Adding Value from Fiber to Fabric · USTER ® QUANTUM clearer. • Launch of a new USTER ® ZWEIGLE...

Uster Technologies Ltd | Annual Report 2010Adding Value from Fiber to Fabric

Uster Technologies AG | Geschäftsbericht 2010Wertschöpfung von der Faser bis zum Stoff

Milestones

1875 Establishment of an aerial telegraphy

workshop in Uster.

1927 Production of auxiliary weaving mill

machines started.

1944 Initiation of operations in the textile

electronics business.

1957 First publishing of USTER® STATISTICS.

1982 Cooperation with the Chinese textile

industry.

2003 Buyout from Zellweger Luwa by the

Management and two private-equity

investment companies.

2005 Development and assembly established

in China.

Sale of the one millionth USTER®

QUANTUM clearer.

2006 Uster Technologies Ltd was sold to its Man-

agement and funds advised by Alpha Be-

teiligungsberatung GmbH & Co. KG via a

secondary buyout.

2007 Listing on the main segment of SIX Swiss

Exchange.

2008 Introduction of new product groups

specifically targeting the mid-market

segment.

2009 Acquisition of Zweigle product range.

Broadening of existing shareholder base

with new strategic investor Toyota In-

dustries Corporation.

2010 Launch of ground-breaking third gen-

eration of USTER® QUANTUM clearer.

Meilensteine

1875 Gründung eines Betriebes für oberirdi-

sche Telegrafie in Uster.

1927 Start der Produktion von Hilfsmaschinen

für Webereibetriebe.

1944 Beginn der Aktivitäten im Bereich Tex-

tilelektronik.

1957 Erste Veröffentlichung der USTER®

STATISTICS.

1982 Zusammenarbeit mit der chinesischen

Textilindustrie.

2003 Buy-out aus der Zellweger Luwa Gruppe

durch das Management und zwei Private-

Equity-Gesellschaften.

2005 Aufbau eines Entwicklungs- und Mon-

tagestandortes in China.

1 Million USTER® QUANTUM Reiniger

verkauft.

2006 Uster Technologies wird im Rahmen

eines zweiten Buy-outs an das Manage-

ment sowie an durch die Alpha Beteili-

gungsberatung GmbH & Co. KG vertre-

tene Fonds verkauft.

2007 Kotierung am Hauptsegment der SIX

Swiss Exchange.

2008 Einführung von neuen, speziell auf die

Bedürfnisse des mittleren Marktsegments

ausgerichteten Produkten.

2009 Übernahme des Produktsortiments von

Zweigle.

Erweiterung des Aktionärskreises durch

den neuen strategischen Investor To-

yota Industries Corporation.

2010 Lancierung der wegweisenden dritten

Generation des USTER® QUANTUM

Garnreinigers.

Gross Sales

in CHF 1,000

2010 132,841

2009 100,763

2008 154,893

2007 186,666

2006 163,900

Net Result

in CHF 1,000

in percent of gross sales

2010 20,763

2009 1,078

2008 5,316

2007 3,587

2006 29,957

EBITA

in CHF 1,000


2010 34,602

2009 22,709

2008 34,168

2007 52,384

2006 46,193

Free Cash Flow

in CHF 1,000


2010 39,011

2009 11,278

2008 29,409

2007 37,084

2006 45,348

Achievements 2010

• 31.8% sales growth with a strong EBITA margin of

26.0%.

• Excellent net result of CHF 20.8 million and further

reduction in net debt to CHF 76.5 million demon-

strate the Company’s strong cash generation abil-

ity.

• Increased investments in all R&D projects in order

to secure long-term growth prospects.

• Continued progress in joint technology and busi-

ness development projects with Toyota Industries

Corporation.

• Launch of ground-breaking third generation of

USTER® QUANTUM clearer.

• Launch of a new USTER® ZWEIGLE laboratory sys-

tem that allows yarn hairiness to be measured with

much better accuracy, reproducibility and speed.

• Sale of the two millionth USTER® QUANTUM clear-

er and celebration of the 50th anniversary of the

launch of the first electronic yarn clearer.

• Demonstrated market leadership at ITMA ASIA &

CITME 2010 under the slogan “The Future Has a

Past”.

Höhepunkte 2010

• Umsatzsteigerung von 31.8% mit hoher EBITA-

Marge von 26.0%.

• Ausgezeichnetes Nettoergebnis in Höhe von CHF

20.8 Mio. und weiterer Abbau der Nettoschulden

auf CHF 76.5 Mio. demonstrieren die ausgeprägte

Fähigkeit, liquide Mittel zu generieren.

• Erhöhung der Investitionen in alle F&E-Projekte

zur Sicherung der langfristigen Wachstumschancen.

• Weitere Fortschritte bei gemeinsamen Technolo-

gie- und Geschäftsentwicklungsprojekten mit

Toyota Industries Corporation.

• Lancierung der wegweisenden dritten Generation

des USTER® QUANTUM Garnreinigers.

• Einführung eines neuen USTER® ZWEIGLE Laborsys-

tems, das die Garnhaarigkeit mit erheblich verbes-

serter Genauigkeit, Reproduzierbarkeit und Geschwin-

digkeit misst.

• Verkauf des zweimillionsten Garnreinigers USTER®

QUANTUM und 50-Jahre-Jubiläum der Markteinfüh-

rung des ersten elektronischen Garnreinigers.

• Demonstration der Marktführerschaft an der ITMA

ASIA & CITME 2010 unter dem Slogan „The Future

Has a Past“.

22.5 %

11.2 %

26.0 %

29.1 %

22.1 %

19.0 %

28.1 %

19.9 %

28.2 %

27.7 %

1.9 %

18.3 %

3.4 %

15.6 %

1.1 %

USTERIZED®

After Sales Services and Textile Technology

i i i i i i

Textile Production Process “Fiber to Fabric”

Process Step

USTER® Products

USTER® Complementary Products and Services

Products and Services

Ginning and Cotton Classing

Fiber Testing Yarn Testing Yarn Clearing Fabric QualityAssurance

Intelligent Sourcing

• INTELLIGIN• HVI Systems

• HVI Systems• AFIS PRO• LVI

• TESTER• TENSORAPID• TENSOJET• CLASSIMAT• SLIVERGUARD• ZWEIGLE

• QUANTUM • STATISTICS• CLASSIMAT• TENSORAPID• TENSOJET• ZWEIGLE

• USTERIZED®

• INTELLIGENT SOURCING

• Quality Profiles

USTER® STATISTICS and USTERIZED®

Integrated Data and Expert Systems

Portrait

The Uster Group is the leading high technology

instrument manufacturer of products for qual-

ity measurement and certification for the textile

industry. The Group provides testing and moni-

toring instruments, systems and services that

allow optimization and certification of quality

through each individual stage of textile produc-

tion; from the raw textile fiber, such as cotton,

wool or synthetic filament yarns, to the final fin-

ished fabric. The Uster Group provides benchmarks

that are the basis for the trading of textile products

at assured levels of quality across global markets.

Uster Technologies Ltd was established in 1875

as an aerial telegraphy workshop in Uster (Swit-

zerland) and became an independent company

in 2003 following the acquisition of the Zellweger

Uster division of Zellweger Luwa by the Manage-

ment and funds advised by two private-equity

investment companies. In 2006 Uster Technolo-

gies Ltd was acquired by its Management and

funds advised by Alpha Beteiligungsberatung

GmbH & Co. KG. In 2007 Uster Technologies Ltd

became a public company by listing its shares on

the SIX Swiss Exchange.

Kurzportrait

Uster Technologies AG ist der weltweit führende

Hersteller von Hightech-Produkten für die Qua-

litätsprüfung und Zertifizierungen in der Textil-

industrie. Das Unternehmen bietet technologisch

anspruchsvolle Systeme und Dienstleistungen

an, welche die Herstellung von Produkten in op-

timaler Qualität auf jeder Stufe der Textilverar-

beitung gewährleisten; von der rohen Textilfaser

wie Baumwolle, Wolle oder synthetischen Garnen

bis zum fertigen Gewebe. Uster Technologies legt

Qualitätsstandards fest, die als Grundlage für den

globalen Handel mit Textilprodukten dienen.

Uster Technologies AG wurde 1875 als Betrieb für

oberirdische Telegrafie in Uster (Schweiz) gegrün-

det. Seine Selbständigkeit erlangte das Unterneh-

men nach der Übernahme der Division Zellweger

Uster der Zellweger Luwa Gruppe durch das

Management sowie durch von zwei Private-Equi-

ty-Gesellschaften vertretene Fonds. 2006 wurde

Uster Technologies AG durch ihr Management

sowie durch von der Alpha Beteiligungsberatung

GmbH & Co. KG betreute Fonds erworben. Im Jahr

2007 wurde das Unternehmen durch die Kotierung

seiner Aktien an der SIX Swiss Exchange zu einer

Publikumsgesellschaft.

Knoxville, USA Charlotte, USA

Technology Centers

Regional Service Centers

Representative Offices

S

Worldwide Sales and Support Network

The Group is headquartered in Uster, Switzer-

land, and operates through a worldwide Market

Organization complemented by Technology

Centers. It has sales and service subsidiaries in

the major textile markets and Technology Cen-

ters in Uster (Switzerland), in Knoxville (USA)

and in Suzhou (China). The Swiss, American,

and Chinese facilities are certified according to

the ISO 9001 standard. The Uster facility is fo-

cused on products for yarn testing and on fabric

quality assurance whereas the Knoxville facility

is focused on products for fiber testing and gin

process control. The Suzhou facility was set up

in 2005 and is focused on low-cost development

and assembly operations as well as allowing the

Group to establish a local supply chain network

to complement its global supply chain manage-

ment activities.

Weltweites Vertriebs- und Servicenetz

Die Uster-Gruppe hat ihren Hauptsitz in Uster in

der Schweiz und ist mit ihren Technologie zentren

in Uster (Schweiz), Knoxville (USA) und Suzhou

(China) sowie einer ausgedehnten Vertriebs- und

Serviceorganisation weltweit in den wichtigsten

Textilmärkten vertreten. Die Technologiezentren

in der Schweiz, den USA und in China sind nach

der Norm ISO 9001 zertifiziert. Das Werk in Uster

ist auf Produkte für die Garnprüfung und zur

Qualitätssicherung von Geweben spezialisiert,

während sich Knoxville auf Produkte zur Faser-

prüfung und Steuerung des Entkörnungsprozes-

ses konzentriert. Das Werk in Suzhou wurde 2005

gegründet und konzentriert sich auf kostengüns-

tige Produktentwicklungen und Montage. Aus-

serdem ermöglicht das Technologie zentrum in

Suzhou der Gruppe die Errichtung eines lokalen

Lieferan tennetzes, das die weltweiten Aktivitäten

im Bereich Supply Chain Management ergänzt.

Uster, Switzerland

Istanbul, Turkey

Bangkok, Thailand

Coimbatore, India

Suzhou, China

Shanghai, China

São Paulo, Brazil

Osaka, Japan

Table of ContentsInhaltsverzeichnis

Foreword / Vorwort ......................................................................................................................................... 3

Operational Review / Operativer Rückblick .................................................................................................. 10

Sales and Marketing / Vertrieb und Marketing .............................................................................................. 16

Research and Innovation / Forschung und Entwicklung .............................................................................. 22

Operations / Produktion und Logistik .......................................................................................................... 26

Outlook / Ausblick ........................................................................................................................................ 28

Corporate Governance ................................................................................................................................. 32

Comment on the Consolidated Financial Statements .................................................................................. 58

Uster Group – Consolidated Financial Statements ...................................................................................... 60

Uster Group – Notes to the Consolidated Financial Statements .................................................................. 65

Report of the Statutory Auditor on the Consolidated Financial Statements ............................................. 107

Uster Technologies Ltd – Financial Statements ......................................................................................... 109

Uster Technologies Ltd – Notes to the Financial Statements ...................................................................... 111

Report of the Statutory Auditor on the Financial Statements .................................................................... 117

Information for Investors ........................................................................................................................... 119

Foreword | Vorwort 3

ForewordVorwort

Dear Fellow Shareholders

“Adding value from fiber to fabric” is the theme of

this year’s report. In each step of the value chain, from

the classing of the raw material to the spinning of

yarns and the finished textile product, Uster Tech-

nologies Ltd helps to increase the efficiency of the

textile manufacturing process while ensuring con-

sistent standards of quality in the final products that

are supplied to customers.

Back on the Growth Track

In the financial year 2010, Uster Technologies Ltd busi-

nesses emerged from the crisis caused by the combina-

tion of the collapse in the textile industry and the

global financial crisis. There were many positive signs

of market recovery in the first half of the year. This

trend continued in the second half, driven by further

improved overall economic conditions in all major

markets and the recovery in textile machinery invest-

ments spearheaded by Asian markets, most notably

China. Our organization is in good shape again and

business momentum is returning to levels last seen

during our record year 2007. Uster Technologies Ltd is

moving back into the growth track. Looking ahead, we

will further exploit the Group’s solid business model

demonstrated by the Company’s strong cash generation

power even in difficult times, allowing us to further

reduce net debt and grow the business at the same time.

In light of the generally improved economic environ-

ment, the Uster Group took action to profit from the

anticipated market upswing by:

• Focusing on the fast growing Chinese and Indian

markets along with pursuing other growth oppor-

tunities such as new classing business. The Group

continued to expand its sales and service network,

particularly in China. Nowadays it is extremely im-

portant to be well positioned in Asian markets and

to possess the innovation power to rapidly adapt

products to the needs of these markets. Beside the

global textile machinery manufacturers, with whom

Uster Technologies Ltd maintains close client rela-

tionships, local equipment producers are rapidly

growing their businesses.

Sehr geehrte Aktionärinnen und Aktionäre

„Wertschöpfung von der Faser bis zum Stoff“ – so

lautet das Motto unseres diesjährigen Geschäftsbe-

richts. In jeder Stufe der Wertschöpfungskette –

von der Klassierung des Rohstoffs über das Spinnen

der Garne bis zum fertigen Textilprodukt – trägt

Uster Technologies AG zur Verbesserung der Effizienz

im Textilherstellungsprozess bei und gewährleistet

gleichzeitig einheitliche Qualitätsstandards der End-

produkte, die an die Kunden geliefert werden.

Zurück auf Wachstumskurs

Im Geschäftsjahr 2010 erholte sich Uster Technolo-

gies AG von der Krise, die durch den Einbruch der

Textilindustrie in Kombination mit der globalen Fi-

nanzkrise ausgelöst worden war. Bereits im ersten

Halbjahr zeigte der Markt viele positive Signale einer

Erholung. Dieser Trend setzte sich im zweiten Halb-

jahr fort, angetrieben durch die allgemeine Erholung

der wirtschaftlichen Rahmenbedingungen in allen

grossen Märkten und die wieder erwachte Investi-

tionsbereitschaft der Textilproduzenten. Sie wurde

von den asiatischen Märkten angeführt, allen voran

von China. Das Unternehmen befindet sich wieder in

gutem Zustand. Das Geschäft gewinnt an Fahrt und

kehrt allmählich auf das Niveau zurück, das wir zu-

letzt in unserem Rekordjahr 2007 erreicht hatten.

Uster Technologies AG ist zurück auf Wachstums-

kurs. Mit Blick in die Zukunft werden wir an dem so-

liden Geschäftsmodell der Gruppe festhalten. Dank

ihm gelang es uns selbst in schwierigen Zeiten liqui-

de Mittel zu generieren, sodass wir unsere Netto-

schulden reduzieren und gleichzeitig unser Geschäft

ausbauen konnten.

Angesichts der allgemeinen Verbesserung des wirt-

schaftlichen Umfelds ergriff die Uster-Gruppe Mass-

nahmen, um vom erwarteten Marktaufschwung zu

profitieren:

• Sie konzentrierte sich in erster Linie auf die wachs-

tumsstarken Märkte in China und Indien bei

gleichzeitiger Erschliessung weiterer Wachstums-

potenziale, wie zum Beispiel neue Aufträge im

Klassierungsgeschäft. Die Gruppe baute ihr Ver-

4 Uster Technologies Ltd | Annual Report 2010

• Immediately restoring all R&D projects back to full

speed with the goal of providing new offerings once

the market recovers and being ready to invest in new

growth. This strategy enabled Uster Technologies

Ltd to launch its ground-breaking third generation

of USTER® QUANTUM clearer at the end of Septem-

ber at a point in time when momentum in the textile

market was picking up worldwide, especially in the

textile machinery market.

• Emphasizing strong cash generation in order to

further reduce debt while at the same time enhanc-

ing the Group’s operational and financial flexibili-

ty to take advantage of future growth opportunities.

In order to ensure that the organization is prepared

to fully benefit from the market upswing, it is neces-

sary to make timely investments in new growth

projects. Increases in expenditures were seen in many

areas of the business, including capital investments

in improved production facilities for the new USTER®

QUANTUM 3 clearer. With our business capabilities

restored to full power, we are pleased to have again

demonstrated our ability to maintain profitability

at a high level. After reporting an EBITA margin of

25.5 % in the first half of 2010, the margin increased

to 26.0 % thanks to the higher sales, clearly exceeding

the target of around 25 %. The net result was enhanced

by one-off effects arising from the resolution of tax

issues from earlier years.

triebs- und Servicenetz, vor allem in China, weiter

aus. Eine gute Wettbewerbsposition in den asiati-

schen Märkten, kombiniert mit der Innovations-

kraft, Produkte rasch an die Anforderungen dieser

Märkte anzupassen, erweist sich heute als erfolgs-

entscheidend. Neben den internationalen Textil-

maschinenproduzenten, zu denen Uster Techno-

logies AG enge Kundenbeziehungen unterhält,

weiten auch lokale Hersteller ihre Geschäftstä-

tigkeit schnell aus.

• Weiter nahm sie unverzüglich alle F&E-Projekte

wieder auf, um mit der einsetzenden Markterho-

lung neue Produkte anbieten zu können und für

Investitionen ihrer Kunden in neues Wachstum be-

reit zu sein. Dank dieser Strategie konnte Uster

Technologies AG Ende September die wegweisen-

de dritte Generation des Garnreinigungssystems

USTER® QUANTUM auf den Markt bringen – genau

zu dem Zeitpunkt, als die Belebung der weltweiten

Textilmärkte, insbesondere im Textilmaschinen-

markt, verstärkt einsetzte.

• Schliesslich legte sie einen Schwerpunkt auf die

Generierung liquider Mittel, um weiter Schulden

abzubauen, die operative und finanzielle Flexibili-

tät der Gruppe zu stärken und damit für zukünftige

Wachstumschancen nutzen zu können.

Damit das Unternehmen in vollem Umfang vom

Marktaufschwung profitiert, investierte das Ma-

nagement rechtzeitig in neue Wachstumsprojekte.

In vielen Geschäftsbereichen wurden die Ausgaben

erhöht. Ein Beispiel hierfür sind die Investitionen

zur Verbesserung der Produktionsanlagen für den

neuen USTER® QUANTUM 3 Garnreiniger. Wir freu-

en uns, dass es uns parallel zur Rückkehr auf den

Wachstumspfad gelungen ist, das hohe Profitabili-

tätsniveau zu halten. Nach dem Ausweis einer

EBITA-Marge von 25.5% im ersten Halbjahr 2010

konnte die Marge dank höherer Umsatzerlöse auf

26.0 % gesteigert werden und übertraf damit die Ziel-

vorgabe von rund 25 % deutlich. Das Nettoergebnis

wurde durch einmalige Effekte aufgrund der Lösung

von Steuerfragen aus früheren Jahren verbessert.

Max-Ulrich Zellweger, Geoffrey Scott

Unique Expertise as Basis for Above-Average

Growth

We are encouraged by the positive market develop-

ments during the past several months and, at the

same time, we are proud to have made the most of

the crisis by expanding and strengthening our mar-

ket leadership relative to the performance of our

competitors. Going forward, we will continue to do

our utmost to outperform the markets. We will con-

centrate on the extensive skills already available in

our organization. In addition, we will further exploit

the synergies and joint development opportunities

emerging from the strategic partnership with Toyo-

ta Industries Corporation, a leading manufacturer

of textile machines for the weaving and spinning

sectors. In the mid-term perspective, the combined

expertise creates new joint growth opportunities

that will help us to achieve our goal of gradually

bringing the Company’s top and bottom-line per-

formance back to the levels achieved prior to the

crisis.

Einzigartige Expertise als Grundlage für über-

durchschnittliches Wachstum

Wir sind von den positiven Marktentwicklungen der

letzten Monate ermutigt. Gleichzeitig sind wir stolz,

dass wir die Krise als Chance genutzt haben, unsere

Marktführerschaft gegenüber anderen Mitbewerbern

auszubauen und zu festigen. Wir werden auch zu-

künftig alles daransetzen, Ergebnisse über dem

Marktdurchschnitt zu erzielen. Dabei konzentrieren

wir uns auf die Stärken, die in unserem Unternehmen

vorhanden sind. Zusätzlich werden wir Synergien und

gemeinsame Entwicklungsmöglichkeiten nutzen, die

sich durch die strategische Zusammenarbeit mit

Toyota Industries Corporation ergeben. Toyota zählt

zu den führenden Textilmaschinenproduzenten für

die Weberei- und Spinnerei-Industrie. Wir sind über-

zeugt, dass aus dem vereinigten Wissen mittelfristig

neue gemeinsame Wachstumsmöglichkeiten entste-

hen, die unser Ziel unterstützen sowie das Umsatz-

und Gesamtergebnis des Unternehmens auf das

Niveau vor der Krise zurückbringen.



Thanks

We are very happy that market demand has recovered

and that all staff members, in particular our colleagues

at the Technology Center in Uster, have returned to

their regular work schedules and are highly moti-

vated to seize the oncoming opportunities. Our em-

ployees at all levels worldwide demonstrated a high

degree of flexibility and steadfast dedication during

the long months of market uncertainty. On behalf of

the Board of Directors and the Executive Committee,

we cordially thank all our employees for their efforts

and strong commitment.

Special thanks go to Deniz Bütüner, Executive Vice-

President Marketing and Business Development of

the Uster Group since 2007, who stepped down from

her position as of 31st December 2010. Her responsi-

bilities were assumed by Reine Wasner, who joined

Uster Technologies Ltd at the beginning of January

2011 and whom we cordially welcome to the Group’s

Executive Committee.

We also thank our business partners, customers and

suppliers for their excellent collaboration with our

teams. Finally, we express our thanks to our Share-

holders for their confidence in our business. We are

now again in the position to reward our shareholders

for their loyalty and support. At the General Meeting

in March, the Board of Directors will propose a divi-

dend of CHF 1.20 per share.

Max-Ulrich Zellweger

Chairman of the Board of Directors

Dank

Wir freuen uns sehr, dass sich die Marktnachfrage

erhöht hat und alle Mitarbeitenden, insbesondere

unsere Kollegen im Technologiezentrum Uster,

wieder zu ihren normalen Arbeitszeiten zurückkeh-

ren konnten. Sie alle sind hoch motiviert, neue

Wachstumschancen wahrzunehmen. In den langen

Monaten der Marktunsicherheiten hat unsere Be-

legschaft weltweit auf allen Ebenen sehr grosse Fle-

xibilität und Standhaftigkeit bewiesen. Im Namen

des Verwaltungsrates und des Executive Committee

möchten wir allen für ihren Einsatz und ihr starkes

Engagement danken.

Ein besonderer Dank geht an Deniz Bütüner. Sie war

seit 2007 Executive Vice-President Marketing und

Business Development der Uster-Gruppe und trat

per 31. Dezember 2010 von ihrer Funktion zurück.

Ihre Aufgaben werden von Reine Wasner übernom-

men, der Anfang Januar 2011 in die Uster Technolo-

gies AG eintrat und den wir herzlich in der Geschäfts-

leitung begrüssen.

Ausserdem danken wir unseren Geschäftspartnern,

Kunden und Lieferanten für die ausgezeichnete Zu-

sammenarbeit mit unseren Teams. Nicht zuletzt

geht ein herzliches Dankeschön an unsere Aktionä-

rinnen und Aktionäre für ihr Vertrauen in unser

Unternehmen. Wir sind jetzt wieder in der Lage, die

Aktionäre für ihre Treue und Unterstützung zu

belohnen. Der Verwaltungsrat schlägt der General-

versammlung im März die Ausrichtung einer Divi-

dende von CHF 1.20 je Aktie vor.

Dr. Geoffrey Scott

Chief Executive Officer

Innovation

USTER® offers textile producers unique know-how and

expertise in meeting current and future industry

requirements as well as in applying state-of-the-art

technology that enhances production efficiency, quality

excellence and competitiveness.

−

Ground-breaking USTER® QUANTUM 3 yarn clearer

with Smart Clearing Technology features new powerful

capacitive and optical sensor technology that makes

all disturbing defects visible, thereby significantly

enhancing detecting precision and accuracy enabling

manufacturers to sort out efficiently short and long thin

and thick places, disturbing contaminants and major

yarn quality deviations.

“Thanks to USTER®’s innovation power we can increase production and cut costs, thereby boosting profitability keeping the quality to the optimum level.”Ruhi Dilaver, Mill Manager, Eren Textiles, Turkey


Uster Technologies AG blickt auf ein Jahr zurück, in

dem sich die Textilindustrie deutlich erholt hat. Die

erfreuliche Entwicklung veranlasste die Textilprodu-

zenten, wieder in die Zukunft zu blicken und in neue

Geschäftsprojekte und Qualitätsverbesserungen zu

investieren. Gleichzeitig stiegen die Rohstoffpreise,

insbesondere für Baumwolle, und die Garnpreise klet-

terten gegenüber dem Niveau am Jahresanfang sprung-

haft in die Höhe. Diese Entwicklung unterstrich die

Wichtigkeit von Qualität und erhöhte das Interesse

der Hersteller, Ausschuss zu minimieren und vor al-

lem für die Produktqualität angemessene Preise zu

erzielen. Letztlich sind sie bestrebt, die Erwartungen

der Endkunden zu erfüllen oder gar zu übertreffen,

anstatt Gefahr zu laufen, Reklamationen aufgrund

mangelhafter Rohmaterial- und Garnqualität wie auch

Gewebefehler zu erhalten. Beanstandungen schmälern

den Gewinn und, was weitaus gravierender ist, können

den Ruf einer Marke nachhaltig schädigen.

Eine weitere bedeutende Veränderung, welche die

Marktdynamik während der Berichtsperiode revita-

lisierte, war die allgemeine Konjunkturerholung. Sie

führte dazu, dass Textilproduzenten wieder investier-

ten und ihr Interesse an Mess- und Prüfsystemen

zurückkehrte. Als Folge begannen die Textilprodu-

zenten, neue Maschinen zur Erhöhung ihrer Effizienz

und Profitabilität anzuschaffen. Diese positive Ent-

wicklung wurde durch bessere Rahmenbedingungen

für Kredit- und Investitionsfinanzierungen für die

Kunden der Gruppe in allen wichtigen Märkten un-

terstützt.

Starke Position in asiatischen Märkten

China ist weiterhin das führende Land in der Tex-

tilindustrie. Dieser Markt ist nach wie vor stark

fragmentiert. Tausende Spinnereien werden von

internationalen Textilmaschinenherstellern und in

zunehmendem Masse von den schnell wachsenden

lokalen Produzenten beliefert. Gegenwärtig vollzieht

sich im chinesischen Markt ein schneller Moderni-

sierungsprozess, der von staatlicher Seite unterstützt

wird. Die Politiker haben erkannt, dass die Textilin-

dustrie einen wichtigen Beitrag zur Wirtschaftsent-

wicklung leistet. Steuererleichterungen sind nur ein

Operational ReviewOperativer Rückblick

Uster Technologies Ltd looks back on a year in which

the textile industry experienced a sharp recovery,

encouraging textile producers to again direct their

focus on the future and to invest in new business pro-

jects and quality improvements. At the same time raw

material prices, especially cotton, and yarn prices

increased compared to their levels at the beginning

of the year. The result was further emphasis on the

importance of quality and sharpened producer inter-

est in minimizing waste and, in particular, in achiev-

ing adequate prices relative to the corresponding

quality level. Their ultimate goal is to meet or surpass

end-consumer expectations rather than to risk pro-

duct returns due to fabric failures and faulty quality,

which reduces profits and, even worse, can damage

a brand’s reputation.

