ems-chemie holding agnical fibers and adhesives – was split into three autonomous business units,...

EMS-CHEMIE HOLDING AGDomat/Ems Switzerland

38th ANNUAL REPORT 2000/2001

1

Contents

Chairman’s Statement 2

The EMS Group

Spotlight on share performance 3Key Figures 1996–2000 4Corporate GovernanceManagement Organization 6General Information on the 2000 Fiscal Yearat the EMS Group 7

Review of Business at the Individual

Business areas in 2000

Performance Polymers Business area 8Fine Chemicals Business area 8Engineering Business area 8

Financial Statements

EMS Group Consolidated Income Statement 9consolidated data Consolidated Balance Sheet 10for the calendar year Consolidated Changes in Shareholders’ Equity 11

Consolidated Cash Flow Statement 12Notes to the Consolidated Financial Statements 13Report of the group Auditors 35

EMS-CHEMIE HOLDING AG Income Statement 38data for the fiscal year from Balance Sheet as of April 30 39May 1, 2000 to April 30, 2001 Notes to the Financial Statements 40

Proposals of the Board of Directors 44Report of the Auditors 44

Addresses of EMS Companies, Switzerland 45Addresses of EMS Companies, Worldwide 46

2

In the 2000 fiscal year,EMS Group exceeded expecta-tions by posting an operatingresult of CHF 213 million (up fromCHF 199 million in the previousyear). We achieved this goodresult by focusing on high-valueproducts and avoiding less profit-able lines. The economic recoveryin Asia also had a beneficialeffect during the financial year.Over the year as a whole, thecurrency influence was neutral forEMS.

The new products were launchedsuccessfully, which helped to liftoperating results above budgetedlevels. Customers showed par-ticular interest in Grivory, a high-quality alternative to expensivelight metals, and Primid, an envi-ronmentally friendly hardeningagent for powder coating. Amarked improvement in the eco-nomic climate in Asia gave asubstantial boost to the engineer-ing business.

The spiraling cost of the principalraw materials, which could notbe passed on immediately tocustomers, meant that the encou-raging rise in sales volumesfor many products was not fullyreflected in earnings growth.Consequently, the business resultwould have declined if new,

higher-margin products had notbeen launched.

The EMS-TOGO Business Unit,which is focused purely on theautomotive industry, was hardesthit by the rise in raw materialsprices. In the year under review,this unit took over Wagner Auto-mobilsysteme, a company head-quartered in Markdorf, Germany.With this move, EMS-TOGO hascontinued to strengthen its marketposition as a one-stop supplierof bonding, corrosion protectionand sealing systems to the auto-motive industry.

To improve competitiveness andachieve a flatter managementhierarchy, EMS-CHEMIE – theGroup's largest profit center,comprising thermoplastics, tech-nical fibers and adhesives –was split into three autonomousBusiness Units, EMS-GRIVORY,EMS-GRILTECH and EMS-SERVICES.

Axantis, a company acquiredat the beginning of 2001, will spe-cialize in refined cellulose andbiochemical derivative products.These activities ideally comple-ment the EMS Group's business.The reorientation of Axantis, themain component of which is Atis-holz, is just the start of a long-

term process. Since it was onlyacquired on 15 March 2001 ithas not been included in the con-solidated accounts for fiscal2000.

The good operating result couldnot have been achieved withoutstrict cost discipline in all units.This is to the credit of our dynamicteam. Thanks are therefore due tothe Group's employees for theirdedicated work. The new, flattermanagement structure introducedin the year under review willhelp improve the motivation ofthe workforce.

For EMS, the current year, 2001,has seen a worsening of thebusiness climate in the USA, againweaker economic growth in Asiaand a marked deterioration inconditions in the automotive andcellulose industries. Nevertheless,EMS will be able to increaseits sales and maintain its goodoperating result.

Christoph BlocherChairman of the Board

of Directors

Spotlight on share performance

Share capital on December 31

2000 1999 1998 1997 1996

Number of shares as per articles of incorporation

Bearer shares (par value CHF 50) 376 000 376 000 376 000 400 000 454 140

Registered shares (par value CHF 10) 729 300 729 300 729 300 729 300 729 300

Conditional capital – – – – –

Authorized capital – – – – –

Number of shares entitled to dividend

Bearer shares 376 000 376 000 376 000 400 000 454 140

Registered shares 729 300 729 300 729 300 729 300 729 300

Treasury shares – – – – –

Information per bearer share:Dividend proposal per share in CHF – – – 1) – 2) 150.00 3)

Equity per share entitled to dividend in CHF 2 242.05 1 764.50 1 347.30 1 680.10 1 585.35

Cash flow per share entitled to dividend in CHF 606.25 522.60 410.90 647.55 465.85

Earnings per share entitled to dividend in CHF

Weighted average of shares, undiluted* 485.39 401.50 303.09 581.00 –

Weighted average of shares, diluted* 485.39 401.50 303.09 581.00 –

Number of shares on December 31 484.30 401.50 307.74 549.75 381.85

Stock prices of bearer shares in CHF

High 7 815 8 500 9 100 7 275 5 650

Low 7 050 6 900 7 100 4 930 4 510

Market capitalization on December 31 (CHF millions) 3 914.0 3 833.1 4 253.2 3 919.3 3 000.0

Bearer shares are quoted on the Swiss Exchange (“SWX”) and are part of the Swiss Market Index (SMI).

Security number Reuters identification Investdata identificationEMS-CHEMIE 158.703 EMS CHOZ

* calculated according to IAS 33

1) Reduction of the share capital by repurchase of 24 000 bearer shares at CHF 8 400 (nominal KCHF 1200, premium KCHF 200 400)2) Reduction of the share capital by repurchase of 40 000 bearer shares at CHF 6 000 and 14 140 bearer shares at CHF 6100

(nominal KCHF 2 707, premium KCHF 323 547)3) Dividend payment (KCHF 94 108) and repurchase of 27 385 bearer shares at CHF 5 050

(nominal KCHF 1369, premium and premium for option KCHF 142 705)

3

4

Key Figures 1996–2000

Calendar years, CHF millions

2000 1999 1998 1997 1996

Net sales revenue 1 160.3 1 086.7 1 063.8 1 025.9 945.2

Change in % against previous year +6.8% +2.2% +3.7% +8.5% +2.3%

Change in local currencies +2.5% +1.1% +7.2% +2.6% +1.2%

Change with identical scope of consolidation +6.8% –0.9% +4.3% +9.9% +2.3%

of which in Switzerland 8.8% 7.0% 10.9% 10.8% 9.6%

Operating income 1 218.1 1 117.0 1 101.0 1 115.8 986.9

Change in % against previous year +9.0% +1.5% –1.3% +13.1% –0.5%

Net operating income 212.9 198.8 189.2 188.3 152.1

Change in % against previous year +7.1% +5.1% +0.5% +23.8% +10.4%

in % of net sales revenue 18.4% 18.3% 17.8% 18.4% 16.1%

Net financial income 102.2 59.2 4.6 175.0 126.1

Change in % against previous year +72.6% +1 182.0% –97.4% +38.8% +12.8%

Net income before taxes and minority interest 315.2 258.0 193.8 363.2 278.2

Change in % against previous year +22.2% +33.1% –46.7% +30.6% +11.5%

Income taxes 56.7 43.2 29.5 62.0 48.7


Net income 252.7 209.5 160.6 300.1 229.1


in % of total operating income 20.7% 18.8% 14.6% 26.9% 23.2%

Investments 98.8 100.1 102.6 70.1 71.8

in % of total cash flow 31.2% 36.7% 47.8% 19.8% 25.7%

Research and development cost

in % of net sales revenue 5.1% 5.1% 5.1% 5.1% 5.3%

Cash flow 316.4 272.7 214.4 353.5 279.5


in % of total operating income 26.0% 24.4% 19.5% 31.7% 28.3%

Depreciation of fixed assets 63.6 63.2 53.8 53.4 50.4

5

Calendar years, CHF millions

2000 1999 1998 1997 1996

Balance sheet total 2 617.5 2 163.6 1 912.5 1 593.8 1 415.7

Assets

Current assets 1 022.4 818.7 548.1 881.9 722.2

Fixed assets 1 595.1 1 344.9 1 364.4 711.9 693.6

Liabilities

Short-term liabilities 488.7 461.7 895.8 525.8 342.5

Long-term liabilities 931.3 758.6 293.7 138.8 117.9

Minority interests 27.5 22.5 19.9 12.0 4.2

Shareholders’ equity 1 170.0 920.8 703.1 917.1 951.2

Balance sheet equity ratio 44.7% 42.6% 36.8% 57.5% 67.2%

Return on equity 21.6% 22.8% 22.8% 32.7% 24.1%

Number of employees on December 31* 2 751 2 713 2 633 2 565 2 658

Fire insurance value of fixed assets 1 839.2 1 892.5 1 802.4 1 810.4 1 799.2

* Excluding apprentices (2000: 144; 1999: 140; 1998: 142; 1997: 144; 1996: 137)

6

Corporate Governance

Management Organization

Term expires

Christoph Blocher, Herrliberg, Chairman and Chief Executive Officer 2001

Albert Sommerauer, Schattdorf, Vice Chairmann 2001

Peter Matter, Sissach 2001

Ulrich Widmer, Trogen 2001

Robert Brütsch, Swiss Certified Public Accountant, ZurichPricewaterhouseCoopers AG, Zurich

Board of Directors ofEMS-CHEMIE HOLDING AG

Auditors ofEMS-CHEMIE HOLDING AG

EMS GROUP

Performance Polymers

EMS-GRIVORY Albert Reich

EMS-GRILTECH Reto Fintschin

EMS-SERVICES Ludwig Locher

EMS-TOGO Hans M. Feix

ATISHOLZ Beat Lorétan

Fine Chemicals

EMS-PRIMID René Berri

EMS-DOTTIKON Hans Rudolf Wittmer

Engineering

EMS-PATVAG Peter Hartmann

INVENTA-FISCHER Alfred Betschart

POWER STATIONS Heinz Fuhrer

EMS-REAL ESTATE Felix Weber

Financial services Joos Zulauf

Accounting/Controlling Ralph Moor

General secretariat Walter Eberle

7

Business trend

The year under review 2000 sawgrowth in both sales and earnings.After EMS had discontinued lessprofitable products in 1999 andincorporated new products intoits range, and with the 4th quarterof 1999 bringing signs of a slow-down in the US economy in par-ticular, EMS had not anticipatedsuch growth. The unexpectedimprovement in the operating re-sult is attributable first and foremostto the successful launch of newproducts – in particular GRIVORY,a high-quality alternative to expen-sive light metal, and PRIMID, anenvironment-friendly hardeningagent for powder coating –as well as to the much healthierengineering business in Asia.The financial result also improved.As a result, net profits rose20.6% to 253 million Swiss francs(210 million Swiss francs).Net sales increased by 6.8%to 1160 million Swiss francs(1 087 million Swiss francs) whileEBIT climbed 7.1% to 213 millionSwiss francs (199 million Swissfrancs).

For EMS, the main features of2001 are a deterioration inthe US economic climate, weakereconomic growth in Asia andmuch tougher conditions in theautomotive and cellulose indus-tries. Despite this situation, EMSwill be able to boost its salesand maintain its high operatingincome.

