
Balance to be carried forward 573 998 480.08 336 097 882.80
Retained earnings 573 998 480.08 336097882.80
Domat/Ems, May 25, 2001
EMS-CHEMIE HOLDING AGThe Chairman of the Board of DirectorsChristoph Blocher
Proposals of the Board of Directors
Report of the Auditors
Report of the Statutory auditorsto the General Meeting ofEMS-CHEMIE HOLDING AG7013 Domat/Ems
As statutory auditors, we haveaudited the accounting recordsand the financial statements(income statement, balance sheetand notes/pages 38 to 44) ofEMS-CHEMIE HOLDING AG forthe year ended April 30, 2001.
These financial statements are theresponsibility of the Board ofDirectors. Our responsibility is toexpress an opinion on thesefinancial statements based on ouraudit. We confirm that we meetthe legal requirements concern-
ing professional qualification andindependence.
Our audit was conducted inaccordance with auditing stan-dards promulgated by the Swissprofession, which require that anaudit be planned and performedto obtain reasonable assuranceabout whether the financial state-ments are free from materialmisstatement. We have examinedon a test basis evidence support-ing the amounts and disclosuresin the financial statements. Wehave also assessed the account-ing principles used, significantestimates made and the overallfinancial statement presentation.We believe that our audit pro-vides a reasonable basis for ouropinion.
In our opinion, the accountingrecords and financial statementsand the proposed appropriationof available earnings complywith Swiss law and the compa-ny’s articles of incorporation.
We recommend that the financialstatements submitted to you beapproved.
Zurich, May 25, 2001
R. BRÜTSCH Swiss Certified AccountantR. Brütsch
PricewaterhouseCoopers AGWilli Grau Matthias von Moos
45
Addresses of EMS Companies, Switzerland
EMS-CHEMIE HOLDING AGKugelgasse 22PostfachCH-8708 MännedorfTel. +41 1 921 00 00Fax +41 1 921 00 01http://www.ems-group.comE-Mail: [email protected]
EMS-CHEMIE AGReichenauerstrasseCH-7013 Domat/EmsTel. +41 81 632 61 11Fax +41 81 632 74 01http://www.emschem.comE-Mail: [email protected]
EMS-CHEMIE AGKugelgasse 22PostfachCH-8708 MännedorfTel. +41 1 921 00 00Fax +41 1 921 00 01http://www.emschem.comE-Mail: [email protected]
EMS-GRIVORYReichenauerstrasseCH-7013 Domat/EmsTel. +41 81 632 78 88Fax +41 81 632 74 01http://www.emsgrivory.comE-Mail: [email protected]
EMS-GRILTECHReichenauerstrasseCH-7013 Domat/EmsTel. +41 81 632 72 02Fax +41 81 632 74 02http://www.emsgriltech.comE-Mail: [email protected]
EMS-SERVICESReichenauerstrasseCH-7013 Domat/EmsTel. +41 81 632 77 66Fax +41 81 632 76 76E-Mail: [email protected]
AXANTIS HOLDING AGCH-4533 RiedholzTel. +41 32 626 89 00Fax +41 32 626 89 09http://www.axantis.comE-Mail: [email protected]
ATISHOLZ AGCH-4542 LuterbachTel. +41 32 626 81 11Fax +41 32 626 81 99http://www.atisholz.comE-Mail: [email protected]
KRAFTWERKE FRISAL AGPostfachCH-7130 IlanzTel. +41 81 920 05 50Fax +41 81 920 05 60
KRAFTWERKE REICHENAU AGPostfachCH-7130 IlanzTel. +41 81 920 05 50Fax +41 81 920 05 60
PATVAG KRAFTWERKE AGPostfachCH-7130 IlanzTel. +41 81 920 05 50Fax +41 81 920 05 60
EMS-PRIMIDReichenauerstrasseCH-7013 Domat/EmsTel. +41 81 632 70 11Fax +41 81 632 74 64E-Mail: [email protected]
EMS-DOTTIKON AGCH-5605 DottikonTel. +41 56 616 81 11Fax +41 56 616 81 20http://www.ems-dottikon.chE-Mail: [email protected]
INVENTA-FISCHER AGReichenauerstrasseCH-7013 Domat/EmsTel. +41 81 632 63 11Fax +41 81 632 74 03http://www.inventa-fischer.comE-Mail: [email protected]
INVENTA-FISCHER AGKugelgasse 22PostfachCH-8708 MännedorfTel. +41 1 921 01 40Fax +41 1 921 01 49http://www.inventa-fischer.comE-Mail: [email protected]
EMS-PATVAG AGReichenauerstrasseCH-7013 Domat/EmsTel. +41 81 632 75 45Fax +41 81 632 74 36E-Mail: [email protected]