A further significant change that revitalized market

dynamics during the reporting period was the gen-

eral economic recovery, which stimulated investment

spending by textile producers and rekindled their

interest in measuring and testing systems. As a result,

textile manufacturers started to buy new equipment

to enhance efficiency and profitability. This positive

development was supported by an improvement in

credit and trade financing terms for the Group’s cus-

tomers in all major markets.

Strong Anchor in Asian Markets

China continued to take the lead in the textile indus-

try. This market is still highly fragmented. Thousands

of spinning mills are supplied by global textile ma-

chinery producers and, increasingly, by fast growing

local manufacturers. Currently, the Chinese market

is experiencing rapid modernization thanks to gov-

ernment support, as policymakers continue to re-

cognize that the textile industry is an important con-

tributor to the country’s economic development.

Favorable tax incentives are an example of the various

programs designed to facilitate the transition from

labor-intensive manual production to automated

production. This paradigm shift in production tech-

nology further boosted demand for quality measure-

ment and testing equipment. In response to the ra pidly

emerging local Chinese manufacturers, Uster Tech-

Operational Review | Operativer Rückblick 11

Beispiel für die verschiedenen Programme, mit denen

die Umstellung von der arbeitsintensiven manuellen

Herstellung auf automatisierte Produktionsverfah-

ren gefördert wird. Dieser Paradigmenwechsel in der

Produktionstechnologie steigerte zusätzlich die

Nachfrage nach Qualitätsmess- und -prüfsystemen.

Als Reaktion auf das rasche Wachstum lokaler chi-

nesischer Hersteller hat Uster Technologies AG ihr

Produktangebot im mittleren Marktsegment ausge-

baut und Systeme eingeführt, die speziell auf die

Anforderungen dieses wichtigen Wachstumssektors

zugeschnitten sind. Es ist eines der zentralen Ziele

der Gruppe, bei diesen Kunden die Nachfrage nach

Qualitätsverbesserungen zu forcieren. Letztere er-

möglichen es ihnen, ihre betriebliche Effizienz zu

verbessern und dadurch weiter zu wachsen.

Im vergangenen Jahr erholten sich auch die mittel-

asiatischen Märkte von den Folgen der wirtschaft-

lichen Instabilität früherer Jahre, darunter Indien,

die Türkei, Bangladesch und Pakistan.

Deutlich höherer Umsatz und Gewinn

Parallel zur Erholung des Textilmarktes erzielte Uster

Technologies AG im Geschäftsjahr 2010 einen Brut-

toumsatz von CHF 132.8 Mio., ein deutlicher Anstieg

von 31.8 % gegenüber dem Vorjahr. Dank der starken

Marktposition kann Uster Technologies AG die meis-

ten Aufträge in Schweizer Franken verrechnen, sodass

die Gruppe einem minimalen Wechselkursrisiko

ausgesetzt ist. Das operative Ergebnis (EBITA) erhöh-

te sich auf CHF 34.6 Mio. und lag damit um 52.4 % über

dem Vorjahreswert von CHF 22.7 Mio. Die EBITA-

Marge konnte ebenfalls auf dem hohen Niveau von

26.0 % (2009: 22.5 %) gehalten werden. Das Netto-

ergebnis stieg von CHF 1.2 Mio. im Jahr 2009 auf

CHF 20.8 Mio. im Jahr 2010.

2010 reduzierte Uster Technologies AG ihre Netto-

schulden weiter auf CHF 76.5 Mio. und erhöhte damit

ihre operative und finanzielle Flexibilität. Das Ge-

samtergebnis unterstreicht erneut das schlanke,

flexible Geschäftsmodell des Unternehmens und

demonstriert die ausgeprägte Fähigkeit des Unter-

nehmens, liquide Mittel zu generieren.

nologies Ltd continued to expand its product range

in the mid-segment market by addressing the spe-

cific needs of this important growth sector. Looking

forward, it is the Group’s goal to move their needs to

enhanced quality levels, allowing them to further

improve operational efficiency and thereby grow their

business.

Also during the past year the mid-Asian markets in-

cluding India, Turkey, Bangladesh and Pakistan re-

covered from the economic instability of previous

years.

Significantly Higher Sales and Profits

With the revival of the textile market, Uster Tech-

nologies Ltd posted gross sales of CHF 132.8 million

in financial year 2010, a strong increase of 31.8 % com-

pared to the previous year. The strong market position

allows Uster Technologies Ltd to invoice in Swiss

Francs for the majority of its business reducing ex-

change rate impacts to a minimum. EBITA increased

to CHF 34.6 million, 52.4 % above the CHF 22.7 million

reported in financial year 2009, and the EBITA margin

improved to the high level of 26.0 % compared to

22.5 % in 2009. The Group’s net result increased from

CHF 1.2 million in 2009 to CHF 20.8 million in 2010.

In 2010 Uster Technologies Ltd further decreased its

net debt to CHF 76.5 million, thereby enhancing its

operational and financial flexibility. Once again, the

bottom-line performance underlines the Company’s

lean and flexible business model and demonstrates

the Company’s strong cash generation power.

Strong Testing Instrument Sales and Service

Business

Strong growth in the testing instrumentation seg-

ment was based on several factors. The sharp increase

in raw material prices since the beginning of 2010

led to a greater emphasis on raw material quality

and enhanced sales of classing systems ordered from

government agencies including China and the US

in order to update the equipment in their quality

control laboratories. Additional business for the HVI

cotton classing systems was secured in other cotton


Starker Umsatz mit Prüfsystemen und Service

Im Segment Prüfsysteme trugen mehrere Effekte zu

einem starken Umsatzwachstum bei. Durch den

massiven Anstieg der Rohstoffpreise seit Anfang

2010 rückte die Rohstoffqualität wieder stärker in

den Mittelpunkt. Davon profitierte der Umsatz mit

Klassierungssystemen. Die staatlichen Behörden,

einschliesslich derjenigen in China und den USA,

erteilten neue Aufträge, um ihre Qualitätsprüfungs-

labors zu modernisieren. Darüber hinaus erhielt

Uster Technologies AG neue Bestellungen für Baum-

wollklassierungssysteme aus anderen Baumwollre-

gionen wie Indien, Afrika und Mittelasien. Sie trugen

zu einer weiteren Diversifizierung der Kundenbasis

im Klassierungsgeschäft bei.

Die Erholung der Nachfrage nach Textilprodukten

löste auch einen starken Anstieg der Garnpreise aus.

Als Folge legten Textilproduzenten noch grösseren

Wert darauf, eine hohe Rohstoffqualität und ange-

messene Preise für die gewünschte Qualität zu erzie-

len. Den Schwerpunkt bildete dabei die Reduzierung

von Ausschuss mit dem Ziel, Produktivitätssteige-

rungen und Kostenreduktionen zu erreichen. Dies

führte zu einem spürbaren Umsatzwachstum bei den

Garn- und Faserprüfsystemen für Labors.

Im Geschäft mit Garnreinigern profitierte Uster Tech-

nologies AG von einem deutlich höheren Auftrags-

eingang von Maschinenherstellern. Hier werden die

Wachstumsraten in den kommenden Jahren voraus-

sichtlich deutlich über den anderen Produktgruppen

liegen. Zu einem optimistischen Umsatzausblick für

die Garnreinigungssysteme trägt ausserdem die weg-

weisende dritte Generation des USTER® QUANTUM

Garnreinigers bei. Sie wurde Ende September 2010

lanciert. Der Auftragsbestand am Jahresende war

aussergewöhnlich hoch, was auf einen weiteren hohen

Umsatz für das Jahr 2011 hindeutet.

Im Segment Service stärkte die Uster-Gruppe ihre

Beziehungen zu einem breiten Kreis von Textilhänd-

lern und förderte deren Interesse an wertsteigernden

Dienstleistungen inklusive des Intelligent Sourcing,

dem USTERIZED®-Label und den USTER® STATISTICS.

Das After-Sales-Geschäft stieg proportional zum

Wachstum der Prüfsysteme an.

growing regions across India, Africa and Central Asia

and further diversified the customer base in the class-

ing business.

The recovery in demand for textile products also led

to a strong increase in yarn prices.

Textile producers attached even greater importance

to attaining adequate raw material quality and pri-

ces for the desired quality level. Their main focus

lay on reducing waste, thereby achieving efficiency

improvements and cost reductions. The result was

significant growth in sales for the laboratory yarn

and fiber testing systems.

In the yarn clearer business Uster Technologies Ltd

benefited from the sharp increase in orders from ma-

chinery manufacturers with growth rates estimated

to clearly outperform other product groups in the

coming year. The sales outlook for yarn clearers has

been further brightened by the launch of the ground-

breaking third generation USTER® QUANTUM clear-

er at the end of September 2010. Order levels at the

end of the year were exceptionally high, indicating

future strong sales in 2011.

In the service segment the Uster Group continued to

develop strong relationships with a wider textile retailer

base, enhancing interest in a number of value-adding

services, including Intelligent Sourcing, USTERIZED®

certification and USTER® STATISTICS. The after sales

service business grew in line with instrumentation

sales.

Operative Verbesserungen und Erweiterung des

Produktangebots

2010 liess Uster Technologies AG eine der schwie-

rigsten Phasen der Unternehmensgeschichte er-

folgreich hinter sich. Die Geschäftsleitung konzen-

trierte sich darauf, die mittel- und langfristigen

Aussichten des Unternehmens durch rigorose Kos-

teneinsparungen sicherzustellen und leitete weitere

operative Verbesserungen ein. Das schlanke, flexib-

le Geschäftsmodell wurde durch Reorganisationen

und Prozessoptimierungen weltweit an allen Stand-

orten weiter gefestigt.

Der wichtigste Eckpfeiler der Wachstumsstrategie

von Uster Technologies AG – sie erhielt durch das

deutlich verbesserte wirtschaftliche Umfeld neue

Impulse – ist der Ausbau des Vertriebs- und Service-

netzwerks im wichtigen chinesischen Markt sowie

die Erweiterung des USTER®-Produktangebots und

dessen massgeschneiderte Anpassung an die sich

kontinuierlich verändernden Kundenbedürfnisse. In

der Berichtsperiode machte Uster Technologies AG

wiederum Schlagzeilen mit der Einführung neuer

Produkte. Erstens brachte die Gruppe ein neues

USTER® ZWEIGLE Laborsystem auf den Markt, das

die Garnhaarigkeit mit erheblich verbesserter Genau-

igkeit, Reproduzierbarkeit und Geschwindigkeit

misst. Zweitens lancierte Uster Technologies AG ihre

wegweisende dritte Generation des USTER® QUANTUM

Garnreinigers. Drittens wurde im chinesischen Markt

eine neue Generation des Systems USTER® SLIVER-

GUARD eingeführt. Es ist auf die Bedürfnisse lokaler

Hersteller zugeschnitten und erweitert die Präsenz

der Uster Technologies AG im Bereich der Spinne-

reivorbereitung. Ausserdem arbeitete die Gruppe

weiter an der Nutzung von Synergien, die sich aus

der strategischen Zusammenarbeit mit Toyota In-

dustries Corporation ergeben – eine Partnerschaft,

von der sich Uster Technologies AG weiteres Wachs-

tumspotenzial erhofft.

Operational Review | Operativer Rückblick 13

Operational Improvements and Further

Expansion of Product Offering

In 2010 Uster Technologies Ltd successfully emerged

from one of the most challenging periods in the or-

ganization’s history. Whilst securing the mid- and

long-term prospects of the Company by implement-

ing sweeping cost-cutting measures, management

concentrated on initiating further operational im-

provements. It further strengthened its lean and flex-

ible business model through reorganization and

process optimization throughout the worldwide

organization.

The most important pillar of Uster Technologies Ltd’s

growth strategy, which is gaining fresh momentum

in the significantly improved economic environment,

is the extension of the sales and service network in

the important Chinese market as well as the expansion

of the USTER® offering and its tailor-made adaptation

to the evolving needs of customers. In the reporting

period Uster Technologies Ltd again made headlines

with the launch of new products. First, the Group

introduced a new USTER® ZWEIGLE laboratory system

that allows yarn hairiness to be measured with much

better accuracy, reproducibility and speed. Second,

Uster Technologies Ltd launched its ground-breaking

third generation of USTER® QUANTUM clearer. Third,

a new generation of USTER® SLIVERGUARD was in-

troduced to the Chinese market. It addresses the needs

of the local manufacturers and expands Uster Tech-

nologies Ltd’s foothold in the spinning preparation

area. In addition, the Group continued to work on

technical synergies arising from the strategic col-

laboration with Toyota Industries Corporation, a

partnership which is expected to yield further growth

potential.

Cotton classing

Government regulatory bodies worldwide rely on

USTER® HVI and its standards in their active oversight

of growers and ginners, mitigating the risk of textile

producers purchasing poor quality or inconsistent and

deceptive products.

−

The USTER® HVI measures all the important fiber quality

parameters currently used in cotton trading to obtain

the proper mix of cotton in spinning mills: micronaire,

fiber length, length uniformity, strength, color, maturity,

and short fiber content.

“USTER® classing systems allow us to precisely define cotton quality, ensuring fair prices for producers and value transparency for buy-ers. When faced with grading the entire U.S. cotton crop each year, we need instru-ments that are accurate, pre-cise and fast, and USTER® provides a quality instrument that fits the bill.”Darryl W. Earnest, Deputy Administrator, U.S. Department of Agriculture (USDA), USA


2010 profitierten alle grossen Märkte von der Kon-

junkturerholung, die den Fokus der Branche wieder

auf neue Wachstumsmöglichkeiten lenkte. Während

China auch mitten in der Krise robust blieb, erholten

sich die mittelasiatischen Märkte von der wirtschaft-

lichen Instabilität früherer Jahre, darunter Indien,

die Türkei, Bangladesch und Pakistan. Das Auftrags-

volumen wird sich 2011 voraussichtlich weiter erhö-

hen. Darüber hinaus hat die Kapazität der Spinnerei-

en weltweit zugenommen, ausgelöst durch die

Ersetzung älterer Spinn- und Spulmaschinen durch

neue hocheffiziente Systeme, die einen geringeren

Arbeitsaufwand erfordern. Ein weiterer Aspekt sind

die gestiegenen Faserpreise. Sie setzen Spinnereien

und vertikale Produzenten unter Druck, die Qualität

zu verbessern und Ausschuss zu vermeiden – eine

Aufgabe, bei deren Bewältigung Uster Technologies

AG wie kein anderer Anbieter massgeblich unterstüt-

zen kann.

Insgesamt trugen die asiatischen Länder 67.3 % zum

Gesamtbruttoumsatz bei (2009: 71.1 %); auf Europa

und Nordamerika entfielen 21.7 % bzw. 11.0 % (2009:

15.7 % bzw. 13.1 %). Das relative Umsatzwachstum in

Europa spiegelt die deutliche Auftragszunahme sei-

tens der europäischen Maschinenhersteller wider.

Insgesamt ist Asien weiterhin der dominante End-

verbrauchermarkt.

Dynamisches mittleres Marktsegment in China

Das mittlere Marktsegment in China wächst weiterhin

aufgrund der starken Inlandsnachfrage und der wach-

senden Kaufkraft sowie den steigenden Qualitätsan-

forderungen der chinesischen Käufer. Uster Techno-

logies AG setzte ihre Strategie fort, Produkte und

Hilfsmittel anzubieten, die speziell auf das mittlere

Marktsegment zugeschnitten sind. Auf der ITMA ASIA

2010 in Schanghai stellte das Unternehmen das neue

System USTER® ML100 vor, dass die Länge von Baum-

wollfasern misst. Dieses neue Produkt bildet in Kom-

bination mit dem bestehenden USTER® MN100 eine

komplette Einstiegslösung für die Prozesssteuerung

von Baumwollfasern in der Spinnerei. Gleichzeitig

führte Uster Technologies AG ihre umfangreichen

Sales and MarketingVertrieb und Marketing

In 2010 all major markets profited from the improving

economic environment, which turned the industry’s

focus back to new growth opportunities. Whilst

China performed strongly even in the midst of the

crisis, the mid-Asian markets including India, Turkey,

Bangladesh and Pakistan recovered from the eco-

nomic instability of previous years. Order levels are

expected to increase further in 2011. In addition, spin-

ning capacity expanded worldwide, driven by the

replacement of older generation spinning and wind-

ing machinery with new highly efficient equipment

requiring less labor input. Furthermore, increased

fiber prices put pressure on spinners and vertical

manufacturers to improve quality and reduce waste,

a role for which Uster Technologies Ltd is uniquely

qualified to assist.

Overall sales in the Asian markets contributed 67.3 %

to total gross sales (2009: 71.1 %); Europe and Americas

generated 21.7 % and 11.0 % of total sales (2009: 15.7 %

and 13.1 %). The relative increase in sales in Europe

reflects the strong surge in business with the Euro-

pean machinery manufacturers. Overall, Asia remains

as the dominant end-user market.

Dynamic Chinese Mid-Market

The Chinese mid-market continues to grow due to

strong domestic demand and increasing purchasing

power and quality demands of the domestic purchas-

er. Uster Technologies Ltd continued with its strat-

egy of providing products and tools customized for

the mid-market. At last year’s ITMA ASIA in Shanghai

the Company launched the new USTER® ML100 which

measures cotton fiber length. This new product in

combination with the existing USTER® MN100 pro-

vides a complete entry level solution for cotton fiber

process control in the spinning mill. In addition, Uster

Technologies Ltd continued with extensive promo-

tional and educational programs for this market. These

programs were specifically designed to enhance cus-

tomers’ understanding of the management of qual-

ity, productivity and profitability with the help of

USTER® instruments, USTER® best practices and

USTER® STATISTICS. Finally Uster Technologies Ltd

Marketing- und Schulungsprogramme für diesen

Markt fort. Diese Programme wurden speziell ent-

wickelt, um Kunden einen besseren Einblick in die

Steuerung der Qualität, Produktivität und Rentabi-

lität mit Hilfe von USTER®-Systemen, USTER® Best

Practices und USTER® STATISTICS zu geben. Schliess-

lich erweiterte die Gruppe ihr Vertriebsnetz und

damit ihre Präsenz, um die steigende Nachfrage in

diesem wichtigen Markt gezielt zu adressieren und

zu erfüllen.

USTER® QUANTUM 3:

Neuer Industriestandard für die Qualitätsprüfung

Das wichtigste Ereignis in der Berichtsperiode war

die Einführung der dritten Generation des Garnrei-

nigungssystems USTER® QUANTUM. Die Anwendung

neuester Qualitätssicherungstechnologie ermöglicht

den Textilherstellern, ihre Fertigungseffizienz und

Kostenstruktur zu optimieren. Damit wird dieses

System zu einem unverzichtbaren Bestandteil des

Qualitätsmanagements von Spinnereibetrieben. Das

System zeichnet sich durch eine neue kapazitive und

optische Hochleistungssensortechnologie aus, mit

der sämtliche Garnfehler und Unregelmässigkeiten

sichtbar gemacht werden können. Dadurch wird nicht

nur die Erkennungsgenauigkeit erheblich verbessert,

sondern der Hersteller kann auch Dünn- und Dick-

stellen, Farbabweichungen und andere unerwünsch-

te Eigenschaften identifizieren.

Das mit Spannung erwartete neue Garnreinigungs-

system wurde von den Kunden und Industriepartnern

äusserst positiv aufgenommen und kam zu einem

Zeitpunkt auf den Markt, als die Maschinenherstel-

ler sich gerade vom Konjunkturabschwung erholten.

Der anschliessende Nachfrageanstieg übertraf die

Erwartungen bei Weitem und schaffte die Voraus-

setzungen für einen erneuten Umsatzsprung 2011.

Der Produktionsaufbau und die Schulungen der

weltweiten Vertriebs- und Serviceteams begannen

im September.

Vor der Markteinführung dieser neuen Produktge-

neration feierte die Gruppe das 50-Jahre-Jubiläum

der Entwicklung des ersten elektronischen Garnrei-

Sales and Marketing | Vertrieb und Marketing 17

further strengthened its sales network thereby increas-

ing sales presence to address and to cover the growing

demand in this important market.

USTER® QUANTUM 3:

New Industry Standard in Quality Measurement

The major event during the reporting period was the

launch of the third generation of the USTER® QUAN-

TUM clearer system. This latest state-of-the-art qual-

ity assurance technology allows textile manufactur-

ers to optimize production efficiency and reduce costs,

making the device an indispensable quality manage-

ment tool in spinning plants. The system features new

powerful capacitive and optical sensor technology

that makes all disturbing defects visible, thereby sig-

nificantly enhancing detecting accuracy and enabling

manufacturers to sort out thin and thick places, in-

consistent colors or other unwanted properties.

The eagerly anticipated new yarn clearer system was

very well received by customers and industry partners

and was introduced at a time when machinery manu-

facturers were recovering from an economic down-

cycle. The subsequent surge in demand by far ex-

ceeded the expectations setting the stage for a further

jump in sales in 2011. The ramp-up of production and

the training of sales and services teams worldwide

commenced in September.

Before the launch of this new-generation product, the

Group celebrated the 50th anniversary of its develop-

ment of the first electronic yarn clearer and, even more

impressively, passed the milestone of two million

USTER® QUANTUM clearers sold.


New USTER® ZWEIGLE Laboratory System:

Eight Times Faster

At the important industry fair ITMA ASIA & CITME

2010 in Shanghai, China, USTER® presented its latest

range of testing instruments under the slogan “The

Future Has a Past”, sending a powerful statement to

the market of the Group’s unrivalled record of in-

novation. In addition, the Group launched a totally

new USTER® ZWEIGLE HL400 laboratory system that

allows the measurement of yarn hairiness with im-

proved accuracy and reproducibility, and at speeds

that are eight times faster than those of previous

devices.

USTER® STATISTICS and USTERIZED®:

Enhancing the Brand

USTER® STATISTICS are used throughout the indus-

try as benchmarks for trading textile products at as-

sured levels of quality across global markets. Addi-

tional new sections for the USTER® STATISTICS were

published along with guidance on best practices. The

USTERIZED® concept (a seal of quality for yarns

tested and cleared with USTER® products) is increas-

ingly used by well-known consumer companies to

assure a consistent level of quality in support of

their own branded products. During 2010, existing

USTERIZED® mills were re-certified and addition-

al members were added to the USTERIZED® com-

munity, supported by a dedicated website that was

launched to allow promotion of information about

certified USTERIZED® customers.

nigers und erreichte den beeindruckenden Meilen -

stein von zwei Millionen verkaufter USTER® QUANTUM

Garnreiniger.

Neues USTER® ZWEIGLE Laborsystem:

acht Mal schneller

Anlässlich der wichtigen Fachmesse ITMA ASIA &

CITME 2010 in Schanghai, China, präsentierte USTER®

unter dem Motto „The Future Has a Past“ sein Sorti-

ment an Prüfsystemen. Damit setzte die Gruppe ein

starkes Zeichen im Markt, indem sie ihre unübertrof-

fene Innovationskraft demonstrierte. Gleichzeitig

brachte die Gruppe mit dem USTER® ZWEIGLE HL400

ein neues Laborsystem auf den Markt, das die Haa-

rigkeit von Garnen mit höherer Präzision und Repro-

duzierbarkeit und acht Mal schneller als bisherige

Systeme misst.

USTER® STATISTICS und USTERIZED®:

Erhöhung der Markenbekanntheit

USTER® STATISTICS werden in der gesamten Branche

und an allen Weltmärkten als Massstab für den Han-

del mit Textilprodukten von verbürgter Qualität he-

rangezogen. Es wurden neue Kapitel für USTER®

STATISTICS zusammen mit Best-Practices-Leitlinien

veröffentlicht. Immer mehr bekannte Konsumunter-

nehmen verwenden das Label USTERIZED® – ein Gü-

tesiegel für Garne, die mit USTER®-Produkten geprüft

und gereinigt wurden. Es signalisiert den Kunden die

konsequente Einhaltung hoher Qualitätsstandards.

2010 wurden bestehende USTERIZED®-Betriebe erneut

zertifiziert und neue Mitglieder in den Kreis der Un-

ternehmen mit dem Siegel USTERIZED® aufgenommen.

Ihnen allen steht eine eigene neue Website zur Ver-

fügung, auf der Angebote und Informationen über

zertifizierte USTERIZED®-Kunden abgerufen werden

können.

Sales and Marketing | Vertrieb und Marketing 19

Fiber processing

Spinning mills use USTER® quality testing equipment

and process management tools to optimize the spinning

process to produce the minimum waste achieving an

optimum level of productivity and quality.

−

With USTER® AFIS, the entire spinning process –

opening, cleaning, carding, combing, drawing

and production of roving – can be analyzed with

unrivaled precision. It measures all the important

fiber characteristics such as fiber length and its

distribution, maturity, trash and nep content. Neps

cause irregular or “neppy” fabric surface and

lead to inferior quality.

“USTER® enables us to influence yarn quality and minimize waste, making the most efficient use of the raw material purchased.”Dai Jun, Vice General Manager Senior Engineer,Jiangsu Yueda Textile Group Co., Ltd. (YDTEX), China


Innovation ist ein wichtiger Motor für künftiges

Wachstum und ein wesentlicher Grund für die ausge-

zeichnete Marktposition von Uster Technologies AG.

Die Geschäftsleitung hat sich das Ziel gesetzt, wei-

terhin rund 10 % des Gesamtumsatzes in F&E zu in-

vestieren. 2010 beliefen sich die F&E-Aufwendungen

auf CHF 14.9 Mio. Dies entspricht einem Umsatz-

anteil von 11.2 % (2009: CHF 11.0 Mio.; 10.9 %). Dieser

hohe F&E-Aufwand widerspiegelt die frühzeitige

Antizipation der sich erholenden Märkte und die

unverzügliche Wiederaufnahme aller zuvor zu-

rückgestellten Projekte. Die Massnahmen verfolg-

ten das Ziel, durch die schnelle Markteinführung

neuer innovativer Produkte in vollem Umfang vom

Marktaufschwung profitieren zu können.

Technologiezentrum Uster:

Fokus auf Produkteinführungen

Während der Berichtsperiode konzentrierte sich das

F&E-Team in Uster auf die neue, dritte Generation

des Garnreinigungssystems USTER® QUANTUM.

Nach intensiven, umfassenden Tests brachten Ver-

kauf und Marketing dieses Produkt Ende September

2010 auf den Markt. Es bietet den Kunden neue ein-

zigartige Möglichkeiten, ihre Wertschöpfung zu

steigern. Neben der Einführung von USTER® QUAN-

TUM 3 stellten die F&E-Spezialisten eine komplett

neue Software für Expert-Systeme der Gruppe fer-

tig. Sie basiert auf neuesten Entwicklungstools und

-prozessen. Ferner wurde an der ITMA ASIA 2010 das

neue System USTER® ZWEIGLE HL400 zur Haarig-

keitslängenklassierung präsentiert. Kernstück ist

eine neue Sensortechnologie, mit der sich Messun-

gen acht Mal schneller als mit bisherigen Systemen

durchführen lassen.

Ein zweiter Schwerpunkt lag auf der Nutzung von

Synergien, die sich aus der strategischen Zusam-

menarbeit mit der Toyota Industries Corporation

ergeben. Durch den gegenseitigen Austausch von

Know-how soll internes Wissen für die Entwick-

lung neuer innovativer Produkte genutzt werden.

