Innovat and Em Machin Global

APPLICATION EXAMPLE INNOVATIVE SEWING AND EMBROIDERY Annual Report 2016 MACHINES FOR THE GLOBAL MARKET

BERNINA considers the quick change in the economy, technology, environment and society to be a challenge. Progress is the most important cornerstone for BERNINA in order to play a leading role in the world of sewing machines and textile technology. BERNINA machines stand for Swiss precision. Quality and innovation are of major impor- tance and have a long tradition. BERNINA International AG is a global company and one of the world’s leading manufacturers of sewing and embroidery machines for private households. As a global outsourcing partner, the Cicor Group is responsible for the production of many electronic and plastic products for BERNINA sewing and embroidery machines. As a long-standing partner, Cicor offers one-stop development services, PCB assembly, tool manu facturing as well as plastic injection molding and box building. Cicor produces electronic and plastic products for BERNINA in Europe and Asia – from the market for the market.

One-stop electronics and plastics

Cicor Technologies Ltd. “As a long-standing partner Route de l’Europe 8 Cicor offers services along 2017 Boudry Switzerland the supply chain – from the www.cicor.com market for the market.”

0_Cicor_GB16_Umschlag_en.indd 5-2 28.02.2017 14:04:26 APPLICATION EXAMPLE INNOVATIVE SEWING AND EMBROIDERY Annual Report 2016 MACHINES FOR THE GLOBAL MARKET

One-stop electronics and plastics

Cicor Technologies Ltd. “As a long-standing partner Route de l’Europe 8 Cicor offers services along 2017 Boudry Switzerland the supply chain – from the www.cicor.com market for the market.”

0_Cicor_GB16_Umschlag_en.indd 5-2 28.02.2017 14:04:26 ABOUT US 2016 / 2015 CICOR – KEY FIGURES SALES ADDRESSES

in CHF 1 000 unless otherwise specified 2013 in % 2014 in % 2015 in % 2016 in % BY INDUSTRY HEAD OFFICE CICOR ELECTRONIC Cicor Anam Ltd. CICOR ADVANCED YOUR TECHNOLOGY SOLUTIONS 15 VSIP Street 4 MICROELECTRONICS Net sales 190 453 100.0 202 458 100.0 180 612 100.0 189 494 100.0 2% Cicor Technologies Ltd. 7% Thuan An District Change compared to previous year (%) 8.2 6.3 –10.8 4.9 12% 5% 8% 2% Route de l’Europe 8 & SUBSTRATES 12% Swisstronics Binh Duong Province 9% 2017 Boudry EBITDA before restructuring costs 17 604 9.2 19 662 9.7 12 117 6.7 12 612 6.7 Contract Manufacturing AG Vietnam Cicorel SA PARTNER Switzerland Gebenloostrasse 15 Change compared to previous year (%) 14.9 11.7 –38.4 4.1 Tel. +84 650 375 66 23 Route de l’Europe 8 info cicor.com 13% @ 9552 Bronschhofen Fax +84 650 375 66 24 2017 Boudry Operating profit before restructuring costs (EBIT) 8 512 4.5 10 229 5.1 3 066 1.7 4 072 2.1 www.cicor.com 9% Switzerland www.cicor.com Switzerland Restructuring costs – 0.0 – 0.0 –4 718 –2.6 –1 145 –0.6 Tel. +41 71 913 73 73 Tel. +41 32 843 05 00 Operating profit (EBIT) 8 512 4.5 10 229 5.1 –1 652 –0.9 2 927 1.5 Fax +41 71 913 73 74 Suzhou Cicor Technology Co. Ltd. Fax +41 32 843 05 99 CONTACT www.cicor.com Earnings before taxes (EBT) 5 816 3.1 8 958 4.4 –3 811 –2.1 1 088 0.6 EPZ No. 11 Building www.cicor.com No. 666 Jianlin Road Income taxes –1 272 –0.7 –1 952 –1.0 –245 –0.1 –830 –0.4 27% 37% Cicor Management AG S.C. Systronics S.R.L. SND-EPZ Sub-industrial Park Cicor Americas Ltd. 27% 30% Gebenloostrasse 15 Net profit before restructuring costs 4 544 2.4 7 006 3.5 662 0.4 1 403 0.7 Zone Parc Industrial F-N 9552 Bronschhofen Suzhou, China 215151 185 Alewife Brook Parkway, 310580 Arad Tel. +86 512 6667 2013 Suite #410 Net profit/(loss) 4 544 2.4 7 006 3.5 –4 056 –2.2 258 0.1 Aerospace & defence Switzerland Romania www.cicor.com Cambridge, MA 02138 Earnings per share (in CHF) 1.58 2.39 –1.37 0.09 Communication www.cicor.com Industrial Tel. +40 257 285 944 USA Number of employees (FTEs at end of period) 1 912 1 852 1 958 1 841 Medical Fax +40 257 216 733 Cicor is a global engineering and manufacturing service provider with Tel. +41 71 913 73 00 Tel. +1 617 576 2005 Automotive & transport www.cicor.com Fax +1 617 576 2001 innovative technology solutions for the electronics industry. With 1 841 Watches & consumer Fax +41 71 913 73 01 Other [email protected] www.cicor.com employees at ten production sites, Cicor manufactures highly complex Cicor Asia Pte Ltd. [email protected] printed circuit boards, hybrid circuits and 3D-MID solutions and offers 45 Changi South Avenue 2 RHe Microsystems GmbH complete electronic assembly and plastic injection molding. #02-01 Singapore 486133 Heidestrasse 70 Singapore 01454 Radeberg The Group supplies customized solutions from design to finished BY EXPORT REGION Tel. +65 6546 16 60 Germany Fax +65 6546 65 76 Tel. +49 3528 4199-0 product for international customers. 2% www.cicor.com Fax +49 3528 4199-99 7% 1% www.cicor.com The shares of Cicor Technologies Ltd. are listed on the SIX Swiss 6% Cicor Ecotool Pte Ltd. 13% 45 Changi South Avenue 2 Reinhardt Microtech GmbH Exchange (CICN). 18% Division results 2013 in % 2014 in % 2015 in % 2016 in % 37% #04-01 Singapore 486133 Sedanstrasse 14 AMS Division 40% Singapore 89077 Ulm Tel. +65 6545 50 30 – Sales 59 095 100.0 56 934 100.0 49 510 100.0 42 844 100.0 Germany Fax +65 6545 00 32 Tel. +49 731 9858 8413 Contact – EBITDA before restructuring 7 740 13.1 7 594 13.3 4 907 9.9 2 583 6.0 www.cicor.com Fax +49 731 9858 8411 Cicor Management AG www.cicor.com Gebenloostrasse 15 ES Division 41% PT Cicor Panatec Batamindo Industrial Park, 9552 Bronschhofen – Sales 131 405 100.0 145 662 100.0 131 578 100.0 146 650 100.0 35% Reinhardt Microtech AG Lot 323 - 324 Aeulistrasse 10 – EBITDA before restructuring 12 018 9.1 13 912 9.6 9 380 7.1 11 568 7.9 Switzerland Switzerland Jalan Beringin, Muka Kuning 7323 Wangs [email protected] Europe (without Switzerland) Batam 29433 Switzerland Asia Indonesia Tel. +41 81 720 04 56 North America Tel. +62 770 61 22 33 www.cicor.com Other Fax +41 81 720 04 50 Fax +62 770 61 22 66 www.cicor.com www.cicor.com

BY PRODUCTION REGION

25% 20% 37% 45% Published by Cicor Technologies Ltd. This annual report is published in Design concept/Realization German and English as a print and Linkgroup AG, Zurich online version. The print and online 38% www.linkgroup.ch German version is binding. 35% © Cicor Technologies Ltd., Photos: BERNINA International AG March 2017 Switzerland Europe (without Switzerland) Asia

0_Cicor_GB16_Umschlag_en.indd 3-6 28.02.2017 14:04:27 ABOUT US 2016 / 2015 CICOR – KEY FIGURES SALES ADDRESSES

BY PRODUCTION REGION

0_Cicor_GB16_Umschlag_en.indd 3-6 28.02.2017 14:04:27 NET SALES BY DIVISION AND EBITDA MARGIN BEFORE RESTRUCTURING

in Mio. CHF in % 240,0 12.0 11.0 200,0 10.0 9.0 160,0 8.0 7.0 120,0 6.0 5.0 80,0 4.0 3.0 40,0 2.0 1.0 0,0 0.0 2013 2014 2015 2016

Net Sales AMS Net Sales ES EBITDA margin before restructuring

in CHF 1 000 unless otherwise specified 31.12.2013 in % 31.12.2014 in % 31.12.2015 in % 31.12.2016 in % Non-current assets 135 777 60.0 55 115 36.7 49 910 33.0 49 788 31.9 Current assets 90 522 40.0 95 015 63.3 101 404 67.0 106 527 68.1 Total assets 226 299 100.0 150 130 100.0 151 314 100.0 156 315 100.0 Equity 125 853 55.6 67 439 44.9 59 700 39.5 60 193 38.5

Financial liabilities 43 590 19.3 38 239 25.5 48 215 31.9 48 978 31.3 Cash and cash equivalents 15 369 6.8 17 006 11.3 27 681 18.3 27 441 17.5 Net debt 28 221 12.5 21 233 14.1 20 534 13.6 21 537 13.8 Gearing ratio (net debt in % of equity) 22.4 31.5 34.4 35.8

Inventories 40 893 18.1 42 127 28.1 41 459 27.4 43 860 28.1 Trade receivables 29 553 13.1 30 869 20.6 27 791 18.4 31 916 20.4 Trade payables –21 037 –9.3 –23 658 –15.8 –21 831 –14.4 –26 909 –17.2 Net working capital 49 409 21.8 49 338 32.9 47 419 31.3 48 867 31.3 in % of sales 25.9 24.4 26.3 25.8

Capex in tangible assets 15 293 10 618 8 453 8 362 in % of sales 8.0 5.2 4.7 4.4

Cicor | Annual Report 2016 | At a Glance 1

1_Cicor_GB16_Berichtsteil_1_en.indd 1 28.02.2017 14:17:58 PROFILEKENNZAHLEN

GERMANY ROMANIA RADEBERG ARAD ULM CHINA SUZHOU

SWITZERLAND BOUDRY VIETNAM BRONSCHHOFEN WANGS THUAN AN TOWN

SINGAPORE SINGAPORE

INDONESIA BATAM

Cicor sales

Operating sites Engineering Cicor supplies customized Printed circuit boards Hybrids, microelectronics solutions from design to PCB assembly Box building finished product for its cus- Plastic injection molding Tooling tomers in Europe, America and Asia.

2 Cicor | Annual Report 2016 | At a Glance

1_Cicor_GB16_Berichtsteil_1_en.indd 2 28.02.2017 14:17:59 AT A GLANCE

2 Profile 4 The Cicor Group 6 Cicor Technologies Ltd. shares 7 Agenda, communication

KEY STATEMENTS

9 Report of the Chairman and the CEO

15 CORPORATE GOVERNANCE

25 REMUNERATION REPORT

FINANCIAL REPORT 33 Consolidated Financial Statements of the Cicor Technologies Group 64 Financial Statements of the Cicor Technologies Ltd.

73 Addresses

Cicor | Annual Report 2016 | At a Glance 3

1_Cicor_GB16_Berichtsteil_1_en.indd 3 28.02.2017 14:18:00 THE CICOR GROUP LEADING TECHNOLOGIES RADEBERG SITE FOR GROWTH CLEANROOM MICROASSEMBLY The Radeberg site has a combined assembly line for SMD components and chips in the clean room. The chip mounting can MARKETS be done classically with subsequent wire bonding or as flip chip mounting including underfill.

WANGS AND ULM SITES FLEXIBLE THIN-FILM SUBSTRATES At Cicor’s Wangs and Ulm sites, flexible thin-film substrates are manufactured for a wide variety of applications. Thin-film technology offers high-resolution structures down to 10 µm and line tolerances of a few micrometers.

BATAM SITE STERILE MEDICAL CONSUMABLES The Batam site is ISO 13485 certified and offers plastic injec- The Cicor Group is an internationally positioned electronics ser- tion molding services for medical technology. The production vice provider. As a complete solutions partner, the company has cleanroom injection molding and cleanroom assembly creates innovative products for growth markets together with (ISO class 8). its customers. The wide portfolio of technologies, services and global manufacturing capacities offers suitable solutions for even the highest demands. Consistently high quality, maximum ANAM, ARAD AND BRONSCHHOFEN SITES traceability, quick prototyping, flexible choice of material, min- QUALITY DATA MANAGEMENT iaturization as well as development and installation services The EMS sites of Arad, Bronschhofen and Anam work with an make Cicor a competent partner around the electronics. integrated quality data management that goes far beyond the In the area of microelectronics, Cicor has the most mod- statutory requirements and offers seamless transparency and ern assembly and interconnect technologies, also under traceability. cleanroom conditions. In the manufacturing and processing of substrates, Cicor stands out through the production of highly complex flexible, rigid and rigid-flexible printed BOUDRY SITE circuit boards and hybrid circuits in both thin- and thick-film DENCITEC technologies. The Boudry site allows new dimensions in miniaturization. The As an EMS (electronic manufacturing services) provider DenciTec PCB technology allows a uniquely high density of with a range of production options in printed circuit board integrated functions for printed circuit boards and enables assembly and box building, tool making and plastic injection line widths and spacing down to 25 μm at copper thicknesses molding, Cicor offers comprehensive outsourcing solutions for of 20 +/–5 μm on all conductive layers. the development and manufacturing of electronic PCBAs as well as complete devices and systems. Our many years of experience and use of the most SUZHOU SITE up-to-date process technologies make the Cicor Group a 3D-MID TECHNOLOGY dependable partner in the development and manufacturing At its site in China, Cicor produces 3D-MID (molded interconnect of customer-specific products. Leading technologies and solu- devices). This technology enables the integration of mechanical tions contribute to Cicor being recognized as a competent and electronic functions into one component in the smallest partner for global customers in growth markets. space.

4 Cicor | Annual Report 2016 | At a Glance

1_Cicor_GB16_Berichtsteil_1_en.indd 4 28.02.2017 14:18:00 Microassembly

Tooling Plastic injection molding

Printed circuit MEDICAL boards (flexible, rigid and rigid-flexible)

MARKETS AEROSPACE INDUSTRIAL AND DEFENCE

THE CICOR GROUP COMPETENCIES Box building/ Engineering system assembly AND SERVICES

AUTOMOTIVE COMMUNI AND CATION TRANSPORT

PCB assembly WATCHES AND COMSUMER Hybrids (thin- and thick-film)

APPLICATIONS

PRINTED CIRCUIT BOARDS / HYBRIDS ELECTRONIC MANUFACTURING SERVICES PLASTIC INJECTION MOLDING Communications and radar electronics Defibrillators Hearing aid Avionics Breast pumps Plastic containers Medical implants Lung ventilators Plastic housings Pacemaker Measuring and regulating equipment Plastic for consumables Medical sensors Machine controls Hearing aids Signal control systems Catheters Security access systems AND MANY MORE . . . Radar sensors Dosing systems Sewing and embroidery systems

Cicor | Annual Report 2016 | At a Glance 5

1_Cicor_GB16_Berichtsteil_1_en.indd 5 28.02.2017 14:18:00 CICOR TECHNOLOGIES LTD. SHARES CICOR SHARES

NUMBER OF SHARES

Number of shares as at 31 December 2012 2013 2014 2015 2016 Share capital 28 764 240 28 805 080 28 920 920 29 020 920 29 020 920 Number of registered shares issued 2 876 424 2 880 508 2 892 092 2 902 092 2 902 092 Par value of registered shares (in CHF) 10.00 10.00 10.00 10.00 10.00 Of which treasury shares 1 500 1 500 1 500 1 500 1 500 Number of outstanding registered shares 2 874 924 2 879 008 2 890 592 2 900 592 2 900 592

KEY FIGURES PER SHARES

Key figures as at 31 December 2012 2013 2014 2015 2016 Profit/(loss) per share (in CHF) 2.28 1.58 2.39 –1.37 0.09 Equity capital per share (in CHF) 41.81 43.65 23.35 20.61 20.75 Gross dividend (in CHF) * – 862 477 866 278 1 040 613 – *Distribution from capital contribution reserves

SHARE PRICE

Stock market price in CHF per share 2012 2013 2014 2015 2016 High 36.40 37.00 38.90 38.00 30.50 Low 24.00 25.55 31.60 22.65 18.40 Year-end 29.00 34.50 35.55 25.20 27.90 Average number of shares traded per day 3 336 3 826 3 344 2 402 1 383 Market capitalization at year-end (in CHF 1 000) 83 373 99 326 102 761 73 095 80 927 The registered shares of Cicor Technologies Ltd. are traded on the domestic segment on the SIX Swiss Exchange in Zurich. Securities symbol: CICN/sec. no.: 870 219/ISIN Code CH0008702190/Bloomberg: CICN SW/Reuters: CICN.S.

SHARE PRICE PERFORMANCE

In CHF Number of traded shares 35 25000

20000 30

15000

25 10000

20 5000

15 0 Jan. Mar. May July Sept. Nov. 2016

Last price (in CHF) Volume (Number of traded shares)

6 Cicor | Annual Report 2016 | At a Glance

1_Cicor_GB16_Berichtsteil_1_en.indd 6 28.02.2017 14:18:00 AGENDA, COMMUNICATION CALENDAR AND CONTACTS

AGENDA

Financial calendar General Assembly: 19 April 2017 Half Year Report 2017: 17 August 2017 MAJOR SHAREHOLDERS Annual Report 2017: March 2018 The following shareholders, known to Cicor Technologies Ltd. from its share register and from published disclosures of share- COMMUNICATION holdings in the Swiss Official Gazette of Commerce, each held Cicor Technologies Ltd. follows an open and transparent more than 3% of the total share capital as at 31 December 2016: information policy in the interests of its shareholders and the general public. HEB Swiss Investment AG 29.36 % In its periodic and ad hoc reporting, the company is Quaero Capital (former ARGOS Funds) 1) 8.96 % committed to equal treatment in terms of timing and content Escatec Holdings Ltd. 4.86 % of all shareholders and members of the public who take an Gideon-Wyler, Erika 2) 3.65 % interest in the company’s business. Free float (according to SIX Swiss Exchange) 53.17 % The Group informs its shareholders, the media, financial 1) As of 1 February 2017, Quaero Capital’s shareholdings are above 10%. analysts and other interested parties through the following 2) As of 13 January 2017, Erika Gideon-Wyler’s shareholdings are below 3%. publications and communication instruments: annual report, half-year report, investor and media presentations and press OVERVIEW OF SHAREHOLDERS AS PER releases. Price-sensitive events are published on an ad hoc SHARE REGISTER AS AT 31 DECEMBER 2016 basis. Additional information about Cicor Technologies Ltd. and its subsidiaries can be found on the Group’s website at Shares entered in the Register 2 361 870 www.cicor.com. Shareholders entered in the Register 852 The company can be contacted at any time at Shareholders with 1–1 000 shares 749 [email protected] or [email protected]. Interested parties can also sign up to a mailing list on the website to receive all Shareholders with 1 001–10 000 shares 81 new press releases immediately. Shareholders with over 10 001 shares 22 Contact address DIVIDEND POLICY Cicor Technologies Ltd. Cicor Technologies generally pursues a conservative dividend c/o Cicor Management AG policy aimed at increasing the value of the company. The Board Gebenloostrasse 15 of Directors proposes dividend payments in line with the busi- 9552 Bronschhofen, Switzerland ness’s long-term and sustainable development, taking into Phone +41 71 913 73 00 account investments to be made into growth and the further www.cicor.com development of the Group. [email protected]

Cicor | Annual Report 2016 | At a Glance 7

1_Cicor_GB16_Berichtsteil_1_en.indd 7 28.02.2017 14:18:01 “With the move into the new building in Bronschhofen, Cicor’s electronics production in Switzerland is optimally positioned.”

