INTERROLL ANNUAL REPORTreports.huginonline.com/902899/117575.pdf · Interroll Polska Sp.z.o.o....

I N T E R R O L L A N N U A L R E P O R T

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Interroll is one of the world’s leading

suppliers of components and subsystems

for materials handling, conveyor technology,

and automation.

Under the umbrella of a strategic

holding company located in S. Antonino,

Switzerland, Interroll’s four global business

units are responsible for managing the

Group’s international activities, based on

an incisive strategy in terms of market and

product positioning.

Within the Components segment,

the business units “Drives & Rollers” and

“Bulk Handling” mainly focus on assisting

regional engineering companies and origi-

nal equipment manufacturers. The business

units “Automation” and “Dynamic Storage”,

which operate in the Subsystems segment,

are responsible for system integrators,

end-users and multinational corporations.

Interroll was founded in 1959 and

is listed on Switzerland’s SWX stock

exchange. The company employs roughly

1200 people in 27 companies worldwide.

www.interroll.com

www.interroll.com/ir (Investor Relations)

Key figures of the Interroll Group and

Information for investors, see overleaf.

Interroll Holding AGZona IndustrialeCH-6592 S. Antonino · SwitzerlandTel. +4191 850 25 25Fax +41 91 850 25 05www.interroll.comwww.interroll.com/ir (Investor Relations)

Contact: Paul ZumbühlCEOTel. +41 91 850 25 [email protected]

Concept and coordination:Interroll Holding AG, Investor Relations

Graphic design:Atelier Oyen, D-Wermelskirchen

DTP:Reprosatz Neumann GmbHD-Remscheid

The Annual Report 2002 was translatedfrom the German original version.

Der Geschäftsbericht 2002 liegt auch in der deutschen Originalfassung vor.

K E Y F I G U R E S O F T H E I N T E R R O L L G R O U P

2002 2001 2000 1999

Interroll Group consolidated

Net Sales Mio. CHF 202.8 224.3 229.4 214.6Change % –9.6 –2.2 6.9 14.8

EBITDA Mio. CHF 24.3 22.0 21.3 19.9Change % 10.1 3.3 7.0 –3.9in % of Net Sales % 12.0 9.8 9.3 9.3

EBITA Mio. CHF 12.7 12.3 13.3 12.1Change % 3.0 –7.5 9.9 – 6.9in % of Net Sales % 6.3 5.5 5.8 5.6

EBIT Mio. CHF 11.6 11.2 13.1 12.1Change % 3.7 –15.0 8.2 –6.9in % of Net Sales % 5.7 5.0 5.7 5.6

Operating Cash Flow Mio. CHF 26.4 15.2 21.5 16.3Change % 74.2 –29.5 31.9 10.9in % of Net Sales % 13.0 6.8 9.4 7.6

Free Cash Flow Mio. CHF 0.4 7.4 1.2 1.5in % of Net Sales % 0.2 3.3 0.5 0.7

Net Profit Mio. CHF 5.7 5.2 2.3 6.7Change % 10.7 126.0 –65.7 –15.2in % of Net Sales % 2.8 2.3 1.0 3.1in % average shareholders’ equity (ROE) % 8.9 7.8 3.3 9.4

Number of employees (year end) 1189 1080 1140 1071Number of employees (average) 1054 1105 1089 1090

Net Sales per employee TCHF 192.0 203.0 210.7 196.9

Investments in tangibleand intangible assets Mio. CHF 6.4 9.8 10.1 16.6

Total Assets Mio. CHF 191.3 173.4 187.2 182.4

Shareholders’ Equity Mio. CHF 63.0 64.9 67.5 73.6in % of Total Assets % 32.9 37.4 36.1 40.4

Indebtedness Factor 2.20 3.63 2.68 2.98

2002 2001 2000 1999

Number of registered shares(par value CHF 50, until 1996 CHF 500)issued 31st December 854 000 854 000 854 000 854 000

Number of registered shares(par value CHF 50)average outstanding 788 463 824 667 846 982 851150

Market price (high/low) CHF 128/79 160/94 230/133 171/135Market price 31st December CHF 98 100 140 156Market capital 31st December Mio CHF 83.7 85.4 119.6 133.2

Operating profit per share outstanding CHF 14.7 13.6 15.5 14.2Operating cash flow per share outstanding CHF 33.5 18.4 25.4 19.2Net profit per share outstanding CHF 7.3 6.3 2.7 7.9Shareholders’ equity per share outstanding CHF 81.0 80.7 79.0 86.2

Dividend per share CHF 2.50* 2.50 2.50 2.50P/E Ratio 31st December Ratio 13.5 16.0 51.6 19.8

Significant shareholders (voting rights):D. Specht and family % 13.68 13.66 13.66 12.58B. Ghisalberti/E. Moreschi and family % 11.21 11.68 11.68 11.68H. vom Stein and family % 12.58 12.58 12.58 12.58N. Axmann and family % 10.10 – – –OZ Holding AG % – 9.53 9.53 9.53Other/Public (incl. own shares) % 52.43 52.55 52.55 53.63TOTAL % 100.00 100.00 100.00 100.00

*Proposed by the Board of Directors for the AGM June 6, 2003.

Interroll Share Price January, 1st 2002 – December, 31st 2002 (versus SPI Small Caps/adjusted)

I N F O R M A T I O N F O R I N V E S T O R S

130 +18.18%© Swissquote

100

75

0.00%

–31.82%Jan 02 Mar 02 May 02 Jul 02 Sep 02 Nov 02

Interroll

SPI Small Caps

The shares of Interroll Holding AG have been listed at the Swiss Exchange SWX since

June 5th, 1997 (Investdata: INRN; Reuters; INRn.S; Security number: 637,289).

3 THE HIGHLIGHTS OF 2002

5 REPORT OF THE BOARD OF DIRECTORS

AND COMPANY MANAGEMENT

11 REVIEW OF THE F INANCIAL YEAR

11 PERFORMANCE BY SEGMENT

17 REGIONAL OVERVIEW

25 CORPORATE GOVERNANCE

33 FINANCIAL REPORT

35 CONSOLIDATED F INANCIAL STATEMENTS

OF THE INTERROLL GROUP

70 FINANCIAL STATEMENTS OF INTERROLL HOLDING LTD . ,

S . ANTONINO

C O N T E N T S

Belt curve, airport baggage handling

3

T H E H I G H L I G H T S O F 2 0 0 2

January Interroll Dynamic Storage North America wins design approval for modules installed in the first

two fully automatic warehouses for Wal-Mart, the world's largest retailer.

February Interroll South Africa secures its biggest ever project for 9800 dynamic pallet places for the

logistics service provider Tibbett & Britten.

March Introduction of a new stock option scheme for senior management.

April Marel of Iceland, leading manufacturer of high-tech food processing equipment, selects

Interroll's “intelligent” Belt Drive as a key component for its next-generation IPM 3 “Laser Eye”

portioning machine.

May Dynamic Storage holds a major conference for leading international trade journals at its head

office in La Roche sur Yon, France.

June Interroll strengthens its strategic presence in China with the new facility

Interroll (Suzhou) Co. Ltd. located near Shanghai.

July Interroll intensifies the penetration of the Eastern markets by opening the sales office

Interroll Polska Sp.z.o.o. located in Warschau, Poland.

August Interroll Automation wins one of its largest orders for Conveyor Lines for the pharmaceutical

industry in Poland.

September Interroll announces considerable increases in the EBITDA margin and Free Cash Flow for the

first half of 2002.

October Numerous representatives of major European trade journals visit the Interroll Press Meeting at

the new DPD parcel distribution centre in Hückelhoven and at the manufacturing plant of

Drives & Rollers in Wermelskirchen, Germany.

November Dynamic Storage is entrusted with the largest project in the history of Interroll of 22 000 pallet

places for a food distribution centre.

December Interroll announces the acquisition of the Axmann companies in Sinsheim, Germany, and

Jeffersonville/Indiana, USA.

Spiral curve, parcel distribution

creation of market and customer-oriented

business units. We have come to appreciate

this insightful strategy. Indeed, our perspi-

cacity within this area has allowed us to

master the current vagaries of the economy.

Aided by this approach, we were able to

accelerate our business activities and

expand further.

As an initial step, we finished pooling

the resources of our manufacturing sites by

creating competence centres for one to two

product lines; we also pressed ahead with

efforts to establish a standardised product

offering. As a result, we succeeded in raising

Dear Shareholder,

Dear Business Associate!

Against the backdrop of economic

volatility both in Europe and the United

States, the financial year 2002 is probably

best summed up as one of renewal. The two

years preceding the period under review

were dedicated to the realignment of the

Interroll Group, the main focus being on the

productivity and margins. The agent struc-

ture was eliminated, with the express pur-

pose of enhancing our current interfaces.

We also bolstered Interroll’s presence

within the burgeoning markets of Poland

and China by establishing new branch

offices in these countries over the course

of 2002.

Finally, towards the end of the year we

made another key strategic move: following

a phase of thorough analysis spanning a

period of roughly two years, Interroll

acquired the two Axmann enterprises in

Sinsheim (near Heidelberg), Germany, and

in Jeffersonville, Indiana/USA. Supported

by Axmann’s innovative product range and

solid expertise, the Interroll Group looks set

to strengthen its market position within the

area of modules and subsystems designed

for the internal handling of unit, i.e. non-bulk,

goods. Thus, Interroll has succeeded in

rapidly capturing a greater share of this

highly lucrative growth market. Moreover,

the Group has enhanced its position as a

truly global player within the international

business arena.

In the financial year under review, our

sales-related activities benefited from com-

prehensive marketing efforts. Interroll

showcased products, applications, and new

concepts at fifteen of the world’s leading

trade fairs. The Company extended its

product documentation and relaunched its

customer magazine. Furthermore, the

business units Drives & Rollers and

Dynamic Storage hosted international open

days for the press, which included tours of

Interroll manufacturing sites and facilities

developed as part of key account projects,

5

R E P O R T O F T H E B O A R D O F D I R E C T O R SA N D C O M P A N Y M A N A G E M E N T

Dieter SpechtChairman of the Board of Directors

Paul ZumbühlCEO

such as the distribution centre of a well-

known express parcel service company.

Within the area of customer service, our

main focus was on achieving faster delivery

via a single freight company, as well as on

implementing online order tracking and a

24/7 support service. In terms of target

groups, we concentrated on food proces-

sors and distributors, mail and parcel

service enterprises, distribution companies,

as well as suppliers of security and airport

technology.

Overall, Interroll displayed a stable

and solid earnings performance in the

financial year 2002, achieving increases in

profits and margins.

The Interroll Group generated sales of

CHF 202.8 million in the year under review,

compared with CHF 224.3 million in 2001.

Almost half of the decline in revenue (4%

calculated in local currency) is attributable

to the strength of the Swiss franc against

the respective local currencies. Further-

more, effective from January 1, 2002,

Interroll disposed of its 51 per cent interest

in a joint venture established in South

America, thus deconsolidating this entity.

In addition, by eliminating less profitable

non-standard products, Interroll was forced

to accept a certain decline in sales revenue.

Earnings before interest, taxes,

depreciation, and amortisation (EBITDA), i.e.

operating profit, grew by CHF 2.2 million,

or 10.1%, in the financial year 2002, taking

this figure to a solid CHF 24.3 million.

Interroll’s EBITDA margin was significantly

improved from 9.8% in 2001 to 12% in

2002, an increase of 22.4%. Interroll also

recorded growth in terms of earnings

before interest and taxes (EBIT), up from

CHF 11.2 million in 2001 to CHF 11.6 mil-

lion in the financial year 2002. This was

accomplished in spite of changes to depre-

ciation and amortisation methods, which

resulted in additional charges of approx.

CHF 2.1 million. The EBIT margin grew by

14% to 5.7%.

Net profit increased from CHF 5.2

million to CHF 5.7 million year on year,

which equates to an improvement of 10.7%.

Interroll’s incisive cost reductions had a

significant impact in terms of improving the

company’s earnings performance. As was

the case in the previous year, Interroll yet

again reduced fixed costs by a substantial

margin in 2002, reining them back by

10 per cent to CHF 61.4 million. In addi-

tion, contribution margins improved as the

direct result of increased profitability and

streamlining of the company’s product

range.

Higher profitability and better man-

agement of net working capital resulted in

a tangible year-on-year increase in cash flow

from CHF 15.2 million to CHF 26.4 million

in 2002. The acquisition of Axmann was

financed in full by net cash from operating

activities.

6

Cash flow grows substantially

Net profit improves

Operating profit and margins increase

The financial year 2002

Lower interest rates and the repayment

of debt facilitated a 23% improvement in

financial result. Up until the acquisition of

Axmann towards the end of 2002, financial

resources were mainly used to repay long-

term borrowings. The deconsolidation of

Interroll’s joint venture in South America

also had a positive effect on net indebted-

ness. Net indebtedness increased by just

CHF 3.2 million relative to the beginning of

2002. Interroll’s equity ratio after acquisi-

tion amounted to 32.9%. The indebtedness

factor (net indebtedness in relation to cash

flow) improved yet again and currently

stands at 2.2.

Of the Interroll Group’s total revenue

of CHF 202.8 million, CHF 144.6 million

was attributable to the “Components” seg-

ment (business units “Drives & Rollers” and

“Bulk Handling”), while CHF 58.2 million

was generated by the “Subsystems” seg-

ment (business units “Dynamic Storage”

and “Automation”). EBITDA within the

Components segment amounted to

CHF 22.8 million, with a margin of 15.8%.

The Subsystems segment posted an

EBITDA figure of CHF 1.5 million, with a

margin of 2.6%. This result includes sub-

stantial capital expenditure related to the

start-up of Interroll’s “Automation” business

unit. Sluggish project-related activities on

the part of our customers proved detrimen-

tal to revenues generated within the areas of

Bulk Handling and Automation.