EFTEC AGHofstrasse 31CH-8590 RomanshornTel. +41 71 466 43 00Fax +41 71 466 43 01http://www.eftec.ch
46
Addresses of EMS Companies, Worldwide
Belgium
EFTEC NVHenry Fordlaan 1B-3600 GenkTel. +32 89 61 27 86Fax +32 89 61 27 93
China
Shanghai EFTECChemical Products Ltd.521 Guang Hua RoadHu Min RoadShanghai 201108P. R. ChinaTel. +86 21 6489 1122/66Fax +86 21 6489 1199
Changchun EFTECChemical Products Ltd.No. 2–1 Hua Xiang RoadLuyuan DistrictChangchun, Postal Code 130111P. R. ChinaTel. +86 431 789 7880Fax +86 431 789 7881
Czech Republic
D PLAST-EFTEC a.s.Luzkovice 206CZ-763 11 ZlínCzech RepublicTel. +420 67 700 44 11Fax +420 67 700 44 44
France
EMS-CHEMIE (France) S.A.73–77, rue de SèvresBoîte postale 52F-92105 Boulogne-Billancourt CedexTel. +33 1 41 10 06 10Fax +33 1 48 25 56 07E-Mail: [email protected]
EFTEC Sàrl131, boulevard CarnotF-78110 Le VésinetTel. +33 134 80 06 67Fax +33 139 76 48 26
Germany
EMS-CHEMIE(Deutschland) GmbHWarthweg 14D-64823 Gross-UmstadtTel. +49 6078 783 0Fax +49 6078 783 416E-Mail: [email protected]
EFTEC GmbHPyrmonter Strasse 76D-32676 LügdeTel. +49 5281 98 2980Fax +49 5281 98 29860
EFTEC Engineering GmbHOtto-Lilienthal-Strasse 18D-88677 MarkdorfTel. +49 7544 920-0Fax +49 7544 920-200
INVENTA-FISCHER GmbH+ Co. KGHolzhauser Strasse 157–159D-13509 BerlinTel. +49 30 43 567 5Fax +49 30 43 567 699http://www.inventa-fischer.deE-Mail: [email protected]
DINOL PYRMO GmbHPyrmonter Strasse 76D-32676 LügdeTel. +49 5281 97 400Fax +49 5281 97 4050
Great Britain
EMS-CHEMIE (UK) Ltd.Drummond RoadAstonfields Industrial EstateGB-Stafford ST16 3HJTel. +44 1785 607 580Fax +44 1785 607 570E-Mail: [email protected]
EFTEC Ltd.Rhigos/AberdareGB-Mid Glamorgan CF44 9UETel. +44 1685 81 54 00Fax +44 1685 81 39 97
India
EFTEC Shroff India LimitedExcel EstateS.V. Road, Goregaon (West)Mumbai 400 062IndiaTel. +91 22 872 3865Fax +91 22 872 5119
Japan
EC-SHOWA DENKO K.K.Yutaka Bldg.4-9-3, TaitoTaito-ku110-0016, TokyoTel. +81 3 3832 1501Fax +81 3 3832 1503E-Mail: [email protected]
EMS-UBE Ltd.Kemikaru Seisan Tokatsu-buUbe-kousan1978-10, Kogushi, Ube-shiYamaguchi-kenTel. +81 8 3631 0213Fax +81 8 3631 0214http://www.ube.co.jp
EMS-DOTTIKON AGAsia-Pacific Office9th Fl. Yutaka Bldg.4-9-3 TaitoTaito-ku110-0016, TokyoTel. +81 3 3832 1517Fax +81 3 3832 1503E-Mail: [email protected]
47
Russia
E PLAST-EFTEC RTTanayevskoye shosse 2423 630 ElabugaRepublic Tatarstan – RussiaTel. +7 85 557 519 40Fax +7 85 557 519 41
Singapore
EFTEC Asia Pte. Ltd.No. 4, Changi South Lane,# 06-01 Nan Wah Bldg.Singapore 486127Tel. +65 545 82 01Fax +65 545 92 06
Spain
EFTEC S. A.Carretera Logroño km 29,2E-50639 Figueruelas (Zaragoza)Tel. +34 976 65 62 69Fax +34 976 65 62 70
Sweden
EFTEC ABSpångatan 3S-28122 HässleholmTel. +46 451 880 00Fax +46 451 880 44
EFTEC Engineering AGGarnisonvägen 40, P.O. Box 62S-281 35 HässleholmTel. +46 451 88100Fax +46 451 88122
DINOL ABSpångatan 3S-28122 HässleholmTel. +46 451 880 00Fax +46 451 880 88
Taiwan
EMS-CHEMIE (Asia) Ltd.36, Kwang Fu South RoadHsin Chu Industrial ParkFu Kou Hsiang, Hsin Chu HsienTaiwan, R.O.C.Tel. +886 35 985 335Fax +886 35 985 345E-Mail: [email protected]
Thailand
EFTEC (Thailand) Co. Ltd.Eastern Seaboard Industrial Estate(Rayong)109/10 Moo 4, PluakdaengRayong 21140/ThailandTel. +66 38 954271-4Fax +66 38 954270
Ukraine
ZAO PlastolUl. Chubanova 5330 118 ZaporozhyeUkraineTel. +380 612 138 568Fax +380 612 138 568E-Mail: [email protected]
United States
EMS-CHEMIE(North America) Inc.2060 Corporate WayP.O. Box 1717Sumter, SC 29151, USATel. +1 803 481 91 73Fax +1 803 481 38 20E-Mail: [email protected]
EMS-DOTTIKON AGUS OfficeOne Paragon Drive, Suite 210Montvale, NJ 07645USATel. +1 201 476 92 29Fax +1 201 476 93 13http://www.ems-dottikon.chE-Mail: [email protected]
DINOL (US) Inc.14826 N E 95th StreetRedmond, WA 98052USATel. +1 425 556 51 14Fax +1 425 556 01 96