8 Cicor | Annual Report 2016 | Key statements

1_Cicor_GB16_Berichtsteil_1_en.indd 8 28.02.2017 14:18:02 DEAR SHAREHOLDERS,

The 2016 financial year was marked by a record order intake and a successful turnaround in the second half of the year for the Cicor Group. In contrast with 2015, Cicor was able to improve both its sales and its results. In autumn 2016, Cicor simplified the management structure. From its new, more direct organization, Cicor expects more clearly defined responsibilities, more direct communication and, in particular, stronger customer focus. In autumn of 2016, Cicor consolidated both production and administration In the 2016 financial year, the Cicor Group was able to recover sites in Bronschhofen in a new building in the second half of the year after a difficult first six months, with significantly optimized processes. thus improving both sales and results by year-end. Sales in the In addition, Cicor Management AG has financial year under review were CHF 189.5 million, 4.9% above moved from Zurich-Oerlikon to eastern the prior year (2015: CHF 180.6 million). In local currencies, Switzerland and the sales office in growth amounted to 3.3%. After a significant loss in 2015, Quartino has also been integrated. In which was mainly caused by the closing of the PCB production 2016, the DenciTec printed circuit board in Moudon, a small net profit of CHF 0.3 million was achieved technology was also introduced and in 2016 (2015: CHF –4.1 million). presented at international trade fairs Most encouraging is the significant growth in order and expert conferences. Feedback from intake of 26.7%, to the record level of CHF 223.5 million. (2015: the market has been very good and Cicor CHF 176.3 million), corresponding to a book to bill ratio of 1.18. is looking positively towards the further Cicor has returned to the desired growth path. development of DenciTec. Cicor differentiates itself in electronics production through its close collaboration with customers right from the start of development, its international production network, leading process technologies and a wide range of services along the supply chain. These competitive advantages enabled the acquisition of important new customers for the Group, thus further strengthening the strategic segments of Medical and Industrial. Besides winning new customers for all divisions, the order intake from existing customers was also significantly increased again and additional development and production orders were acquired from these customers.

Cicor | Annual Report 2016 | Key statements 9

1_Cicor_GB16_Berichtsteil_1_en.indd 9 28.02.2017 14:18:02 “Electronic Solu- tions achieved in 2016 the highest sales in its history.”

The strongest growth was achieved in the segments Industry with a 37% share of Group sales (2015: 30%) and in Automotive and Transport with a share of 13% (2015: 9%). Growth in medical technology was in line with the development of the Group, with an unchanged share in sales of 27%. Reve- nues in Aerospace and Defense remained fairly constant with a share of 7% (previous year 8%). Sales in the Watches and Consumer segment remained constant as well (12% after 12%), whereas Communication (share 2% after 9% the previous year) receded significantly. Regionally, as in the past, the European market (including Switzerland) was dominant with a further increased share in sales of 78% (previous year 75%). Cicor sees great opportunities for growth in other regions of the world, such as North America, where sales of 7% were achieved (2015: 6%) and in Asia with a proportion of 13% after 18% the previous year. year. Important projects manufactured at the Thuan an Town POSITIVE SECOND HALF-YEAR 2016 site (Vietnam) contributed to this growth, along with an in- In the second half-year of 2016 the Cicor Group found its way crease in market share with customers of the Arad (Romania) back to profitable growth. While an operative margin before plant. The operating result at EBITDA level (before restructur- depreciation and restructuring of 5.7% (H1 2015: 8.6%) was ings) increased by 23.3% compared to 2015 to CHF 11.6 mil- achieved in the first half of the year on slightly increased lion, despite the expenditure for relocating production in sales of CHF 92.9 million (plus 0.9%), in the second half of the Switzerland. The Suzhou (China) site, set up in 2011, reaching year the turnover was increased by 9.1% to CHF 96.5 million breakeven for the first time, contributed significantly to the (H2 2015: CHF 88.5 million) and an operational margin before positive result. depreciation and restructurings of 7.6% (H2 2015: 4.7%) was The EBITDA margin of the Division is at 7.9% , up by achieved. With the resulting net profit of CHF 0.9 million (after 0.8 percentage points on the previous year. Additional mea- restructuring costs) the net loss of CHF 0.6 million from the sures to increase operational excellence are being implemented first half of the year was compensated. Thus Cicor has emerged in order to further raise the operating margin. out of its trough. A significant milestone is the process approval obtained from an important customer of the Batam (Indonesia) factory ELECTRONIC SOLUTIONS BACK ON which enables the customer to use plastic parts, manufactured THE ROAD TO SUCCESS there under cleanroom conditions, for medical applications After the ES Division had suffered from the strong appre- without the need for further sterilization before entering the ciation of the Swiss franc in 2015, it has achieved the high- operating theatre. This capability enables Cicor to participate est net sales ever in 2016 with CHF 146.7 million (2015: in an attractive growing market and strengthens its position CHF 131.6 million), a rise of 11.5% compared with the previous as a capable partner in medical technology.

10 Cicor | Annual Report 2016 | Key statements

1_Cicor_GB16_Berichtsteil_1_en.indd 10 28.02.2017 14:18:03 “The measures for structure optimization announced in 2015 were successfully implemented.”

PROGRESS IN TURNING AROUND THE AMS DIVISION With a decline in turnover of 13.5% compared with the previous year, to CHF 42.8 million (2015: CHF 49.5 million), the Division closed the financial year below expectations. The factors responsible for this were a further decrease in demand for PCBs for the watchmaking industry as well as inventory corrections by a customer from the aerospace industry. On the other hand, the demand for microelectronic solutions for medical and industrial technology rose in the second half-year. By focusing on cost reductions, in the second half of the year the operating profit margin at EBITDA level (before restructurings) was significantly increased by 8 percentage points compared with the first half of the year at practically unchanged sales. However, the full year EBITDA margin de- Cicor’s electronics production is now ideally set up: creased from 9.9% to 6.0% compared to the previous year. The flagship operation in Switzerland, with strong engineering The cost reduction measures implemented in 2016 will become capabilities and the production of advanced PCBAs and devices fully effective in 2017, so that a positive operational result is in small- and pilot batches, is complemented by the sites in expected for the division once again in the new financial year. Romania and Vietnam, where labor-intensive production is Despite the challenging market and results situation, located. In order to enable continued growth, land was acquired Cicor has continued to invest in the expansion of its technol- in Arad (Romania) on which a new production plant will be built ogy leadership. Thus, the DenciTec printed circuit board tech- by mid 2018, which will resolve the current capacity bottlenecks. nology was introduced in autumn 2016 and since then has been presented at various international trade fairs and conferences. NEW MANAGEMENT STRUCTURE The feedback during these events has been consistently posi- In the 2016 financial year, Cicor simplified its management tive, as DenciTec allows progress in the continued miniaturiza- structure. With the new and leaner organizational and man- tion of electronic systems. agement structure, Cicor expects more clearly defined responsibilities, more efficient processes, more direct communication SITE OPTIMIZATION EXECUTED and, in particular, stronger customer focus. In the course of The measures announced in 2015 have been implemented this change, CEO Jürg Dübendorfer and both divisional heads, successfully. Thus, the consolidation of printed circuit board Erich Trinkler (manager of ES Division) and Jürgen Steinbichler manufacturing in Boudry was completed, a prerequisite for the (manager of AMS Division) have been released from their duties turnaround of the AMS Division. The property in Moudon was as of 17 August 2016. The Board of Directors wishes to thank divested in early 2017. In autumn of 2016, Cicor consolidated them for their strong commitment over the past years. both production and administration sites in Bronschhofen in Alexander Hagemann was appointed as the new Chief a new building with significantly optimized processes. In addi- Executive Officer (CEO) of the Cicor Group as of 1 September tion, Cicor Management AG has moved from Zurich-Oerlikon to 2016. Eliminating one level of management and delegating eastern Switzerland and the sales office in Quartino has also more responsibility to operational managers will positively been integrated. contribute to the success of the Cicor Group.

Cicor | Annual Report 2016 | Key statements 11

1_Cicor_GB16_Berichtsteil_1_en.indd 11 28.02.2017 14:18:03 “Thanks to the record level of order intake in 2016 Cicor has entered the new financial year with great momentum.”

OUTLOOK FOR THE FINANCIAL YEAR 2017 Thanks to the record order intake in 2016, Cicor had a good start BALANCE SHEET REMAINS SOLID into the new financial year. The restructuring and efficiency With the focus on the efficient use of the net working capital, measures implemented in 2016 will become fully effective in Cicor managed to keep its net working capital in Swiss francs the new year. The focus in 2017 will be on the acceleration of roughly unchanged from 2015, despite the sales growth in the Cicor’s growth, improved operational excellence in the factories second half of the year. In comparison with the previous year, and the turnaround of the AMS Division. the ratio of net working capital to sales was improved, declining Cicor expects that 2017 will be a year of good sales from 26.3% in 2015 to 25.8% in 2016. Net debt at the end of growth and clearly improved results for the group so that it can 2016 stood at CHF 21.5 million, slightly higher than in the pre- return to the good results of 2013 and 2014. vious year (2015: CHF 20.5 million) and the ratio of net debt to On behalf of the Board of Directors and the Group EBITDA amounted to a 1.7. Management, we would like to thank all those who contributed The equity situation of the Cicor Group continues to be to our performance in the past financial year: our employees stable. In comparison with the previous year, equity increased for their commitment and dedication, our customers for their slightly. Due to a balance sheet total that is CHF 5 million higher loyalty and our shareholders and business partners for the con- compared with the previous year, the equity ratio decreased fidence they have shown in us. slightly to 38.5% , about one percentage point lower than at the end of the previous year.

NO DISTRIBUTION OF EARNINGS On account of the results recorded in the 2016 financial year, the Board of Directors will propose to the Annual Shareholders’ Heinrich J. Essing Alexander Hagemann Meeting to forego a distribution of earnings. Chairman of the Board of Directors CEO

12 Cicor | Annual Report 2016 | Key statements

1_Cicor_GB16_Berichtsteil_1_en.indd 12 28.02.2017 14:18:03 HEINRICH J. ESSING, CHAIRMAN “With our efficient organization and the successes recently achieved in the market, Cicor is back on track after the ALEXANDER HAGEMANN, CEO difficult phase from 2015 to “The foundations for a the middle of 2016.” successful 2017 have been laid and we started strongly into the new year.”

Cicor | Annual Report 2016 | Key statements 13

1_Cicor_GB16_Berichtsteil_1_en.indd 13 28.02.2017 14:18:03 14 Cicor | Financial Report 2016 | Corporate Governance

2_Cicor_GB16_Coporate_Governance_en.indd 14 28.02.2017 14:22:31 CORPORATE GOVERNANCE

16 Group structure and shareholders 16 Capital structure 18 Board of Directors 21 Group Management 22 Compensation, shareholdings and loans 22 Shareholders’ rights 22 Changes of control and measures 23 Auditors 23 Information policy

Cicor | Financial Report 2016 | Corporate Governance 15

2_Cicor_GB16_Coporate_Governance_en.indd 15 28.02.2017 14:22:31 1. GROUP STRUCTURE Cicor Technologies Ltd. has received no notice of any sharehold AND SHAREHOLDERS ers’ agreement regarding its shares. Cicor Technologies Ltd. is committed to meeting the high stan- As of 31 December 2016, a total of 852 (previous year dards of Corporate Governance that seek to balance entrepre- 950) shareholders with voting rights were registered in the neurship, control and transparency whilst ensuring efficient share register of Cicor Technologies Ltd. decision-making processes. This report explains how the management and control 1.3 CROSS-SHAREHOLDINGS of the Company are organized and provides background infor- Cicor Technologies Ltd. has no cross-shareholdings with any mation on the Group’s executive officers and bodies, effective other company exceeding a reciprocal 3% of capital or voting 31 December 2016. The report complies with the SIX Swiss rights. Exchange Directive on Information relating to Corporate Gov- ernance. In addition, the report considers Cicor Technologies 2. CAPITAL STRUCTURE Ltd.’s Articles of Incorporation as well as the Company’s organization regulation. 2.1 ORDINARY CAPITAL In the following Corporate Governance Report, the As of 31 December 2016, the ordinary share capital of Cicor terms “Cicor” and “Company” shall be used alternatively to Technologies Ltd. is CHF 29 020 920 divided into 2 902 092 “Cicor Technologies Ltd.” and the term “Group” for the company fully paid-in registered shares with a par value of CHF 10 each. and its subsidiaries. As of 31 December 2016, the Company held 1 500 (previous year 1 500) of its own shares as “Treasury Shares”. 1.1 GROUP STRUCTURE For a detailed description, please refer to section 18 of the notes Cicor Technologies Ltd. is registered in Boudry, Switzerland, and to the consolidated financial statements. is operationally organized into the AMS and ES Divisions. Cicor Technologies Ltd. is the parent company and is listed on the SIX 2.2 AUTHORIZED AND CONDITIONAL Swiss Exchange. CAPITAL

Market capitalization as of 31 December 2016 CHF 80.9 million Authorized capital Security symbol CICN At the Shareholders’ Meeting on 19 April 2016, the shareholders Security number 870 219 decided to renew the authorization of the Board of Directors ISIN CH008702190 to increase the share capital by a maximum of 600 000 fully Without consideration of the treasury shares, see section 2.1. paid-in shares at a nominal value of CHF 10 until 19 April 2018. An overview on the Group’s affiliated companies is shown on page 42. Conditional capital 1.2 PRINCIPAL SHAREHOLDERS At the Shareholders’ Meeting of 13 May 2009, the shareholders The following shareholdings correspond to the ones reported decided to increase the conditional share capital up to 200 000 according to the regulations of the Swiss Stock Exchange fully paid-in registered shares with a total nominal value up to (SIX Swiss Exchange) and updated as in the shares register per CHF 2 000 000 for the exercise of stock option rights granted year-end: to officers and other key employees under an employee stock option plan established by the Board of Directors.

31.12.2016 31.12.2015 As of 31 December 2016, according to the stock option plans approved by the Board of Directors on 3 January 2008, Total Total Shares in %* Shares in %* 3 January 2009 and 26 November 2009, no options (previous HEB Swiss Investment AG, year 21 793) were outstanding due to the fact that all stock Zurich, Switzerland 851 705 29.36 848 375 29.25 option plans have expired. Quaero Capital (former ARGOS At the Shareholders’ Meeting of 13 May 2009, the Funds), Luxembourg 1) 259 928 8.96 145 000 5.00 shareholders decided to create additional conditional share Escatec Holdings Ltd., Port Vila, Vanuatu 141 061 4.86 141 061 4.86 capital of up to 500 000 fully paid-in registered shares with Gideon-Wyler, Erika, a total nominal value of up to CHF 5 000 000 for the exercise Zurich, Switzerland 2) 106 000 3.65 – – of conversion rights granted to holders of convertible debt securities to be issued by the company. Such conversion rights * in % of the total outstanding shares of the company 1) As of 1 February 2017, Quaero Capital’s shareholdings are above 10%. would have to be exercised within five years of the issuance of 2) As of 13 January 2017, Erika Gideon-Wyler’s shareholdings are below 3%. such convertible debt securities.

16 Cicor | Financial Report 2016 | Corporate Governance

2_Cicor_GB16_Coporate_Governance_en.indd 16 28.02.2017 14:22:31 2.3 CHANGES IN CAPITAL 2.7 CONVERTIBLE BONDS AND During 2016, the Company’s share capital did not change. In WARRANTS/OPTIONS 2015, the Company’s share capital was increased by CHF 100 000 The Company has not issued any convertible bonds or similar to CHF 29 020 920 by issuing 10 000 registered shares from equity-linked debt instruments as of 31 December 2016. conditional capital with a par value of CHF 10 for the exercise Based on the Company’s conditional capital (see sec of stock options. tion 2.2 “Authorized and conditional capital”), a first stock option plan for members of the management was established on Ordinary capital 31.12.2016 31.12.2015 31.12.2014 3 January 2008. Under this plan (Plan 1), a total of 22 500 call Registered shares 2 902 092 2 902 092 2 892 092 options on shares were allotted to members of the Group Man- Ordinary share capital (in CHF) 29 020 920 29 020 920 28 920 920 agement and certain other key employees. An option is the right Authorized share capital to buy one share at a price of CHF 78 during the exercise period. Authorized shares 600 000 600 000 600 000 The options are granted free of charge. One third of the options Authorized share capital may be exercised as from one year after the grant date, i.e. after (in CHF) 6 000 000 6 000 000 6 000 000 3 January 2009; another third of the options may be exercised Conditional share capital as from two years after the grant date, i.e. after 3 January Conditional shares 620 670 620 670 630 670 2010; the last third of the options may be exercised as from Conditional share capital three years after the grant date, i.e. after 3 January 2011. None (in CHF) 6 206 700 6 206 700 6 306 700 of the options have been exercised. The exercise period has ended seven years after the grant date, i.e. on 3 January 2015, Further information about changes in capital for the last two meaning that the plan has expired. years can be found on pages 55 and 67/68. A second stock option plan for members of the manage ment has been established on 3 January 2009. Under this plan 2.4 SHARES AND PARTICIPATION (Plan 2), a total of 18 500 call options on shares were allotted CERTIFICATES to the members of the Group Management and certain other With the exception of the shares held by the Company itself, key employees. An option is the right to buy one share at a price each ordinary share is entitled to the same share in the Com- of CHF 32 during the exercise period. The options were granted pany’s assets and profits and bears one voting right at the free of charge. One third of the options may be exercised as Annual Shareholders’ Meeting, provided the shareholder is from one year after the grant date, i.e. after 3 January 2010; registered with voting rights in the Company’s share register. another third of the options may be exercised as from two years Provided that a shareholder does not request the print- after the grant date, i.e. after 3 January 2011; the last third of ing and delivery of share certificates for their investment, the options may be exercised as from three years after the grant the shares of the Company are held in collective deposit at date, i.e. after 3 January 2012. The exercise period has ended Computershare Schweiz AG rather than issued as physical cer- seven years after the grant date, i.e. on 3 January 2016, mean- tificates. At the request of some shareholders, the Company ing that the plan has expired. Overall, 11 330 options have been has issued a number of physical certificates. exercised. As of 31 December 2016, the Company has not issued A third stock option plan for executive directors and any participation certificates. members of management was established on 26 November 2009. Under this plan (Plan 3), a total of 99 500 call options 2.5 PROFIT-SHARING CERTIFICATES on shares was allotted to executive directors and members As of 31 December 2016, the Company has not issued any of management. An option is the right to buy one share at profit-sharing certificates. a price of CHF 28.80 during the exercise period. The options were granted free of charge. Half of the options may be exer- 2.6 LIMITATIONS ON TRANSFERABILITY cised as from 27 November 2009; another 25% of the options AND NOMINEE REGISTRATIONS may be exercised as from one year after the grant date, i.e. All shares of Cicor Technologies Ltd. are registered shares and as from 27 November 2010; the last 25% of the options may freely transferable without any limitation. Entry in the Com be exercised as from two years after the grant date, i.e. as pany’s share register with voting rights requires evidence that from 27 November 2011. The exercise period has ended seven the shares have been transferred for ownership or beneficial years after the grant date, i.e. on 26 November 2016, meaning interest. There are no registration provisions for nominees. The that the plan has expired. Overall, 68 000 options have been share register is kept by the Computershare Schweiz AG. exercised.

