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    ELMN   CH0005319162

ELMA ELECTRONIC AG

(ELMN)
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Elma Electronic : Executive Report 2020 (PDF)

03/09/2021 | 06:00pm EDT

EXECUTIVE REPORT 2020

ELMA - Your Solution Partner

Elma Electronic is a global manufacturer of electronic packaging products for the embedded systems market - from components, backplanes, power supply solutions, storage boards and chassis platforms to fully integrated systems. Elma is listed at the Swiss Stock Exchange, with subsidiaries in 10 countries on 3 conti-nents. To ensure our integrated solutions are optimized to our customers' needs, Elma partners with leading board manufacturers in the industry.

Elma also provides enclosure solutions and rotary switches for demanding applications for electronic com- panies. The company has a broad base of proven standard products which can be tailored to individual applications: Elma offers services from the initial concept to volume production. Elma's reliable solutions, flexibility, and design expertise are key reasons why the leading companies in the world choose Elma time and again.

Key Figures 2020

Elma Group Key Figures

in CHF 1,000

2020

2019

Order income

153,288

158,994

Net sales

147,036

151,155

EBITDA

9,939

9,552

in % of net sales

6.8

6.3

EBIT

6,555

6,408

in % of net sales

4.5

4.2

Net profit

5,584

5,111

in % of net sales

3.8

3.4

in % of average equity

13.5

13.5

Cash Flow from operating activities

10,326

7,774

Balance sheet total

91,803

94,070

Shareholders' equity

42,591

40,071

in % of balance sheet total

46.4

42.6

Headcount year end in FTE (incl. temporary employees)

778

773

The Alternative Performance Measures are described on page 27 of this Executive Report or on Elma's website at the following link:www.elma.com/en/investors/company-profile/alternative-measures

Net sales by region

Net sales by product line

in CHF and %

in CHF and %

778

147.0

million CHF net sales

5.6

million CHF net profit

employees worldwide

153.3

million CHF order income

Content

  • 2 Letter to Shareholders

  • 7 Strategy of the Elma Group

  • 8 Interview with CEO

  • 10 Product Lines

  • 11 Highlights

  • 12 Customer Projects

  • 16 Regions

  • 18 Financial Reports

  • 18 Consolidated Balance Sheet Elma Group

  • 20 Consolidated Income Statement Elma Group

  • 21 Consolidated Cash Flow Statement Elma Group

  • 22 Balance Sheet Elma Electronic AG, Switzerland

  • 24 Income Statement Elma Electronic AG, Switzerland

  • 25 Appropriation of Retained Earnings

  • 26 Multi-year Overview Elma Group

  • 27 Alternative Performance Measures

  • 28 Group Companies

  • 29 Imprint

Dear Shareholders,

The year 2020 was impacted by the global Covid-19 pandemic which posed considerable challenges for companies. In this economically and entrepreneurially demanding environment, the Elma Group succeeded in slightly increasing order income as well as net sales adjusted for cur-rency effects, improving profitability, and closing the financial year with a slightly higher net profit than last year.

Market trends

Elma's performance in 2020 was strongly influ-enced by the ongoing Covid-19 pandemic. Our customers reduced their capacities during the lockdowns ordered by their respective govern-ments. We had to adjust our production capacities accordingly and introduced short-time work in some cases. Covid-19 vaccines are now available and a return to the "new normal" seems to be slowly coming into view. The stimulative policies

-

Order income of CHF 153.3 million increased

by governments as well as the catch-up demand

by 0.7% adjusted for currency effects (pre­

among consumers and the execution of postponed

vious year: CHF 159.0 million)

projects by companies support the economic

-

Net sales of CHF 147.0 million 1.5% higher

recovery phase.

adjusted for currency effects (previous year:

CHF 151.2 million)

Innovation, research and development

-

EBIT of CHF 6.6 million (previous year: CHF

We offer solutions from components to integrated

6.4 million) and net profit of CHF 5.6 million

systems. Innovation is one of the key success fac-

(previous year: CHF 5.1 million) improved

tors for us to deliver market-driven products to our

due to significantly lower sales and other

customers and to ensure profitable growth in all

operating expenses

three regions and product lines. We work closely

-

All three regions with a positive profit contri­

with our customers when developing new products,

bution

system solutions and services. This enables us to

-

Operating cash flow increased by nearly 25%

understand the customer's needs when developing

to CHF 10.3 million

customized, innovative solutions. We are "Your

-

Net debts reduced by CHF 7.1 million to

Solution Partner".

CHF 16.9 million (previous year: CHF 24.0

million)

In the USA, we received five Military & Aerospace

-

Equity ratio improved to 46.4% (December

Engineering Technology Innovation Awards. This is

31, 2019: CHF 42.6%)

the fourth year in a row that Elma products have

-

A high level of innovation with significant

been selected by this important awards program.

product developments for the healthcare

Honorees of the Technology Innovation Awards

sector and five Technology Innovation

have made a pioneering contribution to the de-

Awards received

fense and aerospace industry and are recognized

as leaders with innovative solutions and products.

