Bossard : Semi-Annual Report 2021

REPORT TO THE SHAREHOLDERS

Strong growth dynamic and new records

SEMI-ANNUAL REPORT 2021

CONTENTS

03 Key figures

04 Report to the shareholders

06 Consolidated balance sheet

07 Consolidated income statement

08 Consolidated statement of changes in equity

1. Consolidated cash flow statement
2. Notes to the consolidated financial statements

14 Agenda

Short profile

The Bossard Group is a leading global provider of product solutions and services in industrial fastening and assembly technology. More than 1 million items as well as proven expertise in technical consulting and inventory management distinguishes the Bossard Group.

Bossard was founded in Zug in 1831. Today local and multinational companies count on Bossard's expertise to increase their productivity - with success. Bossard calls this concept, which is also a promise to its customers, "Proven Productivity." This includes, among other things, optimizing processes and reducing inventories to increase the efficiency and productivity sustainably. In addition, Bossard

is considered a pioneer in developing intelligent production facilities in line with Industry 4.0.

With 2,500 employees at 83 locations in 31 countries throughout the world, the Bossard Group generated CHF 812.8 million in sales in the financial year 2020. Bossard is listed on the SIX Swiss Exchange.

Key figures

		First 6 months	First 6 months	Year
in CHF million	2021		2020	2020
Net sales		494.8		399.4	812.8
Gross profit		159.8		122.2	248.7
EBIT	67.2		41.1	86.4
in % of net sales	13.6		10.3	10.6
Net income	52.6		31.6	67.8
in % of net sales		10.6	7.9	8.3
Cash flow from operating activities		46.6	34.4	91.6
Current assets		551.5	480.2	453.2
Non-current assets	191.0	183.4	188.1
Current liabilities	240.8	199.9	174.5
Non-current liabilities	148.1	166.3	144.5
Shareholders' equity	353.6	297.4	322.3
in % of total assets	47.6	44.8	50.3
Total assets	742.5	663.6	641.3
Net debt	152.6	191.9	155.7
Weighted average number of employees 1)	2,459		2,412	2,410
Share capital 2)
Number of shares entitled to dividend
Registered A shares at CHF 5 par	6,336,940		6,314,512	6,330,874
Registered B shares at CHF 1 par	6,750,000		6,750,000	6,750,000
Registered shares equivalents at CHF 5 par
entitled to dividend	7,686,940		7,664,512	7,680,874
Market price in CHF (Ticker symbol: BOSN)
Closing price at end of reporting period		282.5		144.8	178.4
Registered A share high during reporting period		284.5		176.1	179.4
Registered A share low during reporting period	175.6		95.1	90.0
Key figures
Consolidated earnings per registered A share in CHF 2) 3)		13.46		8.25	8.73
Net asset value per registered A share in CHF		46.0		38.8	41.9
Price/earnings ratio (Basis: 30.06./31.12.)		21.0		17.6	20.4
Price/book value per share (Basis: 30.06./31.12.)		6.1		3.7	4.3

1. Period average full time equivalent
2. Basis: Annual average of share capital entitled to dividend
3. Basis: Net income of shareholders of Bossard Holding AG - First 6 months extrapolated to 12 months

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REPORT TO THE SHAREHOLDERS

Strong growth dynamic and new records

Dear shareholders,

A broad-based economic upturn on a global scale dominated the first half of 2021. Bossard reached new records in sales as well as EBIT and net income, thus returning to a growth course. Sales in the first half of 2021 grew by

23.9 percent to CHF 494.8 million (previous year: CHF 399.4 million). All three market re- gions contributed to this significant growth with double-digit growth rates. EBIT increased by 63.6 percent to CHF 67.2 million, with the EBIT margin reaching a high 13.6 percent. Therefore, sales and the mid-year result are not only significantly above prior year, but also 9.7 percent and 26.9 percent respectively above 2019 levels. Ongoing growth initiatives also boost the structural growth of the Group.

The strong performance in the first half of the year is a result of both the last year's low comparative base as well as high demand in all three market regions following the slowdown of the COVID-19 pandemic. The fourth quarter of 2020 already showed accelerated demand, which picked up even further in the first half of this year. The breadth of this recovery was evident in the double-digit growth rates, not only in all three market regions but even in all regional compa- nies. The growth industries in focus, such as robotics, electromobility, railway, and healthcare technology, performed particularly well.

In the first half of 2020, the Bossard Group worked hard to ensure supply to its customers in spite of interrupted supply chains as a result of the lockdowns. Similarly, the Group continued to face major challenges on the procurement market in the first six months of 2021. In this case, above-average demand led to supply shortages, capacity restrictions, and a significant price increase for raw materials and shipping costs.