In Europe, sales revenue amounted to

CHF 135.9 million in 2002, compared

with CHF 151.7 million in 2001. Earnings

7Revenue by segment

Regional overview

Net Sales in CHFm

214.

6

224.

3

202.

8

050

100150

200250

229.

4

1999 2000 2001 2002

EBITDA in CHFm

19.9

21.3

22.0

24.3

0

5

10

1520

25

1999 2000 2001 2002

EBITDA in % of Net Sales

1999 2000 2001 2002

9.3

9.8

12.0

0

5

10

15

9.3

before interest and taxes (EBIT) grew by

22.8% year on year to CHF 8.1 million.

In America, sales revenue stood at

CHF 56.7 million, approximately 10%

below the figure posted in 2001; two thirds

of this decline was attributable to the weak-

ness of the US dollar against the Swiss

franc. Earnings before interest and taxes

(EBIT) amounted to CHF 3.1 million.

Positive revenue growth in Asia: net

sales increased by 18% in the year under

review, up from CHF 8.7 million to

CHF 10.2 million. The EBIT margin

was 4.3%.

8 Operating Cash Flow in CHFm

1999 2000 2001 2002

16.3

21.5

15.2

26.4

05

101520

3025

Operating Cash Flow in %of Net Sales

1999 2000 2001 2002

7.6

9.4

6.8

13.0

0

5

10

15

Net Profit in CHFm

1999 2000 2001 2002

6.7

2.3

5.2

5.7

0

2

4

6

8

Investments in CHFm

1999 2000 2001 200216

.6

10.1

9.8

0

5

10

15

20

6.4

*incl. acquisition Axmann

Indebtedness Factor(Net Debts/Cash Flow)

1999 2000 2001 2002

2.98

0

4

2.68

3.63

2.20

*

3

2

1

Dividend

Operating Profit (EBIT) in CHFm

1999 2000 2001 2002

12.1

13.1

11.2

11.6

0

5

10

15

Operating Profit (EBIT) in % of Net Sales

1999 2000 2001 2002

5.6

5.7

5.0

5.7

0123456

The Board of Directors will be putting

forward a proposal to the General Meeting

of Shareholders on June 6, 2003, to distri-

bute a dividend of CHF 2.50 per registered

share, unchanged from the previous year.

In line with our corporate structure of

business units, we performed an executive

reshuffle within Group management.

In 2002 CEO Paul Zumbühl transferred his

managerial responsibilities within the area

of Bulk Handling to Wolfgang Gresch, the

managing director at Interroll Förder- und

Antriebstechnik in Aschersleben, Germany.

The vacant role of managing director of

“Drives & Rollers” has been filled by Dieter

Menne, effective from January 1, 2003.

Dr.-Ing. Martin Daniel, former managing

director of the Automation business unit

resigned at the end of 2002. Following the

acquisition of Axmann, our Automation busi-

ness unit, based in Sinsheim (Germany),

has grown substantially. This area is now

headed by Dr.-Ing. Heinrich Droste, the

former managing director of Axmann.

Without doubt, 2003 will be a year

of consolidation for Interroll. Our main fo-

cus of attention will be on further strength-

ening profitability and fully integrating, by

the end of the year, the two Axmann compa-

nies in Germany and the United States.

The difficult economic conditions witnessed

in the past few months look set to continue

in the financial year 2003.

In the year under review, Interroll imple-

mented a number of decisive product

innovations, with the express purpose of

expanding the Group’s leading position in

key markets such as food processing and

distribution or mail and parcel services.

Supported by an extended portfolio of

niche products within our Automation

business unit, we are confident that this

segment will capture the imagination of

the market and produce a palpable

increase in business.

Our clearly defined product and pricing

policy, coupled with substantially improved

productivity and a lean corporate structure,

form the basis for healthy growth – taking

into account the current economic climate

and currency-related effects. Interroll is likely

to benefit from an exponential increase in

business as soon as the economy picks up

again.

We would like to take this oppor-

tunity to express our gratitude to all

employees – for their committed contribu-

tions in 2002. We would also like to wel-

come our new colleagues from Axmann to

the Interroll Group.

Thanks to the dedication shown by every

member of our team, Interroll can look

back on a solid financial year. Committed to

excellence, we are confident of meeting the

challenges that lie before us.

Dieter Specht

Chairman of the Board of Directors

Paul Zumbühl

Chief Executive Officer

9

Outlook

Group Management

Committed to excellence

Belt conveyor, injection molding

Key Figures for theComponents segment, in CHFm 2002 2001

Net Sales 144.6 157.7Change in % –8.3 –8.0

Order Income 142.6 152.7

EBITDA 22.8 20.5Change in % 11.2 –% of Net Sales 15.8 13.0

Operating Profit (EBIT) 14.4 13.1% of Net Sales 10.0 8.3

Investments 4.4 5.7

EmployeesEnd of period 726 819Period average 748 817

Despite the general economic

malaise and a year-on-year decline in net

sales of 9.6%, the Interroll Group succeeded

in bolstering its solid earnings performance

in the financial year 2002. Profits and

margins have continued to grow, while fixed

costs were pushed back yet again.

Of the total revenue of

CHF 202.8 million generated in the finan-

cial year 2002, CHF 144.6 million (2001:

CHF 157.7 million) was attributable to the

“Components” segment (business units

“Drives & Rollers” and “Bulk Handling”).

Expressed in local currency, sales revenue

declined by 3.5%. Earnings before interest,

taxes, depreciation, and amortisation

(EBITDA) within the Components segment

amounted to CHF 22.8 million, which is

over 11% higher than the 2001 EBITDA

figure of CHF 20.5 million.

R E V I E W O F T H E F I N A N C I A L Y E A R

11

Performance by segment:Components

Net Sales of the Components segment 2002,by region

AmericaEurope Asia

71%

5%24%

The Drives & Rollers business unit

was able to secure a number of lucrative

contracts, including projects of customers

wishing to outsource their roller manufac-

turing activities. Another ground-breaking

project: the Interroll “Intelligent” Belt Drive.

This Belt Drive is equipped with an integral

encoder for high-precision, slip-free posi-

tioning of the belt in state-of-the-art laser-

controlled food processing equipment. This

highly innovative component for conveyor

units is the perfect solution not only for the

food industry but also for the packaging

sector or applications using dynamic

weighing. The newly developed narrow belt

drive for particularly narrow conveyor belts

is also tailored to the specific requirements

of our customers. This concept was pre-

sented to the public at the CeMat trade fair

in Hannover (Germany) in the year under

review. Overall, productivity levels within

the Drives & Rollers business units were in-

creased substantially, particularly in Europe.

In the US, sales revenue and earnings

performance fell short of our expectations.

In order to improve our service offering

for customers with bulk handling activities,

we transferred our Bulk Handling to

separate entities in England, Spain, and

Thailand.

Owing to tentative investment behaviour

within the area of bulk handling (coal,

cement, gravel, etc.), our Bulk Handling

business unit was faced with a noticeable

decline in sales revenue. Having said this,

we were able to renew a key multi-year

contract with one of the world’s premier

operators of a lignite mining unit.

As part of our increased focus on the

more lucrative market of non-bulk conveyor

technology, we continued our negotiations

with the long-standing Interroll partner

Rulmeca, Italy: The decislan about a possi-

ble sale of our bulk handling operations to

Rulmeca is still pending.

12

Drives & Rollers Bulk Handling

Of the total revenue of

CHF 202.8 million generated by the

Interroll Group in the financial year 2002,

CHF 58.2 million (2001: CHF 66.5 million)

was attributable to the “Subsystems” seg-

ment (business units “Dynamic Storage”

and “Automation”). Roughly half of the

decline in revenue was the result of foreign

currency translation.

The Dynamic Storage business unit

recorded a 17% increase in sales revenue

from its activities in America, as well as

tangible growth in terms of market share.

In the US and Mexico, we secured major

project-related contracts for distribution

centres. In Europe, Dynamic Storage con-

tinued to regain its strength in the second

six months of 2002 following a difficult first

half. Our strategic realignment, focusing on

end-customer markets, and our enhanced

levels of productivity proved to be particu-

larly effective within this respect.

In November, our Dynamic Storage busi-

ness unit secured the largest contract in

Interroll’s history. The project comprises

22 000 dynamic pallet positions for the

merchandise distribution centre of a

company operating in the food industry.

13

Performance by segment:Subsystems

Dynamic Storage

Corporate integration of Sipa in

La Roche sur Yon, France, was completed

in the financial year unde r review; the

product lines have now been standardised.

To increase productivity, the manufacture

of polymeric components for dynamic

flow storage modules was transferred to

Interroll’s injection moulding plant in

S. Antonino, Switzerland.

In May 2002, Dynamic Storage held a

major press conference at its head office in

La Roche sur Yon, France, thus enhancing

its media relations with the European trade

press.

Key Figures for theSubsystems segment, in CHFm 2002 2001

Net Sales 58.2 66.5Change in % –12.4 14.8

Order Income 67.5 56.9

EBITDA 1.5 1.5% of Net Sales 2.6 2.3Change in % 0 –

Operating Profit (EBIT) –2.8 – 1.9% of Net Sales –4.8 –2.9

Investments 2.0 4.1

EmployeesEnd of period 463 261Period average 306 288

14

AmericaEurope Asia

Net Sales of the Subsystems segment 2002,by regions

57%

37 %

6%

Established at the beginning of 2001,

the Automation business unit responsible

for the development, production, and sale

of subsystems and modules for handling

non-bulk goods, benefited from consider-

able investments as part of its start-up activ-

ities. Following the acquisition of Axmann,

Interroll has now reached the critical mass

required and has further strengthened its

position within a high-growth market that it

had failed to penetrate fully prior to the

acquisition. The level of orders in hand is

particularly high, thus underlining the supe-

rior quality and unique selling proposition

of this product offering. Particularly in the

United States, the business unit managed

to secure a number of large-scale projects

to be carried out over a period of several

years. All Axmann products are now being

marketed via Interroll’s global network.

Established in 1974 by Dipl.-Ing.

Norbert Axmann, the enterprise employed

about 100 people in 2002 at its Sinsheim

location. Its workforce in the United States

consisted of 30 employees in the period

under review. Sales revenue amounted to

approx. CHF 30 million in 2002, with an

EBIT margin of over 10 %.

15

In its second year after start-up, our

Automation business unit managed to

increase its sales revenue generated in

Europe. The level of incoming orders from

Eastern Europe was particularly impressive.

Our product portfolio consisting of

modules and subsystems with 24 V

technology for automation lines and zero-

pressure accumulation conveyor lines

benefited from new rollouts in the course of

2002. Moreover, our acquisition of the two

Axmann enterprises in Sinsheim (Germany)

and Jeffersonville (Indiana/USA) has

allowed us to extend the Group’s product

range, a move that is of immense strategic

importance. The two Axmann enterprises

will strengthen the Interroll Group’s market

position in the area of modules and subsys-

tems designed for the internal handling of

packaged, i.e. non-bulk, goods. Our new

product range includes innovative niche

products such as curved units for conveyor

belts, sorters for rapid sorting and distribu-

tion, conveyor modules for plastics manu-

facturing and cleaning technology, as well

as other belt conveyor units. A number of

these products are protected by worldwide

patents.

Automation

Axmann acquisition

Spiral curve, distribution

Europe recorded sales revenues of

CHF 135.9 million in the financial year

2002. Expressed in local currency, this

corresponds to a 5% decline, while in the

reporting currency used for consolidation

the decline amounts to 10.4%. Sales rev-

enue was affected, in particular, by sluggish

investment behaviour as regards clients

operating in the area of bulk handling.

To a large extent, the business units

Drives & Rollers and Dynamic Storage were

able to stabilise their revenue performance.

In Germany, Interroll captured additional

market share. Eastern Europe also recorded

a solid increase in revenue. This encourag-

ing performance bears testimony to the

outstanding efforts of Interroll’s new branch

office in Poland. France and Scandinavia,

on the other hand, fell short of our expec-

tations. On the whole, our position within

the European market improved – also as

a direct result of increased marketing

activities.

17

Regional overview Net Sales Interroll Group 2002,by regions

AmericaEurope Asia

67%

28%5%

Net Sales Europe 2002,by Interroll Business Units

Drives & Rollers Dynamic StorageBulk Handling Automation

62%

19% 6%

13%

Europe In America, sales revenue stood at

CHF 56.7 million in 2002, compared with

CHF 63.9 million in 2001. This decline is

mainly the result of the weaker US and

Canadian dollar against the Swiss franc, the

latter having appreciated by more than

10%. Indeed, expressed in local currency,

sales revenue actually rose slightly, and the

profit ratio also increased.

Our new Dynamic Storage plant in

Canada deserves particular praise, having

improved its marketing activities and in-

creased profitability. Against the backdrop

of difficult trading conditions, our US opera-

tions were forced to downsize their capacity

structures. Interroll recorded double-digit

growth within the market of security tech-

nology (e.g. Belt Drives for X-ray machines

for airport baggage screening).

America

Compared with the same period last

year, our operations in Asia were able to

increase their revenues by an encouraging

18% to CHF 10.2 million in the financial

year 2002.

In June, Interroll strengthened its

strategic presence in Asia. Located at the

Suzhou Industrial Park, 80 km west of

Shanghai, Interroll (Suzhou) Co. Ltd. was

established specifically to support multina-

tional end customers and systems integra-

tors operating in China. Our Chinese unit

specialises in the assembly of standard

components such as Interroll Belt Drives

for supermarket checkouts or check-in

desks at airports, as well as conveyor rollers.

Within the area of subsystems, the enter-

prise is currently focusing on the manufac-

ture and assembly of modules for dynamic

pallet and carton flow systems for the

Chinese and other Asian markets (including

Japan). Our activities in China are designed

to extend Interroll’s strategic partnerships

with global players, while at the same time

enhancing our overall product and service

offering within the premium segment.