Diese sollen den Kunden einen Zusatznutzen lie-

fern, indem sie ihnen ermöglichen, ihre Qualität zu

steigern, effizienter zu produzieren und die Kosten

zu senken.

Research and InnovationForschung und Entwicklung

Innovation is a key engine of future growth and an

essential part of Uster Technologies Ltd’s excellent

market position. Management remains committed

to investing around 10 % of total sales in R&D. In

2010 expenses for R&D amounted to CHF 14.9 mil-

lion, corresponding to 11.2 % of sales (2009: CHF 11.0

million; 10.9 %). This high level of R&D spending

mirrors the early anticipation of the market recov-

ery now underway and the immediate reactivation

of all previously downscaled projects at full speed in

order to fully profit from the market upswing

through the timely market launch of new innova-

tions.

Technology Center Uster:

Focus on Product Launches

During the reporting period the R&D team in Uster

concentrated on the new, third generation of

USTER® QUANTUM clearer system. After extensive

and comprehensive field tests the sales and market-

ing teams launched this product at the end of Sep-

tember 2010, emphasizing new unique value-adding

features to customers. To support the launch of

USTER® QUANTUM 3, R&D specialists finished the

Group’s completely new Expert Software based on

the latest development tools and processes. In addi-

tion, the new hairiness length classification system

USTER® ZWEIGLE HL400 was presented at ITMA

ASIA in 2010. This new device is based on a new

sensor technology which enables measurements to

be made eight times faster than those of previous

devices.

A further focus was on harnessing the synergies

arising from the strategic collaboration with Toyota

Industries Corporation. By sharing know-how, the

intention is to leverage internal expertise into new

innovations that provide added value to customers,

supporting their efforts for quality improvements,

higher production efficiency and cost savings.

Technologiezentrum Knoxville:

Schwerpunkt Klassierungsprojekte

Klassierungsprojekte und neue Entwicklungen sind

weiterhin die Haupttätigkeitsfelder des Technolo-

giezentrums in Knoxville. Die technische Unterstüt-

zung des US-Landwirtschaftsministeriums (USDA)

und der chinesischen Behörde für Faserprüfung

(CFIB) sowie andere internationale Klassierungspro-

jekte wurden auf unvermindert hohem Niveau fort-

gesetzt. Der Schwerpunkt lag dabei auf der nächsten

Generation von HVI-Systemen für die USDA.

Die Technologiezentren in Suzhou und Knoxville

nahmen ein gemeinsames Projekt zur Adressierung

neuer Anforderungen des CFIB auf, in das die globa-

len Entwicklungskompetenzen der Gruppe einflies-

sen werden.

Technologiezentrum Suzhou:

Fokus auf USTER® SLIVERGUARD

Das F&E-Team in Suzhou schloss mit umfangrei-

cher Unterstützung durch das Technologiezentrum

in Uster die Entwicklung des USTER® SLIVERGUARD

ab, eines hochmodernen Online-Systems zur Über-

wachung der Qualität von Bändern. Dieses System

wurde im zweiten Halbjahr 2010 erfolgreich im

chinesischen Markt eingeführt.

Research and Innovation | Forschung und Entwicklung 23

Technology Center Knoxville:

Focus on Classing Projects

Classing projects and new developments continue

to be the major focus of the Technology Center in

Knoxville. Technical support to the United States

Department of Agriculture (USDA) and China Fiber

Inspection Bureau (CFIB) and other international

classing projects continued at high levels. The fo-

cus was on the next generation of HVI for the

USDA.

A joint project between the Technology Centers in

Suzhou and Knoxville to address new requirements

for CFIB was started to leverage the Group’s global

development capabilities.

Technology Center Suzhou:

Focus on USTER® SLIVERGUARD

The R&D team in Suzhou, with strong support

provided by the Technology Center in Uster, com-

pleted the development of a new generation of the

online sliver quality monitoring system USTER®

SLIVERGUARD. This system was successfully in-

troduced to the Chinese market in the second half

of 2010.

“USTER® helps us to achieve a more constant yarn quality so we can consistently meet the requirements and needs of our customers.”S. Kanthimathinathan, President, Rajapalayam Mills, India

Yarn quality management

In the spinning process, fibers are spun into yarns which

are consistently analyzed for their quality characteristics,

hairiness and strength. In the final stage of the process,

yarn clearers detect and eliminate disturbing thick and thin

places and foreign fibers. Sensitive and reliable yarn

quality management ensures that the yarn sent from the

spinning mills to customers has consistent and the right

quality level.

−

The USTER® TESTER boasts an array of advanced sensors

that measure quality parameters like unevenness,

hairiness, diameter variations, count and foreign matter,

imperfections, elongation, remaining dust and trash

particles, twist, friction and isolated weak places.


2010 erzielte Uster Technologies AG weitere Fortschrit-

te bei der Erhöhung der betrieblichen Produktivität.

Die Gruppe fuhr fort, ihr globales Supply-Chain-

Management weiterzuentwickeln und bezog vermehrt

Materialien aus Niedrigkostenländern. Gleichzeitig

arbeiteten die Technologiezentren in gemeinsamen

Projekten mit ihren weltweiten Outsourcing-Partnern

daran, die Prozessabläufe zu vereinfachen und die

Effizienz zu erhöhen. Auf der Basis des schlanken,

flexiblen Geschäftsmodells der Gruppe war die Ge-

schäftsleitung dank dieser Massnahmen in der Lage,

die Ressourcen – in Erwartung des Marktaufschwungs

– schnell an die wieder belebte Nachfrage in der Tex-

tilindustrie anzupassen.

Optimierte globale Beschaffung

Da das Material einen Grossteil der Produktionskos-

ten der Gruppe ausmacht, zählt die Bewertung der

Lieferantenleistung und die Identifizierung poten-

zieller neuer Lieferanten weiterhin zu den wichtigs-

ten Aufgaben. Uster Technologies AG baute die glo-

bale Beschaffungsorganisation weiter aus. Dabei

konzentrierten sich die Spezialisten auf die Überar-

beitung ausgewählter Komponenten und die Erschlies-

sung neuer Bezugsquellen in China und anderen

Niedrigkostenländern. Neben der Ausnutzung von

Währungsschwankungen führte diese Strategie zu

einem bedeutenden Anstieg der weltweiten Einkaufs-

volumen und erheblichen Kosteneinsparungen.

Eine weitere wichtige Aufgabe im Berichtszeitraum

war das Management und die Neuausrichtung der

Lieferkette, um das Unternehmen schnell vom vola-

tilen Marktumfeld auf den unerwartet rasanten Nach-

frageanstieg nach der Markterholung umzustellen.

Insbesondere die grosse Nachfrage nach dem neuen

USTER® QUANTUM 3 Garnreiniger stellte das Einkaufs-

team der Gruppe vor aussergewöhnliche Herausfor-

derungen und führte zu verlängerten Lieferzeiten und

begrenzten Liefermengen. Hier war trotz der Verwen-

dung alternativer Lieferanten und der täglichen Über-

prüfung der Montagepläne auf Basis der Materialver-

fügbarkeit ein hohes Mass an Flexibilität erforderlich.

OperationsProduktion und Logistik

In 2010 Uster Technologies Ltd achieved further

progress in raising operational efficiency. The

Group continued to develop its global supply chain

management and source materials from low-cost

countries. In parallel, all Technology Centers worked

on joint projects with their extensive network of

outsourcing partners worldwide to optimize work

flows and processes and improve efficiency. On

the basis of the Group’s lean and flexible business

model, the result of these efforts allowed manage-

ment – envisaging the market upswing – to quick-

ly rebuild resources in order to meet renewed

market demand.

Enhanced Global Sourcing

Since materials account for a major part of the

Group’s product costs, assessing supplier perfor-

mance and evaluating potentially new suppliers

remained a key task. Uster Technologies Ltd con-

tinued to develop its Global Sourcing Organization,

focusing on the redesign of selected components

and new sourcing channels in China and other low-

cost countries. Besides taking advantage of cur-

rency fluctuations, this strategy led to a consider-

able increase in global sourcing volumes and

significant cost savings.

Another major challenge in the reporting period

was the management and leverage of the supply

chain, quickly switching from the needs of a vola-

tile market environment to an increase in demand

following the market upswing. The surge in demand

for USTER® QUANTUM 3 was a particular challenge

for the Group’s sourcing team as lead times for

electronic components increased and delivery quan-

tities were limited. This required a high degree of

flexibility despite the use of alternative sourcing

options and daily planning of assembly plans based

on material availability.

Aufbau der Lieferkette für USTER® QUANTUM 3

Eine weitere Herausforderung stellte die Anlauf phase

in der Produktion der neuen Generation von Garnrei-

nigern dar. Sie erforderte den Aufbau einer neuen

Lieferkette für diese Produktgruppe und die Einrich-

tung und Etablierung der entsprechenden Herstell-

und Qualitätsprozesse. Die ehrgeizigen Kostenvor-

gaben für den neuen Reiniger wurden dank dem

konsequenten Einkauf aller Materialien in Niedrig-

kostenmärkten eingehalten. Ausserdem wurde für

diese USTER® QUANTUM 3 Reinigergeneration in

Uster ein halbautomatisches Montagesystem instal-

liert, das grosse Flexibilität bei der Mengenanpassung

und eine strenge Kontrolle des Fertigungsprozesses

ermöglicht. Eine neue Prüf- und Kalibrierungsinfra-

struktur gewährleistet zudem, dass alle ausgeliefer-

ten Garnreiniger die USTER®-Qualitätsstandards

erfüllen.

Operations | Produktion und Logistik 27

New Supply Chain for USTER® QUANTUM 3

Another major challenge was the phase-in-process

of the new yarn clearer generation, which entailed

the setting-up of a new supply chain for this prod-

uct group as well as tooling and quality processes.

Demanding cost targets for the new clearer family

were met by sourcing all material from low-cost

markets. Furthermore, a semi-automatic assembly

system for the USTER® QUANTUM 3 clearer gen-

eration was installed in Uster that offers greater

flexibility to adjust volumes and ensures tight

manufacturing process control. In addition, new

testing and calibration infrastructure ensures that

all delivered clearers comply with the USTER® qual-

ity standards.


In Anbetracht der starken Nachfrage in den asiati-

schen Märkten, vor allem in China und Indien, und

der Trends zu Qualität und Automatisierung in den

Schwellenländern geht Uster Technologies AG ge-

genwärtig davon aus, dass der Aufwärtstrend des

Marktes anhalten wird.

Vor diesem Hintergrund erwartet die Unternehmens-

leitung, dass sich die Gruppe mit ihrer erfolgreichen

Strategie, die auf den Basispfeilern Innovationsfüh-

rerschaft, aktives Kostenmanagement und Erweite-

rung des modernen Produkt- und Serviceangebots

beruht, ihre Marktposition weiter ausbauen kann.

Für das Geschäftsjahr 2011 ist die Unternehmens-

führung zuversichtlich, ihr Geschäft auf vergleich-

barem Niveau wie 2010 mit einer EBITA-Marge über

25 % auszuweiten.

Auch zukünftig räumt Uster Technologies AG der

weiteren Stärkung ihrer Wettbewerbsposition hohe

Priorität ein. Das Unternehmen beabsichtigt, neue,

innovative Produkte in allen Marktsegmenten ein-

zuführen und die globale Vertriebsorganisation zu

erweitern. Gleichzeitig wird die Gruppe attraktive

Geschäftsmöglichkeiten ergreifen, die über das Po-

tenzial verfügen, den Mehrwert für die Kunden zu

steigern.

OutlookAusblick

Uster Technologies Ltd is currently expecting on-

going market growth in view of the strong demand

from Asian markets, especially from China and India,

and the increased move towards quality and auto-

mation in emerging markets.

Based on its successful strategy of innovation lead-

ership, proactive cost management and the expansion

of its state-of-the-art product and service offering,

Uster Technologies Ltd is confident it will further

strengthen its market position.

For the financial year 2011 management is confident

that the business will grow at similar levels as 2010

with EBITA margins above 25 %.

Going forward, Uster Technologies Ltd will maintain

its focus on strengthening its competitive position-

ing by introducing new state-of-the-art products in

all market segments and expanding its global sales

organization. At the same time the Group will seize

attractive business opportunities with the potential

to increase the added value of its offering to clients.

“Our clients expect the highest level of yarn quality. With the implementation of the USTERIZED® quality approach we are able to deliver this quality on a consistent level and minimize our own cost of quality.”P. R. Ramasubrahmaneya Rajha, Chairman,Rajapalayam Mills, India

Seal of quality

The USTERIZED ® certification (a seal of quality for yarns

tested and cleared with USTER® products) is increasingly

looked for by well-known consumer companies to assure

a consistent level of quality in support of their own

branded products.

Definition of yarn profiles

In order to ensure the preferred quality, textile producers

turn to USTER® to define yarn profiles for their most

common fabrics, enabling them to clearly specify the

requested yarn through the supply chain. Consistent

quality levels enhance their image and bring customers

back in the store.

−

USTER® STATISTICS are used throughout the industry as

the base benchmarks for the trading of textile products

at assured levels of quality across global markets.

“Our interest is to offer our customers a good quality in our products.USTER® quality stan-dards significantly con-tribute to our efforts to minimize hidden costs of quality, thanks to the common language spoken in the industry based on the USTER® STATISTICS.”Astrid Schödel, Global Head of Quality Management,

s.Oliver, European Fashion and Lifestyle Company, Germany


Corporate Governance

The information disclosed in this section follows the Directive on Information Relating to Corporate Gov-

ernance issued by the SIX Swiss Exchange and complies largely with the Swiss Code of Best Practice for

Corporate Governance issued by Economiesuisse. Uster Technologies Ltd has implemented these principles

of good corporate governance in its articles of association, its organizational rules and its code of conduct.

All information shown in this section applies to the balance sheet date if not indicated otherwise. Significant

changes between the balance sheet date and the copy deadline of the annual report are listed under “10 Mate-

rial Changes since the Balance Sheet Date” at the end of this section.

Further information on Corporate Governance can be found by visiting Uster Technologies Ltd’s website at

www.uster-investors.com/governance.php.

1 Group Structure and Shareholders

1.1 Group Structure

1.1.1 Operational Structure

The operational structure of the Uster Group is illustrated below:

Board of Directors

5 members

Chairman Max-Ulrich Zellweger

Executive Committee

9 membersCEO Geoffrey Scott

Finance and Support

CFO Thomas F. Dressendörfer

Sales and Service

Harold Hoke

Textile Technology

Richard Furter

Research and Innovation

Rafael Storz

U.S. Operations

Hossein Ghorashi

Asian Operations

Naiming Wei

Order Fulfi llment

Renato Murk

Marketing and Business

Development

Deniz Bütüner (until December 31, 2010)

Reine Wasner(starting from January 1, 2011)

Corporate Governance 33

1.1.2 Listed Companies within the Group

Uster Technologies Ltd, Uster, Switzerland, is the parent company of the Uster Group and has been listed

according to the Main Standard of the SIX Swiss Exchange since October 19, 2007. It is the sole listed com-

pany within the Group.

Market capitalization CHF 271,989,000

SIX Swiss Exchange Ticker Symbol USTN

Swiss Security Number 3433153

ISIN CH0034331535

1.1.3 Non-Listed Companies within the Group

The table below shows an overview of the non-listed companies of the Uster Group as of December 31, 2010:

Company Purpose % Capital Shareholdings

Dec 31, 2010

Share Capital in 1,000

Uster Technologies de Mexico S.A. de C.V.(Tlalnepantla, MX) D 100 % MXN 6,250

Uster Technologies GmbH(Neuss, DE) D 100 % EUR 26

Uster Technologies (India) Pvt. Ltd(Bangalore, IN) SC 100 % INR 4,950

Uster Technologies (India) Marketing Pvt. Ltd(Bangalore, IN) S 100 % INR

1)

Uster Technologies K.K.(Osaka-fu, JP) SC 100 % JPY 10,000

Uster Technologies (Shanghai) Co. Ltd(Shanghai, CN) D n/a 2) CNY n/a 2)

Uster Technologies (Shanghai) Trading Co. Ltd(Shanghai, CN) S 100 % CNY

1)

Uster Technologies (Suzhou) Co. Ltd

(Suzhou, CN) TC 100 % CNY 20,185

Uster Technologies Sulamericana Ltda.(Alphaville-Barueri SP, BR) SC 100 % BRL 650

Uster Technologies (Thailand) Ltd(Bangkok, TH) SC 100 % THB 6,000

Uster Technologies Holding (Thailand) Ltd(Bangkok, TH) H 100 % THB 1,000

Uster Technologies, Inc.(Knoxville, US) TC 100 % USD 100

Uster Teknoloji Ticaret A.S.(Istanbul, TR) SC 100 % TRY 50

TC: Technology Center

SC: Service Center

S: Sales Office

H: Holding

D: Dormant1) in process of formation2) liquidated in 2010


1.2 Significant Shareholders

As of December 31, 2010, 880 shareholders (2009: 1,017) were registered in the share register of Uster Tech-

nologies Ltd. In the course of 2010 the following disclosure announcements were made according to art.

20 f. of the Swiss Federal Stock Exchange and Securities Trading Act (SESTA):

• July 22, 2010, Balfidor Fondsleitung, CH-Basel, announced that its stake in the Company’s share capital

increased to 3.09 %.

• November 30, 2010, Uster Management informed that part of the Board and Uster Management formed

a group for purchase and sale of shares.

The following major shareholders owned more than 3.0 % of the share capital of Uster Technologies Ltd as

of December 31, 2010:

• Alcide Ltd 27.9 %

• Toyota Industries Corporation 22.5 %

• Board and Management Group 1) 8.1 %

• T. Rowe Price International Inc. 4.5 %

• Bär Marc Philipp 3.1 %

• Balfidor Fondsleitung AG 3.1 %

1) Part of Board and Management formed a Group for purchase and sale of shares

1.3 Cross-Shareholdings

Uster Technologies Ltd does not have any cross-shareholdings with other companies.


2 Capital Structure

2.1 Ordinary Share Capital

The ordinary share capital of Uster Technologies Ltd as of December 31, 2010, amounted to CHF 79,524,000

and was fully paid up. It consisted of 8,460,000 registered shares with a nominal value of CHF 9.40 each.

2.2 Authorized and Conditional Share Capital

As of December 31, 2010, Uster Technologies Ltd had an authorized share capital of CHF 17,860,000.

According to the articles of association of Uster Technologies Ltd, the Board of Directors is authorized,

at any time until March 30, 2012, to increase the share capital by an amount not to exceed CHF 17,860,000

through the issuance of up to 1,900,000 fully paid registered shares with a nominal value of CHF 9.40 each.

An increase in partial amounts is permitted.

The Board of Directors determines the issue price, the type of payment, the date of issue of new shares,

the conditions for the exercise of pre-emptive rights and the beginning date for the dividend entitlement.

In this regard, the Board of Directors may issue new shares by means of a firm underwriting through a

banking institution, a syndicate or another thirdparty with a subsequent offer of these shares to the cur-

rent shareholders (unless the pre-emptive rights of current shareholders are excluded). The Board of Di-

rectors may permit pre-emptive rights that have not been exercised to expire or it may place these rights

and/or shares as to which pre-emptive rights have been granted but not exercised, at market conditions

or use them for other purposes in the interest of Uster Technologies Ltd.

The subscription and acquisition of the new shares, as well as each subsequent transfer of the shares, shall

be subject to the restrictions mentioned under “2.6 Limitations on Transferability and Nominee Registra-

tions”. The Board of Directors is authorized to restrict or exclude the pre-emptive rights of shareholders

and allocate such rights to third parties if the shares are to be used (a) for the acquisition of enterprises,

parts of an enterprise of participations, or for new investments, or, in case of a share placement, for the

financing or refinancing of such transactions; or (b) for the purpose of the participation of strategic part-

ners (including in the event of a public tender offer) or for the purpose of an expansion of the shareholder

constituency in certain investor markets or in connection with the listing of the shares at domestic or

foreign exchanges, including for the purpose of the delivery of shares to the involved banks in case of the

over-allotment option.

As of December 31, 2010, Uster Technologies Ltd had a conditional share capital, pursuant to which the

share capital may be increased by a maximum aggregate amount of CHF 3,008,000 through the issuance

of a maximum of 320,000 fully paid registered shares with a nominal value of CHF 9.40 each by the exercise

of option rights which the employees, the Management or Directors of Uster Technologies Ltd or another

Group company may be granted in the future. The pre-emptive rights of the shareholders are excluded.

The acquisition of registered shares through the exercise of option rights and the subsequent transfer of

the registered shares are subject to the transfer restrictions mentioned under “2.6 Limitations on Trans-

ferability and Nominee Registrations”.


2.3 Changes in Share Capital

March 30, 2010 New authorized share capital of CHF 17,860,000 was created including the authorization

to increase the share capital until March 30, 2012, by amending article 3a of the articles

of association.

November 2, 2009 The nominal share capital was increased from CHF 61,664,000 to CHF 79,524,000 by

the issuance of 1,900,000 registered shares with a nominal value of CHF 9.40 each. The

new shares were issued from the Company’s authorized share capital to Toyota Indus-

tries Corporation at a price of CHF 23.09 per share, representing a premium of 10 % over

the volume-weighted average share price of the last 30 trading days prior to the capital

increase.

June 13, 2008 A dividend payment by way of nominal value reduction of CHF 0.60 per share reduced

the nominal value from CHF 10 to CHF 9.40 per ordinary share and the nominal share

capital by CHF 3,936,000 to CHF 61,664,000.

October 18, 2007 The share capital was increased from CHF 45,600,000 to CHF 65,600,000 by the issuance

of 2,000,000 shares with a nominal value of CHF 10 each. Both the authorized and con-

ditional share capital increase have been approved at the extraordinary Shareholders’

meeting on October 4, 2007.

2.4 Shares and Participation Certificates

2.4.1 Shares

Each share has a nominal value of CHF 9.40 and each share recorded and registered under a shareholder’s

name in the share register of Uster Technologies Ltd is entitled to one vote. There are no preferential rights

for individual shareholders and all shareholders are entitled to equal dividends.

On January 1, 2009, the new Swiss Federal Act on Intermediated Securities (FISA) became effective. Uster

Technologies Ltd created the uncertificated securities book (Wertrechtebuch) pursuant to art. 973c of the

Swiss Code of Obligations. In addition the shares of Uster Technologies Ltd are registered with the SIX

SIS AG and qualify as intermediated securities in accordance with the FISA.


2.4.2 Participation Certificates

Uster Technologies Ltd has not issued any participation certificates.

2.5 Profit Sharing Certificates

Uster Technologies Ltd has not issued any profit sharing certificates.

2.6 Limitations on Transferability and Nominee Registrations

2.6.1 Limitations on Transferability

Acquirers of registered shares will be recorded in the share register as shareholders with the right to vote,

provided they explicitly declare to have acquired these registered shares in their own name and for their own

account.

2.6.2 Nominee Registrations

Nominees are persons or entities who do not expressly declare in the application form to hold the shares for

their own account and with whom the Board of Directors has entered into the according contractual agreements.

According to the articles of association, the Board of Directors may record nominees in the share register with

voting rights for shares up to a maximum of 3.0 % of the outstanding nominal share capital. Shares held by a

nominee that exceed this limit are only registered in the share register with voting rights if such nominee de-

clares in writing to disclose name, address and shareholding of any person or legal entity for whose account it

is holding 1.0 % or more of the outstanding share capital.

Legal entities and associations or other partnerships that are linked by capital, voting power, management or

in other manner as well as all persons, entities and partnerships that are acting in concert with a view to cir-

cumvent the restrictions on nominee registration (especially as a syndicate) are deemed to be one nominee.

2.7 Convertible Bonds and Warrants/Options

Uster Technologies Ltd has not issued any convertible bonds, warrants or options. Uster Technologies Ltd

has a Restricted Stock Unit (RSU) plan, the essentials of which are set forth under “5 Compensation, Share-

holdings and Loans”.


Board of Directors

Members of the Board of Directors

Akira Onishi

1958, Japan

Member

Elected in: 2010

Elected until: 2013

Harald Rönn

1960, German

Vice-Chairman

Elected in: 2007

Elected until: 2011

Max-Ulrich Zellweger

1941, Swiss

Chairman

Elected in: 2003

Elected until: 2013

Barry James Mulady

1947, British

Member

Elected in: 2003

Elected until: 2012

Geoffrey Scott

1954, British

Member

Elected in: 2003

Elected until: 2013


3 Board of Directors

3.1 Members of the Board of Directors

The following information sets forth the name, year of birth, function, election and directorship term of

each Member of the Board of Directors, all of whom except for Geoffrey Scott are non-executive directors,

followed by a short description of each Member’s business experience, education and activities.

Max-Ulrich Zellweger, Chairman of the Board of Directors

Max-Ulrich Zellweger has been a Member of the Board of Directors of Uster Technologies Ltd since 2003 and

is elected until 2013. Between 1987 and 1992 he was Area Manager Asia Pacific of Schindler Elevators Co. and

in this function responsible for the subsidiaries and joint ventures of Schindler in China, Japan, India, Hong

Kong and other Asian countries. He is now Managing Partner of Pacific Consult Ltd, a Zurich and Shanghai

based business consultant specialized on business development in Asia, established in 1992 by Max-Ulrich

Zellweger with some partners. He frequently lectures on Asia-related topics at universities and Executive

MBA courses. Furthermore, he is Chairman of the Board of Directors of Fr. Sauter Holding AG and a Member

of the Board of Directors of Fr. Sauter AG, Bartec GmbH (Germany) and Pacific Consult Ltd. Max-Ulrich

Zellweger holds a Masters degree in Mechanical Engineering of the Swiss Institute of Technology (ETH) in

Zurich. He was born in 1941 and is a Swiss citizen.

Harald Rönn, Vice-Chairman of the Board of Directors

Harald Rönn has been a Member of the Board of Directors of Uster Technologies Ltd since 2007 and is elect-

ed until 2011. Prior to joining Alpha Beteiligungsberatung GmbH & Co. KG in 1997 as a Managing Partner he

worked at Hoechst Brazil, followed by Citicorp in New York and then Frankfurt in 1987. Harald Rönn moved

in 1991 to 3i Frankfurt as a Manager. He holds a degree in Business Administration from the University

Getulio Vargas in Brazil and is fluent in German, English and Portuguese. He was born in 1960 and is a Ger-

man citizen.

Dr. Barry James Mulady, Member of the Board of Directors

Barry James Mulady has been a Member of the Board of Directors of Uster Technologies Ltd since 2003 and

is elected until 2012. He has been Chairman of PageOne Communications Ltd, London, England, since 2000

and is Chairman of ipTEST Ltd, Guildford, England. From 2000 to 2006, he served as a non-executive Direc-

tor of Tellermate plc, Newport, Wales and Sensima Ltd, London. From 1996 to 1999 he was CEO of Airtech

plc, Aylesbury, England. Prior to that he served as President of Fisons Instruments Europe and CEO of VG

Instruments plc. He has broad experience in general management, mergers and acquisitions and business

development. Barry James Mulady earned a First Class Honours Degree in Physics and a PhD in Nuclear

Magnetic Resonance from the University of Nottingham. He was born in 1947 and is a British citizen.


Akira Onishi, Member of the Board of Directors

Akira Onishi has been elected a Member of the Board of Directors of Uster Technologies Ltd in 2010 for a

period of three years until 2013 and acts as representative of the strategic investor Toyota Industries Corpo-

ration. He started his carrier as sales and marketing manager in the textile machinery division of Toyota

Industries Corporation in 1981. Later he was active in various management functions mainly in Corporate

Planning. Akira Onishi currently holds the positions of Senior Managing Director, Member of the Board,

Corporate Planning and Head of Textile Machinery Business Unit. Akira Onishi earned a degree in law from

Nagoya University, Japan. He was born in 1958 and is a Japanese citizen.

