Annual Report • Mar 18, 2016
Annual Report
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www.melexis.com
| 1. | Letter to the shareholders | 4 | ||
|---|---|---|---|---|
| 2. | Key | figures | 6 | |
| 3. | 3.1 3.2 3.3 |
remain green | Corporate responsibility At Melexis, we engineer the sustainable future, helping cars go green At Melexis, we engineer the sustainable future, helping our planet 'The Melexis Way' |
8 8 8 11 |
| 4. | 4.1 4.2 4.3 4.4 4.5 4.6 |
Reflection | on our strategy Simply the Best Innovation Made Safe at Launch A world of growth opportunities Spotlight on ASSPs and ASICs Partners of choice Leadership in semiconductor and sensor solutions At the front of the pack regarding quality and environmental awareness 13 |
12 12 12 13 13 13 |
| 5. | 5.1 5.2 5.3 5.4 5.5 |
Product Introduction Sense Drive Conclusion |
portfolio Communicate |
14 14 15 18 20 21 |
| 6. | International locations | 22 | ||
| 7. | 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7,8 7.9 |
Annual 7.9.1 7.9.2 7.9.3 7.9.4 |
report – financial report Consolidated statement of financial position Consolidated income statement Consolidated statement of comprehensive income Consolidated statement of changes in equity Consolidated statement of cash flows Result of operations Liquidity, working capital and capital resources Statement of the Board of Directors Notes to the consolidated financial statements General Statement of compliance Summary of significant accounting policies Overview of Group structure |
24 24 26 27 28 31 33 33 34 34 34 34 34 43 |
| A. | Cash and cash equivalents | 44 | U. | General and administrative expenses | 54 |
|---|---|---|---|---|---|
| B. | Current investments | 44 | V. | Selling expenses | 55 |
| C. | Derivatives | 44 | W. | Personnel expenses and average number | |
| D. | Trade receivables | 46 | of employees | 55 | |
| E. | Assets held for sale | 47 | X. | Depreciation and amortization expenses | 55 |
| F. | Inventories | 47 | Y. | Other operating expenses (net) | 55 |
| G. | Other Current Assets | 47 | Z. | Net Financial Result | 57 |
| H. | Intangible Assets | 48 | AA. Income taxes | 58 | |
| I. | Property, plant and equipment | 49 | AB. Operating segments | 60 | |
| J. | Non Current Financial Assets | 49 | AC. Related parties | 63 | |
| K. | Accrued expenses, accrued charges, payroll | AD. Remuneration of Board of Directors | 66 | ||
| and related taxes | 50 | AE. Earnings per share | 66 | ||
| L. | Deferred Income | 50 | AF. Commitments & estimated liabilities | 66 | |
| M. | Other current liabilities | 50 | AG. Operating lease arrangements | 66 | |
| N. | Long and short term debts | 51 | AH. Business Combinations | 66 | |
| O. | Other non current liabilities | 52 | AI. | Litigation | 66 |
| P. | Shareholders' equity and rights attached | AJ. | Auditor's Services | 67 | |
| to the shares | 52 | AK. Reserves Post-retirement Benefits | 67 | ||
| Q. | Product sales and research and development | AL. Subsequent events | 67 | ||
| revenues | 53 | AM. List of subsidiaries consolidated | 67 | ||
| R. | Government grants | 53 | AN. Risk factors | 68 | |
| S. | Cost of sales | 54 | AO. Sensitivity analysis on financial risk | 73 | |
| T. | Research and development expenses | 54 | AP. Financial instruments | 75 |
| 8.1 | Shareholders | 76 | |
|---|---|---|---|
| 8.2 | Management structure | 77 | |
| 8.3 | Board of Directors | 77 | |
| 8.4 | Committees | 79 | |
| 8.5 | Executive Management | 80 | |
| 8.6 | Remuneration report | 81 | |
| 8.7 | Policy on certain transactions | 83 | |
| 8.8 | Internal control and risk assessment procedures in relation to financial | ||
| reporting | 84 | ||
| 8.9 | Elements pertinent to a take-over bid | 85 | |
| 8.10 Auditor | 86 | ||
| 8.11 Compliance with the 2009 Belgian Code on Corporate Governance | 87 | ||
| 9. | Shareholder information |
88 | |
| 9.1 | Shareholder structure | 88 | |
| 9.2 | Share information | 88 | |
| 9.3 | Shareholder contact info | 89 | |
| 9.4 | Financial calendar 2016 | 89 | |
| 9.5 | Dividend policy | 89 | |
| 10. | Excerpt from Melexis nv statutory |
90 | |
| 11. | Glossary | 96 |
The mission at Melexis is to provide innovative micro-electronics for our customers' challenges with a passion for achieving mutual success.
Françoise Chombar
Dear Melexis Shareholder,
2015 was once more a tremendous year for Melexis. We are extremely proud to have achieved a year on year sales growth of more than 20%, surpassing the 400 million EUR sales threshold, nearly doubling our sales vs 2010. We reached this exceptional result despite the fact that the second half of the year was marked by increased economic uncertainty leading to prudent order behavior and inventory management at our customers.
Among the main sources of revenue growth was our magnetic sensor and sensor interface offering, as well as our products for in-vehicle networking, wireless sensing and far infra-red (FIR) sensing. This performance clearly demonstrates that our product portfolio is fully capable of addressing the many challenges our customers face in developing next generation car models, as well as enabling major advances to be realized in industrial, home automation and medical sectors. At Melexis we foster a smart blend of engineering skills and innovation combined with a good observation of the market and customer needs. Our products are not only different but they also make the difference at our customers.
Melexis 2015 financial performance was excellent. By growing more than 20% in sales, posting a gross profit margin of 48% and an operating margin of 27%, Melexis successfully accomplished its 2015 full year guidance. Excluding the currency impact, sales growth was 9%, substantially above market growth. Cash flow from operating activities reached a record level of 115 million EUR.
In 2015, Melexis increased its interim dividend from 1.00 to 1.30 EUR per share. For the first time in history, the Board of Directors proposes to pay out an additional final dividend of 0.60 EUR per share, bringing the total dividend at 1.90 EUR per share, an increase of 90% compared with last year.
At product level we continued to benefit from the trends witnessed in the automotive industry focusing on systems that are safer, cleaner and more intuitive to use, or even completely autonomous. The expansion of the Hall IC portfolio for current sensing with the introduction of high current devices for HEVs and the launch of a unique device with latch and switch functionalities were both welcomed positively by the market. We also introduced a high performance sensor interface IC enabling accurate and reliable monitoring of high operating temperatures increasing further our popular temperature sensor product offering. Our LIN RGB ambient lighting positioned itself among the newest and most operationally intensive LIN network applications being incorporated into next generation vehicles, making cars more stylish.
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Finally we are excited to have signed an agreement with Sony to further expand our Time-of-Flight offering for automobile purposes. With this agreement we are increasing our ability to partner with automotive customers worldwide looking for solutions in the area of gesture recognition.
According to Strategy Analytics, an independent research firm, light vehicle production is expected to grow globally at an average rate of 4% in the next 3 years and semiconductor content per car around 2%. This will result in a total growth of the automotive semi market of 5 to 7%. Taking into account that automotive sales currently account for a record 88% of total Melexis sales, it is no surprise that we see this as a positive confirmation that we continue to operate within the right environment. But not only that, in our other markets our sales growth was 16% in 2015 versus 2014. We have a clear intention to further leverage our automotive technology expertise into other markets, such as smart appliances, infrared body thermometers, building automation devices and industrial equipment.
For the full year 2016, Melexis expects sales growth to be between 8% and 12%, a gross profit margin around 47% and an operating margin around 25%, all taking into account a EUR/USD exchange rate of 1.10. In line with 2015, Melexis again intends to invest around 40 million EUR, including about 10 million EUR in infrastructure. To address the multiple opportunities in the market and to prepare the company for long term growth, R&D spending is expected to increase from 14 to 15% of sales.
Apart from our financial and commercial results we received an external recognition in 2015 which is very close to my heart. In Belgium, we were named as most attractive employer by Randstad. 60% of respondents who knew Melexis indicated that they would like to work for us. We achieved first place in the area of competitive salary and perquisites, career advancement, long-term job security, life balance, financial health, appealing job content, personal development and strong management. Furthermore, Melexis ranked among the top three for working conditions and environmental/social conditions. Melexis continues to hire: in 2015 the average number of employees increased by 15% to 1,054 people. Also in 2016, we will continue to expand our workforce.
At Melexis we adhere to one important rule: we aim to put the right people in the right place. Our track record of years of growth combined with a high level of employee loyalty prove the success of our sustainable, innovative company culture. For us, achieving a balance between people and results is crucial. The results captured in this report are enabled by the efforts of our people and they deserve all recognition for this outstanding achievement. Driven by our people's commitment and enthusiasm we are convinced we can continue to be leaders in our field to the benefit of all our stakeholders.
Sincerely, Françoise Chombar In name and on behalf of the whole Melexis team around the world
| Operating results | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|---|---|---|---|---|
| Revenue | 230,661 | 247,041 | 275,352 | 332,408 | 400,136 |
| Gross profit | 108,210 | 115,476 | 127,529 | 161,306 | 192,121 |
| EBIT | 54,446 | 55,856 | 63,713 | 89,175 | 107,604 |
| EBITDA | 66,394 | 71,066 | 79,222 | 108,951 | 130,414 |
| Net income | 45,894 | 51,529 | 55,214 | 84,994 | 99,071 |
| Balance structure | 2011 | 2012 | 2013 | 2014 | 2015 |
| Shareholders' equity | 107,121 | 129,277 | 157,639 | 204,936 | 252,018 |
| Net indebtedness | 19,212 | 11,732 | (9,225) | (41,446) | (58,703) |
| Working capital | 57,077 | 61,023 | 64,630 | 71,985 | 78,631 |
| Cash flow and capital expenditure | 2011 | 2012 | 2013 | 2014 | 2015 |
| Net cash from operating activities | 58,212 | 55,456 | 70,825 | 94,994 | 114,998 |
| Depreciation + amortization | 11,948 | 15,210 | 15,509 | 19,775 | 22,809 |
| Capital expenditure | 14,613 | 20,749 | 22,532 | 23,694 | 40,281 |
| Ratios | 2011 | 2012 | 2013 | 2014 | 2015 |
| ROE | 43% | 40% | 35% | 41% | 39% |
| Liquidity | 3.4 | 1.8 | 3.4 | 4.2 | 3.7 |
| Solvency | 60% | 66% | 73% | 80% | 82% |
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0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 2011 2012 2013 2014 2015 EBITDA Evolution 66,394 71,065 79,221 108,951 130,414 IN 1,000 EURO
IN 1,000 EURO
Gross Profit Evolution
EBIT Evolution
Dividend Evolution
Melexis designs, develops, tests and markets advanced integrated semiconductor devices. Our core experience is derived from over twenty years supplying ICs to the automotive electronics market. Melexis is and has been an engineering innovator with strong historical contributions toward more energy efficient, safer and more reliable cars, trucks and off-road equipment. Our engineering of greener, more environmental friendly automotive systems generates dozens of new, smart ICs and sensor components every year with a positive impact on fuel economy, carbon emissions and life safety systems on car brands throughout the globe.
Reduced fuel consumption and lower emissions result directly from improvements in IC and IC sensor technologies created by Melexis. Advanced IC Sensors improve fuel injection systems to lower fuel consumption. Sensor Interface ICs are key to pressure sensors to allow better emissions controls. Bus networking ICs mean weight reduction in wire harnesses and advanced microcontroller products such as the Sensorless BLDC motor drivers are critical in HEV (Hybrid and electric vehicles) and Stop/ Start Systems.
The engineers behind these innovations are committed to helping our customers achieve success which is, more than ever, accomplished by targeting designs toward a more sustainable future.
Pure Pragmatism. No Nonsense. At Melexis we embrace lean manufacturing and management techniques which emphasize our attention on waste and inefficiency. The Environmental Policy of Melexis acts as the red line throughout the organization. It expresses what we stand for as a company and highlights those areas where we want to contribute to our customer's successes and to a sustainable environment. It provides a framework for our everyday operation, influences every decision, guides every action and is the basis of the Quality Strategy represented by the following Quality Mission statement:
"Drive smart solutions to enable Melexis innovative products and to encourage customer confidence"
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Proactively taking ownership of improvement opportunities and timely implementation of smart solutions is the Melexis Quality Way.
Continuously monitoring and enhancing product quality throughout the product life cycle and supply chain and steering creativity into concrete actions enable Melexis innovative products.
Effectively listening and timely response to customers and systemic improvements of systems, methods, tools and skills encourage customer confidence.
Through a lean and global organization we strive to provide credibility and technical competence to our internal and external customers.
The Environmental Policy of Melexis aims to interact with the environment and society with the utmost respect and care, demonstrating our responsibility for people and planet. It is based on four environmental principles:
Sustainable development – development of products and processes that have a minimum effect on the environment today and in the future
Preventing is better than curing – our goal is to make our products 'safe at launch on time' achieving 'first time right' designs, maximizing the value of all effort and materials.
The total effect on the environment counts – embodied in the development of products whose production (including energy use), operation and disposal at end-of-life have minimum adverse effects on the environment
Open contact with stakeholders
By every measure, Melexis strives to be a responsible corporate citizen and our team members take an active role in these commitments. The same positive attitudes are instrumental to our continued financial and technical success. We take pride in our daily efforts to reduce waste, improve efficiencies and contribute to engineering the sustainable future.
Pursuing the future in transportation electronics, collaboratively working on state of the art concepts and technologies, knowing the value created from cleaner driving cars, more fuel efficient trucks and buses. Our teams and partners thinking together to create the integrated circuits and sensor components responsible for bringing new possibilities to this century's rapidly changing automobile landscape. Whether combustion, hybrid or electric it is manifest that all improve to their most efficient form. Melexis is proud to be immersed in this effort. Rooted deeply in the knowledge that only the best ICs and sensor components can make the dream a reality. That is the benchmark for our future. A greener future for our world.
At Melexis our values are key to our successful corporate culture. With each day our people reinforce the success of our company culture by embracing the following 5 principles that guide our business approach internally and externally.
We engineer the sustainable future for our customers. Our challenge is finding innovative ways to excel in the quality of our products and services, our relationships and our results. In doing so, we enable our customers to be successful with their respective customers.
We are committed to make working at Melexis enjoyable. Passion is part of our mission. Our goals are very ambitious and challenging for all of us. Both the private sphere and our work environment are essential parts of who we are. We therefore support our people in establishing a sustainable balance in their life.
We are leaders in our markets, through providing state-of–the-art and innovative products and technologies to our customers. We show leadership through team work and responsibility. Combined individual success creates team success. We will recognize the individual results as well as the team effort. To get there, we will ensure that our people are provided with opportunities to be heard and with the skills, information and empowerment to make a difference. One goal, one team, one voice.
This is the clearest and most tangible way to gauge our true effectiveness at delivering products and services that fulfill our customers' expectations. Superior products and services are bound to generate superior profits. Superior profits will attract superior investors and shareholders thereby sustaining the investment cycles necessary to a financially healthy organization. Profitability is food for the future.
We value diversity and strive for business sustainability. We build a work environment of mutual trust and respect, founded on honesty, openness and fairness where each has equality of opportunity regardless of gender, race, ethnic background or experience.
Customer focus and a consistent strategic vision have been the foundation of Melexis growth. Creating and launching innovative products are necessary to our success. Safely launching those products into production at our sites and being on time for our customers is equally important to the mutual success of Melexis and our customers. Collaborative teams from across Melexis' global organization are embracing the core values and no-nonsense culture to deliver class leading technology solutions. Melexis will continue its commitment in the automotive market and at the same time expand its presence in other fields of application, leveraging its organizational tools and team spirit.
The market in car semiconductors shows sound fundamentals. Despite low growth in vehicle sales, per-vehicle electronic content is steadily increasing. Electronics enable car manufacturers to differentiate themselves with regard to safety, environmental impact, performance or comfort. Developing advanced, integrated applications and solutions for this sector will certainly continue to be the Melexis core business. In addition to that we see rewarding growth in new markets and sectors, in consumer electronics, industrial and personal health applications. Melexis, like no other, is able to reap the benefits in these sectors with the expertise gained in the automotive industry. This expertise is in part our knowledge and experience in the field of engineering and testing high-quality, integrated analog digital ICs and sensor components for severe duty use in cars and trucks. Carefully analyzing and selecting opportunities from the much broader market can mean more probability for considerable growth and the expansion of our activities.
Melexis will continue to develop both ASICs (Application Specific ICs) and ASSPs (Application Specific Standard Products).
The latter are Melexis solutions that are within every customer's reach. The targeted goal is to offer widely accepted building blocks for numerous fields of application.
Our ASIC partners continue to recognize the value of engaging Melexis for their proprietary, sole source mixed signal solutions. Melexis routinely delivers more than just a finished tested IC based on the customers' block schematic. We take pride in being a fully active team member in the definition, design and delivery of the ASIC. Innovative, progressive solutions at the schematic level and throughout the program life make the difference.
Our field of attention comprises a product's complete lifecycle. That is why we maintain close-knit working relations with our customers and our suppliers. We strive toward strong continuity in such cooperative activities, especially in the field of development, engineering and technical support as the result is more than just a good product. It provides us with the insight and the overview to develop new innovative products, which allow us to anticipate new trends and spot emerging market niches.
Melexis has a commendable team of experienced engineers. Due to their expertise in product definition, design and testing of integrated analog-digital semiconductor solutions and sensor chips Melexis has achieved a leadership position. In order to maintain this position and further improve it, Melexis is making substantial investments in research and development and in people.
Melexis has an integrated management system that complies with the strict conditions of ISO/TS 16949:2009, including the Semiconductor Commodity. Moreover our company also has been recognized for our commitment to respecting the natural environment with an ISO 14001 certification.
During the development phase, Melexis applies pro-active risk management elements of the ISO 26262 standard (also known as ASIL or Automotive Safety Integrity Level). This secures a higher functional safety for electronic systems in road vehicles.
The automotive industry will continue to be profoundly impacted by smart electronic systems. In today's vehicles many simple tasks have been taken away from the driver in order to enhance the overall driving experience, increase comfort, reduce environmental footprint and (most importantly of all) ensure safety. This has been done through reliance on technologies that interact with the surrounding environment. Smart decisions, such as running the engine under optimal conditions to maximize fuel economy or activating the braking mechanism when travelling on slippery road surfaces, are no longer taken by the driver alone. In the latest generation of cars, new systems help avoid lane departure, maintain an acceptably safe distance from the vehicle ahead and apply automatic braking in case of a sudden emergency occurring. On average every new car produced worldwide has seven Melexis products inside.
These trends are not only being witnessed in automotive, as everyday objects are also becoming greener and safer through heightened levels of intelligence and connectivity. Melexis' sophisticated semiconductor products enable automotive systems and many other items of electronics equipment to effectively become conscious. By doing so, our engineering teams are assisting our customers around the globe to create systems that are safer, cleaner and more intuitive to use, or even completely autonomous.
Real-time sensing of systems and their surroundings requires secure communication of data, transferred at the rates as required by the application, as well as precise control and remote actuation. This has been successfully addressed in the automotive industry for decades. Since then, the art of sensing, processing, actuating and communicating has become a familiar concept in every industry. Whether it's for a car, a refrigerator, or a mobile device, similar principles apply…
Melexis products differentiate themselves from those of rival manufacturers by their inherent ability to integrate sensing, processing, actuating and communicating capabilities into one system. Intelligent integration is increasingly important when it comes to providing the optimal solutions needed to simplify complex electronic designs.
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Melexis is recognized as a long-standing world leader in magnetic sensing. For over a decade the company has pushed the market forward with devices based on its patented Triaxis® Hall sensor technology, which continues to set new benchmarks for contactless magnetic position sensing. Typical uses for these sensor devices are for determining movement, position and speed, as well as current sensing. As these magnetic sensors perform contactless measurements, they are immune to wear and tear, dust, dirt, humidity and vibration. Furthermore, Triaxis® technology allows magnetic sensors to be deployed across multiple markets - in both automotive and everyday applications. By taking out the mechanical tolerances and simplifying the magnetic aspects of the design, Melexis' Triaxis® products are more cost effective to design-in into robust applications and are also considerably easier to manufacture.