In February 2001, EMS-CHEMIEHOLDING AG successfullyconcluded a public offer for theshares of AXANTIS HOLDINGAG, Riedholz (“AXANTIS”). TheEMS Group owns 99.52% of theAXANTIS share package andconsequently in the 2001 financialyear will complete the legal inte-

gration of AXANTIS into EMSand its delisting. The manage-ment of AXANTIS was taken overwith effect from March 15, 2001.Consequently, the company isnot consolidated in the financialstatements for 2000.

Investments

In anticipation of a cooling-off inthe economy, EMS curbed itsinvestment plans. Consequently,at 99 million Swiss francs, invest-ments were below the previousyear’s high of 100 million Swissfrancs. With a cash flow of316 million Swiss francs (273 mil-lion) EMS was able to financeits investments without recourse toborrowings.

Investments by type:

Expansion of capacity 58.8%

Renewal/rationalization 16.2%

Quality-relatedand technologicalimprovements 12.2%

Environmental protection/safety 12.8%

Investments by region:

Switzerland 70.1%

USA 15.3%

Asia 8.9%

Europe 5.7%

Management structure

The last financial year was markedon the one hand by a reductionin both the average age andthe size of the Board of Directors

and on the other by a furtherleveling out of the managementstructure.The number of members of theBoard of Directors was reducedfrom five to four. Three directorsare full-time members of theBoard while one is a part-timemember. With effect from the2000 General Meeting, AlfredGilgen, Karl Imhof, Karl Janjöriand Max Kühne retired from theBoard of Directors, to be replacedby Albert Sommerauer(Vice Chairman), Peter Matterand Ulrich Widmer.

To achieve a flatter managementhierarchy, the existing EMS-CHEMIE profit center was splitinto three autonomous BusinessUnits, EMS-GRIVORY, EMS-GRILTECH and EMS-SERVICES,while the FINANCE Business Areawas split into two autonomousBusiness Units, Accounting/Controlling and Financial Services.The managers of the five newBusiness Units were recruitedfrom within the Group. The ex-ecutive bodies and the organiza-tional structure of managementare set out on page 6.

Personnel

At the end of the review period,the Business Areas forming theEMS Group employed a total of2 751 (2 713) persons and144 apprentices. Of the totalworkforce, 1 873 (1 886) wereemployed in Switzerland, 577(551) elsewhere in Europe, 125(114) in the USA and 176 (162)in the Far East. The apprenticescover 12 different vocationalfields. A total of 40 apprenticessuccessfully completed their train-ing in the year under review.

8

Research and development

Research and development expen-diture amounted to 5.1% (5.1%) ofsales in the year under review.

Breakdown of EMS Groupsales by region

Germany 25.0%

USA 11.7%

Switzerland 8.8%

France 7.3%

Great Britain 7.2%

China 5.1%

Italy 5.1%

Japan 4.1%

Spain 2.8%

Belgium 2.4%

Sweden 2.4%

Austria 1.8%

Holland 1.5%

Taiwan 1.5%

Finland 1.0%

Rest of Europe 4.4%

Other countries 7.9%

Breakdown of productionby region

Switzerland 72.4%

Germany 8.8%

USA 5.2%

Sweden 5.1%

Belgium 3.8%

Great Britain 1.4%

Taiwan 1.4%

Other countries 1.9%

Business areas:

Performance Polymers

EMS’s business area PerformancePolymers produces top-quality,custom-made polymers. In theEMS-GRIVORY Business Unit,these are the fast-growing high-performance polymers, i.e.materials which, thanks to theiroptimum price/performanceratio and economical processingproperties, replace metal in auto-motive construction and in theelectronic industry. The EMS-GRILTECH Business Unit manufac-tures technological thermoplasticadhesives and fibers for the cloth-ing industry and for technologicalapplications such as papermak-ing felt, car interiors, filters andlaminates. The EMS-TOGO Busi-ness Unit specializes in materialsused for bonding, corrosion pro-tection and sealing in the auto-motive industry and manufacturesplastisols, polyurethane adhesivesand anti-corrosion waxes. Theacquisition of AXANTIS togetherwith its principal company,ATISHOLZ, complements theEMS Group’s existing materialsoperations. Whereas EMS mate-rials are based on polyamidesand polyester, the ATISHOLZBusiness Unit will concentrate onrefined cellulose and biochemicalderivative products. The EMS-SERVICES Business Unit is oper-ated as a service provider onbehalf of the Business Unitslocated at the Domat/Ems site.

In 2000, this business area gen-erated net sales of 842.1 millionSwiss francs and an operatingresult of 130.1 million Swiss francs.

Fine Chemicals

In addition to EMS-DOTTIKON,Fine Chemicals now also com-prises the EMS-PRIMID BusinessUnit. The EMS-DOTTIKONBusiness Unit manufactures high-grade intermediates and activesubstances, primarily for thepharmaceuticals, animal healthand plant protection industries.EMS-PRIMID concentrates onadditives for surface treatmentand produces hardening agentsfor powder coating, bondingagents for the tyre industry andepoxy compounds for the manu-facture of building protectionproducts.

This business area generatednet sales of 206.7 million Swissfrancs and an operating resultof 52.3 million Swiss francs.

Engineering

The EMS-PATVAG Business Unitdevelops and manufactures high-performance electrical detonatorsand specializes in airbag squibs.INVENTA-FISCHER plans andbuilds high-quality polymer andsynthetic fiber plants basedon either its own or selected third-party processes. The POWERSTATIONS Business Unit comprisesfive power plants of PATVAGKRAFTWERKE AG, KRAFTWERKEFRISAL AG and KRAFTWERKEREICHENAU AG. The EMS-REALESTATE Business Unit managesthe company’s own property andreal estate.

This business area generated netsales of 120.1 million Swissfrancs and an operating resultof 30.6 million Swiss francs.

9

Consolidated Income Statement of the EMS Group

2000 1999Notes (CHF ’000) (CHF ’000)

Net sales revenue from goods and services 1 1 160 291 1 086 656

Inventory changes, semi-finished and finished goods 19 522 (10 222)

Capitalized costs and other operating income 2 38 297 40 613

Operating income 1 218 110 1 117 047

Material expenses 3 592 258 500 630

Personnel expenses 4 249 278 238 417

Depreciation and amortization 9, 23 63 648 63 184

Other operating expenses 5 99 983 116 037

Operating expenses 1 005 167 918 268

NET OPERATING INCOME (EBIT) 212 943 198 779

Income from equity-valuation of associated companies 3 533 4 887

Financial income 6 139 336 85 511

Financial expenses 7 40 628 31 158

NET FINANCIAL INCOME 102 241 59 240

NET INCOME BEFORE TAXES AND MINORITY INTERESTS 315 184 258 019

Income taxes 8 56 715 43 245

NET INCOME BEFORE MINORITY INTERESTS 258 469 214 774

Minority interests 5 731 5 246

NET INCOME 252 738 209 528

Earnings per bearer share entitled to dividend (CHF) 27 485.39 401.50

Earnings per registered share entitled to dividend (CHF) 27 97.08 80.30

Earnings per bearer share (fully diluted) (CHF) 27 485.39 401.50

Earnings per registered share (fully diluted) (CHF) 27 97.08 80.30

Earnings per bearer share as per 31.12. (in CHF) 27 484.30 401.50

Earnings per registered share as per 31.12. (in CHF) 27 96.86 80.30

Notes to the Consolidated Financial Statements see on pages 18–34.

10

Consolidated Balance Sheet of the EMS Group

31.12. 00 31.12. 99Notes (CHF ’000) (CHF ’000)

FIXED ASSETS 1 595 115 1 344 943

Intangible assets 9 39 726 32 581

Tangible assets 9 789 956 767 001

Financial assets

Investments in associated companies 9 48 880 39 527

Other investments 9 690 907 483 064

Long-term interest-bearing financial assets 9 25 646 22 770

CURRENT ASSETS 1 022 415 818 673

Inventories 10 248 170 242 599

Accounts receivable

Trade accounts receivable 11 215 806 230 035

Other receivables 12 102 782 47 465

Securities 13 242 481 249 017

Cash and cash equivalents 14 213 176 49 557

TOTAL ASSETS 2 617 530 2 163 616

SHAREHOLDERS’ EQUITY 1 170 040 920 831

Share capital 15 26 093 26 093

Retained earnings and reserves 891 209 685 210

Net income 252 738 209 528

MINORITY INTERESTS 16 27 527 22 536

LIABILITIES 1 419 963 1 220 249

Long-term liabilities 931 245 758 608

Bonds 17 50 000 50 000

Bank loans 18 629 628 462 184

Other long-term liabilities 19 23 528 22 875

Deferred income taxes 20 199 834 193 713

Provisions 20 28 255 29 836

Short-term liabilities 488 718 461 641

Bank loans 211 425 200 567

Trade accounts payable 113 006 81 196

Income tax liabilities 58 137 50 280

Other short-term liabilities 21 106 150 129 598

TOTAL LIABILITIES 2 617 530 2 163 616

Notes to the Consolidated Financial Statements see on pages 18–34.The consolidated financial statements were approved by the Board of Directors on March 1, 2001.

11

Consolidated Changes in Shareholders’ Equity of the EMS Group

Share Legal Free Retained Net Shareholders’(CHF ’000) capital reserves reserves earnings income equity

At 1. 1. 1999 26 093 70 000 10 000 436 408 160 597 703 098

Distribution of net income 160 597 (160 597) 0

Net income 209 528 209 528

Currency translation differences 8 205 8 205

At 31. 12. 1999 26 093 70 000 10 000 605 210 209 528 920 831

Distribution of net income 209 528 (209 528) 0

Net income 252 738 252 738

Transactions with treasury shares 100 100

Currency translation differences (3 629) (3 629)

At 31. 12. 2000 26 093 70 000 10 000 811 209 252 738 1 170 040

2000 1999

Balance sheet equity ratio 44.7% 42.6%

Legal reserves include KCHF 5 219 not being allowed to be distributed.The proposal of the Board of Directors for the profit distribution of EMS-CHEMIE HOLDING AG, whose financial year will be closed on April 30, 2001, will be communicated after said date.

For further information and data refer to page 3, “Spotlight on share performance”.