Dr. Geoffrey Scott, Member of the Board of Directors and Chief Executive Officer

Geoffrey Scott has been a Member of the Board of Directors and CEO of Uster Technologies Ltd since 2003

and is elected until 2013. He was Chief Executive Officer of the Zellweger Uster Division of Zellweger Luwa,

Uster, Switzerland, from 1999 to 2003. Prior to that he held Senior Management positions at Kevex Instru-

ments, Fisons plc (Scientific Instruments Division) and Beckman Instruments. He has broad experience of

strategy and business development, sales, marketing and after-sales, product development and general

management. He was a Member of the Board of Directors of Maillefer SA until 12 January 2011. Geoffrey Scott

earned a BSc Honours degree in Biochemistry from the University of Liverpool, and a PhD in Biochemistry

from the University of Nottingham. He was born in 1954 and is a British citizen.

3.2 Independency of the Board of Directors

None of the non-executive Members of the Board of Directors has been a Member of the Executive Commit-

tee of Uster Technologies Ltd or its subsidiaries during the past three years and there are no significant

business connections between Uster Technologies Ltd and its subsidiaries and the non-executive Members

of the Board of Directors.

In his function of a Managing Partner of Pacific Consult Ltd Max-Ulrich Zellweger advises the Company on

certain business issues related to China. Also, Barry James Mulady sometimes delivers consulting services

to the Company. However, the scope of these consultancy services is not significant.

The Members of the Board of Directors do not have any activities and functions outside Uster Technologies

Ltd that would compromise their independency.


3.3 Elections and Terms of Office

The articles of association of Uster Technologies Ltd provide that the Board of Directors may consist of a

minimum of three Members and a maximum of nine Members. Members of the Board of Directors are ap-

pointed and removed exclusively by shareholders’ resolution. The elections are held individually. Their

maximum term of office is three years, re-election is allowed.

3.4 Internal Organization

3.4.1 Duties and Operating Principles of the Board of Directors

The Board of Directors is entrusted with the ultimate direction of Uster Technologies Ltd and the supervision

of the Executive Committee. The Board of Directors’ non-transferable and irrevocable duties include the

following:

• The ultimate direction of the Company and the issuance of the necessary directives;

• The determination of the organization, including the adoption and revision of the organizational rules;

• The organization of the accounting system, the financial control as well as the financial planning;

• The appointment and dismissal of the persons entrusted with the management of the Company as well as

the determination of the signatory power;

• The ultimate supervision of the persons entrusted with the management of the Company;

• The responsibility for the preparation of the annual report and the Shareholders’ meeting as well as the

implementation of the resolutions adopted by the meeting of Shareholders;

• The passing of resolutions regarding the supplementary contribution for shares not fully paid up and of

the corresponding amendments to the articles of incorporation;

• The passing of resolutions concerning an increase in share capital to the extent that such power is vested

in the Board of Directors and of resolutions concerning the confirmation of capital increases and corre-

sponding amendments to the articles of incorporation as well as making the required report on the capital

increase;

• The notification of the judge in case of over-indebtedness of the Company;

• The adoption of and any amendments or modifications to any equity incentive plan, stock option agree-

ment, restricted stock purchase agreement, etc.;

• The decision regarding entering into any financing arrangement in excess of CHF 10.0 million including

loan agreements, credit lines, letters of credit or capitalized leases;

• The issuance of convertible debentures with option rights or other financial market instruments;

• The approval of the business strategy and the approval and adoption of the budget of the Company;

• The approval of any transaction exceeding the amount of CHF 10.0 million which is not in accordance with

the budget.


According to the current organizational rules enacted by the Board of Directors, the Board of Directors meets

at the invitation of the Chairman, or in the Chairman’s absence, the Vice-Chairman or any other Member of

the Board of Directors, as often as the Company’s business requires a meeting and in any event at least six

times per calendar year. Resolutions of the Board of Directors are passed by way of simple majority of the

vote cast. In the case of a tie the Chairman has a casting vote. To pass a resolution validly, the majority of the

Members of the Board of Directors have to attend the meeting.

The Chairman, after consultation with the Chief Executive Officer, determines the agenda for the Board

meetings. Any Member of the Board of Directors may request the convocation of a meeting or the inclusion

of items of business in the agenda. All Members of the Board receive written information on the agenda items

before the meeting in order to be well prepared. The Board of Directors consults external experts where

necessary when discussing specific topics.

In 2010 the Board of Directors held the following meetings:

Number of meetings: 8

Average meeting time (hours): 2

Attendance of Members of the Board of Directors (Meetings):

Max-Ulrich Zellweger 8

Harald Rönn 7

Barry James Mulady 8

Akira Onishi 1) 5

Geoffrey Scott 8

1) elected in March 2010

3.4.2 Committees of the Board of Directors

The Board of Directors has established two committees to further strengthen the corporate governance

structure. The Members of these committees are appointed, as a rule, for the entire duration of their mandate

as Director and are re-eligible. The committees constitute themselves each year at the first meeting after the

annual meeting of shareholders. In discharging their responsibilities the committees have unrestricted ac-

cess to the Company’s and the Management’s books and records.

Audit Committee

According to the Board regulations, the Audit Committee must be composed of non-executive and indepen-

dent Directors. It currently consists of Max-Ulrich Zellweger and Harald Rönn and meets as often as necessary.

Usually there will be at least two meetings a year, one for the review of the budget and one for the review of

the year-end closing. Furthermore, the audit scope, the audit plan and the audit focus points for the year-end

closing are presented in such meetings. The audit committee asks the auditors to present their findings of

the year-end closing. Other audit findings either by an external consultant or by the internal audit team are

presented on a case by case basis.


In 2010 the Audit Committee held the following meetings:



Attendence of Members of Board of Directors (Meetings):


Harald Rönn 2

The Audit Committee assists the Board of Directors in fulfilling its duties of supervision of the Executive

Committee. It has the following powers and duties:

• To review and assess the effectiveness of the statutory auditors, in particular their independence from

the Company;

• To review and assess the scope and plan of the audit, the examination process and the results of the

audit and to examine whether the recommendations issued by the auditors have been implemented;

• To review the auditors’ reports and to discuss their contents with the auditors and with the Executive

Committee;

• To assess the risk assessment established by the Executive Committee and the proposed measures to

reduce risks;

• To assess the state of compliance with norms within the Company;

• To review in cooperation with the auditors, the CEO and the CFO whether the accounting principles and

the financial control mechanism of the Company and its subsidiaries are appropriate in view of the size

and complexity of the Group;

• To review the annual and interim statutory and consolidated financial statements intended for publica-

tion. It should discuss these with the CEO, the CFO and with the head of the external audit;

• The Audit Committee regularly reports to the Board of Directors on its findings and proposes appropri-

ate actions.


Nomination and Compensation Committee

According to the Board Regulations, the Nomination and Compensation Committee must be composed of

non-executive and independent Directors. It currently consists of Max-Ulrich Zellweger, Barry James Mulady

and Harald Rönn and meets as often as necessary.

In 2010 the Nomination and Compensation Committee held the following meetings:



Attendance of Members of the Board of Directors (Meetings):


Barry James Mulady 2

Harald Rönn 2

The Nomination and Compensation Committee assists the Board of Directors in fulfilling its duties of su-

pervision of the Executive Committee. It has the following powers and duties:

• To assure the long-term planning of appropriate appointments to the position of the CEO and to the Board

of Directors;

• To nominate candidates to fill the vacancies on the Board of Directors or the position of the CEO;

• To make recommendations on the composition and balance of the Board of Directors;

• To review and assess on a regular basis the remuneration system of the Company and the Group (including

the management incentive plans) and to make a proposal to the Board of Directors;

• To recommend the terms of employment, in particular the remuneration package of the CEO, and to make

proposals in relation to the remuneration of the Members of the Board of Directors;

• To recommend upon proposal of the CEO the terms of employment, in particular the remuneration pack-

age, of employees reporting directly to the CEO as well as review matters related to the compensation of

other top managers as well as the general employee compensation and human resource practices of the

Company;

• To make recommendations on the grant of options or other securities under any management incentive

plan of the Company.

The Nomination and Compensation Committee regularly reports to the Board of Directors on its findings

and proposes appropriate actions.


Executive Committee

Members of the Executive Committee

Geoffrey Scott

1954, British

Chief Executive Officer

Member since 2003

Thomas F. Dressendörfer

1958, German

Chief Financial Officer

Member since 2008

Hossein Ghorashi

1945, American

Head of U.S. Operations

Member since 2003

Naiming Wei

1962, German

Head of Asian Operations

Member since 2006

Richard Furter

1943, Swiss

Head of Textile Technology

Member since 2003

Deniz Bütüner

1973, Swiss

Head of Marketing and

Business Development

Member since 2007

Rafael Storz

1967, German

Head of Research and

Innovation

Member since 2006

Harold R. Hoke

1954, American

Head of Sales and Service

Member since 2003

Renato Murk

1956, Swiss

Head of Order Fulfillment

Member since 2003


3.4.3 Areas of Responsibilities

In accordance with the law, the articles of incorporation and the organizational rules the Board of Directors

has delegated the Company’s operational management to Geoffrey Scott, the CEO of Uster Technologies Ltd.

Together with the Executive Committee he is responsible for the overall management of the Uster Group.

The CEO has all the powers and duties that are not explicitly reserved to the Board of Directors or a Board

Committee as mentioned above. In particular, the CEO has the following powers and duties:

• The provision of all information and documents necessary to the Board of Directors;

• The implementation of the resolutions passed by the Board of Directors;

• The organization, management and control of the day-to-day business of the Company;

• The proposal to the Board of Directors for the approval of transactions to be resolved by the Board of

Directors;

• The proposal to the Board of Directors for the appointment and dismissal of Members of the Executive

Committee;

• The organization of the Executive Committee and the preparation, calling and presiding the meetings

of the Executive Committee.

3.4.4 Information and Control Mechanisms

Board of Directors

The Board of Directors recognizes the importance of receiving sufficient information from the Executive

Committee to fulfill its supervisory duty and to make the decisions that are reserved to the Board of Direc-

tors. It has the following means to monitor the responsibilities it has delegated to the Executive Committee:

• The CEO of the Group is a Member of the Board of Directors and informs the Board in every meeting about

the current development of the business. Additionally the CFO serves as the secretary of the Board and

also participates in every meeting. Other Members of the Executive Committee are invited to attend

Board meetings to report on their areas of responsibility as deemed necessary by the Board.

• The minutes of the Executive Committee Meetings are made available to the Chairman of the Board.

• Informal meetings are held as required between Board Members and the CEO.

• The Board of Directors receives on a monthly basis the consolidated income statement, balance sheet

and cash flow statement of the Uster Group together with a detailed comment on the course of the busi-

ness. The Board of Directors does not have direct access to the Management Information System of the

Company.

• Risk management and monitoring procedures are evaluated at regular intervals by the Board of Directors.

Board Committees

The Board Committees, especially the Audit Committee, invite external consultants to review the business

and better understand the laws and policies impacting the Company. In addition the CEO, the CFO and the

representative of the external auditors will be invited to the meetings of the Audit Committee.


4 Executive Committee

4.1 Members of the Executive Committee

The following information sets forth the name, year of birth, nationality and function of each Member of

the Executive Committee, followed by a short description of each Member’s business experience, education

and activities.

Dr. Geoffrey Scott, Member of the Board of Directors and Chief Executive Officer

Geoffrey Scott has been a Member of the Board of Directors and CEO of Uster Technologies Ltd since 2003

(elected until 2013). He was Chief Executive Officer of the Zellweger Uster Division of Zellweger Luwa, Uster,

Switzerland, from 1999 to 2003. Prior to that he held Senior Management positions at Kevex Instruments,

Fisons plc (Scientific Instruments Division) and Beckman Instruments. He has broad experience of strategy

and business development, sales, marketing and after-sales, product development and general management.

He was a Member of the Board of Directors of Maillefer SA until January 12, 2011. Geoffrey Scott earned a BSc

Honours degree in Biochemistry from the University of Liverpool, and a PhD in Biochemistry from the Uni-

versity of Nottingham. He was born in 1954 and is a British citizen.

Thomas F. Dressendörfer, Chief Financial Officer, Finance and Support

Thomas F. Dressendörfer has been appointed to the CFO position of Uster Technologies Ltd as of October 1,

2008. He takes responsibility to lead the Finance and Support Team in Uster, including IT, and reports as

member of the Executive Management Committee directly to the CEO. Thomas F. Dressendörfer has worked

in the past years with Randstad, The Nielsen Company and Procter & Gamble, where he has been holding

various key senior finance positions. He brings experience of leading high performing Finance teams as well

as experience of working with Finance groups internationally. Thomas F. Dressendörfer holds a Masters

Degree in Business Administration and Economics from the University of Erlangen-Nuremberg in Germany.

He was born in 1958 and is a German citizen.

Hossein Ghorashi, Head of U.S. Operations

Hossein Ghorashi has been Head of U.S. Operations since 2003. From 1990 through 2002 he held the posi-

tions of Senior Vice-President of R&D and Head of Zellweger Uster Inc. He was with Special Instruments

Laboratory from 1969 through 1989 and was Vice-President of R&D for the last 10 years. He holds a BS and

an MS in Electrical Engineering from the University of Tennessee, Knoxville TN, United States. He is a

coinventor of 18 fiber testing patents, author of numerous papers and presents the Company’s latest in-

novations in important international conferences. He is known and referred to as a cotton fiber testing

expert worldwide. Hossein Ghorashi was born in 1945 and is an American citizen.


Dr. Naiming Wei, Head of Asian Operations

Naiming Wei has been a Member of the Management and Head of Asian Operations of Uster Technologies

Ltd since 2006. From 2000 to 2005 he was General Manager at Shanghai Sachs Huizhong Shock Absorber Co.

Ltd, a joint venture company between the German automotive supplier ZF-Sachs Ltd and Shanghai Automo-

tive Industry Corporation. Prior to that, Naiming Wei worked as management consultant at Management

Engineers GmbH for large and middle size multinational clients in Germany, in the UK and in Switzerland.

From 1993 to 1997 he was Sales and Marketing Manager and Purchasing Manager at Siemens Ltd, Business

Division Private Communication Systems. Naiming Wei holds a Masters degree (Dipl.-Ing.) and a PhD degree

(Dr.-Ing.) in Electrical Engineering from the University Erlangen-Nuremberg in Germany. He was born in

1962 and is a German citizen.

Richard Furter, Head of Textile Technology

Richard Furter has been Head of Textile Technology of Uster Technologies Ltd since 2003. Prior to that he

has worked for Zellweger Uster Ltd since 1967 where he was an electronic engineer in R&D and was par-

ticularly involved in sensor technology and signal processing. In this role he has filed various patents.

Richard Furter held positions as Product Manager, Manager of R&D and Manager of Marketing and Sales.

He is familiar with the customers in the most important textile markets. Richard Furter graduated as an

electronic engineer (currently Lucerne University of Applied Sciences and Arts). He was born in 1943 and

is a Swiss citizen.

Dr. Rafael Storz, Head of Research and Innovation

Rafael Storz has been a Member of the Management since 2006. From 2001 to 2006 he was a Member of the

Management and Head of R&D of Leica Microsystems CMS GmbH, Wetzlar, Germany. From 1998 to 2001 he

was a project manager and deputy head of the R&D department at Leica Microsystems Heidelberg GmbH,

Germany. He is experienced within strategy and business development and product development. He is a

(co-)inventor of 69 patents in the field of measurement equipment and analysis tools. Rafael Storz earned a

PhD in Physics from the University of Konstanz, Germany. He was born in 1967 and is a German citizen.

Deniz Bütüner, Head of Marketing and Business Development

Deniz Bütüner has been a Member of the Management since 2007 and joined Uster Technologies as Vice-

President Marketing in the same year. From 2003 to 2006 she was with Bombardier Transportation’s Propulsion

and Controls Division, where she was responsible for the Division’s strategy, marketing and communication.

Between 1998 and 2002 she held marketing, business development and communications management positions

with Hyperion Solutions, MIS Technologies and Swisslog Management. Deniz Bütüner has experience in strat-

egy, business development and marketing. She is a Member of the Board of Directors of Marble & Fortune AG.

Deniz Bütüner holds a Swiss Federal Diploma in Marketing Management. She was born in 1973 and is a Swiss

citizen.


Reine Wasner, Head of Marketing and Business Development (as of January 1, 2011)

Reine Wasner has been appointed to the position as Vice-President of Marketing and Business Development

as of January 1, 2011. Prior to joining the company, he worked for more than ten years in management con-

sulting including Booz Allen Hamilton, Arthur D. Little and A. T. Kearney. He has experience in the areas of

strategy development, market and business development and innovation management across a wide range

of industries, including projects for Uster Technologies Ltd. Reine Wasner holds a Master of Science in

Mechanical Engineering from the Technical University of Lund, a Master of Business Administration from

the University of Lund as well as a three year research degree from the University of Linköping (all in Sweden)

in collaboration with MIT in Boston (USA). He was born in 1970 and is a Swedish citizen.

Harold R. Hoke Jr., Head of Sales and Service

Harold Hoke has been Head of Sales and Service of Uster Technologies Ltd since 2003. He rejoined Uster

Technologies Ltd in 2002 after almost two years as CEO of Savio America. Harold Hoke originally joined

Zellweger Uster Ltd in 1980 in the U.S. operation. In 1996 he was based in the Company’s Swiss headquarters

and was initially responsible for Sales and Service Asia, later responsible for the companies’ worldwide sales

and service organization including all small subsidiary companies. Harold Hoke has experience in sales,

marketing, service, business development, production management and strategy development. Harold Hoke

holds a BS from Clemson University. He was born in 1954 and is an American citizen.

Renato Murk, Head of Order Fulfillment

Renato Murk has been Head of Order Fulfillment of Uster Technologies Ltd since 2003, a position which

includes the worldwide responsibility for the production processes and supply chain management. From

1999 to 2003 he was responsible for production and logistics of the Zellweger Uster Division of Zellweger

Luwa Ltd. From 1996 to 1999, he was a Manager of Product Assembly Lines at Zellweger Uster. Renato Murk

holds a Master of Industrial Engineering degree from the Swiss Federal Institute of Technology (ETH) with

the majors Process Engineering and Business Administration. Besides significant experience in general and

production management he has executed several efficiency and cost-improving programs as a senior con-

sultant in a Swiss-based management consultancy. He was born in 1956 and is a Swiss citizen.

4.2 Other Activities and Vested Interests

There are no further activities of vested interests of the Members of the Executive Management except the

ones mentioned above.

4.3 Management Contracts

The Board of Directors has not delegated any management tasks to third parties outside the Company.


5 Compensation, Shareholdings and Loans

5.1 Content and Method of Determining the Compensation and the Share-Ownership Programs

5.1.1 Compensation Design

The compensation policy of Uster Technologies Ltd is designed to provide simple and clearly structured

salary systems that ensure fair remuneration and are transparent to employees. Salary levels are geared

relative to salaries in the local markets and are reviewed at regular intervals using different remuneration

studies available on the market. Individual compensation is determined by the specifications of the posi-

tion, competencies and experience, performance and the Group’s business success. Where possible, re-

sults- and performance-driven compensation systems are employed that include a results-related variable

component.

5.1.2 Board of Directors

The remuneration of the Members of the Board of Directors consists of an equal payment in cash for the

ordinary Board Members. The remuneration for Chairman of the Board of Directors is determined by tak-

ing into account his respective responsibility, experience and the time which he invests in his activity as

Chairman. Extraordinary assignments or work which a Director accomplishes outside of his activity as a

Director is specifically remunerated. Such remuneration has to be approved by the Board of Directors. In

addition, the Directors are reimbursed all reasonable cash expenses properly incurred by them in the

discharge of their duties, including their reasonable expenses of traveling to and from the meetings of the

Board of Directors, committee meetings and Shareholders’ meetings. Board Members may also participate

in the Uster Group RSU plan which is detailed below.

5.1.3 Executive Committee

The Members of the Executive Committee are remunerated according to the principle of flexible, perfor-

mance-related compensation. Their remuneration consists of a basic salary and a performance-related

component in the context of the bonus plan. The performance related compensation part amounts to an

average of 50 % of the basic salary for attainment of target; further payment is made for overachievement

against target. The variable component is directly linked to the primary drivers of business performance.

It is based on the yearly gross sales and the operating earnings achieved by the Group (EBITA) as well as

the individual goals amounting to a maximum of 10 % of total performance related compensation. All the

components mentioned above are cash compensations which are paid out immediately and are not subject

to forfeiture clauses. Additional benefits for the Members of the Executive Committee include a car and

participation in the below-mentioned RSU plan.

5.1.4 Share Ownership Program

In April 2010, the Board of Directors adopted a Restricted Stock Unit (RSU) plan. The RSU plan has been

designed to provide an increased incentive to contribute to the future success of the Company, to align

remuneration with the creation of shareholder value, to promote a team-base culture throughout the

organization and to increase the ability of Uster Group to attract and retain individuals with exceptional

skills. The Nomination and Compensation Committee will select the employees eligible for the RSU plan

in its own discretion, but upon proposal by the CEO. The selected employees will be awarded a fixed num-

ber of Restricted Stock Units (RSU Awards) to purchase registered shares of the Company. The total num-

ber of RSU Awards awarded at any one time is left to the sole discretion of the Nomination and Compensa-

tion Committee, which will base its decision on the recommendation of the CEO.


According to the RSU plan, the RSU Awards will vest on the third anniversary from the date of grant of

the RSU Award, provided that neither the employment agreement has been terminated nor any forfeiture

event has occurred.

There are no other share-ownership programs or option plans with regard to the compensation of the

Board of Directors and the Executive Committee. Usually Uster Technologies Ltd does not adjust salaries

during the year.

5.1.5 Compensation Governance

With respect to the compensation the Nomination and Compensation Committee has the following re-

sponsibilities:

• To review and assess on a regular basis the remuneration system of the Group including the incentive

plans for the Executive Committee and to make a proposal to the Board of Directors thereto;

• To make recommendations with respect to the remuneration package of the CEO and the Directors;

• To recommend upon proposal of the CEO the remuneration package of employees reporting directly to

the CEO;

• To make recommendations on the grant of options or other securities under any management incentive

plan. Based on these recommendations the Board of Directors approves the remuneration of the Members

of the Board of Directors and the Members of the Executive Committee.

The Nomination and Compensation Committee generally meets during the fourth quarter to discuss the

remuneration package of the Board Members and the Members of the Executive Committee for the follow-

ing year. Information from different remuneration studies available on the market is made available to

the Members of the Nomination and Compensation Committee and serves as a basis for the discussion of

the remuneration during the meeting. Examples of such studies include surveys from Swissmem and

Landolt & Mächler in Switzerland, Hewitt in China and the Department of Labor in the USA. The CEO is

partially present at the meeting but he has to leave when his remuneration is discussed. After the final

decision on the remuneration of the Board Members and the Members of the Executive Committee by the

Board of Directors the salary changes are signed by a Member of the Board of Directors.

5.2 Compensation of the Members of the Board of Directors and the Executive Committee

Information on the compensation of the Board of Directors and the Executive Committee for the year ending

December 31, 2010, are presented in the note 11 of the Financial Statements of Uster Technologies Ltd.

6 Shareholders’ Participation

6.1 Voting Rights and Representation Restrictions

Transferability and Nominee Registrations above.

In a Shareholders’ meeting each share recorded as a share with the right to vote in the share register entitles

its owner to one vote. By means of a written proxy each shareholder may have his shares represented in a

Shareholders’ meeting by a third person who needs not be a shareholder. Shareholders who are recorded in

the share register with the right to vote at a certain date appointed by the Board of Directors are entitled to

participate in the Shareholders’ meeting and to exercise the right to vote.

No exceptions to these rules were granted by the Board of Directors in the year under review.


6.2 Statutory Quorums

Unless mandatory statutory provisions provide otherwise, the Shareholders’ meeting passes its resolutions

and performs elections with the absolute majority of the votes represented at the meeting.

If an election cannot be completed upon the first ballot and if there is more than one candidate, the Chair-

man shall direct a second ballot at which the relative majority shall decide.

6.3 Convocation of the Shareholders’ Meeting

The Shareholders’ meeting is called by the Board of Directors or, if necessary, the auditors not less than

20 days before the date of the meeting. Notice of a Shareholders’ meeting is given by means of a single

publication in the Swiss Official Gazette of Commerce. The shareholders registered in the share register

may in addition receive a written notice sent by mail.

An extraordinary Shareholders’ meeting is called whenever the Board of Directors or the auditors con-

sider it necessary or if a Shareholders’ meeting decides so. The Board of Directors will also call a Share-

holders’ meeting if one or more shareholders whose combined holdings represent at least 10.0 % of the

share capital so demand in writing and specify the items and the proposals, in the case of elections the

names of the proposed candidates, to be submitted to the meeting.

6.4 Agenda

Shareholders whose individual or combined holdings represent an aggregate nominal value of at least

CHF 1,000,000 or at least 10.0 % of the share capital may demand that an item be included in the agenda.

This right must be exercised in writing at least 60 days before the meeting with indication of the items

and the proposals of the shareholders.

No resolution shall be passed on items for which no proper notice has been given; this prohibition does

not apply to proposals to call an extraordinary Shareholders’ meeting, to initiate a special audit or to elect

the auditors as demanded by a shareholder.

No prior notice is required for proposals concerning items included in the agenda and discussions that

do not result in the adoption of resolutions.

6.5 Inscriptions into the Share Register

After the publication or mailing of the written notice of the Shareholders’ meeting until the day following

the Shareholders’ meeting no recordings in the share register will be made, provided that the Board of

Directors does not appoint a different date.

Uster Technologies Ltd | Annual Report 2010 55

7 Changes of Control and Defense Measures

7.1 Obligation to Make an Offer

According to the Federal Act on Stock Exchanges and Securities Trading (SESTA) a shareholder or a group

of shareholders acting in concert acquiring more than 33 1⁄3 % of the voting rights must submit a takeover

offer to all remaining shareholders. The articles of association of Uster Technologies Ltd do not include

any amendment (i. e. no opting-out or opting-up provision) to this rule.

7.2 Clauses on Changes of Control

Uster Technologies Ltd has a Restricted Stock Unit (RSU) plan, the essentials of which are set forth under

“5 Compensation, Shareholdings and Loans”. The RSU plan sets forth that the RSU awards granted under

the RSU plan vest immediately and may be converted into shares of Uster Technologies Ltd upon the

occurrence of a change of control. In addition to that, neither the Members of the Board of Directors nor

the Members of the Executive Committee have contracts that provide for benefits upon termination of

employment contracts due to a change of control.

8 Auditors

8.1 Duration of the Mandate and Term of Office of the Lead Auditor

The statutory auditors and Group auditors are elected by the Shareholders’ meeting. The term of office of

the auditors is one year, beginning with the day of their election and ending on the day of the next ordinary

Shareholders’ meeting.

Ernst & Young Ltd, Zurich, have been the auditors of the Group since 2003. They have been the statutory

auditors of Uster Technologies Ltd since its incorporation in November 2006. The auditor-in-charge,

Daniel Zaugg, took up office in 2008.

8.2 Auditing Fees

In the year under review, Ernst & Young Ltd invoiced CHF 0.5 million (2009: CHF 0.5 million) for their

audit services.

8.3 Additional Fees

Ernst & Young Ltd invoiced additional fees in the amount of CHF 0.1 million (2009: CHF 0.4 million)

mostly related to tax consulting.

8.4 Information Tools Pertaining to the External Audit

The Audit Committee monitors on behalf of the Board of Directors the performance and independence of

the external auditors. In addition it reviews the audit result and monitors the implementation of the find-

ings by the Executive Committee.