2

Executive Report 2020 Elma Group

Awarded products include the new power system "RP24" for the use in rugged terrain, the "VITA 48.4" liquid flow-through rugged ATR platform for the Defense and Aerospace electronic, the "ComSys 5371" rugged COMe system platform for high per-formance computing as well as the rugged platform for high performance AI applications "JetSys 5320". More information is available at https://www.elma. com/de/who-we-are/awards.

On pages 12 to 15 of this executive report, we show two innovative and demanding customer projects that include an application in the healthcare sector to contain in the Covid-19 pandemic

Order income

Demand from customers in the defense segment remained lively and made a significant contribution to the overall positive development in order in-come. Order income closed at CHF 153.3 million (previous year: CHF 159.0 million), which is a de- crease of 3.6%; however, adjusted for currency effects, a slight plus of 0.7% compared with the previous year was achieved. Orders are recorded as order income only if delivery is affected within the next six months.

In the USA, Elma received five Military & Aerospace Engineering Technology Innovation Awards. This is the fourth year in a row that Elma products have been selected by this important awards program.

Order income developed particularly well in the Asia region and went up 12.4% to CHF 11.8 million; adjusted for currency effects, they even rose by 19.3%. The Americas region increased order income in local currency by 2% to USD 82.0 million; in Swiss Francs, however, there was a decline of 3.9%. In the Europe region, orders income fell by 5.7% to CHF 64.7 million; adjusted for currency effects, the decrease was 3.6%. Orders in Germany and France developed positively with an increase compared with the previous year. The entities in Switzerland, UK and Israel were confronted with a pronounced slowdown, which led to lower order income.

Net sales

Production in 2020 was maintained as well as pos-sible in compliance with strict protective measures. Despite the postponements of orders by customers as a result of the Covid-19 pandemic, the consoli-dated revenue in local currency slightly increased. Short-term orders were executed to fill capacity. In the US, which is strongly driven by the systems business, net sales grew by 3%. Also the Asia region reported an increased demand, while activi-ties in the Europe region were hampered by the weaker economic dynamics and the related project delays in Germany, France and the UK.

In 2020, the Elma Group realized net sales total-ing CHF 147.0 million (previous year: CHF 151.2 million), which corresponds to a decrease of 2.7%; adjusted for currency effects, net sales rose by 1.5%. The Americas region increased net sales by 3.0% to USD 73.5 million (previous year: USD 71.3 million); in Swiss Francs they were down 2.9%. In the Europe region, net sales fell by 6.8% to CHF 65.9 million (previous year: CHF 70.7 million); ad-justed for currency effects, the decrease was 4.8%. In the Asia region, net sales increased by 28.8% to CHF 12.4 million (previous year: CHF 9.6 million); adjusted for currency effects, the growth was even 36.7%.

Despite the postponements of orders by customers as a result of the Covid­19 pandemic, the consolidated revenue in local currency slightly increased. Short­term orders were executed to fill capacity.

The System Solutions product line closed the 2020 business year with sales on previous year's level, thanks to the successful project business in the USA and Asia, which compensated for the decline in demand in Europe. The net sales amounted to CHF 108.8 million (previous year: CHF 108.5 mil-lion); adjusted for currency effects, an increase of 4.9% was achieved. The Enclosures & Components product line generated net sales of CHF 26.2 mil-lion (previous year: CHF 29.7 million), which is a minus of 11.7%; adjusted for currency effects, sales fell by 8.5%. The Rotary Switches product line achieved sales of CHF 12.0 million, a drop of 7.5% (previous year: CHF 13.0 million); adjusted for cur-rency effects, the decrease was 4.3%.

EBIT and net profit

The Elma Group closed the 2020 business year with a net profit of CHF 5.6 million (previous year: CHF 5.1 million). EBITDA reached CHF 9.9 million or 6.8% (previous year: CHF 9.6 million or 6.3%) and EBIT was CHF 6.6 or 4.5% (previous year: CHF 6.4 million or 4.2%). The profit per share amount-ed to CHF 24.44 (previous year: CHF 22.37). The improved profitability is due to the fact that sales and other operating expenses were significantly lower than in the previous year.

Solid balance sheet

As of December 31, 2020, the Elma Group reported total assets of CHF 91.8 million (previous year: CHF 94.1 million). The equity ratio stood at 46.4% (pre-vious year: 42.6%). Net debts fell by CHF 7.1 mil-lion to CHF 16.9 million (previous year: CHF 24.0 million).

Operating cash flow

The operating cash flow amounted to CHF 10.3 mil-lion and thus was CHF 2.6 million above previous year (previous year: CHF 7.7 million). This good re-sult made allowed to finance all investments by own funds, to repay bank debts in the amount of CHF 3.7 million and to increase cash by CHF 3.4 million. The strong operating cash flow was possible due to a higher net profit, lower stocks and reduced accounts receivable, trade and other liabilities.

Dividend policy

Change of Board of Directors and Group Manage­

Elma's dividend policy depends on the following

ment in 2020

factors:

In April 2020, Fred Ruegg has retired and stepped

down from his position as CEO of the Elma Group.

  • - Improved balance sheet structure

  • - Reduced net debts

  • - Equity ratio of over 50%

We have made further progress in the last year to allow a dividend payment. Not all factors have been met yet and the Board of Directors will propose to the General Annual Meeting on April 15, 2021 to fore-go a dividend payment for 2020 and to continue to invest the generated funds into the company.