12

Consolidated Cash Flow Statement of the EMS Group

2000 1999Notes (CHF ’000) (CHF ’000)

Net income 252 738 209 528Minority interests 5 731 5 246Depreciation and amortization of intangible and tangible fixed assets 9, 23 63 648 63 184Capitalized costs 2 (14 880) (17 210)(Profit)/loss from disposal of tangible fixed assets 2, 5 4 501 3 412Increase/(decrease) of other long-term provisions 20 1 001 800Increase/(decrease) of other long-term liabilities 19 879 (5 506)(Gain)/loss from sale of group companies 2 0 (6 227)(Gain)/loss from sale of financial participations 6 (330) 0(Income)/expenses from the equity-valuation of associated companies, net after dividends (3 533) (4 887)Value adjustments financial assets/Goodwill amortization associated companies 9, 23 354 0Unrealized currency translation differences (1 992) 2 235Interests, net 6, 7 11 911 17 627Dividends from securities in current assets 6 (68 353) (14 655)Dividends from associated companies and other companies 6 (6 576) (106)Income from sale of securities 6 (49 908) (68 082)Expenses for income taxes 8 56 715 43 245

OPERATING PROFIT BEFORE CHANGES IN WORKING CAPITAL 251 906 228 604Cash flow from changes in working capital excluding cash and cash equivalents (39 106) (43 765)Taxes paid 8 (42 943) (68 878)Interests received 8 987 3 407Interests paid (29 215) (15 374)Dividends received 74 929 14 761Provisions used 20 (1 922) (1 860)

CASH FLOW FROM OPERATING ACTIVITIES A 222 636 116 895(Purchase) of intangible and tangible fixed assets 2, 9 (83 886) (82 870)Disposal of intangible and tangible fixed assets 2, 5, 9 1 849 1 739Disposal/(purchase) of financial assets 9 (210 178) (257 526)Disposal/(purchase) of marketable securities 56 305 191 835(Purchase)/sale of fully consolidated companies 24 (506) (2 991)(Purchase)/sale of associated companies 9 (5 623) 0

CASH FLOW FROM INVESTING ACTIVITIES B (242 039) (149 813)Dividends paid to minorities 16 (1 303) (663)Minority share in change of share capital 16 1 444 (2 250)(Purchase)/sale of treasury shares 100 0(Increase)/decrease of interest-bearing assets (2 859) 17 086Increase/(decrease) of interest-bearing liabilities 22 178 420 26 392

CASH FLOW FROM FINANCING ACTIVITIES C 175 802 40 565

CHANGE OF CURRENCY TRANSLATION D 4 431 (11 999)

(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C+D) 160 830 (4 352)Cash and cash equivalents at beginning of the year 49 557 53 909(Decrease)/increase of cash and cash equivalents 160 830 (4 352)Cash and cash equivalents at year-end 14 210 387 49 557Notes to the Consolidated Financial Statements see on pages 18–34.

13

Notes to the Consolidated Financial Statements of the EMS Group

Consolidated accountingprinciples

General

The consolidated financial state-ments give a true and fair view ofthe financial position, the resultsof operations and the cash flowsof the EMS Group in accordancewith the International AccountingStandards (IAS) as issued by theInternational Accounting Stand-ards Committee (IASC). They alsocomply with the law.

Scope of consolidation

The scope of consolidation in-cludes all companies in and out-side Switzerland which arecontrolled – directly or indirectly –by EMS-CHEMIE HOLDING AG,holding more than 50% of thevoting rights, or by contracts orother agreements (see list ofsubsidiaries and minority interest,pages 31 and 32). Not includedare companies with a charitablecharacter (such as housing co-operatives). Joint ventures where the partieshave joint control are included atthe equity method of accounting.This method is also applied forthe associated companies, whichare not directly or indirectly con-trolled by EMS-CHEMIE HOLD-ING AG (shareholding normallybetween 20% and 50% of votingrights). Shares in other companies(less than 20% of voting rights)are valued at purchase priceless economically required valueadjustments.

Method of consolidation

The financial statements of major-ity-owned companies are fullyconsolidated. Assets and liabili-ties, income and expenses areincorporated in full and theminority interests in shareholders’equity and net income areseparately disclosed in the con-solidated balance sheet andconsolidated income statement.Capital consolidation is effectedusing the Anglo-Saxon purchasemethod, under which all assetsand liabilities of the acquiredcompany are valued accordingto the accounting principlesof the EMS Group at the time ofacquisition. Any positive differ-ence between the resulting share-holders’ equity and the cost ofacquisition is capitalized asgoodwill and amortized over itsexpected useful life using thestraight-line method. Results foracquired companies are includedin consolidation as from the dateof acquisition. In case of disposal of companies,the deconsolidation is effectedthrough the income statement atthe date of the disposal, whereasthe companies’ results are includedin the consolidation up to this date.Intercompany transactions andrelations have been eliminated inthe course of consolidation.Unrealized profits from intragroupdeliveries are eliminated in theincome statement.

Balance sheet date

The balance sheet date isDecember 31. Subsidiaries witha different year-end closingnot exceeding three months areincluded in the consolidationbased on this closing. If the year-end differs more thanthree months, an interim closing isprepared as of December 31.

Valuation principles

Valuation principles remainedunchanged from previous year.Uniform principles of valuationhave been applied throughoutthe group. Consolidated financialstatements are prepared underthe historical cost convention.Value adjustments and provisionsare set up for all known andquantifiable decreases in valueand liabilities at the balancesheet date.

Intangible fixed assets

This item mainly consists of good-will acquired in acquisitions sinceJanuary 1, 1995. Amortizationperiods have been determinedindividually, with due regard forthe benefit. The maximum usefullife applied is 20 years. If good-will is amortized over more thanfive years, this policy is supportedby detailed business plans fromthe companies concerned. Orga-nization and foundation costs arenot capitalized. Amortization ofintangible fixed assets is calcu-lated on a straight-line method.

14

Tangible fixed assets

Tangible fixed assets are shownat purchase price or manufactur-ing cost less economicallyrequired depreciation. Assets aredepreciated using the straight-line method over their estimateduseful lives and up to the dateof transfer of ownership to theGovernment for power stationsrespectively. Useful lives areestimated in terms of the asset’sphysical life expectancy, corpo-rate policy on asset renewalsand technological and commer-cial obsolescence. The value of the capitalized fixedassets is periodically reviewedand a provision is set up for per-manent impairment, if considerednecessary.

Repairs and maintenance areexpensed as incurred. Investmentsin improvements or renewals ofassets are capitalized if theysignificantly extend service life,increase capacity or provide asubstantial improvement of thequality of production performance.

Assets held under leasing agree-ments which may be consideredas an asset purchase in economicterms (finance leases) are capital-ized as tangible fixed assets attheir estimated present value ofthe underlying lease paymentsand depreciated over their usefullives or the shorter leasing period.Leasing commitments are shownunder financial liabilities. Financ-ing costs are charged to theincome statement over the leasingperiod in such a manner that theperiodic costs are correct.

Payments on leased assets definedas “operating leases” and havinga rental character are expensedover the lease period.

Depreciation periods are asfollows:Land normally not

depreciated

Plant underconstruction normally not

depreciated

Buildings 25–50 years

Technical plantand machinery 7–25 years

Other tangiblefixed assets 5–15 years

Power stations including land areincluded in “Technical plant andmachines” and are depreciatedaccording to the operating life orup to the date of transfer of owner-ship to the Government.

Financial assets

Shares in associated companiesare included using the equitymethod. Shares in other compa-nies are included at the lower ofpurchase price or current marketvalue.

Inventories

Inventories used for productionare valued at their historical pur-chase or production cost (includ-ing attributable manufacturingoverheads) or at their realizablemarket value, whichever is lower.Inventories are valued using the“fifo” method (first-in, first-out).Long-term contract work-in-pro-gress is valued using the “per-centage-of-completion” method(PoC).

Accounts receivable and accruedincome

This item is valued at its nominalvalue less provisions for baddebts. Provisions are either basedon specifically known risks or onhistorical default rates.

Cash and cash equivalents

Liquid assets include cash onhand, bank account balancesand short or medium-termdeposits maturing within twelvemonths. Securities include market-able securities traded on stockexchanges being held with theintention of short-term disposal. Liquid assets are valued at theirnominal value, securities at thelower of cost or market value.Accrued interest on securities iscapitalized. In case of disposalof securities, the profit or loss iscalculated using the averagemethod. Cash and cash equivalents dis-closed in the cash flow statementinclude liquid assets with a matur-ity of less than three months.

Provisions

Provisions are set up for legal orother liabilities if these liabilitieswill most probably bring along acash outflow and if the amountscan be reliably estimated.

Liabilities and deferred income

This item includes short and long-term debts, valued at the amountof repayment, and deferredincome.

15

Pension funds

All subsidiaries in Switzerlanddispose of their own, legally inde-pendent pension plans, beingindependently managed. Theyare financed through contribu-tions from employers andemployees. Present and formeremployees (or their survivingdependants) will receive benefitsupon reaching the age limitand/or in the event of invalidityor death. For the purposes of theconsolidated financial statements,future pension obligations arecalculated on the basis of actuarialmethods complying with IAS. Inthe case of defined-benefit obli-gations, the present value of theprojected benefit obligation isassessed using the projected unitcredit method on the basis ofcompleted and expected yearsof service, the expected pay trendand the adjustment of pensions.Cost for this provision (“ExpenseRecognized in the Income State-ment”) are calculated annuallyand carried to income statement.In case of changes in pensionplans or corrections due to newactuarial assumptions, the changesare spread forward over theremaining service life of employ-ees. Employees of subsidiariesabroad are insured by govern-mental institutions or independentdefined-contribution pensionplans.

Derivative financial transactions

The EMS Group uses derivativefinancial instruments in the usualcourse of business to cover therisks. Different risk positions, com-posed of assets and liabilitiesand future engagements, arejudged and managed by thetreasury for the whole Group.Additionally, the liquidity requiredfor the day-to-day operationshas to be available at all times.Derivative financial instrumentsare only used with parties with ahigh credit rating. The hedging policy of the EMSGroup is written down and super-vised. The results of the hedgeprogram are continuously re-ported to management.The treasury management isauthorized to entirely or partiallyhedge exposures. The EMSGroup does hedge positions ifthe costs in relation to the risksare justified. The EMS Group mostly uses for-ward currency and option con-tracts to hedge against the riskconnected with value losses incash flow terms resulting from bal-ance sheet and income statementitems held in foreign currencies. Profits and losses arising on instru-ments regarded under IASstandards as hedges on existingassets and liabilities, on firmfuture contractual liabilities andon liabilities likely to arise frompossible future commitments, areaccrued and deferred as appro-priate and taken to income state-ment together with the transactionto which they refer. Profits andlosses on instruments which donot qualify as hedges under IASstandards are shown as otherfinancial income and expenses.

Net sales revenue

Net sales revenue includes theinvoiced amounts for suppliedgoods and services less dimin-ished proceeds and the amountof profits as defined by theprogress accomplished on long-term construction contracts. Theamount of profit is determinedon a pro rata basis of overallengineering estimates accordingto the “percentage-of-completion”method (PoC), on which the profitrealized is calculated with regardto the progress achieved. Suchcosts cover all direct and indirectcosts incurred for the projects.Only the Group’s own addedvalue is taken into account.Income is defined as being real-ized on delivery and services ren-dered respectively.

Research and development costs

With the exception of thosedevelopment projects capitalizedin accordance with IAS 9, researchand development costs arecharged to the income statementfor the year in which they originateunder the following headings:wages and salaries, material ex-penses, amortization on researchand development assets andresearch and development over-heads. Research and developmentassets being used over a longperiod of time are classified under“plant and machinery” andare amortized over the estimatedperiod of economic use.

16

Foreign currencytranslation

Financial statements in foreigncurrencies are translated intoGroup currency as follows: cur-rent assets, fixed assets andliabilities at year-end exchangerates, equity at historical ex-change rates. All items in the in-come statement and the netincome are translated using theaverage exchange rate of theyear. These exchange rate differ-ences are carried to equity with-out affecting net income (trans-lation adjustment).In case of disposal of a subsid-iary abroad, the translationdifference, accumulated duringthe period the subsidiary was aconsolidated company, is addedto profit (or loss) from sale of thiscompany. The foreign currencypositions in the financial state-ments of the consolidated com-panies are translated as follows:foreign currency transactions withthe exchange rate of the trans-action day. At year-end the bal-ances of foreign currencies aretranslated with the exchange rateprevailing at year-end. The differ-ences are recognized in the in-come statement (transaction gainsand losses).

