mele-2021-12-31-en

LETTER TO OUR SHAREHOLDERS

Dear Melexis shareholder,

As 2021 was a surprising year for all of us, we are sure

you have plenty of questions you would like to ask the

Melexis leadership team. So we decided to organize a

double interview with Françoise Chombar, Chair of the

Board, and Marc Biron, our new CEO, to give you more

insight into our strategy and the highlights of 2021.

Marc, Françoise, welcome to the both of you. 2021 was

obviously a year of transition for Melexis. Marc became

CEO and Françoise is the new Chair of the Board. What

was your experience during this change in leadership?

Did you notice a difference in approach or impact?

Françoise: Well, the CEO transition from myself to Marc

was in fact very smooth. Of course there is a difference.

There should be. Marc is a different person, but our

mission, our strategy as a whole and our values are still

the same. It’s good to have new leadership from time to

time as this ensures a new boost. That was exactly one of

the intentions of the swap. In my perception the

transition is a success. But maybe we have to ask other

people (laughs).

Marc: I have the same impression. Françoise and I

prepared the transition well. The goal is to keep the same

strategy: an evolution, not a revolution. Of course, the

change of leadership triggered some slight modifications

in policy.

Françoise, what is the main objective of the Chair of the

Board? How different is the impact you can make

compared to being a CEO?

Françoise: Well, a CEO is of course extremely

operational. As CEO you have to make sure that

everything runs smoothly. As Chair, I can take the

helicopter view from a distance. I make time to be a

sounding board for the CEO and I’m still an ambassador

of Melexis to the outside world. I think it’s a way to grow

and expand my focus while still helping to guide the

company.

“Our strategic choices from the past are paying

off”

Marc, in your opinion, what were the commercial

highlights in 2021, which we know was a record year for

Melexis?

Marc: The COVID-19 pandemic and the chip shortage

gave us a strong headwind, but we still achieved great

business success in 2021. It is a confirmation that all our

strategic decisions of the past were the correct ones. For

example our success in applications for electrification of

vehicles. We had many design wins and considerable

revenue growth in the field of current sensors which

monitor the state of the battery. The same goes for

current sensors which optimize the performance of the

DC/DC converter. Other successes were realized in the

field of thermal management of electric vehicles. These

systems require a lot of chips like embedded drivers and

position sensors. In anticipation of the electrification

trend, we developed these products and were ready for

the market shift. Now we see this strategic choice is

paying off.

Some years ago Françoise also set course for the

development of solutions for what we call the adjacent

market (non-automotive). Here we have seen successes

with temperature sensors for health monitoring. Our

position sensors have also done well in the gaming

industry and latch and switch solutions have been

incorporated into power tools. So also in this area, the

organization is delivering according to the strategic

intent.

A record year is without any doubt reason for pride. But

we can imagine that this influences the goals set by the

Board of Directors.

Françoise: When you are successful, you should not

lower your goals. You should, based on actual knowledge,

determine how to leverage the realized successes. You

have to maintain a balance between sustainable growth

and keeping the corporate values alive during that

continued strive for success. Living the values is still a

condition sine qua non because they are the root of our

Melexis Annual Report 2021

growth. What’s especially nice for me to see is that in

both automotive and adjacent markets we reach our

goals of contributing to a better planet.

Marc, what would be the most satisfying goal for you to

see Melexis achieve by January 2023?

Marc: We have some challenges ahead and we should

continue to manage them. The first challenge is the chip

shortage. This will remain a tough situation well into

2022. The huge demand for electronics will only intensify,

which is of course good for Melexis. The digitalization of

the world is a big demand driver. To manage the supply

we are upscaling capacity in-house and at our suppliers,

obviously in close cooperation with them. We’ve got

sufficient new business opportunities to match the

capacity as it gets built.

“Chips are not a commodity”

How do you combine these two? Managing a supply

shortage while creating new business seems

contradictory?

Marc: It’s indeed difficult to find the right balance. We

have an existing business where we need to deliver at

least the minimum of what the market demands. But we

also need to increase our footprint in the car of

tomorrow. We won’t let competitors take our place there.

How do we do this? By working from day to day with our

suppliers so we can optimize the throughput in such a way

that part of the new supply can go to the new markets.

This is not easy but many people within Melexis are

dedicated to this challenge. The mismatch between the

supply and the demand is also an opportunity to select

the businesses that fit our values and our strategic

intents.

Françoise: I’ve been in semiconductors for more than 35

years. It’s the first time ever that I see customers and car

manufacturers being open to long-term commitments.

They used to treat chips like commodities. Now they have

discovered the truth: chips are not a commodity. It takes

quite a bit of time to make them, even more time to

qualify them and surely a lot of time to set up the right

capacity. The mind shift towards long-term cooperation is

really a major game changer. People dealing with

customers have to realize that they shouldn’t stop

booking new business. Because by the time the new

customers will need their products, we will be able to

deliver. In that sense this chip shortage is an opportunity

for us. We have to take advantage of this mind shift right

now. The momentum is there.

Is this mind shift and intensified cooperation within the

supply chain something that will last beyond the supply

crunch?

Françoise: Like Marc mentioned, the digitalization of the

world is leading to chips being ubiquitous. You hear IT

evangelists preaching about data being the new gold. But

without chips there are no data, so chips are the new gold.

You need sensors to capture data, you need digital

computing power to process data and these data need to

be converted to action in the real world. That’s where our

drivers come in. So we are in a fantastic era and market.

It’s fascinating to see new applications, robotization and

automation taking off with the help of our solutions.

Everything needs to interact with the real world.

Marc: It’s sensing and driving.

Françoise: Indeed. So we are in a perfect setting. The

overall strategy from the last couple of years is now

blossoming into beautiful results. This is not something

achieved only by management, everyone in the company

contributed. This journey towards success will continue

well into the future.

The strategic choices were already made a long time

ago. Marc, can you explain what the vision, mission and

strategy look like?

Marc: We will keep fine-tuning the strategy to integrate

new opportunities as they arise, but the basics still hold:

Melexis ICs and people shape our future. Our mission is

to develop and produce solutions that are beneficial for

people and the planet. Our electronics minimize fuel

consumption and thus reduce CO2 emissions. But we look

further. We also want solutions that have a positive

impact on people. In automotive that means increasing

comfort and safety. Outside automotive we aim for added

value in robotics, health monitoring, computing, gaming,

alternative mobility and a net zero carbon world.

“Robotics that make sense”

You mentioned robotics. There is a catch phrase about

‘robotics that make sense’. What is that innovation all

about?

Marc: It’s about giving robots the sense of touch. Our

working prototype will be a game changer in the field of

robotics. Robots already have a lot of functionality: vision,

interpretation of signals, movement and interaction. But

the sense of touch is still missing. Within Melexis we have

the right competency to give robots a real sense of touch.

In a pilot we succeeded to do so. During the next months

Melexis Annual Report 2021

we will further elaborate this beyond only delivering a

chip. It will be a complete solution so this system can be

integrated directly in the hand of the robot.

All these innovations and recent commercial successes

imply the need for more colleagues while at the same

time other companies are also looking for identical

highly-skilled candidates. How does Melexis deal with

that?

Marc: We need to test, ship and supply more products.

Thus we need more people to support this growing

business. We also need more capacity in development as

we intend to keep innovating. In previous years we

launched between 10 and 15 new products each year. In

2021 we launched 16 new products. As we continue to

increase the number of product launches, we also need to

increase the number of colleagues to support them. We

recruit not only for today’s growth, but also to secure our

ongoing success well into the future. As we grow it is our

goal to keep the cost of employment relatively constant in

relation to our revenue.

“A job of and for the future”

How do COVID-19 and the fact that a lot of companies

are looking for the same profiles influence the

recruitment?

Marc: This is indeed one of our two biggest challenges.

While the first priority is still coming to grips with the chip

shortage, the talent shortage is also a significant

challenge. One that we have faced in the past. To meet

this challenge we have a strategic team that constantly

finds new ways to communicate the attractiveness of

Melexis as an employer of choice.

So why would people choose Melexis as an employer?

Marc: Melexis is a dynamic, expanding company that

focuses on developing products to support the needs of

the planet while providing solutions that meet the

expectations of society. Our mission is to contribute to

sustainability, comfort and safety. I’m convinced this

message resonates with people. Who wouldn’t like to be

part of a growing company that creates a better future?

There are a lot of opportunities to grow and to learn.

Growing financially is one thing, but experiencing growth

in expertise is really a satisfying experience. People in

Melexis have a job of and for the future.

Françoise: I fully agree and want to add two more things

from my helicopter view. Melexis was a pioneer of

corporate values in the nineties. Even before anyone was

talking about values, we had them and we were living

them, so it’s deeply ingrained in our legacy and history. A

second aspect is the diversity within our company. We

are gender neutral and diversity is in our DNA. Other

companies are talking about it and are trying to launch

programs to implement diversity, equity and inclusion.

But at Melexis this is not even an issue anymore. We don’t

have that challenge. At all. Diversity is embossed on our

identity and way of working. While this is well known

within Melexis, our challenge is to make sure that the

outside world also knows it. Whatever you are, wherever

you come from, whatever you believe, whatever

preferences you have ... When you are part of this team, it

means that you have something to offer, that you have

competencies we want. That makes you part of the game.

Other companies are jealous of the inclusive mindset

within Melexis. We need to foster that advantage and we

work on it every day. Let’s carry this message to the

outside world.

Marc: We also have a very modern way of working. When

the lockdown started, our colleagues were able to work

from home from day one. Everything was already in place.

We trust our people’s ability to make autonomous

decisions within the clarity of a framework. And we see

how people appreciate it. We believe people know best

for themselves how, where and when they should work to

get the best results.

Trust and autonomy is what we give, results are

what we get”

The hybrid working model was indeed incorporated

very smoothly. It almost seemed effortless. Françoise, in

your position you are in contact with a lot of other

companies. How do we perform? Is Melexis unique in

this approach?

Françoise: I believe we are leaders in the pack. The

transition was indeed seamless. What sets us apart is that

we care how people feel. We ask, listen, measure and

provide help. Working from home and how you

experience it varies from person to person. It’s important

to personalize the approach. The main difference

between Melexis and many other companies is that we

trust our people. Why change that? Trust and autonomy

is what we give. Results are what we get. It goes both

ways: everybody is happy. The company, team and

individual all benefit from this.

In the fight against COVID-19 we see that different

countries have their own set of regulations. How does

Melexis deal with that? Do you limit yourself to

Melexis Annual Report 2021

following national legislation at each site? Or do you

have special Melexis regulations as well?

Marc: For sure we follow the legislation of all countries.

Furthermore, at the beginning of this pandemic, we

assembled a multidisciplinary team within Melexis to

monitor the situation. They focus on communication and

define the right measures for each country. Every site has

a different mission, such as production or development.

So they need a different approach as well. One of our

values is ‘We Care’. We care about our people and about

our customers. Our people need to be and feel safe. At

the same time we must be able to provide our customers

with the products they need. The multidisciplinary team

strives to strike the right balance between the two.

“Making people understand how essential

semiconductors are”

Françoise, you have always been an outspoken STEM1

ambassador. How will this evolve in your new role as

Chair?

Françoise: It will never move out of the spotlight. I’m a

lifelong STEMinist and advocate for diversity. I’m

President of the STEM platform in Flanders. Now that I’m

no longer operationally occupied as CEO, I can spend

more time on these topics. I’m a member of the executive

board of the EU Pact for Skills for semiconductors. The

EU realizes there is a giant need for talent, upskilling and

reskilling. More students with a STEM curriculum are

needed.

Membership of these STEM fora allows me to amplify my

influence on a broader European scale. We connect with

organizations outside of Europe. We gather a lot of

knowledge on diversity, equity and inclusion. This helps to

increase interest in STEM education. We already see an

increased choice for STEM in Flanders. Sometimes we

even exceed our targets. My target is an equal presence

of men and women in STEM. In some areas we are getting

there. What I consider essential as well is helping people

understand how essential semiconductors are for the

future of the planet and our well-being. They are so

hidden within applications that nobody knows or sees

them. As an industry we have to bring that forward.

People know what doctors do, but they have no clue of

the work done by semiconductor engineers and

specialists to give doctors the possibility to do their job.

There is also a need to brand our industry and to

communicate how essential it is for all mankind. When

children realize the important role this technology plays

in our world, they will be more likely to choose a STEM

education. I think it’s vital for Melexis to be part of this

ongoing dialogue.

During this conversation you mentioned the corporate

values several times. How do these values impact our

customers?

Marc: We care, we always have a plan, we know the value

of money, we are always on the customer’s side and we

enjoy the journey towards success. These values remain

relevant and essential. We decided to start a campaign to

see how people live the values. It’s important everybody

understands what they mean so we all have the same

mindset. With the same mindset we will be able to make

faster and smarter decisions, working together in

harmony and consistency. This will result in better

communication and collaboration with our customers.

“Sustainability is in our DNA”

At the moment everybody is dealing with challenge

number one: how to live through and with the virus.

When this crisis is over, without a doubt sustainability

will be the most important societal topic. How is Melexis

dealing with sustainability? What are our plans to create

the best imaginable future for ourselves, our company

and society?

Françoise: Sustainability is embedded in the larger ESG

(Environmental Social Governance) requirements which

are also matters that the Board addresses. So I’m also

very much involved in this topic. This is not new for us.

We’ve been addressing sustainability since the beginning

of Melexis and it has only increased in relevance. As ESG

will garner more attention, the spotlight shines not only

on environmental issues but also on governance and

social topics. We don’t have a lot of difficulties with the

social requirements, they really are in our genes and

embedded in our value system. We had previously done a

lot of work in support of environmental issues, but now

need to formalize our efforts.

Marc: It’s important to realize that this is in our mission:

we contribute to a more sustainable planet. For a decade

we have developed solutions that reduce energy and fuel

consumption, lowering greenhouse gas emissions. We

have significantly contributed to the electrification of the

car. From a product and mission perspective,

sustainability is in our DNA. But that’s not enough. We

have a strategic team tracking our CO2 footprint. They

define action plans to further reduce it. As soon as the

Melexis Annual Report 2021

1 Science, technology, engineering, mathematics

targets are defined we will communicate them to the

whole company. It’s one of our main goals for 2022.

Françoise: This will help us achieve the Sustainable

Development Goals (SDGs) of the United Nations. There

is a lot of work to do. But we already did and do a lot. We

are continuously working toward making our new

facilities more climate friendly using techniques like heat

recuperation. We just need to formalize and

communicate all our initiatives.

Thank you both for the insights. One final question.

Marc, could you summarize 2021 in one sentence?

Françoise, can you do the same for 2022?

Marc: 2021 was the year of great challenges concluded

with great success thanks to the contribution of all

Melexians.

Françoise: 2022 is the start of a fascinating future,

definitely for Melexis!

A NEW CAPTAIN AT THE HELM

Big news on 3 February: Melexis appointed a new CEO.

In August 2021, Marc Biron took over the position from

Françoise Chombar who, in turn, became Chair of the

Board. Mr. Biron joined Melexis in 1997 at the age of 27

and has built up extensive experience in the automotive

industry. From 2009 to 2017 he was VP Global

Development & Quality and in 2018 he became general

manager of the Sense & Drive business unit. Mr. Biron

has been a member of the Executive Management Team

since 2010.

Melexis Annual Report 2021

WHO WE ARE

Melexis is a limited liability company headquartered in

Ieper, Belgium, and incorporated under Belgian law.

Melexis designs, develops, tests and markets advanced

innovative integrated semiconductor devices for the

automotive industry and many other markets. We sell

our products to a wide customer base in Europe, Asia

and North America. This introductory chapter provides

an organizational profile of Melexis.

2.1WE ENGINEER THE BEST

IMAGINABLE FUTURE

Melexis is a global supplier of microelectronic

semiconductor solutions. Our company represents

engineering that enables the best imaginable future - a

future that is safe, clean, comfortable and healthy. All of

these aspects are reflected in the multitude of

applications that our technology empowers.

Melexis Annual Report 2021

2.2OUR SITES WORLDWIDE

Melexis Annual Report 2021

2.3OUR KEY FIGURES

in 1,000 EUR

Operating results

2017

2018

2019

2020

2021

Revenue

511,661

569,370

486,862

507,517

643,786

Gross profit

235,396

261,136

196,234

197,988

273,601

EBIT

132,608

138,488

70,626

75,534

148,448

EBITDA

164,965

177,610

119,230

121,905

193,240

Net income

110,955

115,451

60,255

69,299

131,108

Balance structure

2017

2018

2019

2020

2021

Shareholders' equity

294,303

326,006

299,070

314,776

389,056

Net indebtedness*

(60,798)

418

23,150

6,627

(40,680)

Working capital

84,633

139,128

146,127

151,587

179,062

Cash flow and capital expenditure

2017

2018

2019

2020

2021

Net cash from operating activities

113,306

99,079

94,400

95,761

142,232

Depreciation + amortization

32,357

39,122

48,604

46,372

44,792

Capital expenditure

46,417

76,296

26,632

24,835

39,088

Ratios

2017

2018

2019

2020

2021

ROE

38%

35%

20%

22%

34%

Liquidity

2.5

3.5

4.4

4.9

4.2

Solvency

73%

76%

71%

73%

84%

*Current definition of net indebtedness does not include impact from IFRS 16. For more information on IFRS 16, see note

8.9.5.H.

Melexis Annual Report 2021

2.4OUR INDUSTRY ASSOCIATIONS

Melexis participates in the following industry associations through which we get access to and learn from the industry's best

practices.