The Thai market continued to develop

favourably in the financial year 2002; this

positive trend was witnessed in all of our

business units for components and sub-

systems. Some of our main projects in this

region were the dynamic storage systems

implemented for a multinational client in

the area of food and beverage distribution

and for a major supplier to the automotive

and motorcycle industry.

18

Asia

Net Sales America 2002,by Interroll Business Units


51%5%

6%

38%

Following the acquisition of Axmann,

Interroll Automation has been able to

penetrate the modules and subsystems

market in the US.

In 2002, Interroll’s start-up sales office

in Japan spearheaded further campaigns

to penetrate this highly competitive market.

Despite substantial market-entry costs,

Interroll was able to establish itself in the

field of dynamic flow storage modules.

The Asian markets continue to have

great potential in terms of future growth,

and therefore Interroll is closely monitoring

the competitive environment in this region

in order to identify market trends and act

accordingly. As part of our incisive market-

ing programme for 2003, we intend to

participate in trade fairs staged in China

and to conduct a comprehensive sales

seminar in Asia.

19

Net Sales Asia 2002,by Interroll Business Units


48%

6%23%

23%

Emerging MarketsWe have decided to dispense with

our reports on “Emerging Markets” as a

separate sales region. Following the dis-

posal of our joint venture in South America

and its deconsolidation as of January 1,

2002, the “Emerging Markets” segment

now only covers Interroll SA (PTY) Ltd. in

South Africa as well as non-consolidated

agents and franchisees. The financial results

of Interroll South Africa have been included

in the report on “Europe”.

Effective from January 1, 2003, the

Interroll Group increased its interest in the

South African entity from 60% to 70%.

In the financial year 2002, Interroll South

Africa doubled its revenues thanks to a

number of large-scale projects, including a

pallet flow and a carton flow storage system

for one of South Africa’s leading supermar-

ket chains as well as a pallet flow storage

system for another major distributor.

Curve table for turns in tight spaces

In the course of the financial year

2002, the Interroll Group employed 1054

people on average: 733 in Europe, 251 in

America, and 70 in Asia.

In the year under review, we once again

carried out a number of product-related

training programmes, sales seminars,

and specialist workshops. Committed to

supporting its team when it comes to the

advancement of knowledge, Interroll has

established targeted training programmes

for all members of staff.

In order to enhance customer service

and streamline internal interfaces, Interroll

Drives & Rollers entrusted the three

product lines Belt Drives for conveyor belts,

Roller Drives (24 V roller drives for zero-

pressure accumulation conveyor applica-

tions), and Conveyor Rollers to individual

product managers who have global respon-

sibility for these products.

As an organisation operating a truly

global network, the Interroll Group is home

to many different nationalities, languages,

and cultures. Interroll is based on flat

hierarchies and lean structures when it

comes to decision-making processes.

We promote and demand openness and

honesty, professional integrity, and perfor-

mance throughout the Group.

21

A dedicated team

Employees (average)

1999 2000 2001 2002

1089

1105

1000

1090

1054

1025

1050

1075

1100

1125

AmericaEurope Asia

Employees(average, by regions)

70%

6%24%

Having focused our product portfolio

on the two core areas of components and

subsystems for materials handling in the

last few years, we are now making a con-

certed effort to dominate the growth

markets of food processing and distri-

bution, airport facilities, mail and parcel

distribution systems, as well as electronics

(see “Key Markets” chart).

In the financial year 2002, Interroll

accelerated its development activities for

the above-mentioned markets, and we

rolled out a number of value-added product

innovations.

These technological innovations and next-

generation upgrades are designed to

provide our customers with a sustainable

competitive advantage. It goes without say-

ing that they are also aimed at propelling

our sales revenue and market share

onwards and upwards. Interroll is aware

of the importance that investors ascribe

to the innovatory prowess of a company.

Therefore, we are firmly committed to ex-

tending our position of “innovation leader”

within the Components and Subsystems

segments.


transformed one of its standard Belt Drives

into an “intelligent” component. This highly

innovative product plays a pivotal role in a

high-tech food portioning machine which is

able to cut fish, meat, and poultry with an

unmatched combination of speed and

precision – achieving the exact weight

specified.

Furthermore, we continued work on our

narrow belt drive for narrow conveyor belts

and presented this cutting-edge solution to

the trade press.


Dynamic Storage developed next-generation

speed controllers and separators for the

safe handling and removal of pallets.

22

Innovation and key markets

Example: distributioncentres and order

picking

Example: food industry

Food Mail Airports Automo-tive

suppliers

Pharma-ceuticals

Elec-tronics

Interroll Automation substantially im-

proved its product offering within the area

of automation lines. The diverse range of

transfer modules, for instance, was stream-

lined to create a standardised version.

The newly developed products include a lift

and two curve modules.

Following the acquisition of Axmann,

Interroll is able to provide a comprehensive

product and service portfolio for manufac-

turers of conveyor systems deployed in the

area of airport baggage handling, mail and

parcel distribution and sorting, as well as

food processing. The range offered includes

belt curves and cross belt sorters, as well as

other high-end modules and subsystems.

The postal sector, in particular letter

sorting, is considered to be another highly

attractive market for the Company.

Concepts and prototypes for high-speed

sorting equipment are already in the

pipeline.

The recent acquisition of Axmann has

strengthened Interroll’s position within the

subsystems market. What’s more, it has

also enhanced the level of synergy through-

out the entire Interroll Group, particularly as

a result of our focused marketing activities.

For example, a systems integrator responsi-

ble for planning and implementing a distri-

bution centre will now not only have access

to a high-tech Interroll dynamic storage

solution with rapid return on investment but

will also benefit from a single point of con-

tact for state-of-the-art modules for order

picking, e.g. high-performance sorters in

the distribution area. And there’s more:

customers can increase the productivity of

their unit-handling supply chains by intro-

ducing dynamic storage systems to

complement their conveyor facilities, thus

improving overall stockturn, or by adding

high-end pallet conveyors to their existing

storage system (see “Synergies” chart).

23

Interroll synergies –benefiting customers

worldwide

Example: airports, mail, parcels

Example: production lines

Key Markets

Assembly

Processing

Distribution

Service

Crea

tion

of V

alue

Synergies

DynamicStorage

Automation

Flow storage

Conveyor systems

Portioning machine with “intelligent” Interroll Belt Drive

C O R P O R A T E G O V E R N A N C E

25

O R G A N I S A T I O N

•Interroll (Schweiz) AG S. Antonino, CH

•Interroll (Schweiz) AG S. Antonino, CH

•Interroll CZ, s.r.o. Breclav, CZ•Interroll Fördertechnik GmbH Wermelskirchen, D•Interroll Nordic AS Hvidovre, DK

•Interroll SAS Dijon, F•Interroll Japan Co. Ltd. Tokyo, JPN

•Interroll Ltd. Corby, UK•Interroll Antriebstechnik GmbH Aschersleben, D

•Interroll Förder- und Antriebstechnik Aschersleben GmbH, Aschersleben, D

•Interroll JOKI A/S Hvidovre, DK•Interroll Engineering GmbH Wermelskirchen, D

•Interroll Bulk Handling Ltd. Corby, UK

•Interroll Engineering Ltd. Corby, UK

•Interroll España SA Barbera del Vallés, E

•Interroll Bulk Handling S.L. Barbera del Vallés, E

•Interroll Canada Ltd. Newmarket, CDN

•Interroll SAS La Roche sur Yon, F

•Interroll (Asia) Pte. Ltd. Singapur, SGP




•Interroll (Thailand) Co. Ltd. Samutprakarn, THA


•Interroll Corporation Wilmington NC, USA

•Interroll Corporation Wilmington NC, USA

•Interroll Axmann Automation LLC, Jeffersonville, USA

Components segment Subsystems segment

Drives & RollersUnit Handling

Headquarters: Wermelskirchen, D

Bulk HandlingBulk Handling

Headquarters: Aschersleben, D

Dynamic StorageWarehousing & Distribution

Headquarters: La Roche sur Yon, F

AutomationAutomation & Conveyor LinesHeadquarters: Sinsheim, D

BUSINESS UNITS

SALES AND PRODUCTION COMPANIES

BOARD OF DIRECTORS

STRATEGIC HOLDING

INTERROLL HOLDING AGHeadquarters: S. Antonino, CH

Corporate DevelopmentCorporate ITCorporate Communications

Corporate StrategyPortfolio ManagementCorporate Finance

As of 1st January 2003

•Interroll Canada Ltd. Newmarket, CDN


•Interroll Polska sp.z.o.o. Warsaw, PL

•Interroll AG S. Antonino, CH

•Interroll Axmann Automation GmbH Sinsheim, D

•Interroll (Suzhou) Co. Ltd. Suzhou, China

•Interroll SA (Proprietary) Ltd. Johannesburg, ZA

•Agenten, Franchisees








•Agenten, Franchisees •Agenten, Franchisees •Agenten, Franchisees

Sales companies

Production companies

Sales- and production companies


•Interroll Bulk Handling Co. Ltd. Samutprakarn, THA

•Interroll Japan Co. Ltd. Tokyo, JPN




The Interroll Group develops, manu-

factures, and markets components and

subsystems for the areas of material flow,

conveyor technology, and automation.

These activities are performed worldwide.

Four globally operating business units

are responsible for managing the activities

of the Group: “Drives & Rollers” and

“Bulk Handling” within the Components

segment, “Dynamic Storage” and

“Automation” within the Subsystems

segment. The entities included in the scope

of consolidation of the Interroll Group are

listed in the Notes to the Consolidated

Financial Statements (see page 43/44).

As part of the acquisition by Interroll

of Axmann in Sinsheim/Germany and in

Jeffersonville, Indiana/USA, at the end of the

financial year 2002, Mr. Norbert Axmann,

the founder of the aforementioned com-

pany, acquired 6.58% of the voting rights

effective from December 13, 2002; this

interest was increased to 10.10% as of

December 19, 2002.

As of December 19, 2002, OZ Holding AG,

Pfäffikon SZ, reduced its shareholding from

9.53% to below 5%. Details regarding

significant shareholdings are specified in

the Notes to the Balance Sheet of Interroll

Holding Ltd., S. Antonino (see page 75).

26

Von links

Significant ShareholdersGroup Structure andShareholders

From left: KARL RAHM Member, DIETER SPECHT Chairman, EMANUEL ARNI Member, MARCO GHISALBERTI Member, KURT RUDOLF Member, PROF. DR. HORST WILDEMANN Member

The share capital of Interroll Holding

AG comprises 854 000 fully paid registered

shares which are entitled to dividend pay-

ments and are furnished with voting rights.

The par value per share is CHF 50 (see

page 56). Registered shares of

nominees that exceed 2% of the shares

outstanding are only listed in the Register

as shares furnished with voting rights if the

nominee has provided written consent to

the possible disclosure of names, addresses,

and shareholdings of those persons for

whom the said nominee holds 0.5% or

more of the shares outstanding (in accor-

dance with Art. 6 of the Articles of Associa-

tion). There is a statutory group clause.

In December 2000 and March 2002,

the Company introduced stock option

programmes for senior members of

management (see page 57).

Dieter Specht: German, 1936.

Bachelor of Business Administration.

Co-founder of Interroll; Chief Executive

Officer Interroll 1959 to 1999;

shareholder as member of the founding

family Specht; member of the advisory

board of FAM GmbH, Magdeburg/Germany;

member of the Interroll board of directors

since 1959 and its chairman since 1989;

term of office until 2003.

Emanuel Arni: Swiss, 1938.

Masters Degree Oxford University, England.

Professional background: various manager-

ial positions in industry and finance. Current

responsibilities: chairman of the board of

directors of Becon AG, Zürich; advisory role

at Anova Holding AG, Glarus and Hurden,

Switzerland. Member of the Interroll board

of directors since 1997; term of office

until 2003; no longer available for

reappointment.

27

Capital Structure Board of Directors

PAUL ZUMBÜHLCEO

Marco Ghisalberti: Italian, 1961.

Laurea, Economia e Commercio, Istituto

Universitario di Bergamo, Italy; MBA,

Boston University, Boston, MA/USA.

Professional background: financial con-

troller Interroll Holding AG. Since 2000,

responsible for the subsidiaries of Rulmeca

(Precismeca); member of the board of

directors of Rulli Rulmeca S.p.A.; member

of the board of directors of Interroll Holding

AG; initial election in 1997; term of office

until 2003.

Karl A. Rahm, Swiss: 1946.

Dipl.-Ing. ETH. Professional background:

president of Sulzer Ruti Corp., Spartanburg

SC, USA; deputy director of UBS AG, Zürich.

Current responsibilities: chairman of the

board of directors of Kadi Holding AG,

Langenthal; member of the board of direc-

tors of Prebeton AG, Avenches, and presi-

dent of the municipal council of Stäfa; self-

employed consultant; member of the board

of directors of Interroll Holding AG; initial

election in 1989; term of office until 2003;

no longer available for reappointment.

Kurt Rudolf: Swiss, 1942.

Dipl.-Ing. ETH. Professional background:

managing director of LGZ Landis & Gyr

Zug AG; CEO Portescap Group, La Chaux-

de-Fonds. Current responsibilities: member

of the boards of directors of V-Zug, Belimed

Group, and Medela Group; chairman of the

board of directors of EP-Spray System SA,

Neuenburg, Switzerland; deputy chairman

of the board of directors of Interroll Holding

AG; initial election in 2001; term of office

until 2004.

Horst Wildemann: German, 1942.

University professor Dr. Dr.; full professor

of business studies, with main emphasis on

logistics, at Technische Universität München,

Munich/Germany. Current responsibilities:

member of the supervisory board of

Zeppelin GmbH, Friedrichshafen, and Siep-

mann Werke GmbH, Warstein; chairman of

the supervisory board of Egon Grosshaus

GmbH, Lennestadt, and chairman of the

management board of TCW GmbH, Munich,

Germany; member of the board of directors

of Interroll Holding AG; initial election in

1999; term of office until 2004.