Income taxes

Provisions for deferred incometaxes pay due regard to theimpact in income tax terms of thedifferences in the valuation ofassets and liabilities for Groupconsolidation purposes and forlocal taxation purposes. Theseprovisions are continuouslyadjusted to take account of anychanges to local fiscal law. Provi-sions for deferred taxation areset up using the comprehensiveliability method, under whichprovisions are set up for all tempo-rary differences. Tax losses car-ried forward are not deductedfrom deferred income taxesunless it can be shown with suffi-cient certainty that the futuretaxable profit is adequate to off-set such a loss.Taxes on income from foreignGroup companies which isexpected to be distributed to theparent company have been pro-vided for. Provisions have notbeen set up for non-repatriatedincome invested for an unlimitedperiod of time, or for income thatcan largely be transferred tax-freeto the parent company. Tax ex-penses include income taxes onthe profits of companies consoli-dated using the equity method.

Earnings per share

The “earnings per share” figureis based on the consolidatedannual result divided by theweighted average number ofshares.

Consistency

The principles of valuation,consolidation and classificationremained unchanged from pre-vious year.

Segment reporting

Segment reports are primarilypresented by division and secon-darily by geographical region.For the divisional assignment ofGroup companies, refer to the“List of subsidiaries and minorityholdings” on pages 31 to 32.

The most important exchange rates are:

Average exchange rates Year-end exchange rates

Unit 2000 1999 2000 1999

US dollar USD 1 1.689 1.503 1.637 1.598

Euro EUR 1 1.558 1.601 1.520 1.605

German mark DEM 100 79.66 81.87 77.72 82.06

French franc FRF 100 23.75 24.41 23.17 24.47

Pound sterling GBP 1 2.558 2.431 2.443 2.581

Japanese yen JPY 100 1.567 1.327 1.428 1.562

Swedish krona SEK 100 18.44 18.17 17.17 18.73

Taiwan dollar TWD 1 0.05391 0.04662 0.0494 0.05088

17

Breakdown by Business area

(CHF ’000)

Net sales revenue Operating profitPrimary segment Net sales with other segments Net sales from external customers Total net sales (EBIT) Segment assets1)

2000 1999 2000 1999 2000 1999 2000 1999 2000 1999

PERFORMANCE POLYMERS 0 1 299 842 093 764 518 842 093 765 817 130 104 121 408 811 252 770 961

FINE CHEMICALS 119 45 206 546 223 817 206 665 223 862 52 254 58 651 400 605 393 864

ENGINEERING 8 496 8 552 111 652 98 321 120 148 106 873 30 585 18 720 1 143 617 909 707

Subtotal segments 8 615 9 896 1 160 291 1 086 656 1 168 906 1 096 552 212 943 198 779 2 355 474 2 074 532

– Internal net sales (8 615) (9 896) (8 615) (9 896)

Total EMS Group 0 0 1 160 291 1 086 656 1 160 291 1 086 656 212 943 198 779 2 355 474 2 074 532

Share of net profit/ Book value of Investments DepreciationSegment loss on equity-valued equity-valued in intangible and tangible intangible and tangible

Primary segment liabilities 2) companies companies fixed assets fixed assets

2000 1999 2000 1999 2000 1999 2000 1999 2000 1999

PERFORMANCE POLYMERS 139 011 115 004 3 533 4 887 45 892 39 527 70 156 60 120 37 809 35 689

FINE CHEMICALS 17 350 22 925 0 0 0 0 19 362 24 221 14 786 14 573

ENGINEERING 62 795 72 865 0 0 0 0 9 248 15 739 11 053 12 922

Total EMS Group 219 156 210 794 3 533 4 887 45 892 39 527 98 766 100 080 63 648 63 184

Breakdown by geographical region

(CHF ’000)

InvestmentsTotal net sales revenue Total net sales revenue Operating profit in intangible and tangible

Secondary segment (customers) (production) (EBIT) Segment assets1) fixed assets

2000 1999 2000 1999 2000 1999 2000 1999 2000 1999

Switzerland 102 657 76 310 839 528 792 138 173 694 165 295 1 973 433 1 748 373 69 189 78 719

European Union (EU) 672 403 680 044 239 713 221 456 25 243 27 298 211 580 192 958 5 597 9 475

North America 140 112 142 612 60 874 55 204 3 019 –494 94 064 77 009 15 137 9 467

Far East 3) 171 238 140 539 20 176 17 858 10 987 6 680 76 397 56 192 8 843 2 419

Others 73 881 47 151 0 0 0 0 0 0 0 0

Total EMS Group 1 160 291 1 086 656 1 160 291 1 086 656 212 943 198 779 2 355 474 2 074 532 98 766 100 080

Invoicing and cost attribution between segments uses the same conditions as with third parties.The Business Unit EMS-PRIMID, shown last year under Performance Polymers, is stated under Fine Chemicals in the current year. Previous-year figures have been amended accordingly.

1) Without cash and cash equivalents and investments in associated companies.2) Trade accounts payable, advances from customers, liabilities to related parties and associated companies,

liabilities to social benefit institutions, other short-term liabilities, prepaid expenses and deferred income.3) Mainly China, Japan and Taiwan.

18

Consolidated Income Statement

2000 1999Notes (CHF ’000) (CHF ’000)

1 Net sales revenue from goods and services

Within plant construction, only the Group’s own added value is taken into account. Revenue and cost of sales would be higher by 25 571 63 656if the entire value of third-party purchases wereto be included.

2 Capitalized costs and other operating income

Capitalized costs 14 880 17 210Other operating income 16 723 12 580Real estate income 3 968 1 222Operating interest 1 420 1 870 Income from disposal of Group companies 0 6 227Income from disposal of fixed assets 1 306 1 504

Total capitalized costs and other operating income 38 297 40 613

3 Material expenses

Material and warehouse expenses 569 364 480 287Subcontractor salaries 9 133 8 005Energy expenses 13 761 12 338

Total material expenses 592 258 500 630

4 Personnel expenses

Wages and salaries 208 298 202 553Legal/contractual social insurance 40 980 35 864

Total personnel expenses 249 278 238 417

19

2000 1999Notes (CHF ’000) (CHF ’000)

Pensions schemes:

Some Group companies have their own personnel pension plans, which all comply with national regulations and requirements. Normally, the assets are held in independent trusts. In cases in which a Group company does not have its own personnel pension plans, long-term provisions have been set up in the consolidated balance sheet. The trusts are normally financed through contributions from employers and employees. The future obligations and the corresponding plan assets which are qualified as defined-benefit plans under IAS are periodically verified by qualified actuaries, for the last time as per January 1, 1999.The following figures give an overview over the pension plans:

1.1.2000 1. 1. 1999

Individual defined-benefit plans

a. Plans with funding surplus– Actuarial value of all benefit entitlements of

former and current employees (161 868) (147 222)– Market value of plan assets 211 295 189 009– Actuarial profits, not accounted for (30 037) (27 221)– Total surplus, included in assets 19 390 14 566

b. Plans with funding deficit– Actuarial value of all benefit entitlements of

former and current employees (311 014) (290 025)– Market value of plan assets 314 094 282 122– Actuarial profits, not accounted for (10 388) (7 503)– Total deficit, included in liabilities (7 308) (15 406)

Surplus and deficit respectively are included in long-terminterest-bearing financial assets and other long-term liabilitiesrespectively.

20

2000 1999Notes (CHF ’000) (CHF ’000)

The income statement shows the following:

Current service cost 25 656 23 846Interest cost 18 685 17 291Expected return on plan assets (29 887) (26 727)Actuarial gains/losses 0 0Employees’ contribution (6 417) (6 616)ERIS (Expense Recognized in the Income Statement) 8 037 7 794

The reconciliation to the balance sheet is as follows:

ERIS (Expense Recognized in the Income Statement) 8 037 7 794Employer’s contribution (8 040) (8 341)Surplus of effective employer’s contribution, net (3) (547)

Benefits for pension plan members coveredby defined-benefit plans are calculated using the following average actuarial assumptions:

Expected future service life of the employees 12 years 12 yearsDiscount rate 3.75% 3.75%Expected long-term return on capital 6.00% 6.00%Annual salary development 2.75% 2.75%Adaptation of pension benefits 1.50% 1.50%

5 Other operating expenses

Rents, repairs and maintenance and generaladministration costs 94 176 111 121Losses on disposal of fixed assets 5 807 4 916

Total other operating expenses 99 983 116 037

6 Financial income

Interest on interest-bearing assetsInterest from related parties and associated companies 6 265 614Other interest income 7 904 2 054

Dividends on securities in working capital 68 353 14 655Dividends on investments in associated and other companies 6 576 106Income from sale of securities 49 908 68 082Income from sale of financial participations 330 0

Total financial income 139 336 85 511

Dividends on securities in working capital have to be seen in the light of themerger between Canadian aluminium producer Alcan and algroup.They mainly consist of the special dividend received of CHF 135 per shareand the reduction in par value of CHF 90 per share.

21

2000 1999Notes (CHF ’000) (CHF ’000)

7 Financial expenses

Interest to related parties and associated companies 97 2 842Other interest 25 983 17 453Expenses out of sale/valuation of securities in working capital 134 0Foreign exchange losses, net 12 880 10 863Costs of transactions/Amortization of issue costs 1 221 0Goodwill amortization of associated companies 313 0

Total financial expenses 40 628 31 158

In 1999, “Costs of transactions/Amortization of issue costs”are stated within the interest expenses.

8 Income taxes

Current income taxes 50 234 46 242Deferred income taxes (see note 20) 6 481 (2 997)

Total income taxes 56 715 43 245

The ultimate holding company is incorporated in Switzerland. The subsidiaries operate in different countries with different tax laws and tax rates. The effective income tax expenses were different from the expected income tax expenses. The expected income tax expenses are calculated on the basis of the local profit and tax rate. This difference is as follows:

Breakdown of the income tax expenses:

Net income before income taxes 315 184 258 019Expected income tax rate 26.5% 26.5%Expected income taxes 83 524 68 375

Effect of different income tax rates (14 908) (10 486)Use of losses carried forward (583) (574)Income with special income tax rates (5 757) (1 031)Tax holidays and corrections from previous years (2 771) (8 783)Other (see below) (2 790) (4 256)

Effective income taxes 56 715 43 245Effective income tax rate 18.0% 16.8%

Deferred income taxes are calculated using the “Comprehensive LiabilityMethod”, under which provisions are set up for all temporary differences.Tax losses carried forward are only carried to accrued income if it is certainthat the future taxable profit is sufficient to offset such a loss.The expected income tax rate is 26.5%. Due to changes in the tax law ofthe Canton of Aargau to comply with the Federal Harmonization Act forDirect Cantonal and Municipal Taxes (StHG) and the switch from prior-yearto current-year-based taxation that this alignment entails, the net income of EMS-DOTTIKON AG is only taxed at one third (in position “Other”).As a result, taxes paid by the EMS Group are lower than they would be under normal circumstances.