Melexis Hall ICs are used for sensing pedal, throttle and steering wheel position, steering torque and transmission shifter or sensing rotation of the cam and crank-shafts in engines. On average every new car produced worldwide has seven Melexis products inside.
Triaxis® based sensors are also employed for monitoring movement in motors/actuators and for measuring the current flowing in electrical systems. Other high volume applications for these Hall ICs include mobile devices, gaming, computing and automation equipment.
During 2015, Melexis expanded its Hall IC portfolio for current sensing purposes, with the introduction of high current devices targeted at hybrid/electric vehicles (HEVs) and mild hybrids. The increasing popularity of HEVs has far-reaching implications for the automotive sector, with an ever greater need for high performance current sensing technology in order to deal with the elevated power requirements. The emerging mild hybrid segment has to be addressed too. Here lower power motors, along with a lower voltage net, mean high currents must be supported.
Utilizing Melexis' proprietary IMCTM (Integrated Magnetic Concentrator) technology, the MLX91208 series of automotive-qualified sensors can accurately measure current while enabling significant space savings and simplifying the assembly process.
The Melexis portfolio of magnetic sensors offers solutions for robust and reliable contactless switches - thereby replacing traditional mechanical switches (which are bulky, expensive and unreliable) in applications such as seat-belt buckles, and brake/clutch pedals. Enhanced features in the programmable switch and latch ICs enable our customers to benefit from a higher degree of flexibility in design and manufacturing.
In December 2015, Melexis announced a major advance in magnetic sensing technology within automotive settings, with the introduction of the MLX92292. This game-changing device delivers switch and latch functionality, but unlike competmagnetic fields laterally, as well as orthogonally. The uniqueness of this device is further underlined by the MLX92292 being the only latch/switch on the market to support ASIL B safety integrity level as well as having the lowest current consumption.
Sensors are the enablers of many safety, comfort and powertrain functions in modern vehicles. Air conditioning, diesel particle filters, exhaust after treatment and stability control mechanisms are just a few examples of applications that simply would not be possible without the extensive use of sensor technology.
Melexis has developed highly advanced pressure sensors based on MEMS (Micro-Electro-Mechanical System) technology, where the pressure causes temporary and reversible deformation of a mechanical structure etched into the IC. Pressure is one of the key control parameters in almost all market segments. It can be measured using standalone sensors, for which Melexis also supplies accompanying signal conditioning interface ICs, or via completely integrated pressure sensors.
Integrated pressure sensors incorporate both the sensing element and the conditioning electronics on the same chip. This allows Melexis to address a greater scope of applications and support our customers in overcoming the most difficult of technical challenges.
MEMS technology is also used in products such as the company's FIR (Far Infra-Red) thermal arrays. With regard to the automotive sector, FIR array devices are suitable for multi-zone climate control, passenger classification (for more effective airbag deployment) and driver monitoring (to safeguard against driver distraction). In the consumer sector, these sensors are being implemented into microwave ovens to detect the temperature of food being heated, while in IoT (Internet of Things) systems they are suitable for a wide range of temperature measurement and detection tasks. Alongside Melexis' FIR arrays, the company offers single channel IR (Infra-Red) thermometer products. These have witnessed increased commercial demand due to emerging opportunities in medical and consumer sectors. Melexis FIR arrays have also been adopted for low-resolution visual thermometers in the building automation, industrial, security and do-it-yourself markets, as well as in add-on modules for smartphones.
Back in Januar y 2015, Melexis unveiled the MLX90327. This high performance sensor interface IC enables accurate and reliable monitoring of high operating temperatures - thereby addressing the most critical requirement of next generation automobile powertrains. The device can cope with temperatures up to 150˚C without any compromise to its accuracy. The high temperature capabilities of MLX90327 will have direct environmental advantages, in terms of allowing more energy efficient turbo chargers and better cleaning treatments of exhaust gases.
In the never-ending quest for higher comfort and safety, automatic light and wipers were integrated by manufacturers into many car models several years ago. Sufficient visibility for the driver under all circumstances is vital, therefore the automatic wiper control is a highly valued function. Thanks to the high level of integration, high performance and rich application features offered, the Melexis rain-light interface solution has become almost the de-facto standard in the market for this particular applica-
Consciousness is not only about each device interacting with the world around it. Handheld devices, living spaces and especially cars have to be aware of the user/occupant in a non-intrusive way. For a full and enjoyable user experience, a more intuitive and natural interaction with the various systems is needed.
Melexis technologies, such as proximity sensors and ToF (Time-of-Flight) 3D cameras, are exactly what early adopters of NUIs (Natural User Interfaces) are searching for in their implementations. Melexis is perfectly placed to address this new NUI trend and meet its exacting demands for high levels of robustness.
Proximity sensing can be extremely effective for single-zone and multi-zone position or presence sensing, while 3D ToF sensing enables a complete touch-less HMI (Human Machine Interface) to be realized. Melexis' ToF sensors, due to their outstanding background light and sunlight rejection, allow 3D object recognition in the most challenging environments like cars and manufacturing plants.
With the ongoing move towards autonomous and semi-autonomous vehicles, the ability to monitor the driver's level of engagement at any point in the journey is becoming a major concern and ToF is a key enabling technology in this application.
Melexis signed an agreement with Sony to further expand its ToF offering for automobile purposes in October 2015. The company has entered into a license agreement with Sony relating to the Depth-SenseRM ToF sensor technology and is collaborating with Sony to further expand this technology for the automotive industry in the area of gesture recognition. The products derived from this collaboration will be produced at Sony's world-class image sensor fabrication facility.
Other products contributing to the safety and comfort aspects of cars are our wide range of wireless devices. Recent devices are deployed in TPMS (Tire Pressure Monitoring System), RKE/PKE (Remote/Passive Keyless Entry), and in infotainment systems using NFC (Near Field Communication).
Since the mandatory inclusion of TMPS in vehicles sold in the USA, this market has grown dramatically worldwide. With its most integrated and energy efficient solution, Melexis is well placed to capitalize on this growing demand. In addition to TPMS, wireless connectivity is a key enabler in many different aspects of both the automotive and industrial market. In home and building automation applications, Melexis IC are deployed globally in remote control systems for door garage opener, access control, security alarm systems and increasingly "Internet of Things" such as for example AMR (Automatic Meter Reading) or smart connected appliances.
In September 2015, Melexis introduced the MLX73290-M. This multi-channel RF transceiver IC benefits from the company's long-established technical proficiency in low power wireless implementation. Addressing the sub-GHz ISM bands, the product delivers two RF channels, each with a programmable RF power transmitter and a highly sensitive RF receiver. Fully programmable, this IC is highly suited to home automation, building automation, TPMS, AMR, alarm systems, PKE, medical diagnostics and telemetry. The high degree of programmability means that a wide variety of different RF parameters can be adjusted in order to satisfy specific application criteria.
It was back in the mid-nineties that the previously standalone electronic modules in each vehicle started to be connected together on the vehicle bus. Nowadays, these once independently functioning modules communicate with each other and the stream of data between them effectively represents the vehicle's consciousness. Almost every module from the engine controller, ambient lighting effects to the rear view mirror rely on being connected.
Most car manufacturers now base their vehicle architectures on at least a two tier network. LIN (Local Interconnect Network) is already widely used for the low speed bus applications, while the upcoming CAN FD (Controller Area Network Flexible Data-rate) will be the high speed backbone for in-vehicle networking.
Thanks to the wide portfolio of bus transceivers and integrated LIN node devices, Melexis products will be the basis for these new electrical architectures. Melexis has established itself as the 'One-Stop-Shop' when it comes to LIN - covering everything from simple transceivers and system basis ICs right through to fully integrated LIN SoC (System-on-Chip) solutions with embedded microcontrollers.
The Melexis LIN product portfolio provides the functional blocks which allow many applications to reduce size and weight with only the addition of few external components.
Gathering information from the surroundings is not enough, as there can be no true interaction without driving and actuation.
Smart motor drivers for water pumps, oils pumps and powerful cooling fans are contributing to more environmentally efficient systems. Melexis has been pioneering in smart motor drivers with its TruSenseTM patented technology and leverages its expertise in order to bring to highly effective solutions to market.
LIN RGB (Red-Blue-Green) ambient lighting is among the newest and most operationally intensive LIN network applications being incorporated into next generation vehicles. Through this the lighting inside the car can be altered to fit the driver/passenger's personal preferences.
The Melexis LIN RGB slave IC provides a single chip solution for driving up to 4 LEDs via constant current sources in automotive ambient lighting applications.
All necessary components, such as physical layer LIN transceiver, LIN controller, voltage regulator and 16-bit microcontroller, as well as supporting functions like data conversion, current modulation and LED color/aging compensation are incorporated into the chip.
The MLX813xx is part of the Melexis smart LIN motor driver family and enables small-footprint positioning applications to control small BLDC (Brush-Less Direct Current) , stepper and DC motors with low noise sensorless or sensored driving, and a digital LIN interface for commands and feedback. It follows the Melexis high integration concept by putting all the necessary functional blocks for BLDC motor operation in a single, compact IC.
BLDC motors can be found in pumps, blowers, fans and positioning BLDC actuators. However, not all actuation applications are so visible.
One of the biggest actuation markets in automotive is for the micro actuators which are employed in aerodynamic and HVAC (Heating Ventilation Air Conditioning) systems. These are used to divert airflow and make the vehicle more efficient and comfortable. The seamless operation of these driving and actuation modules is dependent on the steady stream of data being passed to them from the LIN network.
Another example of driver ICs in hidden applications are the Melexis integrated fan drivers, where in addition to the ability to drive the fan directly, these devices also integrate the magnetic sensing function in the smallest possible package. In addition to automotive seat ventilation, small fans are used to cool the ever growing numbers of in-vehicle processors, LCD displays and office equipment.
In January 2015, Melexis introduced the MLX90297, a 600mA single coil fan driver IC targeted at the development of energy efficient cooling systems. The device integrates a high sensitivity Hall sensor with two powerful half bridge output stages, lowering the total cost and the complexity of the system significantly by reducing the number of discrete components involved.
Melexis' products enable systems to be more aware and directly interact with their surroundings. Melexis' core commitment to innovation both in our new and established product lines is allowing us to take advantage of these growing market trends in the automotive, industrial, medical and home and building automation sectors. Thanks to our expertise in product definition, design and testing of integrated analog/digital semiconductor solutions and sensor chips, the company is assured of maintaining its leadership position.
Rozendaalstraat 12 8900 Ieper
Transportstraat 1 3980 Tessenderlo
2, Samokovsko Shosse Gorublyane 1138 Sofia
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Melexis GmbH
Konrad-Zuse-Strasse 15 99099 Erfurt
Unit 501, 5/F, Bio-Informatics Centre, No. 2 Science Park West Avenue, Hong Kong Science Park
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Yokohama Aioi-cho building 10 F 6-104 Aioi-cho, Naka-Ku, Yokohama-Shi, 2310012 Kanagawa-Ken
c/o Automated Technology (Phils.) Inc. No. 1 Hologram St. corner Main Avenue Light Industry and Science Park SEPZ -1 Cabuyao, Laguna 4025
22
SWITZERLAND 10
Melexis Technologies SA
10
5 2
1 5
Chemin de Buchaux 38 2022 Bevaix
Melexis Ukraine 4, Kotelnikova Street 03115 Kiev
11
3
Melexis Inc., Nashua 15 Trafalgar Square Suite 100 NH 03063 Nashua
27333 Meadowbrook Road Suite 200 MI 48377 Novi
1, Silicon Drive Sama Jaya Free Industrial Zone 93350 Kuching
4
9
8
7
14
1, Silicon Drive Sama Jaya Free Industrial Zone 93350 Kuching
in Euro
| December 31st | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current assets: | Cash, and cash equivalents (Note 7.9.5.A) | 73,837,757 | 59,610,361 | ||
| Current investments (Note 7.9.5.B) | 49,451 | 16,605 | |||
| Accounts receivable –trade (Note 7.9.5.D) | 51,243,338 | 40,381,783 | |||
| Accounts receivable –Related companies (Note 7.9.5.AC 2) | 1,999,238 | 1,583,942 | |||
| Assets for current tax (Note 7.9.5.AA) | 1,384,340 | 977,505 | |||
| Assets held for sale (Note 7.9.5.E) | 289,419 | 1,209,563 | |||
| Inventories (Note 7.9.5.F) | 64,098,815 | 56,411,937 | |||
| Other current assets (Note 7.9.5.G) | 5,237,251 | 5,911,087 | |||
| Total current assets | 198,139,609 | 166,102,784 | |||
| Non current assets: | Intangible assets (Note 7.9.5.H) | 7,440,360 | 4,723,303 | ||
| Property, plant and equipment (Note 7.9.5.I) | 90,299,601 | 71,732,753 | |||
| Financial assets (Note 7.9.5.J) | 6,100 | 6,100 | |||
| Other non-current assets | 7,830 | 963,950 | |||
| Deferred tax assets (Note 7.9.5.AA) | 10,876,579 | 13,244,507 | |||
| Total non current assets | 108,630,469 | 90,670,612 | |||
| TOTAL ASSETS | 306,770,078 | 256,773,396 |
24
| December 31st | 2015 | 2014 | |
|---|---|---|---|
| LIABILITIES | |||
| Current liabilities: | Derivative financial instruments (Note 7.9.5.C) | 2,050,498 | |
| Current portion of long-term debt (Note 7.9.5.N) | 7,046,147 | 4,148,252 | |
| Accounts payable – trade | 15,247,382 | 13,863,085 | |
| Accounts payable – related companies (Note 7.9.5.AC 2) | 10,790,802 | 6,158,866 | |
| Accrued expenses, payroll and related taxes (Note 7.9.5.K) | 7,134,597 | 6,585,174 | |
| Accrued taxes (Note 7.9.5.AA) | 6,542,984 | 4,894,429 | |
| Other current liabilities (Note 7.9.5.M) | 3,258,489 | 1,343,448 | |
| Deferred income (Note 7.9.5.L) | 2,358,226 | 436,136 | |
| Total current liabilities | 54,005,199 | 39,479,888 | |
| Non current liabilities: | Long-term debt less current portion (Note 7.9.5.N) | 8,138,440 | 14,032,984 |
| Other non current liabilities (Note 7.9.5.O) | 2,115,608 | 1,899,425 | |
| Total non current liabilities | 10,254,048 | 15,932,409 | |
| Equity: | Shareholders' capital | 564,814 | 564,814 |
| Reserve treasury shares | (3,817,835) | (3,817,835) | |
| Revaluation reserve Hedge (Note 7.9.5.C) | (371,919) | (452,551) | |
| Revaluation reserve Fair value (Note 7.9.5.B) | - | - | |
| Legal reserve | 56,520 | 56,520 | |
| Retained earnings | 252,379,719 | 205,378,254 | |
| Cumulative translation adjustment | (6,310,937) | (378,573) | |
| Equity attributable to company owners | 242,500,360 | 201,350,628 | |
| Non controlling interest | 10,471 | 10,471 | |
| Total equity (Note 7.9.5.P) | 242,510,832 | 201,361,099 | |
| TOTAL LIABILITIES | 306,770,078 | 256,773,396 |
The accompanying notes to this consolidated statement of financial position form an integral part of these consolidated financial statements.
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Product sales (Note 7.9.5.Q) | 398,924,799 | 330,754,939 |
| Revenues from Research and Development (Note 7.9.5.Q) | 1,211,136 | 1,652,716 |
| Cost of sales (Note 7.9.5.S) | (208,014,543) | (171,101,702) |
| Gross margin | 192,121,392 | 161,305,953 |
| Research and development expenses (Note 7.9.5.T) | (56,737,053) | (45,433,627) |
| General and administrative expenses (Note 7.9.5.U) | (19,089,980) | (16,381,465) |
| Selling expenses (Note 7.9.5.V) | (8,689,985) | (7,975,847) |
| Other operating expenses (net) (Note 7.9.5.Y) | - | (2,339,678) |
| Income from operations (EBIT) | 107,604,374 | 89,175,337 |
| Financial income (Note 7.9.5.Z) | 9,589,633 | 7,148,506 |
| Financial charges (Note 7.9.5.Z) | (7,720,932) | (4,240,903) |
| Result before taxes | 109,473,076 | 92,082,940 |
| Income taxes (Note 7.9.5.AA) | (10,401,594) | (7,088,715) |
| Net result of the period | 99,071,482 | 84,994,225 |
| Earning per share attributable to the ordinary equity holders of the parent | ||
| Earnings per share non-diluted (Note 7.9.5.AE) | 2.45 | 2.10 |
| Earnings per share diluted | 2.45 | 2.10 |
The accompanying notes to this consolidated income statement form an integral part of these consolidated financial statements.
in Euro
| December 31st | 2015 | 2014 | ||
|---|---|---|---|---|
| Net result | 99,071,482 | 84,994,225 | ||
| Other comprehensive income | ||||
| Non recyclable components | ||||
| Cumulative translation adjustment | (5,932,364) | 278,448 | ||
| Recyclable components | ||||
| Fair value adjustments cashflow hedges | 80,632 | (191,872) | ||
| Fair value adjustments available-for-sale financial assets | - | (1,304,375) | ||
| Total other comprehensive income for the period | (5,851,732) | (1,217,799) | ||
| Total comprehensive income/ (loss) for the period | 93,219,750 | 83,776,426 | ||
| Total comprehensive income attributable to: | ||||
| Attributable to owners of the parent | 93,219,750 | 83,776,426 |
in Euro
| Number of shares |
Share capital | Legal reserve | Retained earning |
|
|---|---|---|---|---|
| December 31st , 2013 | 40,400,000 | 564,814 | 56,520 | 160,437,896 |
| Net income | - | - | - | 84,994,225 |
| CTA movement | - | - | - | - |
| Hedge reserves (Note 7.9.5 C) | - | - | - | - |
| Fair value adjustments through equity (Note 7.9.5 B) |
- | - | - | - |
| Other comprehensive income | - | - | - | - |
| Dividend | - | - | - | (40,053,868) |
| Transactions with owners of the Parent | - | - | - | (40,053,868) |
| December 31st , 2014 | 40,400,000 | 564,814 | 56,520 | 205,378,253 |
| Net income | - | - | - | 99,071,482 |
| CTA movement | - | - | - | - |
| Hedge reserves (Note 7.9.5 C) | - | - | - | - |
| Fair value adjustments through equity (Note 7.9.5 B) |
- | - | - | - |
| Other comprehensive income | - | - | - | - |
| Dividend | - | - | - | (52,070,017) |
| Transactions with owners of the Parent | - | - | - | (52,070,017) |
| December 31st , 2015 | 40,400,000 | 564,814 | 56,520 | 252,379,718 |
| Hedge treasury shares reserve |
Fair value adjustment reserve |
CTA | Non controlling interest |
Total equity |
|---|---|---|---|---|
| (3,817,835) (260,679) |
1,304,375 | (657,021) | 10,471 | 157,638,540 |
| - - |
- | - | 84,994,225 | |
| - - |
278,448 | - | 278,448 | |
| - (191,872) |
- | - | (191,872) | |
| - | (1,304,375) | - | - | (1,304,375) |
| - (191,872) |
(1,304,375) | 278,448 | - | (1,217,799) |
| - - |
- | - | - | (40,053,868) |
| - - |
- | - | - | (40,053,868) |
| (3,817,835) (452,551) |
- | (378,573) | 10,471 | 201,361,099 |
| - - |
- | - | 99,071,482 | |
| - - |
(5,932,364) | - | (5,932,364) | |
| - 80,632 |
- | - | 80,632 | |
| - | - - |
- | - | |
| - 80,632 |
- (5,932,364) |
- | (5,851,732) | |
| - - |
- | - | - | (52,070,017) |
| - - |
- - |
- | (52,070,017) | |
| (3,817,835) (371,919) |
- | (6,310,937) | 10,471 | 242,510,832 |
In 2014 and 2015, no purchases of own shares were done. At the end of 2015, Melexis NV holds 1,785 own shares and Melexis Technologies NV holds 344,356 shares of Melexis NV, in total representing 0.86% of shares outstanding.