NAME OF THE ASSOCIATION

TYPE OF ASSOCIATION

WEBSITE

AEC-Q100

Industry association

www.aecouncil.com

Agoria - Transport & Mobility Club

Local industry association

www.agoria.be

CAN in Automation (CiA)

Industry association

www.can-cia.org

DGQ

Local quality association

www.dgq.de

EIRMA

Industry association

www.eirma.org

ESIA

Industry association

www.eusemiconductors.eu

IEEE

Professional org. of advanced technology

www.ieee.org

ISELED Alliance

Industry association

www.iseled.com

ISO

Standardization

www.iso.org

MIPI Alliance

Industry association

www.mipi.org

NBN

Standardization

www.nbn.be

Silicon Saxony

Network

www.silicon-saxony.de/netzwerk/verein

VDA

Industry association

www.vda.de

VDE/GMM

Network

www.vde.com

VDI

Industry association

www.vdi.de

ZVEI

Industry association

www.zvei.org

PROUD OF OUR DIPLOMATIC RECOGNITION

In October 2021, our Chinese colleagues were honored to receive the Belgian ambassador, Jan Hoogmartens, in their office

in Shanghai. During the visit Melexis engineers introduced him to our company and technology. Mr. Hoogmartens was

accompanied by consuls Bart Boschmans, Frederic Van Kerrebroeck and Peter Tanghe. Furthermore, our American

colleagues welcomed Wim Sohier from the Belgian Consulate during the Sensors Converge event in San Jose. Our

colleagues in Malaysia received a diplomatic visitor as well, when the Belgian ambassador Pascal H. Grégoire was guided

around our offices in Kuching. The diplomatic recognition proves Melexis is making a difference to create the best

imaginable future.

Melexis Annual Report 2021

WHAT WE DO

3.1.WE DEVELOP CHIPS

Melexis Annual Report 2021

3.2WE INNOVATE FOR OUR CUSTOMERS

WE ENABLE EDGE SENSING AND EDGE DRIVING

WE CATER TO DIFFERENT SECTORS

Melexis operates mainly in the semiconductor market for cars, a market that has a solid foundation and exciting growth

opportunities. However, we continuously build on our knowledge and experience and are expanding our scope to include

new applications, new markets and new sectors, including micromobility, home and consumer electronics, industrial

applications and healthcare.

Melexis Annual Report 2021

3.3WE CATER TO MANY DIFFERENT MARKETS

Our solutions allow systems to become more aware of and interact directly with their surroundings. Melexis is focusing on

innovation in both new and established product ranges as we want to take advantage of beneficial market developments in

sectors including automotive, industry, medical, home and building automation. Our expertise in product definition, design

and testing creates integrated analog and digital semiconductor solutions and sensor and driver chips.

Melexis Annual Report 2021

3.4OUR SOLUTIONS

Melexis products stand out from those of competing

manufacturers because of our intrinsic capacity to

integrate detection, processing, activation and

communication into one single chip. This smart

integration is increasingly critical in delivering optimal

solutions that simplify complex electronic designs.

Our products are invariably found on the edge of

innumerable applications. They either take an analog

signal from the physical environment and convert it to a

digital signal, as we do with our smart sensors, or they

convert a digital signal into an analog action, as we do

through our drivers. Our products communicate with

the outside world, either to record something or to send

something. In fact, most of our products use mixed

signals, as they combine analog and digital signals.

Magnetic position sensor ICs

The effective, accurate and reliable sensing of position is

essential to modern vehicles and many other applications.

With magnetic sensing and its ability to deliver

contactless sensing, innovative advancements such as

Melexis’ patented Triaxis® technology allow engineers to

solve design challenges in numerous automotive and

other applications.

Triaxis® is an innovative magnetic sensor technology

capable of extremely accurate three-axis magnetic field

measurements (Bx, By and Bz) from a single sensor

integrated circuit (IC). Using the three magnetic

components, two- or three-dimensional sensors that

detect rotary (angle), linear (stroke) or joystick-type

motion can be created. One of the many benefits of the

technology is that this allows the use of smaller and

lower-cost magnets, making it an elegant solution in

space- and cost-constrained applications.

Melexis’ Hall-effect ICs are used to detect acceleration

and brake pedal, throttle and steering wheel position as

well as steering torque and gear selection. Triaxis®

sensors are also used to monitor movement in engines

and drivers and to measure current in electrical systems.

Other high-volume applications for these Hall-effect ICs

include game controllers, factory automation and white

goods.

SPREADING TECHNOLOGICAL KNOWLEDGE

Melexis employees have extensive knowledge and

competencies which are not only beneficial for our

company. Sharing this knowledge outside the company

increases traction for innovation and new technologies.

A nice example of this sharing mindset is the white

paper about vertical-cavity surface-emitting lasers or

VCSELs used in IR illumination (www.melexis.com/tech-

talks/in-cabin-ir-illumination-for-time-of-flight-

applications).

MLX90392

Melexis is known for its automotive solutions. However,

due to their proven quality, our products find their way

onto other markets as well. That is why Melexis launched

the MLX90392 on 6 May. It brings patented Triaxis® Hall

magnetic-sensing technology to cost-conscious white

goods, smart metering, gaming and home-security sectors.

Melexis Annual Report 2021

MLX90377

On 27 May, Melexis launched its new MLX90377. This

flexible magnetic position sensor IC is ideal for high-

performance automotive applications. It senses three

axes (i.e. X, Y, Z) from a magnet to measure rotary or

linear motion. The single-mold package (SMP) improves

PCB-less integration and manufacturing costs.

MLX90421 AND MLX90422

Melexis launched the MLX90421 and MLX90422 on 10

June. These ISO 26262 programmable solutions offer the

flexibility to address both linear and rotary position

sensing. Intended for use in cost-sensitive automotive

applications including powertrain actuators, pedal

positioning, fuel level gauges and transmission systems,

these ICs have superior capabilities in terms of functional

safety and electromagnetic compliance (EMC)

characteristics. They also support heightened

temperature operation.

Current sensor ICs

Our Hall-effect based current measuring solutions draw

upon our extensive experience, with millions of devices in

the field. Our products offer significant performance

enhancements and a rugged design, making them ideal for

the innovative applications found in the fast-growing

market for the electrification of modern automobiles.

At first, the IMC-Hall® technology found its way into

battery monitoring applications, but in recent years it has

been deployed more widely as a primary sensor in

inverter and converter applications. The growing demand

for functional safety (ASIL) in battery management

systems with Li-ion chemistry has also led to a substantial

demand increase, given the need for a (heterogenous)

redundant sensing solution next to shunts. The IMC-

Hall® technology, used for example in the MLX91216, is

now the preferred solution for many designers as it

provides denser power electronics, a more flexible and

lighter integration of the mechanical components and an

overall system cost reduction.

Melexis Annual Report 2021

MLX91216 XHF

Our first product launch of 2021 was the expansion of the

IMC-Hall® current sensor IC portfolio with the

MLX91216 XHF. This new variant, launched on 28

January, extends the measuring capability beyond 2000 A

and is suitable for redundant monitoring of battery

management systems. The IC enables smaller assemblies

with surface mount package solutions. This avoids the use

of more complex through-hole packages that often

require specific lead bending and forming that are native

to core-based solutions.

MLX91218 AND MLX91219

Melexis unveiled its new automotive 200-2000 A current

sensors on 24 June. The MLX91218 and MLX91219 with

integrated overcurrent detection deliver enhanced

accuracy for managing high-speed applications such as

motor control, inverters and converters, but also

redundant monitoring of battery management systems

(BMS). The advantages they deliver include increased

resolution, optional 3.3 V or 5 V operation and integrated

overcurrent detection circuitry.

FREE ONLINE MAGNETIC SIMULATOR LAUNCHED

Melexis is more than products. On 1 July we launched our Magnetic

Simulator, a free online simulation tool for magnetic position sensor

design with fast results, high accuracy and configurability, covering

linear and rotary modes of operation. By using the simulation

application, engineers can quickly design a custom magnetic sensor

module to their own specification.

Melexis Annual Report 2021

MELEXIS DEVELOPMENT KITS

On 7 December, Melexis introduced its latest

development kits (DVKs) for current sensor IC

evaluation. These DVKs give engineers a real preview of

each IC’s features in their own design. At the same time,

they optimize the investment and resource allocation.

The new DVKs provide engineers with designing

systems that make life easier. The hassle of building

your own setup, sourcing material from different

suppliers, is finally over. By using these DVKs and the

various devices included, engineers can quickly and

comfortably assess their systems’ operational

parameters. They can then select the ideal current

sensor from the Melexis portfolio for their specific

requirements. This leads to better-realized design

concepts and a faster time-to-market.

Latch and switch ICs

Latch and switch devices rely on the principles of the

Hall-effect too, as the position of a magnet determines

the physical position of an object. These on-off switching

devices are quite common in a variety of applications,

ranging from the automotive (braking, shifter

applications, thermal valves and seat belts), to power

tools, gaming and even respiratory systems. The Melexis

latch and switch sensors use an innovative magnetic

technology that allows the measurement of the lateral

magnetic flux component. These popular products can be

integrated easily into applications that require simplified

design and stable magnetic characteristics.

Embedded motor driver ICs

For more than a decade, Melexis has been providing LIN

drivers for small motors that target automotive

mechatronic applications including motor-controlled

flaps, valves, fans and pumps. Our Melexis solutions are

well known for enabling system cost optimization and

small-sized mechatronic applications for OEMs while also

ensuring low system heating and low-noise motor drive.

Melexis developed an entire second generation family of

smart LIN motor drivers for motor currents from 0.1 to

100 A. These ICs enable low footprint 12 V applications

to drive the electric motor with a sensor or sensorless in

the most silent and efficient way, making them an

excellent choice for new hybrid and electric cars.

Brushless direct current (BLDC) motors can be found in

pumps, blowers, fans and positioning actuators. However,

not all actuator applications are as visible: one of the main

actuator markets in the automotive sector deals with

microactuators used in HVAC systems. These are used to

divert airflow and render a car more efficient and

comfortable. A smooth and silent operation is one of the

most important criteria to ensure the comfort of car

passengers. Additional applications using BLDC motors

are expansion valves used to control the refrigerant flow

into the evaporator in precise amounts, resulting in

efficient cooling.

Melexis Annual Report 2021

MLX81340 and MLX81344

At the beginning of December, Melexis launched LIN

BLDC-motor pre-drivers that combine small size with

high performance and power capability for automotive

mechatronic applications. The MLX81340 (with 32 KB

Flash) and MLX81344 (with 64 KB Flash) integrate

three channels of high-side and low-side drivers. Our

family of LIN drivers allows customers to achieve a

tailored solution for applications from below 10 W up to

1000 W. They control external NFETs with up to 60 nC

capacitance to handle applications up to 500 W. The

drivers leverage single-chip integration that saves

space, simplifies design and enhances reliability.

MLX90412-L

On 18 March, Melexis launched the MLX90412-L. This

all-in-one single-coil fan and pump driver IC offers

unprecedented acoustic noise and vibration

performance. That makes it a cost-effective alternative

for applications which were previously exclusively

considered for more expensive 3-phase solutions.

MLX90412-L is suitable for air pumps, water pumps,

axial fans and radial and cross-blower applications.

Fan and pump driver ICs

Fan control manages the rotational speed of an electric

fan. In electronic devices, various types of fans and pumps

are used to provide adequate cooling, sensing and

different fan control mechanisms to balance their cooling

capacities and the noise they generate. Our broad

portfolio comprises one-coil, two-coil and three-phase

motor controllers, enabling cost-optimized, minimum-

sized and whisper-silent cooling solutions for automotive

and consumer applications.

Inductive position sensor ICs

Inductive position sensors are used in applications that

require very high position sensing accuracy under the

harshest conditions of magnetic stray fields and

temperature. Melexis has already been investing in

inductive position sensing IC solutions for more than a

decade.

MLX90411GLW

As operating lifetime is a key requirement, on 28

October, Melexis launched the MLX90412GLW. The

latest version of this 2.2 A automotive-qualified pump

and fan driver IC is optimized to deal with high ambient

temperature levels and supports prolonged operational

lifespans. This goes up to 15,000 hours of EV

applications such as battery cooling. With the

MLX90412GLW, pump manufacturers can offer a

complete portfolio of water pump solutions. Its high

degree of integration requires a much smaller number

of external components than in traditional solutions

that are currently available on the market.

Melexis Annual Report 2021

Our ASSP product family strategy includes analog and

digital output versions, specifically designed to address

the challenges of e-machine, e-brake booster and

electrical power steering types of applications.

Pressure sensor ICs

As a unique and leading partner for our automotive

customers, we can address all pressure sensor segments

with our advanced technologies, be it signal conditioning

ICs for high pressure applications, relative and absolute

pressure sensors, both packaged and factory-calibrated

for low pressure measurements. We offer plug-and-play

solutions with the best-in-class robustness and

performances in harsh, demanding automotive

environments.

MLX90510

On 16 December, Melexis presented a new inductive

sensing IC that is intrinsically immune to stray magnetic

fields. The MLX90510 inductive interface IC enables

high-speed resolvers minimizing the ECU effort

required to get best-in-class accuracy under extreme

mechanical and electrical conditions. With its superior

EMC capabilities, the MLX90510 is perfect for e-motor

control, e-brake booster and e-power steering

applications. An efficient electric powertrain requires

the synchronization of the stator supply currents with

the rotor position. This leads to optimal efficiency and

torque characteristic control. Thanks to the digital

architecture and rugged design, automotive engineers

take full advantage of the MLX90510 EMC robustness

with minimal effort on the ECU side, resulting in module

cost reduction.

Tire monitoring sensor ICs

As one of the most fully featured, ultra-low power tire

pressure measurement system (TPMS) solutions available

today, the Melexis offering integrates all the electronic

subsystems required to develop a high performance

TPMS with a minimum of external components. Pressure

and acceleration sensors, low-frequency transceiver and

radiofrequency transmitter circuits are combined with a

low power microcontroller in a single tiny form factor.

Embedded lighting ICs

Our LIN-based RGB LED drivers enable sophisticated yet

cost-effective ambient lighting for vehicles from entry-

level to mid-range and luxury models. The Melexis

offering raises the performance bar and lowers the

external component count, thanks to the very high

electromagnetic compatibility (EMC) robustness

achieved by using silicon-on-insulator (SOI) technology

and the full system-on-chip integration. Additionally, new

products are designed in accordance with ISO 26262 to

ease system-level functional-safety certification.

MLX81117

Car manufacturers are increasingly using LED lighting to

optimize their customer experience. To support them,

Melexis launched the MLX81117 multi-channel RGB-

LED driver for MeLiBu™ Lighting on 25 March.

MLX81117 is the next member of the Melexis Lighting

IC family to support the MeLiBu™ high-speed

communication interface, enabling automotive OEMs to

deliver enhanced features in new models.

Melexis Annual Report 2021

Optical sensor ICs and time-of-flight (ToF)

The industry is advancing towards greater levels of

autonomous driving in the coming years, but even so the

driver will still need to be able to take control in certain

circumstances. Real-time monitoring of the driver’s

attention level, position and movements is therefore

crucial. Today, in-cabin monitoring and driver sensing ToF

technology is used for gesture recognition. However, the

potential scope of ToF goes way further. ToF cameras can

map a driver’s hands position, head position and upper

body position in 3D to ascertain that the driver is facing

the road ahead and has his hands firmly placed on the

wheel. ToF technology has gained new momentum

because of additional active safety standards and

MLX75310

On 18 February, Melexis introduced the MLX75310, a

second-generation rain-light sensor interface chip including

an integrated LED driver. The IC provides various auxiliary

circuit functions to support the main mission of the rain-light

sensor.

MLX75026

On 15 September, Melexis launched a new version of its time-

of-flight 3D camera MLX75026 with a fully integrated

infrared bandpass (IRBP) filter. By integrating the IRBP filter,

it is no longer required to include a separate IR filter in the

lens or sensor assembly. This solution is unique in the

industry. It reduces design complexity and cost, while

creating more design choice when sourcing a lens.

EVK75026 AND EVK75027

On 6 December, Melexis released its latest time-of-flight

evaluation platforms, the EVK75026 and the EVK75027.

The MLX75026 (QVGA) and MLX75027 (VGA) enable

real-time 3D imaging at (Q)VGA resolution with

unsurpassed accuracy and sunlight robustness.

Melexis Annual Report 2021

features required by new car models, going beyond in-

cabin use. It is now being evaluated for exterior uses like

short-range cocooning because it combines high

resolution with accurate depth information at short

range, complementing long-range systems such as

cameras and radars.

PARTNERSHIPS BOOST INNOVATION

If you want to go fast, go alone. If you want to go far, go

together. Melexis does not operate on an island. We regularly

form partnerships with other companies, allowing us to take

our innovations to the next level. On 4 March, Chronoptics and

Melexis signed a partnership, allowing Melexis the exclusive

use of Chronoptics’ multipath and linearity error correction

technologies for automotive applications. This further

optimizes our time-of-flight (ToF) technology. Another

partnership with Emotion3D allows Melexis to offer a unique

3D ToF demonstrator. The solution combines the driver

monitoring system with high-precision 3D driver localization

and dynamically aligns augmented reality head-up display

objects. Finally, Melexis also partnered with MultiCoreWare

who will use our ToF software for facial authentication.

Temperature sensor ICs

In the automotive market, our array sensors are suitable

for multi-zone air conditioning, passenger classification

(for more effective airbag use) and driver monitoring (to

prevent drivers from becoming distracted). In consumer

electronics, array sensors are used in microwave ovens to

measure the temperature of heated food. In Internet-of-

Things systems, they are used for many tasks in the field

of temperature measurement and detection. And that is

not all: our far-infrared array sensors can also be found in

low-resolution visual thermometers for use in building

automation and the industrial, security and do-it-yourself

sectors.

TRADE FAIRS AND WEBINARS

Although 2021 was a year heavily affected by

COVID-19, Melexis kept reaching out to its clients.

Online when necessary, in real life if possible. In January

we attended CES in Las Vegas, one of the biggest tech

events in the United States. Another live event was

Sensors Converge, organized in September in San Jose.

In Europe we attended CEE Automotive in Budapest

and were digitally present at SIA Powertrain & Power

Electronics. Furthermore, we organized a webinar about

skin thermometry which was followed by more than 50

high-level prospects. Our Asian colleagues met with live

public at DMS Tech and Electronica China in Shanghai,

while also being digitally present at the online

Automotive Engineering Exposition 2021.

Melexis Annual Report 2021

WHAT WE STAND FOR

Since its founding more than 30 years ago, Melexis has

grown into a company with approximately 1,500

colleagues on three continents, all of whom are

passionate about shaping the future and all of whom

care deeply about people and planet.

We care for people. Our company combines exceptional

people with a unique company culture, great products

and a promising future. A shared corporate vision

enables our growth and we realize that it is our people

who represent a vital link in the chain that connects

motivated individuals, outstanding teams and great

results.

We care for the planet too. We are acutely aware of the

increasing worldwide concern for safety and

sustainability, two areas in which we have been active

for many years. From sensors and sensor interfaces to

embedded and smart drivers, we are constantly

innovating to help create the most sustainable and

reliable solutions possible.