Investments

The investments goals in 2020 focused on increas-ing automation, digitization as well as on optimiz-ing productivity. Overall, investments in the amount of CHF 3.2 million were made in all regions. 54% of the investments were made in the Europe region, 42% in the Americas region and 4% in the Asia region. In the previous year, the investment volume was CHF 14.2 million, mainly due to the purchase of an industrial campus in the USA.

Employees

The headcount of the Elma Group including tempo-rary employees rose slightly to 778 employees (FTE) at the end of 2020 (previous year: 773 FTE). We employed a total of 404 people in the Europe region (previous year: 424), followed by the Americas region with 298 employees (previous year: 277) and the Asia region with 76 employees (previous year: 72).

The Annual General Meeting on April 16, 2020 has elected him to the Board of Directors, preserving his many years of industry experience and high level of expertise for the Elma Group. Thomas Herrmann was appointed by the Board of Directors as the new CEO of the Elma Group and member of the Group Management as per April 17, 2020.

Change of Board of Directors in 2021

Rudolf W. Weber has been a non-executive member of the Board of Directors since 2004. In 2020, he reached the age limit stipulated in Elma's by-laws. He will therefore resign from the Board of Directors after the completion of the Annual General Meeting on April 15, 2021. The Board of Directors has decided in its meeting on February 25, 2021 that the position will not be replaced for the time being and thus the Board will consist of four members after the 2021 Annual General Meeting. The entire Board of Directors thanks Rudolf W. Weber for his successful work of many years and his great contri-bution to the Elma Group as a member of the Board of Directors and Chairman of the Compensation Committee.

The investments goals in 2020 focused on increasing automation, digitization as well as on optimizing productivity.

We started the 2021 business year with a solid order backlog.

The other four members of the Board of Directors will stand for re-election at the Annual General Meeting. The Board of Directors will propose to the Annual General Meeting on April 15, 2021 to re-elect all members as well as re-elect Martin Wipfli as Chairman. In addition, the Board of Directors will propose to the 2021 Annual General Meeting to elect Fred Ruegg and to re-elect Peter Hotz as members of the Compensation Committee.

Annual General Meeting 2021

Based on Art. 27 of Ordinance 3 of the Federal Council on measures to combat the coronavirus (COVID-19) of June 19, 2020 (in the version of February 8, 2021), the Elma Board of Directors de-cided to conduct the Annual General Meeting 2021 without the physical presence of the shareholders. For the upcoming Annual General Meeting on April 15, 2021, the shareholders will have the opportuni-ty to vote and provide instructions to the inde-pendent proxy, either in writing or electronically via the online platform of Share Comm Service AG (shareholder's register). Details regarding voting and instructions to the independent proxy for the 2021 Annual General Meeting will be explained in the invitation to the General Meeting.

Outlook

We started the 2021 business year with a solid or- der backlog. The further development of the Covid-19 pandemic and its effects on the global economy remain unpredictable from today's per-spective. For this reason, we refrain from providing an outlook for 2021.

Special thanks

The year 2020 was very demanding for all of us and presented each of us with new challenges. The Board of Directors and the Group Management would therefore like to take the opportunity to thank all employees of the Elma Group for their great commitment in these difficult times. A big thank you also goes to our customers and business partners for their trust in the Elma Group despite being confronted with the challenges of the pan-demic. We would like to thank our shareholders for their loyal support in a challenging year.

Martin Wipfli Chairman

Thomas Herrmann CEO

Strategy of the Elma Group

Elma - Your Solution Partner. This claim is recog- With production sites in the three nized worldwide as Elma offers products and ser- regions, Elma can quickly respond to

vices of three strategic product lines through ten local Group companies, spread across the regions Americas, Europe and Asia. Elma aims to improve results significantly in the medium term and achieve an organic growth each year. Through se-lective acquisitions Elma exploits additional growth potential.

Elma's corporate strategy focuses on four key ele-ments:

Expand market share

Elma intensifies market activities and develops strategies to win more customers in new market segments for their three strategic product lines System Solutions, Enclosures & Components and Rotary Switches.

Sell all product lines in three regions

Elma's system solutions are based on the compo-nent business. Elma sells their products through their regional subsidiaries, strategic partners and distributors worldwide.

Regional production

With production sites in the three regions, Elma can quickly respond to the needs of customers. In addition, they provide extensive protection against the consequences of significant currency fluctua-tions ("natural hedging").

the needs of customers.

Develop and expand the systems business and expand the customer base and design­ins for the Rotary Switches business

Elma focuses on advanced technical components and system solutions and on expanding the system integration business in all three regions. Elma ex-pands their product range with small form factor products in electronic packaging. In the Rotary Switches product line, Elma supplements business activities and solutions with human-machine inter-face applications.

Thomas Herrmann on his first year as CEO of the Elma Group

Mr. Herrmann, you were appointed CEO of the Elma Group in April 2020, in the midst of the Covid­19 pandemic. You had to familiarize your­self with your new role while at the same time lead through the worst economic crisis in decades. How did you deal with this?