22

Notes

9 Intangible fixed assets, tangible fixed assets, financial assets

I. Intangible fixed assetsChange in Reclassific.

At scope of cons./ and value At1. 1. 00 transl. diff. Additions Disposals adjustments 31. 12. 00

(CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000) (CHF ’000)

Goodwill Cost 36 256 (1 181) 506 (1 093) 34 488Amortization 18 092 (282) 2 298 (1 093) 19 015Book value 18 164 (899) (1 792) 0 15 473

Patents, Cost 17 106 (629) 6 938 6 984 (460) 15 971trade marks Amortization 8 474 (45) 1 353 6 981 (310) 2 491

Book value 8 632 (584) 5 585 3 (150) 13 480

Others, Cost 9 738 (331) 3 100 1 233 7 252 18 526incl. advances Amortization 3 953 (184) 2 316 1 040 2 708 7 753

Book value 5 785 (147) 784 193 4 544 10 773

Total Cost 63 100 (2 141) 10 544 8 217 5 699 68 985intangible Amortization 30 519 (511) 5 967 8 021 1 305 29 259fixed assets Book value 32 581 (1 630) 4 577 196 4 394 39 726

The change in goodwill is due to the purchase of the 30% minorities in EMS-CHEMIE (Japan). EMS Group held accordingly 100% inEMS-CHEMIE (Japan) before the merger with Showa Denko K.K. took place. Now EMS Group holds 70% in the merged company EC-SHOWADENKO K.K. Therefore, additions of intangible fixed assets – less the increase in participation – amount to KCHF 10 038.

IIa. Operating fixed assetsChange in Reclassific.



Land incl. Cost 23 291 (302) 110 783 23 882development Depreciation 1 152 (4) 43 (8) 1 183cost Book value 22 139 (298) 67 791 22 699

Buildings Cost 289 649 (1 599) 7 731 1 992 6 455 300 244Depreciation 127 954 (539) 6 801 884 1 380 134 712Book value 161 695 (1 060) 930 1 108 5 075 165 532

Technical plant, Cost 890 429 (2 647) 23 940 18 252 29 671 923 141machinery, Depreciation 434 659 (1 580) 42 668 14 606 (10 040) 451 101R&D plants Book value 455 770 (1 067) (18 728) 3 646 39 711 472 040

Furniture, Cost 92 176 (1 469) 3 950 9 674 (7 860) 77 123EDP equipment, Depreciation 60 616 (957) 7 088 8 526 (7 065) 51 156vehicles Book value 31 560 (512) (3 138) 1 148 (795) 25 967

Plant under Cost 84 432 192 52 132 (47 736) 89 020construction and Depreciation 2 897 929 (3 826) 0payments in advance Book value 81 535 192 51 203 (43 910) 89 020

Total operating Cost 1 379 977 (5 825) 87 863 29 918 (18 687) 1 413 410fixed assets Depreciation 627 278 (3 080) 57 529 24 016 (19 559) 638 152

Book value 752 699 (2 745) 30 334 5 902 872 775 258

Consolidated Balance Sheet as of December 31

23

Notes

IIb. Non-operating fixed assetsChange in Reclassific.



Land incl. Cost 9 571 (19) 836 243 14 10 159development cost Depreciation 0 0

Book value 9 571 (19) 836 243 14 10 159

Buildings Cost 6 907 (89) 29 152 6 695Depreciation 2 301 (33) 124 143 2 249Book value 4 606 (56) (95) 9 4 446

Furniture Cost 1 071 (49) 72 1 951Depreciation 946 (44) 28 72 858Book value 125 (5) (28) 0 1 93

Total Cost 17 549 (157) 865 467 15 17 805non-operating Depreciation 3 247 (77) 152 215 0 3 107fixed assets Book value 14 302 (80) 713 252 15 14 698

Total tangible Cost 1 397 526 (5 982) 88 728 30 385 (18 672) 1 431 215fixed assets Depreciation 630 525 (3 157) 57 681 24 231 (19 559) 641 259

Book value 767 001 (2 825) 31 047 6 154 887 789 956

In most Group companies, the fixed asset register was revised in 1999 in order to standardize the classification and the useful lives. For theremaining Group companies this revision has been made in the year under review, resulting in a net increase in book values of KCHF 5 281.

III. Financial assets

Associated companiesChange in Reclassific.



Participations Cost 39 527 523 5 842 45 892Depreciation 0 0Book value 39 527 523 5 842 45 892

Goodwill Cost 0 (14) 3 314 3 300Amortization 0 (1) 313 312Book value 0 (13) 3 001 2 988

Total Cost 39 527 509 9 156 0 0 49 192associated Depreciation/Amortization 0 (1) 313 0 0 312companies Book value 39 527 510 8 843 0 0 48 880

Other participations

Cost 483 064 (8) 207 964 101 25 690 944Depreciation 0 37 37Book value 483 064 (8) 207 927 101 25 690 907

24

Notes

Long-term interest-bearing financial assetsChange in Reclassific.



Cost 22 833 (146) 4 324 1 679 374 25 706Depreciation 63 (3) 4 4 60Book value 22 770 (143) 4 320 1 675 374 25 646

The change of participations in associated companies relates to the purchase of a 50% participation in the Czech D PLAST-EFTEC a.s. and the pur-chase of a 49% participation in the Indian EFTEC Shroff India Ltd. In addition, it contains the valuation of all companies valued at equity(KCHF 3 533). The change in other participations is mainly due to the acquisition of Lonza and AXANTIS shares.In the book value of other participations, the shareholding in Lonza is included with KCHF 526 785 (580 000 registered shares with an averagepurchase price of CHF 908.25) and the shareholding in AXANTIS with KCHF 163 463 (501 813 registered shares with an average purchase priceof CHF 325.75). The long-term interest-bearing financial assets contain receivables out of the application of IAS 19 (rev.) of KCHF 18 914.

2000 1999(CHF ’000) (CHF ’000)

Fire insurance value

Property, plant and equipment 1 839 224 1 892 536The insurance of fixed assets is at replacement values.

10 Inventories

Raw materials and supplies 49 662 55 955Semi-finished goods, work in progress 30 135 43 048Finished products 167 031 143 239Advance payments on goods 1 342 357

Total inventories 248 170 242 599

11 Trade accounts receivable

Accounts receivable from long-term production orders 8 620 26 720Trade accounts receivable from associated companies 1 263 0Trade accounts receivable 213 386 211 712Provision for bad debts (7 463) (8 397)

Total trade accounts receivable 215 806 230 035

12 Other receivables

Receivables from related parties 0 44Receivables from associated companies 664 310Other receivables 53 717 34 990Prepayments and accrued income 48 401 12 121

Total other receivables 102 782 47 465

Receivables from related parties bear interest at commercial rates(see notes 21, 32).

25

2000 1999Notes (CHF ’000) (CHF ’000)

13 Securities

Market value of marketable securities included in “current assets” at the end of the year amounts to 309 857 424 813

14 Cash and cash equivalents

Deposits 198 778 16 783Cash and cash equivalents 14 398 32 774

Total cash and cash equivalents 213 176 49 557

Maturity < 3 months 210 387 49 557Maturity > 3 months 2 789 0

15 Share capitalSummary Par value Number

2000

voting rightsPercentage of

capital

Registered shares CHF 10 729 300 65.98% 27.95% 7 293 7 293Bearer shares CHF 50 376 000 34.02% 72.05% 18 800 18 800

Share capital 26 093 26 093

16 Minority interests

This item reflects the minority interests in capital and profit and loss for the year respectively.Minorities own significant shares in EC-SHOWA DENKO K.K., EFTEC Europe Holding AG, KRAFTWERKE FRISAL AG and KRAFTWERKE REICHENAU AG. Minority interests in net income amount to KCHF 5 731.During the year under review, dividends of KCHF 1 303 were paid.Due to the capital increase of EC-SHOWA DENKO K.K.,the minority interests in share capital increased by KCHF 1 444.

17 Bonds

KRAFTWERKE REICHENAU AG43⁄8% debenture bond 1995–1.12.2005 50 000 50 000

Total bonds 50 000 50 000

18 Bank loans

The long-term bank loans are composed as follows:CHF: Average interest rate in 2000: 2.71% (1999: 1.79%) 520 000 400 000JPY: Average interest rate in 2000: 1.69% (1999: 1.45%) 102 602 62 184USD: Average interest rate in 2000: 7.09% (1999: –) 6 548 0SGD: Average interest rate in 2000: 4.56% (1999: –) 478 0

Total bank loans 629 628 462 184

Maturity 1–5 years 622 602 455 936Maturity > 5 years 7 026 6 248

26

2000 1999Notes (CHF ’000) (CHF ’000)

19 Other long-term liabilities

Other long-term liabilities 3 970 4 869Leasing liabilities 355 429Liabilities out of application of IAS 19 (rev.) 19 203 17 577

Total other long-term liabilities 23 528 22 875

20 Provisions

Change in Increase/scope of cons./ decrease via

At currency transl. Income Amounts At1. 1. 00 differences Statement used Reclassification 31. 12. 00


Pension liabilities 1 883 (116) 233 (45) (29) 1 926Other provisions 27 953 (565) 768 (1 877) 50 26 329

Subtotal 29 836 (681) 1 001 (1 922) 21 28 255Provisions for deferred income taxes 193 713 (360) 6 481 199 834

Total provisions 223 549 (1 041) 7 482 (1 922) 21 228 089

Warranty provisions are included within other provisions.

2000 1999Note to the provision for deferred income taxes (CHF ’000) (CHF ’000)

Calculation according to the “Comprehensive Liability Method”Total temporary differences 779 171 701 366

Provision for deferred income taxes basedon temporary differences 199 834 193 713

Losses carried forward, accepted by fiscal authorities

Total not considered losses carried forward 16 928 14 515

Not considered deferred income tax assets basedon not considered losses carried forward 6 263 5 080

Of which to be carried forward at the longest:1 year 20 02 years 138 03 years 144 64 years 0 1535 years 0 648More than 5 years 5 961 4 273

27

2000 1999Notes (CHF ’000) (CHF ’000)

21 Other short-term liabilities

Advances from customers for long-term manufacturing contracts 22 839 49 600Work in progress (long-term manufacturing contracts) (5 778) (8 682)

17 061 40 918Other advances 522 1 075Prepaid expenses and deferred income 50 727 40 510Liabilities to related parties 471 152Dividend obligations 0 328Liabilities to social security institutions 12 134 12 110Other short-term liabilities 25 235 34 505

Total other short-term liabilities 106 150 129 598

Interest on liabilities to related parties is in conformity with market conditions(see notes 12, 32).

22 Liabilities, net

43⁄8% debenture bond 1995–2005 (see note 17) 50 000 50 000Long-term bank loans (see note 18) 629 628 462 184Pension liabilities (see note 20) 1 926 1 883Long-term liabilities to retirement plans 1 999 2 147Short-term bank loans: Average interest rate 2000: 2.25% 211 425 200 567Leasing obligations (see note 19) 355 429Liabilities to related parties (see note 21) 471 152

Interest-bearing liabilities 895 804 717 362

lessReceivables from related parties (see note 12) 0 44Receivables from associated companies (see note 12) 664 310Securities (see note 13) 242 481 249 017Deposits (see note 14) 198 778 16 783

Interest-bearing liabilities, net 453 881 451 208

lessCash and cash equivalents (see note 14) 14 398 32 774

Liabilities, net 439 483 418 434

28

2000 1999Notes (CHF ’000) (CHF ’000)

23 Depreciation of intangible and tangible fixed assets and financial assets

Amortization intangible fixed assets 5 967 5 798Depreciation tangible fixed assets 57 681 57 386Subtotal amortization intangible/depreciation tangible fixed assets 63 648 63 184Value adjustment to financial assets 41 0

Total depreciation intangible and tangible fixed assets and financial assets 63 689 63 184

For the breakdown of the depreciation of tangible fixed assets refer to note 9.The goodwill amortization from associated companies of KCHF 313 isincluded within the financial expenses (see note 7).

