Annual report 2020

The fiscal year 2020 in brief

1 Security matters. Contents Editorial

03 EDITORIAL Groundbreaking, challenging and successful

04 KEY PERFORMANCE INDICATORS RUAG at a glance

06 RUAG MISSION Our mission

08 LOOKING BACK Key results 2020

10 SUSTAINABILITY We have given ourselves sustainable goals regarding environmental protection Dear readers

13 DIVERSITY Groundbreaking, challenging and successful – these three from the Board of Directors, to the Executive Committee, to the Our contribution to diversity words sum up RUAG’s 2020 financial year perfectly. entire workforce, we have worked together in a collaborative and focused manner to achieve our goals. On the other hand, 14 TRANSFORMATION Groundbreaking, because we acted as an independent group we have managed to continue operations seamlessly, to support Separation as an opportunity for a successful future of companies for the first time after our unbundling from the our customers as a professional partner in all situations, and former RUAG Group. During the year, we worked on numerous thus to fulfill our performance mandate comprehensively. We 16 CORPORATE GOVERNANCE projects, involving visionary thinking, that enabled us to lay have also already achieved an attractive financial result in our the foundation for our entrepreneurial future. Among other first year as an independent company. These successes allow Cornerstones and center of our action things, we fully completed the legal unbundling, launched us to look positively to the future. a new, modern external image and started developing our 19 HIGH-QUALITY VOCATIONAL TRAINING culture and organizational structure even further. As RUAG, we demonstrated in 2020 that we are a reliable We are investing today in the know-how of tomorrow partner, particularly in difficult times, and that we make a The year was especially challenging in terms of the unpredict- significant contribution to ’s security – entirely in 20 INNOVATION AND EXPERTISE able underlying conditions. Due to the coronavirus pandemic, the interests of our owner, our customers and the Swiss Shaping the future with innovation and expertise we had to look for robust solutions in parallel with the unbun- people. Our heartfelt thanks go to all employees. dling and further development of the company so we could meet our performance mandate. This demanded additional 22 BOARD OF DIRECTORS AND EXECUTIVE COMMITTEE commitment, flexibility and stamina from our entire workforce. We know that security matters Looking back, we can say that the 2020 financial year was very successful in many respects. On the one hand, the coopera- Nicolas Perrin Andreas Berger tion within the company – despite partly new compositions and Chairman CEO difficult circumstances – was exemplary. Across all levels, RUAG MRO Holding Ltd RUAG MRO Holding Ltd

2 3 Key performance indicators

RUAG at a glance KEY FIGURES OF RUAG MRO HOLDING LTD AT A GLANCE in CHF m

SECURITY IS A CORNERSTONE OF SWITZERLAND. AT RUAG, WE WORK TO ENSURE THIS 2020 ON A DAILY BASIS. THIS IS OUR DRIVING FORCE. AS A FORWARD-LOOKING TECHNOLOGY Order intake 722 PARTNER OF THE , LIFE CYCLE MANAGEMENT, OPERATIONS, AND THE AVAILABILITY OF MILITARY SYSTEMS FOR LAND AND AIR ARE A PRIORITY FOR US. Order backlog 471 Net sales 682

SITES Research and development expenses -14

SWITZERLAND INTERNATIONAL Unbundling costs -28

Zurich Germany EBITDA 51 Berlin Emmen Wangen Hallbergmoos EBIT 30 Kassel Stans EBIT margin 4.5% Payerne USA Altdorf Berlin, Connecticut Net profit 31 Alpnach Aigle Free cash flow 37 Lodrino Sion Net financial position 113

Wilderswil Bank debt 0

EMPLOYEES (FTE) AS OF END DECEMBER 57 ↗ Our employees are ↗ Our first financial year went well and

280 the driving force behind we delivered a pleasing financial result. our company.

INVOICED SALES 2020 BY APPLICATION INVOICED SALES IN 2020 BY SALES MARKET in % in %

2586 FTE in Switzerland Apprentices in Switzerland 90 % 17 % FTE abroad

OUR VALUES

↗ SWISS ↗ COLLABORATIVE ↗ FUTURE-ORIENTED

76 %

83 % Civilian 7 % Switzerland Military Europe DDPS Rest of the world 3 %

4 5 RUAG Mission

Our mission

↗ The security of Switzerland plays a central role in all our activities. Our ambition is to be the strategic and innovative technology and life-cycle partner of choice for the Swiss Armed Forces. We deliver efficient services and build up know-how to support the Swiss Armed Forces at all levels – today and also in the future.

As an independent company, we primarily generate our added value in Switzerland. We are building an innovative life-cycle management approach, focusing primarily on Swiss platforms in the third-party market, and are continuing to develop our technological capabilities in the areas of integration and upgrades, in order to make our contribution to Swiss security.