First of all, I was impressed by how the employees of the Elma Group worldwide mastered the great challenges associated with the Covid-19 pandemic. Good protective measures were introduced, and have been continuously adapted and improved amongst all Elma companies.

My start was of course extremely unusual, espe-cially since the planned visits to our companies and customers in Europe, USA and Asia could not take place physically. We compensated for this through many virtual meetings and digitalIn another example, we were able to develop and manufacture a disinfection device for a customer in Switzerland, which was also used in the Zurich region in Switzerland to disinfect buses, laborato-ries and medical practices.

You described the 2020 business year as "turbulent" but also "solid". Are you satisfied with the performance in the context of the Covid­19 pandemic?

Our results are indeed presentable. We slightly increased net sales and order income adjusted for currency effects. At the same time, we reduced operating expenses and generated a higher EBIT and net profit.

I am very proud that we were able

company tours, which quickly gave me a first im- to make an important contribution to pression of the strengths of the various locations, the public healthcare in 2020 with

and also some weaknesses. Interestingly, the virtual medium has enormously strengthened and accelerated the global dialogue. Nevertheless, I am looking forward to meeting our customers and em-ployees in person soon.

In your opinion, which positive experiences and developments were particularly significant?

I am very proud that we were able to make an im-portant contribution to the public healthcare in 2020 with our technologies, our products and our agility. We were able to supply a large number of rotary switches for ventilator machines in the med-ical sector at short notice; this was a major contri-bution to ensuring that hospitals in Europe and Southeast Asia have received the essential equip-ment.

our technologies, our products and our agility.

Our customers have remained loyal to us, the defense sector has proven to be stable and the de-cline in orders in the industrial sector was largely compensated by the medical and transportation sectors. I am convinced that global companies sur-vive when they operate with agility and customer orientation in this "new normal" environment. I am motivated every day to strengthen the global team approach and the know-how transfer between the companies of the Elma Group as well as related solutions for additional customer segments.

Will the pandemic change the global industrial landscape and technological development per­manently?

I am convinced that digitization will radically change companies, economics, politics and society.

It is the very foundation for future commercial success. Digitization and networking offer great opportunities, yet but they also present us with challenges. At Elma, we continued to invest in digi-tization in 2020, and also in automation and pro-ductivity optimization. This applies to all areas - from production to engineering, communication and administration.

How do you recover from your demanding job as CEO, especially during a pandemic?

I believe I have a special hobby: during the summer months, I am a passionate beekeeper, looking after my bee colonies. I also enjoy engaging in sports with my family; I love skiing in winter and biking in summer. On rainy days, I live out my creative side by painting and sculpting.

I am motivated every day to strengthen the global team approach and the know­how transfer between the companies of the Elma Group as well as related solutions for additional customer segments.

Thomas Herrmann is 49 years old, married, with two children. He holds a mechanical engineering degree from from the ETH Zurich (Switzerland), with an Executive MBA from the University of St. Gallen (Switzerland) and University of Toronto (Canada).

He has held various management positions with Alstom Power and GE Power over the last several years, his last position there as General Manager of Industrial Steam Turbines at GE Power.

Product Lines

System Solutions

Elma develops and manufactures advanced and in-tegrated system solutions for demanding applica-tions and environments. As a leading provider of fully integrated solutions for "embedded systems", Elma supports customers with global engineering teams and production sites. In 2020, Elma success-fully implemented new innovative customer pro-jects in the system business.

Elma has enforced its virtual medium for the global dialog with customers and partners. As a driving force in technological committees, Elma has organized and sponsored a series of webcasts aimed at understanding the technical Sensor Open System Architecture Standard (SOSA). The SOSA consortium enables governments and industry to collaboratively develop open standards and best practices to enable, enhance and accelerate the deployment of affordable, capable and interopera-ble sensor systems. One of the main focuses was explaining why network connections are essential for module compatibility and successful implemen-tation at the system level. The webinars were re-ceived with great international interest. Elma plans to enhance this medium for more technology semi-nars for system applications.

Enclosures & Components

The Enclosures & Components product line focuses on the implementation of customized require-ments and projects in order to meet the individual needs of customers for integrated products.

By using the new 3D configurator, Elma's premium enclosures can be configured online. The software allows customers to autonomously configure the housing according to their requirements, download product model data and add a customized front or rear panel. The configurator is currently available on Elma's website for the products "Stylebox 15 e-motion", "Guardbox 33" and "Compact Case 20"; more products are constantly being added.

Rotary Switches

The rotary switch portfolio offers customers exten-sive and high-quality deployment solutions. The proven switch applications used by customers are testimony to Elma's success story with selector switches, coded switches and encoders. Among oth-ers, they are used in the medical and rescue technol-ogy, for safety and telecommunication applications as well in the defense sector.

Innovation is one of Elma's the most important suc-cess factors. Elma works closely with customers and technology partners to deliver products, solu-tions and services that meet the needs of the mar-ket. Among other activities, the degree of automa-tion at our locations was increased in order to make use of the opportunities that "Industry 4.0" offers for efficient production, traceability and other important aspects. In 2020, the automation modules for the encoder lines "E18" and "E33" were expanded. By combining the two switch fam-ilies, production is additionally designed for higher volumes. On the other hand, the industrialization of the "X1" switch family with four automation modules started. Elma invested almost CHF 1 mil-lion in automation in 2020.