24 Purchase/disposal of consolidated companies

Additions Disposals

Tangible fixed assets 0 33 489Long-term liabilities 0 (4 232)Goodwill paid 506 – 506 9 391Working capital, excluding cash and cash equivalents 0 2 387Subtotal 506 0 506 41 035Purchase price (paid)/received (506) (506) (2 909)Cash and cash equivalents 0 (82)

Cash flow from (purchase)/disposal of participations (506) 0 (506) (2 991)

The purchase of the 30% minorities in EMS-CHEMIE (Japan) Ltd. and thedisposal of 30% in the merged company EC-SHOWA DENKO K.K.(see also note 33 “Change in scope of consolidation”) have been shownon a net basis as a change in the minorities.Therefore, only the goodwill paid of KCHF 506 is shown in this note.

Further Details

25 Contingent liabilities

Commitments and contingent liabilities at the end of the year amount to 58 320 64 701No legal proceedings are known to be in progress within the Groupwhich could have a significant impact on the financial position of the Group.

Consolidated Cash Flow Statement

29

2000 1999Notes (CHF ’000) (CHF ’000)

26 Open derivative financial transactions

The following summary shows the most important open derivative financial transactions:

SWAPS JPY/CHF Notional amount CHF 238 090 204 246Positive replacement value CHF 15 223 9 403Negative replacement value CHF 3 199 11 335

USD/CHF Notional amount CHF 272 046 27 477Positive replacement value CHF 17 268 11Negative replacement value CHF 2 712

EUR/CHF Notional amount CHF 28 093 16 899Positive replacement value CHF 64 132Negative replacement value CHF 60 15

DEM/CHF Notional amount CHF 0 4 126Positive replacement value CHF 0 0Negative replacement value CHF 0 8

GBP/CHF Notional amount CHF 36 098 3 612Positive replacement value CHF 1 820 0Negative replacement value CHF 0 75

SEK/CHF Notional amount CHF 11 780 1 873Positive replacement value CHF 311 0Negative replacement value CHF 124 6

Interest Swaption CHF Notional amount CHF 100 000 –Positive replacement value CHF 0 –Negative replacement value CHF 1 134 –

Total Notional amount CHF 686 107 258 233Positive replacement value CHF 34 686 9 546Negative replacement value CHF 4 519 12 151

Securities in the amount of KCHF 176 713 were sold as of 2001.

Maximum risk equals the sum of the positive replacement values. This risk is considered being minimal, as the counterparties are first-rate financing institutions.

Credit risks

The short and medium-term deposits are placed with institutions having high credit standings. Trade accounts receivable are shown after deducting provisions for bad debts.

Risks of changes of interest rate

The EMS Group uses various instruments to secure financial costs and to hedge changes in interest rates. For the interest rate of bonds, short and medium-term bank liabilities refer to notes17, 18 and 22.

30

2000 1999Notes (CHF ’000) (CHF ’000)

27 Earnings per share – EPS

Earnings per share are calculated by dividing the Group’s net income (net of minority interests) by the weighted average of shares entitledto dividend (excluding treasury shares). “Fully diluted earnings per share” pays due regard to any dilution which may be caused by the exercising of warrant and conversion rights on outstanding bond issues.

Earnings per share details are as follows:

Net income 252 738 209 528Weighted average of bearer shares entitled to dividend 374 833 376 000Weighted average of registered shares entitled to dividend 729 300 729 300Weighted average of bearer shares (fully diluted) 374 833 376 000Weighted average of registered shares (fully diluted) 729 300 729 300Earnings per bearer share entitled to dividend (CHF) 485.39 401.50Earnings per registered share entitled to dividend (CHF) 97.08 80.30Earnings per bearer share (fully diluted) (CHF) 485.39 401.50Earnings per registered share (fully diluted) (CHF) 97.08 80.30Earnings per bearer share as of 31.12. (CHF) 484.30 401.50Earnings per registered share as of 31.12. (CHF) 96.86 80.30

There are no facts with a dilutive effect on earnings per sharecalculation.

28 Significant shareholders

Holders of registered shares:Emesta Holding AG, Zug/Ch. Blocher, 728 829 registered shares

Percentage of capital held (CHF 7 288 290 of CHF 26 093 000) 27.93% 27.93%Percentage of voting rights held (728 829 of 1105 300 votes) 65.94% 65.94%

Holders of bearer shares:Emesta Holding AG, Zug/Ch. Blocher, 195 080 bearer shares


A representation of other significant shareholders is not known to the Board of Directors.Emesta Holding AG is controlled by the Chairman ofEMS-CHEMIE HOLDING AG (see note 32).

29 Transactions with related parties

Transactions with related parties (see note 32)are done at arm’s length conditions.

31

Notes

30 Subsequent events

On December 6, 2000, EMS issued a public purchase offer for CHF 330 per share to the share-holders of AXANTIS with a January 31, 2001, deadline. Based on the shares having been tenderedby the close of the specified offer period, EMS therefore declared on January 31, 2001 – based onthe offer prospectus – that the public offer has been successful. EMS will hence also assume manage-ment responsibility for AXANTIS. The Board of Directors of AXANTIS has in the meantime announcedthat it will hold an extraordinary general meeting on March 15, 2001, to reappoint the Board ofDirectors.Now, the focus is on the legal integration of AXANTIS by EMS and on its delisting.

31 List of subsidiaries and minority holdings (at 31.12.00)

Name Domicile Holding Category Consoli-Group direct dation

EMS-CHEMIE HOLDING AG Domat/Ems D K

BUSINESS AREA PERFORMANCE POLYMERS

Business Units EMS-GRIVORY/ EMS-GRILTECH/EMS-SERVICES

EMS-CHEMIE AG * Domat/Ems 100.00% 100.00% P,V KEMS-CHEMIE (France) S.A. Boulogne 100.00% 100.00% V KEMS-CHEMIE (UK) Ltd. Stafford 100.00% 100.00% V KEC-SHOWA DENKO K.K. Tokyo 70.00% 70.00% V KEMS-UBE Ltd. ** Ube 49.00% 49.00% P E

EMS-CHEMIE (Asia) Ltd. Taipei 100.00% 100.00% P,V KEMS-CHEMIE (Deutschland) GmbH Gross-Umstadt 100.00% 100.00% P,V KEMS-GRILON HOLDING INC. Wilmington 100.00% 95.87% D K

EMS-CHEMIE (North America) Inc. Sumter 100.00% 100.00% P,V K

Business Unit EMS-TOGO

EFTEC Europe Holding AG Zug 70.00% 70.00% D KEFTEC AG Romanshorn 70.00% 100.00% P,V K

EFTEC Sàrl Le Vésinet 70.00% 100.00% V KEFTEC AB Hässleholm 70.00% 100.00% P,V KEFTEC Ltd. Rhigos 70.00% 100.00% P,V KEFTEC NV Genk 70.00% 100.00% P,V KEFTEC S. A. Zaragoza 70.00% 100.00% P,V KEFTEC Asia Pte. Ltd. Singapore 42.00% 60.00% D,V K

EFTEC (Thailand) Co. Ltd. Rayoung 42.00% 100.00% P,V KShanghai EFTEC Chemical Products Ltd. Shanghai 25.20% 60.00% P,V KEFTEC Shroff India Ltd. Mumbai 20.58% 49.00% P,V E

EFTEC GmbH Lügde 70.00% 100.00% P,V KD PLAST-EFTEC a.s. Zlín 35.00% 50.00% P,V E

EMS-TOGO Corp. Taylor 100.00% 100.00% D KEFTEC North America, L.L.C. Madison Heights 30.00% 30.00% P,V E

DINOL Holding AB Hässleholm 100.00% 100.00% D KDINOL AB Hässleholm 100.00% 100.00% P,V KDINOL (U.S.) Inc. Redmond 100.00% 100.00% V KDINOL Pyrmo GmbH Lügde 100.00% 100.00% P,V KSEGURO Corp. Detroit 100.00% 100.00% D K

32

Notes

Name Domicile Holding Category Consoli-Group direct dation

BUSINESS AREA FINE CHEMICALS

Business Units EMS-DOTTIKON/EMS-PRIMID *

EMS-DOTTIKON AG Dottikon 100.00% 100.00% P,V K

BUSINESS AREA ENGINEERING

Business Unit INVENTA-FISCHER

INVENTA-FISCHER AG Zurich 100.00% 100.00% P,V KGRIVELA AG Zurich 100.00% 100.00% D K

EMS-INVENTA ANLAGENBAU (Holding) GmbH Berlin 100.00% 79.77% D KEMS-INVENTA ANLAGENBAU (Berlin) GmbH Berlin 100.00% 100.00% D KINVENTA-FISCHER GmbH & Co. KG Berlin 100.00% 100.00% P,V K

Business Unit EMS-PATVAG

EMS-PATVAG AG Domat/Ems 100.00% 100.00% P,V K

Business Unit POWER STATIONS

KRAFTWERKE FRISAL AG Breil/Brigels 80.60% 80.60% P,V KKRAFTWERKE REICHENAU AG Tamins 75.00% 75.00% P,V KPATVAG KRAFTWERKE AG Domat/Ems 100.00% 100.00% P,V K

OTHERS

AXANTIS HOLDING AG Riedholz 29.04% 29.04% D BLonza Group AG Zurich 9.01% 9.01% D BEMS-SYNTECH GmbH Grenzach 20.00% 20.00% P,V B

Category: Consolidation:P = Production K = Fully consolidated * EMS-PRIMID is a reporting unitV = Trade, sale E = Equity valuation within EMS-CHEMIE AGD = Financing, various B = Book value ** Joint venture with joint control

32 Related parties

Name Domicile Country

Emesta Holding AG Zug Switzerland

33

Notes

33 Change in scope of consolidation

Fully consolidated:Additions:

EC-SHOWA DENKO K.K.On March 16, 2000, EMS-CHEMIE AG purchased the 30% minorities in EMS-CHEMIE (Japan) Ltd.After that, EMS-CHEMIE (Japan) Ltd. merged with SHOWA DENKO K.K. into EC-SHOWADENKO K.K. EMS-CHEMIE AG also holds 70% in the merged company.This transaction did not have an impact on the scope of consolidation; minority interests how-ever changed.

EMS-TOGO CORP./DINOL Int. Inc. USAPer December 31, 2000, these two companies merged under the name of EMS-TOGO CORP.

Disposals:Pyrmofix Verwaltungsgesellschaft mbH/Pyrmo Chemie Verwaltungsgesellschaft mbH

These two companies were liquidated per September 30, 2000.Due to their inactivity, no impact on the scope of consolidation occurred.

Valuation at equity:Additions:

D PLAST-EFTEC a.s.On April 17, 2000, 50% in the Czech company D PLAST a.s. were acquired retroactively perJanuary 1, 2000, and the company renamed into D PLAST-EFTEC a.s.

EFTEC Shroff India Ltd.On September 29, 2000, 49% in the Indian company Dinitrol Shroff were acquired and thecompany renamed into EFTEC Shroff India Ltd.

Valuation at book value:Additions:

AXANTIS HOLDING AGEnd of November/beginning of December 2000, 501 813 registered shares ofAXANTIS HOLDING AG were acquired.