6 7 Looking back

Key results 2020

1 INDEPENDENCE 2020 was our first year as an independent company. As part of the demerger, we separated out the essential parts of the former Defence and Aviation divisions from the RUAG Group and combined them into a new company group as of January 1, 2020.

2 BRANDING At the end of June, we redesigned our external branding, thereby giving our independent status a new and visible presence. Our logo, color scheme and design are modern and reflect our values: Swiss, collaborative and future-

oriented. 1 2

1

JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER 1 2 3 4

4

3 SwissSkills CHAMPIONSHIPS We place great emphasis on the education of our future 3 employees. We are proud that our apprentices were able to participate in the SwissSkills Championships, successfully demonstrating their capabilities and winning medals and certificates in various disciplines.

4 AIR2030 The positive public decision for the procurement of new military jets demonstrates that the Swiss population has a strong need for security. We are proud that we will also continue to play our part as a technology partner of the in the future, contributing to air defense – meeting the needs of our society.

8 9 Sustainability

We have given ourselves sustainable goals regarding environmental protection

WE ARE COMMITTED TO THE SUSTAINABLE USE OF RESOURCES AND THE PROTECTION OF OUR ENVIRONMENT THROUGHOUT OUR LIFE-CYCLE MANAGEMENT.

EVELYN DICK, PROFESSIONAL We are part of the “Exemplary Energy and Climate” initiative CO and Energy Act and by the cantons’ bulk consumer 2 TEST MANAGER ICT launched by the Federal Council. With our contribution, we model. For example, RUAG has not only met our obligation would like to support the objective of Energy Strategy 2050 to reduce the annual CO2 emissions of the heating systems in with innovative and exemplary measures. We are convinced our domestic real estate to 3807 t by 2020, we have exceeded “It is important to understand our customers’ that the coming challenges from the energy and climate it by 22.5 %. challenges. Only by doing so can we support policies can be mastered only with a shared commitment. To them in a targeted manner and create a prove that our actions are in line with Energy Strategy 2050, our One milestone for us was the decision to heat all new con- sustainable, forward-looking relationship memorandum of understanding with the federation specifies struction with renewable energy sources in the future. During our ambitious target values until 2030 for the following: renovations, we consistently do without fossil fuels. For of trust. As the technology partner of the energy efficiency, a greater percentage of renewable energy, example, we are at the Thun (Boden) site to replace the old oil Swiss Armed Forces, this helps us make and increasing our own ecological energy production (with heating with sustainable pellet heating for an entire industrial an important contribution to the security photovoltaic systems, for example). complex. Or, in autumn 2020, we started analyzing the photo- of Switzerland: not only today, but also voltaic potential of our entire real estate portfolio. By doing We are implementing our climate protection and energy so, we would like to determine possible locations for new tomorrow.” efficiency objectives with the Energy Agency for Business photovoltaic systems to expand our environmentally friendly (EnAW). To that end, we are being guided by the Federal energy production.

10 11 Diversity

Our contribution to diversity

WE PAY EQUAL SALARIES FOR EQUAL WORK, WHETHER IT IS PERFORMED BY A WOMAN OR A MAN. THIS IS CONFIRMED BY THE SQS CERTIFICATE “FAIR COMPENSATION”.

In 1848, Switzerland became a federation with the adoption is reflected in our advertisements and during recruiting. We of the federal constitution. At that time, the Federal Council wish to even more increase the percentage of women, and are consisted exclusively of men, all of whom were affiliated with taking gradual steps to do so. One of those measures is paying the same party. Since then, our society has changed and all employees a fair salary that is in line with the market. To developed drastically. On the occasion of the foundation that end, the SQS Certificate “Fair Compensation” refers not ceremony for the new RUAG affiliated companies in November only to equal pay between women and men within comparable 2019, Federal Councillor Viola Amherd made it clear: “Today, employee groups, but also to equal pay between employees of diversity is a ground rule.” Today, women make up 40 % of the same gender. RUAG MRO Holding Ltd’s Board of Directors. And as of January 1, CARMEN COMPAGNONI, EXPERIENCED TECHNICIAN 2021, they make up around 30 % of the Executive Committee. We promote diversity in our employees at all levels. The range AVIONICS HELICOPTER AND KATHRIN BUDMIGER, of age, gender, regionality, and professional diversity gives rise Besides adequately dividing the genders in management to the most varied types of inspiration, innovation, and ideas. APPRENTICE AUTOMATION ENGINEER VET positions, we support flexible forms of work as a modern With our efforts and initiatives, we as an employer wish to employer. This includes part-time work or the possibility to be attractive for the different target groups. Customers profit “Supporting our trainees is important to us. In Alpnach, therefore, work from home, provided the function allows it. Moreover, we from this as well, in the form of comprehensive skills regarding we perform maintenance work on all electrical helicopter systems deliberately try to attract talents from both genders, which products and services. together. By sharing our expertise and experience, we also share our success, and can guarantee our customers’ systems will still be available to the next generations.”