Highlights 2020

Innovation Awards

In the USA, Elma received five Military & Aerospace Engineering Technology Innovation Awards. This is the fourth year in a row that Elma products have been selected by this important awards program. Honorees of the Technology Innovation Awards have made a pioneering contribution to the defense and aerospace industry and are recognized as leaders with innovative solutions and products. Awarded products include the new power system "RP24" for the use in rugged terrain, the "VITA 48.4" liquid flow-through rugged ATR platform for the Defense and Aerospace electronic, the "ComSys 5371" rugged COMe system platform for high per-formance computing as well as the rugged platform for high performance AI applications "JetSys 5320". More information is available at https://www.elma. com/de/who-we-are/awards.

New Online Product Configurator for Enclosures By using the new 3D configurator, Elma's premium enclosures can be configured online. The software allows customers to autonomously configure the housing according to their requirements, download product model data and add a customized front or rear panel.

The configurator is currently available on Elma's website for the products "Stylebox 15 e-motion", "Guardbox 33" and "Compact Case 20"; more products are constantly being added. Link: www. elma.com/en/products/enclosures-and-components

Automation

The degree of automation at our locations was in-creased in order to make use of the opportunities that "Industry 4.0" offers for efficient production, traceability and other important aspects. In 2020, the automation modules for the encoder lines "E18" and "E33" were expanded. By combining the two switch families, production is additionally de-signed for higher volumes. On the other hand, the industrialization of the "X1" switch family with four automation modules started.

Securing Health

©SteinemannDisinfection

Steinemann Disinfection is a specialist in the inter-national disinfection market and offers sustaina-ble, reproducible and efficient concepts, processes and systems for the three-dimensional disinfection of rooms and surfaces. They design processes to control, viruses, and fungi public and industrial institutions as well as in private households, using equipment, chemicals or natural substances. They also specialized on the mediation and dissemina-tion of methods, processes and best practice pro-grams at all levels and in all defined applications.

Elma produces for the customer a cold mist disper-sion devise, the "CleanCube", which independently frees rooms and surfaces from viruses and bacte-ria using a 3D process. The device swirls disinfect-ant evenly indoors using a powerful vortex and does not leave out any spots. Elma was able to in-dustrialize this complex disinfection device within a short period of time and thus makes an important contribution to containing the Covid-19 pandemic.

www.steinemann-disinfection.ch

Redefining Audio Experience

©AryaAudioLabs

Arya Audio Labs is a London based designer and manufacturer of high-end audio equipment. Their team is taking on the challenge to redefine the audio experience and setting a new standard in audio reproduction.

The AirBlade HYPE is Arya Audio's latest creation and a one-of-a-kind product in the high-end audio market. It is used as an add-on unit to augment tra-ditional loudspeaker systems with its unique 180-degree dispersion while covering a much wider frequency range than a typical driver. The ul-tra-wide dispersion achieves true immersive sound by extending the optimal listening position far be-yond a single sweet spot. AirBlade HYPE is fully pas-sive and does not require additional amplification.

Arya Audio Labs has chosen Elma's Rotary Selector Switch Type 04 for its superb quality and customi-sation options. With its gold-plated copper alloy pins, the ceramic body and the adjustable stop po-sitions, the Elma Type 04 is the logical choice for state-of-the-art products like the AirBlade HYPE.

www.arya-audio.com

Regions

Americas

With the two operating companies Elma Electronic Inc. and Optima Stantron Corp. as well as several sales, engineering and production locations, the Americas region offers customers services along the entire value chain of the Elma Group.

Europe

In the Europe region, Elma is represented by six group companies: in Switzerland, Germany, UK, France, Romania and Israel. The regional produc-tion site in Romania ensures the supply of the re-gion with rotary switches as well as enclosures and components.

Demand from customers in the defense segment in 2020 remained stable and made a significant con-tribution to the overall positive development. The Due to the promptly implemented US companies specialize in the implementation of measures, Elma was able to soften

technically demanding system solutions and have further increased order income and net sales, both in local currency.

the impact of the ongoing pan­demic in the Europe region, and all companies made a positive

In 2020, Elma Americas received five Military & profit contribution to Elma's over­ Aerospace Engineering Technology Innovation all performance.

Awards. Honorees of the Technology Innovation

Awards have made a pioneering contribution to the

defense and aerospace industry and are recog-nized as leaders with innovative solutions and products. Awarded products include the new power system "RP24" for the use in rugged terrain.

The US companies specialize in the implementation of technically demanding system solutions and have further increased order income and net sales, both in local currency.

The global Covid-19 pandemic has had the biggest impact on business in Europe. Activities in the Europe region flattened out as a result of the economic slowdown. Due to the promptly imple-mented measures, Elma was able to soften the impact of the ongoing pandemic in the Europe region, and all companies made a positive profit contribution to Elma's overall performance. In the production site in Romania, the automation concept was further advanced with focus on the Rotary Switches product line.