This chapter outlines our main guiding principles

regarding ethics and integrity. It also outlines our

commitment to sustainability as it lists our engagement

to advancing the United Nations Sustainable

Development Goals (SDGs) and our sustainability

reporting through the Global Reporting Initiative (GRI)

framework.

4.1OUR GUIDING PRINCIPLES

4.1.1THE MELEXIS WAY

The Melexis values support our company’s vision, they shape our culture and they reflect what we value as a company. These

values are straightforward: we are on the customer’s side, we always have a plan, we care, we understand the value of money

and we enjoy the journey towards success. ‘The Melexis Way’ truly represents the essence of our identity and guides us in

everything we do.

We are on the customer’s side

We are rooting for our customers’ success. We don’t stop at engineering innovations for our

customers, we feel part of their team and are with them all the way. The time we spend on-site at

our customers offers us unbeatable industry insight. Experiencing our customers’ challenges and

understanding their perspective allows us to peer over the horizon of our industry to build future-

proof innovations.

We always have a plan

We became leaders in the industry because we are not daunted by challenges. We love coming up

with new ways to create value, whether it is by removing obstacles or by exploring new and

exciting opportunities. We are proud to build the future alongside talented colleagues and

customers. And even though we work in the most demanding industries and settings, we are low

maintenance ourselves: you can count on us to be collaborative, patient and self-driven.

Melexis Annual Report 2021

We care

For us, technology is about solving fundamental societal challenges. We think it takes all kinds of

people to solve these challenges, so we actively strive to build a diverse team. We take nothing for

granted, be it our people, our partners and customers, our planet or our resources. We attract and

cultivate talent in an environment that values learning, growth, collaboration and continuous

improvement.

We understand the value of money

We take pride in our track record as an industry leader in terms of innovation, operational

excellence, growth and results. We remain committed to lean ways of working that have brought

us where we are today. This way, we create enduring value for customers, shareholders and other

stakeholders. Our close relationship with customers allows us to focus on engineering solutions

that offer maximum added value, day after day.

We enjoy the journey towards success

We are privileged to work with people who bring enthusiasm and eagerness to the job, who are

always willing to innovate, and who show confidence in their own and their teams’ resourcefulness.

We celebrate our victories, but we think it is even more important to enjoy the journey itself – we

get a real sense of achievement from working towards audacious goals with a team we can rely on.

4.1.2THE MELEXIS QUALITY AND

ENVIRONMENTAL POLICY

The Melexis quality and environmental policy is the

guiding principle throughout our organization. It provides

a framework for our day-to-day operations and guides

every decision and every action. Our quality mission

statement sets out the aim: ‘smart solutions that enable

innovation and strengthen the confidence of our

customers.’ Our quality and environmental policy strives

to keep our environmental footprint as small as possible

because we take our responsibility to both people and

planet very seriously.

4.1.3THE MELEXIS CODE OF CONDUCT

Melexis has outlined an ethical code of conduct

(www.melexis. com/en/investors/corporate-governance/

supervision-and-compliance) to provide a clear and

unambiguous reference for expected behavior during

business activities. Melexis, our colleagues, the members

of our Board and our Executive Management all follow

this code of conduct as it sets out the responsibilities

Melexis takes on in the workplace and in doing business

with its partners. These responsibilities include rules on

respect for human rights, anti-corruption and anti-

bribery, anti-competitive behavior, health and safety,

customer privacy and on many other crucial topics.

4.1.4SUSTAINABILITY AT HEART

Melexis is dedicated to positively impact and care for our

various stakeholders, on an economic, environmental and

social level. That is why we embrace two globally

recognized sustainability initiatives: the United Nations

Sustainable Development Goals (SDGs) and the Global

Reporting Initiative (GRI). For more information on our

sustainability initiatives, please refer to chapter 6.

Melexis Annual Report 2021

OUR STRATEGY

The Melexis strategy is to strengthen our position in the

automotive industry by maintaining our presence in

internal combustion engines (ICE) and chassis-body-

safety applications that we already serve today, to step

up our presence in hybridization and electrification

applications and to remain the global number one in

networked lighting. As said, we aim to further boost our

footprint in the automotive industry - today, every new

car worldwide contains 18 Melexis chips on average - and

to grow in other markets, particularly in alternative

mobility and in health, medical, computing, data center,

telecom infrastructure and robotics applications. We are

equally present in the markets of smart appliances and

smart home, building, gaming, industrial and energy

applications. Our relentless customer focus, the creation

of innovative and compelling products combined with a

timely and reliable production process are fundamental

to how we do business.

Our strategy is set against several global megatrends.

One key trend is an increasing and aging population.

Another is that the world, while it must find a way to meet

growing demand, also needs to continue the fight against

climate change and seek solutions for both CO2 and

power consumption reduction. The call for green

products has never been greater than today, a demand

that will only increase in the coming years in all markets

and impact mobility and energy consumption. The

European Green Deal is striving to make Europe the first

climate-neutral continent and will pave the way for a

better future. Next to that, artificial intelligence and its

related technology is triggering more computing power,

more data servers and more connectivity. The world is

becoming truly virtual, a trend pushed by the COVID-19

pandemic and the need for a different kind of connection

to work and socialize. The ongoing geopolitical landscape

is not favorable. The ongoing trade war between China

and the United States leads to more deglobalization and

impacts the way in which supply chains are set up to

navigate through customs or lockdown measures. Last

but definitely not least, the rise of health applications has

been pushed forward by the COVID-19 pandemic which

highlighted the world population’s vulnerability.

These megatrends bring both risks and opportunities for

Melexis. The world and its economies need to find

solutions to all these major calls for action. We recognize

that the pace and path forward is uncertain and will

require agile decision making. We are committed to work

together with our global customer base to contribute to

the solutions that will enable the best imaginable future, a

future that is sustainable, safe, clean, comfortable and

healthy.

The key to our success is our well-matched team of

almost 700 experienced engineers. For the past 30 years,

their expertise in application, system and product

definition, design and testing of integrated sensing and

driving solutions has given Melexis a leading position.

Melexis invests substantially in R&D and in its people and

will continue to do so. In addition, an energizing mix of

team spirit, a shared set of core values and a no-nonsense

culture empower our people to offer high-quality, leading

technological solutions to customers.

Melexis Annual Report 2021

5.1WE ARE GOING FOR 20 ICs PER

CAR

We are evolving together with the automotive industry

that is currently at a turning point. Under the hood, a shift

has taken place from a single combustion engine towards

a hybrid powertrain combining an internal combustion

engine (fueled from the tank) and an electric motor

(powered by a battery). In parallel, the automotive

ecosystem welcomes new players with disruptive

approaches for the architecture, the development or the

manufacturing of car platforms which become software-

defined and rely on feature-rich hardwares.

The powertrain evolution is making the component

landscape more complex and dynamic. As a partner of

choice in the automotive industry, we are focused on

developing innovations to facilitate that transformation.

Melexis is also present in other sections of the vehicle,

such as the chassis, the body and the safety parts, for

which new needs are emerging.

Despite a modest growth in car sales globally, and even a

significant decrease the last two years, the amount of new

electronic solutions being integrated into vehicles is

steadily increasing year-over-year. We aspire to put 20

ICs in every new car worldwide in the foreseeable future

spread across various powertrain and chassis-body-

safety applications.

A NEW BUILDING IN BULGARIA: MORE THAN STONES IN SILICON SOFIA

In 2021 Melexis finalized the works on its new building in Sofia. At the end of June, a press conference was held to announce the upcoming

finalization and the start of a recruitment campaign to breathe life into the building. The choice for Sofia is not accidental. Highly skilled

people, its interesting central location and an entire ecosystem of other high-tech companies are fertile ground for even more innovation

and improved production.

As a world leader in automotive semiconductor sensor

and driver ICs, we moreover use our core experience in

creating chips for vehicle electronics to expand our

product portfolio to also meet the needs of smart

appliances, smart home and building, health and medical,

computing, data center and telecom infrastructures,

energy, gaming, alternative e-mobility and various

industrial applications.

To further increase our offering to new markets, we have

identified areas where Melexis can play a stronger role

based on our capabilities and we are now executing

exploration projects to enable future product

developments.

5.2THESE APPLICATION TRENDS

DRIVE OUR INNOVATION

With a strong focus on our competencies, Melexis caters

to our customers’ needs today and drives innovations for

the future. We choose to operate in those areas where we

can make a difference.

5.2.1Powertrain

Low-emission vehicles (featuring a combustion

engine)

The pure internal combustion engine (ICE) is disappearing

step by step. A clear transition from mechanical function

operations to electric operations has been taking place

for years and will continue to do so. Tighter emission

regulations on the fleet in regions such as in China and

Europe (with the China 6 and Euro 6c/6d/7 norms

respectively) impose cleaner and greener innovations on

the existing and major car fleet.

Melexis offers precise and accurate sensor ICs and

versatile motor driver ICs contributing to numerous

facets of better engine management such as air intake,

ignition timing, fuel, exhaust gas and temperature

management.

ICE-specific sensors provided by Melexis are magnetic,

inductive or microelectromechanical (MEMS) and include,

among others, camshaft and crankshaft sensors, valve

position sensors (air-intake throttle valve, manifold

Melexis Annual Report 2021

actuator, water valve, exhaust gas recirculation (EGR)

valve, variable turbo geometry actuator, etc.), manifold

absolute pressure (MAP) and temperature (TMAP), fuel

pressure, fuel vapor pressure, crankcase pressure

sensors, exhaust gas temperature and oxygen sensors

(sensor signal conditioning ICs), and diesel and gasoline

particulate filter pressure sensors.

In addition to better engine management, improved

transmissions (from the engine to the wheels) enable

seamless shifting and lead to higher energy efficiency.

Melexis’ magnetic switches, position sensors and

pressure sensors serve those application needs.

Finally, the engine is now limited to driving the wheels,

the alternator and the HVAC compressor, and no longer

other mechanical loads which have been electrified. This

electrification has entered powertrain functions such as

thermal and fuel management, and also chassis functions

such as power steering. The mechanical water pump(s) of

the cooling system is (are) replaced by electric water

pumps. Similarly, the electric power steering (EPS) system

uses an electric motor that draws energy from the

vehicle’s electrical system to reduce the steering

assistance’s energy needs, compared to the historical

hydraulic power steering directly hooked on the engine.

ICE-specific motor drivers provided by Melexis drive

electric water pumps, water valves, grille shutter and

high-efficiency cooling fans for improved thermal

management of the engine, and also fuel and oil pumps.

Hybrid electric vehicles (HEV)

Next to the electrification leading to less mechanical

loads and more electric loads, an automatic start-stop

system is now well embedded in today’s cars,

automatically shutting down and restarting the ICE to

reduce the amount of time the engine spends idling,

thereby reducing fuel consumption and emissions. This is

referred to as the first step of hybridization, also known

as microhybridization (μHEV - standard 12 V battery).

The other hybrid electric vehicles are the mild hybrid

(mHEV), full hybrid (fHEV) and plug-in hybrid (pHEV,

rechargeable). All the hybrid powertrains feature a self-

charging mode coupled with the braking of the vehicle

(regenerative brake).

The electric powertrain (support/assist or drive) is fed

from a small-size 48 V battery (mHEV), a mid-size

300-400 V battery (fHEV) or large-size 300-400 V

battery (pHEV). The latter is the only one enabling a

significant range for a continuous zero-emission drive.

Melexis’ magnetic current and position sensors are used

by world-leading automotive tiers, in 48 V starter-

generators of mHEV and in powerful traction motor

inverters of fHEV and pHEV.

Melexis Annual Report 2021

The different levels of hybridization allow less and less

CO2 (and the directly linked fuel consumption) and other

emissions (e.g. NOx, particulate matters, etc.), with

increasing electric power contributing to the motion of

the vehicle.

The electric power level and battery size cause thermal

management challenges: at least four different

temperatures need to be efficiently regulated (engine,

motor and power electronics, battery and cabin), where

only two exist in a conventional vehicle (engine and

cabin). Next-generation complex intertwined thermal

systems using heat pumps and electric heaters are being

developed today at the OEMs.

Melexis’ motor drivers, magnetic switches, position

sensor (magnetic and inductive) and pressure sensor ICs

enable the engineering of those complex thermal

systems.

Electric vehicles (EV)

We are moving to a world in 2050 where the majority of

our vehicles will be 100% electric, enabling zero emission

while driving. The arrival of pure EVs (featuring battery

[BEV] or fuel cells [FCEV]) has led to two paradigm shifts:

the only source of energy is electric and the heat is not

freely available (as it is around a combustion engine). In

addition, both the source of energy and the power

electronics are temperature sensitive.

The electric drive range is defined through the efficiency

of the electric traction motor(s), the optimized use of

power electronics and battery, and the thermal

management. Increasing the range is one of the biggest

drivers behind technology improvements for electric

vehicles.

Melexis’ current and position sensors are used in the

power electronics (inverter - DC/AC converter) of an

electric car and guarantee accurate torque and efficient

power management for the traction motor(s). Current

sensors are also present on voltage converters (DC/DC)

and on-board chargers (AC/DC). Melexis’ current and

pressure sensors are essential in the battery management

system for a performant and safe operation.

As an EV does not generate heat on its own, it requires a

wide range of sensors and electric motor drivers to keep

the motor, the power electronics, the battery as well as

individual passengers at an ideal temperature whilst using

a minimal amount of electric energy.

The thermal management system of the EV is enabled by

e.g. smart expansion valves, flaps, fans, blowers,

compressors and heaters, which in turn rely on Melexis

motor drivers, pressure, temperature and magnetic

sensors (current, switches and position sensors).

In addition, we are paving the way to play a significant

role in all future thermal management needs in cooling

and heating systems, both for powertrain components

like the battery and the power electronics, as well as for

the air conditioning of the cabin.

Novel products such as smart fuses or contactors are

developed involving Melexis current sensors to control

the triggering function.

We are just at the beginning of what could be done in this

area. Upcoming challenges consist of further optimizing

the range, increasing the efficiency of the power

electronics, introducing innovative thermal management

technologies, enabling cost optimization, securing supply

chain resource availability and ensuring an efficient

charging and recycling eco-system.

Melexis Annual Report 2021

5.2.2Chassis-body-safety

Regardless of the powertrain type (ICE, HEV or EV), today’s vehicles display countless features relying on electronic

components such as sensors, motor drivers and transceivers.

Introduced on the high-end models, they quickly become optional and then standard equipment on mid-range and low-end

models.

Melexis is a key contributor to the technology innovation and continuous growth of the chassis-body-safety segment. We

have taken a pioneering role in the development and evolution of many new applications, leading to improved on-board

comfort, driving pleasure and safety. Included in the many new and traditional applications are networked lighting and

gesture control.

Networked lighting (interior/exterior)

Light has long been allied with comfort, due to its strong influence on a person’s emotions: warm colors can induce passion;

cold colors can bring calm. Light has an ever-increasing role to play in the communication of information. We are all familiar

with lights that warn of a hazard or emergency. With the arrival of autonomous driving, this aspect of lighting is likely to

intensify. Typical examples are when the driver is using headphones, or is engaged in a telephone conversation. In such cases,

the interior suddenly changing to red could alert the driver to take control of the car.

Melexis already has considerable experience in the development of LIN-based RGB LED automotive systems for ambient

interior lighting (static). To address the challenges of smart animated (dynamic) lighting, we developed and trademarked

Melexis Light Bus (MeLiBu™). It combines the best of LIN and CAN: the easily usable, extendable protocol and hardware

architecture of LIN with the speed and robust communication system of CAN. MeLiBu™ ensures the seamless integration of

LED systems from different tier suppliers, as well as different application cases.

Next to our leadership in interior automotive lighting, Melexis serves the automotive rear-lighting for which the

implementation of novel and stylish design can benefit from a similar technical approach.

Melexis Annual Report 2021

MLX81130

Melexis has developed an intelligent OLED controller

for combined point (LED) and area (OLED) lighting for

vehicles. The MLX81130, launched on 22 July, can drive

25 LEDs and OLEDs and supports the Melexis Light Bus

(MeLiBu™) interface. Using LEDs alongside OLEDs

typically requires two types of drivers, with two

controllers and possibly two entire subsystems that are

not easily integrated. The MLX81130 overcomes this,

thanks to independently programmable outputs that

can drive both LEDs and OLEDs. A system that is highly

appreciated by automotive engineers!

MLX81118

On 18 November, Melexis enhanced the design of

creative and animated automotive lighting by

introducing a multi-channel LIN RGB LED controller

with 24 LED driver outputs. Capable of driving eight

RGB channels, the MLX81118 reduces the bill of

materials and simplifies the design of cutting-edge

interior and exterior lighting. The MLX81118 enables

trendsetting styles by providing the highly flexible

control needed for creative effects. With outputs to

support eight RGB channels and precision control of

color and brightness, designers can leverage new

powers to add personalization and enhance safety in

their vehicles.

On-board comfort

The HVAC (Heating Ventilation and Air Conditioning)

systems equip nearly all cars today. The modern

implementation features a modular approach for

diffusing the air flow (multi-zone) combined with low-

noise and efficient blowers to not disturb the quiet

electric mode of the hybrid or electric vehicles. This is

valid for the main unit and also the units mounted in the

seats for even more comfort.

Motor drivers for flaps, fans and blowers as well as

pressure and temperature sensors represent Melexis’

contribution to the on-board comfort beyond the interior

lighting applications mentioned previously.

Further developments for HEVs or EVs target electric

compressors (i.e. decoupled from the engine) and

consider the cabin HVAC as part of the larger thermal

management system.

Gesture control and interior monitoring

With automation on the rise, interior safety is becoming

even more important than before. A time-of-flight or ToF

system is capable of understanding subtle human

gestures as well as the shape, size and behavior of objects

and people inside a car. It enables drivers to operate the

infotainment (radio, phone calls …) and the HVAC

systems, using simple gestures without taking their eyes

off the road. The sensor can also improve safety, for

example through monitoring driver behavior, head pose,

body pose, as well as hands-on-wheel detection and

advanced seat belt detection.

Driver-vehicle interface

Melexis also serves more common ways of translating

driver’s demand into action at the vehicle level. Those

interfaces include pedal position sensors (magnetic and

inductive) for the accelerator and brake pedals (both

remain key for EVs as they enable the one-pedal driving

mode and the regenerative brake), shifter position

sensors selecting the operation mode of the transmission

and steering angle and steering torque sensors (magnetic

Melexis Annual Report 2021

and inductive), enabling electric power steering and

vehicle stability applications.