12 13 Transformation

Separation as an opportunity for a successful future

AS PART OF THE DEMERGER, WE RELEASED TWO DIVISIONS FROM THE FORMER RUAG GROUP AND COMBINED THEM WITHIN A NEW COMPANY. WHILE DOING SO, OUR TOP PRIORITY WAS TO MAINTAIN THE OPERATIONAL BUSINESS ON AN ONGOING BASIS. SINCE THE BEGINNING OF 2020, WE HAVE BEEN OPERATING AS AN INDEPENDENT COMPANY.

The splitting of the former RUAG Group into two new, independ- We have a particular focus on major projects within the Swiss ent company groups and the unbundling of IT and business Armed Forces. Among others, this includes the upcoming relations between them was completed in the second quarter procurement of the new military jets and the new system for of 2020. This means that the organizational measures decided ground-supported air defense, as well as the telecommuni- by the Federal Council to minimize risks and the conditions for cations program (TK A). We want to support the Swiss Armed the further development of international business have been Forces as a strategic technology partner within these projects MANFRED WYSSMÜLLER, implemented. and provide comprehensive support in our role as system and EMPLOYEE OF MRO MOTORS material competence center. This acquired expertise also As a new company, we have also received a new remit from benefits the third-party market. When doing so, we ensure that the Federal Council: We focus on the innovative life cycle we use synergies, expand our competencies and are thereby “My work on the engines and drive groups ensures that management of complex systems, guarantee their availability better able to sustainably fulfill our remit versus the Swiss the Swiss Armed Forces’ fleet of tanks is ready for use, and ensure reliable operation at all levels. We align ourselves Armed Forces. As an innovative defense business, our objec- both for training and for actual deployment. The MRO tive is to be technology and life-cycle partner of the Swiss with the procurement programs of the Swiss Armed Forces, our the department in Thun makes an important contribution to key customer, and secure our position through robust Armed Forces, thereby making our contribution to the security and cost-optimized services. of Switzerland – both today and in the future. the fleet of tanks’ readiness for use, and therefore to the security of Switzerland.”

14 15 TransformationCorporate Governance

Cornerstones and center of our action

↗ Compliance, risk management, and information security are Our relationships with the owner and with our customers and essentially depends on the trust in how we handle their data. partners are based on trust, integrity, and mutual respect. The This is where information security comes in, which must be integral components of our company as part of corporate gover- Board of Directors and the Executive Committee ensure that ensured in all situations – in the knowledge of our own critical nance. The organization, its activities, and its responsibilities are we always conduct ourselves in accordance with our values infrastructure and that of our customers. The assimilation of and pursuant to applicable regulations and internal directives. RUAG into the security perimeter of the Federal Department of based on the acknowledged “Three Lines of Defense” model*. RUAG wishes to further promote this awareness and focuses on Defense, Civil Protection and Sport (DDPS) strengthens us in our the areas of compliance, risk management, and information striving to guard the confidentiality and protect the integrity security. and availability of our information.

Our Compliance Management System ensures ethically correct All departments train their employees and raise their aware- conduct that conforms to regulations and instills that behavior ness. In 2020, training in antitrust law, an e-learning about in the employees. To that end, our Code of Conduct serves as a anticorruption, and various training initiatives in the areas basis and guideline for our actions. Risk management includes of trade compliance and handling cyber threats took place. the consistent handling of risks to support attainment, fulfil- To that end, employees were also made more aware of our ment of tasks, activities, and management of the company whistleblower system: the external whistleblower platform with comprehensive, transparent, and up-to-date risk infor- (“Integrity Line”). We take the reports entered into that system mation. The goal is to improve the predictability of events and seriously, assess them, and investigate them – objectively, * Organising framework for assigning the respective roles and responsibilities in the Governance, Risk and Compliance Management System. strengthen our stakeholders’ trust. Our customers’ trust also consistently, and professionally.

16 17 High-quality vocational training

We are investing today in the know- how of tomorrow

ONE PARTICULARLY IMPORTANT COMPONENT OF RUAG’S CORPORATE RESPONSIBILITY IS TO TRAIN YOUNG PEOPLE. WE ACCOMPANY THEM AS THEY PREPARE FOR PROFESSIONAL LIFE AND IN DOING SO WE INVEST TODAY IN THE KNOW-HOW OF TOMORROW.