The Audit Committee prepares proposals for the appointment or removal of the external auditors for

submission to the Board of Directors, which then nominates the external auditor for election by the Share-

holders’ meeting.

Currently the Audit Committee is informed on the findings of the audit through the Management Letter

issued by the auditors after the year-end audit, which is written after the year-end audit by the auditor.


9 Information Policy

Uster Technologies Ltd is committed to an open and clear information policy towards its shareholders as

well as its other stakeholders.

The audited annual as well as unaudited semi-annual reports are available to the shareholders and other

stakeholders. The annual report is provided in printed form and both annual and semi-annual reports are

available on the website under www.uster-investors.com/financial_reports.php. Additionally the public

is informed via the media of material current changes and developments. Events relevant for the share

price are published according to the ad-hoc publicity guidelines of the SIX Swiss Exchange.

Media and analyst conferences are held at least once a year and the press releases as well as presentations

are available on the website under www.uster-investors.com/news.php.

Interested parties can subscribe to the mailing list available under www.uster-investors.com/subscription_

service.php in order to receive ad-hoc publications or other recent information relating to the Company.

Important Dates

Publication of annual results 2010 February 28, 2011

Media and analyst conference February 28, 2011

Last day for inscription into the share register

before the Shareholders’ meeting 2011

March 18, 2011

Shareholders’ meeting 2011 March 29, 2011

Dividend payment A p r i l 6 , 2 0 1 1

Semi-annual results 2011 July 19, 2011

Contact for Media, Investors and Analysts

Thomas F. Dressendörfer, CFO

Sonnenbergstrasse 10

CH-8610 Uster

Phone +41 43 366 36 06

Fax +41 43 366 36 54

Email [email protected]

10 Material Changes since the Balance Sheet Date

There are no material changes to the information stated in this section since the balance sheet date.

Uster Technologies Ltd | Financial Report 2010

58 Comment on the Consolidated Financial Statements 2010

Comment on the Consolidated Financial Statements

Summary

In a positive market environment Uster Technologies Ltd delivered a strong performance in the 2010 financial year.

Sales grew by 31.8 % to CHF 132.8 million. EBITA increased by 52.4 % to CHF 34.6 million and margins improved to

26.0 %, well above the previous year’s level of 22.5 %.

Key drivers for this strong EBITA margin improvement were:

• Continued sales growth in the key market of China, where the trend to automation and quality testing continues,

and in other markets like India and South East Asia which are returning to pre-crisis growth levels;

• A strong portfolio of high value-adding products that support a convincing investment proposition for customers;

• A flexible organizational structure allowing the Company to immediately adjust for these strong revenue

up-swings meeting the demand of the clients;

• Minimal exchange rate exposures and receivables defaults, with the majority of sales invoiced in CHF, and

with terms of business requiring secured payment terms (letter of credit or down payment).

The net result was CHF 20.8 million or 15.6 % of gross sales. Key drivers for this excellent net result were:

• Positive business performance with a strong EBITA;

• Resolution of a tax case with the Swiss tax authorities related to fiscal period 2007, allowing for the release

of tax accruals;

• Change of Swiss income tax regime as of fiscal period 2008.

The cash position was improved to CHF 21.0 million with an EBITA / operating cash flow conversion of 123.2 %. The

cash flow from operating activities was CHF 42.6 million. This was mainly used to reduce debt by CHF 27.0 mil-

lion, down to CHF 98.0 million resulting in a net debt / EBITDA ration of 2.1, and to invest in improved facilities

in the production area for the new yarn clearer product.

Income Statement

Gross Sales

Gross sales for 2010 amounted to CHF 132.8 million, an increase of 31.8 % compared to the prior year figure of

CHF 100.8 million. The overall increase of gross sales for quality testing instruments and service sales is a result

of the current strong market environment in all the key textile markets. The strongest driver of the sales growth

was the yarn clearer sold through the key automatic winding machinery manufacturers. Uster Technologies

Ltd invoices customers in the majority of cases in CHF with secured payment terms. As a result, exchange rate

gains/losses on sales were held at a level below 1 % of gross sales in 2010.

EBITA

EBITA for the Group amounted to CHF 34.6 million (2009: CHF 22.7 million). As a percentage of gross sales the

EBITA reached 26.0 % (2009: 22.5 %).

Uster Technologies Ltd’s flexible business model allowed the Group to quickly adapt its operations to meet

the increased demand in the market without needing to invest into additional headcount. R&D activities that

had been slowed down in response to the crisis were restored to a high level to support future growth resulting

in R&D expenses of 11.2 % of sales. Furthermore, during the course of the year, the cost of goods sold improved

slightly due to a favorable Euro exchange rate for some parts sourced out of the Euro area.

Balance Sheet

The balance sheet total as of December 31, 2010, amounted to CHF 399.5 million (2009: CHF 404.7 million).

• Amortization of intangible assets of CHF 15.2 million (assets)

Comment on the Consolidated Financial Statements 2010 59

• An increase in cash of CHF 6.0 million (assets)

• Loan repayments of CHF 27.0 million (liabilities)

• Reduction of deferred tax of CHF 7.8 million (liabilities)

• Shareholder’s equity increase by CHF 21.1 million mainly as a result of the positive net result (equity)

• The equity ratio increased to 56.2 % (2009: 50.3 %)

Impairment Test of Intangible Assets and Goodwill

Uster Technologies Ltd performs an impairment test on the goodwill and the intangible assets at least once

a year. The latest impairment test was performed in the fourth quarter of 2010 and was based on recent market

developments, realistic internal assumptions and external input on key parameters. The impairment test

confirmed the carrying amounts of the goodwill and related intangible assets.

Bank Loans

The Group repaid bank loans of CHF 10.0 million as compulsory repayments and further CHF 17.0 million as

voluntary repayments. The Net Debt / EBITDA ratio is at 2.1. compared to 4.5 in 2009. Free, not utilized cred-

it facilities amount to CHF 32.0 million. The maturity date of these bank loans is October 2012.

Cash Flow Statement

Uster Technologies Ltd continues to have a strong focus on cash generation.

The cash flow was positively impacted by higher sales levels (31.8 % above 2009) and higher levels of accounts

receivables due to increasing OEM shipments in 2010. The majority of the cash flow has been used to further

deleverage the balance sheet by voluntarily repaying parts of the loan.

Cash per December 31, 2010, improved by CHF 6.0 million to CHF 21.1 million (2009: CHF 15.1 million).

Capital Expenditure for Intangible and Tangible Assets

Capital expenditure for intangible and tangible assets amounted to CHF -3.8 million (2009: CHF -3.3 million).

The majority of this capital expenditure is attributed to an automation system in the production area. At a

level of only 2.9 % of gross sales this is low compared to market averages and is consuming only 9.0 % of the

cash flow from operating activities. The main reason for this low capital expenditure rate is the consequent

outsourcing of all non-core activities in line with the flexible business model of Uster Technologies Ltd.

Personnel

As of December 31, 2010, the Uster Group employed 445 full time equivalents (2009: 449) which is a decrease

of 0.7 % compared to the prior year.

Taxes

The expected income tax for the Uster Group is positively impacted by a resolved tax case with the Swiss tax

authorities and the new Swiss income tax regime effective as of fiscal period 2008.

Dividend Proposal

At the General Meeting on March 29, 2011, the Board of Directors will propose a dividend payment of about

50 % of net results for the 2010 financial year (CHF 1.20 / share).

60 Uster Group – Consolidated Financial Statements 2010

Uster Group – Consolidated Financial Statements

Consolidated Statement of Comprehensive Income

in CHF 1,000 Notes Jan 1 –

Dec 31, 2010

Jan 1 –

Dec 31, 2009

Gross sales 132,841 100.0 % 100,763 100.0 %

Sales deductions 6 -2,746 -2,858

Net sales 130,095 97.9 % 97,905 97.2 %

Cost of goods sold 7 -52,978 -41,631

Gross profit 77,117 58.1 % 56,274 55.8 %

Sales and marketing expenses 8.1 -14,274 -11,750

Research and development expenses 8.2 -14,916 -11,010

Management and administrative expenses 8.3 -13,418 -11,245

Other income 71 329

Other expenses/amortization 9 -15,149 -15,141

Earnings before interest and tax (EBIT) 19,431 14.6 % 7,457 7.4 %

Amortization 1) 12 15,171 15,252

Earnings before interest tax and amortization (EBITA) 34,602 26.0 % 22,709 22.5 %

Amortization 12 -15,171 -15,252


Finance income 2,443 609

Finance expenses -7,580 -7,653

Finance result 10 -5,137 -3.9 % -7,044 -7.0 %

Earnings before tax 14,294 10.8 % 413 0.4 %

Income tax 16 6,469 665

Profit of the year 20,763 15.6 % 1,078 1.1 %

Currency translation differences -649 83

Total comprehensive income 20,114 15.1 % 1,161 1.2 %

Earnings per share (in CHF)Basic 11 2.45 0.16

Diluted 11 2.44 0.16

1) Change in presentation to focus on relevant information only. For details see note 3.1.

Uster Group – Consolidated Financial Statements 2010 61

Consolidated Statement of Financial Position

in CHF 1,000 Notes Dec 31, 2010 Dec 31, 2009

Trademark and Goodwill 1) 12 119,889 119,889

Intangible assets 1) 12 199,103 213,900

Property, plant and equipment 14 10,263 9,660

Pension fund asset 15 13,867 15,624

Financial assets 173 168

Deferred tax assets 16 1,938 2,028

Non-current assets 345,233 86.4 % 361,269 89.3 %

Inventories 17 12,373 10,451

Receivables trade 18 17,892 15,108

Other receivables 19 2,128 1,840

Income tax receivables 779 1,018

Cash and cash equivalents 20 21,049 15,053

Current assets 54,221 13.6 % 43,470 10.7 %

Assets 399,454 100.0 % 404,739 100.0 %

Share capital 79,524 79,524

Share premium 103,691 103,691

Reserve for share-based payment transaction 22 937 0

Other reserves 445 447

Currency translation differences -1,966 -1,317

Retained earnings 42,027 21,262

Shareholders’ equity 21 224,658 56.2 % 203,607 50.3 %

Bank loans 23 87,518 114,277

Provisions 24 1,353 1,282

Deferred tax liabilities 16 42,360 50,133

Non-current liabilities 131,231 32.9 % 165,692 40.9 %

Bank loans 23 10,000 10,000

Derivative financial instruments 4 1,134 1,900

Trade and other liabilities 25 12,262 4,434

Accrued liabilities 26 11,527 11,212

Provisions 24 855 1,182

Income tax liabilities and provisions 7,787 6,712

Current liabilities 43,565 10.9 % 35,440 8.8 %

Liabilities 174,796 43.8 % 201,132 49.7 %

Shareholders’ equity and liabilities 399,454 100.0 % 404,739 100.0 %

1) Change in presentation to show intangible assets with indefinite useful live separately. For further details see note 3.1.


Consolidated Statement of Cash Flows


Dec 31, 2010

Jan 1 –

Dec 31, 2009

Earnings before tax 14,294 413Adjustments for

Depreciation property, plant and equipment 14 2,393 1,741

Amortization intangible assets 12 15,171 15,252

Change in reserve for share-based payment transactions 22 937 0

Change in pension fund asset 15 1,757 170

Provisions -246 -4,186

Finance result 10 5,137 7,044

Result from sale of intangible assets and property, plant and

equipment and other non-cash items 366 -105

39,809 20,329

Change in

Inventories -2,506 1,721

Receivables trade -2,748 -2,913

Other receivables -428 -600

Trade and other liabilities 8,077 -2,628

Accrued liabilities 464 780

Change in working capital 2,859 -3,640

Income taxes paid -23 -2,411

Cash flow from operating activities 42,645 14,278

Purchase of intangible assets 12 -377 -9

Purchase of property, plant and equipment 14 -3,408 -3,319

Purchase of financial assets -23 -45

Disposal of property, plant and equipment 64 199

Disposal of financial assets 13 99

Interest received 97 75

Cash flow from / (used in) investing activities -3,634 -3,000

Uster Group – Consolidated Financial Statements 2010 63

Consolidated Statement of Cash Flows (continued)


Dec 31, 2010

Jan 1 –

Dec 31, 2009

Proceeds from bank loans 23 0 5,000

Repayment of bank loans 23 -27,000 -45,000

Proceeds from issue of share capital 21 0 43,871

Costs related to issue of share capital 21 0 -1,240

Interest paid -5,729 -6,646

Cash flow from / (used in) financing activities -32,729 -4,015

Net change in cash and cash equivalents 6,282 7,263Cash and cash equivalents at beginning of period 15,053 7,490

Exchange differences on cash and cash equivalents -286 300

Cash and cash equivalents at end of period 20 21,049 15,053

Cash flow from operating activities in % of EBITA 123.2 % 62.9 %


Consolidated Statement of Changes in Equity

in CHF 1,000 Share

Capital

Share

Premium

Reserve for share-

based payment

transaction

Other Reserves Currency

Translation

Differences

Retained

Earnings

2009

Balance at January 1, 2009 61,664 78,647 0 123 -1,400 20,508 159,542Profit of the year 0 0 0 0 0 1,078 1,078Other comprehensive income 0 0 0 0 83 0 83Total comprehensive income 0 0 0 0 83 1,078 1,161Issue of share capital 17,860 26,011 0 0 0 0 43,871Cost related to issue of share capital 0 -1,240 0 0 0 0 -1,240Tax effect of cost related to the issue of

share capital 0 273 0 0 0 0 273Allocation to statutory reserves 0 0 0 324 0 -324 0Balance at December 31, 2009 79,524 103,691 0 447 -1,317 21,262 203,607

in CHF 1,000 Share

Capital

Share

Premium

Reserve for share-

based payment

transaction

Other Reserves Currency

Translation

Differences

Retained

Earnings

2010

Balance at January 1, 2010 79,524 103,691 0 447 -1,317 21,262 203,607Profit of the year 0 0 0 0 0 20,763 20,763Other comprehensive income 0 0 0 0 -649 0 -649Total comprehensive income 0 0 0 0 -649 20,763 20,114Share-based payment transaction 0 0 937 0 0 0 937Allocation to / from statutory reserves 0 0 0 -2 0 2 0Balance at December 31, 2010 79,524 103,691 937 445 -1,966 42,027 224,658

For details to the shareholders’ equity refer to note 21 Share Capital and Reserves.

Uster Group – Notes to the Consolidated Financial Statements 2010 65

Uster Group – Notes to the Consolidated Financial Statements

1 Corporate Information

Uster Technologies Ltd (“the Company”) and its subsidiaries (together “the Group”) are the world’s market

leader in textile quality controlling and provide systems and services that enable the industry to manufacture

optimum quality and competitive products “from fiber to fabric”. The Group has a long history as the leader

in textile electronics. For more than 60 years the testing and monitoring solutions have enabled the produc-

tion of the finest fibers, yarns and fabrics.

Uster Technologies Ltd is domiciled in Switzerland. The address of its registered office is Sonnenberg-

strasse 10, CH-8610 Uster, Switzerland.

2 Basis of Preparation of the Consolidated Financial Statements

2.1 Statement of Compliance

The consolidated financial statements of the Uster Group have been prepared in accordance with the

International Financial Reporting Standards (IFRS).

The consolidated financial statements of the Uster Group for the year ended December 31, 2010, were authorized

for issue in accordance with a resolution of the Board of Directors on February 10, 2011. The general meeting

of shareholders will be held on March 29, 2011. According to the Swiss Code of Obligation, the general meeting

of shareholders has the authority to approve the financial statements.

2.2 Basis of Measurement

The consolidated financial statements have been prepared on a historical cost basis except for the derivative

financial instruments mentioned in note 4.3 Market Risk that have been measured at fair value.

2.3 Functional and Presentation Currency

The consolidated financial statements are stated in Swiss Francs, which is the Company’s functional

currency. All values are rounded to the nearest thousand (CHF 1,000) except when otherwise indicated.

2.4 Significant Accounting Judgments and Estimates

In the process of preparing the consolidated financial statements the Executive Committee of the Uster Group

has to make judgments, assumptions and estimations that affect the reported amounts of assets, liabilities,

income and expenses. These estimates are reviewed on a regular basis and are based on past experience as

well as assumptions about the future that currently seem to be reasonable. The actual results, however, could

differ from these estimates.

The key estimates and assumptions that have a significant risk of causing material adjustments to the carrying

amounts of assets and liabilities are mentioned below.

2.5 Impairment of Goodwill and Intangible Assets

The Uster Group determines at least on an annual basis whether goodwill and intangible assets with indefinite

useful lives are to be impaired or not. For intangible assets with definite useful lives the useful life is reviewed

each year and assessed for impairment whenever there is an indicator that the intangible asset may be impaired.

This requires an estimation of the value in use of the cash-generating units to which the goodwill and the

intangible assets are allocated. Estimating the value in use requires to make an estimate of the future cash

flows of the cash-generating units and to choose a suitable discount rate for the calculation of the present

value of those cash flows (see note 13 Impairment Testing of Goodwill and Intangible Assets with Indefinite

Useful Lives). These estimations are based on internal and external sources of information.

66 Uster Group – Notes to the Consolidated Financial Statements 2010

2.6 Pension Benefits

The cost of defined benefit pension plans is determined using actuarial valuations. The actuarial valuation

involves making assumptions about discount rates, expected rates of return on assets, future salary increases,

mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are

subject to significant uncertainty (see note 15 Pension Benefits).

3 Summary of Significant Accounting Policies

3.1 Changes in Accounting Policies and Presentation

The accounting policies adopted in the preparation of these consolidated financial statements are consistent

with those followed in the preparation of the Group’s annual financial statements for the year ended December 31,

2009. None of the standards, amendments or interpretations effective in 2010 are relevant for the Group.

Standards, Amendments and Interpretations Effective in 2010 not Relevant for the Group

Standard /

Interpretation

Title

Effective Date

IFRS 1 Additional Exemptions

for first time adopters – Amendment

January 1, 2010

IFRS 2 Group Cash-settled Share-based

Payment Transactions – Amendment

January 1, 2010

IFRS 3 Business Combinations – Revised July 1, 2009

IAS 27 Consolidated and Separate

Financial Statements – Amendment

July 1, 2009

IAS 39 Eligible hedged items – Amendment July 1, 2009

IFRIC 9 Embedded Derivatives – Amendment July 1, 2009

IFRIC 17 Distributions of Non-cash Assets to Owners July 1, 2009

IFRIC 18 Transfer of Assets from Customers transfer of assets received after

July 1, 2009

Improvements to IFRS April 2009 January 1, 2010

Standards, Amendments and Interpretations that are not yet Effective in 2010

and have not been Early Adopted by the Group

Standard /

Interpretation

Title

Effective Date

IFRS 1 Severe Hyperinflation and Removal of Fixed Dates

for First-time Adopters – Amendment

July 1, 2011

IFRS 7 Financial Instruments Disclosures – Transfer

of financial assets – Amendment

July 1, 2011

IFRS 9 Financial Instruments January 1, 2013

IAS 12 Deferred Tax: Recovery

of Underlying Assets – Amendment

January 1, 2012

IAS 24 Related Party Disclosures January 1, 2011

IAS 32 Classification of Rights Issues February 1, 2010

IFRIC 14 Prepayments of a Minimum Funding

Requirement – Amendment

January 1, 2011

IFRIC 19 Extinguishing Liabilities with Equity Instruments July 1, 2010

Improvements to IFRS May 2010 January 1, 2011


The Group has not undergone a detailed analysis on the relevance for the Group of the above mentioned

standards, amendments and interpretation. Therefore a final assessment can presently not be made.

Improvements to IFRS

In 2010 the board issued its second omnibus of amendments to its standards primarily with the goal to remove

inconsistencies and clarifying wording. None of these improvements will have an impact on the Group.

Change in Presentation of Consolidated Statement of Comprehensive Income

In previous year’s consolidated statement of comprehensive income the costs of the restructuring measures

announced in November 3, 2008, have been presented separately. This information is not relevant to evaluate

the performance of the financial years 2010 and 2009 and was therefore removed. The below table shows the

information removed.


Dec 31, 2010

Jan 1 –

Dec 31, 2009


Amortization and restructuring 12 14,827 14,638

Earnings before interest tax and amor-tization (EBITA) before restructuring 34,258 25.8 % 22,095 21.9 %

Restructuring costs 24 344 614

Earnings before interest tax and amor-tization (EBITA) after restructuring 34,602 26.0 % 22,709 22.5 %

Amortization 12 -15,171 -15,252

Earnings before interest tax (EBIT) 19,431 14.6 % 7,457 7.4 %

Change in Presentation of Consolidated Statement of Financial Position

Compared to previous years the position of intangible assets has been split into two to clearly separate the

intangible assets with indefinite useful lives (Trademark and Goodwill). Total intangible assets amount to

CHF 319.0 million (2009: CHF 333,8 million).

3.2 Basis of Consolidation

The consolidated financial statements comprise the financial statements of Uster Technologies Ltd and all its

subsidiaries for the period ended December 31, 2010 and 2009, respectively. The financial statements of the

subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting

policies.

Subsidiaries are entities over which the Group has control, i. e. has the power to govern the financial and

operating policies so as to obtain benefits from their activities. The financial statements of subsidiaries are

included in the consolidated financial statements from the date that control commences until the date that

control ceases.

All intragroup balances as well as any income and expenses arising from intragroup transactions are eliminated

upon consolidation. Profits and losses arising from intragroup transactions are eliminated in full.


3.3 Foreign Currency

Foreign Currency Transactions

Each subsidiary determines its functional currency, and items included in the financial statements of each

subsidiary are measured using that functional currency. Transactions in foreign currencies are initially

recorded in the functional currency at the rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currency at the reporting date are translated into the

functional currency using the rates valid at that date.

Exchange rate gains and losses arising from transactions and from the translation of monetary items denominated

in foreign currencies are recognized in profit or loss.

Foreign Subsidiaries

As at the reporting date the financial statements of all subsidiaries that have a functional currency different

from the presentation currency are translated into the presentation currency as follows:

• Assets and liabilities are translated at the closing rate ruling at the reporting date.

• Income and expenses are translated at exchange rates at the dates of transactions.

The exchange differences resulting from the above translation are recognized directly in other comprehensive

income. Upon the disposal of a foreign subsidiary the deferred cumulative exchange differences stated in

other comprehensive income are recognized in profit or loss. None of the subsidiaries has the currency of a

hyperinflationary economy.

Foreign exchange gains and losses resulting from intragroup loans of which the settlement is neither planned

nor likely in the foreseeable future are considered to be part of a net investment in a subsidiary and are

recognized directly in other comprehensive income. The deferred cumulative exchange differences stated in

other comprehensive income are recognized in profit or loss on disposal of the foreign subsidiary or on loss

of control on the subsidiary.

The following rates were used for the translation of the financial statements of the foreign subsidiaries:

Closing Rates Average Rates

Dec 31, 2010 Dec 31, 2009 Jan 1 –

Dec 31, 2010

Jan 1 –

Dec 31, 2009

CHF CHF CHF CHF

USD 1 0.936 1.030 1.043 1.087

EUR 1 1.250 1.484 1.382 1.510

JPY 100 1.151 1.114 1.188 1.161

CNY 100 14.174 15.166 15.405 15.906

THB 100 3.113 3.092 3.288 3.163

INR 100 2.092 2.213 2.281 2.245

BRL 100 56.383 59.077 59.241 54.727

MXN 100 7.556 7.841 8.259 8.047

TRY 100 60.423 68.854 69.214 69.859


3.4 Intangible Assets

Business Combinations and Goodwill

Business combinations are accounted for using the acquisition method. This involves recognizing identifiable

assets (including previously unrecognized intangible assets) and liabilities (including contingent liabilities

and excluding future restructuring) of the acquired business at fair value.

Goodwill represents the excess of the consideration transferred and the amount recognized for non-controlling

interest at the date of the acquisition of the net identifiable assets, liabilities and contingent liabilities assumed.

When the excess is negative (negative goodwill), it is recognized immediately in profit or loss. Goodwill acquired

in a business combination is initially measured at cost.

Following initial recognition goodwill is measured at cost less any accumulated impairment losses. For the

purpose of impairment testing goodwill is allocated from the date of acquisition to cash-generating units.

The allocation is made to those cash-generating units or groups of cash-generating units that are expected

to benefit from the business combination, irrespective of whether other assets or liabilities of the Group are

assigned to those units. Each unit to which the goodwill is allocated represents the lowest level within the

Uster Group at which the goodwill is monitored for internal management purposes. Impairment losses on

goodwill are not reversed.

Research and Development

Research costs are expensed as incurred. An intangible asset arising from development expenditure on an

individual project is recognized only when the Group can demonstrate the technical feasibility of completing

the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use

or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete

the asset and the ability to measure reliably the expenditure during the development. Currently the Group

did not capitalize development cost.

Other Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets

acquired in a business combination is the fair value at the date of acquisition. Following initial recognition

intangible assets are carried at cost less any accumulated amortization and any accumulated impairment

losses. The useful lives of intangible assets are assessed to be either finite or indefinite.

Intangible assets with finite lives are amortized using the straight-line method over their useful economic

life and assessed for impairment whenever there is an indication that the intangible asset may be impaired.

The amortization period and the amortization method for an intangible asset with a finite useful life are

reviewed at least once, usually at the end of, each financial year. Changes in the expected useful life or the

expected pattern of consumption of future economic benefits embodied in the asset are accounted for by

changing the amortization period or method and treated as changes in accounting estimates. The amortiza-

tion expense on intangible assets with finite lives is recognized in the expense category consistent with the

function of the intangible assets.

Intangible assets with an indefinite useful life are tested annually for impairment either individually or at

the level of the cash-generating unit. Such intangibles are not amortized. The useful life of an intangible

asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues

to be supportable. If not, the change in the useful life assessment from indefinite to definite is made on a

prospective basis.


The useful lives of the intangible assets are as follows:

Useful Life in Years

Software 5

Customer base 20

Technology 10

USTER® STATISTICS 25

Trademark indefinite

3.5 Property, Plant and Equipment

Property, plant and equipment including land and buildings are stated at cost less accumulated depreciation

and accumulated impairment. Such cost includes expenditure directly attributable to the acquisition of the

property, plant and equipment.

The cost of replacing part of property, plant and equipment is included in the carrying amount of the item

if it is probable that the future economic benefits associated with the item will flow to the Group and the

cost can be measured reliably. The cost for all other repairs and maintenance is charged to the Statement of

Comprehensive Income as incurred.

Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Land

is not depreciated.

The useful lives of property, plant and equipment are as follows:

Useful Life in Years

Buildings 25

Plant and machinery 3–5

Office equipment 3–5

IT and communication equipment 2–6

Vehicles 4–5

The residual values and useful lives of property, plant and equipment are reviewed and adjusted, if appropriate,

at the end of each financial year.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in

circumstances indicate that the carrying value may not be recoverable.

Items of property, plant and equipment are derecognized upon disposal or when no future economic benefits

are expected from their use or disposal. Any gains or losses on disposals are recognized in profit or loss within

“Other income” or “Other expenses”.

3.6 Financial Instruments

Financial Instruments

Financial instruments comprise investments in equity and debt securities, trade and other receivables,

cash and cash equivalents, loans and borrowings, trade and other payables as well as accrued liabilities.


Financial instruments are classified in the following categories:

• Financial assets at fair value through profit or loss

• Loans and receivables

• Held-to-maturity investments

• Available-for-sale financial assets

• Financial liabilities at fair value through profit or loss

• Financial liabilities at amortized cost

The classification depends on the purpose for which the financial assets or liabilities were acquired or

entered into and is determined at initial recognition.

Non-derivative financial instruments are recognized initially at fair value plus, for instruments not at fair

value through profit and loss, any directly attributable transaction costs. Subsequent to initial recognition

they are measured as described below.