in Euro
| December 31st (indirect method) | 2015 | 2014 |
|---|---|---|
| Cash flows from operating activities | ||
| Net profit | 99,071,482 | 84,994,225 |
| Adjustments for operating activities | ||
| Deferred taxes (Note 7.9.5.AA) | 2,367,928 | 851,230 |
| Unrealized exchange results (Note 7.9.5 Z) | 147,622 | 994,560 |
| Government grants (Note 7.9.5 R) | 805,920 | 677,413 |
| Depreciation and amortisation (Note 7.9.5 X) | 22,809,389 | 19,775,224 |
| Impairments (Note 7.9.5 Y) | - | 2,339,678 |
| Financial results (Note 7.9.5 Z) | (113,640) | (3,470,961) |
| Operating profit before working capital changes | 125,088,702 | 106,161,369 |
| Accounts receivable, net (Note 7.9.5 D) | (10,890,374) | (1,956,687) |
| Other current assets (Note 7.9.5 G) | (420,934) | 3,511,741 |
| Other non-current assets | 956,120 | 483,835 |
| Due to (from) related companies (Note 7.9.5 AC) | 4,631,935 | (1,302,493) |
| Due (to) from related companies (Note 7.9.5 AC) | (415,296) | 52,551 |
| Accounts payable | 1,342,275 | (32,145) |
| Accrued expenses (Note 7.9.5 K) | 6,504,931 | 6,903,026 |
| Other current liabilities (Note 7.9.5 M) | 1,726,945 | 94,558 |
| Other non current liabilities (Note 7.9.5 O) | 1,714,347 | 991,196 |
| Inventories (Note 7.9.5 F) | (10,550,556) | (15,224,561) |
| Interest paid (Note 7.9.5 Z) | (382,689) | (412,394) |
| Income tax (Note 7.9.5 AA) | (4,306,953) | (4,275,878) |
| Net cash from operating activities | 114,998,453 | 94,994,117 |
| Cash flows from investing activities | ||
| Purchase of property plant and equipment and intangible assets (Note 7.9.5.I) | (40,280,566) | (23,694,096) |
| Interest received (Note 7.9.5 Z) | 360,583 | 481,710 |
| Investments, proceeds, from current investments | (32,846) | 4,306,980 |
| Acquisition of subsidiary | - | - |
| Net cash used in investing activities | (39,952,829) | (18,905,407) |
31
| December 31st (indirect method) | 2015 | 2014 |
|---|---|---|
| Cash flows from financing activities | ||
| Repayment from long-term debts (Note 7.9.5.N) | (3,010,338) | (4,146,437) |
| Impact of exchange results on financing items | (5,737,939) | - |
| Dividend payment (Note 7.4) | (52,070,017) | (40,053,868) |
| Net cash used in financing activities | (60,818,294) | (44,200,305) |
| Effect of exchange rate changes on cash | 67 | (487,307) |
| (Decrease) increase in cash | 14,227,396 | 31,888,406 |
| Cash at beginning of the period | 59,610,361 | 27,721,955 |
| Cash at end of the period | 73,837,757 | 59,610,361 |
| Cash at end of the period minus cash at beginning of the period | 14,227,396 | 31,888,406 |
The accompanying notes to this statement of cash flows form an integral part of the consolidated financial statements.
The following discussion and analysis of the financial condition and results of operations should be read in conjunction with the Company's financial statements of prior years.
For 2015 total revenues increased by 20% compared to 2014, from EUR 332,407,655 in 2014 to EUR 400,135,935 in 2015. In 2014 EUR 1,652,716 research and development costs were invoiced, compared to EUR 1,211,136 in 2015. Specific research and development activities are performed under contract for customers. Sales to automotive customers were 89% of sales in 2015. The portion of ASSP sales represented 58%, 2% higher than in the full year 2014.
Costs of sales consist of materials (raw material and semi-finished parts), subcontracting, labor, depreciation and other direct production expenses. The cost of sales amounted to EUR 208,014,543 in 2015 and EUR 171,101,702 in 2014.
Expressed as a percentage of total revenues, the cost of sales increased slightly from 51.5% in 2014 to 52.0% in 2015.
The gross margin, expressed as a percentage of total revenues decreased from 48.5% in 2014 to 48.0% in 2015.
Research and Development expenses amounted to EUR 56,737,053 in 2015, representing 14% of total revenues equal to 2014. The research and development activities concentrate further on research and development of Hall Effect Sensors, MEMS Sensors and Signal Conditioning Interface Sensors, LIN and motor Control IC's, Infrared and Optical Sensors and wireless IC's.
General, administrative and selling expenses mainly consist of salaries and salary related expenses, office equipment and related expenses, commissions, travel and advertising expenses. The general, administrative and selling expenses increased by 14% compared to 2014, slower than sales growth.
The net financial results amounted to EUR 1,868,702 profit in 2015 compared to EUR 2,907,604 profit in 2014. The (net) interest result amounted to a loss of EUR 103,665 in 2015 compared to a loss of EUR 1,282 in 2014. The net currency exchange gains (both realized and unrealized) in 2015 amounted to a gain of EUR 2,283,313, compared to a gain of EUR 2,264,638 during 2014.
The company recorded a net income for 2015 of EUR 99,071,482. The increase in net income, in comparison with 2014, is mainly due to the increase of revenue.
Cash and cash deposits amounted to EUR 73,837,757 as of December 31, 2015, in comparison to EUR 59,610,361 as of December 31, 2014.
In 2015, operating cash flow before working capital changes amounted to EUR 125,088,702. Working capital changes in 2015 are mainly situated in inventories, accounts receivable and accrued expenses, resulting in a net operating cash flow of EUR 114,998,453.
The cash flow from investing activities was negative for an amount of EUR 39,952,829, mainly as a result of investments in fixed assets amounting to EUR 40,280,566 and proceeds from investments for an amount of EUR 32,846, compensated by interests received for an amount of EUR 360,583.
The cash flow from financing activities was negative for an amount of EUR 60,818,294. This is the result of the repayment of bank debts amounting to EUR 3,010,338, the impact of exchange rates on financing items amounting to EUR 5,737,939 and the interim dividend payment amounting to EUR 52,070,017.
The board of directors of Melexis certifies, on behalf and for the account of the company, that, to their knowledge:
The consolidated statements were approved and authorized for issue by the Board of Directors on March 7th, 2016 and were signed on its behalf by Françoise Chombar.
The consolidated statements haven't been changed after the approval by the Board of Directors.
Françoise Chombar Managing Director, Chief Executive Officer (CEO)
Melexis NV is a limited liability company incorporated under Belgian law. The company has been operating since 1989. The company designs, develops, tests and markets advanced integrated semiconductor devices for the automotive industry. The company sells its products to a wide customer base in the automotive industry in Europe, Asia and North America.
The accounting year covers the period from January 1st, 2015 till December 31st, 2015.
The Melexis group of companies employed, on average 1,054 people in 2015 and 915 in 2014.
The registered office address of the group is located at Rozendaalstraat 12, 8900 Ieper, Belgium.
The consolidated results as included in the press release were authorized for issue by the Board of Directors subsequent to their meeting held on February 8th, 2016.
The consolidated financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IASB") and in conformity with IFRS as adopted by the European Union up to December 31st, 2015 (collectively "IFRS"). Melexis has not applied any new IFRS requirements that are not yet effective in 2015.
The consolidated financial statements of Melexis NV are prepared according to IFRS as accepted by the EU per January 1, 2015. The principal accounting policies adopted in preparing the consolidated financial statements of Melexis NV are as follows:
The consolidated financial statements are prepared under the historical cost convention, except that investments available for sale, assets held for sale and derivative financial instruments are stated at their fair value as disclosed in the accounting policies hereafter.
The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised when the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
The critical estimates and judgments that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are listed below.
Assumptions and estimates are applied when recognizing and measuring provisions for tax and litigation risks, determining inventory write-downs, assessing the extent to which deferred tax assets will be realized (Note 7.9.5 AA), useful lives of property, plant and equipment and intangible assets (Note 7.9.5 H and 7.9.5 I).
Deferred tax assets are recognized for deductible temporary differences, unused tax losses and fair value reserves entries only if it is probable that future taxable profits (based on Melexis' operational plans) are available to use those temporary differences and losses. The actual tax results in future periods may differ from the estimate made at the time the deferred taxes are recognized. Other assumptions and estimates are disclosed in the respective notes relevant to the item where the assumptions or estimates were used for measurement (Note 7.9.5 AA).
Please refer to the accounting policies of inventories, property, plant and equipment, intangible assets and provisions in this chapter for the assumptions and estimates.
The presentation currency of Melexis NV has been determined to be the Euro. To consolidate the company and each of its subsidiaries, the financial statements of foreign consolidated subsidiaries, with a non EUR currency, are translated at year-end exchange rates with respect to the statement of financial position and at the average exchange rate for the year with respect to the statement of comprehensive income. All resulting translation differences are included in a translation reserve in equity.
Each entity within the group translates its foreign currency transactions and balances into its functional currency by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction. Exchange rate differences arising on the settlement of monetary items or on reporting monetary items at rates different from those at which they were initially recorded during the period or reported in previous financial statements are recognized in the statement of comprehensive income in the period in which they arise.
Since the introduction of the Euro on January 1st 1999, and in accordance with Belgian law, Melexis NV keeps its books and prepares its consolidated financial statements in Euro. The functional currency of Melexis NV and of its subsidiaries Melexis Technologies NV (formerly known as Melexis Tessenderlo NV), Melefin NV, Melexis GmbH, Melexis Nederland BV and the French branch office is the Euro. The functional currency for Melexis Inc. is the United States Dollar (USD), for Melexis Ukraine the Ukrainian Hryvnia (UAH) and for Melexis Bulgaria Ltd. the Bulgarian Leva (Bgn). The functional currency for Sentron AG, Melexis Switzerland SA and for Melexis Technologies SA is the Swiss Franc (CHF) and the functional currency for Melexis Electronic Technology (Shanghai) Co. Ltd. is the Chinese Yuan Renminbi (CNY). For the Philippine branch of Melexis NV the functional currency is the Philippian Peso (PHP), for the Japanese entity the Japanese Yen (JPY), for the Hong Kong branch the Hong Kong Dollar (HKD) and for Melexis (Malaysia) Sdn. Bhd. and Melexis Technologies NV (Malaysian) branch the Malaysian Ringit (MYR).
Assets and liabilities of Melexis Inc., Melexis Ukraine, Melexis Bulgaria Ltd, Sentron AG, Melexis Technologies SA, Melexis Switzerland SA, Melexis Japan, Melexis Philippines, Mel-
35
exis Hong Kong, Melexis Electronic Technology (Shanghai) Co. Ltd., Melexis Technologies (Malaysian) branch and Melexis (Malaysia) Sdn. Bhd. are translated at closing rate, and revenues and expenses are translated at the average exchange rate during the period. Equity components have been translated at historical exchange rates. Gains or losses resulting from this translation are reflected in the component "cumulative translation adjustment" in the statement of financial position.
Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
De-facto control exists in situations where the company has the practical ability to direct the relevant activities of the investee without holding the majority of the voting rights. In determining whether de-facto control exists the company considers all relevant facts and circumstances, including:
The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognized at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.
The consolidation scope includes on the one hand Melexis NV and its 3 branch offices being Melexis Philippines, Melexis France and Melexis Hong Kong (opened in 2007). On the other hand, the subsidiaries being part of the consolidation scope are Melexis Ukraine, Melexis Nederland BV (incorporated respectively in 2000 and 2001), Melexis Inc. (formerly US MikroChips Inc. which was acquired in the last quarter of 1997), Melexis GmbH (previously known as Thesys Mikroelektronik Produkte GmbH acquired in -October 1999), Melexis Bulgaria Ltd.(acquired in October 2000), Sentron AG (acquired in February 2004), Melefin NV (constituted during the year 2005 by means of a contribution in kind of the shares of Melexis Technologies NV (formerly known as Melexis Tessenderlo NV). As such Melexis Technologies NV became a granddaughter of Melexis NV. On January 31st, 2006 Melexis GmbH acquired Melexis Technologies NV (from Melefin NV), Melexis Technologies SA (during 2006 the Swiss branch Office Bevaix of Melexis NV was transformed in a separate legal entity: Melexis Technologies SA), Melexis Japan (during 2007 a separate legal entity has been incorporated in Japan), Melexis Electronic Technology (during 2009 this separate legal entity has been incorporated in China, Shanghai). Finally, the granddaughter Melexis Technologies NV is also included in the consolidation scope. In 2012 Melexis NV purchased 15% of the shares of Melexis Technologies NV. As a result Melexis Technologies partially became a direct subsidiary of Melexis NV. In December 2013 Melexis Switzerland SA was founded. Melexis Switzerland SA is a 100% subsidiary of Melexis NV. In December 2013 Melexis Switzerland SA acquired 100% of the shares of Melexis Technologies SA. In July 2015 Melexis (Malaysia) Sdn. Bhd. was founded. Melexis (Malaysia) Sdn. Bhd. is a 100% subsidiary of Melexis NV. Also in 2015 Melexis Technologies NV opened a branch in Malaysia.
Cash includes cash on hand and cash in different bank accounts. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less and that are subject to an insignificant risk of change in value.
The company applies hedge accounting for a part of its financial instruments as defined under IAS 39.
The hedges whereby hedge accounting is applied are cash flow hedges. Provided the hedge is effective, changes in the fair value of the hedging instrument are initially recognized in a 'hedging reserve' in equity. At maturity they are transferred to the statement of comprehensive income. The ineffective portion of the change in the fair value of the hedging instrument (if any) is recognized directly in the statement of comprehensive income.
The table with outstanding derivatives at year end is disclosed in Note 7.9.5.C.
Inventories, including work-in-progress are comprised of material, labor and manufacturing overheads and are valued at the lower of cost (determined on FIFO basis) or net realizable value after reserve for obsolete items. Net realizable value is the selling price in the ordinary course of business, less the costs of completion, marketing and distribution. For processed inventories, cost includes the applicable allocation of fixed and variable overhead costs. Unrealizable inventory has been fully written off. Inventory is written off when no sales are expected in the next six months.
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation is computed on a straight-line basis over the following estimated useful lives.
| • | Buildings | 20-33 years |
|---|---|---|
| • | Machinery, equipment and installations | 5 years |
| • | Furniture and vehicles | 5 years |
| • | Computer equipment | 3-5 years |
| • | Mask set | 5 years |
Melexis does capitalize the expenses for masks as tangible assets. A mask is a thin sheet of material from which a pattern has been cut, placed over a semiconductor chip so that an integrated circuit can be formed on the exposed areas. Masks can be used for the lifetime of the product. Therefore, masks are depreciated over the estimated useful lifetime of 5 years.
Expenditures, incurred after the fixed assets have been placed in operation, such as repairs and maintenance and overhaul costs, are included in the statement of comprehensive income, in the period in which the costs are incurred.
The useful life and depreciation methods are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment.
The group classifies its financial assets in the following categories: financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; and available-for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date.
This category comprises financial assets held for trading which have been acquired principally for the purpose of selling in the short term. Derivatives also fall within this category unless they are designated as hedges and the hedge is effective for accounting purposes. Assets in this category are classified as current.
The fair value of this assets is measured using quoted prices (Conform IFRS 7 – level 1) or inputs, other than quoted prices, that are observable for the asset either directly (as prices) or indirectly (derived from prices), both conform IFRS 7 – Level 2.
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognized at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Impairment provisions are recognized when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognized within administrative expenses in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position.
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the group's management has the positive intention and ability to hold to maturity. They are included in non-current assets unless the investment is due to mature within 12 months of the balance sheet date or unless the investment is considered as very liquid.
The fair value of this assets is measured using quoted prices (Conform IFRS 7 – level 1) or inputs, other than quoted prices, that are observable for the asset either directly (as prices) or indirectly (derived from prices). This conform IFRS 7 – Level 2 or Level 3.
Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories. They are included in current or non-current assets. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Investments are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership.
The fair value of these assets is measured using quoted prices (unadjusted) in active markets for identical assets or liabilities conform IFRS 7 – Level 1.
"Available-for-sale financial assets" and "financial assets at fair value through profit or loss" are subsequently carried at fair value. "Loans and receivables" and "held-to-maturity investments" are subsequently carried at amortized cost using the effective interest method. Realized and unrealized gains and losses arising from changes in the fair value of the "Financial assets at fair value through profit or loss" -category are included in the statement of comprehensive income in the period in which they arise. Unrealized gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognized in equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the statement of comprehensive income as gains and losses from investment securities.
Non-current assets and disposal groups are classified as held for sale when:
Non-current assets and disposal groups classified as held for sale are measured at the lower of:
Following their classification as held for sale, non-current assets (including those in a disposal group) are not depreciated. The results of operations disposed during the year are included in the consolidated statement of comprehensive income up to the date of disposal.
A defined contribution plan is a pension plan under which the group pays fixed contributions (percentage of annual gross salary). The scheme is funded through payments to the insurance company. Contributions to defined contribution pension schemes are charged to the consolidated statement of comprehensive income in the year to which they relate.
Intangible assets, externally purchased, are measured initially at cost. Intangible assets are recognized if it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. After initial recognition, intangible assets are measured at cost less accumulated amortization and any accumulated impairment losses. Intangible assets are amortized on a straight-line basis over the best estimate of their useful lives. The amortization period and the amortization method are reviewed annually at each financial year end. Amortization of intangible assets is shown as a separate line item in operating charges.
Amounts paid for licenses are capitalized and then amortized on a straight-line basis over the expected periods of benefit. The expected useful life of licenses is 5 years.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognized at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
The excess of the cost of an acquisition over the company's interest in the fair value of the net identifiable assets and liabilities acquired as at the date of the exchange transaction is recorded as goodwill and recognized as an asset in the statement of financial position. When the excess is negative, a bargain purchase gain is recognized immediately in the statement of comprehensive income. The identifiable assets and liabilities recognized upon acquisition are measured at their fair values as at that date. Any non-controlling interest is stated at the minority's proportion of the fair values. Any goodwill arising on the acquisition of a foreign entity and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign entity are treated as assets and liabilities of the company (unless it concerns badwill, this is recognized in the comprehensive income). Goodwill is carried at cost less accumulated impairment losses. Impairment of goodwill is included in operating profit.
According to IAS 38 Par. 54 all research costs must be charged to expense. Expenditure for development costs is also recognized as an expense when incurred and not capitalized, since not all criteria set forth by IAS 38 Par. 57 are met. Indeed as of today, the company has no analytical tools in place to distinguish on a reliable basis the research phase from the development phase.
The shares of Melexis NV are listed without par value. Melexis' aim in managing its equity is to maintain a healthy financial structure with a minimal dependency on external financing as well as to create shareholders value. Melexis intends to pay out regular (interim-) dividends, in order to maximize the return on equity for its shareholders.
Treasury shares are presented in the statement of financial position as a deduction from equity. The acquisition of treasury shares is presented as a change in equity. No gain or loss is recognized in the statement of comprehensive income on the sale, issuance, or cancellation of treasury shares. Consideration received is presented in the financial statements as a change in equity.
A provision is recognized when, and only when an enterprise has a present obligation (legal or constructive) as a result of a past event and it is probable (i.e. more likely than not) that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.
Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation.
Capital reserves represent the legal reserve of the parent company and are in accordance with the Belgian law.
The translation reserve is used for translation differences arising on consolidation of financial statements of foreign entities.
Non-controlling interests include the third party interests in the fair values of identifiable assets and liabilities recognized upon acquisition of a subsidiary as well as the minority share of the result of the year and retained earnings.
The company recognizes revenue from sales of products upon shipment or delivery, depending on when title and risk of loss are transferred under the specific contractual terms of each sale, which may vary from customer to customer.
Revenue from research projects is recognized upon meeting of all contractual conditions.
Borrowing costs are expensed as incurred. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are included in the cost of the asset.
Government grants are deferred and amortized into income over the period necessary to match them with the related costs that they are intended to compensate. Grants received are treated as deferred income in the accompanying consolidated financial statements.