34

Notes

34 Significant associated companies

EMS-UBE Ltd.Domicile Ube, JapanPercentage of holding 49.00%Financial year April 1, 1999–March 31, 2000Category ProductionCurrency JPYRevenue p.a. KCHF 158 095Fixed assets KCHF 18 468Current assets KCHF 28 691Shareholders’ equity KCHF 24 591Liabilities KCHF 22 568Net income KCHF 2 789

Between April 1, 2000 and December 31, 2000, no events occurred that materially influenced shareholders’ equity.

EFTEC North America, L.L.C.Domicile Madison Heights, USAPercentage of holding 30.00%Financial year December 1, 1999–November 30, 2000Category Production, SaleCurrency USDRevenue KCHF 169 689Fixed assets KCHF 63 199Current assets KCHF 55 341Shareholders’ equity KCHF 102 015Minority interests KCHF (4)Liabilities KCHF 16 529Net income KCHF 10 473

Between December 1, 2000 and December 31, 2000, no events occurred that materially influenced shareholders’ equity.

D PLAST-EFTEC a.s.Domicile Zlín, Czech RepublicPercentage of holding 50.00%Financial year January 1, 2000–December 31, 2000Category Production, SaleCurrency CZKRevenue KCHF 14 342Fixed assets KCHF 3 800Current assets KCHF 3 964Shareholders’ equity KCHF 3 963Liabilities KCHF 3 801Net income KCHF 1 047

35

Report of the Group Auditorsto the General Meeting ofEMS-CHEMIE HOLDING AGDomat/Ems

As auditors of the Group, wehave audited the consolidatedfinancial statements (balancesheet, income statement, changesin consolidated shareholders’equity, cash flow statement andnotes/pages 9 to 34) of EMS-CHEMIE HOLDING AG for theyear ended December 31, 2000.

These consolidated financialstatements are the responsibilityof the Board of Directors. Ourresponsibility is to express anopinion on these consolidatedfinancial statements based on ouraudit. We confirm that we meetthe legal requirements concern-ing professional qualification andindependence.

Our audit was conducted in accordance with auditingstandards promulgated by theSwiss profession and with theInternational Standards on Audit-ing issued by the InternationalFederation of Accountants (IFAC),which require that an audit beplanned and performed toobtain reasonable assuranceabout whether the consolidatedfinancial statements are free from material misstatement. Wehave examined on a test basisevidence supporting the amountsand disclosures in the consoli-dated financial statements. Wehave also assessed the account-ing principles used, significantestimates made and the overallconsolidated financial statementpresentation. We believe that ouraudit provides a reasonablebasis for our opinion.

In our opinion, the consoli-dated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance withthe International AccountingStandards (IAS) and comply with Swiss law.

We recommend that the consolidated financial statementssubmitted to you be approved.

Zurich, March 1, 2001

PricewaterhouseCoopers AG

Willi Grau Matthias von Moos

Report of the Group Auditors

EMS-CHEMIE HOLDING AGDomat/Ems Switzerland

Annual Accounts

EMS-CHEMIE HOLDING AG

(for Fiscal Year May 1, 2000–April 30, 2001)

38

Income Statement May 1, 2000, to April 30, 2001der EMS-CHEMIE HOLDING AG

2000/2001 1999/2000Notes (CHF ’000) (CHF ’000)

INCOME

Financial income

Interest income from third parties 8 593 2 836

Interest income from group companies and related parties 1 24 077 13 045

Foreign exchange differences, net 3 16 438 0

Income from securities 118 656 124 190

Income from participations 115 337 122 534

Other operating income 119 119

Extraordinary income 1 100

Total income 283 221 262 824

EXPENSES

Financial expenses

Interest expenses to third parties 28 432 14 328

Interest expenses to group companies and related parties 2 5 511 5 513

Foreign exchange differences, net 3 0 10 676

Bank charges, duties, fees 2 847 566

Office and administration expenses

Consultancy fees and professional fees 1 156 409

Office and administration expenses 1 1

Extraordinary expenses 47 176

Total expenses 37 994 31 669

Net income before taxes 245 227 231 155

Taxes 7 328 6 548

Net income 237 899 224 607

39

Balance Sheet as of April 30, 2001

30.4.01 30.4.00Notes (CHF ’000) (CHF ’000)

Fixed assets 1 592 485 817 077

Investments 4 1 245 002 603 587

Loans to group companies 347 483 213 490

Current assets 378 176 301 854

Prepayments and accrued income 4 269 44 026

Securities 5 207 044 212 053

Accounts receivable

from third parties 20 281 42 838

from group companies 2 160 2 718

Cash and cash equivalents 6 144 422 219

TOTAL ASSETS 1 970 661 1118 931

Shareholders’ equity 7 680 091 442 190

Share capital 8–10 26 093 26 093

Legal reserves 70 000 70 000

Other reserves 10 000 10 000

Retained earnings 11

Balance brought forward 336 099 111 490

Net income 237 899 224 607

Liabilities 1 290 570 676 741

Long-term liabilities 672 106 528 441

Loans from group companies 49 802 56 922

Bank loans 608 569 457 784

Provisions 12 13 735 13 735

Short-term liabilities 618 464 148 300

Accruals and deferred income 4 177 2 023

Accounts payable to third parties 13 122 389 144 842

Accounts payable to group companies and related parties 14 491 898 1 435

TOTAL LIABILITIES 1 970 661 1 118 931

Balance sheet equity ratio 34.5% 39.5%

40

Notes to the Financial Statements 2000/2001

Accounting principles

1. General

The financial statements ofEMS-CHEMIE HOLDING AGhave been prepared under thehistorical cost convention, and arein accordance with the provisionsof Swiss law. Assets, liabilitiesand shareholders‘ equity continueto be valued using conservativeaccounting principles.The financial year differs fromthe calendar year (closing perApril 30, 2001). Companies in whichEMS-CHEMIE HOLDING AG’sshareholding is in excess of50% (voting rights) are designat-ed as group companies.

2. Foreign currency translation

Revenue and expenditure in for-eign currencies are translated intoSwiss francs for the profit andloss account at the average rates

for the month in which they arose.Financial assets and currentassets are translated at the year-end rate, as are current liabilities.

3. Current assets

Appropriate value adjustmentshave been effected for balancessubject to risk.Securities are shown at the lowerof cost or market value.

4. Fixed assets

Investments in group companiesand other companies are shownat purchase value less any valueadjustments required.

5. Liabilities

Non-current liabilities are shownat their redemption value. All out-standing expenditure items overCHF 5 000 in the current year areincluded in the profit and lossaccount and appear on thebalance sheet as accruals anddeferred income.

41

1 Interest income from group companies and related partiesInterest income from group companies 17 000 11 672 Interest income from related parties 7 077 1373

Interest income from group companies and related parties 24 077 13045

2 Interest expenses to group companies and related partiesInterest expenses to group companies 5 430 2 844 Interest expenses to related parties 81 2 669

Interest expenses to group companies and related parties 5 511 5513

3 Foreign exchange differences, netForeign exchange gains 24 168 175 Foreign exchange losses 7 730 10 851

Foreign exchange differences, net 16 438 (10 676)

Balance Sheet as of April 30, 2001

4 InvestmentsOn April 30, 2001, the direct participations of EMS-CHEMIE HOLDING AG were as follows:

Companies Share Interestcapital in capital

in thousands held Purpose

EMS-CHEMIE AG, Domat/Ems CHF 4000 100.00 ProductionEMS-CHEMIE (Asia) Ltd., Taipei TWD 280000 100.00 ProductionEMS-CHEMIE (Deutschland) GmbH, Gross-Umstadt DEM 5 000 100.00 Production

EMS-GRILON HOLDING INC., Wilmington USD 2420 95.87 FinancingEFTEC Europe Holding AG, Zug CHF 8000 70.00 FinancingEMS-TOGO Corp., Taylor USD 7287 100.00 FinancingDINOL Holding AB, Hässleholm SEK 100 100.00 FinancingEMS-DOTTIKON AG, Dottikon CHF 600 100.00 ProductionINVENTA-FISCHER AG, Zurich CHF 500 100.00 ProductionEMS-INVENTA ANLAGENBAU (Holding) GmbH,Berlin DEM 6 268 79.77 Financing

EMS-PATVAG AG, Domat/Ems CHF 200 100.00 ProductionKRAFTWERKE FRISAL AG, Breil/Brigels CHF 2 000 80.60 ProductionKRAFTWERKE REICHENAU AG, Tamins CHF 1000 75.00 ProductionPATVAG KRAFTWERKE AG, Domat/Ems CHF 2200 100.00 ProductionLonza Group AG, Zurich CHF 64340 10.10 FinancingAXANTIS HOLDING AG, Riedholz CHF 34 560 99.52 FinancingEMS-SYNTECH GmbH, Grenzach DEM 600 20.00 Production

Book value 1 245 002 603587 The voting rights held correspond to the interest in capital held.

2000/2001 1999/2000Notes (CHF ’000) (CHF ’000)

Income Statement 2000/2001

42

5 Securities Book value 207 044 212053 Market value per April 30 214 434 323735

6 Cash and cash equivalentsInterest-bearing deposits placed with banks 144 422 219

7 Shareholders’ equityBalance per May1 442 190 217583 Miscellaneous 2 0Net income (see note11) 237 899 224607

Balance per April 30 680 091 442190

8 Share capitalComposition 2000/2001

Percentage ofPar value Number voting rights capital

Registered shares CHF 10 729300 65.98% 27.95% 7293 7293 Bearer shares CHF 50 376 000 34.02% 72.05% 18 800 18800

Share capital 26093 26093

Registered shares are not traded on the stock exchange.

9 Treasury sharesBearer shares Number

2000/2001 1999/2000

Balance per May1 0 0Purchase at CHF 7400 2 000 0 Sale at CHF 7450 (2 000) 0

Balance per April 30 0 0 0 0

2000/2001 1999/2000Notes (CHF ’000) (CHF ’000)

43

2000/2001 1999/2000Notes (CHF ’000) (CHF ’000)

10 Significant shareholdersHolders of registered shares:Emesta Holding AG, Zug/Ch. Blocher, 728 979 registered shares

Percentage of capital held (CHF 7 289 790 of CHF 26 093 000) 27.94% 27.93%Percentage of voting rights held (728 979 of1105 300 votes) 65.95% 65.94%

Holders of bearer shares:Emesta Holding AG, Zug/Ch. Blocher, 206 698 bearer shares


A representation of other significant shareholders is not knownto the Board of Directors.Emesta Holding AG is controlled by the Chairmanof EMS-CHEMIE HOLDING AG, Ch. Blocher.Transactions between EMS-CHEMIE HOLDING AGand Emesta Holding AG are shown as transactions with related parties and are carried out at arm’s length.