28

DIETER MENNEManaging DirectorBusiness UnitDrives & Rollers

DR. HEINRICH DROSTEManaging DirectorBusiness UnitAutomation

DIDIER LERMITEManaging DirectorBusiness UnitDynamic Storage

JÜRG HÄUSERMANNCFO

The board of directors is composed of

at least six members. The shareholders

Dieter Specht, Hans vom Stein, and Bruna

Ghisalberti or their direct first-generation

descendants are entitled to have three

representatives (or one representative per

family) on the board of directors, insofar as

they hold at least 10% of the share capital.

The remaining members of the board of

directors are elected by the General

Meeting of Shareholders for a three-year

term of office. Re-election is permitted.

The chairman is elected by the board of

directors (Art. 19 & 20 of the Articles of

Association).

The board of directors is responsible

for strategic issues and performs high-

ranking duties as regards the management,

supervision, and control of the executive

members of the Interroll Group. Areas of

responsibility and control are specified with-

in a set of organisational regulations. At no

time has the board of directors performed

operational duties. The Company has estab-

lished committees for strategic issues,

compensation, and audits.

The board of directors convenes at

least fives times per annum. The board is

informed, on a monthly basis, about the

financial position, the financial perfor-

mance, liquidity, and cash flows of the

Company as well as the associated risks

(Management Information System).

The board of directors is responsible for

defining the control systems and the princi-

ples of financial accounting and reporting.

As part of its obligations within this area, it

relies on its own assessments and on the

work of the Company’s external auditor.

The governing bodies of Interroll

Holding AG are the General Meeting of

Shareholders, the Board of Directors, and

the Auditor.

29

Elections and Terms of Office

Information and ControlInstruments

Internal OrganisationalStructure and Definitionof Areas of Responsibility

Group Management

WOLFGANG GRESCHManaging DirectorBusiness Unit Bulk Handling

CARSTEN SPANGGAARDHead of International Affairs

INGO SPECHTHead of Corporate IT

LORENZ KÖHLERHead of Corporate Communications

Paul Zumbühl: Swiss, 1957.

CEO (Chief Executive Officer of Interroll’s

Group Management) since January 1,

2000. Dipl-Ing., MBA (University of Applied,

Sciences of Berne), Swiss federal marketing

manager diploma, Advanced Executive

Management Program at Kellogg Business

School of Northwestern University, USA.

Professional background: managing

director & COO Mikron Plastics Technology,

Biel; general manager and other manage-

rial positions within the Sarna Group,

Sarnen, Switzerland.

Jürg Häusermann: Swiss, 1961.

Since November 2000, responsible for

financial management of the Interroll Group

as CFO; Graduate in Economics and Busi-

ness Administration of the Universities of

Applied Sciences. Professional background:

division controller of the Franke Group,

Switzerland.

Dieter Menne: German, 1959.

Dipl.-Ing. Head of “Drives & Rollers”

business unit since beginning of 2003.

Professional background: head of depart-

ment at Hartmann & Braun AG, Frankfurt,

and various other managerial positions at

Elsag Bailey, Hartmann & Braun, Heiligen-

haus; head of marketing and sales, ABB

Automation Products GmbH, Eschborn,

Germany.

Wolfgang Gresch: German, 1952.

Head of “Bulk Handling” business unit

since beginning of 2002. Dipl.-Ing.;

Professional background: production

engineer and production manager at

Förder- und Antriebstechnik Aschersleben

GmbH, Germany (FAA), and managing

director at FAA.

Didier Lermite: French, 1959.

Head of “Dynamic Storage” business

unit since November 2000. MBA; DESS

(Diplôme Etudes Supérieures Spécialisées)

with Marketing. Professional background:

sales director at SIPA Roller, France, and

manager responsible for establishing the

global sales network at SIPA Roller.

Heinrich Droste: German, 1961.

Dr.-Ing. Head of “Automation” business

unit since beginning of 2003. Professional

background: head of development at Man-

nesmann Dematic, Offenbach, and manag-

ing director at Axmann Fördertechnik

GmbH, Sinsheim, Germany, since 1998.

Ingo Specht: German, 1964.

Bachelor of Business Administration.

Head of information technology for the en-

tire Interroll Group; managing director of

Interroll Ticino SA since 1997; shareholder

within the founding family; secretary of the

board of directors of Interroll.

Carsten Spanggaard: Danish, 1964.

MBA Global Economy & Business. Head

of international affairs, agents, franchisees

since beginning of 2000. Held various

posts at Interroll Denmark and Interroll

England as well as position of managing

director at Interroll Ltd. in Corby, England.

Lorenz Köhler: Swiss, 1959.

Head of public relations and communica-

tion since mid-2001. Media studies at Uni-

versity of Bern. Professional background:

copywriter and advertising assistant at

full-service agency; PR and advertising

coordinator for world’s leading business

aviation group of companies.

30

The Group managementteam is as follows:

The Company introduced stock option

programmes for the senior members of

management: in December 2000 a pro-

gramme covering 5 515 options, and in

March 2002 a programme with 22 875

options (see page 57).

No stock option programme has been

established for the board of directors.

Remuneration for the board of directors

and the Group management amounted

to CHF 2 404 for the financial year 2002.

In the financial year 2002, the highest total

compensation for a member of the board of

directors was CHF 75 000. No shares were

allotted to the board of directors or senior

management in 2002 (2001: no shares

granted). As of December 31, 2002,

according to the share register, the Group

management held 81869 shares and the

non-executive members of the board of

directors held 43 849 shares.

Rights governing shareholder partici-

pation are in accordance with the require-

ments specified within the Swiss Code of

Obligations. No entries are made in the

share register ten days prior to a General

Meeting of Shareholders up to the day

subsequent to the General Meeting of

Shareholders.

A shareholder’s voting rights are

restricted to a maximum of 5% of the total

number of votes. Individual nominees,

however, are entitled to exercise more than

5% of the total votes if they disclose the

identity of the beneficiaries they represent

and if the respective beneficiaries as a

whole do not exercise more than 5% of the

voting rights (Art. 13bis of the Articles of

Association). This restriction of voting rights

does not apply to the founding families,

insofar as the individual families hold at

least 10% of the share capital.

The threshold as regards the obligation to

put forward a full tender offer pursuant

to Art. 32 SESTA* is 33 1/3 % of the voting

rights. No severance compensations have

been defined for members of the board of

directors and Group management.

* Federal Act on Stock Exchanges and

Securities Trading

Since the IPO of Interroll in 1997, the

consolidated financial statements of the

Interroll Group and the individual financial

statements of Interroll Holding AG have

been audited by KPMG Fides Peat Lugano,

headed by Marco Ranzoni. In 2002, the

auditing fees for Interroll Holding Ltd. and

the consolidated financial statements

amounted to CHF 78 010.

The audits include additional points that go

beyond the legally prescribed duties of the

auditors. The audit board is elected by the

General Meeting of Shareholders for a term

of one year.

The consolidated financial statements,

comprising the balance sheet and income

statement, are published on a half-yearly

basis in accordance with IFRS (Internation-

al Financial Reporting Standards). In addi-

tion to the use of electronic methods of

communication, the Company forwards a

print version of the annual report for the

full financial year and of the interim report

for the first half of the financial year to all

shareholders and other interested parties.

For further details and information, please

refer to the Interroll website at

www.interroll.com/ir (Investor Relations).

31

Shareholders’ Participation Rights

Changes of Control andDefence Measures

Information Policy

Auditors

Compensations, Shareholdings and Loans

24 VDC conveying subsystem

33

F I N A N C I A L R E P O R T

34 1 KEY F IGURES

35 2 CONSOLIDATED F INANCIAL STATEMENTS OF THE

INTERROLL GROUP

35 2 .1 CONSOLIDATED BALANCE SHEET

37 2 .2 CONSOLIDATED INCOME STATEMENT

38 2 .3 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

39 2 .4 CONSOLIDATED CASH FLOW STATEMENT

41 2 .5 NOTES TO THE CONSOLIDATED F INANCIAL STATEMENTS

69 2 .6 REPORT OF THE GROUP AUDITORS

70 3 F INANCIAL STATEMENTS OF INTERROLL HOLDING LTD . ,

S . ANTONINO

70 3 .1 BALANCE SHEET

72 3 .2 INCOME STATEMENT

73 3 .3 NOTES TO THE F INANCIAL STATEMENTS

78 3 .4 REPORT OF THE STATUTORY AUDITORS

34

2002 2001

INTERROLL GROUP

Net sales TCHF 202 776 224 251

Operating cash flow TCHF 26 412 15164

Free cash flow TCHF 373 7404

EBITDA TCHF 24 275 22 041

EBITA TCHF 12 727 12 348

Operating profit (EBIT) TCHF 11622 11203

Operating profit as a percentage of net sales % 5.73 5.00

Profit before income taxes TCHF 8 541 7 057

Net profit for the year TCHF 5 718 5164

Net profit for the year as a percentage of averageshareholders’ equity % 8.94 7.80

Shareholders’ equity TCHF 63 036 64 869

Shareholders’ equity as a percentage of total assets % 32.94 37.40

Average number of employees 1054 1105

Net sales per employee TCHF 192 203

Profit before income taxesper average share outstanding CHF 10.83 8.56

Earnings per average share outstanding CHF 7.25 6.26

Shareholders’ equity per share CHF 81.04 80.70

INTERROLL HOLDING LTD.

Net profit (loss) for the year TCHF –9 887 3 105

Shareholders’ equity TCHF 77 923 89 795

Shareholders’ equity as a percentage of total assets % 51.50 90.26

Number of registered shares issued as of balance sheet date 854 000 854 000

Number of registered shares outstanding as of balance sheet date 777 823 803 756

Average number of registered sharesoutstanding during the year 788 463 824 667

1 K E Y F I G U R E S

35

2 C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S O FT H E I N T E R R O L L G R O U P

2 . 1 C O N S O L I D A T E D B A L A N C E S H E E T

Assets as of December 31, (all figures in thousands CHF) 2002 2001

CURRENT ASSETS Notes

Cash & cash equivalents 1 6 866 5 975

Trade accounts receivable 2 40 351 38 120

Current tax assets 3 448 1057

Other accounts receivable 2 583 3 989

Inventories 3 29 794 20 720

Prepaid expenses and accrued income 762 758

83 804 70 619

NON-CURRENT ASSETS

Property, plant & equipment 4.1

Land & buildings 51363 55196

Production equipment & machinery 23 824 23 268

Office equipment 1982 3 225

Assets under construction 988 2 177

Other fixed assets 494 328

Intangible assets 4.2

Goodwill 13 281 9 449

Software 2 046 1795

Other intangible assets (including patents) 7 879 310

Financial assets 4.3&5

Investments in associated companies – –

Other financial assets 960 2 610

Deferred tax assets 15 4 724 4 431

107 541 102 789

191345 173 408

(See notes to the consolidated financial statements.)

36

Liabilities andShareholders’ Equity

as of December 31, (all figures in thousands CHF) 2002 2001

CURRENT LIABILITIES Notes

Trade accounts payable 6 14 825 12 832

Bank liabilities 6181 7 256

Bank loans 9 6 784 4 210

Loans due to shareholders 9 – 60

Other loans 9 967 –

Current tax liabilities 5 607 2 369

Other current liabilities 7 19 450 5 945

Accrued expenses and deferred income 8 8 745 8 343

62 559 41015

NON-CURRENT LIABILITIES

Bank loans 9 48 953 46 237

Loans due to shareholders 9 – 1122

Other loans 9 3 264 4 797

Deferred tax liabilities 15 9 562 11355

Provisions 10 3 577 3 415

65 356 66 926

MINORITY INTEREST 394 598

SHAREHOLDERS’ EQUITY

Share capital 11 42 700 42 700

Own shares 11 –3 809 –2 512

Additional paid-in capital 13 444 14 560

Retained earnings 10 701 10121

63 036 64 869

191345 173 408


37

for the years ended December 31, 2002 2001(all figures in thousands CHF)

Notes

NET SALES 202 776 224 251

Increase (decrease) in work in progressand finished products 764 –538

Income from commissions, licences and freight 5 764 5 025

Own goods capitalised 171 209

OPERATING INCOME 209 475 228 947

Material expenses –82 008 –93 291

Personnel expenses 12&21 –62 494 –67 373

Other operating expenses 13 – 41221 –46 672

Other operating income 523 430

OPERATING PROFIT BEFOREdepreciation & amortisation (EBITDA) 24 275 22 041

Depreciation & amortisation 4 –12 148 –10 838

Gain/(loss) on sale of fixed assets* 13 –505 –

OPERATING PROFIT 11622 11203

Financial expenses, net 14 –3 082 –4 004

Income (loss) from associated companies 1 –142

PROFIT BEFORE INCOME TAXES 8 541 7 057

Income tax expense 15 –2 575 –2 035

PROFIT AFTER INCOME TAXES 5 966 5 022

Minority interest –248 142

NET PROFIT FOR THE YEAR 5 718 5164

Basic and diluted earnings per average share outstanding (in CHF) 11 7.25 6.26

* As from 2002, the gain/(loss) on sale of fixed assets is presented after EBITDA. Due to the insignificance of the previous

year’s amount of 82, figures for 2001 have not been restated


2 . 2 C O N S O L I D A T E D I N C O M E S T A T E M E N T

38

for the years ended December 31, 2002 and 2001(all figures in thousands CHF)

Share Additional Retained earnings Total Minority Total incl.capital paid-in Group interest minorities

capital Accum. Translationresults adjustment

At 01.01.01 41805 16 665 14 473 –5 438 67 505 526 68 031

Dividends –2 135 –2 135 –2 135Increases in minority interest – 247 247Net profit 5164 5164 –142 5 022Purchase of own shares & options –2 068 –2 810 –4 878 –4 878Sale of own shares 451 705 1156 1156Translationadjustment –1943 –1943 –33 –1976

At 31.12.01 40188 14 560 17 502 –7 381 64 869 598 65 467

At 01.01.02 40188 14 560 17 502 –7 381 64 869 598 65 467

Dividends –1985 –1985 –1985Sale of minorityinterest – –215 –215Net profit 5 718 5 718 248 5 966Purchase of own shares & options –1308 –1142 –2 450 –2 450Sale of own shares 11 26 37 37Translationadjustment –3 153 –3 153 –237 –3 390

At 31.12.02 38 891 13 444 21235 –10 534 63 036 394 63 430

Information on the share capital, own shares and significant shareholders is set out in Note 11and in the notes to the financial statements of Interroll Holding Ltd., S. Antonino.Retained earnings include legally restricted reserves in the amount of 3 375 (2001: 2 967)which are not available for distribution.The amount of own shares deducted from share capital and additional paid-in capital is 9 442(2001: 7 030).