The company recognizes government grants if they have reasonable assurance that the grants will be received. They are recognized as income on a systematic and rational basis over the periods necessary to match them with the related costs. The grant related revenue is recorded net of the related expense in the statement of comprehensive income and as deferred income on the statement of financial position.
The income tax charge is based on the result of the year and considers deferred taxation. Deferred taxes are calculated using the balance sheet liability method. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled, based on tax rates enacted or substantially enacted at the balance sheet date.
The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the enterprise expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are recognized regardless of the moment when the timing difference is likely to reverse. Deferred tax assets are not discounted and are classified as non-current assets in the statement of financial position.
Deferred tax assets are recognized when it is probable that sufficient taxable profits will be available against which the deferred tax assets can be utilized. At each balance sheet date, the company reassesses unrecognized deferred tax assets and the carrying amount of deferred tax assets. The enterprise recognizes a previously unrecognized deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. The company conversely reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or that entire deferred tax asset to be utilized.
A deferred tax liability is recognized for all taxable temporary differences, unless the deferred tax liability arises from goodwill for which amortization is not deductible for tax purposes.
Property, plant and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognized in income. The recoverable amount is the higher amount of an asset's net selling price and value in use. The net selling price is the amount obtainable from the sale of an asset in an arm's length transaction while value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit. Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased.
Melexis uses the management approach for determining its segment information. As of 2014 Melexis has only one operating segment. The available information that is evaluated regularly by the chief operating decision maker has only one operating segment. Melexis products and production processes have evolved in such a way that the distinction between automotive and non-automotive segments is no longer relevant. Operating decisions are taken for each individual product during a committee lead by the CEO, based on performance assessments. Financial information on geographical segments is presented in Note 7.9.5 AB.
Contingent liabilities are not recognized in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.
A contingent asset is not recognized in the financial statements, but disclosed when an inflow of economic benefits is probable.
Post year end events that provide additional information about a company's position at the balance sheet date, (adjusting events), are reflected in the financial statements.
Post year end events that are not adjusting events are disclosed in the notes when material.
Basic earnings per share are calculated by dividing the net result for the period attributable to ordinary shareholders by the weighted average number of shares outstanding during the period.
All movements in financial liabilities are accounted at trade date.
Borrowings are initially recognized at fair value. Subsequently they are carried at amortized cost using the effective interest rate method. Amortized cost is calculated by taking into account any issue costs, and any discount or premium on issue. Any differences between cost and redemption value are recognized in the statement of comprehensive income upon redemption.
Trade payables and other short-term monetary liabilities are initially recognized at fair value and subsequently carried at amortised cost using the effective interest method
If a forecast transaction is no longer considered highly probable but the forecast transaction is still expected to occur, the cumulative gain or loss recognized in other comprehensive income is frozen and recognized in profit or loss in accordance with the policy set out in the paragraph above. Subsequent changes in the fair value of the derivative are recognized in profit or loss. If the Group closes out its position before the transaction takes place (even though it is still expected to take place) the cumulative gain or loss on changes in fair value of the derivative is recognized in profit and loss. If, at any point, the hedged transaction is no longer expected to occur, the cumulative gain or loss is reclassified from the cash flow hedge reserve to profit or loss immediately.
The effective portion of gains and losses on derivatives used to manage cash flow interest rate risk (such as floating to fixed interest rate swaps) are also recognized in other comprehensive income and accumulated in the cash flow hedge reserve. However, if the Group closes out its position early, the cumulative gains and losses recognized in other comprehensive income are frozen and reclassified from the cash flow hedge reserve to profit or loss using the effective interest method. The ineffective portion of gains and losses on derivatives used to manage cash flow interest rate risk are recognized in profit or loss within finance expense or finance income.
Where derivatives are used to hedge the Group's exposure to fair value interest rate risk (such as fixed to floating rate swaps), the hedged item is remeasured to take into account the gain or loss attributable to the hedged risk (in the case of a fixed rate loan, the hedged risk is changes in the fair value of interest rates) with the gains or losses arising recognized in profit or loss. This offsets the gain or loss arising on the hedging instrument which is measured at fair value through profit or loss.
An overview of the derivative financial instruments with negative fair value can be found in Note 7.9.5.C.
The consolidated financial statements of Melexis NV are prepared according to IFRS as accepted by the EU per January 1, 2015.
During the current financial year, the Group has adopted all the new and revised Standards and Interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB, that are relevant to its operations and effective for the accounting year starting on January 1, 2015. The Group has not applied any new IFRS requirements that are not yet effective as per December 31, 2015.
The following new Standards, Interpretations and Amendments issued by the IASB and the IFRIC are effective for the current annual period:
The adoption of these new standards and amendments has not led to major changes in the Group's accounting policies.
The Group elected not to early adopt the following new Standards, Interpretations and Amendments, which have been issued but are not yet effective as per December 31, 2015.
15.IAS 19 Employee Benefits Amendments relating to Defined Benefit Plans: Employee Contributions (November 2013)
16.IAS 27 Consolidated and Separate Financial Statements — Amendments reinstating the equity method as an accounting option for investments in subsidiaries, joint ventures and associates in an entity's separate financial statements (August 2014)
In July 2015 Melexis (Malaysia) Sdn. Bhd. was incorporated. Melexis (Malaysia) Sdn. Bhd. is a 100% subsidiary of Melexis NV. Also in 2015 Melexis Technologies NV opened a branch in Malaysia.
Management is currently analyzing the effect on the Group's future financial statements.
43
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Cash at bank and in hand | 73,837,757 | 59,610,361 |
| Total | 73,837,757 | 59,610,361 |
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Current Investments | 49,451 | 16,605 |
In principle, Melexis' current investments are classified as assets available for sale. According to IAS 39, the difference between the purchase price and the fair value of current investments classified as available for sale is recognized directly into equity under 'Revaluation reserve fair value'. On December 31st, 2015 Melexis had no current investments in portfolio classified as assets available for sale. Melexis' financial derivatives with a positive market value are classified as assets at fair value through profit and loss. The fair value changes for those derivatives where no hedge accounting is applicable are immediately recognized in the statement of comprehensive income. As of December 31st, 2015 the fair value of the financial derivatives recognized as asset under current investments amounted to EUR 49,451. A detailed overview of the outstanding derivatives, categorized under current investments, is included in Note 7.9.5.C. On December 31st, 2015 Melexis had no assets in portfolio classified as investments held to maturity
The following table presents the evolution of the aggregate notional amounts of the group's outstanding derivative financial instruments:
| December 31st | 2015 | 2014 | |
|---|---|---|---|
| Outstanding FX hedge contracts per December 31st, not exceeding 1 year |
19,000,000 | 19,000,000 | |
| 60,000,000 | 70,000,000 | ||
| Outstanding Interest hedge contracts per December 31st, exceeding 1 year | EUR | 15,000,000 | 15,000,000 |
| Outstanding Inflation hedge contracts per December 31st, exceeding 1 year | EUR | 15,000,000 | 15,000,000 |
FX hedge contracts are entered into in order to hedge (part of) the outstanding balance sheet exposure in foreign currency (USD/CHF).
Interest hedge contracts are entered into in order to hedge (part of) the group's borrowings at floating interest rate. Inflation hedge contracts are entered into in order to hedge (part of) the salary inflation risk of the group.
The fair value of derivatives is based upon mark to market valuations (input received from bank).
The following table presents an overview of the fair value of outstanding derivatives, classified as an asset under Current Investment, Derivatives:
| December 31st | 2015 | 2014 |
|---|---|---|
| Assets | Fair value EUR |
Fair value EUR |
| Outstanding FX swaps - conform IFRS 7 - level 2 | 49,451 | 16,605 |
| Total, classified under Current investment (see also Note 7.6.5.B) | 49,451 | 16,605 |
These financial instruments are classified as financial assets at fair value through profit or loss. For the representation of the gains and losses relating to these assets we refer to Note 7.9.5 Z.
The following table presents an overview of the fair value of outstanding derivatives, classified as a liability under Derivative financial instruments:
| December 31st | 2015 | 2014 |
|---|---|---|
| Liabilities | Fair value EUR |
Fair value EUR |
| Outstanding FX swaps - conform IFRS 7 - level 2 | (185,088) | (78,234) |
| Outstanding Interest swaps (hedged) - conform IFRS 7 - level 2 | (563,429) | (685,580) |
| Outstanding Inflation swaps - conform IFRS 7 - level 2 | (878,054) | (1,286,684) |
| Total, classified under Derivative financial instruments | (1,626,571) | (2,050,498) |
The following table presents an overview of the fair value of outstanding derivatives, for which hedge accounting is applied as defined under IAS 39. Changes in the fair value of the hedging instrument are recognized in a hedging reserve, classified as 'Revaluation reserve Hedge'.
| December 31st | 2015 | 2014 | |
|---|---|---|---|
| Fair value of instruments through equity (hedge accounting IAS 39) | |||
| Outstanding Interest hedge swaps per December 31st | (563,429) | (685,580) | |
| Subtotal | (563,429) | (685,580) | |
| Deferred tax asset | 191,510 | 233,029 | |
| Total, classified under Revaluation reserve Hedge | (371,919) | (452,551) |
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Trade accounts receivables | 51,640,468 | 40,759,419 |
| Allowance for doubtful accounts | (397,130) | (377,636) |
| Total | 51,243,338 | 40,381,783 |
As at December 31st, 2015 trade receivables of EUR 5,359,284 were past due.
The aging analysis of these receivables including allowance for doubtful accounts is as follows:
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Not due | 45,884,054 | 34,368,970 |
| <30 days | 4,542,243 | 5,039,754 |
| >30 <60 days | 495,615 | 948,934 |
| >60 days | 321,425 | 24,125 |
| Total | 51,243,338 | 40,381,783 |
In the following aging analysis the distinction is made between the receivables for which an accrual for doubtful debtors is made and the receivables for which no accrual for doubtful debtors is needed: in Euro
| December 31st | 2015 | ||
|---|---|---|---|
| accrual for doubtful debt ors |
no accrual for doubtful debt ors |
total receivables |
|
| Not due | - | 45,884,054 | 45,884,054 |
| <30 days | - | 4,542,243 | 4,542,243 |
| >30 <60 days | - | 495,615 | 495,615 |
| >60 days | 397,130 | 321,425 | 718,556 |
| Total | 397,130 | 51,243,338 | 51,640,468 |
The credit control department reviews on a regular basis the outstanding balances of the customers. When a customer is no longer able to fulfill the outstanding balance an accrual for doubtful debtor is made.
The Group intends to dispose of an office building in the next 12 months, as the company is no longer using this building for its core activities. A search is underway for a buyer. An impairment loss of EUR 710,581 was recognized on the building as held for sale. Please refer to note 7.9.5 Y for the impact of the impairment in the statement of comprehensive income. During 2015 another building previously recognized as asset held for sale has been sold.
Inventory is written off when no sales are expected or when the goods contain defects. In 2015 EUR 2,863,665 additional inventory has been written off. EUR 2,959,744 of the inventory written off previous year has been reversed because it has been scrapped or sold. As a result the net effect is EUR 96,079.
| December 31st | 2015 | 2014 |
|---|---|---|
| Raw materials and supplies, at cost | 35,259,162 | 32,246,188 |
| Work in progress, at cost | 31,333,916 | 27,339,194 |
| Finished goods, at cost | 1,979,348 | 1,396,245 |
| Reserve for obsolete stock | (4,473,611) | (4,569,690) |
| Net | 64,098,815 | 56,411,937 |
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Other receivables | 3,561,600 | 4,638,659 |
| Prepaid expenses | 1,675,651 | 1,272,428 |
| Total | 5,237,251 | 5,911,087 |
The other receivables mainly relate to VAT.
in Euro
| December 31st | Licenses | IP | Total |
|---|---|---|---|
| Acquisition value | |||
| Balance end of previous period | 12,888,459 | 1,264,810 | 14,153,269 |
| Additions of the period | 4,228,240 | - | 4,228,240 |
| Retirements (-) | (1,809,631) | - | (1,809,631) |
| CTA | 960,722 | - | 960,722 |
| Total | 16,267,790 | 1,264,810 | 17,532,600 |
| Depreciation | |||
| Balance end of previous period | 8,723,779 | 706,186 | 9,429,965 |
| Additions of the period | 572,025 | 126,481 | 698,506 |
| Retirements (-) | (308,702) | - | (308,702) |
| CTA | 272,471 | - | 272,471 |
| Total | 9,259,573 | 832,667 | 10,092,240 |
| NET BOOK VALUE | 7,008,217 | 432,143 | 7,440,360 |
Licenses are being amortized over a period of 5 years. IP is amortized over 10 years. All intangible assets have finite useful lives. The yearly amortizing expenses are included in the statement of comprehensive income mainly as cost of sales (Note 7.9.5 S) and research and development expenses (Note 7.9.5 T).
At the end of 2015 the IP has been amortized for 6 years and 7 months.
in Euro
| December 31st | Land and building |
Machinery and equip ment |
Furniture and vehicles |
Fixed assets under construction |
Total |
|---|---|---|---|---|---|
| Cost | |||||
| Beginning of the period | 34,429,151 | 163,630,913 | 9,003,757 | 4,907,102 | 211,970,923 |
| Additions of the year | 5,223,395 | 20,760,861 | 2,132,463 | 15,276,383 | 43,393,102 |
| Retirements | (318,673) | (10,529,927) | (289,515) | - | (11,138,115) |
| Transfer to assets held for sale | - | - | - | - | - |
| Transfers | - | 13,925,336 | - | (13,925,336) | - |
| CTA | 180,627 | 963,548 | 92,930 | - | 1,237,105 |
| End of the period | 39,514,500 | 188,750,731 | 10,939,635 | 6,258,149 | 245,463,015 |
| Accumulated depreciation | |||||
| Beginning of the period | 10,567,831 | 123,601,895 | 6,068,446 | - | 140,238,172 |
| Additions of the period | 1,596,069 | 15,679,099 | 1,232,547 | - | 18,507,715 |
| Retirements | (287,545) | (3,992,037) | (258,628) | - | (4,538,210) |
| Transfer to assets held for sale | - | - | - | - | - |
| CTA | 95,438 | 786,068 | 74,232 | - | 955,738 |
| End of the period | 11,971,793 | 136,075,025 | 7,116,597 | - | 155,163,415 |
| NET BOOK VALUE | 27,542,708 | 52,675,706 | 3,823,038 | 6,258,149 | 90,299,601 |
Additions of the year mainly relate to test equipment. Retirements: no material amount of compensation from third parties which have been concluded in the consolidated statement of comprehensive income. Please refer to Note 7.9.5 N for secured loans on property, plant and equipment. Please refer to Note 7.9.5 E for the assets held for sale.
Fixed assets under construction: this mainly relates to the construction in progress of test equipment. The transfer to machinery and equipment relates to the finished construction of new test equipment.
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Non current financial assets | 6,100 | 6,100 |
As per December 31st, 2015, the total of non current financial assets amounted to EUR 6,100.
This amount reflects the non-controlling interest taken in the course of 2010 in a company. The investments are recognized as investments, initially measured at transaction price (cost price).
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Vacation pay bonuses and 13th month | 6,145,362 | 5,589,093 |
| Other social accruals | 279,679 | 258,491 |
| Remuneration | 324,193 | 264,009 |
| Social security | 163,708 | 160,573 |
| Direct and indirect taxes | 221,656 | 313,009 |
| Total | 7,134,597 | 6,585,174 |
| in Euro |
|---|
| December 31st | 2015 | 2014 |
|---|---|---|
| Capital grants | 501,576 | 436,136 |
| Deferred income | 1,856,651 | - |
| Total | 2,358,226 | 436,136 |
The investment grant is attributed to the consolidated statement of comprehensive income pro rata the acquisition value of new machinery and equipment.
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Accrued real estate withholding tax | 50,606 | 25,000 |
| Accrued financial services | 348,653 | 235,458 |
| Accrued design services | 515,640 | 150,905 |
| Accrued management services | 323,110 | 249,013 |
| Accrued HR services | 118,364 | - |
| Accrued transport services | 138,000 | 50,000 |
| Accrued insurances | 4,000 | 42,000 |
| Accrued IT services | 84,000 | 112,000 |
| Accrued software license fees | - | 40,000 |
| Accrued licenses and royalties | 1,182,139 | - |
| Other | 493,977 | 439,072 |
| Total | 3,258,488 | 1,343,448 |
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Secured loans | ||
| Bank loan (in CHF) at floating interest rate; average rate for the year 2015 was 2.50% (1); maturing in 2019 |
184,587 | 207,918 |
| Bank loan (in EUR) at floating interest rate; average rate for the year 2015 was 1.33%; maturing in 2033, early repaid in 2015 |
- | 1,973,318 |
| Total secured loans | 184,587 | 2,181,236 |
| Unsecured loans | ||
| Unsecured loan (in EUR) at floating interest rate; average rate for the year 2015 was 0.88%; maturing in 2016 |
3,000,000 | - |
| Unsecured loan (in EUR) at floating interest rate; average rate for the year 2015 was 1.33%; maturing in 2018 |
12,000,000 | 16,000,000 |
| Total unsecured loans | 15,000,000 | 16,000,000 |
| Total debt | 15,184,587 | 18,181,236 |
| Current maturities | 7,046,147 | 4,148,252 |
| Long-term portion of debts | 8,138,440 | 14,032,984 |
(1) The loan is secured by a mortgage on the building of Bevaix, Switzerland.
As of December 31st, 2015 there are engagements for the following financial covenants:
Repayment of debts as of December 31st, 2015 is scheduled as follows:
| December 31st | |
|---|---|
| 2016 | 7,046,147 |
| 2017 | 4,046,147 |
| 2018 | 4,046,147 |
| 2019 | 46,147 |
| Total | 15,184,587 |
For Melexis NV consolidated:
As per December 31st, 2015 Melexis is respecting all its financial covenants.
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Other non current liability | 2,115,608 | 1,899,425 |
| Total | 2,115,608 | 1,899,425 |
The other non-current liability mainly relates to an obligation of repayment for subsidies. Melexis GmbH received an investment grant for a planned investment project which ended at year end 2009. The allocation of subsidies is based on "Joint agreement for the improvement of regional economic structures (GA)" and according "European fund for regional development (EFRE)".
As of December 31st, 2015 the common stock consisted of 40,400,000 issued and outstanding ordinary shares without face value.
Each shareholder is entitled to one vote per share, without prejudice to specific restrictions on the shareholders' voting rights in the company's articles of association and Belgian company law, including restrictions for non-voting shares and the suspension or cancellation of voting rights for shares which have not been fully paid up at the request of the Board of Directors.
Under Belgian company law, the shareholders decide on the distribution of profits at the annual shareholders' meeting, based on the latest audited statutory accounts of the company. Dividends may be paid either in cash or in kind. However, shareholders may not declare a dividend if the company has not first reserved at least 5% of its profits for the financial year until such reserve has reached an amount equal to 10% of its share capital (the "legal reserve") or if, following any such dividend, the level of the net assets adjusted for the unamortized balance of the incorporation costs and capitalized research and development costs of the company falls below the amount of the company's paid-in-capital and of its non-distributable reserves. The Board of Directors may pay an interim dividend, provided certain conditions set forth in Belgian company law are met.
In the event of a liquidation of the company, the proceeds from the sale of assets remaining after payment of all Since not all agreed criteria were met at the end of the investment period, there is a risk that Melexis GmbH needs to repay the grant. The repayment of the investment grant threatens at the earliest in the financial year 2017. Because of the long-term character of the liability, a non-current liability has been booked for the amount of EUR 1,921,214.
debts, liquidation expenses and taxes are to be distributed proportionally to the shareholders, subject to liquidation preference rights of shares having preferred dissolution rights. The company currently has no plans to issue any shares having such preferred dissolution rights.
Reserve treasury shares: For own shares repurchased by the Company or entities belonging to Melexis Group, the amount of consideration paid, is recognized as a deduction from equity. In case of a cancellation or sale of treasury shares, the result of the transaction is included in retained earnings.
Revaluation reserve Hedge: Changes In the fair value of the hedging instrument, for which hedge accounting is applied as defined under IAS 39, are recognized in a hedging reserve. For more detail about the fair value of the hedging instruments through equity please refer to note 7.9.5 C.