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2_Cicor_GB16_Coporate_Governance_en.indd 17 28.02.2017 14:22:31 3. BOARD OF DIRECTORS

3.1 MEMBERS OF THE BOARD OF DIRECTORS

On 31 December 2016, the Board of Directors (Board) of the Company consisted of the following persons:

Name/Position/ First Current term Other significant board memberships Nationality election ends Heinrich J. Essing 2009 2017 Managing Director of HEB Swiss Investment AG, Zurich, Chairman Member of the Advisory Board of Non-executive, German HSBC Trinkaus & Burkhardt AG, Düsseldorf Robert Demuth 2007 2017 None Non-executive, Swiss Andreas Dill 2009 2017 Member of the Board of Tec-Sem Group Non-executive, Swiss Erich Haefeli 2015 2017 Owner and President of Mariposa Immobilien AG Non-executive, Swiss

3.2 OTHER ACTIVITIES AND VESTED The Chairman of the Board of Directors INTERESTS The Chairman heads the Meetings of the Board, the Presidium Information about other activities of the Board members in and the Shareholders’ Meeting. He supervises the implemen- addition to their functions for Cicor Technologies Ltd. is listed tation of the resolutions passed by the Board and coordinates in the table above. Unless otherwise described in the curriculum the work of the Committees ensuring that the Board as a vitae, the non-executive members of the Board do not have any whole operates as an integrated, cohesive body. The Chairman material business connections with the Group. of the Board of Directors is Heinrich J. Essing.

3.3 ELECTIONS AND TERMS OF OFFICE The Presidium According to the Company’s Articles of Incorporation, the Board The Presidium consists of the Chairman of the Board and up consists of one or more members. The members of the Board to two additional designated Board members. The following as well as the Chairman of the Board are elected by the Annual members have been appointed to the Presidium: Shareholders’ Meeting for a term of office of one year. There –– Heinrich J. Essing, Chairman are no limits as to how many times a member can be re-elected, –– Robert Demuth, Vice Chairman or any upper age limit for election. According to the Company’s Articles of Incorporation, at It is the first priority of the Presidium to supervise the duties least one member must be domiciled in Switzerland. and functions undertaken by the CEO and CFO as well as the other members of the Group Management and to act as an 3.4 INTERNAL ORGANIZATIONAL intermediary between the Board and the officers entrusted with STRUCTURE the management of the Group. The Presidium takes decisions The Board constitutes itself at its first meeting after the Annual on financial and other matters delegated by the Board in ac- Shareholders’ Meeting except for the appointment of the Chair- cordance with the Regulations regarding the Delegation of man of the Board and the members of the Remuneration Com- Management. In particular, the Presidium is responsible for: mittee. It appoints if necessary its Vice Chairman, the Presidium –– preparing resolutions of the Board and overseeing their im- and the Audit Committee as well as a Secretary, who does not plementation where this function is not carried out directly need to be a member of the Board. The Board meets as often by the CEO or by a Committee of the Board; as the Company’s affairs require or upon the written request of –– planning for the replacement of outgoing members and one of its members. The Board approves resolutions and holds evaluating candidates for positions on the Board; elections with the majority of its votes. –– proposing to the Board for approval the members of the The Board is the highest executive instance within the Committees of the Board, the members of the Presidium, Group Management structure and takes responsibility of the the CEO, the CFO, the members of the Group Management; overall governance of the Company and the Group. It oversees the management of their affairs. The basic principles regarding the definition of the areas of responsibility between the Board and the Group Management are described in section 3.5.

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2_Cicor_GB16_Coporate_Governance_en.indd 18 28.02.2017 14:22:31 –– appointing members to the Boards of subsidiaries and appointing the Unit Managers proposed by the CEO; –– discharging other duties in the area of Corporate Governance, where such duties are not assigned to a Committee or Com- mittee of the Board under the revised Regulations; –– supervising and performing the ad hoc and regular information requirements, especially under the SIX Swiss Exchange Andreas Dill Heinrich J. Essing, Chairman regulations and guidelines; Born 1954, graduated as an Born 1949, has acted as private –– approving expenditures, investments or divestments of electrical engineer (MEng) from secretary and manager of various property, plant and equipment whose total value exceeds the ETH Zurich. He started family offices for more than 20 CHF 0.5 million. In case of investments and divestments his professional career in the years. He is currently CEO of HEC whose total value exceeds CHF 2 million, the Presidium sub- semiconductor industry at Group and of its subsidiaries in Zevatech AG where he took on Germany and abroad like Sydney mits a report and a proposal to the full Board. various responsibilities from or Toronto. Heinrich J. Essing also R+D engineer to General Manager. acts as managing director of HEB In addition, the Presidium assists the Board on matters relating From 1998 to 2015, Andreas Swiss Investment AG which is one to finance, investment and capital assets and in evaluating risks Dill has worked in various man- of the Company’s larger sharehold agement positions at the Oerlikon ers. Heinrich J. Essing is also a pertaining thereto. It prepares proposals on such issues for a Corporation, last as CEO of the member of the Advisory Board of vote by the Board. Specifically, the Presidium reviews: Advanced Technologies Segment HSBC Trinkaus & Burkhardt AG, –– financial planning, budgets and budget execution; and a member of the Oerlikon Düsseldorf. –– investments of liquid assets and financial investments, executive committee. Andreas Dill is the owner of the Consulting including investments of assets by the Company’s postem Company Andreas Dill Strategic ployment benefit plans; Business Consulting. He is also –– long-term business plans and strategy as well as their a board member of Tec-Sem Group. communication in the Company’s annual reports; –– reporting of non-operational results.

The Presidium also makes decisions and takes preliminary action on behalf of the full Board in urgent cases.

Erich Haefeli Born 1950, studied law at the Audit Committee University of Zurich. For many The Audit Committee consists of three Board members elected years, he headed the legal and by the Board of Directors. The following members have been patent department of OC Oerlikon appointed: Balzers AG and was also a mem- –– Robert Demuth, Chairman Robert Demuth, Vice Chairman ber of the company’s Executive Born 1947, holds a degree in Management. In addition, he –– Andreas Dill mechanical engineering (dipl. Ing. served on the Board of Directors –– Erich Haefeli HTL Maschinenbau) from the of many firms in the Oerlikon-Bührle Hochschule für Technik & Archi Group, which is today the indus The Audit Committee assists the Board in supervising the tektur Luzern as well as an Ex trial group Oerlikon. Erich Haefeli management of the Company, particularly with respect to ecutive MBA from the University is owner and President of Mariposa of St. Gall. Robert Demuth started Immobilien AG. financial and legal matters as well as in relation to compliance his career with Rieter before being with internal business policies and codes of practice. appointed head of R&D of Bühler AG. Robert Demuth then served as CEO and delegate of Dyconex AG, a Swiss company active in the field of high-tech PCBs, MCMs and electronic inter- connection technology. From 2005 to 2007, Robert Demuth held executive functions within the Group. Robert Demuth is owner of the Consulting Company Robert Demuth Industrial Invest- ment Management.

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2_Cicor_GB16_Coporate_Governance_en.indd 19 28.02.2017 14:22:37 Remuneration Committee 3.5 DEFINITION OF AREAS OF In accordance with the Articles of Incorporation, Cicor has a RESPONSIBILITY Remuneration Committee that consists of three members of the The duties and responsibilities of the Board, the Presidium and Board of Directors, who are elected individually by the Annual the Group Management are defined as follows: Shareholders’ Meeting. The following members have been The Board holds the ultimate decision-making author- elected: ity and decides on all matters which have not been reserved for –– Andreas Dill, Chairman or conferred upon another governing body of the Company by –– Heinrich J. Essing law, the Articles of Incorporation or Regulations regarding the –– Robert Demuth Delegation of Management of the Company. The Board has the following non-transferable and The roles and responsibilities of the Remuneration Committee indefeasible duties in particular: are defined in detail by the Board of Directors. More information – overall governance of the Company and the Group, including on their duties is provided in the Compensation Report. formulating medium- and long-term strategies, planning priorities and laying down guidelines for corporate policy; Operating methods of the Board, –– approving the annual Group budgets and medium- to long- the Presidium and the Committees term Group business and investment plans; Between 1 January and 31 December 2016, the Board met for –– establishing the basic organizational structure; 12 ordinary Board meetings as well as two phone conferences. –– defining the guidelines for accounting, financial controlling The CEO and/or the CFO of the Group attended all meetings. On and financial planning systems; a selective basis, external advisors also participated in some –– taking decisions on transactions of substantial strategic meetings on specific subjects. The meetings of the Board last- significance; ed on average six hours. For each Board meeting, the members –– appointing and removing those responsible for managing the were provided with adequate material in advance to prepare Company’s affairs and acting as its agent, in particular the for the items on the agenda. At each ordinary meeting, the members of the Presidium, the CEO, the CFO and other mem- CEO or the CFO presented the results of Cicor Technologies Ltd. bers of the Group Management; and its segments in detail. The members discussed the results –– appointing and removing the members of the Committees comprehensively and, if required, instructed the CEO or the CFO of the Board (Remuneration Committee is elected by the to take necessary actions or to draw up plans for measures. Annual Shareholders’ Meeting); In 2016, the Presidium held one meeting. –– overall supervision of the bodies and officers responsible for The Audit Committee held three meetings in 2016. The the management of the Company; CFO of the Group participated in each conference. In addition, –– drawing up the annual and interim reports, preparing the these meetings were attended by the Head of External Audit. Annual Shareholders’ Meeting; The meetings lasted on average one hour. –– notifying the court in the event of over-indebtedness; The Remuneration Committee held three meetings as –– proposing and implementing capital increases and amend- well as one phone conference in 2016. The meetings lasted on ing the Articles of Incorporation; average one hour. –– checking the professional qualifications of the external Group auditors.

The Board conferred management functions in the manner provided by the organizational regulation to the CEO or the Group Management. Thereby, it follows the Company’s general principle according to which all executive bodies and officers delegate their duties and powers to the hierarchically lowest possible body or officer that possesses the knowledge and expertise necessary to make appropriate decisions. The transferable supervisory and representative functions of the Board are delegated to the Presidium. The Operational Group Man- agement is responsible for the day-to-day operational business of the Group. Its main duties consist of: –– conducting day-to-day business of the Group in compliance with the applicable laws, Articles of Incorporation, regulations and instructions;

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2_Cicor_GB16_Coporate_Governance_en.indd 20 28.02.2017 14:22:38 –– implementing the Group strategy; Alexander Hagemann –– preparing and executing the resolutions of the Board and Born 1962, Alexander Hagemann holds a Degree in Mechanical ensuring their Group-wide implementation; Engineering from the RWTH Aachen University, Germany. Before –– reporting all matters to be dealt with by the Board, the Pre- he joined the Cicor Group as Chief Executive Officer in Septem- sidium and the Committees; ber 2016, he held the position as Chief Executive Officer of –– accounting and analyzing of the monthly results and the Schaffner Group from 2007–2016. Prior to that, Alexander semi-annual and annual accounts on Group and divisional Hagemann held a number of management roles at Schott Group, levels as well as implementing the required internal control including the position of Executive Vice President, Optics for measures. Devices. In the beginning of his professional career he held various management positions in the area of production and 3.6 INFORMATION AND CONTROL logistics at BMW. Alexander Hagemann is a Member of the INSTRUMENTS TOWARDS THE GROUP Board of Directors of WICOR Holding AG. Moreover, he is a MANAGEMENT Member of the Executive Board of the Swiss-Asian Chamber of The Board receives annotated key data of all segments within Commerce, Zurich, Switzerland. the framework of a Group-wide institutionalized reporting system. The format of the data is defined within a MIS (Man- Patric Schoch agement Information System). Born 1972, Patric Schoch is a senior international CFO, with a Each month, the Management Information System sum- proven international career in finance as a controller or CFO for marizes in a simplified format the most important key figures; major business units and regions of international companies. every quarter, it presents comprehensive financial statements in Patric Schoch has many years of experience in working in the line with the requirements set for the year-end. These reports industry, including living and working for more than ten years are available to the Group Management in full length and in a in South East Asia, Taiwan and China. He joined Cicor Group condensed format to the Board of Directors. as interim CFO end of July 2012 and became permanent CFO as The Board analyzes such data in detail in its meetings. of 1 April 2013. From December 2012 to Mai 2015 Patric Schoch At each ordinary meeting of the Board and the Presidium, the was also acting CEO of the Group. CEO and the CFO inform on the operational day-to-day business and all important business events. The members of the Board, the Presidium and the Board Committees are entitled to request information on all Company-related issues. See section 3.4 for additional information on the work methods of the Board, the Presidium and the Committees. In addition to the above described Management Infor- mation System, a Risk Management System was introduced in 2008. More detailed information is given on page 59.

4. GROUP MANAGEMENT

4.1 MEMBERS OF THE GROUP MANAGEMENT The members of the Group Management are appointed by the Board upon proposal by the Presidium. The Group Management consists of the CEO and the CFO. As of 31 December 2016, the Group Management consisted of the following persons:

Name/Nationality Position Appointment Alexander Hagemann CEO September 2016 German Patric Schoch CFO July 2012 Swiss

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2_Cicor_GB16_Coporate_Governance_en.indd 21 28.02.2017 14:22:38 4.2 OTHER ACTIVITIES AND VESTED 6.3 CONVOCATION OF THE SHAREHOLDERS’ INTERESTS MEETING No member of the Group Management held a position outside Shareholders’ Meetings are convened by the Board and, if the Cicor Technologies Group which could be of significance to required, by the Auditors at the latest 20 days before the date the Company. of the meeting. The Annual Shareholders’ Meeting is held at the latest within six months of the close of the financial year. 4.3 MANAGEMENT CONTRACTS Shareholders registered in the share register with voting rights Cicor Technologies Ltd. delegated no management duties to representing an aggregate of at least 10% of the share capital legal entities or natural persons outside the Company in 2016. may request in writing, setting forth the items to be discussed and the proposals to be decided, that an extraordinary Share- 5. COMPENSATION, SHAREHOLDINGS holders’ Meeting is convened. AND LOANS The Company publishes the invitation to the Sharehold- This information is provided in the Compensation Report. ers’ Meeting in the “SOGC”, as well as in other publications as decided by the Board of Directors. Simultaneously, the written 6. SHAREHOLDERS’ RIGHTS invitation is sent to the shareholders or beneficiaries who are Each registered share of the Company entitles the owner/ben- entered in the share register of the Company. eficiary of the share to one vote at the Shareholders’ Meeting, The invitation contains details of the day, time and place provided that he is registered in the share register of the Com- of the meeting as well as the agenda and the proposals of the pany as a shareholder with voting rights. Board and the shareholders who have requested the Sharehold- ers’ Meeting or an item to be included on the agenda. 6.1 VOTING RIGHTS AND REPRESENTATION RESTRICTIONS 6.4 AGENDA There are no statutory restrictions on voting rights. All share- Shareholders registered in the share register with voting holders, provided that they are registered in the share register rights, whose combined shareholdings represent an aggregate of the Company as shareholders with voting rights, have the nominal value of at least CHF 1 million, may request that an item same right to attend the Shareholders’ Meeting or to be repre- be included in the agenda of a Shareholders’ Meeting. Such a sented by a legal representative or, with written authorization, request shall be made in writing at least 60 days before the by another person or by the independent voting proxy. meeting and shall specify the items and motions to be included in the agenda. 6.2 STATUTORY QUORUM The Shareholders’ Meeting passes its resolutions with the 6.5 ENTRY INTO THE SHARE REGISTER absolute majority of the votes allocated to the shares repre- The Computershare Schweiz AG keeps the Company’s share sented. If a second ballot is required, the relative majority of the register which contains the names and addresses of sharehold- votes allocated to the shares represented is sufficient for the ers and the number of shares they have registered. After dispatch adoption of an agenda item. In the event of equality of votes, of the invitation to the Shareholders’ Meeting, no entries can the Chairman has the casting vote. According to the Articles of be made in the share register until the day after the Sharehold- Incorporation, a resolution of the Shareholders’ Meeting passed ers’ Meeting has taken place. by at least two thirds of the votes represented and the absolute majority of the par value of shares represented are required for: 7. CHANGES OF CONTROL AND MEASURES –– changing the purpose of the Company; –– introducing shares with privileged voting rights; 7.1 DUTY TO MAKE AN OFFER –– limiting the transferability of registered shares; The Company does not have an opt-in or opt-out clause in –– increasing authorized or conditional share capital; its Articles of Incorporation, meaning that the mandatory bid –– increasing share capital out of equity, against contributions obligation of the Swiss Stock Exchange Act is triggered if a in kind or for the purpose of acquisition of assets and grant- shareholder or a group of shareholders acting in concert acquire ing special benefits; more than one third of the outstanding shares of the Company. –– limiting or withdrawing preemptive rights; –– changing the domicile of the Company; 7.2 CLAUSES ON CHANGES OF CONTROL –– dissolving the Company. As of 31 December 2016, there are no specific clauses included in agreements and schemes benefitting members of the Board or Group Management in the event of a change of control situation.

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2_Cicor_GB16_Coporate_Governance_en.indd 22 28.02.2017 14:22:38 8. AUDITORS 9. INFORMATION POLICY For the benefit of its shareholders and the public interested in 8.1 DURATION OF THE MANDATE the business activities of the Company, Cicor Technologies Ltd. AND TERM OF OFFICE OF THE LEAD pursues an open and transparent information policy. In terms AUDITOR of periodical as well as ad hoc reporting, the Company aims The Annual Shareholders’ Meeting elects the auditors for a term to guarantee equal treatment with respect to time as well as of one year. On 19 April 2016, the General Meeting mandated to content. The Company has a clear policy to prevent insider KPMG, Cicor Technologies Ltd.’s Group auditor since 2007, for an dealings. The corresponding guidelines contain provisions re- additional year. KPMG or a subsidiary of the KPMG Group audits garding the handling of confidential information to which all the consolidated and statutory financial statements. The auditor persons concerned within and outside of the Company are in charge since 2014 of the current mandate is Roman Wenk. subject, as well as clear instructions regarding time and form of the respective publication. 8.2 AUDITING FEES From internal availability to approval of the semi-annual During the year under review, KPMG charged a total of or annual results by the Board, the Company and its manage- TCHF 271 (previous year TCHF 264) for their services in connec- ment refrain from communicating to the investing public any tion with the auditing of consolidated and statutory financial qualitative and quantitative statements and information which statements. might give an indication as to the expected sales or results. After the Board meeting, in which the semi-annual and 8.3 ADDITIONAL FEES annual reports are approved, the general public is informed in KPMG AG additionally received fees of TCHF 6 (previous year: summary about the course of business by means of an ad hoc TCHF 6) for other services to the Company. announcement. Furthermore, the Company informs its shareholders, the 8.4 SUPERVISORY AND CONTROL media, financial analysts and other interested parties by using INSTRUMENTS PERTAINING TO the following publications and channels: THE AUDIT –– Annual and Interim Reports in accordance with Swiss GAAP The Audit Committee supervises and controls on behalf of the FER; Board of Directors the performance and independence of the –– presentation of annual results; external auditors. It determines the targets of the audit and –– Shareholders’ Meeting; assesses the work of the external auditors and their fees. In –– press releases as well as publications of share price-sensi- addition, it reviews the audit result and monitors the imple- tive facts (ad hoc publicity). mentation of the findings by the Management. In 2016, the Audit Committee and the external auditors The 2017 General Shareholders’ Meeting will be held on met once to plan the auditing of the financial statements of the 19 April 2017. The Interim Report is planned to be published on Group and its subsidiaries. In a second meeting, these statements, 17 August 2017. as well as the corresponding “Management Letter” formulated by external auditors, were reviewed and discussed in detail with For additional information about Cicor Technologies Ltd. and its the Audit Committee. In total, the Audit Committee had three subsidiaries, please visit the Group’s website (www.cicor.com). meetings in the presence of the external auditors. Inter alia, previous annual reports and press releases can be found on the website. Responsible for investor relations are Alexander Hagemann, CEO, and Patric Schoch, CFO, phone +41 71 913 73 00, [email protected].