2 . 3 C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y

39

2 . 4 C O N S O L I D A T E D C A S H F L O W S T A T E M E N T


for the years ended December 31,(all figures in thousands CHF) Notes 2002 2001

Net profit for the year 5 718 5164Adjustments for:Minority interest 248 –142Depreciation & amortisation 4 12 148 10 838Loss (income) from associated companies 1 418Loss (gain) on sale of property, plant & equipment 13 505 82Changes in provisions and deferred taxes –2 027 1389Other (income) expensesnot involving the movement of funds –326 –1262

16 267 16 487

Working capital changes(Increase) decrease in

trade accounts receivable –986 3 356prepaid taxes and other accounts receivable –625 –1179inventories 3 286 2 879prepaid expenses and accrued income 22 44

Increase (decrease) intrade accounts payable 1336 –921current tax and other current liabilities 6 827 –2 828accrued expenses and deferred income 285 –2 739

Other changes in working capital 17 – 65

Net cash provided by operating activities 17 26 412 15164(cash flow)

Additions to property, plant & equipment 4 –5 808 –8 897Disposals of property, plant & equipment 4 372 3 996Additions to intangible assets 4 –574 –882Disposals of intangible assets 4 3 68Additions to financial assets 4 –45 –685Settlement of loans receivable 4 3 884 1029(Acquisition) disposals of subsidiaries 17 –23 871 –65Residual payment for SIPA acquisition – –2 324

Net cash used in investing activities 17 –26 039 –7 760

Free cash flow 373 7404

40

Dividends paid –1985 –2 135(Decrease) increase in bank liabilities –1075 2 585(Decrease) increase in loans 6 715 –4 930Purchase of own shares –2 450 –4 878Sale of own shares 37 1154

Net cash provided by (used in) financing activities 17 1242 –8 204

Effect of exchange rate changes 17 –724 –152

Net increase (decrease) in cash & cash equivalents 17 891 –952Cash & cash equivalents at January 1 5 975 6 927Cash & cash equivalents at December 31 6 866 5 975


41

2 . 5 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

The 2002 consolidated financial

statements of Interroll Group are based on

the annual accounts of Interroll Holding Ltd.

and its subsidiaries as of December 31,

2002, which have been drawn up according

to uniform Group accounting principles.

The consolidated financial statements

present a true and fair view of the consoli-

dated financial position, results of oper-

ations and cash flows in accordance with

the International Financial Reporting Stan-

dards (IFRS) and comply with Swiss Law.

The accounting policies have been

consistently applied during the years under

review.

Basis of the consolidated

financial statements

42


of Interroll Holding Ltd. include the parent

company’s financial statements and the

financial statements of all directly or indi-

rectly held Swiss and foreign subsidiaries

where the parent company holds more than

50% of the voting rights.

The full consolidation method is applied,

whereby the assets, liabilities, income and

expenses are fully incorporated. The pro-

portion of the net assets and net income

attributable to minority shareholders is

presented separately as minority interest on

the consolidated balance sheet and in the

consolidated income statement.

Accounts payable to, accounts receivable

from, income and expenses between the

companies included in the scope of conso-

lidation are eliminated. Intercompany

profits included at year-end in inventories

of goods produced within the Group are

also eliminated. Transactions between

subsidiaries are generally conducted at

arm’s length.

Subsidiaries acquired during the year

are included in the consolidated accounts

from the date of acquisition, while subsi-

diaries sold are excluded from the consoli-

dated accounts from the date of sale.

Acquisitions are accounted for by applica-

tion of the Purchase Method of accounting.

Goodwill relating to acquisitions carried out

before December 31, 1993 was deducted

from retained earnings. Other goodwill is

recognised as an asset and amortised over

its estimated useful life not exceeding

20 years.

Investments in associated companies

are investments where the parent company

is, directly or indirectly, entitled to 20% to

50% of the voting rights. Such investments

are recorded on the consolidated balance

sheet using the Equity Method of accoun-

ting, whereby the carrying amount of the

investment reflects the share in net assets

at each balance sheet date presented.

The share in net profit of such investments

is presented separately as income from

associated companies in the consolidated

income statement. Any dividends received

from such investments are recorded as a

reduction to the carrying amount.

Investments of less than 20 percent and

certain insignificant subsidiaries are not

consolidated but stated at their estimated

fair value. Such investments are presented

on the consolidated balance sheet under

other financial assets. Any fair value adjust-

ments are recognised in the income

statement.

Principles of consolidation

43

Scope of consolidation

Percentage heldThe companies included in the scope of consolidation are the following:Country Name & domicile Share capital 2002 2001

Switzerland Interroll Holding AG, S. Antonino CHF 42 700 000 Parent company

Interroll SA, S. Antonino CHF 100 000 100 100Interroll (Schweiz) AG, S. Antonino CHF 5 000 000 100 100

(1) Interroll Management AG, S. Antonino CHF 100 000 100****) 0Belgium Interroll Benelux NV, Herenthout – – 0*) 100France Interroll SAS, Dijon EUR 808 000 100 99.94

Interroll SAS, La Roche sur Yon EUR 2 660 000 100 100Germany Interroll Fördertechnik GmbH,

Wermelskirchen EUR 25 565 100 100Interroll Engineering GmbH, Wermelskirchen EUR 1662 210 100 100Förder- und Antriebstechnik Aschersleben GmbH, Aschersleben EUR 511292 100 100

(2) Interroll Antriebstechnik GmbH, Aschersleben EUR 25 000 100****) –

(3) Interroll Axmann Automation GmbH,Sinsheim EUR 2 000 000 100***) –

(4) Interroll Holding GmbH & Co. KG,Wermelskirchen EUR 500 000 100****) –

(5) Interroll GmbH, Wermelskirchen EUR 25 000 100****) –Great Britain Interroll Ltd., Corby EUR 3 100 100(6) Interroll Bulk Handling Ltd., Corby EUR 15 856 100****) –

Interroll Engineering Ltd., Corby EUR 2 069 586 100 100Japan Interroll Japan Co. Ltd., Tokyo JPY 10 000 000 100 100Canada Interroll Canada Ltd., Newmarket CAD 1720 000 100 100Netherlands Interroll Europe BV, Emmeloord EUR 90 756 100 100USA Interroll Corporation,

Wilmington/N.C. USD 65 000 100 100(7) Interroll Axmann Automation LLC,

Jeffersonville, Indiana USD 100 100***) –Denmark Interroll Nordic AS, Hvidovre EUR 67125 100 100

Interroll Joki AS, Hvidovre EUR 2 013 750 100 100Sweden Interroll JOKI MOTOR AB, Landskrona – – 0*) 100Malaysia Interroll (Malaysia) SDN. BHD.,

Petaling Jaya Selangor MYR 50 002 100 100Singapore Interroll (Asia) Pte. Ltd., Singapur SGD 3 000 000 100 100Spain Interroll España SA,

Barbera del Vallés EUR 1202 024 100 100(8) Interroll Bulk Handling SA,

Barbera del Vallés EUR 852 399 100****) –Thailand Interroll (Thailand) Co. Ltd., Bangkok THB 47 000 000 100 100(9) Interroll Bulk Handling Co. Ltd., Bangkok THB 2 000 000 100****) –British VirginIslands Inroll Ltd., BVI, Tortola CHF 70 000 000 100 100Argentina Interroll South America SA, Buenos Aires – – 0**) 51

44

Brazil Interroll Brasil Ltda., São Paulo – – 0**) 51Czech Republic Interroll CZ sro., Breclav CZK 1000 000 100 100South Africa Interroll SA (Proprietary) Ltd.,

Johannesburg ZAR 1500 000 60 60Poland(10) Interroll Polska Sp.z.o.o., Zabrze PLZ 100 000 100****) –China(11) Interroll Suzhou Co. Ltd., Suzhou SGD 250 000 100****) –

*) liquidated **) sold as per 01.01.2002 ***) acquired (see Note 17) ****) founded

The following companies were acquired during the year under review (***):

(7) as per 01.12.2002 Interroll Axmann Automation LLC, Jeffersonville/IN, USA(3) as per 30.12.2002 Interroll Axmann Automation GmbH, Sinsheim, Germany

The following companies were founded during the year under review (****):

(2) January 2002 Interroll Antriebstechnik GmbH, Aschersleben, Germany(6) January 2002 Interroll Bulk Handling Ltd., Corby, Great Britain(8) April 2002 Interroll Bulk Handling SA, Barbera del Vallés, Spain

(10) May 2002 Interroll Polska Sp.z.o.o., Zabrze, Poland(9) September 2002 Interroll Bulk Handling Co. Ltd., Bangkok, Thailand

(11) October 2002 Interroll Suzhou Co. Ltd., Suzhou, China(1) November 2002 Interroll Management SA, S. Antonino, Switzerland(4) November 2002 Interroll Holding GmbH & Co. KG, Wermelskirchen, Germany (5) November 2002 Interroll GmbH, Wermelskirchen, Germany

The acquisition and disposal of subsidiaries concluded during 2002 generated an increase in assets of CHF 37.3 million and an increase in liabilities of CHF 11.3 million (see Note 17).The impact of such acquisitions/disposals on the net profit for 2002 is negligible.

Investments in associated companies include:Percentage held

Country Name & domicile 2002 2001

India Interroll (India) PVT Ltd., New Delhi 40 40

45

Current assets are assets expected to

be realised or consumed in the normal

course of the Group’s operating cycle or

assets held for trading purposes. All other

assets are classified as non-current assets.

Current liabilities are liabilities expected

to be settled by use of cash generated in

the normal course of the Group’s operating

cycle or liabilities due within one year from

the reporting date. All other liabilities are

classified as non-current liabilities.


are presented in Swiss francs (CHF).

All assets and liabilities of the consolidated

foreign subsidiaries are translated using

the exchange rates prevailing at the balance

sheet date. Income, expenses and cash

flows are translated at the average exchange

rates for the year under review.

The foreign currency translation diffe-

rences resulting from applying different

translation rates to the balance sheet and

the income statement, and those resulting

from the translation of the subsidiaries’

opening net asset values at year-end rates,

are added to or deducted from retained

earnings.

Transactions in foreign currencies are

recorded using exchange rates prevailing

at the time of the transaction. Gains or

losses arising on settlement of these

transactions are included in the current

year’s income. Monetary assets and liabili-

ties denominated in foreign currencies are

translated using the exchange rates

prevailing at the balance sheet date.

Any gains or losses resulting from this

translation are also included in the current

year’s income.

Current/Non-currentdistinction

Foreign currencytranslation

Significant accounting policies

The following exchange rates were used for the translation of financial statements denominated in foreigncurrencies:

Average rates Year-end rates

2002 2001 2002 2001

1 CAD 0.9936 1.0854 0.9229 1.05141 EUR 1.4680 1.5064 1.4669 1.48231 JPY 0.0125 0.0138 0.0118 0.01281 SGD 0.8739 0.9358 0.8210 0.90631 THB 0.0362 0.0379 0.0333 0.03731 USD 1.5575 1.6840 1.4385 1.67831 ZAR 0.1506 0.1943 0.1610 0.14051 CZK 0.0480 0.0442 0.0472 0.04621 MYR 0.4101 0.4442 0.3788 0.44181 CNY 0.1885 – 0.1740 –1 PLZ 0.3826 – 0.3808 –

46

The Group does not hold or issue any

derivative financial instruments for trading

purposes. In certain limited instances,

foreign currency forward contracts are

entered into for hedging purposes. Such

derivative financial instruments are stated at

fair value, and any fair value fluctuations are

recognised in the income statement.

In both the “Components” and

“Subsystems” segments revenue is gene-

rally recognised upon delivery. In some

cases, depending on the size and the com-

plexity of the order, revenue is recognised

only upon technical approval by the

customer. To cover the risks arising from

revenue recognition the Group has esta-

blished appropriate warranty provisions.

The Group sponsors pension plans

according to the national regulations of the

countries in which it operates. All significant

pension plans are operated through pen-

sion funds that are legally independent

from the Group. Generally, they are funded

by employees’ and employers’ contributions.

The foreign pension schemes are defined

contribution plans whereby the pension

expense for a period equals the companies’

contributions during that period. The Swiss

pension scheme has certain characteristics

of a defined benefit plan; the financial

impact of this plan on the consolidated

financial statements is determined based

on the Projected Unit Credit Method.

Actuarial gains and losses arising from

the periodical reassessments are recognised

to the extent that they exceed 10% of the

higher of the projected benefit obligation

and the plan assets. The amount exceeding

this “corridor” is amortised over the

expected average remaining working lives

of the employees participating in the plan.

Derivative financial instruments

Revenue recognition

Retirement benefits

Research anddevelopment

Segment information

Expenditure on research and develop-

ment is not capitalised but recognised as

an expense when incurred, unless the

recognition criteria of IAS 38 for develop-

ment costs are met. Technical equipment &

machinery used for research purposes are

stated at cost and depreciated over their

estimated useful lives.

Expenses for research and development

include wages and salaries, material costs,

depreciation of technical equipment &

machinery dedicated to research and

development, as well as overhead costs for

research and development. Such expenses

are presented under the respective line

items of the consolidated income statement.

The primary segments are defined

as “Components” and “Subsystems”.

