1 Performance

1.1 Segment information: order intake/net sales

Order intake¹

Order intake is an important performance indicator. An order is recognized when a sales contract is signed, an initial down payment is received and the customer's product orders have been placed at the production plants.

Net sales

The following overview shows the net sales by segment, for the previous year divided into continuing operations Bystronic and discontinued operations.

With reference to the recommendation for listed companies (FER 31/8), Bystronic refrains from disclosing segment results in the interest of the shareholders for the following reasons:

• Impairment of negotiating positions:
  The disclosure of segment results would allow conclusions to be drawn about the pricing, which could significantly affect Bystronic’s negotiating position.
• Competitive disadvantage compared to competitors:
  Bystronic’s competitors do not disclose segment information and detailed segment results. The disclosure of segment results would put Bystronic at a competitive disadvantage compared to its competitors as the results allow conclusions to be drawn about the margin and cost situation per segment.

Accounting principles

External segment reporting is based on the internal reporting used by the Executive Committee and the Board of Directors for corporate management purposes. There are four regional segments at Bystronic: EMEA, Americas, China and APAC.

Machine sales are recognized when the risks and rewards of ownership have been transferred to the buyer. Hence, revenue is recognized upon completion of the installation and when the machine is ready for operation. This is generally recorded in an acceptance protocol. The revenue is recognized separately for transactions with separable components. Services rendered are recognized as revenue based on their stage of completion if this can be reliably estimated. Net sales correspond to the expected value of the services provided, net of sales and value-added taxes, sales deductions such as sales bonuses, rebates and discounts granted as well as value adjustments and currency effects on trade receivables.

1.2 Backlog¹

The backlog at the end of the period equals the backlog at the end of the previous period, adjusted for foreign currency effects, plus the order intake of the reporting period minus net sales of the reporting period.

1.3 Other operating income

Other operating income includes proceeds from the sale of fixed assets and obsolete materials and income from subsidies and insurance payments.

1.4 Operating expenses

Material expenses

Material expenses include all expenses for raw materials, supplies and merchandise as well as expenses for the external manufacture, processing or treatment of own products (external services).

Compared to the increase in net sales of 8.1%, material expenses rose disproportionately by 11.3% taking into account the changes in inventories of unfinished and finished goods. The ratio of the adjusted material expenses to net sales (materials ratio) amounted to 46.2%, 1.3 percentage points higher than in the previous year. The higher materials ratio compared to the previous year is due to increased purchasing and transportation costs and additionally to higher procurement costs due to supply bottlenecks for key components. On the other hand, Bystronic was able to benefit from the slightly higher share of sales from the service business compared to the previous year.

Personnel expenses

Bystronic’s personnel expenses increased by 7.2% compared to the previous year. In relation to sales, personnel expenses decreased by 0.2 percentage points to 25.6%.

Due to the coronavirus pandemic, some Bystronic companies received short-time working compensation or similar state subsidies. The personnel-related compensations and subsidies were credited to personnel expenses and amounted to CHF 0.1 million (previous year: CHF 0.7 million).

As of the balance sheet date, the number of Bystronic employees increased by 1.9% to 3,609. The increase was mainly due to the strategic expansion of the service business. The average number of employees rose by 9.4% to 3,679 full-time equivalents.

Other operating expenses

Compared to the previous year, other operating expenses of Bystronic increased by 14.6%. Both the direct costs of goods sold and the costs of purchased services as well as for exhibitions and travelling increased. In relation to net sales, other operating expenses increased by 1.2 percentage points to 21.9%.

1.5 Income taxes

Current income taxes include taxes paid and still owed on the taxable income of the individual companies.

The expected tax rate for Bystronic of 20.0% (previous year: 21.0%) corresponds to the weighted average of tax rates in the respective tax jurisdictions. The effective tax rate is 19.5% (previous year: 18.0%) on the ordinary income before taxes. The decrease from the average applicable tax rate to the effective tax rate is mainly due to the utilization of loss carryforwards.

Bystronic calculates deferred taxes at the tax rates actually expected to apply to the temporary differences in the individual companies. Deferred tax assets from loss carryforwards, temporary differences and from the elimination of intercompany profits amounted to CHF 24.2 million (previous year: CHF 22.8 million). Due to uncertainties regarding future offset possibilities, tax effects from loss carryforwards in the amount of CHF 0.7 million (previous year: CHF 0.3 million) were not capitalized. This evaluation is based on the expected income tax rates. Deferred tax liabilities amounted to CHF 20.3 million (previous year: CHF 21.7 million).

Significant estimates made by management

Significant estimates have to be made to determine the amount of current and deferred income tax assets and liabilities. Some of these estimates are based on the interpretation of existing tax legislation and regulations. Various internal and external factors may have favorable or unfavorable effects on income tax assets and liabilities. These factors include, but are not limited to, changes in tax legislation and regulations and their interpretation as well as changes in tax rates and in the overall level of earnings before taxes. Such changes may impact the current and deferred income tax assets and liabilities recognized in future reporting periods.

Accounting principles

Income taxes include current and deferred income taxes. All tax liabilities are accrued, irrespective of their maturity. The expected taxes on the valuation differences between the group’s carrying amounts and the tax bases are accrued at the applicable income tax rates for the companies. The change in these deferred taxes is recognized through tax expenses. The deferred tax assets from offsetting loss carryforwards and temporary valuation differences are only capitalized if it is highly probable that future taxes on profits can be offset.

1.6 Earnings per share

Share-based payments do not lead to a dilution of earnings per share.

Accounting principles

Earnings per share category were calculated on the basis of the portion of net income attributable to the shareholders of Bystronic AG, based on their portion of the share capital and the average number of outstanding shares (issued shares less treasury shares).