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2_Cicor_GB16_Coporate_Governance_en.indd 23 28.02.2017 14:22:38 24 Cicor | Remuneration Report

3_Cicor_GB16_Vergütungsbericht_en.indd 24 28.02.2017 14:22:59 REMUNERATION REPORT

26 Introduction 26 Remuneration system 27 Approval process 28 Remuneration during the year under review 29 Remuneration during the previous year 29 Payments to related parties 29 Loans 31 Report of the statutory auditor on the Remuneration Report

Cicor | Remuneration Report 25

3_Cicor_GB16_Vergütungsbericht_en.indd 25 28.02.2017 14:22:59 1. INTRODUCTION Variable compensation This Remuneration Report details Cicor’s remuneration policy, Members of the Group Management are entitled to a variable covering all key elements and general principles and outlines salary component. If the defined targets are met or exceeded, the responsibilities with regard to planning, approval framework the CEO receives a variable salary component worth up to and implementation. It also contains detailed information on 130% of his base salary, while the other members of the the remuneration of the Board of Directors and the Group Group Management receive up to 80% of their base salary. The Management for financial years 2015 and 2016. achievement of targets and thus the amount of the variable This Remuneration Report meets the requirements of salary component, is determined once a year following the the Swiss Ordinance against Excessive Compensation in Listed approval and publication of the Cicor Group’s Annual Report. Stock Companies (Verordnung gegen übermässige Vergütun- The variable performance-related compensation is paid in cash gen bei börsenkotierten Aktiengesellschaften, VegüV, which only and is based on: replaces article 663bis by the corresponding VegüV provisions) –– individual targets (30%); and Article 5 of the Annex to the Directive on Information Relat –– the achievement of predefined operative and/or financial ing to Corporate Governance (Corporate Governance Directive, key figures (70%). DCG) of the SIX Swiss Exchange dated 1 September 2014, as well as the recommendations in Art. 38 “Compensation report and For the CEO and other members of the Group Management, transparency” of Appendix 1 to the Swiss Code of Best Practice operative key figures have been defined as targets like growth for Corporate Governance of economiesuisse. in net sales, achievement of the budgeted operative result (EBIT) and free cash flow for the Group. Individual targets are 2. REMUNERATION SYSTEM based on strategic and operative parameters agreed following the budgeting process and strategy meeting and approved at Principles of remuneration the beginning of the year. The remuneration paid to members of the Group Management Cicor does not provide members of the Group Manage- may comprise three components: ment or Board members with a company vehicle. –– fixed basic remuneration; –– variable performance-related compensation; Long-term participation plans –– individual allocation of company shares. In 2008 and 2009, Cicor paid to members of the Group Man- agement as well as certain employees in key positions an addi Members of the Board of Directors have no executive duties tional, performance-related remuneration on top of the variable and receive a fixed salary, plus any compensation due to them salary component. The objective of this remuneration in form for the performance of special duties that exceed the usual of an allocation of call options is to increase the long-term scope of their mandate. commitment of these key employees to the Company and its success. The call options entitle holders to buy Cicor shares Basic remuneration at a predefined price, subject to certain blocking periods. The The basic remuneration for the members of the Group Man existing plans of 2008 and 2009 carried blocking periods of two agement may comprise a monthly salary, a lump sum for enter respectively three years and could be exercised within seven tainment and car expenses, other benefits as per individual years. As per 31 December 2016, all option plans have expired. agreement and the relevant social security contributions. Other benefits as per individual agreement include contributions to Employment contracts and special benefits professional development. No member of the Group Management has an employment The monthly salary is determined on a discretionary contract with a notice period of more than 12 months. None of basis, taking into account the individual’s duties, amount of these employment contracts involve any severance payments. responsibility, qualifications and experience required, as well as the actual external market environment in relation to the entire Number of external mandates and functions remuneration system for the senior management of the Group. According to the Articles of Incorporation, Board members may Members of the Board of Directors receive a fixed salary, which not have or perform more than three mandates in other listed is dependent on their function and committee memberships. companies and not more than 15 in non-listed companies. Members of the Group Management may not have or perform more than one mandate in another listed company and not more than three in non-listed companies. Mandates or employment relationships with associated companies outside the Cicor Group that entail sitting on a management or administrative body or a function in executive management are deemed a single mandate under this provision.

26 Cicor | Remuneration Report

3_Cicor_GB16_Vergütungsbericht_en.indd 26 28.02.2017 14:22:59 3. APPROVAL PROCESS Board of Directors The remuneration system and the remuneration of the Group The Board of Directors decides on all matters that are not, ac- Management are established by the Remuneration Committee cording to the law, Articles of Incorporation or organizational in consultation with the CEO and submitted to the Board of regulations, explicitly entrusted to another governing body of Directors for approval. The processes and responsibilities within the Company. In particular it approves, upon request by the Cicor are organized as follows: Remuneration Committee: –– the conditions and remuneration set out in the employment CEO contracts of the CEO, CFO and other members of Group Man- The Group CEO supports the Remuneration Committee by pro- agement; posing for discussion: –– total remuneration for members of Group Management and –– the conditions of employment contracts for the Group Man- senior management, including variable compensation; agement and senior management members; –– remuneration guidelines; –– the individual target achievement for the variable salary com- –– the introduction of performance-related remuneration sys- ponent at the beginning of the year and tems, including the introduction of share and option-based –– new targets to be determined for the current financial year remuneration systems; for the Group Management and senior management. –– changes in pension schemes; –– additional benefits for employees; Remuneration Committee –– remuneration of the Board of Directors; The Remuneration Committee comprises three Board members. –– compensation for additional duties of Board members; It currently consists of: –– appointment of members to the various Board committees, –– Andreas Dill, Chairman except the members of the Remuneration Committee, as well –– Heinrich J. Essing as their remuneration. –– Robert Demuth Annual Shareholders’ Meeting The Remuneration Committee reviews, evaluates and submits The Annual Shareholders’ Meeting prospectively votes on the for approval to the entire Board: approval of the total remuneration amounts for the Board of –– the conditions and remuneration set out in the employment Directors and the Group Management once a year. In addition, contracts of the CEO, CFO and other members of the Group it can hold a consultative vote on the full remuneration report. Management; If, after the remuneration has been prospectively approved by –– the total remuneration for the members of the Group the Annual Shareholders’ Meeting, the Group Management is Management and senior management members, including expanded or a member of Group Management is promoted or the achievement of individual targets for variable compen- replaced, there is, compliant to the Articles of Incorporation, an sation for the past financial year at the beginning of the year, additional amount available. Such additional amount may not as well as new targets to be set for the current financial year; exceed 30% of the previously approved total compensation –– remuneration guidelines; amount per remuneration period and per member promoted or –– the introduction of performance-related remuneration sys- replaced. tems, including the introduction of share and option-based remuneration systems; –– changes in pension schemes; –– additional benefits for employees; –– remuneration of the Board of Directors; –– compensation for additional duties of Board members; –– compensation for the various Board committees.

Cicor | Remuneration Report 27

3_Cicor_GB16_Vergütungsbericht_en.indd 27 28.02.2017 14:22:59 4. REMUNERATION DURING 2016 Remuneration is reported in accordance with the principle of accrual.

Board of Directors Board members receive a fixed salary, paid in cash, as well as any compensation due to them for the performance of special duties that exceed the usual scope of their office.

in CHF 1 000 Remu- Bonus Pension Social Other Consul- Total neration fund security tancy contri- fee butions

Heinrich J. Essing 68 – – – – 7 75 Robert Demuth 50 – – 4 – 32 86 Andreas Dill 40 – – 6 – 7 53 Erich Haefeli 34 – – – – 6 40 Total current Board members 192 – – 10 – 52 254

Total former Board members – – – – – – –

Total current and former Board members 192 – – 10 – 52 254 No other payments, services, payments in kind, premiums, guarantees or compensation were awarded.

Group Management

in CHF 1 000 Remu- Bonus Pension Social Other Consul- Total neration fund security tancy contri- fee butions

Total current Management 1) 1 273 260 143 100 22 – 1 798 Of which highest single compensation paid to: Jürg Dübendorfer 400 109 43 32 5 – 589

Total former Management – – – – – – –

Total current and former Management 1 273 260 143 100 22 – 1 798 No other payments, services, payments in kind, premiums, guarantees or compensation were awarded.

1) The former CEO, Dr. Jürg Dübendorfer, as well as ES Division head Erich Trinkler and AMS Division head Jürgen Steinbichler, have been released from their duties as of 17 August 2016. For 2016 their compensation is shown under current Management.

28 Cicor | Remuneration Report

3_Cicor_GB16_Vergütungsbericht_en.indd 28 28.02.2017 14:22:59 5. REMUNERATION DURING 2015 Board of Directors

in CHF 1 000 Remu- Bonus Pension Social Other Consul- Total neration fund security tancy contri- fee butions

Heinrich J. Essing 58 – – – – 17 75 Robert Demuth 40 – – 3 – 15 58 Andreas Dill 30 – – 5 – 1 36 Erich Haefeli 1) 21 – – – – – 21 Total current Board members 149 – – 8 – 33 190

Antoine Kohler 2) 20 – – 3 – – 23 Hans Knöpfel 2) 9 – – – – – 9 Total former Board members 29 – – 3 – – 32

Total current and former Board members 178 – – 11 – 33 222 No other payments, services, payments in kind, premiums, guarantees or compensation were awarded.

1) Member of the Board of Directors since 23 April 2015 2) Member of the Board of Directors until 23 April 2015

Group Management

in CHF 1 000 Remu- Bonus Pension Social Other Consul- Total neration fund security tancy contri- fee butions

Total current Management 846 323 99 77 15 – 1 360 Of which highest single compensation paid to: Patric Schoch 3) 300 87 31 25 – – 443

Total former Management 205 64 13 27 17 – 326

Total current and former Management 1 051 387 112 104 32 – 1 686 No other payments, services, payments in kind, premiums, guarantees or compensation were awarded.

3) Includes remuneration for five months as acting CEO of the Group.

6. PAYMENTS TO RELATED PARTIES No persons close to the Board of Directors or the Group Management were granted any loans of any kind, nor did they receive any remuneration at all.

7. LOANS Cicor does not grant loans to Board members or to members of the Group Management.

Cicor | Remuneration Report 29

3_Cicor_GB16_Vergütungsbericht_en.indd 29 28.02.2017 14:22:59 30 Cicor | Remuneration Report

3_Cicor_GB16_Vergütungsbericht_en.indd 30 28.02.2017 14:22:59

Report of the Statutory Auditor To the General Meeting of Shareholders of Cicor Technologies Ltd., Boudry

We have audited the accompanying remuneration report of Cicor Technologies Ltd for the year ended 31 December 2016. The audit was limited to the information according to articles 14 – 16 of the Ordinance against Excessive compensation in Stock Exchange Listed Companies contained in the sections 4 to 7 on pages 28 to 29 of the remuneration report.

Responsibility of the Board of Directors

The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report in accordance with Swiss law and the Ordinance against Excessive compensation in Stock Exchange Listed Companies (Ordinance). The Board of Directors is also responsible for designing the remuneration system and defining individual remuneration packages.

Auditor's Responsibility

Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit in accordance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the remuneration report complies with Swiss law and articles 14 – 16 of the Ordinance. An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration report with regard to compensation, loans and credits in accordance with articles 14 – 16 of the Ordinance. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatements in the remuneration report, whether due to fraud or error. This audit also includes evaluating the reasonableness of the methods applied to value components of remuneration, as well as assessing the overall presentation of the remuneration report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the remuneration report for the year ended 31 December 2016 of Cicor Technologies Ltd complies with Swiss law and articles 14 – 16 of the Ordinance.

KPMG AG

Roman Wenk David Grass Licensed Audit Expert Licensed Audit Expert Auditor in Charge

Zurich, 8 March 2017

Enclosure: - Remuneration report

KPMG AG, Badenerstrasse 172, PO Box, CH-8036 Zurich

KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved.

Cicor | Remuneration Report 31

3_Cicor_GB16_Vergütungsbericht_en.indd 31 28.02.2017 14:23:00 32 Cicor | Financial Report 2016 | Consolidated Financial Statements

4_Cicor_GB16_Finanzteil_1_en.indd 32 28.02.2017 14:28:08 FINANCIAL REPORT

CONSOLIDATED FINANCIAL STATEMENTS OF THE CICOR TECHNOLOGIES GROUP

34 Consolidated balance sheet 35 Consolidated income statement 36 Consolidated cash flow statement 37 Consolidated statement of changes in equity 38 Notes to the consolidated financial statements 61 Report of the statutory auditor on the consolidated financial statements

FINANCIAL STATEMENTS OF THE CICOR TECHNOLOGIES LTD.

64 Balance sheet 65 Income statement 66 Notes to the financial statements 70 Report of the statutory auditor on the financial statements

Cicor | Financial Report 2016 | Consolidated Financial Statements 33

4_Cicor_GB16_Finanzteil_1_en.indd 33 28.02.2017 14:28:08 CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET

in CHF 1 000 Notes 31.12.2016 in % 31.12.2015 in % Assets Property, plant and equipment (5) 44 492 28.5 45 041 29.8 Intangible assets (6) 968 0.6 787 0.5 Deferred tax assets (11) 4 328 2.8 4 082 2.7 Non-current assets 49 788 31.9 49 910 33.0 Inventories (7) 43 860 28.1 41 459 27.4 Trade accounts receivable (8) 31 916 20.4 27 791 18.4 Income tax receivable 2 0.0 4 0.0 Other accounts receivable (8) 2 728 1.7 3 685 2.4 Prepaid expenses and accruals 580 0.3 784 0.5 Cash and cash equivalents (9) 27 441 17.6 27 681 18.3 Current assets 106 527 68.1 101 404 67.0 Total assets 156 315 100.0 151 314 100.0

Liabilities and shareholders’ equity Ordinary share capital 29 022 18.6 29 022 19.2 Share premium 113 449 72.6 113 455 75.0 Treasury shares –37 –0.0 –37 –0.0 Retained earnings –80 258 –51.3 –80 575 –53.3 Translation reserve –1 983 –1.4 –2 324 –1.5 Equity attributable to Cicor shareholders 60 193 38.5 59 541 39.4 Non-controlling interests – 0.0 159 0.1 Total equity 60 193 38.5 59 700 39.5 Long-term provisions (10) 2 546 1.7 2 875 1.9 Deferred tax liabilities (11) 796 0.5 902 0.6 Long-term financial liabilities (12) 4 700 3.0 43 668 28.8 Liabilities for post-employment benefits (13) 1 605 1.1 1 652 1.1 Other long-term liabilities – 0.0 12 0.0 Non-current liabilities 9 647 6.3 49 109 32.4 Short-term financial liabilities (12) 44 278 28.3 4 547 3.0 Trade accounts payable 26 909 17.2 21 831 14.4 Other current liabilities (14) 5 090 3.3 6 514 4.3 Accruals (14) 6 781 4.2 6 233 4.0 Short-term provisions (10) 3 222 2.1 3 278 2.2 Income tax payable 195 0.1 102 0.1 Current liabilities 86 475 55.2 42 505 28.1 Total liabilities 96 122 61.5 91 614 60.5 Total equity and liabilities 156 315 100.0 151 314 100.0 General remark to the notes of the consolidated financial statements: unless otherwise stated all amounts in CHF 1 000

34 Cicor | Financial Report 2016 | Consolidated Financial Statements

4_Cicor_GB16_Finanzteil_1_en.indd 34 28.02.2017 14:28:09 CONSOLIDATED INCOME STATEMENT

in CHF 1 000 Notes 2016 in % 2015 in % Net Sales (4) 189 494 100.0 180 612 100.0 Change in inventory of finished and unfinished goods 490 0.3 5 0.0 Material costs –100 144 –52.8 –89 466 –49.5 Personnel costs (21) –56 127 –29.6 –56 889 –31.5 Other operating income 679 0.3 1 181 0.6 Other operating expenses (23) –21 780 –11.6 –23 326 –12.9 Restructuring costs (10) –1 145 –0.6 –4 718 –2.6 Depreciation (5) –8 311 –4.4 –8 702 –4.8 Amortization (6) –229 –0.1 –349 –0.2 Operating profit/loss (EBIT) 2 927 1.5 –1 652 –0.9 Financial income (24) 4 195 2.2 5 504 3.0 Financial expenses (24) –6 034 –3.1 –7 663 –4.2 Profit/loss before tax (EBT) 1 088 0.6 –3 811 –2.1 Income tax (11) –830 –0.5 –245 –0.1 Net profit/loss 258 0.1 –4 056 –2.2

Attributable to: – Cicor shareholders 258 –3 982 – Non-controlling interests – –74

Earnings per share (CHF) – basic (19) 0.09 –1.37 – diluted (19) n/a –1.37

Cicor | Financial Report 2016 | Consolidated Financial Statements 35

4_Cicor_GB16_Finanzteil_1_en.indd 35 28.02.2017 14:28:09 CONSOLIDATED CASH FLOW STATEMENT

in CHF 1 000 Notes 2016 2015 Profit/loss before tax 1 088 –3 811 Depreciation (5) 8 311 8 702 Impairment 84 3 463 Amortization (6) 229 349 Interest income (24) –31 –57 Interest expenses (24) 1 732 1 767 (Gain)/loss on disposal of assets –54 –41 Increase/(decrease) in provisions –316 934 Increase/(decrease) in other non-current liabilities –15 –29 Unrealized currency (gains)/losses 254 507 Subtotal before working capital changes 11 282 11 784 Decrease/(increase) in inventories –2 328 –986 Decrease/(increase) in trade accounts receivable –3 983 859 Decrease/(increase) in other current assets 3 129 1 227 (Decrease)/increase in trade accounts payable 5 066 157 (Decrease)/increase in other current liabilities –3 629 –3 413 (Increase)/decrease in working capital –1 745 –2 156 Income tax paid –995 –788 Interest paid –1 216 –881 Interest received 23 57 Net cash from operating activities 7 349 8 016 Purchase of property, plant and equipment (5) –8 362 –8 453 Proceeds from sale of property, plant and equipment 193 45 Proceeds on disposals of intangible assets –173 – Purchase of intangible assets (6) –247 –153 Purchase of minority shareholdings –112 – Net cash used in investing activities –8 701 –8 561 Proceeds from issue of share capital – 288 Payment to shareholders from capital contribution reserves – –1 041 Payment of finance lease liabilities –133 84 Proceeds from borrowings 4 801 15 943 Repayment of borrowings –3 592 –3 536 Net cash from financing activities 1 076 11 738 Currency translation effects 36 –518 Net increase/(decrease) in cash and cash equivalents –240 10 675 Cash and cash equivalents at the beginning of the period (9) 27 681 17 006 Cash and cash equivalents at the end of the period (9) 27 441 27 681