Financial Assets at Fair Value through Profit or Loss

Financial assets at fair value through profit or loss include financial assets held for trading. A financial

asset falls under this category if acquired principally for the purpose of selling in the short-term. Assets

in this category are classified as current assets. The Group did not have financial instruments falling under

this category on December 31, 2010 or 2009.

Subsequent to initial recognition financial assets at fair value through profit or loss are measured at fair

value, and changes therein are recognized in profit or loss without any deduction for transaction costs

that may occur on sale or disposal.

Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are

not quoted in an active market. They are included in current assets, except for maturities greater than 12

months after the reporting date. These are classified as non-current assets. The Group’s loans and receivables

comprise “receivables trade” (note 18 Receivables Trade), “other receivables” (note 19 Other Receivables),

“cash and cash equivalents” (note 20 Cash and Cash Equivalents) as well as “financial assets” that include

mainly deposits.

Loans and receivables are carried at amortized cost, using the effective interest method less any allowance

for impairment. Gains and losses are recognized in profit and loss when the loans and receivables are

derecognized or impaired.


Held-to-maturity Investments

Held-to-maturity investments are non-derivative financial instruments which carry fixed or determinable

payments and fixed maturities and which the Group has the positive intention and ability to hold to maturity.

The Group did not have financial instruments falling under this category on December 31, 2010 or 2009.

Available-for-sale Financial Assets

Available-for-sale financial assets are those non-derivative financial instruments that are designated as

available-for-sale or are not classified in any of the three preceding categories. As of December 31, 2010

and 2009, no financial assets have been designated as available-for-sale financial assets.

Financial Liabilities at Fair Value through Profit or Loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading. A

financial liability falls under this category if entered into principally for the purpose of repayment in the

short-term. Liabilities in this category are classified as current liabilities.

Subsequent to initial recognition financial liabilities at fair value through profit or loss are measured at

fair value, and changes therein are recognized in profit or loss.

As of December 31, 20010, the Group held one derivative financial instrument (see note 4.3 Market Risk)

to hedge its interest rate risk exposure on the bank loans. This interest rate swap, however, does not qualify

as a hedge accounting instrument according to IAS 39.

It is recognized initially at fair value (as an asset or liability at fair value through profit or loss) and any

gains or losses resulting from the valuation at market value are taken through profit or loss as incurred.

Financial Liabilities at Amortized Cost

All loans and borrowings are initially recognized at fair value less directly attributable transaction costs.

Subsequently they are measured at amortized cost, using the effective interest method. Gains and losses

are recognized in profit or loss when the liabilities are derecognized as well as through the amortization

process.

As of December 31, 2010 and 2009, the Group had bank loans as well as trade and other liabilities that

qualified as financial liabilities at amortized cost (see notes 23 Bank Loans and 25 Trade and Other Liabilities).

Accounting for finance income and expenses is discussed in note 3.15 Finance Income and Expenses.

Share Capital

Ordinary Shares

Ordinary shares are classified as equity. Transaction costs directly attributable to the issue of ordinary

shares are recognized as a deduction from equity net of any tax effects.

Treasury Shares

When share capital recognized as equity is repurchased, the amount of the consideration paid is recognized

as a deduction from equity. When treasury shares are sold or reissued subsequently, the amount received

is recognized as an increase in equity and the resulting surplus or deficit on the transaction is recorded in

retained earnings. As of December 31, 2010 and 2009, the Group did not have any treasury shares.


3.7 Share-based Payment Transactions

The Group operates a Restricted Stock Unit Plan under which the Group receives services from employees

as consideration for shares of the Group at CHF 9.40 each.

Equity-settled Transactions

The cost of equity-settled transactions is recognized, together with a corresponding increase in reserve for

share-based payment transaction in equity, over the period in which the performance and/or service conditions

are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until

the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of

the number of equity instruments that will ultimately vest. The income statement expense or credit for a

period represents the movement in cumulative expense recognized as at the beginning and end of that period

and is recognized in personnel expense (note 8.4).

Expense is recognized for equity-settled transactions where vesting is conditional upon a market or non-vesting

condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition

is satisfied, provided that all other performance and/or service conditions are satisfied. Where the terms of

an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the

terms had not been modified, if the original terms of the award are met. An additional expense is recognized

for any modification that increases the total fair value of the share-based payment transaction, or is otherwise

beneficial to the employee as measured at the date of modification. Where an equity-settled award is cancelled,

it is treated as if vested on the date of cancellation, and any expense not yet recognized for the award is recog-

nized immediately. This includes any award where non-vesting conditions within the control of either the

entity or the employee are not met. However, if a new award is substituted for the cancelled award, and

designated as a replacement award on the date that it is granted, the cancelled and new awards are treated

as if they were a modification of the original award, as described in the previous paragraph. All cancellations

of equity-settled transaction awards are treated equally. The dilutive effect of outstanding options is reflected

as additional share dilution in the computation of diluted earnings per share (further details are given in

note 22).

3.8 Inventories

Inventories are measured at the lower of cost and net realizable value. Cost for inventories is based on the

weighted average principle and includes expenditure incurred in acquiring the inventories, conversion costs

and other costs incurred in bringing them to their existing location and condition. Manufactured inventories

as well as work in progress cost includes an appropriate share of production overheads based on normal

operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs

of completion and the selling expenses.


3.9 Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, bank account balances as well as short-term deposits with

an original maturity of 90 days or less.

3.10 Provisions

Provisions are recognized when the following criteria are met:

• The Group has a present legal or constructive obligation as a result of a past event;

• It is probable that an outflow of resources embodying economic benefits will be required to settle the

obligation;

• The amount of the obligation can be reliably estimated.

The expense relating to any provision is presented in the Statement of Comprehensive Income net of any

reimbursement.

3.11 Impairment

Intangible Assets and Property, Plant and Equipment

Assets with an indefinite useful life are not subject to amortization and depreciation but are tested for

impairment annually or more frequently if events or changes in circumstances indicate that the carrying

value may be impaired.

Assets that are subject to amortization and depreciation are reviewed for impairment whenever there is an

indication that the carrying amount may not be recoverable.

An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable

amount. An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in

use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are

separately identifiable cash in flows (cash-generating units).

Impairment losses are recognized in profit or loss. Intangible assets other than goodwill and intangible assets

with indefinite useful lives and property, plant and equipment for which an impairment loss was recognized

are reviewed for possible reversal of the impairment at each reporting date. Such reversal is recognized in

profit or loss.

Financial Assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that

it is impaired. An impairment loss in respect of a financial asset measured at amortized cost is calculated as

the difference between its carrying amount and its present value of the future estimated cash flows discounted

at the original effective interest rate. An impairment loss in respect of an available for sale financial asset is

calculated by reference to its fair value. Individually significant financial assets are tested for impairment on

an individual basis. In relation to trade receivables a provision for impairment is made when there is objective

evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the

Group will not be able to collect all of the amounts due under the original terms of the invoice. The carrying

amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognized

when they are assessed as uncollectible.


3.12 Pension Benefits

Defined Benefit Pension Plan

Uster Technologies Ltd provides pension benefits for its employees in Switzerland in the event of retirement,

disability and death. The pension scheme is organized as a separate legal entity and is funded in accordance

with legal requirements.

Costs and liabilities related to the defined benefit pension plan are determined using the projected unit

credit method with attribution of benefit by service pro rata.

The amount recognized in the Statement of Financial Position in respect of defined benefit pension plans is

the fair value of plan assets less the present value of the defined benefit obligation at reporting date, together

with adjustments for unrecognized actuarial gains and losses, unrecognized past service cost and for unre-

cognized assets.

Actuarial gains and losses are recognized as income or expense when the cumulative unrecognized actuarial

gain or loss exceeds 10.0 % of the higher of the defined benefit obligation and the fair value of the plan assets.

These gains or losses are recognized over the expected average remaining working life of the employees

participating in the plan.

Defined Contribution Plans

For employees in other subsidiaries the company pays contributions to the separate legal entity as the plans’

rules require. The regular contributions constitute net periodic costs for the year in which they are due and as

such are included in personnel expenses.

3.13 Leases

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified

as finance leases. As of December 31, 2010 and 2009, the Group did not have any finance leases.

All the Group’s leases are operating leases and the leased assets are not recognized in the Group’s Statement of

Financial Position. Operating lease payments are recognized as an expense in profit or loss on a straight-line

basis over the lease term. Lease incentives received are recognized as an integral part of the total lease expense

over the term of the lease.

3.14 Revenue Recognition

Revenue from the sale of testing instrumentation is measured at the fair value of the consideration received or

receivable net of returns, discounts and volume rebates, sales taxes and duty. Revenue is recognized when the

significant risks and rewards of ownership of the goods have passed to the buyer; it is probable that the eco-

nomic benefits associated with the transaction will flow to the entity, the associated costs incurred or to be

incurred can be estimated reliably, and the amount of revenue can be measured reliably.

Risks and rewards for products and spare parts sold are usually transferred to the client as soon as the products

and spare parts leave an entity of the Uster Group. However, sometimes the transfer of risks and rewards occurs

when they are received by the client at the port of entry.

Revenue from service contracts relating to maintenance of testing instrumentation sold is recognized on a pro

rata basis over the contract period. The length of the service contracts usually varies between 3 and 12 months.


3.15 Finance Income and Expenses

Finance income includes interest income on funds invested as well as changes in the fair value of the interest

rate swap described in note 4.3 Market Risk. Interest income is recognized as it accrues in profit or loss using

the effective interest rate method.

Finance expenses comprise interest expense on loans, changes in the fair value of the interest rate swap described

in note 4.3 Market Risk, and impairment losses recognized on non-derivative financial instruments with the

exception of accounts receivable trade for which the valuation allowance is recorded under sales deductions.

All interest expenses on loans are recognized in profit or loss using the effective interest rate method.

3.16 Income Tax

Income tax includes current and deferred tax. Income tax is recognized in profit or loss except to the extent that

it relates to items recognized directly in equity or in other comprehensive income, in which case it is recognized

in equity or other comprehensive income.

Current Income Tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected

to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are

those that are enacted at the reporting date.

Deferred Tax

Deferred income tax is provided using the liability method on temporary differences at the reporting date

between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax is recognized for all taxable temporary differences except:

• If the deferred income tax arises from the initial recognition of an asset or liability in a transaction that is not

a business combination and, at the time of the transaction, affects neither the accounting profit nor the

taxable profit or loss;

• With respect to the taxable temporary differences associated with investments in subsidiaries where the

timing of the reversal of the temporary differences can be controlled and it is probable that the temporary

differences will not reverse in the foreseeable future;

• On taxable temporary differences arising on the initial recognition of goodwill.

Deferred income tax assets are recognized for all carry forwards of unused tax credits and unused tax losses to

the extent that it is probable that taxable profit will be available against which the deductible temporary differences

and the carry forwards of unused tax credits and losses can be utilized.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year

when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or

substantively enacted at the reporting date.

Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to

set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same

taxable entity and the same taxation authority.

A provision is made for non-recoverable withholding taxes on undistributed earnings of foreign subsidiaries.


4 Financial Risk Management

The Uster Group is exposed to the following risks from its use of financial instruments:

• Credit risk

• Liquidity risk

• Market risk

Included in this note is information regarding the Group’s exposure to each of these risks, the Group’s objectives,

policies and processes for measuring and managing risks as well as information about the management of

capital.

The Board of Directors has set up the Group’s financial risk management framework. The Executive Committee

agrees policies for managing each of the risks and monitors them on a regular basis. The Audit Committee is

responsible to judge the risk assessment established by the Executive Committee and the proposed measures

to reduce risks. It evaluates at regular intervals the financial risk management and monitoring procedures of

the Executive Committee.

4.1 Credit Risk

Credit risk means the risk to suffer a financial loss if a customer or counterparty to a financial instrument

does not meet the contractual obligations. It arises principally from the Group’s accounts receivable trade.

Generally it is the policy of the Group to work in emerging countries with secured payment terms such as e. g.

letters of credit and prepayments in hard currencies like CHF, EUR, USD or in cases where this is not possible

to insure the revenue at SERV (Swiss Export Risk Insurance) or similar trade financing concepts. This policy

is applied with new customers as well as with existing customers. If customers wish to trade on credit terms,

it is the Group’s policy that these customers are subject to credit verification procedures. In addition, receivable

balances are monitored on an ongoing basis with the result that the Group’s exposure to losses is not considered

significant.

With respect to credit risks arising from other financial assets, the Group’s exposure to credit risks has a

maximum exposure equal to the carrying amount of these financial assets. Since the Group maintains bank-

ing relations with first-class financial institutions, the risk is considered minimal.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure

to credit risk at the reporting date was as follows:

in CHF 1,000 Dec 31, 2010 Dec 31, 2009


Receivables trade 17,892 15,108

Other receivables 380 408

Cash and cash equivalents 21,049 15,053

Total 39,494 30,737


4.2 Liquidity Risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they become due.

The Group manages its liquidity in a way that it will always have sufficient liquidity to meet its obligations,

even under stressed conditions.

For medium term the Group uses a recurring cash planning tool to monitor its risk to a shortage of funds.

This tool considers the expected cash inflows and outflows in the Group for the coming six months on a

detailed level. The long-term monitoring is done based on the 5-year cash flow forecast also used for impair-

ment testing (see note 13). For temporary cash shortages, the Group currently has two revolving credit fa-

cilities of CHF 5.0 million each and a non-drawn amount of CHF 22 million of loan facility B at its disposal

(2009: CHF 20.0 million in total).

The following table shows the contractual maturities of the financial liabilities:

Dec 31, 2009

in CHF 1,000

Within

1 year

1 to

2 years

3 to

5 years

Total

Bank loans 13,550 13,266 107,982 134,798

Interest rate swap 990 910 0 1,900

Trade and other liabilities 4,434 0 0 4,434

Accrued liabilities 5,331 0 0 5,331

Total liabilities 24,305 14,176 107,982 146,463

Dec 31, 2010

in CHF 1,000

Within

1 year

1 to

2 years

3 to

5 years

Total

Bank loans 12,783 90,499 0 103,282Interest rate swap 1,134 0 0 1,134Trade and other liabilities 12,262 0 0 12,262Accrued liabilities 4,937 0 0 4,937Total liabilities 31,116 90,499 0 121,615


4.3 Market Risk

Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and finan-

cial environmental risks affect the Group’s income or the value of its holding of financial instruments.

Foreign Currency Risk

The Group is exposed to currency risks on accounts receivables, accounts payables and loans that are de-

nominated in a currency other than the respective functional currencies of the Group entities. The currencies

in which these positions are primarily denominated as of December 31, 2010, are USD / CHF, CHF / CNY, TRY / CHF

and EUR / CHF (transaction currency / functional currency) (2009: USD / CHF, CHF / CNY and TRY/CHF).

The Group developed a model to actively control and limit these foreign exchange risks at the source and

therefore has no need to enter into contracts to hedge these exposures as the remaining risk is not significant.

Nevertheless the following sensitivity analysis has been performed.

Increases of 5 % of the transaction currency against the functional currency would have the following impact

on the consolidated financial statements:

Dec 31, 2009

in CHF 1,000

Effect on Profit

before Tax

Effect in

Equity

CurrenciesUSD / CHF -21 -21

CHF / CNY -55 -55

TRY / CHF 20 44

Dec 31, 2010

in CHF 1,000

Effect on Profit

before Tax

Effect in

Equity

CurrenciesUSD / CHF -82 -82

CHF / CNY -139 -139

TRY / CHF 26 26

EUR / CHF -26 -26

Interest Rate Risk

According to the credit facility agreement for the bank loans described in note 23 Bank Loans, the Group has to

hedge at least CHF 50.0 million of the bank loans. Therefore the Group entered on October 29, 2007, into an

interest rate swap contract to fix the Libor at a floor of 2.4 % and a cap of 3.65 %. The interest rate swap is the only

derivative financial instrument of the Group and does not qualify for hedge accounting according to IAS 39. Its

contract volume as of December 31, 2010, amounted to CHF 50.0 million and it expires on October 29, 2011.

The interest situation and hedging possibilities are continuously monitored.


The table below sets out the carrying amount of the Group’s interest bearing financial instruments exposed

to interest rate risk:

Dec 31, 2009

in CHF 1,000

Balance within

1 year

1 to

2 years

3 to

5 years

Over

5 years

Variable rateCash and cash equivalents 15,053 0 0 0

Bank loans 124,277 114,518 104,759 0

Interest rate swap 1,900 0 0 0

Total 141,230 114,518 104,759 0

Dec 31, 2010

in CHF 1,000

Balance within

1 year

1 to

2 years

3 to

5 years

Over

5 years

Variable rateCash and cash equivalents 21,049 0 0 0

Bank loans 97,518 87,759 0 0

Interest rate swap 1,134 0 0 0

Total 119,701 87,759 0 0

The Group’s bank loans at variable rate are analyzed on a dynamic basis with regards to the interest rate exposure.

On a regular basis the sensitivity of the Group’s result before tax to a reasonably possible change in interest

rates, with all other variables held constant, is tested.

The result of the sensitivity testing mentioned above is as follows:

Change in base points Effect on result before tax

in CHF 1,000

Dec 31, 2010 Dec 31, 2009

+ 5 -59 -84

+ 20 -233 -335

- 10 103 168

-15 117 251

4.4 Capital Management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going

concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an

optimal capital structure to reduce the cost of capital. As of December 31, 2010, equity amounted to 56.2 % of

total equity and liabilities (2009: 50.3 %).

Please refer to note 23 Bank Loans for covenant requirements.


4.5 Financial Instruments – Fair Values

The fair value of financial assets and liabilities together with the carrying amounts shown in the Statement

of Financial Position are as follows:

in CHF 1,000 Dec 31, 2009

Financial Assets/LiabilitiesValuation

Category acc. to

IAS 39

Valuation

Level acc. to

IFRS 7

Total

Carrying

Amount

Non-financial

Assets/

Liabilities

Amortized

Costs

Fair

Value

Carrying

Amount

Fair Value

AssetsFinancial assets L&R 168 168 168 168

Receivables trade L&R 15,108 15,108 15,108 15,108

Other receivables L&R 1,840 1,432 408 408 408

Cash and cash equivalents L&R 15,053 15,053 15,053 15,053

LiabilitiesBank loans non-current FLAC 114,277 114,277 114,277 115,000

Bank loans current FLAC 10,000 10,000 10,000 10,000

Interest rate swap FLFVTPL 2 1,900 1,900 1,900 1,900

Trade and other liabilities FLAC 4,434 4,434 4,434 4,434

Accrued liabilities FLAC 11,212 5,881 5,331 5,331 5,331

Total -109,654 -105,205 -105,928

in CHF 1,000 Dec 31, 2010

Financial Assets/LiabilitiesValuation

Category acc. to

IAS 39

Valuation

Level acc. to

IFRS 7

Total

Carrying

Amount

Non-financial

Assets/

Liabilities

Amortized

Costs

Fair

Value

Carrying

Amount

Fair Value

AssetsFinancial assets L&R 173 173 173 173

Receivables trade L&R 17,892 17,892 17,892 17,892

Other receivables L&R 2,128 1,748 380 380 380

Cash and cash equivalents L&R 21,049 21,049 21,049 21,049

LiabilitiesBank loans non-current FLAC 87,518 87,518 87,518 88,000

Bank loans current FLAC 10,000 10,000 10,000 10,000

Interest rate swap FLFVTPL 2 1,134 1,134 1,134 1,134

Trade and other liabilities FLAC 12,262 12,262 12,262 12,262

Accrued liabilities FLAC 11,527 6,590 4,937 4,937 4,937

Total -81,199 -76,357 -76,839

Categories:

L&R: Loans and Receivables

FLFVTPL: Financial Liabilities at Fair Value through Profit or Loss

FLAC: Financial Liabilities at Amortized Cost


The fair value of the bank loans has been determined using current market interest rates. As of December 31,

2010, the Group held an interest rate swap measured at fair value, which classifies as Level 2 fair value

measurement. During the reporting period there have been no transfers between the Level 1 and Level 2

fair value measurement.

The fair value of unquoted instruments is estimated by discounting expected future cash flows using market

rates currently available for instruments on similar terms, credit risk and remaining maturities

5 Segment Reporting

Under the application of IFRS 8 (management approach) the Group is organized in only one operating segment.

Whilst revenues are primarily reported by geographical areas, the operating results and the statement of

financial position are only analyzed at Group level. This is the primary way in which Management and the

Board of Directors are provided with financial information to decide on allocation of resources. Therefore

the information by operating segment has already been given in these Consolidated Financial Statements.

The Group’s activities are managed with focus on the three geographical regions: Asia, Europe and the

Americas. In each of these geographical regions the Group is present with a Technology Center to be close

to the market. Therefore the following information is primarily given following the management focus.

Additional country level information is provided below the respective table

Gross Sales by Geographical Location of Customers

in CHF 1,000 Jan 1 –

Dec 31, 2010

Jan 1 –

Dec 31, 2009

Asia 89,348 67.3 % 71,672 71.1 %

Europe 28,863 21.7 % 15,863 15.7 %

Americas 14,630 11.0 % 13,228 13.1 %

Total 132,841 100.0 % 100,763 100.0 %

Total Sales attributable to the country of domicile amounted to CHF 0.8 million (2009: CHF 0.3 million). In

2010 the sales to Chinese customers amounted to 27.0 % of total sales (2009: 39.2 %) and revenues with Indian

customers reached 9.0 % (2009: 5.7 %) of total sales. Revenues of approximately CHF 27.5 million and CHF 17.1 million

respectively are derived from two single external customers (2009: CHF 15.6 million from one single external

customer). These revenues are included in the geographical location Asia.


Gross Sales by Testing Instrumentation and Service

Gross sales primarily derive from the sale of testing instrumentation which is used to increase and balance

the quality of textile production and from service sales consisting of the maintenance of these instruments.

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Testing instrumentation 114,147 85.9 % 85,232 84.6 %

Service sales 18,694 14.1 % 15,531 15.4 %

Total 132,841 100.0 % 100,763 100.0 %

Non-current Assets1) by Geographical Location of Legal Entity

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Asia 3,607 1.1 % 3,216 0.9 %

Europe 323,174 98.1 % 337,482 98.3 %

Americas 2,474 0.8 % 2,751 0.8 %

Total 329,255 100.0 % 343,449 100.0 %

1) Other than financial instruments, deferred tax assets and post-employment benefit assets.

The full amount of non-current assets in Europe is attributable to the country of domicile.

6 Sales Deductions

Sales deductions include items that are directly related to revenue from sales such as discounts, currency

differences, shipping expenses and the change in the allowance for uncollectible receivables (see note 18

Receivables Trade).

7 Cost of Goods Sold

Cost of goods sold comprises direct production costs such as material expense and personnel costs as well

as a proportion of overhead costs like logistics procurement and quality control. The material expense for

2010 amounted to CHF -32.3 million (2009: CHF -24.9 million).

Additionally warranty costs and the depreciation on the production equipment are included in this expense

category.

8 Overhead

8.1 Sales and Marketing Expenses

This position contains expenses for sales and marketing activities such as wages, amortization, depreciation,

project cost, agent commissions, consultancy, and other overhead costs.

8.2 Research and Development Expenses

The expenditure for research and development includes wages, amortization, depreciation, material costs,

consultancy, and other overhead costs related to research and development projects.

8.3 Management and Administrative Expenses

Management and administrative expenses consist of wages, amortization, depreciation, rent, consultancy,

IT, and other overhead costs of the support process.


8.4 Personnel Expense


Dec 31, 2010

Jan 1 –

Dec 31, 2009

Wages and salaries 29,644 25,470

Social security costs 3,547 3,261

Pension costs 3,722 2,149

Share-based payment transaction expense 937 0

Other personnel expense 1,558 767

Total 39,408 31,647

8.5 Amortization, Impairment and Depreciation


Dec 31, 2010

Jan 1 –

Dec 31, 2009

Amortization of technology, customer base, USTER® STATISTICS 15,066 15,066

Amortization of other intangible assets 105 186

Depreciation of property, plant and equipment 2,393 1,741

Total 17,564 16,993

9 Other Expenses

Other expenses amounting to CHF 15.1 million (2009: CHF 15.1 million) consist mainly of the amortization

of technology, customer base, and USTER® STATISTICS.

10 Finance Result


Dec 31, 2010

Jan 1 –

Dec 31, 2009

Interest income bank accounts & fixed-term deposits (L&R) 84 68

Interest income other receivables (L&R) 56 61

Gain on interest rate swap (FLFVTPL) 766 211

Exchange gain 1,537 269


Interest expense bank loans (FLAC) -5,367 -5,826

Other expenses / fees bank loans (FLAC) -507 -841

Other finance expense -96 -220

Exchange loss -1,610 -766

Finance expense -7,580 -7,653

Finance result -5,137 -7,044

Categories:

L&R: Loans and Receivables

FLFVTPL: Financial Liabilities at Fair Value through Profit or Loss

FLAC: Financial Liabilities at Amortized Cost


The net foreign exchange differences charged to the Statement of Comprehensive Income are included in

the following lines:


Dec 31, 2010

Jan 1 –

Dec 31, 2009

Sales deductions -450 -1,117

Cost of goods sold -308 -5


Finance expense -1,610 -766

Total -831 -1,619

The origin of the above mentioned foreign exchange differences are as follows:

Sales deductions: accounts receivables trade

Cost of goods sold: accounts payable trade

Finance income: mainly other receivables and other payables

Finance expense: mainly other receivables and other payables

11 Earnings per Share

Basic earnings per share amounts are calculated by dividing the net result for the period by the weighted

average number of shares outstanding during the year. Diluted earnings per share amounts are calculated

by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average

number of ordinary shares outstanding during the year plus the weighted average number of ordinary

shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

in CHF Jan 1 –

Dec 31, 2010

Jan 1 –

Dec 31, 2009

Basic earnings per shareProfit of the year 20,763,000 1,078,000

Weighted average number of shares outstanding 8,460,000 6,867,123

Earnings per share 2.45 0.16

Number of sharesIssued ordinary shares at January 1 8,460,000 6,560,000

Effect of shares issued November 2, 2009 307,123

Weighted average number of ordinary shares at period end 8,460,000 6,867,123

in CHF Jan 1 –

Dec 31, 2010

Jan 1 –

Dec 31, 2009

Diluted earnings per shareProfit of the year 20,763,000 1,078,000

Weighted average number of shares outstanding incl. dilution effect 8,514,462 6,867,123

Earnings per share 2.44 0.16

Number of sharesIssued ordinary shares at January 1 8,460,000 6,560,000

Effect of shares issued November 2, 2009 307,123

Effect of shares under option 54,462

Weighted average number of ordinary shares at period end 8,514,462 6,867,123


12 Intangible Assets

in CHF 1,000 Customer Base Trademark Technology USTER®

STATISTICSGoodwill Other

Intangible

Assets

2009

At CostBalance at January 1, 2009 180,000 58,700 48,500 30,400 64,549 776 382,925Additions 0 0 0 0 0 9 9Disposals 0 0 0 0 0 0 0Currency translation differences 0 0 0 0 0 -1 -1Balance at December 31, 2009 180,000 58,700 48,500 30,400 64,549 784 382,933

Accumulated Amortization / ImpairmentBalance at January 1, 2009 -18,000 0 -9,700 -2,432 -3,360 -401 -33,893Amortization -9,000 0 -4,850 -1,216 0 -186 -15,252Disposals 0 0 0 0 0 0 0Currency translation differences 0 0 0 0 0 1 1Balance at December 31, 2009 -27,000 0 -14,550 -3,648 -3,360 -586 -49,144

Net book value at January 1, 2009 162,000 58,700 38,800 27,968 61,189 375 349,032Net book value at December 31, 2009 153,000 58,700 33,950 26,752 61,189 198 333,789

in CHF 1,000 Customer Base Trademark Technology USTER®

STATISTICSGoodwill Other

Intangible

Assets

2010

At CostBalance at January 1, 2010 180,000 58,700 48,500 30,400 64,549 784 382,933Additions 0 0 0 0 0 377 377Disposals 0 0 0 0 0 - 2 - 2Currency translation differences 0 0 0 0 0 -5 -5Balance at December 31, 2010 180,000 58,700 48,500 30,400 64,549 1,154 383,303

Accumulated Amortization / ImpairmentBalance at January 1, 2010 -27,000 0 -14,550 -3,648 -3,360 -586 -49,144Amortization -9,000 0 -4,850 -1,216 0 -105 -15,171Disposals 0 0 0 0 0 2 2Currency translation differences 0 0 0 0 0 2 2Balance at December 31, 2010 -36,000 0 -19,400 -4,864 -3,360 -687 -64,311

Net book value at January 1, 2010 153,000 58,700 33,950 26,752 61,189 198 333,789Net book value at December 31, 2010 144,000 58,700 29,100 25,536 61,189 467 318,992


Customer Base

The intangible asset “customer base” represents the estimated value of the customers of the Uster Group.