Revaluation reserve Fair value: The difference between the purchase price and the fair value of current investments classified as available for sale is recognized directly into equity into 'Revaluation reserve fair value'. For more detail about the fair value of the current investments please refer to note 7.9.5 C.
Legal reserve: The part of the retained earnings that can't be used for distribution to the shareholders as a result of the legal requirement to have a legal reserve of at least 10 per cent of the share capital.
Retained earnings: The net earnings retained by the company to be reinvested in its core business, or to pay debt. Cumulative translation adjustment: The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.
Research and development revenues relate to revenues for specific product developments.
The product sales and research and development revenues are as follows:
| December 31st | 2015 | 2014 |
|---|---|---|
| Product sales | 398,924,799 | 330,754,939 |
| Research and development revenues-product developments | 1,211,136 | 1,652,716 |
| Total | 400,135,935 | 332,407,655 |
For the revenue from product sales, please refer to the Operating Segments section in chapter 7.9.5 AB.
The government grants mentioned below consist of capital grants and operational grants. Capital grants are received for investments in buildings, machinery and equipment. The capital grants consist of a percentage of the purchase price of the building, machinery and equipment. Capital grants can be revoked if the expected investment threshold is not met. There is one subsidy that most probably needs to be repaid, this subsidy has been classified as other non-current liability, please refer to note 7.9.5 O. Operational grants are received as an incentive for research and development expenses. Operational grants are paid after pre-defined milestones are met. Capital grants are recognized as cost of sales in relation to the depreciation period of the underlying assets. The operational grants are recognized as a reduction of research and development expenses when incurred.
| December 31st | 2015 | 2014 |
|---|---|---|
| Grants for research and development | 913,831 | 567,677 |
| Investments grants in building, machinery and employment grants | 122,155 | 178,271 |
| Total | 1,035,986 | 745,947 |
Grants for research and development are recognized as a reduction of other expenses included in total research and development expense, see Note 7.9.5 T.
Investment grants in building, machinery and employment grants are recognized as a reduction of purchases included in total cost of sales, see Note 7.9.5 S.
Cost of sales includes the following expenses:
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Purchases | 158,542,346 | 128,821,276 |
| Transportation costs | 3,945,889 | 3,002,435 |
| Salaries | 17,888,917 | 15,400,842 |
| Depreciation and amortization (*) | 16,039,822 | 14,026,559 |
| Other direct production costs | 11,597,569 | 9,850,590 |
| Total | 208,014,543 | 171,101,702 |
The increase in sales resulted in an increase in purchases. The salaries increased due to an increase in headcount.
(*) Includes amounts written off on inventory for the amount of KEUR 2,864 and reversal of amounts written off previous year for
kEUR 2,960. Inventory movement of 2015 (increase) for the amount of EUR 7,686,878 is part of total cost of sales
Research and development expenses include the following expenses:
| December 31st | 2015 | 2014 |
|---|---|---|
| Salaries | 29,408,496 | 24,965,630 |
| Depreciation and amortization | 4,516,485 | 3,741,010 |
| External services | 11,160,784 | 7,843,799 |
| Prototype wafers | 1,982,954 | 2,034,421 |
| Fees | 3,237,190 | 2,166,949 |
| Other | 6,431,144 | 4,681,817 |
| Total | 56,737,053 | 45,433,627 |
Due to an increase in headcount the expenses for salaries increase.
General and administration expenses include the following expenses:
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Salaries | 5,579,230 | 4,362,548 |
| Depreciation and amortization | 2,173,503 | 1,936,650 |
| External services | 3,836,459 | 3,370,629 |
| Fees | 1,295,523 | 1,211,042 |
| Other | 6,205,264 | 5,500,596 |
| Total | 19,089,979 | 16,381,465 |
Selling expenses include the following expenses:
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Salaries | 5,029,911 | 4,670,434 |
| Depreciation and amortization | 79,579 | 71,004 |
| Commissions | 1,136,798 | 1,024,111 |
| Other | 2,443,697 | 2,210,298 |
| Total | 8,689,985 | 7,975,847 |
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Wages and salaries | 57,906,555 | 49,399,454 |
| Total | 57,906,555 | 49,399,454 |
The average number of employees is 1,054 in 2015 and 915 in 2014.
For more detail on compensation of key management, see chapter 8.
Depreciation and amortization include the following expenses: in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Cost of sales | 16,039,822 | 14,026,559 |
| Research and development | 4,516,485 | 3,741,010 |
| General and administration | 2,173,503 | 1,936,650 |
| Selling | 79,579 | 71,004 |
| Total | 22,809,389 | 19,775,224 |
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Other operating expenses | - | 2,339,678 |
| Total | - | 2,339,678 |
The Group intends to dispose of one office building in the next 12 months. A search is underway for a buyer. An impairment loss of EUR 2,339,678 was recognized on reclassification of the buildings as held for sale in 2014. The impairment loss has been booked as other operating expense. In 2015 an impairment loss of EUR 710,581 was recognized as well as a gain of EUR 710,581 on the sale of one building.
in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Financial income | 9,589,633 | 7,148,506 |
| Interest income | 360,583 | 481,710 |
| Exchange differences | 8,753,939 | 4,825,155 |
| Result on financial instruments excluding fair value adjustments | - | 1,800,787 |
| Fair value adjustment FX swaps | 41,113 | 16,605 |
| Fair value adjustment Inflation swaps | 408,630 | - |
| Dividend | - | - |
| Other | 25,368 | 24,250 |
| Financial charges | (7,720,932) | (4,240,903) |
| Interest charges | (464,247) | (482,991) |
| Bank charges | (115,014) | (119,228) |
| Exchange differences | (6,470,626) | (2,560,516) |
| Result on financial instruments excluding fair value adjustments | (591,566) | (335,636) |
| Fair value adjustment FX swaps | - | (117,061) |
| Fair value adjustment Inflation swaps | - | (536,019) |
| Other | (79,480) | (89,451) |
| Net financial results | 1,868,702 | 2,907,604 |
The income tax expenses can be detailed as follows:
| December 31st | 2015 | 2014 |
|---|---|---|
| Current tax expenses | 8,075,186 | 6,138,684 |
| Deferred tax expenses | 2,326,408 | 950,031 |
| Total | 10,401,594 | 7,088,715 |
Intra group transactions resulted in intangible assets in the Melexis Technologies NV and Melexis Technologies SA statutory financial statements. These assets, although eliminated in consolidated figures, result in tax deductible amortization charges in the hands of both companies. Deferred tax effects linked to these transactions could amount to approximately EUR 20.4 mio at year end 2015. Added to deferred tax effects linked to available tax offsets carried forward in the hands of Melexis Technologies NV and Melefin NV and deferred tax effects resulting from among others fair value adjustments related to financial instruments the maximum amount of deferred tax assets to be recognized sums up to EUR 30.9 mio at year end 2015.
Consistent with prior years the company assessed to which extent it is probable that this positive tax effect will effectively be realized in the future. In this respect the Board of Directors in particular takes into account the uncertainties related to the rapid technological evolutions in the sector, the highly competitive market as well as the fact that the company only has short term contracts with
Components of deferred tax assets are as follows: in Euro
its customers. In line with prior year, in her judgment, the Board of Directors not only takes into account the profitability over the coming year but instead the average profitability over the coming three years. Such approach is found to be expedient in order to avoid unrealistic year on year fluctuations in estimated realization of the deferred tax asset. Taking into account these considerations the Board of Directors has decided to recognize as per December 31st, 2015 a cumulative deferred tax asset of EUR 10,876,579. Accordingly the unrecognized deferred tax asset amounts to approximately EUR 20.0 mio at year end 2015.
Consolidated figures show a current tax receivable amounting to EUR 1,384,340 and a current tax liability amounting to EUR 6,542,984. Most important component of the current tax liability is the Belgian corporate income tax due by Melexis Technologies NV for financial year 2014 amounting to EUR 1.8 mio and the estimated Belgian corporate income tax due by Melexis Technologies NV for financial year 2015 amounting to EUR 3.9 mio.
| 1 Jan 2015 | Charged to income statement |
Charged to equity |
31 Dec 2015 | |
|---|---|---|---|---|
| Tax amortization charges | 11,560,000 | (2,090,000) | 9,470,000 | |
| Fair value adjustments financial instruments | 1,218,291 | (873,737) | 344,554 | |
| Tax losses carried forward | - | 650,000 | 650,000 | |
| Fair value adjustments hedge accounting | 233,028 | (41,519) | 191,509 | |
| Miscellaneous | 233,187 | (12,671) | 220,516 | |
| Total | 13,244,506 | (2,326,408) | (41,519) | 10,876,579 |
Reconciliation of the expected tax expense and the consolidated income taxes is as follows: in Euro
| December 31st | 2015 | 2014 |
|---|---|---|
| Income before taxes | 109,473,076 | 92,082,940 |
| Expected taxes at domestic rate | 37,209,898 | 31,298,991 |
| Effective taxes | 10,401,594 | 7,088,715 |
| Difference to be explained | (26,808,304) | (24,210,276) |
| Explanation of the difference | ||
| Difference foreign tax percentages and other tax regimes | (1,208,338) | 904,786 |
| Effect IP amortization | (8,282,764) | (6,036,240) |
| Fair value adjustments financial instruments | 113,738 | (216,337) |
| Tax effect non-deductible items | 232,967 | 215,496 |
| Tax effect non-taxable income | (192,893) | (839,675) |
| Tax effect patent income deduction | (6,983,613) | (10,767,228) |
| Tax effect notional interest deduction | (9,014,934) | (4,065,998) |
| Tax effect investment deduction | (2,939,100) | (3,175,681) |
| Tax losses carried forward | (674,042) | (3,800,937) |
| Current tax adjustments relating to prior years | (510,995) | (137,378) |
| Miscellaneous | 49,074 | 1,549,679 |
| Unrecognized deferred tax assets current period | 389,925 | 914,129 |
| Change of recognition of deferred tax assets (decrease + / increase - ) | 2,212,671 | 1,245,108 |
| Total | (26,808,304) | (24,210,276) |
| Difference | - | - |
Melexis uses the management approach for determining its segment information. As of 2014 Melexis has only one operating segment. The available information that is evaluated regularly by the chief operating decision maker has only one operating segment. Melexis products and production processes have evolved in such a way that the distinction between automotive and non-automotive segments is no longer relevant. Operating decisions are taken for each individual product during a committee lead by the CEO, based on performance assessments.
The following table summarizes sales by customer for the 10 most important customers. It consists of the sales to the end customers and not to the subcontractors.
The Melexis group's activities are conducted predominantly in Western Europe, Eastern Europe, Asia and the United States.
| December 31st | 2015 | 2014 |
|---|---|---|
| Customer A | 18 | 18 |
| Customer B | 7 | 6 |
| Customer C | 6 | 6 |
| Customer D | 4 | 5 |
| Customer E | 4 | 4 |
| Customer F | 3 | 4 |
| Customer G | 3 | 3 |
| Customer H | 3 | 3 |
| Customer I | 2 | 2 |
| Customer J | 2 | 2 |
| Total | 53 | 53 |
The table below shows the revenue by origin, this refers to the geographical area in which the entity, which has made the invoice towards the customer, is located.
| December 31st, 2015 | Europe, Middle East and Africa |
North and Latin America |
Asia Pacific | Total |
|---|---|---|---|---|
| Revenue by origin | 400,136 | - | - | 400,136 |
| Non current assets | 101,689 | 312 | 6,630 | 108,630 |
in %
| December 31st, 2014 | Europe, Middle East and Africa |
North and Latin America |
Asia Pacific | Total |
|---|---|---|---|---|
| Revenue by origin | 332,408 | - | - | 332,408 |
| Non current assets | 88,147 | 271 | 2,253 | 90,671 |
Due to the fact that the production sites are mainly located in Europe, the assets are also centralized in Europe (see table above). In the other geographical areas outside Europe, mainly sales offices are located and therefore less assets are present.
The following graph and table summarizes sales by destination (this refers to the geographical area in which the customer is located. Also equal to billing address):
| December 31st | 2015 | 2014 |
|---|---|---|
| Europe, Middle East and Africa | 159,547,540 | 134,526,658 |
| Germany | 70,991,866 | 60,373,101 |
| France | 11,571,558 | 8,249,812 |
| United Kingdom | 11,286,085 | 9,205,976 |
| Poland | 9,784,860 | 8,711,229 |
| Switzerland | 7,681,199 | 5,097,134 |
| Ireland | 4,599,118 | 4,845,221 |
| Czech Republic | 3,044,865 | 2,784,577 |
| Austria | 14,581,128 | 13,162,942 |
| Netherlands | 1,190,535 | 731,369 |
| Romania | 9,265,644 | 9,257,761 |
| Bulgaria | 2,466,749 | 1,823,428 |
| Spain | 941,897 | 1,855,834 |
| South Africa | 2,526,753 | 1,713,583 |
| Hungary | 4,654,359 | 3,658,803 |
| Other | 4,960,924 | 3,055,888 |
| North and Latin America | 56,615,200 | 51,062,950 |
| United States | 39,243,371 | 36,222,352 |
| Canada | 2,502,435 | 1,728,463 |
| Mexico | 14,754,797 | 13,018,351 |
| Brazil | 114,597 | 93,784 |
| Asia Pacific | 183,973,196 | 146,818,047 |
| Japan | 32,310,736 | 27,023,705 |
| China | 39,464,476 | 33,570,267 |
| Hong Kong | 19,644,124 | 14,789,724 |
| Thailand | 51,485,509 | 40,497,357 |
| Korea | 22,335,883 | 17,255,961 |
| Philippines | 5,278,672 | 3,168,059 |
| Taiwan | 7,988,090 | 6,281,007 |
| India | 1,338,940 | 1,266,587 |
| Other | 4,126,766 | 2,965,380 |
Total 400,135,935 332,407,655
In Euro
Melexis NV is the parent company of the Melexis group that includes following entities and branches which have been consolidated:
| Melexis Inc | US entity |
|---|---|
| Melexis Gmbh | German entity |
| Melexis Bulgaria Ltd. | Bulgarian entity |
| Melexis BV | Dutch entity |
| Melexis Ukraine | Ukrainian entity |
| Melexis Technologies SA | Swiss entity |
| Melexis French branch | French branch |
| Sentron AG | Swiss entity |
| Melefin NV | Belgian entity |
| Melexis Technologies NV | Belgian entity |
| Melexis Philippine branch | Philippine branch |
| Melexis Japan | Japanese Entity |
| Melexis Hong Kong | Chinese branch |
| Melexis Electronic Technology Co. Ltd | Chinese entity |
| Melexis Switzerland SA | Swiss entity |
| Melexis (Malaysia) Sdn. Bhd. | Malaysian entity |
| Melexis Technologies NV (Malaysian) branch | Malaysian branch |
The shareholders of Melexis NV are as follows:
ops, produces and sells test systems for the semi-conductor industry. During 2014, Xtrion NV acquired the shares of XPEQT Group held by Mrs Françoise Chombar and Mr Roland Duchâtelet. As a consequence, XPEQT Group is now owned by Xtrion NV for 99.99%. One share is held by Mrs Françoise Chombar and one share is held by Mr Roland Duchâtelet.
As of December 31st 2015 and 2014, the following balances were outstanding:
| December 31st | 2015 | 2014 | |
|---|---|---|---|
| On | Elex | 3,630 | 3,630 |
| Xtrion | 4,598 | 4,598 | |
| Fremach Dieppe | 16,380 | 147,723 | |
| Epiq NV | - | - | |
| Xfab group | 1,578,427 | 1,128,688 | |
| Xpeqt group | 30,305 | 15,631 | |
| Anvo-Systems | 365,898 | 283,437 | |
| Other | - | 236 | |
| Total | 1,999,238 | 1,583,942 |
| December 31st | 2015 | 2014 | |
|---|---|---|---|
| On | Elex | 41,794 | 27,767 |
| Xtrion | 65,665 | 50,410 | |
| Epiq NV | (4) | (4) | |
| Xfab group | 8,640,193 | 4,920,644 | |
| Xpeqt group | 1,958,423 | 1,160,685 | |
| Anvo-Systems | 33,536 | (635) | |
| Other | 51,196 | - | |
| Total | 10,790,802 | 6,158,866 |
| December 31st | 2015 | 2014 |
|---|---|---|
| Long term receivable part of other non-current assets | ||
| Xfab group | - | 910,970 |
EUR 0 is outstanding for more than 1 year and EUR 896,340 is due within 1 year. The amount of 896,340 due withing 1 year is part of the receivable amount on Xfab group of 1,578,427.
In the course of the year, following transactions have taken place:
| December 31st | 2015 | 2014 |
|---|---|---|
| Sales to | ||
| Fremach Dieppe (mainly IC's)* | 492,524 | 1,153,388 |
| Xpeqt group | 1,040 | 1,040 |
| * IC's: Integrated Circuits | ||
| December 31st | 2015 | 2014 |
| Purchases from | ||
| Xfab group (mainly wafers) | 122,896,023 | 103,568,347 |
| Xpeqt group (mainly equipment and goods) | 10,545,394 | 5,338,723 |
| Xtrion (mainly IT infrastructure) | 324,234 | 248,532 |
| X-CelePrint | 1,800,000 | - |
| Sales/purchases of services | ||
| December 31st | 2015 | 2014 |
| Sales to | ||
| Elex (mainly R&D services and rent) | 37,209 | 36,000 |
| Xpeqt group (infrastructure office building) | 172,047 | 120,346 |
| Epiq NV (infrastructure office building) | - | - |
| Xtrion (infrastructure office building) | 47,565 | 45,600 |
| Xfab group | 567,178 | 553,837 |
| Anvo-Systems | 139,874 | 198,976 |
| December 31st | 2015 | 2014 |
| Purchases from | ||
| Xtrion NV (mainly IT and related support) | 1,046,902 | 1,028,224 |
| Elex NV (mainly IT and related support) | 165,188 | 80,286 |
| Xpeqt group | 1,808,179 | 1,502,768 |
| Xfab group | 2,315,922 | 1,885,031 |
| Anvo-Systems | 649,150 | 679,384 |
| X-CelePrint | 105,000 | - |
The Board of Directors and the Audit Committee have reviewed and analyzed the major transactions and concluded these transactions are within the normal course of business and that there are sufficient elements to conclude that the remuneration is based on arm's length principles.
In accordance with the company's bylaws, directors can be remunerated for their mandate. The independent directors or entity that they represent, have received in total EUR 45,000 and 12,650 expenses during 2015. The other directors are not remunerated.
Net earnings per share are calculated by dividing the net result for the period attributable to ordinary shareholders of EUR 99,071,482 in 2015 and EUR 84,994,225 in 2014 by the weighted average number of ordinary shares outstanding during the period (40,400,000 in 2015 and 40,400,000 in 2014).
The average number of ordinary shares outstanding diluted and non-diluted are the same.
There were no material share transactions or potential share transactions, which occurred after balance sheet date.
The Board of Directors approved on February 8th 2016 to propose to the Annual Shareholder meeting to pay out over the result of 2015 a total dividend of EUR 1.90 gross per share. This amount contains an interim dividend of EUR 1.30 per share which was paid in October 2015 and a final dividend of EUR 0.60 per share which will be payable after approval of the Annual Shareholders meeting.
As of December 31st, 2015 the company had purchase commitments for tangible fixed assets amounting to EUR 1,356,060 mainly related to test equipment for the production sites.
AG. OPERATING LEASE ARRANGEMENTS Operating leases relate to leases of company cars and office material with lease terms of 5 years. The group does not have an option to purchase the leased company cars and office material at the expiry of the lease periods.
| December 31st | 2015 | 2014 |
|---|---|---|
| Company cars | 111,600 | 102,000 |
| Office equipment | 22,080 | 22,080 |
| Total | 133,680 | 124,080 |
Operating lease commitments
| December 31st | 2015 |
|---|---|
| < 1 year | 133,680 |
| >1 year <5 years | 146,440 |
| >5 years | - |
| Total | 280,120 |
No business combinations in 2015.