36 Cicor | Financial Report 2016 | Consolidated Financial Statements

4_Cicor_GB16_Finanzteil_1_en.indd 36 28.02.2017 14:28:09 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

in CHF 1 000 Share Share Treasury Retained Translation Equity Non- Total capital premium shares earnings reserve attributable controlling equity to Cicor interest shareholders Balance at 1 January 2015 28 922 114 308 –37 –76 593 533 67 133 306 67 439 Net loss –3 982 –3 982 –74 –4 056 Dividend/capital contribution paid to shareholders –1 041 –1 041 –1 041 Capital increase for the established stock option plans 100 188 288 288 Translation adjustment –2 857 –2 857 –73 –2 930 Balance at 31 December 2015 29 022 113 455 –37 –80 575 –2 324 59 541 159 59 700

in CHF 1 000 Share Share Treasury Retained Translation Equity Non- Total capital premium shares earnings reserve attributable controlling equity to Cicor interest shareholders Balance at 1 January 2016 29 022 113 455 –37 –80 575 –2 324 59 541 159 59 700 Net profit 258 258 258 Purchase Minority Shareholdings 59 59 –159 –100 Costs in connection with capital increase –6 –6 –6 Translation adjustment 341 341 341 Balance at 31 December 2016 29 022 113 449 –37 –80 258 –1 983 60 193 – 60 193

Cicor | Financial Report 2016 | Consolidated Financial Statements 37

4_Cicor_GB16_Finanzteil_1_en.indd 37 28.02.2017 14:28:09 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. CORPORATE INFORMATION 2.2 SIGNIFICANT ACCOUNTING PRINCIPLES Cicor Technologies Ltd., Boudry, is a public company, the shares Basis of consolidation of which are traded on the Swiss Stock Exchange (SIX). The consolidated financial statements comprise the financial Cicor Group offers a seamless production and service statements of Cicor Technologies Ltd. and all subsidiaries which chain for electronic components and systems – from develop- the parent company, directly or indirectly, controls either by ment and engineering to large-scale manufacturing, after-sales holding more than 50% of the voting rights or by otherwise service and product lifecycle management. Mainly active in having the power to govern their operating and financial poli- Europe, the USA and Asia, Cicor’s main competences are: cies. These subsidiaries are fully consolidated. The financial –– Manufacture of PCBs and HDIs – rigid, rigid-flexible and statements of subsidiaries are included in the consolidated flexible financial statements from the date that control commences –– Hybrid manufacturing (thin/thick film, RF boards) until the date that control ceases. A list of all subsidiaries is –– Quick turn prototypes, small, medium and large series disclosed in note 3. Cicor does not hold any subsidiaries, in –– Microassembly (SMD, wire bonding, flip chip, etc.) vestments, assets or liabilities which are not fully consolidated –– Packaging within the financial statements of the Cicor Group. –– Outsourcing services for the manufacture of electronic mod- Upon the loss of control the Group derecognizes the ules, component groups and complete electronic products assets and liabilities of the subsidiary, any non-controlling (EMS: Electronic Engineering and Manufacturing Services) interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control 2. BASIS OF THE CONSOLIDATED is recognized in profit or loss. FINANCIAL STATEMENTS Non-controlling interests in equity and profit are shown separately. Changes in the Group’s interest that do not result in a 2.1 BASIS OF PREPARATION loss of control are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling Statement of compliance interests are adjusted to reflect the changes in their relative in- The consolidated financial statements of the Cicor Group are terests in the subsidiaries. Any difference between the amount based on uniform accounting and valuation principles applica- by which the non-controlling interests are adjusted and the fair ble to all subsidiaries of the Group. The consolidated financial value of the consideration paid or received is recognized directly statements have been prepared in accordance with Swiss GAAP in equity and attributed to owners of the Group. Intercompany FER (GAAP = Generally Accepted Accounting Principles / FER = balances, transactions and profits are eliminated on consolidation. Fachempfehlungen zur Rechnungslegung) and the requirements of the Swiss Code of Obligations. Purchase method The consolidated financial statements of Cicor Group for Acquisitions of subsidiaries and businesses are accounted for using the year ended 31 December 2016 were authorized for issue on the purchase method. The consideration paid plus directly attrib- 8 March 2017 and are subject to approval at the Shareholders’ utable transaction costs for each acquisition are eliminated at the Meeting of 19 April 2017. date of acquisition against the fair value of the net assets acquired, determined based on uniform accounting policies. Any excess of Basis of measurement the consideration transferred over the net assets acquired is rec- The consolidated financial statements have been prepared on an ognized as goodwill. Goodwill is amortized over five years. accrual basis under the historical cost convention except for derivative financial instruments which are measured at fair value. Foreign currency conversion Transactions in foreign currencies are converted at the rate of Presentation currency exchange as of the transaction date. Gains and losses from for- The consolidated ﬁnancial statements are presented in Swiss eign currency transactions and from converting year-end foreign francs (CHF). currency balances are recognized in the income statement. Foreign exchange differences on long-term loans to foreign operations with equity characteristics, where a repayment is neither likely nor planned, are recognized in equity.

38 Cicor | Financial Report 2016 | Consolidated Financial Statements

4_Cicor_GB16_Finanzteil_1_en.indd 38 28.02.2017 14:28:09 The financial statements of subsidiaries that report in foreign Goodwill currencies are translated into Swiss francs as follows: Goodwill represents the excess of the consideration trans- –– balance sheet items: at year-end exchange rates, ferred over the Group’s interest in the net of the identifiable –– income statement and cash flow statement items: at average assets acquired and the liabilities assumed measured at fair exchange rates for the year. value. Subsequently, goodwill is measured at cost less accu –– Equity is translated at historical rates. mulated amortization and accumulated impairment losses. Goodwill is amortized over five years, in justified cases over 20 The translation differences resulting from the conversion of years at the most. financial statements denominated in foreign currencies are directly charged to equity. At the date of sale of a foreign sub- Other intangible assets sidiary, the respective cumulative foreign currency translation Other intangible assets are measured at cost less accumulated differences are recognized in profit or loss. amortization and accumulated impairment losses. Amortization is computed on a straight-line basis over the estimated useful Foreign exchange rates 2016 2015 life of the asset (normally 5 years, in justified cases 20 years Closing EUR 1.0736 1.0807 at the most). USD 1.0239 0.9891 RON 0.2367 0.2386 Impairment of assets SGD 0.7071 0.6996 Property, plant and equipment as well as intangible assets CNY 0.1476 0.1523 are reviewed for impairment whenever events or changes in Average EUR 1.0901 1.0680 circumstances indicate that the carrying amount of the asset USD 0.9851 0.9623 may not be recoverable. If such indication exists, then the as- RON 0.2427 0.2403 set’s recoverable amount is estimated. SGD 0.7135 0.7001 An impairment loss is recognized in profit or loss when CNY 0.1483 0.1545 the carrying amount of an asset exceeds its estimated recover able amount. The recoverable amount of an asset or a group of Segment information assets is the greater of its value in use and its net selling price. Segment information presented is based on the internal report- In assessing value in use, the estimated future cash flows from ing regularly provided to the Board of Directors. This reporting continuing use of an asset or a group of assets that are largely includes discrete financial information for the two divisions AMS independent of cash flows of other assets are discounted to and ES which were identified as the two segments of the Group. their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the Property, plant and equipment risks specific to the asset. The relevant cash flows are based on Items of property, plant and equipment are individually meas- the most recent business plans of these cash-generating units ured at cost less accumulated depreciation and accumulated (period of three years) and the assumptions therein concerning impairment losses. Depreciation is computed on a straight-line development of prices, markets and market shares. Assets for basis over the estimated useful life of the assets as follows: which an impairment loss was recognized are reviewed at each reporting date for any indications that the loss has decreased Land * or no longer exists. An impairment loss is reversed only if there Buildings 25–50 years has been a change in the estimates used to determine the Improvements max 10 years recoverable amount. The reversal is limited to the amount that Machinery 3–10 years would have been determined, net of depreciation or amortiza- Furniture 5–15 years tion, if no impairment had been recognized. Such reversal is Equipment 3–10 years recognized in profit or loss. Impairment losses on goodwill are Vehicles 4 years not reversed. * Land is not depreciated as it is deemed to have an indefinite life. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount When parts of an item of property, plant and equipment have of any goodwill allocated to the units and then to reduce the different useful lives, they are accounted for as separate items carrying amounts of the other assets in the unit (group of units) (major components) of property, plant and equipment. on a pro rata basis. Subsequent expenditure is capitalized if the market value or the value in use or the useful live of the respective item of property, plant and equipment has increased substantially.

Cicor | Financial Report 2016 | Consolidated Financial Statements 39

4_Cicor_GB16_Finanzteil_1_en.indd 39 28.02.2017 14:28:09 Leasing agreements Bank borrowings, trade and other liabilities Fixed assets acquired under leasing contracts where both the Non-derivative financial liabilities are initially recognized at fair risks and rewards of ownership are substantially transferred to value less any attributable transaction costs and are subse- Cicor, are classified as finance leases. Such assets are recorded quently measured at amortized cost. at the lower of the estimated net present value of future lease payments and the estimated fair value of the asset at the Provisions inception of the lease. Assets under finance leases are fully Provisions are recognized when: amortized over the shorter of the lease term and its useful life. –– the Group has a present legal or constructive obligation as a The corresponding lease obligations, excluding finance charges, result of past events; are included in either short or long-term financial debt. Lease –– it is probable that resources are needed to extinguish the installments are divided into an interest and a redemption com- obligation; ponent. –– the amount of the obligation can be estimated in a reliable way. Operating lease payments are recognized as an expense in profit or loss on a straight-line basis over the lease term. A provision is recognized for expected warranty claims on products sold during the last two years, based on past experi- Inventories ence of the level of repairs and returns. Inventories are valued at the lower of purchase or manufac turing costs and fair value less cost to sell. Costs for raw ma- Government grants terial are measured according to the weighted average cost Government grants are recognized as income over the periods method. Cost of work-in-progress and finished goods include matching the related costs, which they are intended to com- materials, related manufacturing labor and related overheads. pensate on a systematic basis. Government grants are only Concerning work-in-progress, estimated losses correspond to recognized when there is reasonable assurance that the com- the negative difference between the fair value less cost to sell pany will comply with the conditions attached to them and that and the estimated costs until finalization of work-in-progress. the grants will be received.

Trade accounts receivable Income taxes Trade accounts receivable are measured at nominal value less Income tax is recognized in profit or loss except to the extent necessary allowances for bad debts. The Group establishes an that it relates to items recognized directly in equity, in which allowance for impairment that represents its estimate of incurred case it is recognized in equity. Current income taxes are ac- losses in respect of trade accounts receivables. The main com- crued based on taxable income of the current year. The tax ponents of this allowance are a specific loss component that rates and tax laws used to compute the amount are those that relates to individually significant exposure and a collective loss are enacted or substantially enacted at the reporting date. component established for groups of assets with similar risk Deferred income tax assets and liabilities are recognized for characteristics in respect of losses that have been incurred, but all temporary differences between the tax and accounting not yet identified. The collective loss allowance is determined bases of assets and liabilities at the reporting date using the based on historical data of payment statistics for similar receiv- liability method. ables. Deferred income taxes are measured at the tax rates that are expected to apply in the period when the asset is Cash and cash equivalents realized or the liability is settled. Cash and cash equivalents are stated at amortized costs and Deferred tax assets arising from tax loss carry-forwards include cash on hand, postal and bank accounts at sight and and deductible temporary differences are capitalized only if it time deposits with maturities at the balance sheet date of 90 is probable that they can be used to be offset against future days or less. taxable profits.

Derivative ﬁnancial instruments Derivative financial instruments are stated at fair value and gains and losses are reported in the financial result.

40 Cicor | Financial Report 2016 | Consolidated Financial Statements

4_Cicor_GB16_Finanzteil_1_en.indd 40 28.02.2017 14:28:09 Pension plans Revenue recognition Cicor maintains several pension plans for employees in Swit- Revenue from the sale of products comprises all revenues that zerland and Germany. A liability is recognised if a pension plan are derived from sales of products to third parties after deduc- has an underfunding and there is an economic obligation for tion of price rebates and value-added tax. Revenues from the Cicor to pay additional contribution. The assessment of whether sale of products are recognized when the significant risks and there is an obligation is made using the recognition criteria for rewards of ownership of the goods have passed to the buyer, provisions. For Swiss plans, the measurement of the liability is usually on delivery of the products. based on the financial statements of the pension plan prepared Revenues from engineering and consulting services are in accordance with FER 26 and for German plans, this is based recognized in the accounting period in which the services are on an actuarial calculation. An asset arising from an economic rendered. Bad debt losses are included in net sales. benefit relating to an overfunding is not recognized. Employer contribution reserves are always recognized as an asset. Research and development costs Changes in the economic obligation, the employer con- Research costs are expensed as incurred. An intangible asset tribution reserves and the contributions incurred for the period arising from development expenditure on an individual project are recognized in Personnel costs in the income statement. is recognized only when a future benefit is expected, costs can be measured reliably, the asset is controlled by the organization Earnings per share and the resources needed to complete the asset are/will Basic earnings per share are calculated by dividing net profit be made available. Additionally, the Group has to demonstrate excluding non-controlling interests by the weighted average the technical feasibility, the availability of resources and its number of shares outstanding during the reporting period. intention of completing the project so that it will be available Diluted earnings per share include all potentially dilutive effects. for use or sale. Capitalized development cost is measured at cost less Treasury shares accumulated amortization and accumulated impairment losses. When share capital is repurchased, the amount of the consideration paid, which includes directly attributable costs, is Changes in accounting principles recognized net of any tax effects as a deduction from capital The following standards and amendments to standards have reserves. Repurchased shares are classified as treasury shares been adopted in the current period. They had no or no signifi- and are presented as a deduction from total equity. When trea cant impact on the consolidated financial statements. sury shares are sold or reissued subsequently the resulting gain or loss on the transaction is recognized in capital reserves. Standard Amendments to Framework, FER 3 and FER 6 Revenue Recognition Share-based payments The grant date fair value of options granted to employees is recognized as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options. The amount recognized as an expense is adjusted to reflect the number of share options for which the related service and performance conditions are expected to be met such that the amount ultimately recognized is based on the number of options that are going to meet the related service and performance condition at the vesting date, if any.

Cicor | Financial Report 2016 | Consolidated Financial Statements 41

4_Cicor_GB16_Finanzteil_1_en.indd 41 28.02.2017 14:28:09 3. SCOPE OF CONSOLIDATION

in local currency 1 000 Currency 2016 Nominal Participation 2015 Nominal Participation share capital in % share capital in % Cicorel SA, Boudry/Switzerland * CHF 8 000 100 8 000 100 Engineering/Production/Sales/Distribution Reinhardt Microtech AG, Wangs/Switzerland * CHF 1 800 100 1 800 100 Engineering/Production/Sales/Distribution Reinhardt Microtech GmbH, Ulm/Germany EUR 500 100 500 75 Engineering/Production/Sales/Distribution RHe Microsystems GmbH, Radeberg/Germany * EUR 216 100 216 100 Engineering/Production/Sales/Distribution Electronicparc Holding AG, Bronschhofen (Wil)/Switzerland * CHF 23 271 100 23 271 100 Holding/Finance Swisstronics Contract Manufacturing AG, CHF 3 000 100 3 000 100 Bronschhofen (Wil)/Switzerland Engineering/Production/Sales/Distribution Systronics SRL, Arad/Romania RON 5 145 100 5 145 100 Production/Sales Systel Italia SRL, Milano/Italy EUR 10 100 10 100 Sales/Distribution ESG Holding Pte Ltd., Singapore * SGD 1 896 100 1 896 100 Holding/Finance Cicor Asia Pte Ltd., Singapore SGD 1 000 100 1 000 100 Sales/Distribution Cicor Ecotool Pte Ltd., Singapore SGD 1 000 100 1 000 100 Engineering/Production PT Cicor Panatec, Batam/Indonesia USD 300 100 300 100 Production Brant Rock Enterprises Corporation, British Virgin Islands USD 10 100 10 100 Holding/Finance Cicor Anam Ltd., Thuan An Town/Vietnam USD 1 500 100 1 500 100 Production Suzhou Cicor Technology Co. Ltd., Suzhou/China CNY 34 798 100 34 798 100 Production Cicor Americas Inc., Cambridge/USA * USD 10 100 10 100 Sales/Distribution Cicor Management AG, Bronschhofen (Wil)/Switzerland * CHF 250 100 250 100 Management Services * Directly held subsidiaries of Cicor Technologies Ltd.

Minority Reinhardt Microtech GmbH Reinhardt Microtech AG, Wangs, a fully owned subsidiary of Cicor Technologies Ltd., acquired the residual 25.1% of Reinhardt Microtec GmbH, Ulm, as per 22 June 2016. Reinhardt Microtech AG now owns 100% of Reinhardt Microtech GmbH. The purchase price was paid in cash. The badwill originating from this transaction was booked through equity. Reinhardt Microtech AG is entitled to the profit for the 2016 financial year as well as to the accumulated retained earnings.

42 Cicor | Financial Report 2016 | Consolidated Financial Statements

4_Cicor_GB16_Finanzteil_1_en.indd 42 28.02.2017 14:28:10 4. SEGMENT REPORTING

2016 AMS Division ES Division Total Corporate and Consolidated in CHF 1 000 2016 2016 reportable eliminations 2016 segments 2016 2016 Income statement Sales to external customers 42 844 146 650 189 494 – 189 494 Intersegment sales – – – – – Segment result before depreciation and amortization (EBITDA) 2 236 11 292 13 528 –2 061 11 467 Segment result (EBIT) –2 412 7 459 5 047 –2 120 2 927

Balance sheet 31.12.2016 31.12.2016 31.12.2016 31.12.2016 31.12.2016 Intangible segment assets 521 387 908 60 968 Other than intangible segment assets 57 715 89 104 146 819 8 528 155 347 Segment assets 58 236 89 491 147 727 8 588 156 315 Segment liabilities 62 443 62 202 124 645 –28 523 96 122

Other segment information 2016 2016 2016 2016 2016 Depreciation and amortization 4 648 3 833 8 481 59 8 540 Capital expenditures for property, plant and equipment 1 742 6 620 8 362 – 8 362

2015 AMS Division ES Division Total Corporate and Consolidated in CHF 1 000 2015 2015 reportable eliminations 2015 segments 2015 2015 Income statement Sales to external customers 49 508 131 342 180 850 –238 180 612 Intersegment sales 2 236 238 –238 – Segment result before depreciation and amortization (EBITDA) 642 8 930 9 572 –2 173 7 399 Segment result (EBIT) –4 440 5 136 696 –2 348 –1 652

Balance sheet 31.12.2015 31.12.2015 31.12.2015 31.12.2015 31.12.2015 Intangible segment assets 650 18 668 119 787 Other than intangible segment assets 59 577 82 228 141 805 8 722 150 527 Segment assets 60 227 82 246 142 473 8 841 151 314 Segment liabilities 60 666 57 912 118 578 –26 964 91 614

Other segment information 2015 2015 2015 2015 2015 Depreciation and amortization 4 952 3 794 8 746 305 9 051 Capital expenditures for property, plant and equipment 4 059 4 394 8 453 – 8 453

Cicor defines its reportable segments based on the internal ufacturing capabilities to different industries whereas the ES Di- reporting to its Board of Directors. They base their strategic vision provides electronic manufacturing services from product and operational decisions on these monthly distributed reports, development to volume production and after-sales service. which include the aggregated financial data for the Group and For internal reporting and therefore the segment report- for the divisions. The two divisions, AMS and ES, have been ing, the applied principles of accounting and valuation are the identified as the two reportable segments. The AMS Division same as in the consolidated financial statements. Intersegment supplies printed circuit boards and thin/thick-film-coating sales are recognized at arm’s length. technologies as well as a wide range of microelectronic man-

Cicor | Financial Report 2016 | Consolidated Financial Statements 43

4_Cicor_GB16_Finanzteil_1_en.indd 43 28.02.2017 14:28:10 in CHF 1 000 2016 2015 Reconciliation of total reportable segment result Total reportable segment result (EBIT) 5 047 696 Other corporate expenses –2 120 –2 348 Financial income 4 195 5 504 Financial expenses –6 034 –7 663 Consolidated profit/loss before tax 1 088 –3 811 Other corporate expenses contain stewardship costs and costs related to the listing at the Swiss Stock Exchange (SIX).