“Components” include the business units

“Drives & Rollers” and “Bulk Handling”.

“Subsystems” include the business units

“Dynamic Storage” and “Automation”.

The relevant figures of the secondary,

geographical segments “Europe”, “America”

and “Asia” are allocated according to the

location of the assets.

Cash & cash equivalents include cash

on hand, postal and bank accounts, as well

as credit balances payable on demand and

deposits becoming due or payable within

90 days. These balances are stated at

nominal value.

Cash & cash equivalents

Principles of valuation

47

Marketable securities are stated at their

fair value as of balance sheet date.

Own shares are recognised not as an

asset but as a deduction from the issued

share capital. Differences between the par

value and acquisition cost as well as gains

and losses arising from transactions with

own shares are recognised in additional

paid-in capital.

Trade and other accounts receivable are

stated at nominal value less any valuation

adjustments for credit risks.

Inventories are stated at the lower of

cost (purchase price or Group production

cost) and net realisable value. The cost of

inventories is calculated using the weighted

average method. Production overheads are

allocated to inventories on a proportional

basis. Goods with long storage periods and

obsolete stocks are written down. Intercom-

pany profits included in inventories due to

deliveries from other Group companies are

eliminated from net income and inventories

upon consolidation.

Property, plant & equipment are stated

at historical cost less adequate adjustments

for depreciation and any impairment.

Assets acquired by way of finance leases are

recognised at the lower of the present value

of minimum lease payments and fair value,

and depreciated like the other fixed assets.

The cost of land & buildings is based on

appraisals prepared by independent experts

in 1988 for initial consolidation purposes.

Depreciation is recognised on a straight-

line basis. The following depreciation rates

apply:

Buildings 4%

Machinery, furniture & fixtures 10%*)

Vehicles 20%

EDP 33.3%*)

Office machines 20%*)

Tools & moulds 20%*)

*) with certain residual values of 4% of

original cost.

Intangible assets include goodwill,

licences, patents and similar rights as well

as software acquired from third parties.

These assets are stated at cost and

amortised on a straight-line basis over their

estimated useful lives, up to a maximum

of 5 years (goodwill up to a maximum of

20 years). Any impairment is recognised

additionally.


are accounted for using the Equity Method.

Thereby the investment is initially recorded

at the purchase price. Goodwill included in

the purchase price, representing any excess

of consideration over the Group’s share in

net assets of the associated company, is

recognised separately and amortised over

its estimated useful life not exceeding

20 years. Subsequent to acquisition, the

carrying amount of the investment is in-

creased or decreased by the share of the

associate’s profits or losses incurred after

the date of acquisition, adjusted for any

impairment losses. Dividends received

during the year reduce the carrying amount

of such investments.

Trade and otheraccounts receivable

Inventories

Property, plant &equipment

Intangible assets


Marketable securities

48

Other financial assets mainly comprise

loans receivable that are stated at their

nominal amount less any valuation

allowance.

Loans payable are stated at their nomi-

nal amount, which equals amortised cost.

The recoverability of non-current assets

is reviewed at least on an annual basis.

If there is an indication of an impairment,

an impairment test of the recoverable

amount is performed. An impairment loss

is recognised in the income statement, if an

asset’s carrying amount exceeds its recover-

able amount.

Provisions relate to services yet to be

rendered, warranties, employee benefits and

known risks. They are recognised when the

Group has a probable present obligation to

transfer economic benefits as a result of

past events. The amounts recognised repre-

sent management’s best estimate of the

expenditure that will be required to settle

the obligation.

Current income taxes are calculated on

the statutory results of the Group compa-

nies at the enacted or substantively enacted

tax rate. They include adjustment charges

and credit notes issued on previous years’

results as well.

Deferred taxes are basically recognised

on any temporary difference between the

carrying amount of an asset or a liability

and its tax base (Balance Sheet Liability

Method). Changes in deferred taxes are

presented as income tax expense.

Deferred taxes are calculated using local

enacted or substantively enacted tax rates.

The future benefits of tax loss carry-forwards

are recognised as an asset if it is probable

that future taxable profits will be available to

realise such benefits.

Income taxesOther financial assets

Loans payable

Impairment

Provisions

49

N O T E S T O T H E C O N S O L I D A T E D B A L A N C E S H E E T(all figures in thousands CHF)

1 Cash & cashequivalents

2 Trade accountsreceivable

3 Inventories

2002 2001

Cash on hand, bank and postal accounts 3 892 4 208Short term notes receivable 271 251Promissory notes 2 703 1516

Total cash & cash equivalents 6 866 5 975

Trade accounts receivable arise from deliveries and services relating to the Group’s operating activities.

2002 2001

Accounts receivable from third parties 41867 39 856Valuation allowance –1516 –1736

Total trade accounts receivable, net 40 351 38 120

2002 2001

Raw materials 15 898 15 962Work in progress* 13 085 3 525Finished products 1937 2 292Advance payments 17 61Valuation allowance –1143 –1120

Total inventories, net 29 794 20 720

*The significant increase in work in progess is primarily due to acquisitions (see Note 17).

50

Land & Production Office Assets Other Totalbuildings equipm. & equipm. under fixed PP&E

2001 machinery constr. assets

COST

At 1.1.01 72 292 82 074 12 934 575 1056 168 931Currency trans. adj. –1250 –950 –152 –38 –13 –2 403Additions 2 106 4192 822 1661 116 8 897Disposals –4 604 –3 991 –2 067 –21 –236 –10 919Reclassification –72 65 7 – 25 25Changes in scope of cons. 2 125 40 – 13 179At 31.12.01 68 474 81515 11584 2 177 960 164 710

ACC. DEPRECIATION

At 1.1.01 –13 843 –55 613 –8 975 – –665 –79 096Currency trans. adj. 226 612 96 – 2 936Additions –1250 –6 355 –1398 – –114 –9117Disposals 1590 3 160 1937 – 154 6 841Changes inscope of cons. –1 –51 –19 – –9 –80At 31.12.01 –13 278 –58 247 –8 359 – –632 –80 516

Total PP&E net at 31.12.01 55196 23 268 3 225 2 177 328 84194

Thereof finance leases 3 382 2 091 536 – 150 6159

Land & Production Office Assets Other Totalbuildings equip. & equipment under fixed PP&E

2002 machinery constr. assets

COST

At 1.1.02 68 474 81515 11584 2 177 960 164 710Currency trans. adj. –2 396 –2 887 –433 –41 –99 –5 856Additions 256 6185 469 –1148 46 5 808Disposals –37 –2 400 –677 – –166 –3 280Reclassification –1969 –666 –582 – – –3 217Changes inscope of cons. 168 1686 559 – 446 2 859At 31.12.02 64 496 83 433 10 920 988 1187 161024

ACC. DEPRECIATION

At 1.1.02 –13 278 –58 247 –8 359 – –632 –80 516Currency trans. adj. 548 1945 307 – 74 2 874Additions –2 182 –5 998 –1720 – –88 –9 988Disposals 37 1743 575 – 49 2 404Reclassification 1750 1010 441 – – 3 201Changes in scope of cons. –8 –62 –182 – –96 –348At 31.12.02 –13 133 –59 609 –8 938 – –693 –82 373

Total PP&E net at 31.12.02 51363 23 824 1982 988 494 78 651

Thereof finance leases 3 173 2 002 224 – 94 5 493

4 Movements of non-current assets

4.1 Property, plant & equipment

2002 2001

Capital commitments 544 1386

Fire insurance value of property, plant & equipment 232 019 231957

51

Goodwill Software Other Total

2001 intangible intangibleassets assets

COST

At 1.1.01 11011 10 582 237 21830Currency trans. adj. –330 –162 –6 –498Additions – 582 300 882Disposals – –130 –116 –246Changes in scope of consolidation 58 5 – 63At 31.12.01 10 739 10 877 415 22 031

ACC. AMORTISATION

At 1.1.01 –183 –8 748 –153 –9 084Currency trans. adj. 38 111 4 153Additions –1145 –566 –10 –1721Disposals – 124 54 178Changes in scope of consolidation – –3 – –3At 31.12.01 –1290 –9 082 –105 –10 477

Total intangible assets net at 31.12.01 9 449 1795 310 11554

Thereof finance leases – 29 – 29

Goodwill Software Other Total

2002 intangible intangibleassets assets

COST

At 1.1.02 10 739 10 877 415 22 031Currency trans. adj. –521 –271 –26 –818Additions – 810 –236 574Disposals – –35 – –35Reclassification 150 –2 246 753 –1343Changes in scope of consolidation 5 446 525 7 844 13 815At 31.12.02 15 815 9 660 8 750 34 224

ACC. AMORTISATION

At 1.1.02 –1290 –9 082 –105 –10 477Currency trans. adj. 11 243 1 255Additions –1105 –1054 –1 –2 160Disposals – 31 – 31Reclassification –150 2 248 –766 1332Changes in scope of consolidation – – – –At 31.12.02 –2 534 –7614 –871 –11019

Total intangible assets net at 31.12.02 13 281 2 046 7 879 23 205

Thereof finance leases – – – –

4.2 Intangible assets

2002 2001

Capital commitments – 16

52

Investments Other Total

2001 in associated financial financialcompanies assets assets

At 1.1.01 253 2 933 3 186Currency trans. adj. – 21 21Additions – 685 685Disposals – –1029 –1029Write-off/unrealised losses –142 – –142Changes in scope of consolidation –111 – –111

At 31.12.01 – 2 610 2 610

Investments Other Total

2002 in associated financial financialcompanies assets assets

At 1.1.02 – 2 610 2 610Currency trans. adj. – –166 –166Additions – 45 45Disposals – –3 883 –3 883Write-off/unrealised losses – – –Changes in scope of consolidation – 2 354 2 354

At 31.12.02 – 960 960

4.3 Financial assets

53

5 Financial assets

6 Trade accounts payable

7 Other current liabilities

8 Accrued expensesand deferred income

2002 2001

Accrued vacation and overtime 2 688 2 360Deferred government grants 31 232Accrued interest 60 40Other accrued expenses and deferred income 5 966 5 711

Total accrued expenses and deferred income 8 745 8 343

2002 2001

Advances received from customers* 13 065 215Employee benefits payable 1144 1173Other liabilities 5 241 4 557

Total other current liabilities 19 450 5 945

* The significant increase in advances received from customers is primarily due to acquisitions (see Note 17).

2002 2001

Accounts payable to third parties 14 825 12 832

Total trade accounts payable 14 825 12 832

Other financial assets: 2002 2001

Deposits 144 128Loans due from third parties 630 2 269Other investments 186 213

Total other financial assets 960 2 610

Interest rates on loans receivable range from 4.0% to 6.0%.

%* 2002 2001

Investments in associated companies:Interroll(India) PVT Ltd. (Indien) 1) 40 pm pm

Total investments in associated companies – –

* Total percentage directly and/or indirectly held as at December 31, 20021) The investment in Interroll(India) PVT had been fully written off already in 2001.

54

9 Loans 2002 2001

Bank loans 55 737 50 447

Loans due to minority shareholders – 1182

Other loansFinance leases 3 854 3 692Other loans 377 1105

Total other loans 4 231 4 797

Total loans 59 968 56.426

Interest rates on bank loans range from 1.38% (in JPY) to 16.00% (in ZAR) (2001: 1.7% to 14.22%) per annum. The majority of the loans is denominated in EUR, CHF and USD. The weighted average interest rates on bank loans are as follows: 5.05% for EUR, 2.23% for CHF, and 3.21% for USD. The loans due to minority shareholders were transferred with the sale of certain subsidiaries as per 01.01.2002.

As of December 31, 2002 loans in the amount of 12 030 were secured by mortgage deeds (2001: 17 277).

Bank loans as of December 31, 2002 are due as follows:

Current:2003 6 784

Non-current:over 1 - 2 years 11172over 2 - 5 years 10 613more than 5 years 27168

48 953

Total bank loans 55 737

The debt covenants relating to the credit lines with the house bank were renegotiated in January 2002. They require the adherence to a minimum EBIT level in relation to interest charges and to a maximum indebtedness level in relation to the EBITDA. As of December 31, 2002 the Company was in compliance with those new debt covenants.

55

The finance lease liabilities in the amount of 3 854 (2001: 3 692) are due as follows:

Present values Nominal amountsless than 1 year 974 1130over 1 - 2 years 981 1109over 2 - 5 years 1463 1634more than 5 years 436 460

Total 3 854 4 333

Warranties Termination Restruc- Other Totalbenefits turing provisions provi-

& litigation sions

At 1.1.02 1203 76 1874 262 3 415Currency translation adjustment –75 –1 –1 –1 –78Additions 3 328 33 206 201 3 768Use –1844 –44 –37 –46 –1971Releases –17 –8 –1750 – –1775Reclassification – – – – –Changes in scope of consolidation 218 – – – 218

Total at 31.12.02 2 813 56 292 416 3 577

10 Provisions

The Group companies normally grant a

24 month warranty. The warranty provisions

are recognised based on past experience

as well as for specific projects.

The warranty provision increased

remarkably during 2002. The addition of

CHF 3.3 million is higher than the warranty

costs incurred of CHF 1.85 million.

The warranty provision corresponds to

1.4% of net sales and is adequate.

The provision for termination benefits

represents actuarially determined redun-

dancy costs for former employees of

subsidiaries.

The provisions for restructuring and

litigation relate to specific restructuring

projects as a result of acquisitions and reor-

ganisations, as well as legal claims between

the Company and certain business partners

and customers. They are calculated based

on the estimated outflow of future economic

benefits. The comparative figures include

a provision of CHF 1.75 million relating to

a litigation in the USA, which was released

after a positive outcome reached during

2002. However, the above mentioned

significant increase in warranty provisions,

based on a thorough analysis of the risks

involved, compensated this positive effect

on the result.

56

11 Share capital andearnings per share

The issued share capital consists of 854 000 fully paid-in registered shares with a par value of CHF 50 each.