11 Retained earningsBalance brought forward 336 097 111 490 Miscellaneous 2 0Net income 237 899 224 607

Retained earnings 573 998 336 097

12 Provisions Provisions for general risks 13 735 13 735

13 Accounts payable to third partiesAccounts payable to third parties 6 710 14 Income tax liabilities 4 692 4 369 Fixed advances from banks 110 987 140 459

Accounts payable to third parties 122 389 144 842

14 Accounts payable to group companies and related partiesAccounts payable to group companies 491 658 1 435 Accounts payable to related parties 240 0

Accounts payable to group companies and related parties 491 898 1 435

15 Contingent liabilitiesGuarantees (maximum liability) 14 633 15 547

44

The Board of Directors will present to the Ordinary Shareholders’ Meeting of August 18, 2001, the followingproposals regarding the 2000/2001 financial year:

1. approval of the Annual Report and the consolidated financial statements per December 31, 2000, andthe financial statements for the year ended April 30, 2001;

2. discharge of the Board of Directors from its responsibilities for the conduct of the business;

3. distribution of available retained earnings consisting of:

2000/2001 1999/2000

Net income 237 899 232.28 224 607 441.04Miscellaneous 1 365.00 178.75Balance brought forward 336 097 882.80 111 490 263.01

Retained earnings 573 998 480.08 336097882.80

to be appropriated as follows:

Balance to be carried forward 573 998 480.08 336 097 882.80

Retained earnings 573 998 480.08 336097882.80

Domat/Ems, May 25, 2001

EMS-CHEMIE HOLDING AGThe Chairman of the Board of DirectorsChristoph Blocher

Proposals of the Board of Directors

Report of the Auditors

Report of the Statutory auditorsto the General Meeting ofEMS-CHEMIE HOLDING AG7013 Domat/Ems

As statutory auditors, we haveaudited the accounting recordsand the financial statements(income statement, balance sheetand notes/pages 38 to 44) ofEMS-CHEMIE HOLDING AG forthe year ended April 30, 2001.

These financial statements are theresponsibility of the Board ofDirectors. Our responsibility is toexpress an opinion on thesefinancial statements based on ouraudit. We confirm that we meetthe legal requirements concern-

ing professional qualification andindependence.

Our audit was conducted inaccordance with auditing stan-dards promulgated by the Swissprofession, which require that anaudit be planned and performedto obtain reasonable assuranceabout whether the financial state-ments are free from materialmisstatement. We have examinedon a test basis evidence support-ing the amounts and disclosuresin the financial statements. Wehave also assessed the account-ing principles used, significantestimates made and the overallfinancial statement presentation.We believe that our audit pro-vides a reasonable basis for ouropinion.

In our opinion, the accountingrecords and financial statementsand the proposed appropriationof available earnings complywith Swiss law and the compa-ny’s articles of incorporation.

We recommend that the financialstatements submitted to you beapproved.

Zurich, May 25, 2001

R. BRÜTSCH Swiss Certified AccountantR. Brütsch

PricewaterhouseCoopers AGWilli Grau Matthias von Moos

45

Addresses of EMS Companies, Switzerland

EMS-CHEMIE HOLDING AGKugelgasse 22PostfachCH-8708 MännedorfTel. +41 1 921 00 00Fax +41 1 921 00 01http://www.ems-group.comE-Mail: [email protected]

EMS-CHEMIE AGReichenauerstrasseCH-7013 Domat/EmsTel. +41 81 632 61 11Fax +41 81 632 74 01http://www.emschem.comE-Mail: [email protected]

EMS-CHEMIE AGKugelgasse 22PostfachCH-8708 MännedorfTel. +41 1 921 00 00Fax +41 1 921 00 01http://www.emschem.comE-Mail: [email protected]

EMS-GRIVORYReichenauerstrasseCH-7013 Domat/EmsTel. +41 81 632 78 88Fax +41 81 632 74 01http://www.emsgrivory.comE-Mail: [email protected]

EMS-GRILTECHReichenauerstrasseCH-7013 Domat/EmsTel. +41 81 632 72 02Fax +41 81 632 74 02http://www.emsgriltech.comE-Mail: [email protected]

EMS-SERVICESReichenauerstrasseCH-7013 Domat/EmsTel. +41 81 632 77 66Fax +41 81 632 76 76E-Mail: [email protected]

AXANTIS HOLDING AGCH-4533 RiedholzTel. +41 32 626 89 00Fax +41 32 626 89 09http://www.axantis.comE-Mail: [email protected]

ATISHOLZ AGCH-4542 LuterbachTel. +41 32 626 81 11Fax +41 32 626 81 99http://www.atisholz.comE-Mail: [email protected]

KRAFTWERKE FRISAL AGPostfachCH-7130 IlanzTel. +41 81 920 05 50Fax +41 81 920 05 60

KRAFTWERKE REICHENAU AGPostfachCH-7130 IlanzTel. +41 81 920 05 50Fax +41 81 920 05 60

PATVAG KRAFTWERKE AGPostfachCH-7130 IlanzTel. +41 81 920 05 50Fax +41 81 920 05 60

EMS-PRIMIDReichenauerstrasseCH-7013 Domat/EmsTel. +41 81 632 70 11Fax +41 81 632 74 64E-Mail: [email protected]

EMS-DOTTIKON AGCH-5605 DottikonTel. +41 56 616 81 11Fax +41 56 616 81 20http://www.ems-dottikon.chE-Mail: [email protected]

INVENTA-FISCHER AGReichenauerstrasseCH-7013 Domat/EmsTel. +41 81 632 63 11Fax +41 81 632 74 03http://www.inventa-fischer.comE-Mail: [email protected]

INVENTA-FISCHER AGKugelgasse 22PostfachCH-8708 MännedorfTel. +41 1 921 01 40Fax +41 1 921 01 49http://www.inventa-fischer.comE-Mail: [email protected]

EMS-PATVAG AGReichenauerstrasseCH-7013 Domat/EmsTel. +41 81 632 75 45Fax +41 81 632 74 36E-Mail: [email protected]

EFTEC AGHofstrasse 31CH-8590 RomanshornTel. +41 71 466 43 00Fax +41 71 466 43 01http://www.eftec.ch

46

Addresses of EMS Companies, Worldwide

Belgium

EFTEC NVHenry Fordlaan 1B-3600 GenkTel. +32 89 61 27 86Fax +32 89 61 27 93

China

Shanghai EFTECChemical Products Ltd.521 Guang Hua RoadHu Min RoadShanghai 201108P. R. ChinaTel. +86 21 6489 1122/66Fax +86 21 6489 1199

Changchun EFTECChemical Products Ltd.No. 2–1 Hua Xiang RoadLuyuan DistrictChangchun, Postal Code 130111P. R. ChinaTel. +86 431 789 7880Fax +86 431 789 7881

Czech Republic

D PLAST-EFTEC a.s.Luzkovice 206CZ-763 11 ZlínCzech RepublicTel. +420 67 700 44 11Fax +420 67 700 44 44

France

EMS-CHEMIE (France) S.A.73–77, rue de SèvresBoîte postale 52F-92105 Boulogne-Billancourt CedexTel. +33 1 41 10 06 10Fax +33 1 48 25 56 07E-Mail: [email protected]

EFTEC Sàrl131, boulevard CarnotF-78110 Le VésinetTel. +33 134 80 06 67Fax +33 139 76 48 26

Germany

EMS-CHEMIE(Deutschland) GmbHWarthweg 14D-64823 Gross-UmstadtTel. +49 6078 783 0Fax +49 6078 783 416E-Mail: [email protected]

EFTEC GmbHPyrmonter Strasse 76D-32676 LügdeTel. +49 5281 98 2980Fax +49 5281 98 29860

EFTEC Engineering GmbHOtto-Lilienthal-Strasse 18D-88677 MarkdorfTel. +49 7544 920-0Fax +49 7544 920-200

INVENTA-FISCHER GmbH+ Co. KGHolzhauser Strasse 157–159D-13509 BerlinTel. +49 30 43 567 5Fax +49 30 43 567 699http://www.inventa-fischer.deE-Mail: [email protected]

DINOL PYRMO GmbHPyrmonter Strasse 76D-32676 LügdeTel. +49 5281 97 400Fax +49 5281 97 4050

Great Britain

EMS-CHEMIE (UK) Ltd.Drummond RoadAstonfields Industrial EstateGB-Stafford ST16 3HJTel. +44 1785 607 580Fax +44 1785 607 570E-Mail: [email protected]

EFTEC Ltd.Rhigos/AberdareGB-Mid Glamorgan CF44 9UETel. +44 1685 81 54 00Fax +44 1685 81 39 97

India

EFTEC Shroff India LimitedExcel EstateS.V. Road, Goregaon (West)Mumbai 400 062IndiaTel. +91 22 872 3865Fax +91 22 872 5119

Japan

EC-SHOWA DENKO K.K.Yutaka Bldg.4-9-3, TaitoTaito-ku110-0016, TokyoTel. +81 3 3832 1501Fax +81 3 3832 1503E-Mail: [email protected]

EMS-UBE Ltd.Kemikaru Seisan Tokatsu-buUbe-kousan1978-10, Kogushi, Ube-shiYamaguchi-kenTel. +81 8 3631 0213Fax +81 8 3631 0214http://www.ube.co.jp

EMS-DOTTIKON AGAsia-Pacific Office9th Fl. Yutaka Bldg.4-9-3 TaitoTaito-ku110-0016, TokyoTel. +81 3 3832 1517Fax +81 3 3832 1503E-Mail: [email protected]

47

Russia

E PLAST-EFTEC RTTanayevskoye shosse 2423 630 ElabugaRepublic Tatarstan – RussiaTel. +7 85 557 519 40Fax +7 85 557 519 41

Singapore

EFTEC Asia Pte. Ltd.No. 4, Changi South Lane,# 06-01 Nan Wah Bldg.Singapore 486127Tel. +65 545 82 01Fax +65 545 92 06

Spain

EFTEC S. A.Carretera Logroño km 29,2E-50639 Figueruelas (Zaragoza)Tel. +34 976 65 62 69Fax +34 976 65 62 70

Sweden

EFTEC ABSpångatan 3S-28122 HässleholmTel. +46 451 880 00Fax +46 451 880 44

EFTEC Engineering AGGarnisonvägen 40, P.O. Box 62S-281 35 HässleholmTel. +46 451 88100Fax +46 451 88122

DINOL ABSpångatan 3S-28122 HässleholmTel. +46 451 880 00Fax +46 451 880 88

Taiwan

EMS-CHEMIE (Asia) Ltd.36, Kwang Fu South RoadHsin Chu Industrial ParkFu Kou Hsiang, Hsin Chu HsienTaiwan, R.O.C.Tel. +886 35 985 335Fax +886 35 985 345E-Mail: [email protected]

Thailand

EFTEC (Thailand) Co. Ltd.Eastern Seaboard Industrial Estate(Rayong)109/10 Moo 4, PluakdaengRayong 21140/ThailandTel. +66 38 954271-4Fax +66 38 954270

Ukraine

ZAO PlastolUl. Chubanova 5330 118 ZaporozhyeUkraineTel. +380 612 138 568Fax +380 612 138 568E-Mail: [email protected]

United States

EMS-CHEMIE(North America) Inc.2060 Corporate WayP.O. Box 1717Sumter, SC 29151, USATel. +1 803 481 91 73Fax +1 803 481 38 20E-Mail: [email protected]

EMS-DOTTIKON AGUS OfficeOne Paragon Drive, Suite 210Montvale, NJ 07645USATel. +1 201 476 92 29Fax +1 201 476 93 13http://www.ems-dottikon.chE-Mail: [email protected]

DINOL (US) Inc.14826 N E 95th StreetRedmond, WA 98052USATel. +1 425 556 51 14Fax +1 425 556 01 96

ems-chemie holding agnical fibers and adhesives – was split into three autonomous business units,...

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