Asia

Elma is represented in Asia with subsidiaries in China, Singapore as well as a Design Center in India, specializing in sophisticated electronic de-sign and software solutions. By using the in-house capabilities at the production site in Shanghai, customers in Asia are offered a wide range of housings in the highest Elma Quality.

Business activities in China resumed earlier than in other regions when the restrictions of the Corona pandemic were partly lifted. There was increased demand, especially in Southeast Asia, because of the successful project business for demanding system solutions. In the Asia region, order income and net sales improved significantly, both in local currency and as adjusted for curren-cy effects.

Elma China has received certification for the rail industry. The electronic control cabinets were suc-cessfully tested for shock and vibration in accor- dance with IEC61373-2010. The cabinets are mainly used in signaling control systems in vehicle cockpits on board or on the track side.

There was increased demand, especially in Southeast Asia, because of the successful project business for demanding system solutions.

at December 31

Assets

2020

2019

Cash

10,619

7,223

Trade accounts receivable

20,820

23,285

Other short-term accounts receivable

1,126

1,515

Inventories

30,545

32,040

Prepayments and accrued income

1,254

1,121

Total current assets

64,364

65,184

Non­current assets

Tangible assets

23,426

26,131

Deferred tax assets

2,339

2,433

Other financial assets

172

190

Intangible assets

1,502

132

Total non­current assets

27,439

28,886

Total assets

91,803

94,070

18

in CHF 1,000

at December 31

Liabilities and equity

2020

2019

Short-term bank debts

6,716

8,158

Trade accounts payable

9,388

10,974

Other current liabilities

4,173

3,846

Short-term provisions

2,605

2,580

Accrued liabilities and deferred income

4,507

4,644

Total current liabilities

27,389

30,202

Non­current liabilities

Long-term bank debts

10,786

13,051

Subordinated loan

10,000

10,000

Other long-term liabilities

25

10

Deferred tax liabilities

429

307

Long-term provisions

583

429

Total non­current liabilities

21,823

23,797

Total liabilities

49,212

53,999

Equity

Share capital

2,513

2,513

Capital reserves

8,388

8,388

Retained earnings

31,690

29,170

Total equity

42,591

40,071

Total liabilities and equity

91,803

94,070

19

in CHF 1,000

Consolidated Income Statement Elma Group

in CHF 1,000

2020

2019

Net sales from goods and services

147,036

151,155

Cost of goods sold

-108,335

-110,356

Gross profit

38,701

40,799

Sales and Marketing expenses

-18,351

-19,992

Administrative expenses

-11,088

-10,993

Research and development expenses

-2,297

-2,454

Other operating income

846

954

Other operating expenses

-1,256

-1,906

Operating income (EBIT)

6,555

6,408

Financial result

-553

-620

Ordinary result

6,002

5,788

Non-operating result

399

176

Profit before income taxes (EBT)

6,401

5,964

Income taxes

-817

-853

Net profit

5,584

5,111

Net profit per share in CHF

24.44

22.37

20

Consolidated Cash Flow Statement Elma Group

January 1 to December 31

in CHF 1,000

Cash flow from operating activities Net profit

Income taxes Financial result Adjustments for

Depreciation of tangible assets Amortization of intangible assets Change in provisions

Net profit from disposal of tangible assets Other non-cash-effective income and expenses Changes in net working capital

Inventories

Trade accounts receivable

Other short-term accounts receivable and prepaid expenses Trade accounts payable

Other short-term payables and accruals

Income taxes paid

Interest expenses paid (net)

2020 2019

Total cash flow from operating activities 7,738

Cash flow from investing activities

Purchase of tangible assets Disposal of tangible assets Purchase of intangible assets Changes of other financial assets

Total cash flow from investing activities

Cash flow from financing activities Issuance of short-term bank debts Repayment of short-term bank debts Issuance of long-term bank debts Repayment of long-term bank debts Total cash flow from financing activities

Effects of exchange rate on cash

Increase in cash

Cash at January 1

5,584 5,111

817 853

553 620

3,258 3,057

126 87

330 -180

-11 -36

1 6

151 -2,267

1,351 446

190 -142

-1,355 616

196 738

-300 -551

-565 -620 10,326

-14,175

18 36

-1,200 -44

12 13

-2,919 -14,170

- 5,209

-3,733 -2,943

8,500 4,571

-

-3,713 6,837

Cash at December 31 7,223

7,223 6,905

-298 -87

3,396 318

10,619

at December 31

Assets

in CHF 1,000

2020

2019

Current assets

Cash

3,281

1,194

Trade accounts receivable

- Group companies

2,963

2,926

- Third parties

3,016

3,217

Other accounts receivable

- Group companies

3,614

2,891

- Third parties

416

736

Inventories

10,406

11,392

Prepayments and accrued income

360

243

Total current assets

24,056

22,599

Non­current assets

Financial assets

- Investments

20,155

20,405

- Loans to Group companies

1,977

6,848

- Other financial assets

10

10

Tangible assets

9,183

9,683

Intangible assets

132

62

Total non­current assets

31,457

37,008

Total assets

55,513

59,607

22

at December 31

Liabilities and equity

in CHF 1,000

2020

2019

Liabilities

Current liabilities

Short-term interest-bearing liabilities

6,716

7,886

Trade accounts payable:

- Group companies

572

379

- Third parties

1,817

3,143

Other current liabilities:

- Group companies

4

77

- Third parties

215

479

Accrued liabilities and deferred income

1,434

1,364

Total current liabilities

10,758

13,328

Non­current liabilities

Non-current interest-bearing liabilities

- Bank debts

10,786

13,051

- Subordinated loan

10,000

10,000

Provisions

24

10

Total non­current liabilities

20,810

23,061

Total liabilities

31,568

36,389

Equity

Share capital

2,513

2,513

Legal reserves

- Capital reserves

7,311

7,311

- Retained earnings

1,077

1,077

Free reserves

5,899

5,899

Retained earnings

7,145

6,418

Total equity

23,945

23,218

Total liabilities and equity

55,513

59,607

23

Income Statement Elma Electronic AG, Switzerland

2020

2019

41,613

43,755

2,745

2,019

44,358

45,774

Material expenses

-25,745

-27,048

Personnel expenses

-12,686

-13,421

Other operating expenses

-3,895

-3,908

Depreciation

-1,199

-1,103

Other operating income

294

343

Gain from disposal of fixed assets

12

7

Operating income (EBIT)

1,139

644

Financial income

183

235

Financial expenses

-532

-588

Revaluation on investments

-250

1,105

Ordinary result

540

1,396

Non-operating result

240

223

Net profit before taxes (EBT)

780

1,619

Taxes

-53

-27

Net profit

727

1,592

24

in CHF 1,000

Appropriation of Retained Earnings

Retained earnings

2020

2019

on April 15, 2021 as follows:

in CHF 1,000

in CHF 1,000

Retained earnings carried forward from previous year

6,418

4,826

Net profit

727

1,592

Retained earnings

7,145

6,418

Proposal of the Board of Directors

for the appropriation of retained earnings

2020

2019

Proposal of the

Proposal of the

Board of Directors

Board of Directors

in CHF 1,000

in CHF 1,000

To be carried forward

7,145

6,418

Retained earnings

7,145

6,418

25

Retained earnings will be proposed to the Annual General Meeting

Multi­year Overview Elma Group

2020

2019

2018

2017

2016

Order income

153,288

158,994

148,626

143,201

144,777

Net sales

147,036

151,155

145,981

143,978

130,308

EBITDA

9,938

9,552

10,221

9,687

6,369

EBITA

6,555

6,408

7,236

6,951

3,525

EBIT

6,555

6,408

7,236

6,951

3,525

Net profit

5,584

5,111

5,613

3,009

2,335

in % of average equity (ROE)

13.5

13.5

16.9

10.3

8.8

Depreciation of tangible assets

3,258

3,057

2,780

2,517

2,563

Amortization of intangible assets

126

87

204

219

281

Investments in tangible assets

1,872

14,175

2,448

3,166

3,078

Investments in intangible assets

1,348

44

1

86

138

Cash flow from operating activities

10,326

7,774

5,713

4,815

-1,063

Cash flow from investment activities

-2,919

-14,206

-2,393

-3,186

-3,179

Free cash flow

7,407

-6,432

3,320

1,629

-4,242

Cash flow from financing activities

-3,713

6,837

-3,823

911

1,619

Non-current assets

27,439

28,886

18,387

19,395

19,923

thereof tangible assets

23,426

26,131

15,469

15,908

15,208

Current assets

64,364

65,184

63,445

66,164

56,865

thereof cash and cash equivalents

10,619

7,223

6,905

7,416

4,874

Balance sheet total

91,803

94,070

81,832

85,559

76,788

Equity

42,591

40,071

35,865

30,460

27,755

in % of balance sheet total

46.4

42.6

43.8

35.6

36.1

Non-current liabilities

21,823

23,797

19,013

20,792

22,505

Current liabilities

27,389

30,201

26,954

34,307

26,528

Total financial liabilities

27,502

31,209

24,383

28,216

27,336

Net financial debts (financial liabilities

less cash balances)

16,883

23,986

17,478

20,800

22,462

ROCE (EBIT/Capital Employed) in %

10.2

10.0

13.2

13.6

7.0

Indebtedness factor (net interest-bearing

liabilities/EBITDA)

1.7

2.5

1.7

2.1

3.5

Headcount (FTE) end year

778

773

766

735

720

Headcount (FTE) average

772

773

751

725

715

Net sales per employee (average)

191

196

194

198

182

26

Alternative Performance Measures

Order Income

The order income includes deliveries within the next six months. Call orders are only disclosed if the partial delivery is scheduled within the next six months

EBITDA (Earnings before Interest, Income Taxes, Depreciation and Amortization)

Earnings before Interest, Income Taxes as well as Depreciation and Amortization on fixed assets and intangible assets. In 2020, the depreciation amounted to a total of CHF 3.3 million (previous year: CHF 3.1 million)

EBITA (Earnings before Interest, Income Taxes and Amortization)

Earnings before Interest, Income Taxes and Amortization on intangible assets

EBIT (Earnings before Interest and Income Taxes)