The Melexis miniature magnetic position sensors are

used in a novel concept of top-column module (behind the

steering wheel) to measure the position of the stalks in a

contactless fashion, no longer using mechanical switches.

Other

To complete the body applications, there is an intake of

sockets driven from additional electrification of some

functions (e.g. electrically retractable door handles or

telematics & 5G antenna cooling) and further

improvements of others already electrified (e.g. window-

lift, sunroof, power tailgate, door lock, wiper, mirrors,

seat, keyless entry, ECU cooling, etc.).

This all fuels demand for magnetic and inductive position

sensors, magnetic switches, optical sensors and motor

drivers.

Chassis

The chassis applications represent a stable available

market for Melexis. Moreover, the regenerative brake

associated with the HEVs and EVs opens new sensor

opportunities for Melexis and aerodynamics innovations,

such as retractable air dams or rear spoilers, create

business opportunities in terms of motor drivers.

Next to the vehicle height position sensors (magnetic and

inductive), Melexis supports systems like active roll

stabilization or active suspension still reserved to the

high-end segments (in combination with the

hybridization).

Melexis continues to deliver tire pressure monitoring

sensors (TPMS).

Passive safety

Melexis’ leadership is recognized for innovative magnetic

solutions addressing the contactless seat belt buckle

requirements.

5.2.3Additional application trends that

drive our innovations

Temperature control applications

As we become more conscious of our health and our

environment, temperature sensing is becoming

increasingly relevant. As a result, it is a function now

being added to many fitness and health monitoring

devices in the form of medical body thermometers, point-

of-care equipment and smart wearable devices.

This technology is also integrated in smart buildings for

access control, dynamic HVAC and lighting control

systems, and also in smart appliances. The Melexis non-

contact temperature sensing solutions are used in a

number of medical applications for which we

encountered a high demand in 2020 because of

COVID-19. Further developments are ongoing to capture

the growth for health and medical applications.

Motion control

The use of robotics continues to advance, expand, and

evolve at a rapid pace and in many different

environments such as industrial (quality improvements

and productivity increase with decreasing costs),

collaborative robots (increasing safety for employees)

and humanoids (human-mirrored senses and motions).

Melexis aims to play an important role in this emerging

market by providing, among others, sensors and motor

drivers for motion control.

Cooling management

In our hyperconnected world, driven by cloud data

storing and computing (e.g. artificial intelligence or AI)

through wireless telecommunication (e.g. 5G), the

required systems are getting more complex and faster,

with more loads and processes that are power draining.

Today, Melexis supports the cooling needs and delivers

ICs for robust and high-efficiency fans used for

processing units (CPUs/GPUs) in computing servers, data

centers, base stations and game consoles. Similar

products are also used for home appliances (e.g. in

refrigerators).

Future solutions are currently being developed to

address the continuously growing need for thermal and

power management systems.

Alternative transportation

Our acquaintance with the automotive industry is an

opportunity for Melexis to explore other applications

related to mobility as it is undisputed that mobility needs

and habits are changing and will continue to evolve. At

Melexis, alternative transportation covers, among others,

motorcycles (with ICE), electric motorcycles, e-bikes,

robotaxis, and also drones, air taxis or automated guided

vehicles (AGVs). The need for low-emission or clean

electric mobility drives innovations which can be

addressed by Melexis’ products (dedicated or derived

from our automotive portfolio) and which, combined with

the expected market growth, represent a substantial

business potential.

Melexis Annual Report 2021

For low-emission motorcycles, the key products are

motor drivers (for fuel pumps), magnetic switches (for

speed sensing), pressure sensors (for optimized engine

management) and position sensors (for engine

management and throttle control).

In case of zero-emission electric mobility, the current and

position sensors are instrumental to control the traction

motor and sense the actual cyclist demand (torque

measurement for the pedal assist, pedaling cadence).

Energy management and monitoring

A clean environment calls for clean energy, such as solar

energy, for which Melexis has a portfolio of current

sensors to address the different sensing needs on those

systems (e.g. input current measurement in solar panels,

residential inverter, uninterruptible power supply,

battery monitoring and overcurrent, etc.).

User interface

COVID-19 has triggered a surge on the market of gaming

applications (e.g. personal computers, consoles, etc.), and

this wave is expected to last.

Next to the cooling (see above) of those intensively used

devices, Melexis enables great gaming experiences

through the controllers (e.g. joystick, steering wheels,

pedals, etc.) or an innovative positioning system for

pawns on an interactive board. Those applications are

made possible by Melexis’ magnetic switches and position

sensors. Similar products are also found on computer

peripheral devices.

5.3WE FOCUS ON ASSPs AND ASICs

Two thirds of our developments stem from own

initiatives and are created independently, from within

Melexis. We call these our ASSPs or application-specific

standard products and sell them to multiple customers in

a variety of markets.

Our ASSPs are our intellectual property that we share for

the benefit of our customers. This approach is one of the

key building blocks for our future growth. In addition, we

offer programmable functionalities allowing customers to

adapt the basic chip comprising our technology to their

specific needs in a flexible manner.

When it comes to our ASICs or custom-made application-

specific integrated circuits, customers have every reason

to put their trust in our mixed-signal ICs. At Melexis, the

latter include not only analog and digital but also sensing

capabilities. Moreover, we pride ourselves on offering

more than just a finished and tested component based on

the customer’s block diagram. The responsible teams

partner up with customers to design, develop and deliver

the most suitable ASIC solution for their needs.

5.4WE WANT TO BE OUR

CUSTOMERS’ PARTNER OF CHOICE

We foster a close relationship with our customers and our

suppliers. We aim for strong continuity in these

collaborative activities, especially in the field of

development, engineering and technical support.

Working closely together with our customers allows us to

go beyond simply developing a good product: we

continuously search for out-of-the-box solutions that

other companies have not yet detected. It offers crucial

insight and the big-picture perspective needed to develop

applications that anticipate future plans and needs, new

trends and emerging markets.

Melexis Annual Report 2021

OUR SUSTAINABILITY REPORT

With our annual sustainability report, inspired by the

Global Reporting Initiative (GRI) Standards, Melexis

endeavors to enable accountability and transparency

regarding our company’s sustainability efforts. In the

following subchapters, various material topics with

regard to sustainability are covered. Unless otherwise

specified, the disclosed information refers to the 2021

fiscal year and is valid for the whole organization.

6.1OUR KEY MATERIAL TOPICS AND

CONCERNS

6.1.1THE SUSTAINABLE DEVELOPMENT

GOALS

Adopted by all its member states, the UN has developed

17 Sustainable Development Goals (SDGs) as the

blueprint to achieve a better and more sustainable future

for all.

The SDGs address the global challenges we face,

including those related to poverty, inequality, climate

change, environmental degradation, peace and justice2.

Following a compelling materiality workshop that

included all internal key representatives and

departments, Melexis has defined the SDG topics that are

material to our company and stakeholders. As we have a

significant or major impact on the following SDGs, we will

support these with dedicated company initiatives:

Melexis Annual Report 2021

2 www.un.org/sustainabledevelopment/sustainable-development-goals/

6.1.2THE GRI STANDARDS

The Global Reporting Initiative (GRI) Standards help

organizations to determine their material impact on the

economy, environment and society. Its sustainability

reporting framework increases accountability and

enhances transparency regarding an organization’s

contribution to sustainable development. For some years

now, Melexis has been inspired by the GRI Standards.

Following several internal stakeholder workshops within

our company, Melexis has identified the relevant material

GRI topics as seen in the table below and reports on them

throughout this annual report. Fully in line with the

Belgian law of 3 September 2017 (detailing the

publication of non-financial information and information

regarding diversity by large companies and groups), we

will continue to report our sustainability efforts in

accordance with the GRI Standards: Core option.

GRI Standard

Topic

205

Anti-corruption

301

Materials

302

Energy

303

Water and effluents

305

Emissions

306

Waste

308

Supplier environmental assessment

401

Employment

403

Occupational health and safety

404

Training and education

405

Diversity and equal opportunity

408

Child labor

409

Forced or compulsory labor

414

Supplier social assessment

This chapter reports on all these material topics. For easy

referencing, please refer to chapter 13 for our GRI

content index.

6.2OUR STAKEHOLDER

ENGAGEMENT

Melexis takes nothing for granted, be it our people, our

partners, our customers, the planet or its resources. An

open dialogue with various yet equally important

stakeholders is essential in order to continuously improve

overall sustainability.

Our stakeholders are those people whom Melexis has an

influence on or who have an influence on Melexis,

including customers, shareholders, suppliers, distributors,

representatives and neighbors. They deserve the utmost

integrity, honesty and fairness in all their interactions

with our company and we make sure to respond

adequately to their reasonable expectations and

interests.

The following table lists our stakeholders, their

respective concerns and interests and the different

communication channels we use to respond to them.

Melexis Annual Report 2021

Our stakeholder groups, their interests and our communication channels

OUR STAKEHOLDER

GROUPS

THEY CARE ABOUT

WE COMMUNICATE VIA

Our customers

•Product quality, safety and

lifecycle

•The greenification trend, fully

embedded in society and with their

customers

•Health and medical applications in

light of COVID-19

•Responsible supply chain and

conflict minerals

•Business ethics and customer

privacy

•Annual customer audits and business reviews

•Annual strategic technology roadmaps

•Regular sales meetings with key customers

•24/7 technical support hotline

•Technical interface engineers

•Weekly social media posts

•Monthly press releases

•Monthly events

•Brochures and product sheets

•Letters, e-mail, phone and social media with

regard to COVID-19

Our colleagues

•The greenification trend, fully

embedded in society

•Development and retention

•Diversity and migrant workers

•Safety, health and well-being

•STEM and community involvement

•Monthly internal company newsletters

•Quarterly internal information meetings

•Regular team meetings

•Employee values program

•Regular leadership communications

•People surveys

•Global employee performance excellence

system

•Global intranet

•Social media and website

Our investors

•The greenification trend and the

shift

•towards electric vehicles

•Continuous innovation and

intellectual property

•Responsible supply chain (conflict

minerals)

•Business ethics and customer

privacy

•Annual shareholders meetings

•Quarterly reports

•Annual report

•Regular analyst meetings

•Investor relations press releases

•Yearly financial statements

•Weekly social media posts

Our suppliers

•Product quality, safety and

lifecycle

•Continuous innovation and

intellectual property

•Responsible supply chain and

conflict minerals

•Business ethics and customer

privacy

•Supplier audits and business reviews

•Regular supplier meetings

•Weekly social media posts

•Supplier assessment

Our communities

•STEM involvement

•Community involvement

•Health and safety

•Materials and energy use

•Industry associations

•Corporate social responsibility activities

•Trade fairs

•Weekly social media posts

•Regular press releases

Melexis Annual Report 2021

Due to the global COVID-19 pandemic and its multitude

of operational and social restrictions, we reached out to

our stakeholders to tackle these exceptional

circumstances. By communicating with our stakeholders

through all means possible, including e-mails, social media

and video calls, Melexis worked hard to stay in touch,

maintain the long-standing trust in our company and

ensure its continuous day-to-day operational

management.

6.3OUR TALENTS

People are not only the most important assets in our company, they ARE our company. Our HR approach builds upon the

principles of the self-determination theory: autonomy, relatedness and competence. These three universal and innate

psychological needs are seen in humanity across time, gender and culture. They are essential to the psychological health,

well-being and growth of any individual. In this chapter, we outline our human resources approach.

6.3.1Our employment statistics

By employment type: employee statistics on 31.12.2021

At year’s end in 2021, 1,515 Melexians worked full-time and 89 Melexians worked part-time at Melexis.

EMPLOYMENT TYPE

Full-time

Part-time

Currently inactive

(thematical at Melexis leave)

Region

Absolute #

Percentage

Absolute #

Percentage

Absolute #

Percentage

APAC

Female

100%

Male

100%

EMEA

Female

442

86%

10%

Male

982

96.3%

3.3%

0.4%

NALA

Female

100%

Male

91%

Female count

478

87%

10%

Male count

1,037

96.4%

3.3%

0.4%

Total 2021

1,515

93%

Total 2020

1,364

92%

Melexis Annual Report 2021

By new hires: employee statistics on 31.12.2021

AGE

<35

35-55

>55

Total absolute #

Region

Absolute #

Percentage

Absolute #

Percentage

Absolute #

Percentage

APAC

Female

14%

86%

Male

67%

33%

EMEA

Female

43%

49%

127

Male

137

63%

34%

218

NALA

Female

50%

Male

100%

Female count

41%

51%

136

Male count

141

62%

34%

226

Total 2021

197

54%

146

40%

362

Total 2020

56%

42%

124

In 2021, we welcomed 362 new Melexians, an increase

from last year’s 124 new hires. To keep up with our ever-

growing business needs and to venture into adjacent

markets, Melexis actively manages to find the right talent

for the right job, by promoting the upskilling and reskilling

of internal talent, while also increasing the volume and

variety of our external job vacancies.

Our dedicated talent scouts flexibly adapt their branding

and recruiting strategy to scan the labor market to hire

for global key positions, including hard-to-fill profiles and

vacancies. This global team collaborates seamlessly with

the local HR teams and the hiring managers, flexibly

addressing hiring locations and fostering diversity at the

same time. To back up their efforts, the career section of

our website and online tools like LinkedIn, Xing and

Google Ads are actively used.

In order to keep rejuvenating our workforce and attract

young graduates, Melexis usually focuses on job fairs,

university networking and collaboration activities. They

provide ample opportunities to showcase our innovative

solutions for sustainable mobility, now and in the future, a

message that is not lost on the upcoming generation of

young professionals. However, in 2021, in the face of

ongoing COVID-19 measures, this strategy had to be

translated into online sessions, which proved somewhat

less effective. That is why we redefined and reintroduced

our dedicated Fresh Graduates Program in Bulgaria in

2021 and, following its favorable results, will continue to

do so globally in the upcoming years.

By retention: employee statistics on 31.12.2021

Melexis is often cited as an attractive employer. We aim

to excel in the area of career opportunities, long-term job

security, life balance, financial health, appealing job

content, personal development and strong management.

We strive for optimal working, environmental and social

conditions and are privileged to work with people who

bring enthusiasm and eagerness to the job. And

colleagues clearly appreciate what our company stands

for: they tend to stick with Melexis, as shown in our high

and stable retention rate of 89.04%.

On top of our prolonged efforts for lifelong learning and

personal development, our retention rate may be

favorably influenced by the COVID-19 pandemic. In the

face of disruptive working circumstances, our retention

numbers remain stable. Melexians clearly feel more

connected with their company than ever before, as we

stand by our value ‘We care’ in times of crisis.

Below tables show Melexis’ employee retention rate on

the one hand, and our turnover rate on the other. The

turnover rate includes terminations, resignations and

retirements. The minimal 0.54% turnover increase is

driven mainly by the job classification ‘Function Global

Operations’: these profiles are highly sought-after in the

high-tech labor market and tend to switch employers

more frequently.

Melexis Annual Report 2021

EMPLOYEE TURNOVER (permanent employees only) in 2021, by region, age and gender

AGE

<35

35-55

>55

Total absolute

Region

Absolute #

Percentage

Absolute #

Percentage

Absolute #

Percentage

APAC

Female

60%

40%

Male

20%

70%

10%

EMEA

Female

36%

50%

14%

Male

60%

33%

117

NALA

Female

100%

Male

50%

Female count

37%

51%

12%

Male count

57%

36%

129

Total 2021

50%

41%

194

Total 2020

50%

40%

10%

163

Employee benefits

Benefits vary according to local legislation obligations

and local market practices. We aim to offer benefits that

are market competitive or even transcend current market

practices in all our sites. On top of that, we focus on

opportunities for tax optimization, so that employees end

up with an optimized net remuneration package.

Melexis respects the well-being of its colleagues and

wants to stand out as a preferred place to work. That is

why Melexis offers its colleagues more benefits than is

legally required. These benefits may include, among

others: parental leave (for both partners), flexible

working hours, remote working, additional health/

pension/life insurance, benefits passes, meal vouchers,

etc. All benefits standard to full-time employees are also

applicable to part-time employees and employees with an

employment agreement of determined duration.

Melexis does not offer compensation in the form of

Melexis shares as we strongly believe in the self-

determination theory (Edward L. Deci and Richard M.

Ryan, psychologists at the University of Rochester),

arguing that contingent rewards can have detrimental

effects on intrinsic motivation, creativity and innovation.

Within Melexis, we focus on intrinsic value creation for

the company; the share price is a result thereof. The

financial numbers which impact the level of the business

component of the variable remuneration, i.e. revenue

growth and EBIT growth, are important elements driving

the valuation of the company. As such, we believe there is

a clear alignment between shareholders on the one hand

and the Melexis community on the other.

In the course of 2021, Melexis was delighted to offer all

colleagues a one-time allowance as a way to say thank

you for joint efforts during the prolonged COVID-19

health crisis. Their dedication and spirit helped us to

remain a successful and resilient organization, as

reflected in our results. It is a recognition of their

incredible energy and commitment during a time of crisis,

supporting each other and customers and maintaining an

excellent quality of service, regardless of the new hybrid

way of working. The implementation modalities of the

allowance have been determined locally, in line with local

market practices and needs.

Melexis Annual Report 2021

Parental leave

99 Melexians have taken parental leave over the course of 2021. This is the first year that we publish detailed information on

this topic, which will serve as a reference point for future annual reports. To this end, we have collected site data that is based

on each country’s local definition of parental leave. The below table lists parental leave but does not include pregnancy or

birth leave. It is worthwhile noting that both female and male Melexians take up their parental roles. In turn, the high parental

leave numbers of the EMEA region may partly be explained by Europe’s stimulating parenting legislation. Melexis frequently

goes beyond what is legally required and has, for example, facilitated and expanded pregnancy leave for our US employees.

PARENTAL LEAVE

Full-time

Part-time

Total absolute #

Region

Absolute #

Percentage

Absolute #

Percentage

APAC

Female

Male

100%

EMEA

Female

52%

48%

Male

71%

29%

NALA

Female

Male

100%

Female count

52%

48%

Male count

72%

28%

Total 2021

64%

36%

6.3.2Training and education

At Melexis, people are not taken for granted. Talent is

attracted and cultivated in an environment that prizes

learning, growth, collaboration and continuous

improvement.