Uster enjoys a strong customer loyalty and appreciation in approximately 75 countries. Technical training,

product performance, trusted measurement and long living products as well as after-sales services produce

high customer retention and loyalty. Its useful life of 20 years (remaining amortization period 16 years)

was reviewed during the fourth quarter of 2010 and was confirmed.

Trademark

Uster products are used as standard references for quality control in the global textile industry. USTER®

STATISTICS are used throughout the industry as the base benchmarks for the trading of textile products at

assured levels of quality across global markets. The USTER® STATISTICS are perceived as industry standard

all over the world.

The USTERIZED® concept (as seal of quality for yarns tested and cleared with USTER® products) is increas-

ingly used by well-known consumer companies to assure a consistent level of quality in support of their own

branded products.

Due to the brand awareness and the excellent reputation of the brand “USTER®”, this intangible asset is

considered to have an indefinite useful life.

Technology

The intangible asset technology summarizes the estimated value of the intellectual property of the Group, i. e.

patents and designs which are registered in the name of Uster Technologies Ltd, Switzerland. These intellectual

property rights refer to all the different processes, instruments and machines which have been developed by

the Group through the course of the years. A welldefined policy protects the intellectual property in the markets

relevant to the business. The Technologies useful life of 10 years (remaining amortization period 6 years) was

reviewed during the fourth quarter of 2010 and was confirmed.

USTER® STATISTICS

Uster provides a service to the textile industry by collecting data from thousands of samples of fiber and yarn

from its customers around the world. The Company produces a database, USTER® STATISTICS, of performance

data against the historic population of quality metrics and makes the results freely available to the industry.

USTER® STATISTICS was established in 1957 and looks back on more than 50 years of fiber and yarn quality

measurement. It is perceived as industry standard all over the world. The USTER® STATISTICS’ useful life of

25 years (remaining amortization period 21 years) was reviewed during the fourth quarter of 2010 and was

confirmed.


13 Impairment Testing of Goodwill and Intangible Assets with Indefinite Useful Lives

The annual impairment test is usually performed in the fourth quarter of each year.

Goodwill and intangible assets with indefinite useful lives acquired through business combinations have

been allocated to the respective individual cash-generating units (CGUs), which correspond to the legal

entities of the Uster Group.

The legal entities are the smallest identifiable group of assets that generate cash inflows that are largely

independent of the cash inflows from other groups of assets.

For the impairment test of each cash-generating unit the recoverable amount has been defined based on the

value in use.

The impairment test showed that the recoverable amounts of the tested intangible assets are well above their

carrying amount.

The carrying amount of the goodwill allocated to each of the cash-generating units as of December 31, 2010

and 2009, was as follows:

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Uster Technologies Ltd 60,538 60,538

Other CGU 651 651

Total 61,189 61,189

The carrying amount of CHF 58.7 million of the intangible asset trademark, the only intangible asset with

indefinite useful life, has been allocated to the cash-generating unit Uster Technologies Ltd.

13.1 Key Assumptions Used for the Value in Use Calculations

The following describes each key assumption on which the Group has based its cash flow projections to

undertake the impairment testing of goodwill and intangible assets with indefinite useful lives.

EBITDA

The EBITDA projections are based on current financial forecasts and budgets covering the period from 2011

to 2015. The underlying sales projections were established using historic performance track records, internal

expectations and external official statistics and forecasts. All assumptions made are consistent with past

actual outcomes. The current financial forecast and budgets are approved by the Board of Directors.

Growth Rate

The growth rate used for the value in use calculation of the cash-generating units for the planning period is

based on financial budgets approved by the Board of Directors. The cash flows beyond this period are extrapolated

using the inflation of the Consumer Price Index of the corresponding country as the growth rate the cash-

generating unit is situated in. Using the inflation rate as growth rate reflects past experience and is supported

by external sources.


Discount Rate

The discount rate used is the pre-tax weighted average cost of capital (WACC) based on the capital asset

pricing model. It consists unchanged to prior year of the country specific ten-year governmental bond rate

at the date of the impairment test, a country specific market risk premium, a debt interest rate and a

debt / equity ratio of 50 / 50. Further, a 2 % (2009: 2 %) markup on the cost of equity has been added to take into

account the small cap size of the Uster Group. The values assigned to this key assumption are consistent with

external sources of information.

The following data was used as a basis for the impairment test made in 2010:

in CHF 1,000 Growth Rate Discount Rate

2010 2009 2010 2009

Uster Technologies Ltd 1.5 % 1.5 % 10.7 % 8.9 %

Other CGU 7.9 % 5.9 % 15.1 % 11.2 %

13.2 Impairment Loss

An impairment loss is recognized if the recoverable amount is below the carrying amount. For the year under

review no impairment loss on goodwill and intangible assets with indefinite useful lives has been recognized.

13.3 Sensitivity Analysis

The Group has kept last year’s approach and has performed a critical sensitivity analysis on the intangibles

with indefinite useful life not only by varying the assumption such as discount rate, but also the long-term

growth rate and the future EBITDA. The Board of Directors and the Executive Committee of the Uster Group

consider these underlying assumptions as accurate. Nevertheless a sensitivity analysis with the following

not cumulative changes on each of the key assumptions has been performed (all other factors held constant):

EBITDA projections: - 30 %

Growth rate: - 1.5 %

Discount rate: + 2.0 %

None of these changes leads to an impairment of either Goodwill or Trademark.

That means that a negative deviation of the EBITDA projections of 30 % does not lead to impairment. The

same applies to an increase of the discount rate of 2 % or a decrease of the growth rate of 1.5 %.


14 Property, Plant and Equipment

in CHF 1,000 Land and

Buildings

Machinery and

Equipment

Furniture and

Fixtures

2009

At CostBalance at January 1, 2009 2,968 4,817 4,277 12,062Additions 0 2,954 365 3,319Disposals 0 -192 -349 -541Currency translation differences -75 -40 -14 -129Balance at December 31, 2009 2,893 7,539 4,279 14,711

Accumulated Depreciation / ImpairmentBalance at January 1, 2009 -301 -1,695 -1,827 -3,823Depreciation -155 -737 -849 -1,741Disposals 0 101 346 447Currency translation differences 15 31 20 66Balance at December 31, 2009 -441 -2,300 -2,310 -5,051

Net book value at January 1, 2009 2,667 3,122 2,450 8,239Net book value at December 31, 2009 2,452 5,239 1,969 9,660

Fire insurance values 5,325 17,181 8,356 30,862

in CHF 1,000 Land and

Buildings

Machinery and

Equipment

Furniture and

Fixtures

2010

At CostBalance at January 1, 2010 2,893 7,539 4,279 14,711Additions 40 2,135 1,233 3,408Disposals -4 -85 -139 -228Currency translation differences -268 -171 -172 -611Balance at December 31, 2010 2,661 9,418 5,201 17,280

Accumulated Depreciation/ImpairmentBalance at January 1, 2010 -441 -2,300 -2,310 -5,051Depreciation -149 -1,303 -941 -2,393Disposals 2 56 101 159Currency translation differences 56 115 97 268Balance at December 31, 2010 -532 -3,432 -3,053 -7,017

Net book value at January 1, 2010 2,452 5,239 1,969 9,660Net book value at December 31, 2010 2,129 5,986 2,148 10,263

Fire insurance values 7,183 17,209 10,062 34,454


15 Pension Benefits

Defined Benefit Pension Plan

Uster Technologies Ltd provides pension benefits for its employees in Switzerland in the event of retirement,

disability and death. The pension scheme is organized as a separate legal entity and is funded in accordance

with legal requirements. The plan assets exceed the defined benefit obligation leading to a positive funding

position in 2010 as well as in 2009.

The following tables summarize the components of net benefit expense recognized in the Statement of Com-

prehensive Income as well as the actual return on plan assets.


Dec 31, 2010

Jan 1 –

Dec 31, 2009

Amounts recognized in the income statementCurrent employer service cost -2,434 -2,146

Interest expense -2,034 -1,981

Expected return on plan assets 2,521 2,596

Amortization of net actuarial gain / (loss) -1,137 -15

Pension costs current year -3,084 -1,546

Actual return on plan assetsExpected return 2,521 2,596

Actuarial gain / (loss) on plan assets 3,099 -6,151

Actual return on plan assets 5,620 -3,555

Uster Technologies Ltd expects to contribute CHF 1.4 million to the defined benefit pension plan in 2011.

The funded status of the pension plan and the amounts recognized in the Statement of Financial Position of

Uster Technologies Ltd are as follows:

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Funded StatusFair value of plan assets 61,362 61,718

Defined benefit obligation -60,635 -61,638

Surplus 727 80

Amounts recognized in the balance sheetSurplus 727 80

Unrecognized actuarial loss / (gain) 13,140 15,544

Pension fund asset / (liability) in the balance sheet 13,867 15,624


The changes in the present value of the defined benefit obligation are as follows:

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Reconciliation of defined benefit obligationDefined benefit obligation at January 1 61,637 63,802

Current employer service cost 2,434 2,146

Interest expense 2,034 1,981

Employee contribution 1,136 1,175

Benefit payments / net inflow -8,440 -762

Plan settlement 0 -8,762

Actuarial (gain) / loss 1,834 2,057

Defined benefit obligation at December 31 60,635 61,637

The changes in the fair value of the plan assets are as follows:

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Reconciliation of assetsAssets at January 1 61,718 72,245

Expected return 2,521 2,596

Employer contribution 1,328 1,377

Employee contribution 1,136 1,175

Benefit payments / net inflow -8,440 -762

Plan settlement 0 -8,762

Actuarial gain / (loss) on plan assets 3,099 -6,151

Assets at December 31 61,362 61,718

The strategic target of major categories of plan assets as a percentage of the fair value of total plan assets are

as follows:

Dec 31, 2010 Dec 31, 2009

Asset categoriesEquity securities 25 % 28 %Debt securities 33 % 33 %Property 26 % 26 %Other 16 % 13 %

The overall expected rate of return is determined based on the plan’s asset allocation strategy and current

market rates.


The principal assumptions used in determining the defined benefit pension plan obligations are shown

below:

Jan 1 –

Dec 31, 2010

Jan 1–

Dec 31, 2009

Actuarial assumptionsDiscount rate 2.40 % 3.30 %Expected return on plan assets 3.60 % 4.00 %Salary increases 2.00 % 2.00 %Pension increases 0.00 % 0.00 %

The discount rate is determined on the basis of corporate bonds with a rating of AA or AAA.

The history of experience gains and losses is summarized below:

in CHF 1,000 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006

History of experience gains and lossesFair value of plan assets 61,362 61,718 72,245 89,346 85,001

Defined benefit obligation -60,635 -61,838 -63,802 -70,978 -66,835

Surplus 727 80 8,443 18,368 18,166Experience (gain) / loss on plan assets -3,099 6,151 11,185 3,988 0

Experience gain / (loss) on plan liabilities 3,387 1,068 -174 630 0


16 Income Tax

Statement of Comprehensive Income


Dec 31, 2010

Jan 1 –

Dec 31, 2009

Current income taxes -4,591 -3,078

Current income taxes previous years 3,240 -4,276

Deferred income taxes 7,820 8,019

Total 6,469 665

The current income tax from previous years results mainly from the retroactive change of the income tax

structure in Switzerland and from the finalization of the tax audit relating to the fiscal years 2007 to 2009

which led to the release of a tax risk provision.

A reconciliation of the expected tax expense based on the parent company’s tax rate to the effective tax

expense is as follows:


Dec 31, 2010

Jan 1 –

Dec 31, 2009

Earnings before tax 14,294 413 Tax at expected tax rate of the parent company -2,430 -17.0 % -81 -19.5 %Effects from different tax rates in the Group’s different

jurisdictions 147 1.0 % -287 -69.6 %

Tax effect of non-deductible or non-taxable items -448 -3.1 % -176 -42.6 %Impact of tax rate changes on temporary differences 6,416 44.9 % 5,887 1,425.4 %Unrecognized tax losses 22 0.2 % -341 -82.6 %Non-recoverable withholding tax -14 -0.1 % -22 -5.3 %Current income taxes previous years 3,240 22.6 % -4,276 -1,035.5 %Others -464 -3.3 % -39 -9.5 %Total 6,469 45.2 % 665 160.8 %

The difference between the expected tax rates 2010 and 2009 is due to the change of the income tax

structure in Switzerland.

The following table shows the deferred income tax related to items charged or credited directly to equity:

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Tax effect of costs related to the issue of share capital 0 273

Total 0 273


Recognized Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities are attributable to the following items:

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Deferred tax assets by types of temporary differenceNon-current assets 769 1,009

Inventories 1,140 903

Trade and other receivables 24 17

Current liabilities and accruals 759 1,281

Tax on costs related

to the issue of share capital booked to equity 0 273

Total 2,692 3,483

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Deferred tax liabilities by types of temporary differenceNon-current assets 41,421 49,597

Inventories 440 451

Trade and other receivables 474 867

Other current assets 148 2

Other non-current liabilities 82 141

Current liabilities and accruals 5 0

Non-recovarable withholding tax 544 530

Total 43,114 51,588

Net tax assets / (liabilities) -40,422 -48,105

Deferred tax assets 1,938 2,028

Deferred tax liabilities 42,360 50,133


Movements in Temporary Differences

The movements in temporary differences were as follows:


Dec 31, 2010

Jan 1 –

Dec 31, 2009

Non-current assets 7,674 7,874

Inventories 314 -257

Trade and other receivables 401 -481

Other current assets -157 -2

Other non-current liabilities 59 -40

Current liabilities and accruals -457 1,090

Non-recoverable withholding tax -14 -22

Tax losses 0 -143

Changes booked to income statement 7,820 8,019

Tax on costs attributable to

the issue of share capital booked to equity 0 273

Changes booked to equity 0 273

Currency differences -137 -25

Other changes -137 -25

Total changes of deferred taxes 7,683 8,267

Unrecognized Deferred Tax Assets

Based on the evaluation of tax assets in the foreign subsidiaries deferred tax assets amounting to

CHF 333,000 (2009: 285,000) of which the major part will not expire have not been recognized. These relate

to tax losses and temporary differences for which the Group does not expect to have any future taxable

profit to offset them against.


17 Inventories

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Raw materials and supplies 2,327 4,161

Semifinished and finished goods 9,011 5,680

Work in progress 1,035 610

Total 12,373 10,451

The amount of write-down of inventories recognized as an expense in profit or loss in 2010 amounted

to CHF 1.2 million (2009: CHF 0.4 million) and is included in cost of goods sold. The total amount of

inventories valued at fair value less cost to sell amounts to CHF 0.0 million (2009: CHF 0.0 million).

18 Receivables Trade

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Accounts receivable trade 17,060 14,647

Bills receivable trade 832 461

Total 17,892 15,108

Accounts receivable trade as well as bills receivable trade are non-interest-bearing and are generally on 30

to 90 days’ terms.

The carrying amounts of trade and bills receivables less the allowance for uncollectible items are assumed

to approximate their fair values due to the short-term nature of trade receivables.

The carrying amount of the Group’s trade receivables are denominated in the following currencies:

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

CHF 15,445 11,534

USD 1,183 1,391

CNY 880 771

TRY 137 152

JPY 88 942

EUR 0 90

Other 159 228

Total 17,892 15,108


The ageing of these receivables is as follows:

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Not overdue 13,716 12,197

Overdue 1 to 60 days 4,012 2,572

Overdue 61 to 90 days 98 313



Overdue more than 150 days 0 0

Total 17,892 15,108

Provisions for uncollectible amounts are established based upon the difference between the receivable value

and the estimated net collectible amount. Uster establishes its provision for doubtful accounts receivable

trade based on historical loss experiences.

The effective losses of accounts receivables recognized in 2010 amount to CHF 64,000 (2009: CHF 59,000).

The following table summarizes the movements in the allowance for uncollectible amounts:

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Balance at January 1 -878 -817

Amounts used 64 59

Reversals 347 431

Increases -511 -553

Translation adjustments 4 2

Balance at December 31 -974 -878

The creation and release of the valuation allowance is included in sales deductions in the Statement of

Comprehensive Income.

19 Other Receivables

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

VAT receivables 1,151 719

Other financial receivables 380 408

Prepaid expenses 597 713

Total 2,128 1,840

No provision for impairment has been recognized on these balances.


20 Cash and Cash Equivalents

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Cash on hand 27 26

Time deposits 6,392 799

Bank accounts 14,630 14,228

Total 21,049 15,053

Cash on bank accounts earns interest at floating rates based on bank deposit rates. Time deposits are made for

varying periods of between one day and three months depending on the immediate cash requirements of the

Uster Group and earn interest at the respective short-term deposit rates.

21 Share Capital and Reserves

21.1 Share Capital

Ordinary Share Capital

On November 2, 2009, the Uster Group issued 1.9 million newly registered shares with a nominal value of

CHF 9.40 out of the authorized capital. The ordinary share capital of Uster Technologies Ltd as of Decem-

ber 31, 2010, amounts to CHF 79.5 million and is fully paid up. It consists of 8,460,000 registered shares with

a nominal value of CHF 9.40 each (December 31, 2009: share capital of CHF 79.5 million and 8,460,000 shares

with a nominal value of CHF 9.40 each).

Conditional Share Capital Increase

As of December 31, 2010, Uster Technologies Ltd has a conditional share capital increase available, pursuant

to which the share capital may be increased by a maximum aggregate amount of CHF 3.008 million through

the issuance of a maximum of 320,000 fully paid registered shares with a nominal value of CHF 9.40 each by

the exercise of option rights which the employees, the Management or Directors of Uster Technologies Ltd

or another Group company may be granted.

Part of this conditional share capital increase is used by the share-based payment transaction described in

note 22.

Development of Ordinary Shares

in 1,000 of shares 2010 2009

Balance at January 1 8,460 6,560

Capital increase 0 1,900

Balance at December 31 8,460 8,460


21.2 Reserves

Other Reserves

Other reserves include the statutory reserves that have to be allocated from retained earnings based on the

regulations in the jurisdictions of the subsidiaries.

Currency Translation Differences

This reserve contains all currency differences arising from the translation of the financial statements of

foreign subsidiaries as well as from the translation of the intragroup loans that are considered as a part of

the net investment in foreign subsidiaries.

21.3 Dividends

The holders of registered shares are entitled to dividends and to one vote per share at the Shareholders’

meetings of Uster Technologies Ltd. No dividends have been paid in 2010. At the General Meeting on

March 29, 2011, the Board of Directors will propose a dividend payment of CHF 10.2 million for the 2010

financial year (CHF 1.20 / share).

22 Share-Based Payment Transaction

In May 2010 a Restricted Stock Unit Plan has been implemented by the Group. Under this plan, selected em-

ployees of the Group have been awarded a fixed number of Restricted Stock Units (RSU Awards) to purchase

registered shares of Uster Technologies Ltd on May 4, 2013 (vesting date), at CHF 9.40 per share. The shares

(up to 320,000) will be provided out of conditional share capital. There is no cash settlement of these awards.

These awards are forfeited when a participant’s employment with a member of the Group is terminated

before the vesting date (except for the cases of retirement, disability or death). The fair value of the RSUs

granted is estimated at the date of grant using the Black-Scholes pricing model using the following

assumptions:

Dividend yield: 0 %

Expected volatility: 50.8 %

Risk-free interest rate: 1.05 %

Expected life: 3 years

Weighted average share price: CHF 22.11

Uster Technologies Ltd is a relatively newly listed company with comparably little trading activity in its

share. In addition, the historical data window available is shorter than the RSUs’ lifetime of 3 years. For the

valuation herein, the historical volatility of the Company’s shares computed over the available price history.

Second, the historical volatility of a predefined peer group is estimated using a time window equal to the

tenor of the RSUs. Each volatility number is given a 50 % weight.

A share-based payment transaction expense of CHF 937,000 was recognized as personnel expense and directly

in equity according to the regulations of IFRS 2.


Movements in the Year

The following table illustrates the number (No.) and weighted average exercise price of, and movements in,

Restricted Stock Units during the year:


Dec 31, 2010

Jan 1 –

Dec 31, 2009

No. Weighted

average

Exercise Price

No. Weighted

average

Exercise Price

Outstanding January 1 0 0.00 n/a n/a

Granted during the year 309,000 9.40 n/a n/a

Forfeited during the year -5,000 9.40 n/a n/a

Balance at December 31 304,000 9.40 n/a n/a

Out of the 304,000 outstanding Restricted Stock Units none was exercisable. All 304,000 Restricted

Stock Units will be exercisable on May 4, 2013, and have the exercise price of CHF 9.40 per share.

23 Bank Loans

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Facility A 79,625 94,438

Facility B 7,893 19,839

Total non-current 87,518 114,277

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Current portion Facility A 10,000 10,000

Total current 10,000 10,000

Total 97,518 124,277

Facility A

In 2007 the initial balance of Facility A amounted to CHF 140.0 million and has been reduced by the directly

attributable transaction costs that are amortized using the effective interest method. Facility A is unsecured.

After yearly contractual repayments of CHF 10.0 million in December and additional voluntary repayments

of CHF 20.0 million (thereof CHF 5.0 million in 2010), the remaining amount of CHF 90.0 million has to be

repaid in full in December 2012.

Facility B

In 2007 the initial balance of Facility B amounted to CHF 40.0 million and has been reduced by the directly

attributable transaction costs that are amortized using the effective interest method. Facility B is unsecured.

It is voluntarily repayable. Repayments of CHF 12.0 million were made in 2010 (2009: CHF 15.0 million, 2008:

CHF 5.0 million). The remaining amount of CHF 8.0 million has to be repaid in full in December 2012.


The effective interest rate and the maturity of the bank loans are as follows:

Effective Interest Rate Maturity

Facility A Libor + margin % Dec 31, 2012

Facility B Libor + margin % Dec 31, 2012

The margin applicable to the basic Libor interest rate on the bank loans ranges depending on the covenants

from 1.0 % to 4.5 % (2009: 1.0 % to 4.5 %). These covenants focus on equity ratio, on EBITDA and on free cash

flows generated.

The Group met all loan covenants.

24 Provisions

in CHF 1,000 Restructuring

Provision

Warranty

Provisions

Other

Provisions

2009

Balance at January 1, 2009 2,546 2,870 1,235 6,651Amounts used -1,581 -1,277 -635 -3,493Reversals -614 0 -471 -1,085Increases 0 392 0 392Currency translation differences 3 -3 -1 -1Balance at December 31, 2009 354 1,982 128 2,464

Thereof Non-current 0 1,254 28 1,282Current 354 728 100 1,182

in CHF 1,000 Restructuring

Provision

Warranty

Provisions

Other

Provisions

2010

Balance at January 1, 2010 354 1,982 128 2,464Amounts used -8 -537 0 -545Reversals -344 0 0 -344Increases 0 641 2 643Currency translation differences -2 -8 0 -10Balance at December 31, 2010 0 2,078 130 2,208

Thereof Non-current 0 1,323 30 1,353Current 0 755 100 855


Restructuring Provisions

The restructuring program launched in November 2008 was carried on as planned and has been finalized

in early 2010. The remaining amount has been reversed in 2010.

Warranty Provisions

The Uster Group usually grants a 12-month warranty period for its products. During this period products

will be repaired or replaced free of charge. The provision is on the one hand based on gross sales and past

experience with warranty claims. On the other hand it also considers the Group’s repairs and replacements

made on a voluntary basis towards important clients. It is expected that the warranty costs provided for

will be incurred within the next 3 years.

Other Provisions

Other provisions include provisions with respect to agent contracts. The Group cancelled agent contracts

and paid the open commissions due. Some agents, however, refused to sign a confirmation that all the

outstanding balances are settled. Therefore the estimated possible risks for additional claims have been

provided for.

25 Trade and Other Liabilities

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Accounts payable trade 5,770 1,793

Advance payments from customers 2,898 1,376

Other financial liabilities 3,594 1,265

Total 12,262 4,434

Accounts payable trade and other liabilities are non-interest-bearing and are generally on 30 to 60 days’

terms. Other liabilities include mostly payables to third parties that are not related to trade activities such

as payables for marketing, consulting activities or IT costs as well as social cost payments.


26 Accrued Liabilities

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Compensation related liabilities 6,590 5,881

Sales related liabilities 996 953

Liabilities from other operating activities 3,634 4,152

Financial liabilities 307 226

Total 11,527 11,212

Compensation Related Liabilities

This accrual includes liabilities for bonus payments to the employees and the management, overtime, vacation,

social costs, and a length of service compensation.

Sales Related Liabilities

Sales related liabilities include accruals for sales commission or discounts to be paid to agents and clients.

Liabilities from Other Operating Activities

Comprised in this accrual are various liabilities with regards to the operating business such as liabilities

related to consulting, marketing, IT as well as research and development services.

Financial Liabilities

The accrued financial liabilities are mainly related to accrued interest due on bank loans.


27 Operating Lease Commitments

Non-cancellable operating lease rentals are payable as follows:


Dec 31, 2010

Jan 1 –

Dec 31, 2009

Up to 1 year 3,446 3,457

2 to 5 years 3,771 6,589

Total 7,217 10,046

The Group usually leases its premises. The only exception is the facility of Uster Technologies, Inc. in

Knoxville which is owned by the Group. CHF 5.6 million (2009: CHF 8.9 million) of the leasing expense

above is attributable to the non-cancellable rental agreement for the facilities of Uster Technologies Ltd

in Switzerland.

During the year ended December 31, 2010, CHF - 3.6 million was recognized in the Statement of Comprehensive

Income as an expense with respect to operating leases (2009: CHF -4.0 million).

28 Pledged Assets

As of December 31, 2010, none of the assets of the Uster Group have been pledged (2009: none).

29 Related Parties

29.1 Parent and Ultimate Controlling Party

Since October 19, 2007, the shares of Uster Technologies Ltd are listed on the main segment of SIX Swiss Exchange.

880 shareholders were entered in the share register of Uster Technologies Ltd as of December 31, 2010 (2009:

1,017). Of those the following held more than 3.0 % of the total voting rights:

• Alcide Ltd 27.9 % (27.9 %)

• Toyota Industries Corporation 22.5 % (22.5 %)

• Board and Management Group 1) 8.1 % (n/a)

• T. Rowe Price International Inc. 4.5 % (4.4 %)

• Bär Marc Philipp 3.1 % (3.1 %)

• Balfidor Fondsleitung AG 3.1 % (–)

1) Part of Board and Management formed a Group for purchase and sale of shares.


29.2 Transactions with the Board of Directors and the Executive Committee

Compensation of the Members of the Board of Directors and the Executive Committee

The compensation of the Board of Directors and the Executive Committee comprised the following:


Dec 31, 2010

Jan 1 –

Dec 31, 2009

Short-term employee benefits 5,416 3,377

Post-employment benefits 5 7 1 4 7 3

Share-based payment transactions 578 n/a

Total 6,565 3,850

In addition to their salaries the Members of the Executive Committee participate in the RSU Plan and have

a company car at their disposal.