Entity-wide information

in CHF 1 000 31.12.2016 % 31.12.2015 % Sales by export region Switzerland 69 527 36.7 72 097 39.9 Europe (without Switzerland) 78 048 41.2 63 155 35.0 Asia 25 211 13.3 31 658 17.5 North America 12 658 6.7 11 537 6.4 Other 4 050 2.1 2 165 1.2 Total 189 494 100.0 180 612 100.0

Sales by industry Aerospace & defence 12 749 6.7 14 881 8.2 Communication 3 576 1.9 16 596 9.2 Industrial 70 426 37.2 54 100 30.0 Medical 51 010 26.9 48 473 26.8 Automotive & transport 24 148 12.7 16 332 9.0 Watches & consumer 22 450 11.8 22 117 12.2 Other 5 135 2.8 8 113 4.6 Total 189 494 100.0 180 612 100.0

Sales by production region Switzerland 70 408 37.2 80 752 44.7 Europe (without Switzerland) 72 142 38.0 63 252 35.0 Asia 46 944 24.8 36 608 20.3 Total 189 494 100.0 180 612 100.0

Major customers Cicor Group’s biggest customer contributes less than 8% (2015: less than 8%) to the Group’s consolidated sales. In 2016, about 44% (2015: about 45%) of total Group’s net sales can be attributed to the Group’s top ten clients.

44 Cicor | Financial Report 2016 | Consolidated Financial Statements

4_Cicor_GB16_Finanzteil_1_en.indd 44 28.02.2017 14:28:10 5. PROPERTY, PLANT AND EQUIPMENT

2016 Land and Machinery Furniture and Other Total in CHF 1 000 buildings equipment equipment Acquisition costs Balance at 1 January 2016 29 319 92 218 11 683 2 102 135 322 Additions 3 293 4 471 583 15 8 362 Disposals –158 –13 149 –4 006 –740 –18 053 Reclassification – – –405 – –405 Translation adjustment –15 –40 –48 –9 –112 Balance at 31 December 2016 32 439 83 500 7 807 1 368 125 114

Accumulated depreciation Balance at 1 January 2016 –14 675 –65 555 –8 164 –1 887 –90 281 Depreciation –1 467 –5 815 –918 –111 –8 311 Impairment –84 – – – –84 Disposals 158 13 386 3 530 740 17 814 Reclassification – – 232 – 232 Translation adjustment –11 –34 44 9 8 Balance at 31 December 2016 –16 079 –58 018 –5 276 –1 249 –80 622

Net book value 1 January 2016 14 644 26 663 3 519 215 45 041 31 December 2016 16 360 25 482 2 531 119 44 492 Thereof net book value of assets under financial lease – – – – –

Net book value of pledged assets 2 673 Addition of assets under financial lease –

In 2016, Cicor invested CHF 3.3 million in land and buildings. The biggest investments were undertaken in Romania (CHF 1.9 million land purchase) and Bronschhofen (CHF 1.2 million lease- hold improvements). Additionally, Cicor invested CHF 4.5 million in machinery in companies in Switzerland, Germany, Romania and Asia. The biggest investments were undertaken in Romania where CHF 1.9 million was invested in new assembly machines (SMT SX line). In Germany, CHF 0.7 million was invested in a new laser (GFH laser). The remaining investment sum was spent on several minor investments in Switzerland and Asia. The reclassification concerns an MES planning tool.

Cicor | Financial Report 2016 | Consolidated Financial Statements 45

4_Cicor_GB16_Finanzteil_1_en.indd 45 28.02.2017 14:28:10 2015 Land and Machinery Furniture and Other Total in CHF 1 000 buildings equipment equipment Acquisition costs Balance at 1 January 2015 29 482 92 264 11 073 2 187 135 006 Additions 530 6 802 1 064 57 8 453 Disposals –9 –4 565 –26 –13 –4 613 Translation adjustment –684 –2 283 –428 –129 –3 524 Balance at 31 December 2015 29 319 92 218 11 683 2 102 135 322

Accumulated depreciation Balance at 1 January 2015 –13 145 –62 203 –7 355 –1 826 –84 529 Depreciation –1 602 –5 869 –1 054 –177 –8 702 Impairment –134 –3 078 – – –3 212 Disposals 9 4 133 17 13 4 172 Translation adjustment 197 1 462 228 103 1 990 Balance at 31 December 2015 –14 675 –65 555 –8 164 –1 887 –90 281

Net book value 1 January 2015 16 337 30 061 3 718 361 50 477 31 December 2015 14 644 26 663 3 519 215 45 041 Thereof net book value of assets under financial lease – 980 – 47 1 027

Net book value of pledged assets 4 319 Addition of assets under financial lease –

In 2015, Cicor invested CHF 6.8 million in machinery in companies in Switzerland, Germany, Romania and Asia. The biggest investments were undertaken in Romania where CHF 1.7 million was invested in new assembly machines (SMT SX line). In Germany, CHF 1.6 million was invested in a fully automated SMD and chip assembly line. The remaining investment sum was spent on several minor investments in Switzerland and Asia. The impairments are mainly due to the consolidation of the production sites of Cicorel SA (see note 10).

46 Cicor | Financial Report 2016 | Consolidated Financial Statements

4_Cicor_GB16_Finanzteil_1_en.indd 46 28.02.2017 14:28:10 6. INTANGIBLE ASSETS

2016 Goodwill Brand Technology Clients Other Total in CHF 1 000 Acquisition costs Balance at 1 January 2016 96 188 6 711 7 415 3 176 1 395 114 885 Additions – – – – 247 247 Reclassification – – – – 405 405 Translation adjustment 17 – –6 – –10 1 Balance at 31 December 2016 96 205 6 711 7 409 3 176 2 037 115 538

Accumulated depreciation Balance at 1 January 2016 –96 188 –6 711 –6 789 –3 176 –1 234 –114 098 Amortization – – –128 – –101 –229 Reclassification – – – – –232 –232 Translation adjustment –17 – 5 – 1 –11 Balance at 31 December 2016 –96 205 –6 711 –6 912 –3 176 –1 566 –114 570

Net book value 1 January 2016 – – 626 – 161 787 31 December 2016 – – 497 – 471 968

2015 Goodwill Brand Technology Clients Other Total in CHF 1 000 Acquisition costs Balance at 1 January 2015 96 188 6 711 7 743 3 617 1 264 115 523 Additions – – 23 – 130 153 Translation adjustment – – –351 –441 1 –791 Balance at 31 December 2015 96 188 6 711 7 415 3 176 1 395 114 885

Accumulated depreciation Balance at 1 January 2015 –96 109 –6 711 –6 937 –3 617 –1 083 –114 457 Amortization –79 – –120 – –150 –349 Translation adjustment – – 268 441 –1 708 Balance at 31 December 2015 –96 188 –6 711 –6 789 –3 176 –1 234 –114 098

Net book value 1 January 2015 79 – 806 – 181 1 066 31 December 2015 – – 626 – 161 787

7. INVENTORIES

in CHF 1 000 31.12.2016 31.12.2015 Net value of raw materials 23 021 21 110 Net value of work-in-progress 13 622 11 764 Net value of finished goods 7 217 8 585 Total inventories 43 860 41 459 Change in inventory allowance 299 740

Cicor | Financial Report 2016 | Consolidated Financial Statements 47

4_Cicor_GB16_Finanzteil_1_en.indd 47 28.02.2017 14:28:10 8. TRADE ACCOUNTS RECEIVABLE AND OTHER ACCOUNTS RECEIVABLE

in CHF 1 000 31.12.2016 31.12.2015 Trade accounts receivable 32 064 28 002 Allowance for bad debts –148 –211 Total trade accounts receivable 31 916 27 791

Ageing of trade accounts receivable

in CHF 1 000 31.12.2016 31.12.2016 31.12.2015 31.12.2015 Gross Allowance Gross Allowance Not yet due 28 015 –55 21 833 –140 Overdue 0–45 days 2 604 – 4 903 –27 Overdue 46–90 days 348 –2 676 –19 Overdue 91–180 days 330 –5 91 –3 Overdue 181–360 days 540 –86 177 –5 Overdue more than 360 days 227 – 322 –17 Total trade accounts receivable 32 064 –148 28 002 –211

Movement in the allowance for impairment for trade accounts receivable

in CHF 1 000 2016 2015 Individual impairment allowance Balance as of 1 January 204 288 Allowance increase 22 72 Utilization/consumption – –2 Reversal of allowance –174 –152 Translation adjustments –1 –2 Balance as of 31 December 51 204

Collective impairment allowance Balance as of 1 January 7 – Change in allowance 90 7 Balance as of 31 December 97 7

Other accounts receivable

in CHF 1 000 31.12.2016 31.12.2015 Receivables on bullion dealers’ accounts 708 746 Value added taxes 602 423 Other 1 418 2 516 Total other accounts receivable 2 728 3 685

48 Cicor | Financial Report 2016 | Consolidated Financial Statements

4_Cicor_GB16_Finanzteil_1_en.indd 48 28.02.2017 14:28:11 9. CASH AND CASH EQUIVALENTS

in CHF 1 000 31.12.2016 31.12.2015 Bank accounts 27 441 27 681 Total cash and cash equivalents 27 441 27 681 Cicor Technologies’ banking partners are first-rate Swiss, German, English and Romanian banks. Cash earns interests at floating rates of –0.75% (CHF); 0.00% (EUR); and 0.00% (USD).

10. PROVISIONS

2016 in CHF 1 000 Restructuring Warranties Other Total provisions Deferred taxes Total provisions and deferred taxes Balance at 1 January 2016 1 201 2 783 2 169 6 153 902 7 055 Additional provisions 219 2 195 1 674 4 088 6 4 094 Unused amounts reversed –50 –1 896 –670 –2 616 –2 616 Amount used –1 102 –15 –715 –1 832 –112 –1 944 Translation adjustments – –21 –4 –25 –25 Balance at 31 December 2016 268 3 046 2 454 5 768 796 6 564 thereof short-term provisions 268 1 519 1 435 3 222 thereof long-term provisions – 1 527 1 019 2 546

2015 in CHF 1 000 Restructuring Warranties Other Total provisions Deferred taxes Total provisions and deferred taxes Balance at 1 January 2015 – 2 137 1 858 3 995 1 219 5 214 Additional provisions 1 217 1 454 1 284 3 955 110 4 065 Unused amounts reversed – –715 –244 –959 – –959 Amount used –16 –2 –629 –647 –427 –1 074 Translation adjustments – –91 –100 –191 – –191 Balance at 31 December 2015 1 201 2 783 2 169 6 153 902 7 055 thereof short-term provisions 1 201 1 068 1 009 3 278 thereof long-term provisions – 1 715 1 160 2 875

Warranty provisions are recognized for warranty claims on The restructuring costs as shown in the income products sold. The additional provisions in 2016 were based on statement 2015 of TCHF 4 718 include impairments on fixed several smaller cases. The unused amount is due to the fact, assets (TCHF 3 212) and valuation adjustments on inventory that certain claims became time-barred or have been settled (TCHF 250), termination based benefits (TCHF 504) and other otherwise. costs (TCHF 752). The costs recognized as provisions at As per 31 December, other provisions consist mainly of 31 December 2015 are TCHF 1 201. These restructuring costs jubilee benefits (2016: TCHF 661; 2015: TCHF 781), rebuilding are due to the fact that Cicor Group merged the AMS Division’s costs (2016: TCHF 371; 2015: TCHF 356), a rent obligation in con- two PCB production locations in Switzerland. This move in- nection with the move to the new building in Bronschhofen volved the consolidation of the Cicorel SA location in Moudon decreased to TCHF 270 (2015: TCHF 320). with the location in Boudry. Cicor Group has also merged The restructuring costs as shown in the income state- the ES Division’s customer support operation in Switzerland ment 2016 of TCHF 1 145 include costs regarding personnel from its previous two locations into one joint location. As part changes in Group Management as well as costs regarding of this measure, the Ticino sales office in Quartino relocated to a lay-off in Boudry in connection with the merger of the the ES Division’s headquarters in Bronschhofen and integrated AMS Division’s two PCB production locations. The costs recog- its existing competencies there. nized as provisions at year-end regarding these restructurings amount to TCHF 268.

Cicor | Financial Report 2016 | Consolidated Financial Statements 49

4_Cicor_GB16_Finanzteil_1_en.indd 49 28.02.2017 14:28:11 11. TAXES

Major components of tax expense

in CHF 1 000 2016 2015 Current income taxes 1 229 1 099 Income tax for prior years –47 –183 Deferred tax –352 –671 Total tax expense 830 245

Deferred tax assets and liabilities

in CHF 1 000 31.12.2016 31.12.2016 31.12.2015 31.12.2015 Assets Liabilities Assets Liabilities Deferred taxes on intangible assets – 125 – 157 Deferred taxes on property, plant and equipment 94 300 134 301 Deferred taxes on other assets 599 370 516 451 Deferred taxes on liabilities 479 101 544 179 Total 1 172 896 1 194 1 088 Deferred taxes on loss carried forward 3 256 – 3 074 – Offset of assets and liabilities –100 –100 –186 –186 Total deferred tax assets and liabilities 4 328 796 4 082 902

Balance at 1 January 4 082 902 3 572 1 219 Change of temporary differences recognized in the income statement 64 –106 310 –317 Change in tax loss carried forward recognized in the income statement 182 – 200 – Balance at 31 December 4 328 796 4 082 902 The Group average tax rate for the calculation of the deferred income taxes is 19.2%.

Reconciliation of current income taxes and deferred taxes

in CHF 1 000 2016 2015 Profit/loss before tax 1 088 –3 811 Weighted average income tax in % 23.9 % 9.2 % Expected income tax expense/(income) 260 –352 Current year losses for which no deferred tax asset is recognized 76 934 Recognition of tax assets on previously unrecognized tax losses –86 –802 Effects of change in losses carried forward 425 602 Effect of tax rate changes compared to prior period – – Effect of non-deductible expenses 129 13 Effect of tax-exempt income 30 – Adjustments for current tax of prior periods –46 –183 Other adjustments 42 34 Effective income taxes 830 246 Effective income taxes in % of profit/(loss) before tax 76.3 % –6.5 %

50 Cicor | Financial Report 2016 | Consolidated Financial Statements

5_Cicor_GB16_Finanzteil_2_en.indd 50 28.02.2017 14:51:46 Tax loss carried forward for which no deferred tax assets have been capitalized

in CHF 1 000 31.12.2016 31.12.2015 tax loss carried forward expiring within 1 year 1 560 4 231 tax loss carried forward expiring in 1 year 7 011 515 tax loss carried forward expiring in 2 years 1 605 1 398 tax loss carried forward expiring in 3 years 1 283 1 305 tax loss carried forward expiring in 4 or more years 1 705 7 893

Since the group operates in various tax jurisdictions, its average expected tax rate is calculated as a weighted average of the tax rates in these jurisdictions. This rate changes from year to year due to changes in the mix of the group’s taxable income and changes in local tax rates. Tax losses carried forward are capitalized where the possibility of using them is high. In 2016, an additional deferred tax asset of TCHF 873 has been capitalized.

12. FINANCIAL LIABILITIES

Long-term financial liabilities

in CHF 1 000 31.12.2016 31.12.2015 Borrowings, long-term 4 700 43 668 Total long-term financial liabilities 4 700 43 668

Short-term financial liabilities

in CHF 1 000 31.12.2016 31.12.2015 Bank overdrafts – 2 016 Bank borrowings, short-term 43 820 1 945 Short-term portion of long-term borrowings 458 484 Financial leases – 102 Total short-term financial liabilities 44 278 4 547

Maturity of financial liabilities

in CHF 1 000 31.12.2016 31.12.2015 Within 1 year 44 278 4 547 Within 2 to 5 years 4 700 43 668 Over 5 years – – Total financial debts 48 978 48 215

Cicor | Financial Report 2016 | Consolidated Financial Statements 51

5_Cicor_GB16_Finanzteil_2_en.indd 51 28.02.2017 14:51:46 Repayments of financial liabilities

2016 Interest rate 2017 * 2018 * 2019 * 2020 * 2021 * 2022 and after * CHF 55.0 million revolving credit line 2.1 % 41 888 EUR 5.0 million revolving credit line 1.1 % 3 825 EUR 3.1 million revolving credit line 1.6 % 2 390 393 334 142 6 – Total 44 278 393 4 159 142 6 –

2015 Interest rate 2016 * 2017 * 2018 * 2019 * 2020 * 2021 and after * CHF 65.0 million revolving credit line 1.9 % – 42 476 – – – – EUR 3.0 million revolving credit line 1.6 % 2 016 – – – – – EUR 3.4 million revolving credit line 1.7 % 2 429 420 353 299 120 – Leasing n.a. 102 – – – – – Total 4 547 42 896 353 299 120 – * in CHF 1 000

On 22 December 2014, the Group signed a syndicated bank The current CHF 55 million revolving credit line, which was loan agreement on a total line of CHF 65 million plus an allow- divided into CHF 50 million cash and CHF 5 million for guaran- ance of an external basket of CHF 10 million valid for three tees, was utilized by CHF 42 million cash at a variable interest years, beginning on 19 January 2015, with two extension options rate of 2.08% on average and for guarantees of CHF 0.7 million of one additional year each, therefore running for a maxi- bearing commission charges of 0.7%. mum term of five years. Facility A of the loan agreement In addition to the syndicated loan, the Group has revolv (CHF 10 million) has expired as Cicor did not make use of it ing loans of EUR 8.1 million utilized with EUR 6.9 million at an until 30 September 2016, leading to a reduced total line of average variable interest rate of 1.3%. CHF 55 million plus an allowance of an external basket of Collateral assets of CHF 2.7 million were pledged. The CHF 10 million. In 2016, the Group furthermore decided not shares of the following companies at a nominal value of to make use of the second extension options. As a result the CHF 36.3 million (2015: CHF 36.3 million) are in deposit with bank loan will expire on 22 December 2017. This is the reason the lead bank pledged as collateral for the syndicated for the reclassification from long-term to short-term. The pro- credit line: Cicorel SA, Electronicparc Holding AG, Swisstronics cess of re-financing has started. Contract Manufacturing AG, Reinhardt Microtech AG and RHe The covenants are net debt/EBITDA ratio of a maximum Microsystems GmbH. of 2.5 times and a minimum equity ratio of 35%. EBITDA is calculated before restructuring costs, possible acquisitions can be added pro forma. The interest bases on LIBOR added by a margin variable depending on the net debt/EBITDA ratio. The respective bank covenants were fulfilled at all reporting dates.