We listen to, develop and coach our people

At intervals, a people survey is sent out to all Melexians to

gather their feedback on different topics such as

company image, well being, development, performance

management, remuneration, vision and strategy. The

survey allows us to assess Melexis as an employer in a

structured, consistent and uniform way with the ability to

compare results to other high-tech companies and to

define areas of strength and areas which need to be

improved to create the best imaginable future for our

people.

The Melexis business competences and values are the

fundamentals of our talent development. We aim to

nurture talent in a culture of coaching, feedback,

recognition and candor. The core of our learning strategy

is based on the self-determination theory, which

underlines the three universal and innate psychological

needs of autonomy (ownership), competence and

relatedness at the workplace.

When joining Melexis or taking up a new position, a

structured onboarding program facilitates a colleague’s

smooth integration. Melexis is constantly improving its

worldwide onboarding program, called ‘Melexis

OnBoard’, to ensure new Melexians are oriented,

integrated and delivering results as efficiently, effectively

and energetically as possible. The Melexis University

serves as the central platform for all relevant content.

Once new hires are on board, they can expect to be

offered global, competence-based programs and career

pathing. As an innovative employer, Melexis supports

further knowledge building on the concept of leadership

within organizations through its endowment of the

Antwerp Management School Chair.

Lifelong learning and a learning mindset are the backbone

of everything we do to provide learning solutions. As an

employer, we want our colleagues to do what they love

and we need to inspire them to find their own sweet spot

in their career by helping them to connect their purpose,

passion and profession. By providing in-depth knowledge

in different areas with targeted on-the-job development,

we help them to become agile learners.

As colleagues own their development journey, they are

encouraged to determine their own learning needs. To

Melexis Annual Report 2021

this end, our HR team members are evolving towards a

role as learning facilitator. In 2021, we have significantly

increased training opportunities for all functional levels

and different business skills and provided better digital

learning experiences. We developed (technical and

digital) solutions that enable user-friendly content access

both internally and externally, inspiring peer learning and

expert knowledge sharing.

To provide colleagues with more insight into their

internal career possibilities, an ambitious job family

classification project has been implemented. Following

the analysis of more than 400 unique positions, Melexis

created 24 job families, each clustering positions with

shared or similar key accountabilities and purposes. This

new job family approach now constitutes the backbone of

our HR processes. It ensures transparent functional and

cross-functional career paths, a better alignment

between positions across functions and an objective and

efficient way to describe positions.

Leadership development retains our laser focus, as we

consider our leaders as multipliers of the learning

mindset. In 2021, we developed a trajectory for beginning

leaders to guide them through volatile, uncertain,

complex and ambiguous (VUCA) times. This well-liked

leadership program, designed in partnership with

external experts and fully performed online, allowed no

less than 60 first-time leads to improve and upgrade their

leadership skills.

As the digital way of working has become fully integrated

into our daily realities, it has become a crucial driver for

transformation.

In 2021, our focus on further digitalization strengthened

team connection and collaboration, provided the required

transparency to the business on people-related topics

and allowed increased proactivity and agility within our

HR processes.

The automated registration of training activities and

hours, aimed at consolidating all our business and

technical training records, both on global and local levels,

allows for more in-depth data analytics and future

planning. In 2021, we logged 74,789 hours of training.

These include a mix of readily available online courses on

the Melexis University platform, blended learning and

peer training. This hybrid model improves business and

production skills as well as social skills. In 2021, special

attention was also given to physical and mental well-

being in times of COVID-19. With a focus on core

competencies like resilience and active learning, we want

to support the development of future-proof talent and

have fully integrated the development of resilience into

our well-being program.

In addition to our internal programs, we invested EUR

573,143 in training sessions provided by external parties

in 2021.

As always, 100% of our colleagues received their yearly

or twice-yearly performance and career development

review in 2021. In our digital talent center, team leaders

and managers find easy and uniform guiding tools and

processes to review their team members while individual

colleagues can access their individual objectives and

review on the same platform.

6.3.3Diversity and equal opportunity

Diversity of the Board of Directors: statistics on 31.12.2021

AGE

<35

35-55

>55

Total absolute #

Female

Male

Total 2021

Total 2020

As evidenced, the Board of Directors is well balanced in terms of gender diversity.

Melexis Annual Report 2021

Diversity of employees by region and gender: employee statistics on 31.12.2021

At year’s end in 2021, 1,628 Melexians worked at Melexis. Notwithstanding the fact that we are a high-tech engineering

company, we are proud to be able to attract and retain more than 34% of female colleagues, an unusually high number when

compared to other high-tech companies and an increase of 1% year-on-year.

Female

Total absolute #

Region

Absolute #

Percentage

Absolute #

Percentage

APAC

40%

60%

EMEA

516

34%

1,020

66%

1,536

NALA

35%

65%

Total 2021

552

34%

1,076

66%

1,628

Total 2020

492

33%

998

67%

1,490

GENDER EQUALITY EMBEDDED IN MELEXIS’ DNA

Melexis has always advocated gender equality. Our former CEO, Françoise Chombar, emphasized the importance of equal

chances on any occasion. For example, she participated in ‘The Female Future of Tech’, a virtual event of the Global

Semiconductor Alliance. She also gave a live interview on Belgian national television where she advocated inclusion as a

driver for innovation and a better world. Her ceaseless efforts to promote gender equality and inclusion never go by

unnoticed and she received an award from the Catholic University of Leuven for her societal merit.

Diversity of employees by age: employee statistics on 31.12.2021

At year’s end in 2021, we noted a fairly even and representative distribution of generations on the work floor at Melexis.

With a keen eye on attracting young graduates, Melexis usually reverts to job fairs, university networking and collaboration

activities. However, in 2021, in the face of ongoing COVID-19 measures, this strategy proved somewhat less effective. That

is why we redefined and reintroduced our dedicated Fresh Graduates Program in Bulgaria in 2021 and, following its

favorable results, will continue to do so globally in the upcoming years.

AGE

<35

35-55

>55

Total absolute #

Region

Absolute #

Percentage

Absolute #

Percentage

Absolute #

Percentage

APAC

Female

43%

53%

Male

16%

82%

EMEA

Female

187

36%

283

55%

516

Male

430

42%

513

50%

1020

NALA

Female

83%

17%

Male

18%

55%

27%

Female count

200

36%

304

55%

552

Male count

439

41%

556

52%

1,076

Total 2021

639

39%

860

53%

129

1,628

Total 2020

602

40%

776

52%

112

1,490

A diverse workforce of 50 nationalities

Melexis is present in 12 countries worldwide, with a diverse workforce of no less than 50 nationalities. This versatility is a

direct result of our hiring strategy that seems to foster diversity naturally. Reflecting our ‘We care’ value, Melexis never

Melexis Annual Report 2021

labels humans according to gender, age, vulnerability, nationality, religion or educational level. HR Decisions are not

influenced by any preferential treatment. We simply select new colleagues based on fundamental criteria like competencies,

performance record and potential.

Considering the current challenges to attract the right talent in the labor market, we pursue international recruitment for

every location, followed by dedicated support for international hires during their onboarding period.

International recognition

Melexis and our solutions are widely recognized. This often leads to awards for the ingenuity of our products, the efficiency of our

operations or our general merit. Thumbs up for the Bulgarian HR team as Melexis received the Bulgarian Employer of Choice award on 2

March. Our colleagues in China received the 2021 Gasgoo Award for Technology Innovation for the powertrain and electrification of our

MLX91220. This 0-50 A isolated integrated Hall-effect current-sensor with dual overcurrent detection operates on a 5 V supply. It is the

easiest all-in-one integrated current sensor with a perfect balance between small footprint, low impedance, high bandwidth, isolation and

more general features.

Our remuneration policy

As a global company, Melexis employs people in different

locations around the world. To become an employer of

choice, to facilitate teamwork and cooperation and to

secure engineering excellence in product development

and product quality, Melexis has defined a reward policy

based on the three cornerstones of fairness, transparency

and consistency. The reward programs are driven by the

desire to continuously invest in our people and are based

on business performance and local competitive market

practices. Melexis’ goal is to secure externally

competitive and internally equitable remuneration

packages based on the three cornerstones above and on

differentiation.

Melexis’ performance philosophy fosters a culture of

excellence through achieving results. Achievement of

results has a positive impact on the personal and

professional growth of its people and enables Melexis to

reward them financially in line with their contribution to

the business.

Salaries are determined by local markets. They have been

benchmarked against country-based benchmark data,

independent of gender or nationality. Remuneration

reviews are implemented annually. On top of local

geography and the job function, the annual review takes

into account the progress made by employees regarding

their required technical and business competencies

(which are evaluated by performance and career

development reviews), the allocated budget, the

Melexis Annual Report 2021

comparison of the individual salary to the relevant pay

market and a determination to ensure an internal and fair

pay consistency across Melexis positions and functions

across the globe.

Our people increasingly value Melexis’ attention towards

life balance as part of their employment value

proposition, such as flexible working hours and

teleworking. In 2021, teleworking opportunities have

become a staple in the new hybrid way of working.

Over the last years, and in line with our company values,

increased focus is given to health and well-being

programs, medical coverage plans, accident coverage and

retirement and disability plans.

6.4SAFETY, HEALTH AND WELL-

BEING

6.4.1Occupational health and safety

Melexis takes safety in the workplace very seriously and

works hard to avoid any risk, hazard, accident or injury in

the workplace. A safe working environment begins with

creating awareness. At Melexis, health and safety training

as well as exercises (such as evacuation, fire prevention

and first aid) are organized on a regular basis. Our

Melexis sites comply with local regulations and ensure

continuous improvement regarding their working

environment. Injuries are tracked at all sites in

accordance with local legislation. In 2021 no work-

related fatalities or serious injuries occurred.

In the clean rooms in our testing facilities, rigorous

hygiene standards are put in place. A strict protective

dress code needs to be respected. Our colleagues’ well-

being is never disregarded. Preventive maintenance of

tools and equipment further contributes to safety in the

workplace. Properly functioning tools and equipment

prevent not only unexpected downtime but also

accidents.

All our sites are audited for mandatory ISO 14001

certification, both internally and by external consultants.

As such, they comply with all due procedures regarding

any possible hazard identification, risk assessment and

incident investigation regarding occupational health and

safety.

For a second year, Melexis closely monitored and

responded to the COVID-19 outbreak around the world

in 2021. The health and safety of our colleagues and other

stakeholders were our foremost concern. With a

dedicated COVID-19 taskforce firmly in place, we

worked around the clock to react to the pandemic

adequately and communicated with our colleagues

intensely.

Specific measures – such as remote working, social

distancing and business continuity planning – were

implemented in all our sites worldwide. Site managers

rearranged office spaces to allow for locally required

distances between office desks. Internal wall-mounted air

conditioning units have been deactivated to avoid inter-

room air circulation. Following the air quality

recommendation of HVAC consultants, Melexis

measured and remained well within that target in all its

office and building rooms. To make sure everyone was on

board, our safety mascots Mel and Lex spread the word in

an internal safety awareness campaign. All these

concerted efforts showcased just how much our

colleagues respect the Melexis value ‘We care’.

With the 2021 development of a COVID-19 vaccine,

many sites have also helped to facilitate vaccination

opportunities for colleagues, external co-workers and

sometimes even their families. For example, colleagues

appreciated the fact that Melexis invited local health

agencies or municipalities to administer vaccines on site,

or local scientific experts to respond to possible questions

and concerns surrounding vaccination in their own

language.

In collaboration with (external) local occupational health

services, each Melexis site has a description of the

functions that contribute to the identification and

elimination of hazards and minimization of risks, and an

explanation of how the organization ensures the quality

of these services and facilitates workers’ access to them.

It stands to reason that local occupational health services

are obliged to maintain the confidentiality of workers’

personal health-related information and ensure the latter

is not used for any favorable or unfavorable treatment of

workers.

Colleagues are encouraged to connect into site groups

and communities and facilitate reporting any

occupational health and safety issues. Both spontaneous

and Melexis-organized groups such as Speak@Melexis,

Oxygen and High Five have already suggested and

implemented practical workflow improvements in this

way.

6.4.2Our colleagues’ well-being

Not merely mindful of avoiding accidents and injuries or

ensuring business continuity, Melexis also offers a

workplace that truly cares. As an employer, Melexis

Melexis Annual Report 2021

promotes an internal culture of transparency and

awareness around well-being by providing a comfortable,

safe and secure work environment. We foster an open

culture in which people feel free to speak openly. We

provide development courses about well-being and have

set up a network of internal persons of trust and external

professionals who are available for phone or face-to-face

counseling when required.

We ensure that these options are properly promoted and

regularly review people’s perception of their state of

well-being by continuously collecting feedback so that

improvements can be made. With a focus on the

development of core competencies like resilience – in

2021, still essential in the COVID-19 context – we aim to

support future-proof talent.

TAKING WELL-BEING TO HEART WITH THE PULSE SURVEYS

The onset of COVID-19 changed the lives of all Melexians, from where and when they work to how they connect with

friends, family and colleagues. In alignment with our company values, Melexis launched the Five Ways of Well-Being

newsletters in 2020, delving into the simple things you can do as part of your daily work and private life to boost resilience

and well-being. In 2021, we wanted to ensure that well-being was integrated more formally in our daily ways of working. To

do so, a global team was created to enable all sites to align themselves with our global well-being strategy.

As numbers never lie, the Global Well-Being Team decided to create a brand-new quarterly survey. These consecutive

Pulse Surveys focus on connection, collaboration and engagement and allow Melexis to work with a well-being index that

can be monitored globally, regionally and locally. With a representative response rate of more than 40 percent, the results

are encouraging!

In 2021, the first three* surveys clearly indicate that the feeling of connection among Melexians remains strong, even in the

face of increasingly hybrid work models. The first survey also highlighted three points of attention, regarding the ability to

disconnect at the end of the day and to find new ways to stay energized, and to keep learning in times of information

overload. Points of attention immediately led to dedicated actions, the results of which swiftly reflected into higher score

results.

For example, the team created a central storage place for well-being information and resources for employees, new hires

and team leaders on our intranet and talent center with dynamic links to local well-being initiatives. Also, together with an

external party, we created a series of five webinars to create healthy hybrid habits. A new platform harbors a well-being

library while each site organizes get-togethers like site walks, food events, online games, an international week of

happiness, detox (disconnect) week, desk bikes, running events, and sleep workshops. Furthermore, the online Fit@Melexis

community that started up in Ieper has now been expanded globally and is pulling in many colleagues who are eager to take

their well-being in hand and contribute to a better work experience.

The Global Well-Being team will keep a finger on the pulse with ensuing surveys and are already planning an attractive

events calendar for 2022.

*Results of the fourth survey were not yet available at the time of writing this article.

Melexis Annual Report 2021

We expect, in turn, that our people become actively

engaged in their own health and participate in activities

that promote mental and physical well-being. We

encourage Melexians to live a healthy lifestyle by

providing nutritious food options such as fresh fruit at our

sites. Depending on the site, Melexis is experimenting

with outside walking meetings, green patches inside and

outside office buildings, leisure opportunities (like fitness

rooms, darts, table tennis), online yoga sessions,

dedicated newsletters from Fit@Melexis that focus on

moving, food and the mind, reassuring COVID-19

information sessions etc. We equally support different

sports activities. Colleagues are offered the possibility to

have flexible working hours and to work from home. The

Melexis culture is based on trust. We believe that when

people are able to organize their work autonomously,

they are even more motivated to deliver output.

Melexis respects all local work-related legislation and

abides by the local laws when it comes to social elections,

worker representation, shift work, the company’s

handbook, timely notification of operational changes etc.

Approximately 50% of all employees are covered by

collective bargaining agreements.

6.4.3.CYBERSECURITY

At Melexis, we attach great importance to keeping our

assets safe. All of our IT tools have been screened in

terms of vulnerability to cyberattacks. Unfortunately,

however, cyberattacks are never 100% preventable. That

is why we have two continuity response plans (CRPs) in

place to limit the harm that cyberattacks could cause: a

continuity response plan with regard to the technical

track, and a continuity response plan with regard to the

communication track.

Next to the Melexis code of conduct which outlines our

colleagues’ obligations with regard to computing and

information resources, our information security code of

conduct is intended to raise awareness and knowledge of

the importance, risks and consequences of information

security for Melexis. By increasing the information

security awareness and knowledge and emphasizing the

employees’ role in protecting information, we strengthen

a secure environment to support our company’s future

growth.

As people are often the weakest link when it comes to

preventing cyberattacks, we believe that Melexians can

truly make the difference and we want to empower them

to make the right decisions. That is why we established a

Mel & Lex communication campaign, which consists of

nine principles:

1.Knowing our code of conduct on information security

2.Wearing our badge at all times

3.Thinking before we click

4.Reporting any suspicious activity

5.Managing our passwords properly

6.Asking for help in case an IT or security breach is

suspected

7.Collaborating in the cloud

8.Backing up our data

9.Thinking twice before we print in order not to leave

confidential documents unattended for too long.

As our company is rooted in intellectual property,

development and know-how, protecting this knowledge is

vital for Melexis. Therefore, our mascots Mel & Lex

launched an IT security campaign. They do IT safely. Over

the last two years, Melexians have become more aware of

security. No small feat, considering the worldwide

increase in security hacks by ill-intentioned crooks.

However, as Mel & Lex are diligent go-getters, they keep

coming up with even smarter safety tips.

6.5LOCAL COMMUNITIES

For Melexis, technology is about solving fundamental

societal challenges. After all, one of our core values is that

‘We care’. Melexis respects all its stakeholders. Our

collective reputation as a corporation and as a collection

of individuals representing the Melexis brand must meet

the highest standards. This means that all our

stakeholders, including customers, shareholders,

suppliers, distributors, representatives and neighbors,

deserve the utmost integrity, honesty and fairness in all

their interactions with our company.

6.5.1Our social responsibility

In many Melexis sites a social engagement team is set up

to coordinate and implement Melexis’ efforts to the

benefit of the communities we operate in. Every year, a

number of local initiatives are set up at our sites. These

may include but are not limited to breast cancer

awareness in Ieper, the collection of educational toys for

underprivileged children in Tessenderlo, a fundraising for

people with disabilities in Erfurt, a UNICEF ‘Back2school’

information campaign, a second-hand clothes collection, a

food donation initiative for families in need in Sofia, a

clothing collection for people in need in Kyiv, our US

teams volunteering at a foodbank and car-free days on

some sites.

