VAT : Summary Report 2021

SUMMARY

REPORT

2021:

VAT's leading technology, global footprint and strong operational performance drove record sales, EBITDA, EBITDA margin, free cash flow and further market share gains in 2021.

VAT is the leading supplier of high-vacuum valves and related equipment used to manufacture semiconductors, displays, solar cells and many other digital devices. The company reported record results in 2021 in a market characterized by strong semiconductor demand, significant supply constraints and uncertainties surrounding the global coronavirus pandemic. This achievement reflects the successful execution of the company's profitable growth strategy and the engagement of its more than 2,000 employees worldwide. VAT expects to continue to outgrow the market and create more value for all of its stakeholders in 2022 and beyond.

PASSION. PRECISION. PURITY.

Key figures

In CHF million	2021	2020	Change
		restated1
Order intake	1,227.9	724.5	69.5%
Order backlog as of December 31	461.2	145.3	217.3%
Net sales	901.2	692.4	30.1%
Gross profit	570.5	430.1	32.6%
Gross profit margin	63.3%	62.1%	-
EBITDA	307.9	210.5	46.3%
EBITDA margin	34.2%	30.4%	-
EBIT	264.9	169.8	56.0%
EBIT margin	29.4%	24.5%	-
Net income	217.4	127.9	70.0%
Net income margin	24.1%	18.5%	-
Basic earnings per share (in CHF)	7.25	4.27	69.9%
Diluted earnings per share (in CHF)	7.24	4.26	69.9%
Cash flow from operating activities	239.8	166.2	44.3%
Capex2	44.1	19.2	121.8%
Capex margin	4.9%	2.8%	-
Free cash flow3	195.7	147.0	33.1%
Free cash flow margin	21.7%	21.2%	-
Free cash flow conversion rate4	63.6%	69.8%	-
Free cash flow to equity5	192.0	143.0	34.3%
As of December 31	2021	2020
In CHF million		restated
Total assets	1,064.9	989.1	7.7%
Total liabilities	430.5	444.5	-3.1%
Equity	634.4	544.6	16.5%
Net debt	79.7	128.5	-37.9%
Net debt/EBITDA	0.3	0.6	-57.6%
Invested capital6	463.9	411.1	12.8%
NOPAT7	235.5	155.6	51.3%
Return on invested capital (ROIC)	53.8%	40.6%	-
Dividend per share8 (in CHF)	5.50	4.50	22.2%
Payout ratio9	85.9%	94.4%	-
Number of employees10	2,540	2,041	24.5%

1 Prior琀 -period financial statements have been restated in line with a clarification in 2021 by the IFRS Interpretations Committee that costs for cloud-based services, such as VAT's new ERP system, are to be expensed through the income statement when they occur, rather than capitalized.

2 Capex comprises acquisitions of subsidiaries net of cash, purchases of property,

• plant and equipment, and intangible assets and proceeds from sale of property,
• plant and equipment.

3 Free琀 cash flow is calculated as cash flow from operating activities minus cash flow from investing activities.

4 The琀 free cash flow conversion rate is calculated as free cash flow as a percentage of EBITDA.

5 Free琀 cash flow to equity is calculated as cash flow from operating activities less cash flow from investing activities less interest paid.

6 Invested琀 capital is defined as total assets (excluding current income tax receivables, goodwill, acquired technology & customer relationships, brands & trademarks, deferred income taxes and current income tax liabilities) less non-current liabilities (excluding loans & borrowings and deferred income tax liabilities).

7 Net琀 operating profit less adjusted taxes (NOPAT) is calculated as EBITDA minus depreciation and amortization (excluding amortization of acquired technology and customer relationships) plus finance income (excluding net foreign exchange gains/losses from financing activity and excluding other finance income) less taxes at the average Group rate of 16.0% (previous year 16.0%).

8 2021 dividend proposal of the VAT Board of Directors to its shareholders at

the AGM on May 17, 2022; CHF 5.25 per share to be paid from accumulated gains, CHF 0.25 to be paid from reserves from capital contributions

9 Percentage琀 of free cash flow to equity proposed to be paid out as dividend

10Number琀 of employees expressed as full-time equivalents (FTE)

Net sales

901in CHF million .2

2020:  692.4

VAT GROUP AG	3
SUMMARY REPORT 2021
KEY FIGURES

Net sales development in CHF million

+30%

901

692	698	692
		570

2017 2018 2019 2020 2021

EBITDA	EBITDA margin
in CHF million	in %
3072020: 210.5.9	342020:  30.4.2

Net sales by segment in %

19

81

81 VALVES

19 GLOBAL SERVICE

2020:

82 VALVES

18 GLOBAL SERVICE

Net sales by region in %

13

53

34

53 ASIA

1. AMERICAS

1. EMEA

2020:

53 ASIA

1. AMERICAS

1. EMEA

Free cash flow

in CHF million

195.7

2020:  147.0

Dividend per share* in CHF

5.50

2020: 4.50

*⁜2021琀 dividend proposal of the VAT Board of Directors to its shareholders at the AGM on May 17, 2022; CHF 5.25 per share to be paid from accumulated gains, CHF 0.25 to be paid from reserves from capital contributions

4	VAT GROUP AG
SUMMARY REPORT 2021
LETTER TO SHAREHOLDERS

Dear Stakeholders,

Your company again performed strongly in 2021. Record sales, profitability, cash flow and net income, along with further technology innovations, market share gains, operational improvements and footprint adjustments - all of this despite the second year of a global pandemic that has challenged all of us, both personally and professionally.

With that in mind and on behalf of the entire Board of Directors, I'd first like to thank our more than 2,500 employees who made this performance possible. Their dedication to our customers, their passion for technology and innovation, and their adaptability in the face of rapidly changing markets were the keys to our success last year. This includes another year of disciplined implementation of all the measures needed to reduce the impact of the COVID-19 pandemic and to keep themselves, our customers and our suppliers safe. As I've said before, our people really are a significant competitive advantage.

From a market perspective, 2021 was another year of strong demand. Our high-end vacuum valves are mission -critical components in the manufacture of semi- conductors, the driving force behind global digitali- zation. With our technology and market leadership, VAT continues to benefit from megatrends such as cloud computing, smart devices, the Internet of Things and artificial intelligence. These trends were augmented in 2021 by a global semiconductor shortage that prompted a number of chip makers to accelerate capital investments to boost production.

Against this positive market background, we continued to implement the profitable growth strategy we first presented in 2020. This is based on gaining market share in our core valves business; growing our global service business; expanding into value-adding adjacencies; and continuing to improve our operational performance and optimizing our global foot- print. Our 2021 results show that we have made progress in all these areas.

Our cumulative market share is higher across all the sectors in which we operate, and close to 75% in the higher-end semiconductor market, where our technology lead and deep customer relationships are critical differentiators. Net sales in our Global Service segment were up 35% on the year as we help customers get more from their existing assets, and we're on track with our expansion into adjacent products, such as motion components and advanced valve modules.

Furthermore, we continued to implement operational excellence initiatives to optimize our global footprint, make the organization faster and more flexible, and secure sustainable profitable growth. For example, in December we announced a CHF 160 million capital expenditure plan that includes the further expansion of our production capabilities in Malaysia. This will yield supply chain benefits as well as make us more responsive to customer needs in the increasingly important Asia market. We will also build an innovation center at our head office location in Haag, Switzer- land, to further strengthen our technology lead and bring together all of our research and development capabilities into a single, more powerful and cost-effective unit.

We continue to develop meaningful ways to create value that is sustainable over the long term, for our customers and shareholders, but also for our people and the communities in which they work and live. These include extensive training, international talent development and know-how transfer across borders. Promoting diversity of experience fuels innovation and makes VAT a more attractive employer. We also continue to reduce our environmental footprint in ­areas such as renewable energy and packaging and to establish metrics on our sustainability performance to drive further improvements.

VAT GROUP AG	5
SUMMARY REPORT 2021
LETTER TO SHAREHOLDERS

"The business environment looks positive, and we have both the market position and the people to capture the growth opportuni-­ ties ahead."

DR. MARTIN KOMISCHKE

CHAIRMAN OF THE BOARD OF DIRECTORS

Since VAT was listed on the SIX Swiss Exchange in 2016, the company has come a long way. Net sales have more than doubled since then, to CHF 900 million in 2021, and our EBITDA margin has increased from 30% to 34%, all despite the cyclical downturn we had to weather in 2019.

I believe this demonstrates the incredible strength of our company and gives us confidence to view 2022 and beyond with optimism. We expect the impact of the COVID-19 pandemic to continue to wane over the course of the year. The business environment looks positive, and we have the market position, operational flexibility and the people to capture the growth opportunities ahead and continue our successful track record of value creation. Consequently, we plan to recommend a 22% higher dividend of CHF 5.50 per share at our Annual General Meeting in May.

Finally, the Board and I would like to thank you for your continued support. I look forward to a fruitful collaboration with you in the years ahead.

Sincerely,

Dr. Martin Komischke