2002 2001

Issued share capital 42 700 42 700Own shares –3 809 –2 512

Outstanding share capital 38 891 40.188

Information on significant shareholders

and own shares is set out in the notes to the

financial statements of Interroll Holding Ltd.,

S. Antonino.

The calculation of earnings per share is

based on a weighted average of 788 463

(previous year: 824 667) outstanding

shares and the net profit for the year as

presented in the consolidated income

statement. The additional 30 022 potential

ordinary shares resulting from the issue of

options under the employee stock option

plan (see Note 12) have no dilutive effect

due to the fact that the strike price is higher

than the average share price during the

years under review.

57

In March 2002, the Company intro-

duced a new stock option plan for manage-

ment personnel. The participants receive

their bonus in form of stock options of the

Company. After a lock-up period of 3 years,

the options issued may be sold back to the

Company at their fair value as of that date,

or they may be exercised. One option

entitles the holder to buy one share for

CHF 110. The 24 750 options are issued

by a bank on behalf of the Company.

The Company has pledged 24 750 own

shares with an acquisition cost of 2 945 to

secure these options.

As of December 31, 2002, 28 390

options were issued for a total considera-

tion of 534 (2001: 5 515 options for 152),

and no options were exercised.

The number of options held under the

plan as of December 31, 2002 was 19 815

(2001: 17 940) with an acquisition cost of

344 (2001: 354), which was deducted

from additional paid-in capital.

The introduction of an additional stock

option plan is not foreseen at this stage.

The cash received from issuing options

is recognised as an addition to additional

paid-in capital. No amounts are recognised

in the income statement upon issuing and

exercising the options.

12 Personnel expenses

N O T E S T O T H E C O N S O L I D A T E D I N C O M ES T A T E M E N T

2002 2001

Wages and salaries 51501 55 374Social security costs 7 501 7496Pension costs (see Note 21) 1253 1507Other employee benefit costs 2 239 2 996

Total personnel expenses 62 494 67 373

Average number of employees 1054 1105

The remuneration to the Board of Directors of Interroll Holding Ltd., S. Antonino, amounted to 392 (2001: 562).

58

13 Other operating expenses

14 Financial expenses, net

2002 2001

Office and administration 5 085 6 097Loss on sale of property, plant & equipment * – 82Provisions and allowances 3 310 2 953Various taxes other than income taxes 1390 1357Consultancy, auditing 2 926 3 058Marketing 2 859 2 075Freight 7 323 7 926Commissions, bad debt adjustments and related insurance 2 861 5 590Buildings 2 937 2 721Maintenance 2 390 2 329Travelling and transportation 4 526 4 799Consumables for production 2 605 2 893Insurances 1687 1491Other expenses 1322 3 301

Total other operating expenses 41221 46 672

* The gain / (loss) on the sale of fixed assets is presented after the EBITDA as from 2002, and is therefore no longer included in “other operating expenses”.

2002 2001

Loss on foreign exchange rates (net) 503 230Interest expenses 2 750 4 030Interest income –171 –256

Financial expenses, net 3 082 4 004

59

15 Income taxes The components of income tax expense are the following:

2002 2001

Current income tax expenseIncome taxes relating to the current period 4 322 3 193Income taxes relating to past periods, net 300 10

Current income tax expense 4 622 3 203

Deferred income tax expenseDue to temporary differences –1730 –425Due to tax rate changes 25 –154Creation/use of recognised tax loss carry-forwards 241 –1319Valuation allowances on deferred tax assets –583 737Other effects – –7

Deferred income tax expense –2 047 –1168

Total income tax expense 2 575 2 035

Taxes on capital are included in other operating expenses (see Note 13).

Income tax expense can be analysed as follows: 2002 2001

Profit before income taxes 8 541 7 057

Income tax expense at the average applicable rate of 30.54% (previous year: 47.21%) 2 608 3 332

Items that reduce income tax expense:Non-taxable income –57 –693Release of valuation allowances on deferred tax assets –583 –Tax rate changes – –181Initial recognition of tax loss carry-forwards –644 –1665

Items that increase income tax expense:Non-tax deductible expenses 1793 1038Valuation allowances on deferred tax assets – 737Tax rate changes 25 27Other effects –567 –560

Effective income tax expense 2 575 2 035

60

The Group disposes of the following tax loss carry-forwards:

Expiry 2002 2001

2003 – –2004 – 202005 117 1282006 2 100 2 4472007 328

unlimited* 12 283 14 481

Total 14 828 17 076

Tax benefit 4 713 5197Valuation allowance –1856 –1748

Assets recognised under deferred tax assets 2 857 3 449

* including unrecognised tax loss carry-forwards of 5 327.

The valuation allowance relates to tax loss carry-forwards of which future economic benefits are currently not considered probable.

16 Research and development

The Group incurred the following expenses for research and development during the last two years:

2002 2001

Research and development 1558 1246

The deferred tax assets/ liabilities relate to the following balance sheet line items:

2002 2001Deferred tax Deferred tax

assets/liabilities assets/liabilities

Property, plant & equipment 184 7 815 90 8 513Intangible assets 561 29 9 47Financial assets 30 177 77 174Benefit of tax loss carry-forwards 2 857 – 3 449 –Other assets 407 184 277 171Accrued and deferredincome/expenses 246 26 105 –Provisions 429 1324 251 2 362Other liabilities 10 7 173 88

Total 4 724 9 562 4 431 11355

61

17 Cash flow statement The cash flow statement reports, net of

any foreign exchange rate effects, cash

flows during the year classified by operating,

investing and financing activities.

Cash & cash equivalents represent the

“fund” in the cash flow statement. Cash equi-

valents are held for the purpose of meeting

the Group’s short term cash commitments

rather than for investment or any other pur-

poses.

Net cash from operating activities is de-

termined using the indirect method, whereby

N O T E S T O T H E C O N S O L I D A T E D C A S HF L O W S T A T E M E N T

the net profit for the year is adjusted for:

• effects of transactions of a non-cash

nature;

• deferrals or accruals of past or future

operating cash receipts or payments; and

• items of income or expense associated

with investing or financing cash flows.

The effect of exchange rate changes on

cash & cash equivalents in foreign currencies

is presented separately.

Other information: 2002 2001

Interest received in cash 169 269Interest paid in cash 2 586 3 608Income taxes paid in cash 3 854 5 628

Cash flows relating to the acquisition 2002 2002 2001and disposal of subsidiaries Acquisition Sale

Cash & cash equivalents 894 –43 –Trade accounts receivable 4 611 –312 –Prepaid taxes 243 –131 –Other accounts receivable 799 –98 –Inventories 13 666 –1030 –Prepaid expenses and accrued income 39 – –Property, plant & equipment 2 787 –275 –Intangible assets 8 370 – –Financial assets 2 354 – –Deferred tax assets – – –

Trade accounts payable –1623 312 –Bank liabilities – 85 –Bank loans –85 – –Other current liabilities –10 560 74 –Accrued expenses and deferred income –392 5 –Other loans – 1141 –Deferred tax liabilities –51 – –Provisions –219 – –Minority interest – 215

Net assets acquired/(sold) 20 833 –57 65*)Goodwill acquired/(sold) 5 446 –223 –

*) Due to immateriality the purchase price was not allocated to the balance sheet positions.

62

Cash flows relating to the acquisition and 2002 2002 2001disposal of subsidiaries Acquisition Sale

Total investment/(selling price) 26 279 –280 65less:– outstanding purchase price (payable)/

receivable –1277 – –– cash & cash equivalents (acquired)/sold –894 43 –

Net cash (in)/outflow 24108 –237 65

Details on the subsidiaries acquired and sold are set out under the section “scope of consolidation”. The goodwill is amortised over its estimated useful life of 10 years.

18 Contingent liabilities and other commitments

Other disclosures 2002 2001

Guarantees issued in favour of third parties 9 427Contingent liabilities – –Operating lease commitments 15 971 10 760

Payments under non-cancellable operating leases as of December 31, 2002 will become due as follows:

within 1 year 2 349between 1 and 5 years 6 656over 5 years 6 966

Total 15 971

Operating lease expenses for 2002 include contingent rents (related to sales) in the amount of 311 (2001: 291).

Assets pledged or assigned: 2002 2001

Software 30 9Land & Buildings 38 895 32 465Production equipment & machinery 5 475 6 200Office equipment 314 749Motor vehicles 3 41Inventories 3 739 2 506Trade receivables 4 690 3 687

Assets pledged or assigned 53 146 45 657

19 Financial instruments The Group is in its normal course of

business exposed to market risks from

changes in interest rates and foreign cur-

rency exchange rates. The Group’s foreign

currency exchange risks are managed by

a monthly multilateral netting process

between the Group companies.

Hedging is done to a very limited extent

only. The Company refrained from hedge

accounting according to IAS 39 in both

years under review.

As of December 31, 2002, one foreign

currency forward contract was outstanding

with a contract value of CHF 7.3 million

63

20 Segment information

Assets by business unit 2002 2001

Components 103 037 126138Subsystems 88 308 47 270

Total assets 191345 173 408

INFORMATION BY PRIMARY SEGMENT

Net sales with third parties by business unit 2002 2001

Components 144 639 157 707Subsystems 58 137 66 544

Total net sales 202 776 224 251

Operating result by business unit 2002 2001

Components 14 435 13 133Subsystems –2 813 –1930

Total before reconciling items 11622 11203Reconciliation to Group figure – –

Total operating result 11622 11203

(2001: 3 foreign currency forward con-

tracts with contract values amounting to

CHF 3.6 million), and the fair value amoun-

ted to an unrealised gain of 86 (2001: 67).

The Group is also exposed to various

credit risks in the ordinary course of its ope-

rating activities. Such risks are considered

in the valuation of the underlying accounts

receivable or loans. Most accounts recei-

vable in Europe are insured against losses.

There is no significant concentration of

credit risk.

The fair values of the Group’s financial

assets and liabilities approximate their

carrying amounts.

Investments in property, plant & equipmentand intangible assets by business unit 2002 2001

Components 5 225 5 661Subsystems 1984 4118

Total investments in non-current tangible and intangible assets 7 209 9 779Elimination of investments between segments –827 –

Total investments in non-current tangibleand intangible assets 6 382 9 779

64

Depreciation and amortisation of property, plant & equipment and intangible assets by business unit 2002 2001

Components 8 007 7 360Subsystems 4141 3 478

Total depreciation and amortisation 12 148 10 838

Liabilities by business unit 2002 2001

Components 60 631 80 202Subsystems 67 284 27 739

Total liabilities 127 915 107 941

Average number of employees by business unit 2002 2001

Components 748 817Subsystems 306 288

Total average number of employees 1054 1105

65

INFORMATION BY SECONDARY SEGMENT

Net sales with third parties by region 2002 2001

Europe 135 892 151673America 56 655 63 886Asia 10 229 8 692

Total net sales 202 776 224 251

Net sales with third parties* and Interrollsubsidiaries in other regions 2002 2001

Europe 8 642 9 552America 1687 1634Asia – –

Total 10 329 11186

* The share of net sales with third parties in other regions is insignificant

Operating result by region 2002 2001

Europe 8 104 6 746America 3 071 4141Asia 447 316

Total before reconciling items 11622 11203Reconciliation to Group figure – –

Total operating result 11622 11203

Assets by region 2002 2001

Europe 179 371 158 189America 39 708 39 881Asia 7 848 7628

Total assets before elimination between regions 226 927 205 698Elimination –12 747 –9 453Investments in subsidiaries –22 835 –22 837

Total assets 191345 173 408

66

Investments in property, plant & equipment and intangible assets by region 2002 2001

Europe 4 513 8 100America 1572 1536Asia 297 143

Total investments in non-current tangibleand intangible assets 6 382 9 779

Depreciation and amortisation of property, plant & equipment and intangible assets by region 2002 2001

Europe 10 060 8 840America 1784 1728Asia 304 270

Total depreciation and amortisation 12 148 10 838

Liabilities by region 2002 2001

Europe 108 532 89 636America 23 714 19 502Asia 8 416 8 258

Total liabilities before elimination 140 662 117 396Elimination –12 747 –9 455

Total liabilities 127 915 107 941

Average number of employees by region 2002 2001

Europe 733 768America 251 283Asia 70 54

Total average number of employees 1054 1105

BASIS OF TRANSFER PRICES BETWEEN THE SEGMENTS:

Intercompany transactions are generally conducted at arm’s length.

67

21 Pension obligations and pension costs

The pension costs for 2002 amounted

to 1253 (2001: 1507). Such costs con-

sisted of employer contributions relating

to the defined contribution plans abroad,

and the pension costs relating to the Swiss

pension plan.

The components of pension costs are the following:

2002 2001

Costs of the foreign defined contribution plans 824 1293Costs of the Swiss defined benefit plan: 242 145

Current service costs 517 456Employee contributions –299 –282Interest costs 127 158Expected return on plan assets –103 –187

Unrecognised prepayments 187 69

Pension costs 1253 1507

The actual return on plan assets for 2002 amounted to 169 (2001: -77).

The funded status of the Swiss defined benefit plan for approximately 100 employeesis as follows:

2002 2001

Present value of defined benefit obligation 3 290 3 166Fair value of plan assets 3 316 3 184

Unrecognised pension asset 26 18

Due to the fact that the Company does not have control over the pension fund’s assets, no pension asset was recognised on the consolidated balance sheet.

The roll-forward of the unrecognised pension asset is as follows:

2002 2001

Unrecognised pension asset as of January 1 18 186Pension costs –541 –427Contributions 598 564Unrecognised actuarial losses –49 –305

Unrecognised pension asset as of December 31 26 18

68

The following assumptions were applied:

2002 2001

Discount rate 4.0% 4.0%Expected return on plan assets 3.25% 4.5%Expected benefit increases 0.0% 0.0%Future salary increases 0.3% -5.0%* 0.1%-5.5%*Fluctuation rate 0.0%-28.0%* 0.0%-32.0%*

* depending on age and sex

22 Related party transactions

The significant shareholders and the di-

rectors of the Board of Interroll Holding Ltd.

as well as any company controlled by them,

to the extent that it enters into transactions

with Interroll Group, are considered related

parties. Transactions with related parties are,

as a principle, conducted at arm’s length.