Melexis Annual Report 2021

MELEXIS IN SPACE

Melexis entered space! As of 29 August, the Melexis logo is

floating in the big wide open. A multidisciplinary team from

UHasselt (university of Hasselt, Belgium) came up as the clear

winner of a European Space Agency contest. By winning the

ESA contest, the students were able to introduce their

scientific project, the OSCAR-Qube, into the international

space station ISS. The Qube is an advanced, high-sensitivity

magnetometer built with carbon materials and synthetic

diamonds. Its goal is to measure magnetic fields in space and on

earth. The Qube was launched with a SpaceX-23 rocket from

NASA’s Kennedy Space Center. Because Melexis, a specialist in

magnetic sensors, sponsored its retrieval, our logo was placed

on the Qube.

6.5.2Our educational responsibility

Melexis invests a lot of time and effort in establishing

long-term educational partnerships with local

universities. Such cooperation takes on many different

forms: Melexis colleagues give guest lectures at

universities, they provide practical training to students

and internships and summer jobs are made available for

students.

Our focal point of educational awareness and

responsibility is the organization of several STEM-related

activities. STEM stands for Science, technology,

engineering and mathematics and aims to foster inquiring

minds, logical reasoning and collaboration skills. Each of

the four STEM domains is indispensable for today’s and

tomorrow’s world. Their real strength, however, lies in

where the domains meet, in how they complement and

reinforce one another and, of course, in the cross-

pollination with other (social) sciences and domains.

STEM concerns everyone, because it looks for answers to

societal challenges: from energy to health and food

security, from sustainable mobility to refining a care

robot.

For several years now, Melexis has been firmly

committed to bringing STEM to the forefront whenever

possible. We organize several successful initiatives for

children and aim to boost their interest in the exact

sciences and technology from a young age. Melexis is

determined to follow this path for many years to come.

You can find more on our STEM support activities on our

website: www.melexis.com/en/info/stem.

STUDENTS IN STEM, THE FUTURE PILOTS OF OUR

ECONOMY

As a high-tech company, Melexis strongly believes that

STEM provides answers to most of our societal

problems. Through innovation and understanding we

can create the best imaginable future. This is why

Melexis supports different STEM initiatives around the

world. Examples are the Formula Electric and High

Speed Karlsruhe race teams who participated in the

Formula Student Championship. Other sponsored

projects were the ‘Sound of Science Nights’, the Board

of European Students of Technology in Belgium and

Bulgaria and the Sensor Space Camp in Erfurt. In the

latter, 30 students worked with six different camp

partners on different challenges in sensory, 3D printing,

optic and robotic fields. At the Melexis Challenge,

students were dared to build their own sensor-

controlled 3D light cube through soldering,

programming and the assembling of LEDs. During the

German ‘Tag der Berufe’, Melexis welcomed students

onsite and gave them a tour of the production hallway,

allowing students to gain more insight into future study

and job opportunities.

Melexis Annual Report 2021

6.6THE ENVIRONMENT

Our quality and environmental policy strives to keep our

environmental footprint as small as possible because we

take our responsibility to both people and planet very

seriously. This environmental awareness and

responsibility translates into many different areas.

Melexis continuously monitors and measures its

environmental performance in order to be able to

improve it.

Our quality and environmental policy is based on five

principles:

•Sustainable development: we develop products and

processes that have a minimal impact on the

environment, now and in the future.

•Prevention is better than cure: we design products that

are ‘safe at launch’ and ‘first time right’, maximizing the

value of the effort and materials used.

•The total environmental impact counts: production

(including energy consumption), use and end-of-life

disposal have as little effect as possible on the

environment.

•An open dialogue with all stakeholders: everything we

do contributes to our corporate social responsibility,

with team members playing an active part. This positive

attitude helps determine the financial and

technological success of our company. We are proud of

our daily efforts to produce less waste, improve

efficiency and contribute to building a sustainable

future.

•Zero incidents: throughout the entire supply chain and

life cycle of our products, we ensure robust competitive

processes that continuously reduce incident

occurrence and enhance incident detection.

Over the years, through collaboration with suppliers

and through quality innovations, Melexis has

continuously enhanced its Zero Incident Program. Its

objectives remain the prevention of incidents and the

early detection of any abnormality.

Over the 2019-2021 period, Melexis has reduced its

defective parts at customer (so-called Parts Per Billion)

by 15% year-over-year.

Over the years, through collaboration with suppliers and

through quality innovations, Melexis has continuously

enhanced its Zero Incident Program. Its objectives remain

the preventive of incident and the early detection

abnormality.

Over the 2019-2021 period, Melexis has reduced its

defective parts at customer (so called Part Per Billion) by

15% year on year.

We aim to use our technological expertise to improve the

quality of people’s lives. Our environmental program

focuses on three aspects: our environmental efficiency

(relating to the life cycle of our products), our

environmental effectiveness (relating to our processes

and work environment) and our environmental social

responsibility (taking into account our Melexis values and

strategies).

Reporting on our care for the planet

Melexis has been caring for people and the planet for

more than 30 years. While this care is deeply ingrained in

our DNA, we are increasing our attention to and efforts

for the planet even more in a desire to meet the

expectations of our stakeholders. All our stakeholders’

decisions, especially the ones of investors, employees and

customers, are based on trust. Our respect for

environmental and social impact is a critical element in

that trust.

The European Green Deal and the European ‘Fit for 55’

program have put in motion a momentum for a renewed

sustainability reporting approach. Reporting on the

emission of greenhouse gases has become a business

imperative, with reporting on scope 1 and 2 emissions

now essential and scope 3 emissions still voluntary.

Based on advancing insights, and in a bid to provide more

transparency on our environmental impact, we are now

measuring our impact more accurately and developing

multi-year action plans. To this end, and in consultation

with external consultants, our sites are now thoroughly

investing in providing information regarding their

environmental impact.

To meet stakeholder interest, we are continuously

expanding the reporting on our website’s sustainability

pages. At the same time, we report on our scope 1 and 2

emissions in this annual report for the first time. The

report also includes information on materials used,

energy, water, effluents and waste and environmental

compliance (see page 53-55).

Melexis Annual Report 2021

Our carbon footprint: Melexis reports on scope 1

and 2

In order to reduce our ecological footprint, it is necessary

to first determine our carbon footprint. Based on this,

targets for reducing the greenhouse gas emission can be

defined and realized in order to evolve towards low‐

carbon or CO2 neutral business operations.

The carbon footprint analysis is based on the Greenhouse

Gas or GHG Protocol (the most widely used protocol to

calculate greenhouse gas emissions) and lists three

scopes as presented in the image below:

•Scope 1 covers the direct emissions from owned or

operated assets (for example, the fumes from the

tailpipes of a company’s fleet of vehicles).

•Scope 2 covers the indirect energy-related emissions

from the purchase of energy.

•Scope 3 emissions are all other indirect emissions,

being the emissions from everything else, such as raw

materials, suppliers, distributors, product use …

Our scope 1 and 2 footprints have been calculated for

2021. They will serve as a baseline for 2022 to define a

realistic target for CO2 reduction to meet the carbon

neutrality goal of the European Green Deal in 2050.

For the calculation of the carbon footprint the ‘méthode

Bilan Carbone®’, version V8.6.1 was used. The study was

carried out in accordance with ISO 14064-1 (ISO

14064-1: Greenhouse gases — Part 1: Specification with

guidance at the organization level for quantification and

reporting of greenhouse gas emissions and removals). The

results are presented in conformity with the Greenhouse

Gas (GHG) Protocol guidelines. The GHG Protocol

Corporate Accounting and Reporting Standard provides

requirements and guidance for companies and other

organizations, such as NGOs, government agencies, and

universities, that are preparing a corporate-level GHG

emissions inventory.

Scope

ton CO2e

724

5.2

13,090

94.8

Total 2021

13,814

100

Scope

Activity

Unit

2021

Total emission

ton CO2 e

13,814

Production

volume

devices

1,775,559

Specific emission

ton

CO2e/106

dev.

7.78

Melexis has been reporting on its scope 2 emissions for a

few years now. As opposed to previous years, our 2021

measurements cover all our sites and cover a broader

scope.

Our scope 1 and 2 footprints calculated for 2021 will

serve as a baseline for 2022 to define a realistic target for

CO2 reduction to meet the carbon neutrality goal of the

European Green Deal in 2050.

6.6.1Climate change and the greenification

trend

The world needs to continue the fight against climate

change and seek solutions for both CO2 and power

consumption reduction. The call for green products has

never been greater than today, a demand that will only

increase in the coming years in all markets and impact

mobility and energy consumption. The European Green

Deal is striving to make Europe the first climate-neutral

continent and will pave the way for a better future.

Melexis is especially well positioned to contribute to the

electrification trend in the automotive industry that is

currently seeing an acceleration on the back of a

heightened and justified attention to combating climate

change.

An important environmental risk that Melexis faces is

linked primarily to climate change, such as the higher

occurrence of natural hazards. Melexis is mapping,

proactively and together with our suppliers, business

continuity risks including natural hazards, at every stage

of the supply chain and ensuring mitigation of the main

risks.

Another risk related to climate change is the potential

need for increased expenditures and investments by

players in the semiconductor industry to ensure

compliance with new regulations to reduce the CO2

footprint. The production of wafers for instance is very

energy and water intensive. Moreover, the environmental

footprint of transportation of ICs is high, given the global

nature of the semiconductor supply chain. Therefore,

regulation in view of climate change could put pressure

on the industry and lead to substantial increases in the

cost of doing business.

Melexis Annual Report 2021

Melexis is continuously looking for ways to reduce

emissions and energy by designing sustainable products

for our customers who are also increasingly looking to

minimize their impact on the environment. To do so,

Melexis adheres to the Greenhouse Gas or GHG Protocol

and is now measuring its scope 1 and 2 emissions. In

consultation with an external consultant, all our sites

have now been assessed and their baseline

measurements regarding CO2 emissions have been

determined. These initial values provide the starting point

for annual comparisons and allow for the establishment

of future key performance indicators.

6.6.2Materials, emissions, water and waste

We reduce our use of raw materials as much as possible

and we are always looking for the most environmentally-

friendly materials to use in our products. We design our

packaging to facilitate its recycling and reuse. We look to

reduce our CO2 emissions and use renewable energy as

much as possible. We minimize waste by separating it

efficiently to ensure recycling. And we apply the 5S

strategy to ensure effective workflows and areas, travel

and transportation as we encourage carpooling and

streamline shipments and deliveries. Our water

consumption is merely destined towards basic usage in

our facilities, for example for showers, toilets and wash

basins.

Local sites are forever stepping up efforts to create

sustainable awareness in practical daily steps. Whether

they abolish plastic drinking cups and cutlery, teach

employees to sort waste properly, collect reusable toys

and clothes or donate furniture, all these baby steps

together create more awareness and buy into our respect

for natural resources and, ultimately, the planet.

6.6.3Energy

With a keen eye on reducing our ecological impact, our

sites are actively analyzing environmental opportunities.

By replacing its end-of-life and energy-gobbling old

testing equipment with more efficient ones, Erfurt

reduced its power consumption in production from 5

GWh to 4.1 GWh in 2019. In 2020 and 2021, our sites in

Ieper, Tessenderlo and Bevaix have installed charge

points for electric vehicles, fitting in nicely with our

strategic mobility plans. Furthermore, the use of new

chillers in the current Sofia building’s air conditioning

helped save a projected 1 GWh in electricity

consumption.

In 2022, when the brand-new building in Sofia becomes

fully operational, it is to be expected that it will positively

impact our environmental performance data even

further. The state-of-the-art building was designed to

minimize the risk of energy and heat waste. The amount

of electricity used will be minimized by the use of low-

consumption compressors and the amount of water used

will be reduced by the collection and reuse of rainwater.

To control the building’s temperature, we have targeted

potential energy-loss points like windows and doors, we

are recuperating heat emanating from the facility’s own

equipment and we have opted for outdoor blinds to avoid

the accumulation of heat inside. Another promising step

is taken at the site in Bevaix, where we will be installing

approximately 350 m² of solar panels, leading to an

estimated CO2 reduction of 5,917 kg per year, which

represents the equivalent of 29,585 km traveled by car or

the CO2 consumption of 473 trees.

6.6.4The precautionary principle

In light of our business activity, it should be noted that

ISO 14001 certification rules have defined Melexis as a

company with low environmental impact. Melexis designs

high-tech semiconductors and integrated circuits and its

main production process is testing: we probe products on

wafer level and subsequently on the final device.

This means that no chemical substances or hazardous

substances are used in our production sites. We use

nitrogen for low-temperature testing and electricity is the

main source of energy for our operational processes.

However, we practice a ‘precautionary principle’ by

identifying, assessing, preventing and continuously

mitigating risks related to environmental, quality, supply

chain and sustainability aspects. The main environmental

risks that Melexis faces are linked primarily to global

climate change, such as natural hazards. Melexis is

mapping, proactively and together with our suppliers,

natural hazards at every stage of the supply chain and

ensuring mitigation of such risks. Our internal

requirements and targets are often more stringent than

applicable guidelines, laws and standards. We do this not

just to comply with legal requirements but because we,

just like our customers, are genuinely concerned with any

impact our solutions may have on their final end-user

products.

That is why Melexis employs a variety of mechanisms to

monitor, measure and improve the effective

implementation of our quality and environmental

management system. These include the follow-up on

environmental key performance indicators by

maintaining balance score cards, specific reporting

(including details about waste, water, nitrogen, electricity

…) and regular internal audits in accordance with the

Melexis global audit program. In 2021, nine internal

Melexis Annual Report 2021

audits were performed, five of which took place online

because of the COVID-19 pandemic.

In the last few years, we have improved our audit

methodology by combining different kinds of audits.

These combined audits minimize the audit effort as much

as possible. Relevant standard requirements and

processes are covered at all sites and experts are involved

as co-auditors at the different locations.

In 2021, we also initiated deep dive audits. Deep dive

audits focus specifically on a particular process. Typically,

it involves a small number of audits (usually three or four)

and starts with the process owner. Based on this first

layer, the interactions with other processes are then also

audited. The results of these audits are included in the

combined audit report of the site where the process

owner is located.

In 2021, nine customer audits were performed, spread

over five Melexis locations. Most of these audits were

performed remotely due to COVID-19-related

restrictions.

Melexis increasingly focuses on reducing the ecological

footprint of our sites too. We keep investing in green

energy and lowering our emission levels.

Notwithstanding our ISO 14001 certification as a low

environmental impact company, we do collect our main

environmental performance data for the purpose of

transparency. The following table indicates the use of

materials* in all our Melexis sites and our key suppliers. It

also contains entries on energy, water, emissions,

effluents and waste from our three major manufacturing

sites, Erfurt, Ieper and Sofia. The sites of Corbeil and

Kuching are not included in these figures because their

impact is negligible.

For information on our Scope 1 and 2 emissions, please

refer to chapter 6.6.

Melexis Annual Report 2021

Our environmental performance data of our manufacturing sites Erfurt, Sofia and Ieper on 31.12.20213

UNITS

2021

2020

2019

Materials*

Materials used by weight

Total

tons

116.5

83.7

85.6

material category ‘Silicon'

tons

11.56

6.40

5.36

material category ‘Copper'

tons

43.89

32.73

33.50

material category ‘Gold'

tons

0.27

0.22

0.23

material category ‘Silver'

tons

1.57

1.17

1.19

material category ‘ Silica'

tons

48.60

35.70

37.44

material category ‘Tin'

tons

2.00

1.41

1.46

material category ‘Others'

tons

8.66

6.05

6.43

Energy

Energy consumption

within the organization

Total

megawatt hour

30,343

26,418

27,033

Energy intensity

Total

megawatt hour per 1 million

sold parts

17.09

19.38

21.69

Water

Water withdrawal

Total

cubic meter

10,715

9,066

9,382

Effluents and

waste

Water discharge by

quality and destination

Total

tons

10,715

9,066

9,382

Waste

Total

tons

265

216

212

Significant spills

Number of significant spills

in 2021

number

Environmental

compliance

Non-compliance with

environmental laws and

regulations

Number of non-

compliances with

environmental laws and

regulations

number

6.6.5Our environmental compliance

ISO 14001 certification sets the parameters for an

environmental management system. It provides a

framework for establishing effective energy-efficient

processes and to limit waste, reducing environmental

risks and supporting the development of energy-efficient

solutions. We have passed all ISO 14001 audits in 2021.

We comply with all locally relevant environmental legal

requirements for our production sites. As of 2022, this

will include our brand-new offices in Sofia, Bulgaria.

Recognized standards are of crucial importance in the

automotive industry and thus also essential to suppliers

like Melexis. Vehicle manufacturers must be able to trust

suppliers to have their processes under control,

understand their customers’ needs and continue to

innovate. The IATF 16949 quality management system

certificate demonstrates that we meet all these criteria.

In 2021, Melexis successfully passed ten out of ten

certification audits related to IATF 16949:2016 (ISO

9001:2015) and ISO 14001:2015.

Driving a car is a self-evident part of people’s lives. We

drive to work, to school, go shopping and visit friends and

family. To minimize the risks on society which are related

to driving, the industry has provided steady

improvements in car safety over the last decades.

Advances in modern electronics have accelerated the

number and quality of safety systems. Semiconductor

devices and computer-controlled systems with complex

software are integral to these system designs.

ISO 26262 provides appropriate standardized

requirements, processes and an automotive-specific risk-

based approach to determine integrity levels, also known

as Automotive Safety Integrity Levels or ASILs. ASILs are

used to specify applicable requirements of the ISO 26262

standard so as to avoid unreasonable residual risk. The

Melexis ASIL-ready Functional Safety Program was

designed and deployed to institutionalize these

competencies and to realize functional safety as an

Melexis Annual Report 2021

3 These data comprise the materials of all our Melexis sites and our key suppliers.

organization-wide capability. With respect to functional

safety, Melexis keeps complying with ever evolving EU

legislation. To do so, we invested in software that is

continuously filtering new EU rules and regulations that

involve chemicals and materials that we effectively use.

Furthermore, it should be noted that our focus on

product safety and quality is not limited to traditional

automotive solutions but also includes more autonomous

vehicles and the consumer, medical and industrial

applications.