52 Cicor | Financial Report 2016 | Consolidated Financial Statements

5_Cicor_GB16_Finanzteil_2_en.indd 52 28.02.2017 14:51:47 13. LIABILITIES FOR POST-EMPLOYMENT BENEFITS

Cicor maintains several pension plans for employees in Switzer as well as the investment controller. And finally, the supervi- land and Germany. Pension expenses totaled TCHF 2 069 (2015: sory authority, the Zentralschweizer BVG- und Stiftungsaufsicht TCHF 2 212). German pension funds are not legally independent (ZBSA), audits the management of the pension fund and the in contrast to Swiss pension funds. Companies therefore need assets in collaboration with the auditors. The projected funding to recognize a provision according to the German Commercial ratio as per 31 December 2016 is 100.9%. Whenever there is a Code. RHe Microsystems GmbH and Reinhardt Microtech GmbH legal obligation to cover an under-funding this has to be rem- did so by recognizing TCHF 861 resp. TCHF 744 as liability. edied by various measures such as increasing employee and The majority of Cicor‘s insured employees are covered employer contributions, lowering the interest rate on retirement for the risk of old age, death and disability within two collective account balances, reducing prospective benefits and a suspen- pension schemes which are administrating pension plans of sion of the early withdrawal facility. various unrelated employers. Plan A is an independent pension fund whereas Plan B has been established by an insurance Plan B: company. The standard retirement age for Plan B is 65. Employees qual- ify for early retirement on their 58th birthday at the earliest. Plan A: Furthermore, the employees may choose to take their entire The standard retirement age for Plan A is 65. Employees qual- pension or part thereof in the form of capital payment. For ify for early retirement on their 58th birthday at the earliest. retirements at the age of 65, the conversion rate is 6.8% for the Furthermore, the employees may choose to take their entire compulsory part and between 5.01% and 5.36% for the supple pension or part thereof in the form of capital payment. For mentary part. The accumulated savings result from employee retirements at the age of 65, the conversion rate is 6.4% (from and employer contributions which are paid into the individual 2017 on). This rate is relevant to determine the pension payment savings account of each individually insured person as well as in relation to the accumulated savings. These savings result the interest accruing on the accumulated savings. The final from employee and employer contributions which are paid into benefit is contribution-based with certain minimum guarantees. the individual savings account of each individually insured person Plan B is legally organized as a foundation under Swiss law as well as the interest accruing on the accumulated savings. and has all risks reinsured under an insurance contract. The Plan A has reinsured its exposure to the risks of death most senior governing body of the foundations is the Board of and disability. It is a collective multi-employer pension fund Trustees that consists of an equal number of employer’s and organized as a foundation under Swiss law. The most senior employees’ representatives. The reinsurance contract covers governing body of the foundation is the Board of Trustees that the risks of death and disability as well as the investment risk, consists of an equal number of employer’s and employees’ rep- the legally required minimum interest rate and the lifelong pay- resentatives. The people entrusted with the management of ment of current old-age and survivors‘ pensions, regardless of the pension fund and its assets are subject to the charter of the financial market performance. Swiss Pension Fund Association ASIP. All processes are audited The Group does not have employer contribution reserves. by the internal auditors and the independent external auditors

in CHF 1 000 Surplus/ Economical part Change to prior Contribu- Pension benefit expenses deficit of the organization year period or tions with personnel expenses recognized in the concerning current result the of the period, business respectively period 31.12.2016 31.12.2016 31.12.2015 2016 2015

Pension institutions without surplus/deficit (Plan A) – – – – 1 477 1 477 1 443 Pension institutions with surplus (Plan B) 1) – – – – 521 521 597 Pension institutions without own assets – 1 605 1 652 –47 118 71 172 Total – 1 605 1 652 –47 2 116 2 069 2 212

1) The surplus of the collective pension fund attributable to Cicor cannot be determined.

Cicor | Financial Report 2016 | Consolidated Financial Statements 53

5_Cicor_GB16_Finanzteil_2_en.indd 53 28.02.2017 14:51:47 14. OTHER CURRENT LIABILITIES AND ACCRUALS

in CHF 1 000 31.12.2016 31.12.2015 Value-added taxes 385 250 Other current liabilities 770 1 086 Other accounts payable 3 935 5 178 Total other currenct liabilities 5 090 6 514

Accrued interest – 398 Accrued personnel expenses 3 775 2 524 Other accrued expenses 3 006 3 311 Total accruals 6 781 6 233

Total other current liabilities and accruals 11 871 12 747

Other current liabilities and accrued expenses are non-interest-bearing financial liabilities. Other accounts payable also contain payables for social security.

15. LEASE COMMITMENTS

Operating leasing

in CHF 1 000 31.12.2016 31.12.2015 within 1 year 3 236 3 199 from over 1 year to under 5 years 8 933 7 193 due in 5 years or later 17 548 19 083 Total operating leasing 29 717 29 475

Operating leasing commitments stem mostly from mid- to long- term lease obligations for production and office premises. The leases have varying terms and renewal rights.

For financial leasings, please refer to note 12. 16. CONTINGENT LIABILITIES There are no contingent liabilities for Cicor Group companies as at 31 December 2016. For contingent liabilities of Cicor Tech- nologies Ltd. refer to the notes of the financial statements (Holding) on page 68.

54 Cicor | Financial Report 2016 | Consolidated Financial Statements

5_Cicor_GB16_Finanzteil_2_en.indd 54 28.02.2017 14:51:47 17. ISSUED CAPITAL

Capital structure

in CHF 1 000 Share capital at 1 January 2015 28 922 Increase of ordinary share capital of 10 000 registered shares at CHF 10 100 Share capital at 31 December 2015 29 022 Share capital at 31 December 2016 29 022

2 902 092 registered shares of CHF 10

Ordinary share capital Conditional capital There was no increase in ordinary share capital in 2016 out of At the Shareholders’ Meeting of 13 May 2009, the shareholders conditional capital for the established stock option plans (2015: decided to increase the conditional share capital up to 200 000 10 000 shares at a nominal value of CHF 10). fully paid-in registered shares with a total nominal value up to Cicor Technologies Ltd. is a holding company estab- CHF 2 000 000 for the exercise of stock option rights granted lished under Swiss law. According to the provisions of law to officers and other key employees under an employee stock governing the appropriation of retained earnings by holding option plan established by the Board of Directors. During 2016, companies, the share capital and appropriations to the general no shares (2015: 10 000) were issued. legal reserve to the extent of 20% of share capital as well as As of 31 December 2016, according to the stock option the reserve for treasury shares may not be distributed. plans approved by the Board of Directors on 3 January 2008, 3 January 2009 and 26 November 2009, no options (previous Dividend year 21 793) were outstanding due to the fact that the all option Any dividend distribution must be proposed by the Board of plans have expired. Directors and approved by the Annual Shareholders’ Meeting. At the Shareholders’ Meeting of 13 May 2009, the At the Shareholders’ Meeting on 19 April 2016, the shareholders shareholders decided to create additional conditional share decided to forego a distribution of earnings. Due to the results capital of up to 500 000 fully paid-in registered shares with in the 2016 financial year, the Board of Directors will propose a total nominal value of up to CHF 5 000 000 for the exercise to the Annual Shareholders’ meeting to forego a distribution of of conversion rights granted to holders of convertible debt earnings. securities to be issued by the company. Such conversion rights would have to be exercised within five years of the issuance of Authorized capital such convertible debt securities. At the Shareholders’ Meeting on 19 April 2016, the shareholders decided to renew the authorization of the Board of Directors to increase the share capital by a maximum of 600 000 fully paid-in shares at a nominal value of CHF 10 until 19 April 2018.

18. TREASURY SHARES

Number of in CHF 1 000 shares Balance as per 1 January 2015 1 500 37 Balance as per 31 December 2015 1 500 37 Balance as per 31 December 2016 1 500 37

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5_Cicor_GB16_Finanzteil_2_en.indd 55 28.02.2017 14:51:47

19. EARNINGS PER SHARE Basic earnings per share are calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares outstanding during the year.

Basic earnings per share

2016 2015 Net profit/loss attributable to Cicor shareholders in CHF 1 000 258 –3 982 Weighted average number of ordinary shares outstanding 2 900 592 2 896 914 Basic earnings per share in CHF 0.09 –1.37

Diluted earnings per share

2016 2015 Weighted average number of shares outstanding (basic) n/a 2 896 914 Adjustment for share options n/a 1 282 Weighted average number of shares outstanding (diluted) n/a 2 898 196 Profit applicable for calculation of earnings per share (basic and diluted) in CHF 1 000 n/a –3 982 Diluted earnings per share in CHF n/a –1.37

20. SHARE-BASED PAYMENTS Cicor Technologies Ltd. has issued options under three stock option plans during the financial years 2008 and 2009. Since then, no additional stock option plans have been issued. Plan 1 has expired in 2015, plans 2 and 3 have done so on 3 January 2016 respectively 26 November 2016. As of 31 December 2016, there are no active stock option plans.

Assessment The prices of the call options issued to executive directors and management on 3 January 2008, 3 January 2009 and 26 No- vember 2009 were calculated according to a trinomial model using the following parameters:

Plan 1 Plan 2 Plan 3 Share price on 3 January 2008/2009 and 26 November 2009 CHF 73.70 CHF 26 CHF 30 Exercise price CHF 78 CHF 32 CHF 28.80 Expected volatility 28% 40% 45% Life of the option 3 January 2015 3 January 2016 26 November 2016 Risk-free interest rate 2.97% 2.44% 1.88% Vesting period three years three years two years Option type American American American

The weighted average share price for 2016 was CHF 24.82 (2015: 30.57). There were no option expenses recognized during the financial years 2016 and 2015.

56 Cicor | Financial Report 2016 | Consolidated Financial Statements

5_Cicor_GB16_Finanzteil_2_en.indd 56 28.02.2017 14:51:47 Option holdings The following table shows the option holdings of executive directors and the members of the executive and senior management as of 31 December:

2016

Plan 2 Plan 3 Outstanding options per 1 January 2016 2 668 19 125 Exercised – – Expired –2 668 –19 125 Outstanding options per 31 December 2016 – – Thereof exercisable – –

2015

Plan 1 Plan 2 Plan 3 Outstanding options per 1 January 2015 4 000 2 668 29 125 Exercised – – –10 000 Expired –4 000 – – Outstanding options per 31 December 2015 – 2 668 19 125 Thereof exercisable – 2 668 19 125

21. PERSONNEL COSTS

in CHF 1 000 2016 2015 Wages and salaries 45 626 46 646 Social security costs 7 550 7 653 Other personnel costs 2 951 2 590 Total 56 127 56 889

22. EMPLOYEES

2016 2015 Number of employees (FTE) Production 1 662 1 786 Marketing and sales 68 64 Administration 111 108 Total 1 841 1 958

Cicor | Financial Report 2016 | Consolidated Financial Statements 57

5_Cicor_GB16_Finanzteil_2_en.indd 57 28.02.2017 14:51:47 23. OTHER OPERATING EXPENSES

in CHF 1 000 2016 2015

Facility costs 7 683 8 006 Maintenance costs 3 291 3 389 Other production costs 4 592 4 626 Sales and marketing costs 1 715 1 557 Administration costs 4 499 5 748 Total 21 780 23 326

24. FINANCIAL INCOME AND EXPENSE

in CHF 1 000 2016 2015 Income Interest income 31 57 Foreign exchange gains 4 164 5 447 Total 4 195 5 504

Expense Interest expense 1 732 1 767 Foreign exchange losses 4 302 5 896 Total 6 034 7 663

25. RELATED PARTIES DISCLOSURES Compensation of key management personnel The consolidated financial statements include the financial of the Group statements of Cicor Technologies Ltd., Boudry, and the sub- The remuneration of the Board of Directors and the Manage- sidiaries listed in note 3. ment also include the remuneration recorded at subsidiaries. The governing and supervisory bodies of Cicor Tech- Detailed information concerning compensation is published nologies Ltd. are the only other related parties. within the Remuneration Report on pages 28 to 29. As per 31 December 2016, HEB Swiss Investment AG, the main shareholder, holds 29.36% of total shares outstanding. 26. RISK MANAGEMENT Other principal shareholders are presented in the notes of the Risk management is a fundamental element of Cicor’s business financial statements of Cicor Technologies Ltd. practice at all levels and encompasses different types of risks. It The property in Bronschhofen (Gebenloo) has been sold has been integrated into the controlling and reporting process from HEB Swiss Investments AG to Die Anlagestiftung Immo- according to the regulation in the Swiss Code of Obligation bilien DAI on 30 December 2016. Art. 663b/12. Material risks are identified and quantified in workshops and discussed with the executive management and the Board of Directors. The risk management process will be repeated regularly, at least once a year.

58 Cicor | Financial Report 2016 | Consolidated Financial Statements

5_Cicor_GB16_Finanzteil_2_en.indd 58 28.02.2017 14:51:47 27. FINANCIAL RISK MANAGEMENT The carrying value of financial assets reflects the maximum The Group has exposure to the following risks from its use of credit risk and is presented in the table below: financial instruments: –– Credit risk in CHF 1 000 2016 2015 –– Market risk Cash and cash equivalents 27 441 27 681 –– Liquidity risk Trade receivables 31 916 27 791 Other accounts receivable 1 334 1 791 This note presents information about the Group’s exposure to Other currrent assets 73 489 each of the above risks. Further quantitative disclosures are Total 60 764 57 752

included throughout these consolidated statements. The Board of Directors has overall responsibility for the establishment and Every operational unit has a credit policy under which each oversight of the Group’s risk management framework. The fol- new customer is analyzed individually for credit-worthiness. lowing paragraphs give an overview of the extent of the above Purchase limits are established for each customer which rep- mentioned risks. resent the maximum open amount possible. Customer lists are reviewed in a monthly meeting with the Group management. On Credit risk a quarterly basis the allowances made according to the Group’s The credit risk is the risk of financial loss to the Group if a cus- rules laid down in the financial manual are closely monitored. tomer or counterparty to financial instruments fails to meet its contractual obligation. The assets mainly exposing the Group Market risk to a credit risk are: cash, cash equivalents and trade accounts The market risk is the risk that changes in market prices, such receivable. The Group minimizes credit risk arising on cash and as foreign exchange rates, interest rates and equity prices will cash equivalents by investing in funds of high credit rated affect the Group’s income or the value of its holdings of financial banks. These investments generally have a maturity of less than instruments. The objective of risk management is to manage three months. and control market risk exposures within acceptable limits. Cicor The Group’s exposure to credit risk arising from trade does not hold any financial instruments carried at fair value, receivables is influenced mainly by the individual characteristics but classifies all financial assets and liabilities as loans and of each customer. The demographics of the Group’s customer receivables respectively as liabilities at amortized costs. base, including the default risk of the industry and country in which customers operate, has less of an influence on credit Currency risk risk. The danger of risk concentration is generally minimized by The Cicor Technologies Group is exposed to currency risk on the large number of customer credit balances, as no single sales and purchases that are denominated in a currency other customer accounts for more than 8% of consolidated sales than the respective currencies of Group entities. The currencies 2016 (2015: no single customer accounted for more than 8% of in which these transactions are primarily denominated are consolidated sales). Swiss francs (CHF), euros (EUR), Singapore dollars (SGD) and US dollars (USD). These risks are mostly offset by cash flows from financial assets or liabilities resulting from opposite operational transactions (natural hedge). Consequently, these risks are at present not hedged by currency forwards or deriv ative instruments. Currency translation effects arising from year-end valuations are also not hedged.

Cicor | Financial Report 2016 | Consolidated Financial Statements 59

5_Cicor_GB16_Finanzteil_2_en.indd 59 28.02.2017 14:51:47 Interest rate risk Liquidity risk The interest rate risk is the risk that there is a change in market The liquidity risk is the risk that Cicor Technologies Ltd. cannot value or future cash flow of a financial instrument if there is a meet its financial obligations when they are due. change in interest rate. A syndicated loan of CHF 55 million (utilized as per The Group’s exposure to market risk for changes in 31 December 2016: CHF 42 million) is available to secure short- interest rates relates primarily to the Group’s interest bearing to long-term financing requirements (see note 12). Compliance financial debts. The Group’s policy is to manage its interest with the financial covenants defined in the syndicated loan cost using a mix of fixed and variable debt. For an amount of is a central element of the Group’s financial risk management. CHF 42 million, the interest rate was increased in 2016 from an The respective bank covenants were fulfilled at all reporting average of 1.9% to an average of 2.1%. At the reporting date dates. The short-term liquidity risk is reduced by the cash flow the interest rate profile of the Group’s interest-bearing financial generated by operations, the trend of which is monitored con- instruments is presented in note 12. tinuously.

The following table shows the contractual cash flows of financial liabilities including interest payments as of 31 December:

2016 in CHF 1 000 Carrying Contractual 2017 2018 2019 2020 2021 and after amount cash flow contractual contractual contractual contractual contractual cash flow cash flow cash flow cash flow cash flow Financial liabilities 49 090 49 780 44 941 485 4 204 144 6 Trade payables 26 909 26 909 26 909 – – – – Other current liabilities and accruals 11 793 11 793 11 793 – – – – Total 87 792 88 482 83 643 485 4 204 144 6

2015 in CHF 1 000 Carrying Contractual 2016 2017 2018 2019 2020 and after amount cash flow contractual contractual contractual contractual contractual cash flow cash flow cash flow cash flow cash flow Financial liabilities 47 691 50 825 5 408 1 234 43 762 304 117 Trade payables 21 831 21 831 21 831 – – – – Other current liabilities and accruals 12 139 12 139 12 139 – – – – Total 81 661 84 795 39 378 1 234 43 762 304 117

The net carrying amount of financial assets and liabilities is a rea- 28. RESEARCH AND DEVELOPMENT sonable approximation of the fair value. No significant deviations Cicor Group does not have any costs for research activities, but between the net carrying amount and the fair value were noted. on average spends about 7% to 8% of sales as development Financial liability is measured using the effective inter- costs. est method. The effective interest method is a method of cal- culating the amortized cost of a financial liability and allocating 29. SUBSEQUENT EVENTS the interest expense over the relevant period. No events took place between 31 December 2016 and 8 March 2017 that would require an adjustment to the amounts recognized in these consolidated financial statements.

60 Cicor | Financial Report 2016 | Consolidated Financial Statements

5_Cicor_GB16_Finanzteil_2_en.indd 60 28.02.2017 14:51:47 Statutory Auditor’s Report To the General Meeting of Cicor Technologies Ltd., Boudry

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of Cicor Technologies Ltd. and its subsidiaries (the Group), which comprise the consolidated balance sheet as at 31 December 2016 and the consolidated income statement, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion the consolidated financial statements (pages 34 to 60) give a true and fair view of the consolidated financial position of the Group as at 31 December 2016, and its consolidated results of operations and its consolidated cash flows for the year then ended in accordance with Swiss GAAP FER and comply with Swiss law.