In both extreme situations, three key factors were essential for Bossard's success. The first is the flexibility of our employees, who performed exceptionally well under difficult circumstances. The second is Bossard's proven purchasing strategy, which is based on multiple sources of procurement. And the third is our gen-

erous stock-keeping. Although the latter represents a capital lockup of over CHF 280 million, the largest position on the balance sheet, it was of major importance during the last 18 months because it ensured the best possible delivery capability to our customers.

Strong recovery in Europe

Europe played a major role in the significant improvement of the result in the first half of the year. Sales in the first six months increased by 24.6 percent to CHF 293.7 million (in local currency: +22.2 percent). All areas, with the exception of the aerospace seg- ment, showed solid growth. This was not only due to Bossard's consistently high delivery capability, but also a result of the recovery of the European econo- my. In addition, substantial business was gained in the focus market of railway vehicle construction.

Diversified growth in America

In the first half of the year, the Group saw a broad- based, above-average increase in demand in America. Sales grew by 14.5 percent to CHF 110.8 million. In local currency, growth was even higher, with an increase of 21.4 percent. Our expertise in the electro- mobility sector built up over the last several years proved especially successful and translated into new customer relationships.

Market share gains in Asia

In Asia, sales in the first six months grew by an impressive 35.0 percent (in local currency: +34.6 percent) to CHF 90.3 million, notwithstanding last year's relatively high comparative base. The Group's focus on growth segments led to an expanded market position in the robotics and electronics sectors, with a gratifying development of the project pipeline.

Significant jump in profit

The sales growth compared to last year was also reflected in gross profit, which grew by 30.8 percent to CHF 159.8 million. Selling and administrative expenses increased by 14.2 percent to CHF 92.6 million, with some of this increase driven by the higher number of employees. Compared to the previous year, the number of employees increased by 3.2 percent to 2,480 full-time equivalents. Nonetheless, selling and administrative expenses in relation to sales fell from last year's 20.3 percent to 18.7 percent.

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In spite of the higher cost basis, the strong growth dynamic resulted in a striking growth in earnings. In the first six months, EBIT increased by CHF 26.1 million, or 63.6 percent, to CHF 67.2 million. The EBIT margin amounted to 13.6 percent compared to the previous year's 10.3 percent. Net income increased to CHF 52.6 million (previous year: CHF 31.6 million), a plus of 66.5 percent.

Solid balance sheet

Because of the accelerated growth in the first six months, total assets increased by 15.8 percent to CHF 742.5 million compared to year-end 2020. This was largely driven by the higher operating net working capital, which increased by 13.7 percent. This increase is driven by higher customer receivables due to increased sales as well as higher inventory on stock, which was expanded considerably to ensure delivery capability in the tense procurement market. The equity ratio amounts to 47.6 percent, which underlines our solid financial position.

Outlook

We anticipate demand to remain strong in the second half of 2021. This expectation is based on our customers' full order books as well as the broad-based global economic recovery, which is reflected in the purchasing manager indices. The situation on the procurement market will likely remain tense in the second half of the year, leading to further price increases and longer delivery times. The outlook for the full year remains subject to uncertainties and risks as a result of the COVID-19 pandemic.

Until the end of this year, we expect the growth rate to normalize as recovery continues. For the financial year 2021, the Group is targeting sales between CHF 930 million and CHF 960 million (2020: CHF 812.8 million). From today's perspective, the EBIT margin is expected to be in the upper part of the targeted range of 10 percent to 13 percent.

Growth reflected in cash flow

In the first half of the year, free cash flow was CHF 35.3

million compared to last year's CHF 13.6 million. The
main drivers were solid earning power and lower in-	Dr. Thomas Schmuckli	Dr. Daniel Bossard
vestment activities. In spite of the dividend payment	Chairman of the	CEO
of CHF 33.9 million in April 2021, net debt fell slight-	board of directors
ly in the first six months from CHF 155.7 million to
CHF 152.6 million.	Zug, August 24, 2021

Innovation as the foundation for further growth

The market is embracing Smart Factory Assembly. With the introduction of this new, independent ser- vice, we are supporting our customers in digitalizing their assembly processes. This boosts process reliability and productivity and lowers production costs. With additional digital services such as our new «Real Time Manufacturing» purchasing plat- form, we enable our customers to procure milled or turned CNC prototypes or initial small series quickly and with time and cost reliability. Both areas highlight our expertise in digitalization, process optimi- zation, and improving productivity.

In the course of implementing our Strategy 200, Bossard will continue to invest heavily in growth initiatives.

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