(1) Melexis is involved in a patent claim because austriamicrosystems is seeking compensation for IP related to a patent on magnetic angle sensing they acquired. The court in Düsseldorf (1st instance) has judged in favour of austriamicrosystems against which Melexis has lodged an appeal with the Higher Regional Court of Düsseldorf. Moreover, Melexis initiated in March 2010 on the basis of prior art, a claim against the austriamicrosystems patent with the Federal Patent Court in Münich, the only competent German court for judging patent validity. As a consequence, the appeal with the Higher Regional Court of Düsseldorf was postponed. On December 9, 2010 the Court rendered its verdict on this patent nullity case. In 1st instance, the Court declared all attacked patent claims as null and invalid based on the prior art submitted by Melexis. The invalidation of all relevant claims of the austriamicrosystems patent takes away the basis for the earlier judgment in the parallel patent infringement case judged in Düsseldorf. However, in May 2014, the patent nullity claim, against which austriamicrosystems lodged an appeal in the Federal Supreme Court of Karlsruhe was judged against Melexis. As a result, the claim in appeal with the Higher Regional Court of Düsseldorf has been reopened. A hearing and verdict might be expected for 2016.
On consolidated basis audit fees and audit related fees required by law amounted to:
Contributions to defined contribution pension schemes are charged to the consolidated statement of comprehensive -income in the year to which they relate. The contributions to defined contribution schemes amounted to EUR 658,209 in 2015 compared to EUR 469,102 in 2014.
The company's employees in Belgium participate in defined contribution plans, funded through a group insurance. The employer contributions paid to the group insurance are based on a fixed percentage of the salary. By law, employers are required to provide an average minimum guaranteed rate of return over the employee's career, currently equal to 3.75% on employee contributions and 3.25% on employer contributions. Until 2016 the insurance company guarantees the minimal rate of return. Since the minimum guaranteed reserves were entirely covered by plan assets, no amounts were recognized in the statement of financial position at December 31, 2014 and 2015.
There are no subsequent events.
| Subsidiary | Place of incorporation |
Principal activities | Ownership interest |
|---|---|---|---|
| Melexis Inc. | USA | R&D, Marketing & Sales support | 100% |
| Melexis GmbH | Germany | R&D + Test operations | 100% |
| Melexis Ukraine | Ukraine | R&D | 100% |
| Melexis Bulgaria Ltd. | Bulgaria | R&D + Test operations | 100% |
| Melexis BV | The Netherlands | R&D | 100% |
| Sentron AG | Switzerland | R&D | 100% |
| Melefin NV | Belgium | Treasury | 99.9% |
| Melexis Technologies NV | Belgium | R&D | 99.9% |
| Melexis Technologies SA | Switzerland | R&D | 99.9% |
| Melexis Japan | Japan | Marketing & Sales support | 100% |
| Melexis Electronic Technology Co.Ltd | China (Shanghai) | Marketing & Sales support | 100% |
| Melexis Switzerland SA | Switzerland | Holding | 100% |
| Melexis (Malaysia) Sdn. Bhd. | Malaysia | Test operations | 100% |
An investment in shares involves certain risks. Prior to making any investment decision, prospective purchasers of shares should consider carefully all of the information set forth in this annual report and, in particular, the risks described below. If any of the following risks actually occur, the company's business, results of operations and financial condition could be materially adversely affected. Except for the historical information in this annual report, the discussion contains certain forward-looking statements that involve risks and uncertainties such as statements regarding the company's plans, objectives, expectations and intentions. The cautionary statements made in this annual report should be read as being applicable to all forward-looking statements wherever they appear in this annual report.
The company's business and prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies active in new and rapidly evolving markets, such as the semiconductor market. To address these risks and uncertainties, the company must, among other things: (1) increase market share; (2) enhance its brand; (3) implement and execute its business and marketing strategy successfully; (4) continue to develop and upgrade its technology; (5) respond to competitive developments; and (6) attract, integrate, retain and motivate qualified personnel. There can be no assurance that the company will be successful in accomplishing any or all of these things, and the failure to do so could have a material adverse effect on the company's business, result of operations and financial condition.
As a result of the rapidly evolving markets in which it competes, the company may be unable to forecast its revenues accurately.
The company's current and future expense levels are based largely on its investment plans and estimates of future revenues. Sales and income from operations generally depend on the volume and timing of, and ability to fulfill, orders received, which are difficult to forecast. The company may be unable to adjust its expenditures in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues in relation to the company's planned expenditures would have an immediate adverse effect on the company's business, income from operations and financial condition. Further, in response to changes in the competitive environment, the company may from time to time make certain pricing, service or marketing decisions that could have a material adverse effect on the company's business, result of operations and financial condition.
The company is subject to risks of currency fluctuations to the extent that its revenues are received in currencies other than the currencies of the company's related costs. Fluctuations in the value of the Euro against an investor's currency of investment may affect the market value of the shares expressed in an investor's currency. Such fluctuations may also affect the conversion into US dollars of cash dividends and other distributions paid in Euros on the shares.
Please refer to the foreign currency risk in chapter 7.9.5 AO of Melexis' Annual Report for more information about the impact of foreign currencies.
The company is subject to risks of financial losses on investments in marketable securities and short term deposits.
To manage future growth effectively, the company must enhance its financial and accounting systems and controls, further develop its management information systems, integrate new personnel and manage expanded operations. The company's failure to manage its growth effectively could have a material adverse effect on the quality of its products and services, its ability to retain key personnel and its business, operating result and financial condition.
As a part of its growth strategy, the company regularly evaluates potential acquisitions of businesses, technologies and product lines. Announcements concerning potential acquisitions and investments could be made at any time.
Future acquisitions by the company may result in the use of significant amounts of cash, potentially dilutive issuing of equity securities, incurrence of debt and amortization expenses related to goodwill and other intangible assets, each of which could materially and adversely affect the company's business, result of operation and financial condition or negatively affect the price of the shares. Should the company's future acquisitions operate at lower margins than those that exist for the company's present services and products, they may further limit the company's growth and place a significant strain on its business and financial resources. In addition, acquisitions involve numerous risks, including difficulties in the assimilation of the operations, technologies, products and personnel of the acquired company, the diversion of management's attention from other business concerns, risks of entering markets in which the company has no, or limited, direct prior experience and potential loss of key employees of the acquired company. While the company has had discussions with other companies, there are currently no commitments or agreements with respect to any potential acquisition. In the event that such an acquisition does occur, there can be no assurance that the company's business, result of operations and financial condition, and the market price of the shares, will not be materially adversely affected.
The company's performance is substantially dependent on the performance and continued presence of its senior management and other key personnel. The company's performance also depends on the company's ability to retain and motivate its other officers and employees. The loss of the services of any of the company's senior management or other key employees could have a material adverse effect on the company's business, result of operations and financial condition.
The company's future success also depends on its ability to identify, attract, hire, train, retain and motivate other highly skilled technical, managerial, marketing and customer service personnel. Competition for such personnel is intense, and there can be no assurance that the company will be able to attract, integrate or retain sufficiently qualified personnel. The failure to retain and attract the necessary personnel could have a material adverse effect on the company's business, result of operations and financial condition.
The company's products may contain undetected defects, especially when first released that could adversely affect its business. Despite rigorous and extensive testing, some defects may be discovered only after a product has been installed and used by customers. Any defects discovered after commercial release could result in (1) adverse publicity; (2) loss of revenues and market share; (3) increased service, warranty or insurance costs; or (4) claims against the company. Any of the foregoing could have a material adverse effect on the company's business, result of operations and financial condition.
The majority of sales to the large automotive accounts are generated by direct sales people. However, over time, increasingly more sales of ASSP's have been generated via the representative and distribution network of Melexis. As the majority of the Melexis ASSP products are unique, the end customers are still dependent on Melexis and not on the representative or distributor that they are working with.
Every distributor or agent or distribution method may involve risks of unpaid bills, idle inventories and inadequate customer service. Any of the foregoing could have a material adverse effect on the company's business, result of operations and financial condition.
The semiconductor industry is characterized by frequent claims alleging the infringement of patents and other intellectual property rights. Thus, the company may receive communications or claims from third parties asserting patents or other intellectual property rights on certain technologies or processes used by the company. In the event any third party claim were to be valid, the company could be required to discontinue using certain processes or technologies or to cease the use and sale of infringing products, to pay damages and to acquire licenses to the allegedly infringed technology or develop non-infringing technologies. The company's business, financial condition and result of operations could be materially and adversely affected by any such development.
The company has already obtained patent protections and expects to file additional patent applications when appropriate to protect certain of its proprietary technologies. The company also protects its proprietary information and know-how through the use of trade secrets, confidentiality agreements and other measures. The process of patent protection can be expensive and time consuming. There can be no assurance that patents will be issued from applications or that, if patents are issued, they will not be challenged, invalidated or circumvented, or that rights granted there under will provide meaningful protection or other commercial advantage to the company. Likewise, there can be no assurance that the company in the future will be able to preserve any of its other intellectual property rights. Melexis is currently involved in a court case with another company related to IP infringement. More information can be found in note 7.9.5 AI Litigation of Melexis' Annual Report.
Melexis receives on a regular basis claims from customers and competitors. The company uses all possible resources to limit the risk for the company. More information on the pending claims can be found in note 7.9.5 AI Litigation of Melexis' Annual Report.
Melexis' biggest customer accounts for 18% of total sales. No other customers have sales over 10% of total sales. While at the moment of introduction of Melexis to the stock market in 1997, the top seven customers still accounted for 70% of sales, the top ten customers for the year ended December 31st, 2015, only accounted for 53% of sales. This decrease is mainly the result of the increased design of Application Specific Standard Products as opposed to customized products.
The main shareholder holds 53.58% of the company's issued and outstanding ordinary shares. As a result, this shareholder, through the exercise of his voting rights, has the ability to significantly influence the company's management and affairs and all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. In addition, some decisions concerning the company's operations or financial structure may present conflicts of interest between the company and this shareholder. For example, if the company is required to raise additional capital from public or private sources to finance its anticipated growth and contemplated capital expenditures, its interests might conflict with those of these shareholders with respect to the particular type of financing sought. In addition, the company may have an interest in pursuing acquisitions, divestitures, financings, or other transactions that, in management's judgment, could be beneficial to the company, even though the transactions might conflict with the interests of this shareholder. Likewise, this shareholder has contractual and other business relationships with the company from time to time. Although it is anticipated that any such transactions and agreements will be on terms no less favorable to the company than it could obtain in contracts with unrelated third parties, conflicts of interest could arise between the company and this shareholder in certain circumstances.
For the required information with respect to the potential conflicts of interest please refer to the related parties in chapter 7.9 of Melexis' Annual Report.
The semiconductor industry is characterized by rapid technology change, frequent product introductions with improved price and/or performance characteristics, and average unit price erosion. These factors could have a material adverse effect on the company's business and prospects.
The automotive semiconductor market is very different from other segments of the semiconductor market. In particular, technological requirements for automotive semiconductors differ significantly as automotive electronics must withstand extreme conditions, including very hot and cold temperatures, dry and humid weather conditions and an environment subject to dust, oil, salt and vibration. In addition and unlike the situation in other segments of the semiconductor market, the supply voltage to automotive semiconductors originating from a car's battery will vary strongly in practice (between 6,5 and 24 volts). As a result these factors make automotive semiconductor product design and, in particular, testing, difficult when compared with other semiconductor markets.
The company currently competes with a number of other companies. These companies could differ for each type of product. The company's competitors include, among others, Allegro Microsystems, Analog Devices, Atmel, Austria Micro Systems, Elmos, Honeywell, Infineon Technologies, Micronas, NXP, ST Microelectronics.
The company believes that the principal competitive factors in its market are technological know-how, human resources, new product development, a close relationship with the leading automotive original equipment manufacturers and to a lesser extent with the car manufacturers.
Many of the company's current and potential competitors have longer operating histories, greater brand recognition, access to larger customer bases and significantly greater financial, technical, marketing and other resources than the company. As a result they may be able to adapt more quickly to new or emerging technologies and changes in customer requirements or to devote greater resources to the promotion and sale of their products than the company.
There can be no assurance that the company will be able to compete successfully against current and future competition. Further, as a strategic response to changes in the competitive environment, the company may, from time to time, make certain pricing, service and marketing decisions or acquisitions that could have a material adverse effect on its business, results of operations and financial condition.
New technologies and the expansion of existing technologies may increase the competitive pressures on the company by enabling its competitors to offer a lower cost service or a better technology. There can be no assurance that any current arrangements or contracts of the company will be renewed on commercially reasonable terms.
Any and all of these events could have a material adverse effect on the company's business result of operations and financial condition.
The semiconductor market is characterized by rapidly changing technology, frequent new product announcements, introductions and enhancements to products, and average unit price erosion. In the automotive semiconductor market the active product life cycle is approximately 5 to 10 years.
Accordingly, the company's future success will depend on its ability to adapt to rapidly changing technologies, to adapt its products and services to evolving industry standards and to improve the performance, features and reliability of its products and services in response to competitive product and service offerings and evolving demands of the marketplace. The failure of the company to adapt to such changes would have a material adverse effect on the company's business, result of operations and financial condition.
The vast majority of the company's products are manufactured and assembled by foundries and subcontract manufacturers under a "fabless" model. This reliance upon foundries and subcontractors involves certain risks, including potential lack of manufacturing availability, reduced control over delivery schedules, the availability of advanced process technologies, changes in manufacturing yields, dislocation, expense and delay caused
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by decisions to relocate manufacturing facilities or processes, and potential cost fluctuations.
During downturns in the semiconductor economic cycle, reduction in overall demand for semiconductor products could financially stress certain of the company's subcontractors. If the financial resources of such subcontractors are stressed, the company may experience future product shortages, quality assurance problems, increased manufacturing costs or other supply chain disruptions.
During upturns in the semiconductor cycle, it is not always possible to respond adequately to unexpected increases in customer demand due to capacity constraints. The company may be unable to obtain adequate foundry, assembly or test capacity from third-party subcontractors to meet customers' delivery requirements even if the company adequately forecasts customer demand.
Alternatively, the company may have to incur unexpected costs to expedite orders in order to meet unforecasted customer demand. The company typically does not have supply contracts with its vendors that obligate the vendor to perform services and supply products for a specific period, in specific quantities, and at specific prices.
The company's foundry and assembly subcontractors typically do not guarantee that adequate capacity will be available within the time required to meet customer demand for products. In the event that these vendors fail to meet required demand for whatever reason, the company expects that it would take up to twelve months to transition performance of these services to new providers. Such a transition may also require qualification of the new providers by the company's customers or their end customers, which would take additional time. The requalification process for the entire supply chain including the end customer could take several years for certain of the company's products.
Melexis sources the majority of its wafers from a related party (cfr. also Related Parties in Chapter 7), but sources also from 2 Asian wafer fabs to reduce the risk of dependency on one supplier. For the packaging services, Melexis sources from several Asian vendors.
The trading price of the company's shares has been and may continue to be highly volatile and could be subject to wide fluctuations in response to factors such as actual or anticipated variations in the company's quarterly operating results, announcements of technological innovations, or new services by the company or its competitors, changes in financial estimates by securities analysts, conditions or trends in semiconductor industries, changes in the market valuations of companies active in the same markets, announcements by the company or its competitors of significant acquisitions, strategic relationships, joint ventures or capital commitments, additions or departures of key personnel, sales of shares or other securities of the company in the open market and other events or factors, many of which are beyond the company's control. Further, the stock markets in general, and Euronext, the market for semiconductor-related and technology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies. These broad market and industry factors may materially and adversely affect the market price of the company's shares, irrespective of the company's operating performance.
Melexis is mainly sensitive to foreign currency and interest rate risk.
unit in currencies other than the unit's functional currency, especially in USD. In 2015, approximately 59% of the group's sales are denominated in USD and approximately 49% of the group's costs are denominated in USD.
The group has transactional currency exposures. Such exposure arises from sales or purchases by an operating
The following table demonstrates the sensitivity to a reasonably possible change in the EUR/USD exchange rate, with all other variables held constant of the Group's result before tax.
| FY 2015 | Increase / Decrease in EUR/USD rate |
Effect on result before taxes (in EUR) |
|---|---|---|
| Reference rate : 1.119 (average FY 2015) | ||
| +0.05 (1.169) | (4,033,143) | |
| -0.05 (1.069) | 4,410,251 |
At December 31st, 2015, following financial assets and liabilities are denominated in USD and CHF:
| 31 Dec 15 (USD) | 31 Dec 15 (CHF) | |
|---|---|---|
| Financial assets | 52,960,914 | 953,260 |
| Cash and cash equivalents | 16,738,277 | 946,738 |
| Trade and other receivables | 36,222,637 | 6,522 |
| Financial liabilities | 12,409,938 | 1,083,070 |
| Trade and other payables | 12,409,938 | 883,070 |
| Loans and borrowings | - | 200,000 |
An increase/decrease of the EUR/USD rate of +/- 500 base points (reference rate = 1.09) would have an impact on the balance sheet value of -1,636k EUR/ +1,793k EUR at 31 December 2015.
An increase/decrease of the EUR/CHF rate of +/- 500 base points (reference rate = 1.08) would have an impact on the balance sheet value of +5k EUR/ -6k EUR at 31 December 2015.
The portion of other non-functional currencies (other than USD and CHF) is not material.
The group's exposure to the risk of changes in market interest rates relates primarily to the group's long-term debt obligations with floating interest rates.
At December 31st, 2015 approximately 100% of the group's borrowings are at a floating rate of interest. In order to hedge the interest rate risk, Melexis is using interest rate derivatives.
The following table demonstrates the sensitivity of the group's financial result to a reasonably possible change in interest rates (through the impact on floating rate borrowings), with all other variables held constant.
The calculation is based on outstanding debt at year end and assumes an increase/decrease of the interest rate on the whole interest rate curve.
| Increase / Decrease | Effect on financial result (in EUR) | ||
|---|---|---|---|
| FY 2015 | in base points | excluding derivatives | including derivatives |
| +15 | (22,777) | (277) | |
| -15 | 22,777 | 277 |
Melexis operates internationally, which could give an exposure to market risks from changes in interest and foreign exchange rates. Melexis uses derivative financial instruments to manage the foreign exchange risks, interest risks and inflation risks.
Risk management policies have been defined on group level, and are carried out by the local companies of the group.
The group has no significant concentration of credit risk with any single counterparty or group of counterparties having similar characteristics. The group has a policy to ensure that sales are only made to new and existing customers with an appropriate credit history.
The group does use derivatives to manage interest rate risks of the outstanding bank debt.
The schedule of long-term-debt repayments is disclosed in Note 7.9.5.N.
The table with outstanding derivatives at year end is disclosed in Note 7.9.5.C.
Liquidity risk arises from the possibility that customers may not be able to settle obligations to the company within the normal terms of trade. To manage the risk the company periodically assesses the financial viability of customers.
The currency risk of the group occurs due to the fact that the group operates and has sales in USD. The group uses derivative contracts to manage foreign exchange risks. The table with outstanding derivatives at year end is taken up in Note 7.9.5.C.
The fair value of foreign exchange contracts is determined using forward exchange market rates at the balance sheet date. For all of these instruments, the fair values are confirmed to the group by the financial institutions through which the group has entered into these contracts.
The group's principal financial instruments not carried at fair value are cash and cash equivalents, trade receivables, other current assets, other non current assets, trade and other payables, bank overdrafts and long term borrowings.
The carrying amount of cash and cash equivalents and of bank overdrafts approximates their fair value due to the short-term maturity of these financial instruments. The fair value of current investments is calculated by reference to the market value on the stock exchange on which the shares are listed.
The fair value of the long-term loans is based on the current rates available for debt with the same maturity profile and approximates their carrying amounts.
Management believes that the exposure to interest rate risk of financial assets and liabilities as of December 31st, 2015 was minimal since their deviation from their respective fair values was not significant.
According to the Royal Decree of 6 June 2010 (B.S.G. 28 June 2010) the 2009 Belgian Code on Corporate Governance is applicable to all listed companies in Belgium.
The English version of the Code can be found on the website of the Belgian Corporate Governance Committee.