The compensation paid to the Board of

Directors is disclosed in Note 12.

Loans with shareholders (including minority

shareholders) bear market interest rates

(see Note 9). No other transactions with

related parties were performed during the

year under review.

23 Post balance sheetevents


were approved by the Board of Directors on

April 16, 2003 and are subject to further

approval by the General Meeting of

Shareholders. No events have occurred

between December 31, 2002 and April 16,

2003 which would require adjustment to

the carrying amounts of the Group’s assets

and liabilities as of December 31, 2002, or

would require disclosure in accordance with

IAS 10 revised.

69

2 . 6 R E P O R T O F T H E G R O U P A U D I T O R S

As Group auditors, we have audited the

consolidated financial statements of

InterrollHolding Ltd., S. Antonino, and

subsidiaries, presented on pages 35 to 68

and consisting of the consolidated balance

sheet as of December 31, 2002 and the

consolidated statements of income, changes

in equity and cash flows and the notes to

the consolidated financial statements for

the year then ended. The financial state-

ments of certain subsidiaries included in

the scope of consolidation have been

audited by other auditors.

These consolidated financial statements

are the responsibility of the Company’s

Board of Directors. Our responsibility is to

express an opinion on these consolidated

financial statements based on our audit.

We confirm that we meet the legal require-

ments concerning professional qualification

and independence.

Our audit was conducted in accordance

with auditing standards promulgated by the

Swiss profession and with the International

Standards on Auditing (ISA). Those stan-

dards require that we plan and perform an

audit to obtain reasonable assurance

about whether the consolidated financial

statements are free of material misstate-

ment. An audit includes examining, on a

test basis, evidence supporting the amo-

unts and disclosures in the consolidated

financial statements. An audit also includes

assessing the accounting principles used

and significant estimates made by manage-

ment, as well as evaluating the overall pre-

sentation of the consolidated financial state-

ments. We believe that our audit provides a

reasonable basis for our opinion.

In our opinion, the consolidated financial

statements give a true and fair view of the

consolidated financial position, results of

operations and cash flows in accordance

with the International Financial Reporting

Standards (IFRS) and comply with

Swiss law.

We recommend that the consolidated

financial statements submitted to you be

approved.

KPMG Fides Peat

Marco Ranzoni Philipp Hallauer

Swiss Certified Swiss Certified

Accountant Accountant

Auditor in charge

Lugano, April 16, 2003

70

3 F I N A N C I A L S T A T E M E N T S O FI N T E R R O L L H O L D I N G L T D . , S . A N T O N I N O

3 . 1 B A L A N C E S H E E T

Assets as of December 31, (all figures in thousands CHF) 2002 2001

CURRENT ASSETS Notes

Cash & cash equivalents 14 7

Own shares and options 1 7 809 5 642

Accounts receivable from:Group companies 1446 2 409Third parties 2 235 684

Prepaid expenses and accrued income 102 80

Advances on taxes 256 26

9 862 8 848

NON-CURRENT ASSETS

Financial assetsInvestments 3 120 985 64 961 Loans due from Group companies 4 20 459 25 675

141444 90 636

151306 99 484

(See notes to the financial statements.)

71

Liabilities and Shareholders’ Equity

as of December 31, (all figures in thousands CHF) 2002 2001

CURRENT LIABILITIES Notes

Accounts payable to:Group companies 49 546 835Third parties 157 138

Other accounts payable 55 15Tax provision – –Other provisions 6 305 261

Accrued expenses and deferred income 306 265

50 369 1514

NON-CURRENT LIABILITIES

Loans due to:Group companies 5 11627 8 175Third parties 11387 –

23 014 8 175

SHAREHOLDERS’ EQUITY

Share capital 7 42 700 42 700 Additional paid-in capital 8 19 078 19 078

Legal reserves:General legal reserve 2 585 2 430Reserve for own shares 9 9 099 6 676

Special reserve 41 41Available earnings 10 4 420 18 870

77 923 89 795

151306 99 484


72

3 . 2 I N C O M E S T A T E M E N T

for the years ended December 31, (all figures in thousands CHF) 2002 2001

INCOME Notes

Investment income 4120 3 243

Royalty income 2 152 2 274

Interest income 1107 1167

Other operating income 941 507

8 320 7191

EXPENSES

Administrative expenses 12 728 426

Financial expenses 231 241

Personnel expenses 669 905

Foreign currency exchange losses, net 770 680

Other operating expenses 1629 1800

Investment expenses 13 14153 –

18 180 4 052

Profit before income taxes –9 860 3 139

Income tax expense –27 –34

Net profit (loss) for the year –9 887 3 105


73

Significant accounting policies Principles of valuation

3 . 3 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S

Current/Non-current distinction

Foreign currency translation

Own shares and options

Cash & cash equivalents

Accounts receivableand payable

Loans

Investments

Accrued expenses anddeferred income

Current assets are assets expected to

be realised or consumed in the normal

course of the Company’s operating cycle

or assets held for trading purposes.

All other assets are classified as non-

current assets.

Current liabilities are liabilities expected

to be settled by use of cash generated in

the normal course of the Company’s opera-

ting cycle or liabilities due within one year

from the reporting date. All other liabilities

are classified as non-current liabilities.

Transactions in foreign currencies are

recorded using exchange rates prevailing

at the time of the transaction. Gains or

losses arising on settlement of these tran-

sactions are included in the current year’s

income under the line item “foreign

currency exchange losses/(gains), net”.

Monetary assets and liabilities denomina-

ted in foreign currencies are translated

using the exchange rates prevailing at the

balance sheet date. Any gains or losses

resulting from this translation are also

included in the current year’s income,

except for unrealised gains which are

deferred.

Cash & cash equivalents are stated at

nominal value.

Accounts receivable are stated at nomi-

nal value less any valuation adjustments

for credit risks. Accounts payable are stated

at nominal value.

Accounts receivable from Group com-

panies arise from services provided by

Interroll Holding Ltd. and related interest

and royalties billed. These services are

recognised on an accrual basis.

Own shares and options to buy own

shares are stated at the lower of cost and

fair value.

Non-current loans receivable are stated

at nominal value less any valuation adjust-

ments deemed necessary to reflect the

credit risk. Non-current loans payable are

stated at nominal value.

Investments are stated at cost less any

valuation adjustments deemed necessary

to recognise a decline other than tem-

porary in value (impairment).

Accrued expenses and deferred income

primarily relate to interest due on loans

payable. They are stated at nominal value.

74

N O T E S T O T H E B A L A N C E S H E E T

1 Own shares and options

2 Accounts receivable from third parties

3 Investments

In 2002 the Company acquired 26161 own shares for an average consideration of CHF 93.66 per share and sold 228 own shares for an average consideration of CHF 119.44per share. As of December 31, 2002 the Company held 76177 own shares with a carrying amount of 7465 (2001: 50 244 own shares with a carrying amount of 5 288). A reserve for own shares equal to their original cost of 9 099 was established in accordance with the law. “Own shares” also include options on own shares acquired in the amount of 344 (2001: 354).

2002 2001

Withholding tax (Switzerland) 0 24Other accounts receivable 235 62Receivable for the sale of property by Interroll Austria 0 598

Total 235 684

Total capital Carrying 2002in amount in

thousands thousandsCountry Company CHF %

British VirginIslands Inroll Ltd., Tortola CHF 70 000 70 000 100.00Canada Interroll Canada Ltd., Newmarket CAD 1720 2 762 100.00Denmark Interroll AS, Hvidovre DKK 15 000 8 800 80.00Germany Interroll GmbH, Wermelskirchen EUR 25 41 100.00India Interroll (India) PVT Ltd.,

New Delhi Rupie 1000 – 40.00Netherlands Interroll Europe B.V., Emmeloord EUR 91 7 935 100.00Poland Interroll Polska Sp.z.o.o., Zabrze PLZ 100 39 100.00Switzerland Interroll (Schweiz) AG, S. Antonino CHF 5 000 8 930 100.00

Interroll SA, S. Antonino CHF 100 8 367 100.00Interroll Management SA, S. Antonino CHF 100 100 100.00

South Africa Interroll SA (Proprietary) Ltd., Johannesburg ZAR 1500 281 60.00

USA Interroll Corporation, Wilmington,North Carolina USD 65 13 730 100.00

120 985

The following investments were acquired or increased in 2002:

In May 2002, a new subsidiary was founded in Poland (Interroll Polska Sp.z.o.o., Zabrze), wholly-owned by the Company.

In November 2002, a new subsidiary was founded in Switzerland (Interroll Management SA, S. Antonino).

75

Interest rates range from:

2.51% to 5.07% (2002)3.48% to 8.10% (2001)

The loans due from Group companies are redeemable within a period of three months. However, Group management expects no redemption within 12 months.

The following interest rates apply:

2.51% to 3.49% (2002)2.17% to 4.77% (2001)

4 Loans due from Group companies

5 Loans due to Group companies

6 Other provisions Other provisions comprise the following:

2002 2001

Unrealised foreign exchange gains 305 261

Total 305 261

7 Share capital The share capital consists of 854 000 fully paid-in registered shares with a par value of CHF 50 each.

SIGNIFICANT SHAREHOLDERS: Voting rights (%)

2002 2001

D. Specht and family 13.68 13.66B. Ghisalberti / E. Moreschi and family 11.21 11.68H. vom Stein and family 12.58 12.58N. Axmann and family 10.10 –OZ Holding Ltd. – 9.53Public (including own shares) 52.43 52.55

Total 100.00 100.00

In November 2002, a new subsidiary was founded in Germany (Interroll GmbH, Wermelskirchen), wholly-owned by the Company.

In December 2002, a capital increase of Inroll Ltd., Tortola, British Virgin Islands, from USD 1 000 to CHF 70 million took place.

See also Note 13.

76

10 Available earnings and proposed appropriation

Balance as of January 1, 2001 21738Reserve for own shares –3 723Dividend –2 135Transfer to legal reserve –115Net profit for the year 2001 3 105

Balance as of December 31, 2001 18 870Reserve for own shares –2 423Dividend –1985Transfer to legal reserve –155Net loss for the year 2002 –9 887

Balance as of December 31, 2002 4 420

The Board of Directors proposes to appropriate theavailable earnings as of December 31, 2002 as follows:

in thousand CHF

Dividend (CHF 2.50 per share outstanding, estimated as of the date of the General Meeting of Shareholders) 1950To be carried forward 2 470

4 420

The dividend policy is based on the consolidated results achieved by the Group, and therefore a dividend can be distributed although Interroll Holding Ltd. incurred a net loss for 2002.

8 Additional paid-in capital

9 Reserve for ownshares

In connection with the capital increase due to the initial public offering in 1997the Company received an additional paid-in capital of 28 490. The cost of the initial public offering in the amountof 9 412 was deducted from this amount.

The reserve for own shares equals the cost of own shares held as of balance sheet date (see Note 1).

77

11 Contingent liabilities Guarantees issued on behalf of Group companies:

Country Company 2002 2001

Singapore Interroll (Asia) Pte Ltd., Singapore 410 329USA Interroll Corporation, Wilmington,

North Carolina 3 671 3 249

Total 4 081 3 578

Additionally, Interroll Holding Ltd. issued letters of continuing financial support in favour of the following Group companies:

Country Company

British Virgin Islands Inroll Ltd., TortolaFrance Interroll SAS, Dijon

Interroll SAS, La Roche sur YonGreat Britain Interroll (Engineering) Ltd., Corby

Interroll Ltd., CorbySwitzerland Interroll (Schweiz) Ltd., S. AntoninoSingapore Interroll (Asia) Pte Ltd., Singapore

12 Administrative expenses

13 Investment expenses

N O T E S T O T H E I N C O M E S T A T E M E N T

2002 2001

Advisory services 221 154 Other administrative expenses 307 67 Investor relations 184 203 IT services 16 2

Total 728 426

The investment expenses of 14153 include extraordinary value adjustments of 4 000 on theUS investment and of 10 000 on the investment in Interroll SA, S. Antonino.

There are no further facts that would require disclosure under article 663b of the Swiss Codeof Obligations.

78

3 . 4 R E P O R T O F T H E S T A T U T O R Y A U D I T O R S

As Statutory auditors, we have audited

the accounting records and the financial

statements of Interroll Holding Ltd.,

S. Antonino, presented on pages 70 to 77

and consisting of the balance sheet as of

December 31, 2002 and the income state-

ment and notes to the financial statements

for the year then ended.

These financial statements are the

responsibility of the Company’s Board of

Directors. Our responsibility is to express

an opinion on these financial statements

based on our audit. We confirm that we

meet the legal requirements concerning

professional qualification and indepen-

dence.

Our audit was conducted in accordance

with auditing standards promulgated by

the Swiss profession. Those standards

require that we plan and perform an audit

to obtain reasonable assurance about

whether the financial statements are free

of material misstatement. An audit includes

examining, on a test basis, evidence sup-

porting the amounts and disclosures in the

financial statements. An audit also includes

assessing the accounting principles used

and significant estimates made by mana-

gement, as well as evaluating the overall

presentation of the financial statements.

We believe that our audit provides a

reasonable basis for our opinion.

In our opinion, the accounting records,

financial statements, and the proposed

appropriation of available earnings comply

with Swiss law and the Company's articles

of incorporation.

We recommend that the financial state-

ments submitted to you be approved.

KPMG Fides Peat

Marco Ranzoni Philipp Hallauer

Swiss Certified Swiss Certified

Accountant Accountant

Auditor in charge

Lugano, April 16, 2003

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INTERROLL ANNUAL REPORTreports.huginonline.com/902899/117575.pdf · Interroll Polska Sp.z.o.o....

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