In 2020, RUAG had about 300 apprentices in Switzerland, who and polymechanics. Three were so strong in their disciplines were trained in 14 occupations requiring formal training.* RUAG that they won a silver medal: Mauro Schwegler in the Poly­ strengthens this work by cooperating closely with professional mechanic/Automation category, Luca Meyer in the Automation organizations and the SwissSkills foundation. Engineering category and Elias von Atzigen in the Polyme- chanic/CNC Turning category. It was a very special year for the 2020 SwissSkills Champion- ships. Due to the COVID-19 pandemic, the Swiss Championships They were coached, supported, and carried by RUAG’s Swiss were carried out locally in various places in Switzerland, instead Selection Team. The VET/PET professionals and committed of a central large event in Berne. Between the beginning of employees in vocational training ensured that the candidates September and the end of November, experts chose a total and the team grew together within one year and prepared of 56 new Swiss professional masters. Despite the unusual optimally for the championships – despite the challenges circumstances, all eleven participants from RUAG had the 2020 brought. opportunity to successfully present their excellence of professional practice in the disciplines of mechanical engi- neering, automation, IT, mediamatics, design engineering

* Mechanical Engineering Technician, Automation Engineer, Electronics Technician, Building and Grounds Custodian, Information and Documentation Specialist, Industrial Painter, Computer Scientist, Commercial Employee, Design Engineer, Logistics Specialist, Mediamatics Technician, Multimedia Electrician, Polymechanic and Production Mechanic.

18 19 Innovation and expertise

Shaping the future with innovation and expertise

RUAG IMPRESSES WITH ITS MAINTENANCE AND DEVELOPMENT SKILLS. WE WOULD LIKE TO DEVELOP FURTHER, AND TO ESTABLISH OURSELVES AS A PLATFORM FOR SECURITY-RELEVANT PROBLEMS AND SOLUTIONS.

We can claim to be not just one of, but the technology partner approaches and methods as part of our research and develop­ of the Swiss Armed Forces. In our function as a comprehensive ment work as well. We bundle our expertise and enable material competence center (MCC) and system integration cross-sectoral cooperation. specialist, we offer solutions along the entire product life cycle; from procurement to introducing units to decommis- The Kickbox concept, which creates an internal innovation sioning a system. platform and purposefully promotes entrepreneurship, delivers us additional ideas. Therefore, we involve our employees and We would like to enhance our service portfolio and, in addition encourage them to develop their own new ideas. We allow to our role as a life-cycle partner of the Swiss Armed Forces these ideas to mature, test them, and improve them. An in- and innovation and technology partner of the Swiss security house committee supports the pilot projects with its expertise organizations, develop a platform for security-relevant problems and involves the customers from the beginning. If it becomes and solutions. We operate within the entire environment of Swiss evident during the process that an idea is not well thought security firms, working with small start-ups and long-estab- out, we learn this early on, save the budget, and increase lished companies alike. And we tirelessly search for innovative the chances of success for future projects.

20 21 Board of Directors and Executive Committee We know that security matters

OUR BOARD OF DIRECTORS

Nicolas Perrin Heinz Liechti Nicolas Gremaud Caroline Kuyper Prof. Dr. Sibylle President Vice President Member Member Minder Hochreutener Member

OUR EXECUTIVE COMMITTEE

↗ CEO ↗ BUSINESS UNITS

Andreas Berger Thomas Gehring Hannes Hauri Thomas Kipfer Balz Villiger CEO RUAG MRO Senior Vice President Senior Vice President Senior Vice President Senior Vice President Holding Ltd Military Aviation Land Systems Subsystems & Products NEO Services

↗ SERVICE UNITS

Melanie Gödecke Marcel Jüni Benoît Macherel Michelle Mägerle Dr. Nicolas Meyer Vice President Vice President CFO RUAG MRO CHRO RUAG MRO General Counsel & Head IMPRINT Supply Chain Business Services & IT Holding Ltd a.i. Holding Ltd of Directorate staff Publisher RUAG MRO Holding Ltd, Stauffacherstrasse 65, 3000 Bern 22 Translations Amplexor, Stampfenbachstrasse 123, 8006 Zurich Layout and composition Our Executive Committee in 2021 Amstutz Partners AG, Kellerstrasse 36, 6005 Lucerne As a future-oriented technology partner of the Swiss Armed Forces, we strive to constantly Print further develop as a company. In this context, we have made organizational changes within Engelberger Druck AG, Oberstmühle 3, 6370 Stans RUAG. Since January 1, 2021, we have been working with a new structure of the Executive Committee to render our services more efficiently and with greater customer orientation in the future. Reprinting, reproduction and further distribution of texts and images, including excerpts, only with the permission of RUAG MRO Holding Ltd. Printed on FSC-certified paper.

22 23 ruag.ch