Melexis has aligned its Corporate Governance Charter with the 2009 Belgian Code on Corporate Governance. The Corporate Governance Charter can be consulted on the website of the Company at:
http://www.melexis.com/InvestorRelations-Corporate-Governance.aspx
An overview of the principles and guidelines where Melexis does not comply with the 2009 Belgian Code on Corporate Governance is given in Section 8,11 of this Corporate Governance Statement.
Melexis seeks to guarantee transparant and clear communication with its shareholders. Active participation of the shareholders is encouraged by Melexis.
In order to achieve this goal, the shareholders can find all the important and relevant information on the website of Melexis. Melexis publishes the annual reports, half year reports, statutory reports, quarterly results and the financial calendar on its website in the section "Investor Relations". Melexis realizes that the publication of these reports and information benefits the relationship of trust with its shareholders and other stakeholders.
Further on Melexis is committed to guarantee the rights of the shareholders. The terms and obligations which are included in the announcement of the Belgian Financial Services and Markets Authority of April 27, 2011 related to the Law of 20 December 2010 concerning the exercise of certain rights of shareholders, are accordingly respected by Melexis.
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Directors are giving strategic direction to Melexis and supervising the state of affairs within Melexis.
The Board of Directors is assisted in its role by an Audit Committee and a Nomination and Remuneration Committee. These board committees have an advisory function. Only the Board of Directors has the decision-making power.
The daily management of Melexis has been delegated by the Board of Directors to the Chief Executive Officer, Ms. Françoise Chombar, who can represent the company by her sole signature within the framework of the daily management. For actions that fall outside the scope of the daily management, Melexis is validly represented by two directors acting together.
The Chief Executive Officer is also the chairman of the Executive Management. The Executive Management is responsible for leading Melexis in accordance with the global strategy, values, planning and budgets approved by the Board of Directors. The Executive Management is also responsible for screening the various risks and opportunities that the company might encounter in the short, medium or longer term, as well as for ensuring that systems are in place to address these risks and opportunities.
In accordance with article 13 of Melexis' Articles of Association, the Board of Directors consists of at least 5 members, of which at least three members should be independent in accordance with article 526ter of the Companies Code.
The Board of Directors is composed of at least half nonexecutive members and at least one executive member. Independent directors fall in the category of non-executive directors.
The directors are appointed by the majority of the votes cast of the General Meeting for a period of four years. In the same way the General Meeting may dismiss a director at any time. There is no age limit for directors and directors with an expiring mandate can be reappointed within the limits stipulated in the Companies Code.
The Chief Executive Officer is the only member of the Board of Directors that has an executive mandate.
The Chairman of the Board is Mr. Roland Duchâtelet.
The composition of the Board of Directors already takes into account the Act of 28 July 2011 which requires that one third of its members has to be of a different gender as of 1 January 2017.
| Name | Age | Expiry mandate | Position |
|---|---|---|---|
| Roland Duchâtelet | 69 | 2018 | Chairman of the Board Non-executive director |
| Rudi De Winter | 55 | 2018 | Vice-chairman of the Board Non-executive director |
| Françoise Chombar | 53 | 2018 | Managing director, CEO |
| Procexcel BVBA, represent ed by Ms. Jenny Claes |
68 | 2017 | Non-executive and independent director |
| Shiro Baba | 66 | 2017 | Non-executive and independent director |
| Martine Baelmans | 51 | 2018 | Non-executive and independent director |
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Board of Directors Roland Duchâtelet, Martine Baelmans, Rudi De Winter, Jenny Claes, Shiro Baba, Françoise Chombar.
Mr. Roland Duchâtelet is private shareholder of the company since April 1994 and serves as a director ever since. Prior to that date, Mr. Duchâtelet served in various positions in production, product development and marketing functions for several large and small companies. He contributed in the start-up of two other semiconductor manufacturers: Mietec Alcatel (Belgium) from 1983 to 1985 as business development/sales manager and Elmos GmbH (Germany) from 1985 to 1989 as marketing manager. Mr. Duchâtelet is the co-founder of the parent company of Melexis NV. He holds a degree as Electronics Engineer, Applied Economics and an MBA from the University of Leuven.
Mr. Rudi De Winter is private shareholder of the company since April 1994. Since January 2011, he is Chief Executive Officer at X-FAB, a main supplier and related party to Melexis. Between 1996 and 2010 he served as Chief Executive Officer and Managing Director of Melexis. Prior to that date, Mr. De Winter served as development engineer at Mietec Alcatel (Belgium) from 1984 to 1986 and as development manager at Elmos GmbH (Germany) from 1986 to 1989. In 1990, Mr. De Winter became director together with Mr. Duchâtelet of Xtrion NV, the parent Company of Melexis NV. Mr. De Winter holds a degree as Electronics Engineer from the University of Gent. Mr. De Winter is married to Ms. Chombar, Chief Executive Officer and Managing Director.
Ms. Françoise Chombar has served as acting Chief Operating Officer since 1994. Prior to that date, she served as planning manager at Elmos GmbH (Germany) from 1986 to 1989. From 1989 she served as operations manager and director at several companies within the Elex group. Ms. Chombar became director in 1996. She holds a master's degree as Interpreter in Dutch, English and Spanish from the University of Gent. In 2004 Ms. Chombar was appointed co-Managing Director and Chief Executive Officer. After the resignation of Mr. Rudi De Winter, mid February 2011, as Managing Director and Chief Executive Officer, Ms. Chombar will continue these functions.
Ms. Jenny Claes has a long career in three different companies and was mainly active in the field of logistics. This included responsibilities for commercial planning, production planning, warehousing, transport, international sales administration, ICT and quality management. She participated in the start up of the European distribution centre of SKF in Tongeren and held the position of General Manager of SKF Logistics Services Belgium from the end of 2003 till the end of 2008. Ms. Claes held the position of Manager Quality and Business Excellence of SKF Logistics Services worldwide. Ms. Jenny Claes holds a Masters degree in International Trade.
Mr. Shiro Baba has 38 years professional and management experience in different fields related to the semiconductor business. He started his career in 1975 with the semiconductor division of Hitachi. Since 1999 he has held several general management positions within the Hitachi semiconductor division. From 2003 till 2009 Mr. Baba was employed by Renesas Technology Corp. amongst others as general manager of the Automotive Semiconductor Business Unit and later as Board Director and senior VP. His last mandate was President & CEO of Hitachi ULSI Systems Co. before retiring in 2013. Since April 2013 Mr. Baba has been appointed as independent director of Melexis. Mr. Baba obtained a Master's degree in Electrical and Physical Engineering from Tokyo Institute of Technology and in Electrical Engineering from Stanford University.
Ms. Martine Baelmans started her career at KU (Catholic University) Leuven in 1987 as assistant at the Division of Applied Mechanics and Energy Conversion. Since 2006 she is Full Professor at the Faculty of Engineering Sciences and until mid-2013 she was also vice-rector at this university. Ms. Baelmans holds a Master of Science in Mechanical Engineering and a PhD degree in Engineering Sciences from KU Leuven. Her research has been mainly focused on thermodynamics and heat transfer, particularly in applications for electronics cooling.
The Articles of Association (Articles 13 and following) and the Melexis Corporate Governance Charter contain specific rules concerning the (re)appointment, the induction and the evaluation of directors.
Directors are appointed for a term not exceeding four years by the General Meeting of Shareholders, who can also dismiss them at any time. An appointment or dismissal requires a simple majority of the votes cast.
If and when a position of a director prematurely becomes vacant within the Board, the remaining directors temporarily appoint a new director until the General Meeting appoints a new director. Said appointment will then be included in the agenda of the next General Meeting.
The Nomination and Remuneration Committee submits a reasoned recommendation to the Board on the nomination of directors and equally makes propositions to the Board on the remuneration policy for directors and Executive Management.
The internal regulation of the Board is part of the Corporate Governance Charter. The Board convened 8 times in 2015 and discussed, amongst others, the following topics:
• Recommendations of the Audit Committee and the Nomination and Remuneration Committee;
Mrs Jenny Claes could not attend two meetings of the board. The other board members attended all meetings.
The effectiveness of the Board of Directors and its Committees is monitored and reviewed every three years in order to achieve possible improvements in the management of Melexis.
In the evaluation special attention is paid to:
The Audit Committee assists the Board of Directors in its supervisory tasks with respect to the internal supervision in the broadest sense, including the financial reports, as described in the Company's Corporate Governance Charter. The Audit Committee also assists the Executive Management with its execution of the recommendations by the auditor.
The Audit Committee is composed of three non-executive members: Mr. Roland Duchâtelet, Chairman, Procexcel BVBA, represented by Ms. Jenny Claes, independent director and Mr. Shiro Baba, independent director.
According to Article 526bis, §2 of the Belgian Companies Code at least one independent member of the Audit Committee has to be experienced in accounting and audit. Both Procexcel BVBA, represented by Ms. Jenny Claes, and Mr. Shiro Baba comply with this requirement through their relevant work experience. In this respect we like to refer to the short biographies of the abovementioned members in this chapter.
The Chief Executive Officer, the Chief Financial Officer and the external auditor are invited to the meetings of the Audit Committee to warrant the interaction between the Board of Directors and the Executive Management.
The Audit Committee met three times during 2015. All members attended the meetings.
In addition to the exercise of its legal powers and the tasks listed in the Melexis Corporate Governance Charter, the Audit Committee reviewed amongst others:
The Nomination and Remuneration Committee advises the Board of Directors concerning the way in which the company's strategic objectives may be promoted by adopting an appropriate nomination and remuneration program. This committee will supervise the development of salaries, allocation of bonuses and the general performance within Melexis.
The Nomination and Remuneration Committee is composed of three non-executive members, Mr. Roland Duchâtelet, Chairman, Procexcel BVBA, represented by Ms. Jenny Claes, independent director and Mr. Shiro Baba, independent director.
The Nomination and Remuneration Committee met twice in 2015. All members attended the meetings.
In addition to the exercise of its legal powers and the tasks listed in the Melexis Corporate Governance Charter, the Nomination and Remuneration Committee reviewed amongst others:
The Executive Management is composed of the following members:
| Name | Age | Position | |
|---|---|---|---|
| Marc Biron | 45 | Global Development Manager | |
| Françoise Chombar | 53 | Chief Executive Officer | |
| Kristof Coddens | 45 | Business Unit Manager Magnetic Sensors and Sensors Interfaces | |
| René Gouverneur | 66 | Global HR Manager | |
| Karen Van Griensven | 45 | Chief Financial Officer | |
| Veerle Lozie | 42 | Global Operations and IT Manager | |
| Damien Macq | 49 | Business Unit Manager Wireless | |
| Sam Maddalena | 39 | Business Unit Manager Sensors | |
| Gianluigi Morello | 51 | Global Sales Manager | |
| Robert Remmers | 47 | Business Unit Manager Actuators | |
| Ursula Saremski | 60 | Global Quality Manager |
The remuneration policy of Melexis is analyzed on an annual basis by the Nomination and Remuneration Committee in close cooperation with the HR department. This evaluation takes into account the market pay levels to ensure that compensation within Melexis is established in such a way that it enables the company to attract and motivate its talent.
Recommendations of the Nomination and Remuneration Committee are submitted to the Board of Directors for its approval. The Board of Directors approved the remuneration policy in its meeting of December 15th, 2014. The Remuneration Policy has been added to the Corporate Governance Charter of the company. The remuneration policy will most likely remain the same during the current and following financial year.
The remuneration of the directors is subject to the approval of the General Meeting.
Only the mandates of the independent directors are remunerated. Their compensation consists of a fixed annual remuneration of EUR 15,000 and reimbursement of costs to attend the board and/or committee meetings. The directors are expected to uphold the expenditure policy within Melexis and to submit suitable justification for their costs. In 2015 Melexis paid in total EUR 45,000 as remuneration to the independent directors and EUR 12,650 as reimbursement of costs as follows:
| Name | Remuneration | Costs |
|---|---|---|
| Procexcel BVBA, represented by Jenny Claes |
15,000 | 179 |
| Shiro Baba | 15,000 | 12,471 |
| Martine Baelmans | 15,000 | - |
The other directors are not remunerated for their mandate and do not receive any fringe benefits.
The performances of directors are evaluated by the Board of Directors to ensure that only persons with competences matching Melexis' international ambitions are nominated as director.
The compensation of the Executive Management members combines three integrated elements: base salary, variable pay and other benefits. The remuneration packages are granted with the purpose to attract and to retain the best team and management talent in each part of the world where Melexis is present.
The base salaries remain in line with market average. Variable pay payments are dependent on the company's performance and the individual/team performance measured through the achievement of pre-established targets. They can vary up to 20% of the annual base salary, except for the CEO, who can potentially receive a variable pay up to 50% of the annual base salary. Variable pay is paid out in cash. No shares, options or other rights to acquire shares are granted as part of the compensation. The other benefits concern only a smaller part of the total compensation of the Executive Management.
The Nomination and Remuneration Committee evaluates the performance of the CEO and discusses with the CEO the performance of the other members of the Executive Management based on the guidelines of the company's remuneration policy.
The Nomination and Remuneration Committee then makes recommendations to the Board of Directors with respect to the compensation level of the CEO and the other members of the Executive Management based on performance outputs and a benchmark analysis of compensation levels for similar positions at comparable companies. The company has not materially deviated from its remuneration policy during the reported financial year.
Of all the members of the Executive Management only the CEO is also a member of the Board of Directors. The CEO does not receive an additional remuneration for this mandate.
The remuneration of the CEO is composed of a fixed amount and a variable pay. The variable pay of the CEO may vary up to 50% of the determined fixed compensation and will have the following multi year payout period: (i) 50% of the variable pay will be based on performance criteria measured over the performance year itself (ii) 25% of the variable pay will be based on performance criteria measured over two financial years and (iii) 25% of the variable pay will be based on performance criteria measured over three financial years. The funding levels for the annual variable payment are dependent on the company's performance against approved financial targets regarding revenue growth and EBIT growth. The Board however retains the discretion to deviate from these guidelines in exceptional circumstances.
| Françoise Chombar | Remuneration 2015 |
|---|---|
| Base remuneration | 249,996 |
| Short-term variable remuneration | 62,500 |
| Mid-term variable remuneration | 31,250 |
| Long- term variable remuneration | 31,250 |
| Pension | 0 |
| Extra legal arrangements | 0 |
| Reimbursement of costs | 11,398 |
In 2015 the CEO received a fixed remuneration amounting to EUR 249,996 and a variable pay of EUR 125,000.
The CEO does not benefit from contributions in a pension scheme, nor does she have any extra legal arrangements through an individual/group insurance paid for by the company or does she receive any other fringe benefits.
The total amount of the fixed remuneration of the other members of the Executive Management amounted to EUR 1,450,848 in 2015. The total of the 2015 variable pay component payouts amounted to EUR 262,444.
| Executive Managers | Remuneration 2015 |
|---|---|
| Base remuneration | 1,450,848 |
| Variable remuneration | 262,444 |
| Pension | 24,656 |
| Extra legal arrangements | 37,973 |
| Reimbursement of costs | 65,667 |
The Executive Management variable pay scheme does not include a multi-year payout horizon so far.
The annual variable pay opportunities of the Executive Management, except for the CEO, constitute up to 20% of the annual base remuneration, with the exception of one case with an opportunity of 30%, include (i) a global business performance measured through revenue growth and EBIT growth which represents a 50% opportunity of the total variable pay (ii) an assessment of individual performance measured through achievement of pre-established targets, which represents a 50% opportunity of the total variable pay and may be increased up to 70%, taking a discretionary element into consideration.
In the event that any variable remuneration would be paid based on incorrect financial data, such miscalculation could be compensated with the payment of future remuneration.
The members of the Executive Management, except for the CEO, also benefit from extra legal arrangements through a group insurance that is in effect in their respective home countries i.e. pension, life insurance, disability and medical insurance. All these group insurance elements are in line with home country market practices and only represent a minor portion of their remuneration.
Some members of the Executive Management have concluded a service agreement with the company. The total amount of fixed remuneration paid for the services rendered during the financial year 2015 under such agreements amounted to EUR 620,798. The total of the 2015 variable pay component under these agreements amounted to EUR 74,629. These amounts are included in the total amount of the remuneration for the other members of the Executive Management mentioned above.
Members of the Executive Management have contractual agreements with the company or with a subsidiary of the company that provide for severance payments in case of termination of the cooperation in line with the applicable laws of the country where the company or its subsidiary is located. No special arrangements have been made regarding severance payment in the case of contract termination.
According to Article 523 of the Companies Code a member of the Board of Directors has to inform the other directors about any item on the agenda of the Board that will cause a direct or indirect conflict of interest of financial nature to him. In this event the respective director may not participate in the deliberation and the voting on this agenda item.
Pursuant to article 524 of the Belgian Companies Code, companies listed on the stock exchange must follow a special procedure before decisions are taken or operations are executed concerning (i) the relations of the listed company with an affiliated company, except its subsidiaries, and (ii) the relations between a subsidiary of the listed company and an affiliated company of the subsidiary, other than a subsidiary of the subsidiary. Prior to the decision or transaction, a committee composed of three independent directors, assisted by one or more independent experts, must prepare a written motivated advice for the Board of Directors. The auditor delivers an opinion regarding the accuracy of the information contained in the committee advice and in the minutes of the Board of Directors' decision. The advice of the committee, an excerpt from the minutes of the Board of Directors and the opinion of the auditor have to be recorded in the annual report of the company.
The 16th of March 2015 Melexis and X-CelePrint Ltd entered into a non-exclusive license agreement for the use by Melexis of a portfolio of intellectual property concerning the development of magnetic field sensor applications. In accordance with article 523 of the Company Code, the directors concerned Françoise Chombar, Rudi De Winter and Roland Duchâtelet have notified and explained this conflict of interest to the other directors. The committee of independent directors of Melexis decided that the procedure as stated in the articles 523 and 524 of the Belgian Companies Code did not apply since the decision to enter into this license agreement was part of the daily management of Melexis and therefore could be considered as a usual transaction which was concluded at customary market conditions.
During the Meeting of the Board of 14 December of 2015 it was decided to pay an advance to X-FAB Semiconductor Foundries AG to maintain the delivery of wafers. In accordance with article 523 of the Company Code, the directors concerned Françoise Chombar, Rudi De Winter and Roland Duchâtelet have notified and explained this conflict of interest to the other directors. The committee of independent directors of Melexis decided that the procedure as stated in the articles 523 and 524 of the company code did not apply since the decision to pay the advance, was made in the ordinary course of business of Melexis at customary market conditions.
As determined by clause VII.2 of the Melexis Corporate Governance Charter, members of the Board of Directors and the Executive Management have to refrain from any action that could raise the impression to be in conflict with the interests of the company. Therefore any transaction between a director and the company has to be reported to the chairman of the Board of Directors.
In 2015 however there were no transactions between the company and its directors or executive managers which involved a conflict of interest.
In compliance with clause 3.7 of the Belgian Corporate Governance Code 2009 the Melexis Insider Trading Policy was updated in 2011 and approved by the Board of Directors on February 7, 2012. It is integrated as an Annex to the Melexis Corporate Governance Charter.
Melexis complies with the Belgian provisions on insider trading and market abuse. In this respect a list is kept up to date of all people with managerial responsibilities as well as all other people who have access to share price sensitive information.
The Melexis Insider Trading Policy has the purpose to prevent the abuse of information which could have a considerable effect on the share price, in particular during the periods prior to the publication of financial results, or decisions or events which can affect the share price. As determined in the Melexis Insider Trading Policy it is prohibited to sell Melexis shares during such closed period. This closed period includes at least 21 days immediately preceding the announcement of the financial results.
Moreover, before trading any shares of the company the members of the Board and the Executive Management have to receive green light from the Compliance Office and have to report back once the transaction has been completed. Furthermore, in compliance with the same legislation, the members of the Board and the Executive Management have to notify all their transactions in Melexis shares to the Belgian Financial Services and Markets Authority, who will publish this notices on its website.
Compliance with the Melexis Insider Trading Policy will be supported and verified by the Compliance Officer.
The internal control and risk assessment procedures in relation to the process of financial reporting are coordinated by the CFO. Such procedures have to make sure that the financial reporting is based on reliable information and that the continuity of the financial reporting in conformity with the IFRS accounting principles is guaranteed.