For further information regarding the compensation of the Board of Directors and the Executive Committee,

please refer to note 11 Compensation of the Members of the Board of Directors and the Executive Committee

of the statutory financial statements of Uster Technologies Ltd.

Other Transactions with Members of the Board of Directors

In his function of a Managing Partner of a consulting company a Member of the Board of Directors advises

the Company on certain business issues related to China. Also another Board Member delivers consulting

services to the Company from time to time. Consultancy services in the amount of CHF 43,620 (2009: CHF 10,640)

were conducted on the same terms and conditions as if they were delivered by third parties.

30 Subsidiaries

Company Country of

Incorporation

% Capital

Shareholdings

Dec 31, 2010 Dec 31, 2009

Uster Technologies de Mexico S.A. de C.V. Mexico 100 % 100 %

Uster Technologies GmbH Germany 100 % 100 %

Uster Technologies (India) Pvt. Ltd India 100 % 100 %

Uster Technologies (India) Marketing Pvt. Ltd India 100 % n/a

Uster Technologies K.K. Japan 100 % 100 %

Uster Technologies (Suzhou) Co. Ltd China 100 % 100 %

Uster Technologies (Shanghai) Co. Ltd China n/a 100 %

Uster Technologies (Shanghai) Trading Co. Ltd China 100 % n/a

Uster Technologies Sulamericana Ltda Brazil 100 % 100 %

Uster Technologies (Thailand) Ltd Thailand 100 % 100 %

Uster Technologies Holding (Thailand) Ltd Thailand 100 % 100 %

Uster Technologies, Inc. USA 100 % 100 %

Uster Teknoloji Ticaret A.S. Turkey 100 % 100 %

1) in process of formation2) liquidated in 2010

2)

1)

1)

Report of the Statutory Auditor on the Consolidated Financial Statements 2010 107

Report of the Statutory Auditor on the Consolidated Financial Statements

To the General Meeting of Uster Technologies Ltd, Uster

Zurich, 11 February 2011

As statutory auditor, we have audited the consolidated financial statements of Uster Technologies Ltd, which

comprise the statement of comprehensive income, statement of financial position, statement of cash flows,

statement of changes in equity, and notes (pages 60 to 106) for the year ended 31 December 2010.

Board of Directors’ responsibility

The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial

statements in accordance with International Financial Reporting Standards (IFRS) and the requirements of

Swiss law. This responsibility includes designing, implementing and maintaining an internal control system

relevant to the preparation and fair presentation of consolidated financial statements that are free from

material misstatement, whether due to fraud or error. The Board of Directors is further responsible for

selecting and applying appropriate accounting policies and making accounting estimates that are reasonable

in the circumstances.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with Swiss law and Swiss Auditing Standards and International

Standards on Auditing (ISA). Those standards require that we plan and perform the audit to obtain reasonable

assurance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

consolidated financial statements. The procedures selected depend on the auditor’s judgment, including

the assessment of the risks of material misstatement of the consolidated financial statements, whether due

to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant

to the entity’s preparation and fair presentation of the consolidated financial statements in order to design

audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion

on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness

of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating

the overall presentation of the consolidated financial statements. We believe that the audit evidence we have

obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements for the year ended 31 December 2010 give a true and

fair view of the financial position, the results of operations and the cash flows in accordance with IFRS and

comply with Swiss law.

108 Report of the Statutory Auditor on the Consolidated Financial Statements 2010

Report on other legal requirements

We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA)

and independence (Art. 728 CO and Art. 11 AOA) and that there are no circumstances incompatible with our

independence.

In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an

internal control system exists, which has been designed for the preparation of consolidated financial state-

ments according to the instructions of the Board of Directors.

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

Ernst & Young Ltd

Daniel Zaugg Tobias Meyer

Licensed audit expert Licensed audit expert

(Auditor in charge)

Uster Technologies Ltd – Financial Statements 2010 109

Uster Technologies Ltd – Financial Statements

Income Statement


Dec 31, 2010

Jan 1 –

Dec 31, 2009

Gross sales 116,513 83,422

Sales deductions -3,285 -2,770

Net sales 113,228 80,652

Other operating income 4,049 4,522

Operating income 117,277 85,174

Material expense -37,061 -27,041

Personnel expense -23,447 -17,887

Depreciation and amortization -15,066 -14,813

Other operating expense -21,255 -17,149

Operating expense -96,829 -76,890

Earnings before interest and tax (EBIT) 20,448 8,284


Finance expense -6,826 -6,658

Finance result -4,871 -6,196

Earnings before tax 15,577 2,088

Taxes -797 -6,782

Profit / (Loss) of the year 14,780 -4,694

110 Uster Technologies Ltd – Financial Statements 2010

Balance Sheet

in CHF 1,000 Dec 31, 2010 Dec 31, 2009

Organizational costs 6,254 9,114

Other intangible assets 276,593 286,833

Property, plant and equipment 6,546 6,122


Investments in subsidiaries 5,825 7,368

Loans to group companies 612 716

Non-current assets 295,844 310,166

Inventories 5,181 4,625

Receivables trade third parties 12,496 9,920

Receivables trade group companies 5,812 5,599

Other receivables third parties 1,225 865

Other receivables group companies 1,430 765

Prepaid expenses third parties 474 578

Prepaid expenses group companies 70 72

Cash and cash equivalents 17,026 12,002

Current assets 43,714 34,426

Assets 339,558 344,592

Share capital 79,524 79,524

Reserve from capital contribution 1) 110,011 110,011

Statutory reserve 422 422

Retained earnings 1) 3,327 8,021

Net result 14,780 -4,694

Shareholders’ equity 208,064 193,284

Bank loans 88,000 115,000

Provisions 1,323 1,254

Non-current liabilities 89,323 116,254

Bank loans 10,000 10,000

Derivative financial instruments 1,134 1,900

Payables trade third parties 7,136 2,516

Payables trade group companies 381 948

Other liabilities third parties 2,785 420

Other liabilities group companies 4,798 3,676

Accrued liabilities third parties 14,975 14,367

Accrued liabilities group companies 200 170

Provisions 762 1,057

Current liabilities 42,171 35,054

Liabilities 131,494 151,308

Shareholders’ equity and liabilities 339,558 344,592

1) Retained earnings have been split in reserve from capital contribution and retained earnings. Previous year’s figures have been adapted accordingly.

Uster Technologies Ltd – Notes to the Financial Statements 2010 111

Uster Technologies Ltd – Notes to the Financial Statements

1 Statement of Compliance

The financial statements of Uster Technologies Ltd are prepared in compliance with the Swiss Code of

Obligations.

2 Company Information

Since the initial public offering on October 19, 2007, the shares of Uster Technologies Ltd are listed on the

main standard of SIX Swiss Exchange.

3 Shareholders’ Equity

in CHF 1,000 Share

Capital

Reserve from

Capital

Contribution 1)

Statutory

Reserves

Retained

Earnings 1)

Total

Balance at January 1, 2009 61,664 0 98 92,345 154,107Restatement 1) 0 84,000 0 -84,000 0

Balance at January 1, 2009 61,664 84,000 98 8,345 154,107Appropriatin of retained earnings 0 0 324 -324 0Capital increase 1 7 , 8 6 0 26,011 0 0 4 3 , 8 7 1Profit / (Loss) of the year 0 0 0 -4,694 -4,694Balance at December 31, 2009 79,524 110,011 422 3,327 193,284

Balance at January 1, 2010 79,524 110,011 422 3,327 193,284Appropriatin of retained earnings 0 0 0 0 0Capital increase 0 0 0 0 0Profit / (Loss) of the year 0 0 0 14,780 14,780Balance at December 31, 2010 79,524 110,011 422 18,107 208,064

1) Retained earnings have been split into reserve from capital contribution and retained earnings. Previous year’s figures have been adapted accordingly.

Ordinary Share Capital

On November 2, 2009, the Uster Group issued 1.9 million newly registered shares with a nominal value of

CHF 9.40 out of the authorized capital. The ordinary share capital of Uster Technologies Ltd as of Decem-

ber 31, 2010, amounted to CHF 79.5 million and was fully paid up. It consisted of 8,460,000 registered shares

with a nominal value of CHF 9.40 each (December 31, 2009: share capital of CHF 79.5 million and 8,460,000

shares with a nominal value of CHF 9.40 each).

Conditional Share Capital Increase

As of December 31, 2010, Uster Technologies Ltd had a conditional share capital increase available, pursuant

to which the share capital may be increased by a maximum aggregate amount of CHF 3.008 million through

the issuance of a maximum of 320,000 fully paid registered shares with a nominal value of CHF 9.40 each by

the exercise of option rights which the employees, the Management or Directors of Uster Technologies Ltd

or another Group company may be granted.

Part of this conditional share capital increase is used by the share-based payment transaction described in

note 22 of the Notes to the Consolidated Financial Statements of the Group.

112 Uster Technologies Ltd – Notes to the Financial Statements 2010

4 Pledged Assets

As of December 31, 2010, none of the assets of Uster Technologies Ltd were pledged (2009: none).

5 Guarantee

As of December 31, 2010, Uster Technologies Ltd did not have any guarantees outstanding (2009: none).

6 Fire Insurance Values of Property, Plant and Equipment

The fire insurance values of property, plant and equipment as of December 31, 2010, amounted to CHF 17.1 million

(2009: CHF 15.3 million).

7 Pension Fund Liability

As of December 31, 2010, Uster Technologies Ltd had a pension fund liability of CHF 0.3 million (2009: CHF 0.0 million).

8 Risk Assessment

Risk management is part of the management process which is defined within the management handbook.

All risks / groups of risks are assigned to the process owners of the business processes containing the specific

risk. Strategic risks are directly assigned to the Executive Management Team.

The process owners supervise the risks / group of risks and propose process changes if the risks take unexpected

developments. The process changes are approved by the Executive Management Team.

The risk management process is reviewed at least once a year by the Board of Directors.

9 Significant Shareholders

880 shareholders were entered in the share register of Uster Technologies Ltd as of December 31, 2010

(2009: 1,017). Of those the following held more than 3.0% of the total voting rights:

• Alcide Ltd 27.9 % (27.9 %)

• Toyota Industries Corporation 22.5 % (22.5 %)

• Board and Management Group 1) 8.1 % (n/a)

• T. Rowe Price International Inc. 4.5 % (4.4 %)

• Bär Marc Philipp 3.1 % (3.1 %)

• Balfidor Fondsleitung AG 3.1 % (–)

1) Part of Board and Management formed a Group for purchase and sale of shares.


10 Investments in Subsidiaries

As of December 31, 2010, Uster Technologies Ltd held the following investments:

Company Purpose % Capital

Shareholdings

Share Capital

Dec 31, 2010 in 1,000

Uster Technologies de Mexico S.A. de C.V.

(Tlalnepantla, MX) D 100 % MXN 6,250

Uster Technologies GmbH

(Neuss, DE) D 100 % EUR 26

Uster Technologies (India) Pvt. Ltd

(Bangalore, IN) SC 100 % INR 4,950

Uster Technologies (India) Marketing Pvt. Ltd

(Bangalore, IN) S 100 % I N R 1 )

Uster Technologies K. K.

(Osaka-fu, JP) SC 100 % JPY 10,000

Uster Technologies (Shanghai) Co. Ltd

(Shanghai, CN) D n/a CNY n/a

Uster Technologies (Shanghai) Trading Co. Ltd

(Shanghai, CN) S 100 % CNY 1 )

Uster Technologies (Suzhou) Co. Ltd

(Suzhou, CN) TC 100 % CNY 20,185

Uster Technologies Sulamericana Ltda.

(Alphaville-Barueri SP, BR) SC 100 % BRL 650

Uster Technologies (Thailand) Ltd

(Bangkok, TH) SC 100 % THB 6,000

Uster Technologies Holding (Thailand) Ltd

(Bangkok, TH) H 100 % THB 1,000

Uster Technologies, Inc.

(Knoxville, US) TC 100 % USD 100

Uster Teknoloji Ticaret A. S.

(Istanbul, TR) SC 100 % TRY 50

TC: Technology Center

SC: Service Center

S: Sales Office

H: Holding

D: Dormant1) in process of formation2) liquidated in 2010

2) 2)


11 Compensation of the Members of the Board of Directors and the Executive Committee

11.1 Loans and Other Payments

No loans to present or former Members of the Board of Directors or Executive Committee were granted or

outstanding as of December 31, 2010 (2009: none).

During 2010 payments for consulting services amounting to CHF 43,620 (2009: CHF 10,640) have been

made to Pacific Consult Ltd of which Max-Ulrich Zellweger is a Managing Partner.

11.2 Compensation

The compensation of the Board of Directors and the Executive Committee for the year ending December 31, 2010,

was as follows:

Board of Directors

in CHF 2009

Name Function Base

Compensation

(Cash)

Bonus

(Cash)

Share-based

Payment

Transaction

Other

Social Costs

Total

Max-Ulrich Zellweger Chairman 80,000 50,000 0 7,125 137,125Beat Lüthi 1) Vice-Chairman 50,000 0 0 3,625 53,625Harald Rönn Member 50,000 0 0 3,625 53,625Barry James Mulady Member 50,000 0 0 3,125 53,125Geoffrey Scott 3) Member

Total 230,000 50,000 0 17,500 297,500

in CHF 2010

Name Function Base

Compensation

(Cash)

Bonus

(Cash)

Share-based

Payment

Transaction

Other

Social Costs

Total

Max-Ulrich Zellweger Chairman 80,000 0 209,550 4,000 293,550Beat Lüthi 1) Vice-Chairman 0 0 0 0 0Harald Rönn Vice-Chairman 0 0 0 0 0Barry James Mulady Member 50,000 0 104,775 3,125 157,900Akira Onishi 2) Member 0 0 0 0 0Geoffrey Scott 3) Member Total 130,000 0 314,325 7,125 451,450

1) Beat Lüthi left the Board of Directors at the Ordinary General Meeting held on March 30, 2010.

2) Akira Onishi was elected Member of the Board of Directors by the Ordinary General Meeting held on March 30, 2010.

3) The compensation of the executive member of the Board of Directors is shown under the compensation

of the Executive Committee.


Executive Committee

in CHF 2009

Name Function Base

Compensation

(Cash)

Bonus

(Cash)

Share-based

Payment

Transaction

Pension

Benefits

Other

Social Costs

Total

Geoffrey Scott CEO 553,045 354,000 0 77,134 61,028 1,045,207Other members 2,244,504 626,000 0 177,130 175,345 3,222,979Total 2,797,549 980,000 0 254,264 236,373 4,268,186

in CHF 2010

Name Function Base

Compensation

(Cash)

Bonus

(Cash)

Share-based

Payment

Transaction

Pension

Benefits

Other

Social Costs

Total

Geoffrey Scott CEO 555,923 562,731 488,950 78,676 73,930 1,760,210Other members 2,258,028 1,909,397 1,816,100 179,168 232,477 6,395,170Total 2,813,951 2,472,128 2,305,050 257,844 306,407 8,155,380

1) Including board member fee of CHF 50,000 (2009: CHF 50,000).

11.3 Ownership of Uster Shares by the Board of Directors and the Executive Committee

As of December 31, 2010, the Members of the Board of Directors and the Executive Committee held the

following number of shares of Uster Technologies Ltd:

Board of Directors

Name Function Number of

Shares owned

2010

Number of

Restricted

Stock Units

owned 2010

Number of

Shares owned

2009

Number of

Restricted

Stock Units

owned 2009

Max-Ulrich Zellweger Chairman 40,000 15,000 40,000 n/a

Beat Lüthi 1) Vice-Chairman n/a n/a 0 n/a

Harald Rönn Vice-Chairman 13,000 0 7,000 n/a

Barry James Mulady Member 10,148 7,500 10,148 n/a

Akira Onishi 2) Member 0 0 n/a n/a

Geoffrey Scott 3) Member

Total 63,148 22,500 57,148 n/a

1) Beat Lüthi left the Board of Directors at the Ordinary General Meeting held on March 30, 2010.2) Akira Onishi was elected Member of the Board of Directors by the Ordinary General Meeting held on March 30, 2010.3) The ownership of shares of the executive member of the Board of Directors is shown under the ownership of shares of the Executive Committee.

1)

1)


Executive Committee

Name Function Number of

Shares owned

2010

Number of

Restricted

Stock Units

owned 2010

Number of

Shares owned

2009

Number of

Restricted

Stock Units

owned 2009

Geoffrey Scott CEO 235,193 35,000 213,945 n/a

Thomas F. Dressendörfer CFO 17,500 25,000 10,000 n/a

Naiming Wei Asian Operations 106,000 15,000 100,000 n/a

Harold Hoke Sales and Service 92,000 15,000 92,000 n/a

Hossein Ghorashi U. S. Operations 75,000 15,000 75,000 n/a

Renato Murk Order Fulfillment 73,400 15,000 73,400 n/a

Rafael Storz Research and Innovation 32,000 10,000 32,000 n/a

Richard Furter Textile Technology 5,000 25,000 5,000 n/a

Deniz Bütüner Marketing and

Business Development

7,000 10,000

7,000 n/a

Total 643,093 165,000 608,345 n/a

Proposal for the Appropriation of Available Earnings and Capital Reserve

The Board of Directors proposes to appropriate the available earnings and capital reserve as follows:

in CHF Dec 31, 2010 Dec 31, 2009

Unappropriated retained earningsBalance brought forward 3,327,208 8,021,470

Profit / (Loss) of the year 14,780,447 -4,694,262

Total unappropriated retained earnings 18,107,655 3,327,208

Appropriation of retained earningsUnappropriated retained earnings 18,107,655 3,327,208

Transfer of reserve from capital contribution 10,152,000 0

Total available for distribution 28,259,655 3,327,208Dividend proposed by the Board of Directors -10,152,000 0

Unappropriated retained earnings to be carried forward 18,107,655 3,327,208

in CHF Dec 31, 2010 Dec 31, 2009

Reserve from capital contributionBalance brought forward 110,011,000 84,000,000

Capital increase 0 26,011,000

Transfer to retained earnings -10,152,000 0

Balance to be carried forward 99,859,000 110,011,000

Report of the Statutory Auditor on the Financial Statements 2010 117

Report of the Statutory Auditor on the Financial Statements

To the General Meeting of Uster Technologies Ltd, Uster

Zurich, 11 February 2011

As statutory auditor, we have audited the financial statements of Uster Technologies Ltd, which comprise

the income statement, balance sheet and notes (pages 109 to 116) for the year ended 31 December 2010.

Board of Directors’ responsibility

The Board of Directors is responsible for the preparation of the financial statements in accordance with the

requirements of Swiss law and the company’s articles of incorporation. This responsibility includes designing,

implementing and maintaining an internal control system relevant to the preparation of financial statements

that are free from material misstatement, whether due to fraud or error. The Board of Directors is further

responsible for selecting and applying appropriate accounting policies and making accounting estimates

that are reasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted

our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan

and perform the audit to obtain reasonable assurance whether the financial statements are free from material

misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

financial statements. The procedures selected depend on the auditor’s judgment, including the assessment

of the risks of material misstatement of the financial statements, whether due to fraud or error. In making

those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation

of the financial statements in order to design audit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system.

An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness

of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We

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

opinion.

Opinion

In our opinion, the financial statements for the year ended 31 December 2010 comply with Swiss law and the

company’s articles of incorporation.

118 Report of the Statutory Auditor on the Financial Statements 2010

Report on other legal requirements

We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA)

and independence (Art. 728 CO and Art. 11 AOA) and that there are no circumstances incompatible with our

independence.

In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an

internal control system exists, which has been designed for the preparation of financial statements according

to the instructions of the Board of Directors.

We further confirm that the proposed appropriation of available earnings complies with Swiss law and the

company’s articles of incorporation. We recommend that the financial statements submitted to you be

approved.

Ernst & Young Ltd

Daniel Zaugg Tobias Meyer

Licensed audit expert Licensed audit expert

(Auditor in charge)

Information for Investors 2010 119

Information for Investors

Share Information

Development of Share Price in CHF

Share Information and Key Figures

The table below shows the most important information regarding the shares of Uster Technologies Ltd.

2010 2009

Share capitalNominal value per share CHF 9.40 9.40

Shares issued number 8,460,000 8,460,000

Issued share capital CHF 1,000 79,524 79,524

Free float 49.6 % 49.6 %

Market capitalization and dividendMarket capitalization CHF 1,000 271,989 225,882

as % of gross sales 204.7 % 224.2 %

as % of shareholders’ equity 121.1 % 110.9 %

Dividend per share, gross CHF 0.00 0.00

Total dividend paid, gross CHF 1,000 0 0

Payout ratio 0.0 % 0.0 %

40

35

30

25

20

Uster Technologies Ltd

SPI, rebased

31.1

0.20

10

30.1

1.20

10

31.0

8.20

10

30.0

6.20

10

30.0

4.20

10

31.0

5.20

10

31.0

7.20

10

30.0

9.20

10

28.0

2.20

10

31.0

3.20

10

31.1

2.20

09

31.0

1.20

10

31.1

2.20

10

31.0

1.20

11

120 Information for Investors 2010

2010 2009

Key figures per shareShare price at the end of the year CHF 32.15 26.70

Highest share price CHF 33.20 27.00

Lowest share price CHF 22.50 5.50

Dividend yield 0.0 % 0.0 %

Basic earnings per share CHF 2.45 0.16

Diluted earnings per share CHF 2.44 n/a

P / E ratio 13.1 166.9

Stock Exchange Information

SIX Swiss Exchange Ticker Symbol USTN

Swiss Security Number 3433153

ISIN CH0034331535

Shareholding Structure

The structure of the shareholders entered in the share register is as follows:

Shares Shareholders Shares

1 – 100 285 32.4 % 18,154 0.2 %

101 – 1,000 485 55.1 % 191,505 2.3 %

1,001 – 10,000 79 9.0 % 220,808 2.6 %

10,001 – 100,000 23 2.6 % 840,787 9.9 %

100,001 – 1,000,000 6 0.7 % 1,497,601 17.7 %

> 1,000,000 2 0.2 % 4,258,377 50.4 %

Not registered 1,432,768 16.9 %

Total 880 100.0 % 8,460,000 100.0 %

Important Dates

Publication of annual results 2010 February 28, 2011

Media and analyst conference February 28, 2011

Last day for inscription into the share register

before the Shareholders’ meeting 2011 March 18, 2011

Shareholders’ meeting 2011 March 29, 2011

Dividend payment April 6, 2011

Semiannual results 2011 July 19, 2011

Contact for Media, Investors and Analysts

Thomas F. Dressendörfer, CFO


CH-8610 Uster

Phone +41 43 366 36 06

Fax +41 43 366 36 54



Key Figures


Dec 31, 2010

Jan 1 –

Dec 31, 2009

Jan 1 –

Dec 31, 2008

Jan 1 –

Dec 31, 2007

Consolidated Income StatementGross sales 132,841 100.0 % 100,763 100.0 % 154,893 100.0 % 186,666 100.0 %

Sales deductions -2,746 -2,858 -1,925 -3,087

Net sales 130,095 97.9 % 97,905 97.2 % 152,968 98.8 % 183,579 98.3 %

Cost of goods sold -52,978 -39.9 % -41,631 -41.3 % -61,952 -40.0 % -76,212 -40.8 %

Gross profit 77,117 58.1 % 56,274 55.8 % 91,016 58.8 % 107,367 57.5 %

Sales and marketing

expenses -14,274 -10.7 % -11,750 -11.7 % -19,465 -12.6 % -21,433 -11.5 %

Research and

development expenses -14,916 -11.2 % -11,010 -10.9 % -19,857 -12.8 % -18,645 -10.0 %

Management and

administrative expenses -13,418 -10.1 % -11,245 -11.2 % -17,582 -11.4 % -15,930 -8.5 %

Other income, expenses &

amortization -15,078 -11.4 % -14,812 -14.7 % -15,212 -9.8 % -17,606 -9.4 %

Earnings before interest and tax (EBIT) 19,431 14.6% 7,457 7.4% 18,900 12.2 % 33,753 18.1 %

Amortization 15,171 15,252 15,268 18,631

Earnings before interest tax and amortization (EBITA) 34,602 26.0 % 22,709 22.5 % 34,168 22.1 % 52,384 28.1 %

Amortization -15,171 -15,252 -15,268 -18,631

Earnings before interest and tax (EBIT) 19,431 14.6% 7,457 7.4% 18,900 12.2 % 33,753 18.1 %

Finance result -5,137 -3.9 % -7,044 -7.0 % -10,211 -6.6 % -26,865 -14.4 %

Earnings before tax 14,294 10.8 % 413 0.4 % 8,689 5.6 % 6,888 3.7 %

Income tax 6,469 45.3 % 665 161.0 % -3,373 -38.8 % -3,301 -47.9 %

Profit / (Loss) of the year 20,763 15.6 % 1,078 1.1 % 5,316 3.4 % 3,587 1.9 %

122 Information for Investors 2010


Dec 31, 2010

Jan 1 –

Dec 31, 2009

Jan 1 –

Dec 31, 2008

Jan 1 –

Dec 31, 2007

Consolidated Cash Flow StatementEarnings before tax 14,294 413 8,689 6,888

Finance result 5,137 7,044 10,211 26,865

Amortization, depreciation &

change in accruals / provision 20,378

12,872 20,729 18,409

Change in working capital 2,859 -3,640 -2,256 -6,986

Income taxes paid -23 -2,411 -4,617 -5,951

Cash flow from operating activities 42,645 14,278 32,756 39,225

Purchase of non-current assets -3,808 -3,373 -3,735 -2,969

Disposal of non-current assets 77 298 124 828

Interest received 97 75 264 125

Cash flow from / (used in) investing activities -3,634 -3,000 -3,347 -2,016

Proceeds from loans 0 5,000 1 178,557

Repayments of loans -27,000 -45,000 -15,000 -296,100

Share capital transactions 0 42,631 -3,936 97,137

Interest paid -5,729 -6,646 -8,478 -19,321

Cash flow from / (used in) financing activities -32,729 -4,015 -27,413 -39,727

Net change in cash and cash equivalents 6,282 7,263 1,996 -2,518

Cash flow from operating activities in % of EBITA 123.2 % 62.9 % 95.9 % 74.9 %


in CHF 1,000 2010 2009 2008 2007

Balance sheetAssets 399,454 404,739 409,805 432,057

Non-current assets 345,233 361,269 375,321 391,189

as % of total assets 86.4 % 89.3 % 91.6 % 90.5 %

Current assets 54,221 43,470 34,484 40,868


Equity 224,658 203,607 159,542 158,594


Liabilities 174,796 201,132 250,263 273,463

Non-current liabilities 131,231 165,692 215,174 231,309


Current liabilities 43,565 35,440 35,089 42,154


Net debt 76,469 109,224 156,546 173,412

AR collection period 48 53 35 31

AP collection period 42 41 48 52

Capital expenditureIntangible assets -377 -9 -174 -446

Property, plant, and equipment -3,408 -3,319 -3,513 -1,991

Total -3,785 -3,328 -3,687 -2,437

EmployeesNumber of employees (FTE) 445 449 536 529

Gross sales per employee 298,251 224,416 288,979 352,866


Imprint

Content Concept and Editing

IRF Communications AG

Text


Design, Concept and Layout

TGG Hafen Senn Stieger

Photos Imagepages

Vonier Fotografie

Photos Board of Directors

and Executive Committee

T+T Fotografie

Printing

Ostschweiz Druck AG



CH-8610 Uster / Switzerland

Phone +41 43 366 36 36

Fax +41 43 366 36 37


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