For the purpose of increased transparency, Melexis

continually updates its webpage on quality and

environment to answer some frequently asked

environmental questions: www.melexis.com/en/tech-

info/quality/environmental-forms-and-declarations/faq.

In 2021, we have expanded on this, adding a dedicated

web page on sustainability. This includes product-related

environmental information forms, all relevant REACH

documentation and other certificates.

6.6.6Our environmental engagement to

stakeholders

Melexis is dedicated to considering the needs and

expectations of all parties interested in terms of its

overarching environmental strategy and performance.

We involve and enter into dialogue with all our

stakeholders. These include:

•Our customers: close communication loops with our

customers help us identify new development

opportunities for environmentally-friendly products.

Melexis is accountable for supporting customers and

supplying them with products of the highest quality

only, in order to meet customer requirements in a

manner that is consistent with environmental

standards.

•Our colleagues: they are involved in environmental

sustainability and continuous improvement activities.

Their input is taken into account in management

reviews as well as continuous improvement plans.

•Our investors: Melexis strives to ensure minimizing

risks while maximizing returns to guarantee a good

relationship with our investors.

•Our suppliers and subcontractors: they are a crucial

element of our environmental program. We require

them to act environmentally responsibly and have their

own environmental policy, system and continuous

improvement planning in place. Melexis requests

environmental information records on all materials

supplied to us, all within a defined time frame. An ISO

14001 certification is requested in case of supplier

selection.

•Society: we recognize that we have a responsibility

towards the local communities and surrounding

environment where we operate and hence take their

needs and requirements into account in terms of

strategies and objectives.

•Legal authorities: legal requirements set into force with

laws and regulations by the relevant local legal

authorities are recorded by each national organization.

These are communicated to the relevant local sites on a

regular basis by our environmental coordinator.

Compliance with local, national and supranational

legislation that is relevant for our customers is also

taken into account and given as much attention as our

customer-specific requests.

For all product declarations, product conformities and

our answers to frequently asked environmental

questions, please consult www.melexis.com/en/tech-

info/environment.

6.6.7EU taxonomy

The EU taxonomy is a classification system based on

performance criteria that assess an economic activity’s

contribution towards six environmental objectives:

climate change mitigation, climate change adaptation, the

sustainable use and protection of water and marine

resources, the transition to a circular economy, pollution

prevention and control and the protection and

restoration of biodiversity and ecosystems. Technical

screening criteria for each environmental objective have

been defined through delegated acts.

On 9 December, the Delegated Act on climate mitigation

and climate adaptation was adopted by the European

Union. The act lays out the technical screening criteria –

the benchmarks that define if an economic activity

addresses (or in taxonomy terms delivers a substantial

contribution to) the objective of climate mitigation or

adaptation. It also contains minimum safeguards that

must be secured for all other four environmental

objectives of the taxonomy - the Do No Significant Harm

(DNSH) criteria.

For 2021, companies are required to report only on the

eligibility of their economic activities. The interpretation

of the EU taxonomy is however today still somewhat

unclear and many rules, regulations and guidelines are

still under development.

Assessment Melexis

Under the current EU taxonomy there is no activity that

clearly matches the business of Melexis. We believe that

activity 3.6 ‘Manufacturing of low carbon technologies’ is

linked most to the Melexis business activities. It is clear

Melexis Annual Report 2021

that Melexis is an enabler of technologies that reduce

energy consumption and GHG emissions significantly.

However, based on the current application of the

eligibility criteria, our products and technologies must

directly enable the requested aim of substantial life-cycle

GHG emission reductions in other sectors of the economy

and this compared to the best performing alternative

technology/product/solution available on the market.

There is currently insufficient guidance to determine

under which conditions the standard for this aim is met.

This is why we opt to have 0% of Melexis’ total net sales,

CAPEX and OPEX currently disclosed as eligible.

6.7RESPONSIBLE SUPPLY CHAIN

Developing and maintaining long-term and sustainable

relationships with suppliers is essential for Melexis’

success and growth. It is also a key factor in ensuring

business continuity, which is why Melexis is working

closely with its suppliers in each step of the process. We

are proud to see that the majority of our supplier base has

been stable since the company was founded and is based

on trusted, long-term partnerships with key suppliers.

Nevertheless, and as can be expected, we do on a regular

basis reevaluate the sustainability of all our supplier

collaborations.

With 89% business to the automotive market, it goes

without saying that our supplier management adheres to

the automotive industry standards with regards to

supplier selection, evaluation, qualification and

development. Yet, as our solutions for medical, industrial

and consumer applications are becoming increasingly

popular, we are currently adapting our supply chain

strategy to the needs of customers and markets in an

agile and flexible way.

6.7.1How we select and evaluate suppliers

Melexis pursues a balanced supplier portfolio in each

solution or service category. Preferred suppliers play a

key role but, at the same time, we never lose sight of our

business continuity plan. Hence, when deemed

appropriate, Melexis strives for a dual manufacturing

approach. A multifunctional team selects the suppliers

and ensures that all aspects from cost to quality,

innovation capabilities, supply chain risks, supply chain

robustness and standardization possibilities are

considered.

Supplier audit is a mandatory step for direct suppliers to

get the status of preferred supplier. VDA 6.3 is used to

assess the supplier’s ability to meet automotive and

customer specific requirements from both quality and

technical perspective.

Key suppliers in the field of bill-of-material (for wafers

and assembly) are evaluated on a quarterly basis on

several metrics and foster dialogue between Melexis and

the supplier on potential improvement plans. No new

suppliers have been onboarded for bill-of-material in

2021. We have been working on a similar methodology

for key equipment (machinery) suppliers and intend to

roll this out shortly.

The output of these evaluations is taken into account in

any sourcing decision, on top of cost, business continuity

planning and technical factors.

6.7.2How we manage supply chain risks and

business continuity

Melexis works with numerous suppliers for which we do

not always have an alternative source available. A robust

process is in place to safeguard the continuity of supply

for critical processes and products. We reinforce our dual

sourcing strategy with several activities, identified on the

basis of a continuous evaluation of our spend portfolio,

supply risk and business importance.

Throughout 2021, in the aftermath of the COVID-19

pandemic and as a result of recovering automotive sales,

Melexis faced and - at the time of writing - is still facing an

upsurge in demand and a limitation of supply, longer lead

times and increased cost structures at our suppliers. A

delicate balancing act was and remains needed in order to

support our suppliers to increase their capacity and, at

the same time, match that capacity with the demand of

our customers to ensure no overinvestments were being

made.

This includes obtaining long-term capacity commitments

from our suppliers to support the growing demand from

our customers. It requires close cooperation with

suppliers to monitor several raw material market

situations. We also support suppliers through our direct

contacts with material suppliers, increasing leverage and

bringing business visibility. And finally, we have increased

the dual sourcing availability and flexibility of our

suppliers with sub suppliers. The importance we attach to

dual sourcing and business contingency plans remains

high on the agenda for the coming years.

With regard to production continuity in 20210, our global

business continuity response team has defined clear links

between any incident’s investigation and the escalation

path for its impact on operations. In local sites, we have

improved and standardized our production assessment

process, in which local teams evaluate the possible

consequences of an event and its impact on our

equipment and subsequently on our production output.

Melexis Annual Report 2021

Melexis closely follows any geopolitical shift that may

affect our business continuity. For example, to improve

our lead time and proximity to our Chinese customers, we

continued exploring new China-based suppliers in 20201.

Furthermore, as soon as the United Kingdom voted in

favor of leaving the European Union, Melexis established

a multidisciplinary Brexit readiness project team to follow

up on any possible impact Brexit may have on our

business model and business continuity. With the Brexit

deadline postponed several times, Melexis'

multidisciplinary Brexit readiness project team had ample

time to assess the Brexit impact and risks on our

customers, supply chains and internal automation

processes (such as our ERP system). Even though we only

work with a limited number of UK customers and

suppliers, we made sure to defuse any issues that could

arise and have communicated about possible risks and

their solutions with all stakeholders involved. This

preparation resulted in a very smooth transition without

any hiccups.

Equally, in 2021, we continued to monitor the financial

robustness of suppliers. We kicked off a more formal

supplier tracking methodology in collaboration with our

finance department to document and track key financial

parameters of our key suppliers with the goal to detect

early warning signs or changes in their financial situation.

Last but not least, in 2021, the ongoing global COVID-19

pandemic kept challenging us in unprecedented ways.

Our supply chain management team worked ever more

closely with suppliers during trying times. Non-stop open

communication and a transparent relationship with key

suppliers enabled us to respond to local COVID-19 cases

in factories efficiently. Working closely together with

suppliers allowed us to maximize output while ensuring

and supporting restrictive measures to secure a safe

working environment for all employees.

6.7.3Supplier social and environmental

assessment

As Melexis is committed to operate in a socially and

environmentally responsible manner in all areas of its

business, we make sure to comply with all relevant

legislation.

All key suppliers are required to sign a quality agreement

that states, among others, that they ensure that all

relevant laws and regulations are known, understood and

implemented. Suppliers must prove they respect the

protection of internationally proclaimed human rights for

all, including the basic human rights of employees within

their supply chain. We follow up on this with a bi-annual

CSR questionnaire that is sent to all our key suppliers in

the format of a multiple-choice self-assessment. The

survey was held in 2018 and 2020 and is subsequently

planned for 2022.

Melexis proactively undertakes due diligence and

continuous monitoring of its supply chain to avoid direct

or indirect procurement of conflict minerals. Our

products do not contain any conflict minerals (gold,

tantalum, tungsten and tin) mined from the Eastern

Democratic Republic of Congo (DRC) and its adjoining

countries, as defined in Section 1502 of the Dodd-Frank

Wall Street Reform and Consumer Protection Act and its

affiliated laws or regulations. Suppliers must also work

diligently with other, third-party suppliers to

systematically address the process for sourcing minerals

that are conflict-free.

Melexis confirms that all products supplied to Melexis

customers do not contain ‘intentionally introduced’ lead,

cadmium, mercury, hexavalent chromium,

polybrominated biphenyls (PBB) or polybrominated

diphenyl ethers (PBDE) as defined in the Restrictions on

Hazardous Substances (RoHS) EU Directive 2011/65/EU

and the Commission’s Delegated Directive (EU)

2015/863 of 31 March 2015 amending Annex II to

Directive 2011/65/EU unless exempted by regulation.

Melexis further declares that any unintentional

contaminant concentrations of these substances are

below 0.1% for lead, mercury, hexavalent chromium,

polybrominated biphenyls (PBB) and polybrominated

diphenyl ethers (PBDE) for each homogeneous material.

Impurities of cadmium are less than 0.01% for each

homogeneous material.

In addition, Melexis confirms that all our green products

supplied to Melexis customers do not contain any halogen

(bromine and chlorine) as defined under IEC 61249-2-21.

Melexis is not required to register our company’s

products under the REACH (Registration, Evaluation,

Authorization and Restriction of Chemicals) Regulation

EC/1907/2006. Nevertheless, Melexis aims to achieve

the REACH goals, meaning that all products supplied to

Melexis’ customers do not contain any of the substances

in the Candidate List of Substances of Very High Concern

(SVHC). Also included are the new substances announced

by ECHA (European Chemical Agency) on 15 January

2018. Melexis also acknowledges Annex XVII of REACH

regulation and confirms the absence of those substances

too.

Our product solutions are tested at every stage of

development in accordance with our own internal

Melexis Annual Report 2021

worldwide procedure for negative health and safety

impacts. In addition, Melexis products are inspected

annually by an external institute for hazardous

substances. Our customers are informed about the

results by means of product declarations. Safety data

sheets are equally available for all our product solutions.

In short, we can attest that we are compliant with ROHS,

REACH, the conflict minerals requirements (e.g. based on

Dodd-Frank Wall Street Reform and Consumer

Protection Act), ELV/WEEE and any other local legal

requirements and requests. Our product declarations and

their conformity with the above-mentioned requirements

can be consulted in greater detail on www.melexis.com/

en/tech-info/environmentwww.melexis.com/en/tech-

info/quality/environmental-forms-and-declarations.

Melexis is equally committed to not help produce any

products for military use.

6.8OUR BUSINESS ETHICS

Melexis has an ethical code of conduct to provide a clear

and unambiguous reference to human rights and

expected behavior during business activities. Melexis

colleagues are made aware of the Melexis values, a strict

adherence to the Melexis Code of Conduct and the

avoidance of any activity that may lead to a disrespect for

human rights, corruption, bribery, anti-competitive

behavior and privacy. Melexis colleagues receive

newsletters, site presentations and training on the

Melexis Code of Conduct to ensure their commitment.

Melexis organized presentations for each of its sites over

the course of 2020 and 2021 to promote and refresh the

commitments in its Code of Conduct. Subsequently, every

Melexis employee received a recording of this

presentation. Melexis also created a complementary

training and test for these presentations and launched a

pilot on its Belgian sites. Since its rollout in Q4, 74.5% of

the assigned persons have already engaged with this

training and test. The full implementation of this

complementary training is planned for the 2022 reporting

period.

6.8.1Human rights, child labor and forced or

compulsory labor

Melexis recognizes that human rights are fundamental

and universal. These include freedom from discrimination

based on race, creed, color, nationality, ethnic origin, age,

religion, gender, sexual orientation, marital status,

disability, and the freedom of thought, conscience and

religion.

Melexis is fully committed to the effective abolition of

child labor and forced labor. Besides economic

considerations, we believe that it is unethical to partake

in child labor: it sustains poverty across generations and

leads to under-skilled workers in the future.

To ensure adherence by our business partners, the

Melexis general purchase conditions require suppliers to

comply with our Code of Conduct and with all applicable

laws, rules and regulations on (international) trade.

Furthermore, we conduct reviews of key suppliers by

means of self-assessment questionnaires. All our key

suppliers reported to either have an internal or an

external policy on the topics of human rights, child labor

and forced labor.

Key suppliers are equally required to sign a quality

agreement that states, among others, that they ensure

that all relevant laws and regulations are known,

understood and implemented. Suppliers must respect the

protection of internationally proclaimed human rights for

all, including the basic human rights of employees within

their supply chain. Therefore, suppliers must also work

diligently with other, third-party suppliers to

systematically address the process for sourcing minerals

that are conflict-free.

Melexis has not found any violations of human rights or

instances of child labor or forced labor in the reports it

received from its key suppliers.

6.8.2Anti-corruption and anti-bribery

Melexis strives to fight corruption and seeks to avoid

conflicts of interest. We want to distinguish ourselves

from our competitors through high-quality products and

excellent services. The slightest hint of corruption would

conflict with this goal and with our values. The Melexis

Code of Conduct provides directions and guidelines to

prevent and deal with corruption. This policy has been

communicated to all employees working for Melexis, in all

the regions where Melexis is active. Melexis has launched

and is further elaborating on its is also implementing and

launching anti-corruption training for its colleagues and

governance body members (the members of the Board of

Directors) to further reduce any risk of unacceptable

behavior. Moreover, our purchasing policy provides our

employees with clear guidelines on ethical business

relationships with suppliers that are based on our core

value of respect.

Melexis has determined that one of the main risks of

corruption and/or bribery stems from dealing with

Melexis stakeholders such as customers and suppliers,

more specifically the acceptance and giving of personal

Melexis Annual Report 2021

gifts or hospitality to and from Melexis stakeholders.

Additionally, Melexis has also identified abuse of function

and trust as a main risk of corruption. The existence of

corruption and/or the acceptance of bribes could result in

loss of economic profits because of damage to Melexis’

reputation and integrity.

Therefore, any agreement or understanding regarding

favors or benefits in exchange for gifts will not be

accepted by Melexis. Exceptions to this rule are only

allowed for gifts of minimal value, given in the ordinary

course of business, that do not result in any (impression

of) partiality towards the gifting party. Melexis requires

full disclosure of and prior relevant clearance for any gift

that is not of minimal value or that may result in an

impression of bias.

Melexis will also not pay or offer bribes or illicit payments

to government officials, candidates or any other party in

order to obtain or retain business. Melexis colleagues will

not assist others in profiting from opportunities

discovered through their affiliation with Melexis and

which should normally be served by Melexis. Melexis

does not allow any personal relationship with a customer,

supplier or competitor, in which personal interests

conflict or might appear to conflict with that of the

company. In case of a family (or any other personal)

relationship, management must always be informed to

avoid any conflict of interest.

Melexis also counts on all other business partners it

engages with to uphold respectable standards on anti-

corruption. Furthermore, the Melexis general purchase

conditions require suppliers to comply with the Melexis

Code of Conduct and with all applicable laws, rules and

regulations on (international) trade. Key suppliers are

equally required to sign a quality agreement that states,

amongst others, that they ensure that all relevant laws

and regulations are known, understood and implemented.

Melexis encountered and diligently resolved one incident

of corruption in 2021. The incident was related to abuse

of function and trust. Melexis chose to discontinue the

relationship with the involved business partners as a

result of the incident. Melexis has taken appropriate

organizational measures to resolve the incident and

minimize potential future risks.

6.8.3Anti-competitive behavior

Melexis values fair and open competition and respects all

relevant laws and regulations that serve it. Melexis

colleagues are expected to fully devote their energy to

Melexis. Any outside employment which interferes or

competes with their employment at Melexis is not

allowed. Melexis has a clean history regarding anti-

competitive behavior litigation and fully intends to keep it

that way.

6.8.4Respect for customer privacy

Melexis continuously offers training to its employees,

outlining how to use and process confidential, proprietary

and personal information in a correct and secure manner.

Melexis has not received any substantiated complaints

concerning breaches of customer privacy, neither from

outside parties or from regulatory bodies during the

reporting period. Similarly, Melexis has not identified any

reportable leaks, thefts, or losses of customer data during

the reporting period.

6.8.5Mechanisms for advice and concerns about

ethics

Melexis colleagues are encouraged to speak up if they

experience, witness or learn of unlawful harassment,

discrimination or unethical behavior. An internal speak-

up policy was implemented in 2018 to increase

transparency and stimulate the reporting of any concerns

regarding unethical behavior or incidents. This policy was

updated in view of the EU whistleblowing directive to

ensure that colleagues have complete knowledge of how

to report their concerns and how their reports will be

processed. Melexis also remains responsive to the

national implementations of this directive by member

states as they come into force. Any colleague reporting a

possible case of questionable conduct can expect a

careful, fast, respectful and discreet examination of his or

her report. Any act that is inconsistent with our Code of

Conduct will be promptly corrected and is subject to

disciplinary action, up to and including termination.