Basis for Opinion

We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those provisions and standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Report on Key Audit Matters based on the circular 1/2015 of the Federal Audit Oversight Authority

Valuation of inventory allowances

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Cicor | Financial Report 2016 | Consolidated Financial Statements 61

5_Cicor_GB16_Finanzteil_2_en.indd 61 28.02.2017 14:51:48 Valuation of inventory allowances

Key Audit Matter Our response

As per 31 December 2016, the Group had inventory Our procedures included, amongst others, the following: balances, including work-in-progress (WIP) balances, — Obtaining an understanding of the Group’s process of CHF 43.9 million. The Group’s business model for determining inventory allowances and, for drives a variety and complexity of products, mainly specific significant entities, testing the effectiveness electronic components, devices and systems. of key controls that mitigate the risk of over- or Management has to apply judgment in assessing the understatement of the inventory allowances; level of allowance required to account for slow- — Challenging the appropriateness of the Group’s moving, excess or obsolete inventory items. methodologies and assumptions based on our understanding of the individual businesses within Inventory allowances are determined using the Group, taking into account the nature of their methodologies that the Group deems appropriate to inventories, information on inventory turnover and the respective business. consumption rates in the past as well as expected future usage, and evidence gained from observing The level of judgment involved in assessing whether physical inventory counts; an allowance should be recognized and how it should — Testing the mathematical accuracy of the be measured, coupled with the fact that allowance calculation of the inventory allowances on a random movements impact operating profit/loss, results in sample basis; and inventory allowances being a key area that our audit — Assessing on a sample basis the recoverability of was concentrated on. inventory through comparison of net realisable values to cost, considering where applicable the expected cost to complete. This also involved tracing recognized cost amounts back to source documents.

For further information on the valuation of inventory allowances refer to the following: — Note 2.2 to the consolidated financial statements (significant accounting policies, inventories, page 40) — Note 7 to the consolidated financial statements (inventories, page 47)

Responsibility of the Board of Directors for the Consolidated Financial Statements

The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with Swiss GAAP FER and the provisions of Swiss law, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Swiss law and Swiss Auditing Standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

62 Cicor | Financial Report 2016 | Consolidated Financial Statements

5_Cicor_GB16_Finanzteil_2_en.indd 62 28.02.2017 14:51:48 — Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. — Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. — Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made. — Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. — Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. — Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Board of Directors or its relevant committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Board of Directors or its relevant committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report, unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors.

We recommend that the consolidated financial statements submitted to you be approved.

KPMG AG

Roman Wenk David Grass Licensed Audit Expert Licensed Audit Expert Auditor in Charge

Zurich, 8 March 2017

KPMG AG, Badenerstrasse 172, PO Box, CH-8036 Zurich

Cicor | Financial Report 2016 | Consolidated Financial Statements 63

5_Cicor_GB16_Finanzteil_2_en.indd 63 28.02.2017 14:51:48 FINANCIAL STATEMENTS OF THE CICOR TECHNOLOGIES LTD.

BALANCE SHEET

in CHF 1 000 31.12.2016 31.12.2015 Assets Cash and cash equivalents 16 951 18 926 Other current receivables – third parties 64 44 – subsidiaries 3 884 1 958 Accruals 206 607 Current assets 21 105 21 535 Long-term loans to subsidiaries 49 047 49 795 Long-term loans to subsidiaries subordinated 18 000 18 000 Investments 83 236 83 236 Non-current assets 150 283 151 031 Total assets 171 388 172 566

Liabilities and shareholders’ equity Financial liabilities – subsidiaries 8 220 9 645 – third parties 42 000 – Other liabilities – Subsidiaries 400 – – third parties 82 13 Accrued expenses 1 297 2 211 Current liabilities 51 999 11 869 Non-current interest bearing liabilities – third parties – 43 000 Non-current liabilities – 43 000 Ordinary share capital 29 021 29 021 Legal capital reserve – General reserve 1 467 1 467 – Capital contribution reserves 108 353 108 171 – Share premium 1 051 1 239 Voluntary retained earnings – (loss)/gain brought forward –22 163 15 706 – net profit/(loss) of the year 1 697 –37 869 Treasury shares –37 –38 Shareholders’ equity 119 389 117 697 Total liabilities and shareholders’ equity 171 388 172 566

64 Cicor | Financial Report 2016 | Financial Statements (Holding)

5_Cicor_GB16_Finanzteil_2_en.indd 64 28.02.2017 14:51:48 INCOME STATEMENT

in CHF 1 000 2016 2015 Income Financial income 3 850 3 747 Interest received from Group companies 1 475 1 373 Interest received from third parties – 41 Other income 1 029 – Total income 6 354 5 161

Expenses Financial expense 2 485 2 591 Administrative expense 2 171 2 437 Impairment – 38 000 Ta x 1 2 Total expenses 4 657 43 030 Net profit/(loss) of the year 1 697 –37 869

Cicor | Financial Report 2016 | Financial Statements (Holding) 65

5_Cicor_GB16_Finanzteil_2_en.indd 65 28.02.2017 14:51:48 NOTES TO THE FINANCIAL STATEMENTS OF THE CICOR TECHNOLOGIES LTD.

1. PRINCIPLES 2. INFORMATION ON BALANCE SHEET AND INCOME STATEMENT ITEMS General aspects These financial statements were prepared according to the Minority Reinhardt Microtech GmbH provisions of the Swiss Law on Accounting and Financial Reinhardt Microtech AG, Wangs, a fully owned subsidiary Reporting (32nd title of the Swiss Code of Obligations). Where of Cicor Technologies Ltd., acquired the residual 25.1% of not prescribed by law, the significant accounting and valuation Reinhardt Microtech GmbH, Ulm, as per 22 June 2016. Reinhardt principles applied are described below. Microtech AG now owns 100% of Reinhardt Microtech GmbH. The purchase price was paid in cash. The badwill originating Non-current assets from this transaction was booked through equity. Reinhardt Non-current assets include long-term loans and investments. Microtech AG is entitled to the profit for the 2016 financial year Loans granted in foreign currencies are translated at the rate as well as to the accumulated retained earnings. at the balance sheet date, whereby unrealized losses are recorded but unrealized profits are not recognized. Investments Long-term loans to subsidiaries are valued at their acquisition cost adjusted for impairment Loans in the amount of TCHF 46 450 have been granted to losses, if any. our companies in Switzerland, Romania and Asia. Loans in the amount of TEUR 7 900 have been granted to our companies Treasury shares in Germany. Loans in the amount of TUSD 8 725 have been Treasury shares are recognized at historical costs and deducted granted to our companies in Asia. A loan in the amount of from shareholder’s equity at the time of acquisition. In case of TSGD 4 500 has been granted to one of our companies in Asia. a resale, the gain or loss is recognized through the income statement as financial income or financial expense.

Long-term interest-bearing liabilities Interest-bearing liabilities are recognized in the balance sheet at nominal value. Issue costs for financial debts are capitalized and amortized on a straight line method over the financial debt maturity period.

Foregoing a cash flow statement and additional disclosures in the notes As Cicor Technologies Ltd. has prepared its consolidated financial statements in accordance with a recognized accounting standard (Swiss GAAP FER), it has decided to forego presenting additional information on interest-bearing liabilities and audit fees in the notes as well as a cash flow statement in accordance with the law.

66 Cicor | Financial Report 2016 | Financial Statements (Holding)

5_Cicor_GB16_Finanzteil_2_en.indd 66 28.02.2017 14:51:48 Investments

in CHF 1 000, unless otherwise stated Participation Currency 31.12.2016 31.12.2015 in % Cicorel SA, Boudry/Switzerland * 100 CHF 8 000 8 000 Engineering/Production/Sales/Distribution Reinhardt Microtech AG, Wangs/Switzerland * 100 CHF 1 800 1 800 Engineering/Production/Sales/Distribution Reinhardt Microtech GmbH, Ulm/Germany 100 EUR 500 500 Engineering/Production/Sales/Distribution RHe Microsystems GmbH, Radeberg/Germany * 100 EUR 216 216 Engineering/Production/Sales/Distribution Electronicparc Holding AG, Bronschhofen (Wil)/Switzerland * 100 CHF 23 271 23 271 Holding/Finance Swisstronics Contract Manufacturing AG, Bronschhofen (Wil)/Switzerland 100 CHF 3 000 3 000 Engineering/Production/Sales/Distribution Systronics SRL, Arad/Romania 100 RON 5 145 5 145 Production/Sales Systel Italia SRL, Milano/Italy 100 EUR 10 10 Sales/Distribution ESG Holding Pte Ltd., Singapore * 100 SGD 1 896 1 896 Holding/Finance Cicor Asia Pte Ltd., Singapore 100 SGD 1 000 1 000 Sales/Distribution Cicor Ecotool Pte Ltd., Singapore 100 SGD 1 000 1 000 Engineering/Production PT Cicor Panatec, Batam/Indonesia 100 USD 300 300 Production Brant Rock Enterprises Corporation, British Virgin Islands 100 USD 10 10 Holding/Finance Cicor Anam Ltd., Thuan An Town/Vietnam 100 USD 1 500 1 500 Production Suzhou Cicor Technology Co. Ltd., Suzhou/China 100 CNY 34 798 34 798 Production Cicor Americas Inc., Cambridge/USA * 100 USD 10 10 Sales/Distribution Cicor Management AG, Bronschhofen (Wil)/Switzerland * 100 CHF 250 250 Management Services * Directly held subsidiaries

Non-current interest bearing liabilities Cicor signed a syndicated bank loan agreement on 22 Decem- Issued capital and changes in capital structure ber 2014 on a total line of CHF 65 million, which was utilized by During 2016, the Company’s share capital did not change. In CHF 42 million cash on 31 December 2016 (please refer to 2015, the Company’s share capital was increased by 10 000 page 52 for further information). registered shares from conditional capital. Cicor Technologies Ltd. is a holding company estab- Capital structure lished under Swiss law. According to the provisions of law governing the appropriation of retained earnings by holding 31.12.2016 31.12.2015 companies, the share capital and appropriations to the gener- Share capital at 31 December al legal reserve to the extent of 20% of share capital as well as 2 902 092 (2015: 2 902 092) registered shares of CHF 10.– 29 020 920 29 020 920 the reserve for treasury shares may not be distributed.

Cicor | Financial Report 2016 | Financial Statements (Holding) 67

5_Cicor_GB16_Finanzteil_2_en.indd 67 28.02.2017 14:51:49 Dividend Financial income Any dividend distribution must be proposed by the Board of The financial income mainly consists of the dividends of Elec- Directors and approved by the Annual Shareholders’ Meeting. tronicparc Holding AG (TCHF 2 700), RHe Microsystems GmbH At the Shareholders’ Meeting of 19 April 2016, the shareholders (TEUR 250) and Reinhardt Microtech AG (TCHF 300) and of decided to forego a distribution of earnings. Due to the results realized foreign exchange gains (TCHF 608). Unrealized foreign in the 2016 financial year, the Board of Directors will propose exchange gains have been reversed. to the Annual Shareholders’ meeting to forego a distribution of earnings. Other income The other income is due to the release of a provision in connec- Authorized capital tion with the expired option plans. At the Shareholders’ Meeting on 19 April 2016, the shareholders decided to renew the authorization of the Board of Directors Administrative expense to increase the share capital by a maximum of 600 000 fully The administrative expense mainly consist of remuneration to paid-in shares at a nominal value of CHF 10 until 19 April 2018. the Board of Directors of TCHF 202 and stewardship costs of TCHF 1 449 (costs charged by Cicor Management AG, costs for Conditional capital the annual report and Annual Shareholders’ meeting). At the Shareholders’ Meeting of 13 May 2009, the shareholders decided to increase the conditional share capital up to 200 000 3. OTHER INFORMATION fully paid-in registered shares with a total nominal value up to CHF 2 000 000 for the exercise of stock option rights granted Full-time equivalents to officers and other key employees under an employee stock Cicor Technologies Ltd. does not have any employees. option plan established by the Board of Directors. During 2016, no (2015: 10 000) shares were issued. Contingent liabilities As of 31 December 2016, according to the stock option For a lease contract between Cicorel and a Swiss insurance plans approved by the Board of Directors on 3 January 2008, company, Cicor Technologies Ltd. grants a guarantee in favor of 3 January 2009 and 26 November 2009, no options (previous the said insurance company in the amount of TCHF 5 198, which year 21 793) were outstanding due to the fact, that all stock represents the discounted value of future rental payments. option plans have expired. At the Shareholders’ Meeting of 13 May 2009, the share- in CHF 1 000 31.12.2016 31.12.2015 Guarantee in favor of a Swiss insurance holders decided to create additional conditional share capital of company 5 198 5 869 up to 500 000 fully paid in registered shares with a total nominal value of up to CHF 5 000 000 for the exercise of conversion rights granted to holders of convertible debt securities to be Pledged assets issued by the company. Such conversion rights would have to be The shares of the following companies at a net book value of exercised within five years of the issuance of such convertible TCHF 80 036 (2015: TCHF 80 036) are in deposit with Commerz debt securities. bank AG and pledged as collateral for the syndicated credit line contracted in 2014: Cicorel SA, Electronicparc Holding AG, Treasury shares Swisstronics Contract Manufacturing AG, Reinhardt Micro- tech AG and RHe Microsystems GmbH. Number of shares 1 January 2015 1 500 31 December 2015 1 500 31 December 2016 1 500 Neither in 2016 nor in 2015 have any treasury shares been sold or purchased.

68 Cicor | Financial Report 2016 | Financial Statements (Holding)

5_Cicor_GB16_Finanzteil_2_en.indd 68 28.02.2017 14:51:49 Principal shareholders The following shareholdings correspond to the ones reported according to the regulations of the Swiss Stock Exchange (SIX Swiss Exchange) and updated as in the shares register per year-end.

31.12.2016 in %* 31.12.2015 in %* Number of Number of shares shares HEB Swiss Investment AG, Zurich, Switzerland 851 705 29.36 848 375 29.25 Quaero Capital (previously ARGOS Fund), Luxembourg 1) 259 928 8.96 145 000 5.00 Escatec Holdings Ltd., Port Vila, Vanuatu 141 061 4.86 141 061 4.86 Gideon-Wyler, Erika, Zurich, Switzerland 2) 106 000 3.65 – –

* in % of the total outstanding shares 1) As of 1 February 2017, Quaero Capital’s shareholdings are above 10%. 2) As of 13 January 2017, Erika Gideon-Wyler’s shareholdings are below 3%.

Compensation of Board of Directors and Management 2016 Please refer to pages 28 to 29.

Shareholdings of Board of Directors and Management

in CHF 1 000 2016 2016 2015 2015 Number of Number of Number of Number of shares options shares options

Heinrich J. Essing 9 000 – – – Robert Demuth 5 124 – 5 124 10 000 Andreas Dill 1 000 – 1 000 – Erich Haefeli – – – – Total current Board members 15 124 – 6 124 10 000

in CHF 1 000 2016 2016 2015 2015 Number of Number of Number of Number of shares options shares options

Alexander Hagemann 2 000 – n/a n/a Patric Schoch 4 500 – 4 000 – Jürg Dübendorfer 1) 3 940 – 4 000 – Erich Trinkler 1) – – – – Jürgen Steinbichler 1) – – – – Total current Management 10 440 – 8 000 –

1) The former CEO, Dr. Jürg Dübendorfer, as well as ES Division head Erich Trinkler and AMS Division head Jürgen Steinbichler, have been released from their duties as of 17 August 2016.

Shares or options on shares for members 4. PROPOSED APPROPRIATION of the board and employees OF AVAILABLE EARNINGS In 2016 and 2015, no shares or options on shares were allocated to members of the board or to employees. As of 31 December in CHF 1 000 31.12.2016 2016, there are no active stock option plans. Plans 2 and 3 have Loss brought forward –22 163 expired on 3 January 2016 resp. 26 November 2016. Net profit of the year 1 697 Loss brought forward –20 466 Significant events after the balance sheet date There are no significant events after the balance sheet date The Board of Directors is proposing to forego a profit distribu- which could impact the book value of the assets or liabilities or tion. which should be disclosed here.

Cicor | Financial Report 2016 | Financial Statements (Holding) 69

5_Cicor_GB16_Finanzteil_2_en.indd 69 28.02.2017 14:51:49 Statutory Auditor’s Report To the General Meeting of Cicor Technologies Ltd., Boudry

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Cicor Technologies Ltd., which comprise the balance sheet as at 31 December 2016, and the income statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion the financial statements (pages 64 to 69) for the year ended 31 December 2016 comply with Swiss law and the company’s articles of incorporation.

Basis for Opinion

We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those provisions and standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the entity in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Report on Key Audit Matters based on the circular 1/2015 of the Federal Audit Oversight Authority

Valuation of investments and long-term loans to subsidiaries

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

70 Cicor | Financial Report 2016 | Financial Statements (Holding)

5_Cicor_GB16_Finanzteil_2_en.indd 70 28.02.2017 14:51:49 Valuation of investments and long-term loans to subsidiaries

Key Audit Matter Our response

The financial statements of Cicor Technologies Ltd. as Our audit procedures included, amongst others, per 31 December 2016 include investments in evaluating the methodical and mathematical accuracy of subsidiaries in the amount of CHF 83.2 million and the model used for the impairment tests as well as the long-term loans to subsidiaries in the amount of CHF appropriateness of management’s assumptions. 67.0 million (thereof CHF 18.0 million subordinated). This comprised: The company annually reviews investments and long- term loans to subsidiaries for impairment on an — Retrospectively assessing the accuracy of individual basis. management’s past projections by comparing historical forecasts to actual results; In performing the impairment tests, management — Agreeing forecasts used in the impairment tests to determined the recoverable amounts using a current expectations of management and the discounted cash flow model. business plans approved by the Board of Directors; and The impairment assessment of investments and long- term loans to subsidiaries requires significant — Challenging the robustness of key assumptions on management judgment, in particular in relation to the a sample basis, including forecast cash flows, long- forecast cash flows, future growth rates and the term growth rates and discount rates, based on our discount rates applied, and is therefore a key area that understanding of the commercial prospects of the our audit was concentrated on. respective investments and comparison with publicly available data.

For further information on the valuation of investments and long-term loans to subsidiaries refer to the following: — Note 1 to the financial statements (non-current assets, page 66) — Note 2 to the financial statements (long-term loans to subsidiaries, page 66)

Responsibility of the Board of Directors for the Financial Statements

The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisions of Swiss law and the company’s articles of incorporation, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Cicor | Financial Report 2016 | Financial Statements (Holding) 71

5_Cicor_GB16_Finanzteil_2_en.indd 71 28.02.2017 14:51:49 As part of an audit in accordance with Swiss law and Swiss Auditing Standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

— Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. — Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control. — Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made. — Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the entity to cease to continue as a going concern.

From the matters communicated with the Board of Directors or its relevant committee, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report, unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial statements according to the instructions of the Board of Directors.

We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.

KPMG AG

Roman Wenk David Grass Licensed Audit Expert Licensed Audit Expert Auditor in Charge

Zurich, 8 March 2017

KPMG AG, Badenerstrasse 172, PO Box, CH-8036 Zurich

72 Cicor | Financial Report 2016 | Financial Statements (Holding)

5_Cicor_GB16_Finanzteil_2_en.indd 72 28.02.2017 14:51:49 ABOUT US 2016 / 2015 CICOR – KEY FIGURES SALES ADDRESSES

BY PRODUCTION REGION

0_Cicor_GB16_Umschlag_en.indd 3-6 28.02.2017 14:04:27 APPLICATION EXAMPLE INNOVATIVE SEWING AND EMBROIDERY Annual Report 2016 MACHINES FOR THE GLOBAL MARKET

One-stop electronics and plastics

Cicor Technologies Ltd. “As a long-standing partner Route de l’Europe 8 Cicor offers services along 2017 Boudry Switzerland the supply chain – from the www.cicor.com market for the market.”

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