Operating result, i.e. net sales less cost of goods sold, sales and administrative expenses as well as other operating expenses plus other operating in-come before financial result, non-operating result and income taxes

ROE (Return on Equity)

Return on equity, i.e. net profit divided by the average equity

Net debts

Short-term and long-term interest-bearing financial liabilities minus cash

Free Cash Flow

Cash flow from operating activities minus cash flow from investing activities

ROCE (Return on capital employed)

EBIT/(capital employed [=total assets - current liabilities]) in%

Net debts ratio

Net financial debts /EBITDA

Adjusted for currency effects

Order income and net sales are also shown adjusted for currency effects. Foreign currency effects are adjusted by converting orders and net sales for the current reporting period using the average exchange rates for the same period in the previous year

Stock market capitalization

The stock market capitalization is equivalent to the share closing price, multiplied by the number of shares on the reporting date

Group Companies

Switzerland

France

Singapore

Elma Electronic AG

Elma Electronic France SASU

Elma Asia Pacific Pte. Ltd.

Hofstrasse 93

Parc des Forges

8 Ubi Road 2

8620 Wetzikon

16 rue Hannah Arendt

#07-14 Zervex Building

Phone +41 44 933 41 11

67200 Strasbourg

Singapore 408538

sales@elma.ch

Phone +33 437 06 21 10

Phone +65 6479 8552

sales@elma-electronic.fr

salesap@elma.com.sg

Romania

Elma Electronic Romania SRL

Great Britain

India

Chi¸soda, DN 59 Km 8 + 550 m

Elma Electronic UK Ltd.

Elma Electronic Private Ltd.

307221 Jude¸t Timi¸s

Solutions House

Green Arch, 1st Main

Phone +40 374 480 400

Fraser Road

3rd Phase, J.P. Nagar

info@elma.ro

Priory Business Park

Bangalore 560078

Bedford MK44 3BF

Phone +91 080 6772 4200

Germany

Phone +44 1234 838 822

idc@elma.com

Elma Electronic GmbH

sales@elma.co.uk

Stuttgarter Strasse 11

USA

75179 Pforzheim

China

Headquarters

Phone +49 7231 97 340

Elma Electronic Technology

Elma Electronic Inc.

info@elma.de

(Shanghai) Co., Ltd.

44350 Grimmer Blvd.

Building #11, No 198,

Fremont, CA 94538

Israel

Chang Jian Road

Phone +1 510 656 3400

Elma Electronic Israel Ltd.

Bao Shan District

sales@elma.com

34, Modi'in St.

Shanghai 200949

I.Z. Sgula

Phone +8621 586 65 908

Optima Stantron Corp.

Petach-Tikva 4927177

sales@elmachina.com

2305 New Point Parkway

Phone +972 3 930 5025

Lawrenceville, GA 30043

sales@elma.co.il

Phone +1 770 496 4000

sales@optimastantron.com

28

Executive Report 2020 Elma Group

Contact

Elma Electronic AG Hofstrasse 93 CH-8620 Wetzikon Phone +41 933 41 11www.elma.com

Investor Relations Edwin Wild, CFO

Phone +41 44 933 42 45

Shareholders' Register Jasmine Loetscher Phone +41 44 933 42 91share.register@elma.ch

Agenda

April 15, 2021

Annual General Meeting

August 11, 2021

Half-Year Report at June 30

Annual Report 2020

The Annual Report 2020 is available as full report or as an executive summary. The full version of the Annual Report is available in German language only and is binding. It is only online. The Executive Report is available in German and English. Both documents can be downloaded from our website athttp://www.elma.com/en/investors/reports/

Explanation of statements about the future

This Annual Report contains statements about what the future might hold for Elma, and these are of course subject to uncertainties and risks. The reader must therefore bear in mind that statements of this kind may ultimately be at variance to actual events occurring at a future date. These statements about future prospects take the form of projections of potential developments. All statements about the future are based on data available to Elma at the time this Annual Report was being produced. Elma does not accept any obliga-tion for updating the statements about future prospects contained in this Annual Report to reflect new information, future events or similar developments.

Impressum

Publisher Elma Electronic AG, Wetzikon,www.elma.com

Concept and implementation Linkgroup AG, Zurich,www.linkgroup.chTolxdorff Eicher, Horgen, www.tolxdorffeicher.ch

Editorial Elma Electronic AG, Wetzikon,www.elma.com

© Elma Electronic AG 2021

www.elma.com

Disclaimer

Elma Electronic AG published this content on 10 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 March 2021 20:30:06 UTC.


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Financials
Sales 2020 147 M 164 M 164 M
Net income 2020 5,58 M 6,22 M 6,22 M
Net Debt 2020 16,9 M 18,8 M 18,8 M
P/E ratio 2020 20,1x
Yield 2020 -
Capitalization 142 M 158 M 158 M
EV / Sales 2019 0,82x
EV / Sales 2020 0,88x
Nbr of Employees 778
Free-Float 10,3%
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NameTitle
Fred Ruegg Chief Executive Officer
Edwin Wild Chief Financial Officer
Martin Wipfli Chairman-Supervisory Board
Walter Häusermann Member-Supervisory Board
Rudolf Wilhelm Weber Member-Supervisory Board
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