The process of internal control in relation to the financial reporting is based on the following principles:
local financial information before sending it to the Global Finance Department.
Melexis is validly represented by the sole signature of the CEO for all aspects of the daily management of the company. Specific powers are granted to members of the Executive Management to represent Melexis in matters that relate to the business unit for which they are responsible. For actions that fall outside the scope of the daily management, the company is validly represented by two directors acting together.
In the event of detection of certain deficiencies, this will be reported to the Executive Management to determine which appropriate measures can be taken.
The risk assessment in connection with the financial reporting is based on the following principles:
• In accordance with the 2009 Belgian Code on Corporate Governance Melexis has set up an internal audit function for its financial department, whose resources and skills are adapted to assess the financial reporting and the risk management of the company. The Audit Committee receives a periodic summary of the internal audit activities.
The registered capital of Melexis NV amounts to EUR 564,813.86 and is represented by 40,400,000 equal shares without par value. The shares are in registered or non-material form.
The Articles of Association contain no restrictions on the transfer of the shares. The Board of Directors is furthermore not aware of any restrictions imposed by law on the transfer of shares by any shareholder, except in the framework of market abuse regulations.
Each share entitles the holder to one vote. The Articles of Association contain no restrictions on the voting rights and each shareholder can exercise his voting rights provided he is validly admitted to the General Meeting and his rights have not been suspended. Pursuant to Article 9 of the Articles of Association the company is entitled to suspend the exercise of the rights attaching to securities belonging to several owners until one person is appointed towards the company as representative of the security.
No one can vote at the General Meeting using voting rights attached to securities that have not been reported timely in accordance with the Articles of Association and with the law.
The Board is not aware of any other restrictions imposed by law on the exercise of voting rights.
The Board of Directors is not aware of any agreements among shareholders that may result in restrictions on the transfer of securities or the exercise of voting rights.
The Articles of Association can be amended by an Extraordinary General Meeting in accordance with the Companies Code. Each amendment to the Articles of Association – including capital increases or reductions, mergers, demergers and a winding up – in general requires an attendance quorum of 50% of the subscribed capital and acceptance by a qualified majority of 75% of the votes cast. More stringent majority requirements have to be complied with in a number of cases, such as the modification of the corporate object or the company form.
The Articles of Association do not mention any special authorities granted to the Board of Directors to increase the registered capital.
The Board of Directors is authorized by the Extraordinary General Meeting of April 22, 2014 to acquire own shares of the Company, whether directly, whether by a person acting in his own name, but on behalf of the Company or by a direct Subsidiary in accordance with article 5, §2, 1 º, 2 º and 4 º, of the Companies Code, under following conditions:
85
and by prior deduction of the available profit. The reserves the company has made unavailable for distribution is only obligatory, if and as long as the shares are being held;
The Board of Directors is also authorized for an indefinite period of time to dispose of purchased own shares in accordance with Article 622, §2, section 2, 1º of the Companies Code to the extent that the shares are disposed on the regulated market on which they are quoted.
On 31 December 2015, the Melexis Group was in the possession of 346,141 shares out of 40,400,000 shares in the registered capital of the company, or 0.86% of the total outstanding share capital. In accordance with art. 622 of the Companies Code, the voting rights on these shares are suspended.
The company has not issued securities with special control rights.
No agreements have been concluded between the company and its directors or employees providing for a compensation if, as a result of a take-over bid, the directors resign or are made redundant without valid reason or if the employment of the employees is terminated.
At the annual General Meeting of April 22nd, 2013 BDO Bedrijfsrevisoren Burg Ven CVBA, with registered office in 1930 Zaventem, Da Vincilaan 9/E6, listed in the Register for Legal Entities of Brussels with company number 431.088.289, has been reappointed as statutory auditor of the company for a period of 3 years, which ends after the annual General Meeting of 2016 relating to the 2015 financial year. Ms. Veerle Catry, auditor, with office in 9820 Merelbeke, Guldensproenpark 100, blok K, is appointed as permanent representative of the auditor.
The annual fee for this mandate amounted consolidated to EUR 125,000 audit fees, VAT excluded and is adjusted annually according to the consumer index. In 2015 the additional legal fees amounted to EUR 16,000 VAT excluded.
Taking into account the expiry of the mandate of the statutory auditor at the general meeting of shareholders of 20 April 2016, this general meeting has to deliberate and decide on the reappointment of the current statutory auditor or the appointment of a new statutory auditor.
On 16 April 2014 the European Parliament and the Council adopted in this respect Regulation No 537/2014 on the specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC Text with EEA relevance. Since Melexis is an issuer of shares that are listed at the stock market of NYSE Euronext Brussels, it is considered to be a public-interest entity within the scope of the Regulation.
As from 17 June 2016 audit firms with an audit mandate in a public-interest entity will be required to rotate after an engagement period of 10 years. This maximum audit engagement of 10 years may be extended with up to 10 additional years if a tender procedure is organized to choose a new audit firm. The period can even be extended with up to 14 additional years in case of joint audit, i.e. if the company being audited appoints more than one audit firm to carry out its audit.
A calibrated transitional period taking into account the duration of the audit engagement is foreseen to guarantee legal certainty and a smooth transition. For Melexis a delay of the audit rotation is possible until 17 June 2023.
Predictive to the application of the Regulation, Melexis organised a tender in which several audit firms were compared prior to the appointment of BDO Bedrijfsrevisoren as statutory auditor of Melexis at the annual general meeting of 22 April 2013.
Therefore the Board of Directors recommends, following the advice of the Audit Committee, to extend the mandate of BDO Bedrijfsrevisoren Burg Ven CVBA, represented by Mrs. Veerle Catry, statutory auditor, at the general meeting of shareholders of 20 April 2016.
Melexis complies to a large extent to all corporate governance rules of the 2009 Belgian Code on Corporate Governance. In view of the "comply-or-explain"- principle of the Code the following overview sets out the principles of the Code that Melexis does not comply with, along with an explanation of the reasons for non-compliance.
The 2009 Belgian Code on Corporate Governance recommends that the Chairman of the Board should not chair the Audit Committee. The Board of Directors of Melexis opts to have its advising committees presided by its Chairman to clarify the interests of the Company and the shareholders.
| • | Listing | Euronext | |
|---|---|---|---|
| --- | --------- | -- | ---------- |
• Reuters ticker MLXS.BR
• Bloomberg ticker MELE BB
Situation on December 31, 2015
| Company | Number of Shares | Participation Rate |
|---|---|---|
| Xtrion | 21,644,399 | 53.58% |
| FMR LLC (Fidelity) | 4,032,132 | 9.98% |
| Treasury Shares | 346,141 | 0.86% |
| Public | 14,377,328 | 35.59% |
| Total | 40,400,000 | 100.00% |
| October 10th, 1997 |
|---|
| 40,400,000 |
| (Euro) | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|---|---|---|---|
| Earnings per share | 2.45 | 2.10 | 1.37 | 1.25 | 1.06 | 1.12 | (0.09) | 0.52 | 0.86 | 0.80 |
| Net cash from operating activities | 2.85 | 2.35 | 1.75 | 1.41 | 1.35 | 1.04 | 0.46 | 0.62 | 0.77 | 0.86 |
| Gross Dividend | 1.90 | 1.00 | 0.70 | 0.65 | 0.60 | 0.30 | 0.00 | 0.60 | 0.60 | 0.50 |
| Year end price | 50.18 | 37.50 | 23.18 | 12.88 | 10.37 | 13.46 | 6.78 | 5.00 | 11.15 | 13.80 |
| Year's high | 59.47 | 37.54 | 24.44 | 13.40 | 13.84 | 13.80 | 7.44 | 11.87 | 15.00 | 14.38 |
| Year's low | 37.70 | 23.10 | 13.19 | 10.60 | 8.35 | 6.84 | 3.33 | 4.95 | 10.15 | 10.99 |
| Average volume of shares traded/day | 47,105 | 31,617 | 21,046 | 20,591 | 34,818 | 34,900 | 22,137 | 32,991 | 56,569 | 47,027 |
Phone: +32 13 67 07 79 Fax: +32 13 67 21 34 Rozendaalstraat 12, B-8900 Ieper, Belgium www.melexis.com/InvestorRelations.aspx
April 20th, 2016 Annual Shareholder's Meeting
April 22nd, 2016 Announcement of Q1 Results
July 27th, 2016 Announcement of Half Year Results
October 26th, 2016 Announcement of Q3 Results
February 8th, 2017 Announcement of Full Year Results
Taking into account the current and future cash flow situation and if no rewarding investment opportunities can be found, Melexis NV intends to pay out regular (interim-) dividends, in order to maximize the return on equity for its shareholders.
Gross (interim-) dividend paid out per share in 1999: EUR 0.30 interim dividend 2002: EUR 0.50 interim dividend 2003: EUR 0.50 interim dividend 2004: EUR 0.2762 dividend and EUR 0.7238 capital decrease 2005: EUR 0.50 interim dividend 2006: EUR 0.50 interim dividend 2007: EUR 0.60 interim dividend 2008: EUR 0.60 interim dividend 2009: no dividend 2010: EUR 0.30 interim dividend 2011: EUR 0.60 interim dividend 2012: EUR 0.65 interim dividend 2013: EUR 0.70 interim dividend 2014: EUR 1.00 interim dividend 2015: EUR 1.30 interim dividend EUR 0.60 final dividend (payable after approval of the Annual Shareholders meeting on April 20th, 2016)
The following information is extracted from the separate Belgian GAAP financial statements of Melexis NV. These separate financial statements, together with the management report of the board of directors to the general assembly of shareholders as well as the auditors' report, will be filed with the National Bank of Belgium within the legally foreseen time limits.
It should be noted that only the consolidated financial statements as set forth in chapters 7 and 8 present a true and fair view of the financial position and performance of the Melexis group.
Therefore, these separate financial statements present no more than a limited view of the financial position of Melexis.
For this reason, the board of directors deemed it appropriate to publish only an abbreviated version of the non-consolidated balance sheet and income statement prepared in accordance with Belgian GAAP as at and for the year ended December 31st, 2015. Participations in affiliated companies are recognized at purchase price.
The statutory auditors' report is unqualified and certifies that the non-consolidated financial statements of Melexis NV prepared in accordance with Belgian GAAP for the year ended December 31st, 2015 give a true and fair view of the financial position and results of Melexis NV in accordance with all legal and regulatory dispositions.
The full statutory financial statements can be obtained at the registered office of the company at Rozendaalstraat 12, 8900 Ieper.
90
in 1,000 Euro
| ASSETS | 2015 | 2014 |
|---|---|---|
| FIXED ASSETS | 686,411 | 683,973 |
| I. Formation expenses | - | - |
| II. Intangible assets | 844 | 601 |
| III. Tangible assets | 30,283 | 29,133 |
| A. Land and buildings | 12,258 | 10,403 |
| B. Plant machinery and equipment | 16,691 | 16,214 |
| C. Furniture and vehicles | 894 | 887 |
| F. Assets under construction and advanced payments | 441 | 1,628 |
| IV. Financial assets | 655,283 | 654,239 |
| A. Affiliated companies | 655,253 | 654,202 |
| 1. Participations | 655,253 | 654,202 |
| B. Other enterprises linked by participating interests | 6 | 6 |
| 1. Participations | 6 | 6 |
| C. Other financial assets | 24 | 31 |
| 2. Receivables and caution money | 24 | 31 |
| CURRENT ASSETS | 2,278 | 2,554 |
| V. Amounts receivable after more than one year | 3 | 47 |
| 1. Other receivables | 3 | 47 |
| VII. Amounts receivable within one year | 295 | 166 |
| A. Trade receivables | 29 | 71 |
| B. Other receivables | 266 | 95 |
| VIII. Cash investments | 271 | 271 |
| A. Own shares | 21 | 21 |
| B. Other investments and deposits | 250 | 250 |
| IX. Cash deposits | 161 | 205 |
| X. Deferred assets and accrued income | 1,547 | 1,865 |
| TOTAL ASSETS | 688,689 | 686,527 |
91
in 1,000 Euro
| 2015 | 2014 | |
|---|---|---|
| SHAREHOLDERS' EQUITY | 361,630 | 430,232 |
| I. Capital | 565 | 565 |
| A. Outstanding Capital | 565 | 565 |
| IV. Reserves | 84 | 81 |
| A. Legal reserve | 57 | 57 |
| B. Reserves not available for distribution | 28 | 24 |
| 1. In respect of own shares held | 28 | 24 |
| V. Retained earnings | 360,585 | 429,312 |
| VI. Investment grants | 396 | 274 |
| DEBTS | 327,059 | 256,295 |
| IX. Amounts payable within one year | 325,502 | 254,876 |
| B. Financial debts | - | - |
| 1. Credit institutions | - | - |
| C. Trade debts | 2,096 | 1,287 |
| 1. Trade payables | 2,096 | 1,287 |
| E. Taxes, remuneration and social security | 2,082 | 4,174 |
| 1. Taxes | 6 | 2,281 |
| 2. Remuneration and social security | 2,076 | 1,893 |
| F. Other amounts payable | 321,324 | 249,415 |
| X. Accrued charges and deferred income | 1,557 | 1,420 |
| TOTAL LIABILITIES | 688,689 | 686,527 |
in 1,000 Euro
| 2015 | 2014 | |
|---|---|---|
| I. Operating income | 44,235 | 39,734 |
| A. Turnover | 43,341 | 38,805 |
| C. Other operating income | 894 | 929 |
| II. Operating charges | (31,938) | (28,094) |
| B. Services and other goods | 13,110 | 11,392 |
| C. Remuneration, social security charges and pensions | 12,019 | 10,422 |
| D. Depreciations | 6,709 | 6,148 |
| E. Amounts written off stocks, contracts in progress and trade receivables | - | 1 |
| G. Other operating charges | 99 | 132 |
| III. Operating result | 12,297 | 11,640 |
| IV. Financial income | 49 | 23 |
| B. Income from current assets | 12 | 2 |
| C. Other financial income | 37 | 21 |
| V. Financial charges | (4,308) | (5,360) |
| A. Debt charges | 4,025 | 3,968 |
| C. Other financial charges | 283 | 1,391 |
| VI. Result of ordinary activities before taxes | 8,039 | 6,303 |
| VII. Extraordinary income | - | - |
| D. Gains on disposal of fixed assets | - | - |
| VIII.Extraordinary charges | - | (750) |
| D. Impairment on financial fixed assets | - | 750 |
| IX. Result of the year before taxes | 8,039 | 5,553 |
| X. Income taxes | (6) | (17) |
| A. Taxes | 6 | 41 |
| B. Regularization | (0) | (24) |
| XI. Result of the year | 8,033 | 5,536 |
| XIII. Profit of the year available for appropriation | 8,033 | 5,536 |
| 2015 | 2014 | |
|---|---|---|
| A. Result to be appropriated | 437,345 | 469,712 |
| 1. Result of the period available for appropriation | 8,033 | 5,536 |
| 2. Result carried forward | 429,312 | 464,176 |
| C. Transfers to capital and reserves | (3) | (2) |
| 1. To other reserves | (3) | (2) |
| D. Result to be carried forward | 360,585 | 429,312 |
| 1. Result to be carried forward | 360,585 | 429,312 |
| F. Distribution of profit | (76,757) | (40,398) |
| 1. Dividends | (76,757) | (40,398) |
Profit attributable to equity holders of Melexis divided by the weighted average number of ordinary shares.
Profit attributable to equity holders of Melexis divided by the fully diluted weighted average number of ordinary shares.
Product sales + Revenues from Research and Development.
Turnover/Sales – Cost of sales – Research and development expenses – General and administrative expenses – Selling -expenses – Other operating expenses.
EBIT + depreciation, amortization and impairment.
Shareholders' capital + retained earnings (inclusive current year's result) +/- reserves (reserve treasury shares, revaluation reserve hedge, revaluation reserve fair value, legal reserve) +/- Cumulative translation adjustment.
Current portion of long-term debt + long-term debt less -current portion + bank loans and overdrafts – current -investments - cash and cash equivalents.
(Total current assets – Cash and cash equivalents - current investments) – (current liabilities – bank loans and overdrafts – current portion of long-term debt – derivative financial -instruments).
Net Result +/- adjustments for operating activities +/ changes in working capital.
Capital expenditure Investments in Property, Plant and Equipment.
Net Income/Shareholders' equity.
Liquidity Current assets/current liabilities.
Shareholders' equity/total assets.
Total assets - liabilities - intangible assets.
96
Fax: +32 www.bdo 210 54't0 232 43 40 (0)e (0)e .be
Axxes Business Park Gutdensporenpark 100 - btok K B-9820 Meretbeke
MELEXIS NV
Statutory auditor's report to the general meeting of the company for the year ended 3l December 2015
BDO Bedrijfsrevisoren Burg. Ven. CVBA / BTW BE 0431 088 289 RPR Brussel
Fax: +32 www.bdo.be (0\9 210 54 10 (0\9 232 43 40 Axxes Business Park Gutdensporenpark 100 - btok K B-9820 Meretbeke
Free translation
As required by [aw, we report to you on the performance of our mandate of statutory auditor. This report inctudes our opinion on the consotidated financial statements, as we[[ as the required additional statement. The consotidated financiat statements comprise the consotidated statement of financiat position as at 31 December 2015, the consotidated income statement, consotidated statement of comprehensive income, the consotidated statement of changes in equity and the consotidated statement of cash flows for the year then ended and the exptanatory notes.
We have audited the consotidated financial statements of the company Metexis NV for the year ended 31 December 2015, prepared in accordance with the lnternationa[ Financial Reporting Standards as adopted by the European Union, which show a consotidated statement of financial position totat of 306.770.078 EUR and a consotidated income statement showing a consolidated profit for the year of 99.071.482 EUR.
The board of Directors is responsible for the preparation of consotidated financial statements that give a true and fair view in accordance with the lnternational Financial Reporting Standards, and for such internal control as the board of Directors determines is necessary to enabte the preparation of annual accounts that are free from material misstatement, whether due to fraud or error.
Our responsibitity is to express an opinion on these consotidated financial statements based on our audit. We conducted our audit in accordance with lnternational Standards on Auditing (lSA's). Those standards require that we comply with the ethical requirements and ptan and perform the audit to obtain reasonabte assurance about whether the consolidated financial statements are free from material misstatement.
An audit invotves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the statutory auditor's judgment, inctuding the assessment of the risks of material misstatement of the consotidated financiat statements, whether due to fraud or error. ln making those risk assessments, the statutory auditor considers the company's internal control relevant to the preparation of consotidated financial statements that give a true and fair view, 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 Ínternal control. An audit also includes evatuating the appropriateness of accounting policies used and the accounting estimates made by the board of Directors, as well as evatuating the overalt presentation of the consolidated financial statements.
BDO Bedrijfsrevisoren Burg. Ven. CVBA / BTW BE 0431 088 289 RPR Brussel
BDO Bedrjjfsrevisoren Burg. Ven. CVBA, a timjted tiabitity company incorporated in Betgium, is a member of BDO lnternationaI Limited, a UK company timited by guarantee, and forms part of the internationat BDO network of independent member firms.
We have obtained from the board of Directors and company officiats the exptanations and information necessary for performing our audit.
We betieve that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
ln our opinion, the consolidated financial statements of the company Melexis NV give a true and fair view of the group's equity and financia[ position as at 31 December 201 5, and of its results and its cash flows for the year then ended, in accordance with the lnternational Financial Reporting Standards as adopted by the European Union.
The board of Directors is responsibte for the preparation and the content of the Directors' report on the consotidated financial statements.
ln the context of our mandate and in accordance with the Betgian standard which is complementary to the lnternational Standards on Auditing (lSAs) as appticabte in Betgium, our responsibitity is to verify, in atl material respects, comptiance with certain [egat and regutatory requirements. On this basis, we make the following additionat statement, which do not modify the scope of our opinion on the consotidated financiat statements:
. The Directors' report the consolidated financial statements includes the information required by law, is consistent with the consotidated financial statements and is free from material inconsistencies with the information that we became aware of during the performance of our mandate.
Mere 2016
B prises Soc. Civ. SCRL audito Represented by Veerte Catry
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