The Melexis Code of Conduct is publicly available on our

website.

Melexis Annual Report 2021

OUR CORPORATE GOVERNANCE

With the Royal Decree of 12 May 2019 (B.S.G. 17 May

2019), the 2020 Belgian Code on Corporate Governance

(hereinafter “Code 2020”) was introduced as the new

reference code on corporate governance as of 1 January

2020 for all listed companies in Belgium.

The full text of the Code 2020 can be found on the

website of the Belgian Corporate Governance

Committee, both in English and Dutch

(www.corporategovernancecommittee.be/en/).

Melexis’ Corporate Governance Charter can be

consulted on our website: www.melexis.com/en/

investors/corporate-governance/corporate-

governance-charter.

7.1 SHAREHOLDERS

Melexis seeks to guarantee transparent 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 important

and relevant information on our website. Melexis

publishes its 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 its trust-based

relationship with its shareholders and other stakeholders.

Furthermore, Melexis is committed to guaranteeing

shareholder rights:

•Shareholders can submit questions to the company (at

the latest six days) prior to the annual shareholders’

meeting in order to have those questions answered

during the meeting.

•At the latest 30 days prior to the annual shareholders’

meeting, the agenda and other relevant documents are

published on our website.

•Shareholders representing at least 3% of the share

capital have the right to add items and/or resolution

proposals to the agenda at the latest 22 days prior to

the annual shareholders’ meeting.

•During the annual shareholders’ meeting, shareholders

have the right to vote on each item on the agenda. In

case they cannot attend the meeting, they have the

right to appoint a proxy holder.

•The minutes of the annual shareholders’ meeting with

the voting results will be published on our website after

the meeting.

The Directors of Melexis are:

Name

Age

Expiry mandate

Position

Françoise Chombar

2022

Chair and non-executive director (from 1

August 2021)

Marc Biron

2025

Managing director, CEO (from 1 August 2021)

Roland Duchâtelet

2022

Non-executive director

Procexcel BV, represented by Jenny Claes

2021

Non-executive and independent director (until

11 May 2021)

Shiro Baba

2025

Non-executive and independent director

Martine Baelmans

2022

Non-executive and independent director

Maria Pia De Caro

2025

Non-executive and independent director (from

11 May 2021)

Melexis Annual Report 2021

7.2MANAGEMENT STRUCTURE

The Board of Directors determines the strategic direction

of Melexis and supervises 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, Mr.

Marc Biron, who can represent the company by his sole

signature within the framework of the daily management.

For actions that fall outside the scope of daily

management, Melexis is validly represented by two

directors acting jointly.

The Chief Executive Officer is also the Chair 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.

Besides that, the Executive Management is responsible

for screening the various risks and opportunities that the

company might encounter in the short, medium or longer

term, and for ensuring that systems are in place to identify

and address these risks and opportunities.

On 1 August 2021, Ms. Françoise Chombar, Melexis’ Chief

Executive Officer, became Chair of the Board of Directors.

Mr. Roland Duchâtelet, remains a member of the Board of

Directors.

The 2020 Belgian Code on Corporate Governance

stipulates that "the board should ensure that, when

considering nominating the former CEO as a board

member, the necessary safeguards are in place so that the

new CEO has the required autonomy. If the board

envisages appointing a former CEO as chair, it should

carefully consider the positive and negative implications

of such a decision and disclose in the CG Statement why

such appointment will not hamper the required autonomy

of the CEO."

The general principle is that the Board of Directors

defines the strategy of the company, whereas the CEO is

responsible for the execution thereof. With the

appointment of Françoise Chombar as Chair of the Board,

the long-term strategy and vision of Melexis are ensured.

Apart from being the representative of the controlling

shareholder, Ms. Chombar brings in a wealth of

knowledge and experience to the Board.

The appointment of Françoise Chombar as Chair of the

Board does not hamper the autonomy of the new CEO,

Marc Biron. Melexis' HR approach builds upon the

principles of the self-determination theory: autonomy,

relatedness, and competence, three components that

result in the best possible performance. This is no

different for the CEO.

While the Chair of the Board and the CEO have regular

consultations, these solely serve as providing a sounding

board for the CEO. The Chair never intervenes in the day-

to-day management of the company.

Mr. Marc Biron replaced Ms. Françoise Chombar as the

new Chief Executive Officer of Melexis on 1 August 2021.

After approval of the shareholders during the annual

shareholders’ meeting, he joined the Board of Directors

on 1 August 2021.

7.3BOARD OF DIRECTORS

Composition

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 are

independent in accordance with article 7:87 of the Belgian

Code of Companies and Associations. The Board of

Directors is composed of at least 50% of non-executive

members and at least one executive member.

Independent directors qualify as non-executive directors.

The directors are appointed by the majority of the votes

cast at the annual shareholders’ meeting for a period of

four years. In the same way, the annual shareholders’

meeting may revoke 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

Belgian Code of Companies and Associations.

Currently, the Chief Executive Officer is the only member

of the Board of Directors that has an executive mandate.

The Chair of the Board is Ms. Françoise Chombar.

Melexis Annual Report 2021

The Board of Directors aims at achieving the largest possible diversity and complementarity between the board members.

This is one of the key policy guidelines the Board takes into account when proposing a new director for appointment to the

annual shareholders’ meeting. As a result, the current composition of the Board of Directors also exceeds the requirement of

article 7:86 of the Belgian Code of Companies and Associations that at least one third of its members has to be of a different

gender.

Board of Directors

Martine Baelmans, Shiro Baba, Françoise Chombar, Roland

Duchâtelet, Maria Pia De Caro

Ms. Françoise Chombar 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. In 1994, she was

appointed Chief Operating Officer of Melexis. Ms.

Chombar became director in 1996. 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 continued these functions until

August 2021. In 2021, she was appointed as Chair of

Melexis’ Board of Directors. Ms. Chombar is currently a

board member at Umicore, a global materials technology

and recycling group. On 26 July 2019, she was appointed

as a member of the board and the strategy and

governance/nomination committees of Soitec, a company

specialized in generating and manufacturing

semiconductor materials. In March 2021, Ms. Chombar

joined the Board of BioRICS, a health tech company. Ms.

Chombar is also president of the STEM platform, an

advisory board to the Flemish government, aiming to

encourage young people to pursue an education in

science, technology, engineering or mathematics. She

holds a master’s degree in interpreting in Dutch, English

and Spanish from the University of Ghent.

Mr. Roland Duchâtelet has been a private shareholder of

the company since April 1994 and has served as a director

ever since. Prior to that date, Mr. Duchâtelet served in

various positions in production, product development and

marketing for several large and small companies. He

contributed to 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 in electronic

engineering, a degree in applied economics and an MBA

from the University of Leuven.

Mr. Marc Biron holds a degree in electronic engineering

and obtained a Ph.D. in applied sciences in 1999 at the

University of Liège, Belgium. Mr. Biron began his career in

the electronics industry in 1997 when joining Melexis,

where he held a number of senior positions over a 25-year

period. In 2006, Mr. Biron was given responsibility for the

Hall sensor/engine management business unit and its

turnover generation. In 2009, he became global

development & quality manager, focusing on the efficient

development of profitable and reliable products, leading a

team of 500 people. In 2018, he became VP and general

manager of the sense & drive business unit and added the

responsibility of global innovation manager in 2020,

focusing on the right new technologies and know-how. In

Melexis Annual Report 2021

2021, Mr. Biron was appointed Chief Executive Officer of

Melexis. Since September 2013, Mr. Biron has been a

visiting lecturer for the course ‘Major Project in

Electronics’ at the University of Liège.

Mr. Shiro Baba has 38 years of professional and

management experience in different fields related to the

semiconductor business. He started his career in 1975

with the semiconductor division of Hitachi. As from 1999,

he held several general management positions within the

Hitachi semiconductor division. From 2003 until 2009,

Mr. Baba was employed by Renesas Technology Corp. as

general manager of the automotive semiconductor

business unit, among others, and later as board director

and senior VP. His last mandate was president and CEO of

Hitachi ULSI Systems Co. before retiring in 2013. In April

2013, Mr. Baba was appointed independent director of

Melexis. Mr. Baba obtained a master’s degree in electrical

and physical engineering from the 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

has been full professor at the faculty of engineering

sciences. She is currently also vice-rector for education

policy at KU Leuven. Ms. Baelmans holds a master’s

degree in mechanical engineering and a Ph.D. in

engineering sciences from KU Leuven. Her research has

mainly focused on thermodynamics and heat transfer,

particularly in applications for electronics cooling.

Ms. Maria Pia De Caro currently serves as Chief Supply

Officer at Nomad Foods, where she is responsible for the

entire supply chain organization including strategy,

manufacturing operations, planning and logistics,

procurement and safety management. Ms. De Caro has a

track record of more than 25 years of leadership in areas

such as engineering, manufacturing, M&A and supply

chain at a number of fast-moving consumer goods

companies like Procter & Gamble and Mondelez. Ms. De

Caro holds a master’s degree in mechanical engineering

from the Sapienza University of Rome and is an avid

supporter of diversity and inclusion.

Appointment and replacement of

directors

The Articles of Association (Articles 13 and following) and

the Melexis Corporate Governance Charter contain

specific rules concerning the (re-)appointment, induction

and evaluation of directors.

Directors are appointed for a term not exceeding four

years by the annual shareholders’ meeting, which can also

revoke their mandate 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 annual

shareholders’ meeting appoints a new director. Said

appointment will then be included in the agenda of the

next annual shareholders’ meeting.

The Nomination and Remuneration Committee submits a

reasoned recommendation to the Board on the

nomination of directors and equally makes

recommendations to the Board on the remuneration

policy for directors and the Executive Management.

Functioning of the Board of Directors

The terms of reference of the Board of Directors are part

of the Corporate Governance Charter.

In 2021, the Board convened nine (9) times and treated,

among others, the following topics:

•Sale of treasury shares through an accelerated

bookbuilding procedure

•Financial results of the Group

•Financial and legal risks to which the Group is exposed

•Strategic review

•Dividend policy

•Budget for the next financial year

•Code of Conduct

•COVID-19

•Recommendations of the Audit Committee and the

Nomination and Remuneration Committee.

Ms. Martine Baelmans could not attend the meeting of the

Board of Directors on 26 February 2021 and 23 April

2021.

Evaluation of the Board and its

Committees

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. The last review was performed in

2019, led by the Chair.

In the evaluation, special attention is paid to:

•The functioning of the Board of Directors and its

relevant committees

•The thoroughness with which important issues are

prepared and discussed

•The effectiveness of the interaction with the Executive

Management

Melexis Annual Report 2021

•The quality of the information provided

•The individual contribution of each member of the

Board.

7.4COMMITTEES

Audit Committee

The Audit Committee assists the Board of Directors in its

supervisory duties with respect to the internal supervision

in the broadest sense, including the financial reporting, as

described in the company’s Corporate Governance

Charter and article 7:99 of the Belgian Code of Companies

and Associations. The Audit Committee also monitors the

assessment and follow-up by the Executive Management

of the auditor’s recommendations.

The Audit Committee is composed of three non-executive

members: Mr. Shiro Baba, independent director and

Chair4, Mr. Roland Duchâtelet, director and Ms. Maria Pia

De Caro, independent director.

According to article 7:99 of the Belgian Code of

Companies and Associations, the members of the Audit

Committee as a whole have competencies relevant to the

sector in which Melexis is operating and at least one of its

members has a competence in auditing and accounting.

Both Ms. Maria Pia De Caro and Mr. Shiro Baba comply

with the latter requirement through their relevant work

experience. In this respect, we refer to the short

biographies of the above-mentioned members in this

chapter.

The Chief Executive Officer, the Chief Financial Officer,

the external and internal 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 four (4) times in 2021. All

members were present at all the meetings.

In addition to the exercise of its legal powers and the

duties listed in the Melexis Corporate Governance

Charter, the Audit Committee reviewed, among others:

•Statutory audit fees

•Reports of the statutory auditor

•Internal audit updates.

Nomination and Remuneration

Committee

The Nomination and Remuneration Committee, which

qualifies as a remuneration committee pursuant to article

7:100 of the Belgian Code of Companies and Associations,

advises, among others, 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 supervises the

development of remuneration, allocation of variable

remuneration and the general performance within

Melexis.

The Nomination and Remuneration Committee is

composed of three non-executive members of which a

majority of independent directors, Ms. Françoise

Chombar, director and Chair, Ms. Martine Baelmans,

independent director and Ms. Maria Pia De Caro,

independent director5. The committee has the relevant

expertise regarding remuneration policy.

The Nomination and Remuneration Committee met four

(4) times in 2021. All members were present at all the

meetings.

In addition to the exercise of its legal powers and the

duties listed in the Melexis Corporate Governance

Charter, in 2021 the Nomination and Remuneration

Committee reviewed, among others:

•Remuneration and variable remuneration of the

Executive Management

•Assessment of the variable remuneration of the CEO

•HR strategy and policies

•Executive Management team assessment.

Melexis Annual Report 2021

4 On 11 May 2021, Mr. Shiro Baba replaced Procexcel BV, represented by Ms. Jenny Claes, as Chair of the Audit Committee.

5 On 11 May 2021, Ms. Maria Pia De Caro replaced Procexcel BV, represented by Ms. Jenny Claes, as a member of the

Remuneration Committee. On August 1, 2021, Ms. Françoise Chombar was appointed Chair of the Remuneration Committee.

7.5EXECUTIVE MANAGEMENT

Composition

The Executive Management is composed of the following members6:

Name

Age

Position

Marc Biron7

Chief Executive Officer

Kristof Coddens

VP Artificial Intelligence

Antonius Duisters

VP Sense & Drive

Karen van Griensven

Chief Financial Officer

Vincent Hiligsmann

VP Corporate Strategy - Global Sales, Brand & Communication

Veerle Lozie

Chief Operations and Information Officer

Damien Macq

VP Sense & Light

Nicolas Simonne

VP Development & Quality

Heidi Stieglitz

VP Human Resources & Sites

As evidenced, the Executive Management consists of a diverse team, not only as to gender diversity but also considering age

and professional background. To maintain the diversity, the Board of Directors sees to it that, among others, the above-

mentioned diversity criteria are taken into consideration by Melexis in its selection processes and management succession

planning.

Executive Management

Karen van Griensven, Kristof Coddens, Damien Macq, Marc Biron, Veerle Lozie, Nicolas Simonne, Vincent Hiligsmann,

Antonius Duisters, Heidi Stieglitz

Melexis Annual Report 2021

6 Certain members are representatives of private companies with limited liability (BV/SRL).

7 On 1 August 2021, Mr. Marc Biron replaced Ms. Françoise Chombar as CEO. Ms. Chombar became Chair of the Board of

Directors.

7.6REMUNERATION REPORT

Introduction

The remuneration of the directors and the Executive

Management is governed by Melexis’ remuneration policy

which can be found under www.melexis.com/en/

investors/corporate-governance/corporate-governance-

charter. This remuneration policy was approved by the

shareholders’ meeting on 11 May 2021.

In order to recognize the great efforts of the personnel to

secure the company objectives in the unusually adverse

circumstances in 2021, all personnel were awarded with a

10% increase to their variable pay. This also applies to (the

short-term variable pay of) members of the Executive

Management and the CEO and is a deviation from the

Remuneration Policy as published on the website.

Total remuneration

The application of the remuneration policy during 2021

for the directors and executives lead to the effective

remuneration as shown in the table below:

Melexis Annual Report 2021

in EUR

Françoise Chombar -

Non-executive director

—

Fixed: -

Variable: -

Roland Duchâtelet -

Non-executive director

—

Fixed: -

Variable: -

Shiro Baba -

Independent director

20,000.00

—

20,000.00

Fixed: 100%

Variable: 0%

Procexcel BV, permanently

represented by Jenny Claes -

independent director

10,000.00

—

66.40

—

10,066.40

Fixed: 100%

Variable: 0%

Martine Baelmans -

Independent director

20,000.00

—

20,000.00

Fixed: 100%

Variable: 0%

Maria Pia de Caro -

Independent director

12,802.00

—

12,802.00

Fixed: 100%

Variable: 0%

Marc Biron -

Executive director

—

Fixed: -

Variable: -

Marc Biron Consulting BV,

permanently represented by

Marc Biron - Executive, CEO

(from 1 August 2021)

261,500.00

—

4,645.19

98,832.00

32,090.00

—

397,067.19

Fixed:

67.03%

Variable:

32.97%

Name - position

1. Fixed remuneration

2. Variable

remuneration

3. Extra-

ordinary

items

4. Pension

expense

5. Total

remuneration

Proportion

of fixed and

variable

remune-

ration

Base salary

Fees

Other

benefits

One-year

variable

Multi-year

variable

Melexis Annual Report 2021

Sensinnovat BV,

permanently represented by

Françoise Chombar - Executive, CEO

(until 1 August 2021)

145,831.00

—

1,136.30

40,104.00

22,786.00

—

209,857.30

Fixed:

70.03%

Variable:

29.97%

Executive Management

excl. Sensinnovat BV and

Marc Biron Consulting BV

1,720,509.00

—

28,556.24

402,753.67

133,893.38

—

2,285,712.29

Fixed:

76.52%

Variable:

23.48%

Name - position

1. Fixed remuneration

2. Variable

remuneration

3. Extra-

ordinary

items

4. Pension

expense

5. Total

remuneration

Proportion

of fixed and

variable

remune-

ration

Base salary

Fees

Other

benefits

One-year

variable

Multi-year

variable

Melexis Annual Report 2021

Application of the performance criteria

a.CEO

The variable remuneration for the CEO contains both a short, medium and long-term element:

i.Short term: 25% is based on performance criteria measured over one financial year

ii.Medium term: 12.5% is based on performance criteria measured over two financial years

iii.Long term: 12.5% is based on performance criteria measured over three financial years.

The cash bonus for the CEO is dependent on the achievement of the target revenue growth and target EBIT growth over the

reference period, which are measured on a Melexis Group consolidated basis, based on IFRS accounting standards. The same

targets are used for the short, medium and long-term bonus. This KPI ensures a link between the bonus and the recurring

operational result of Melexis.

Revenue growth

<10%

>10% - <15%

>15%

EBIT growth

<10%

25%

50%

>10% - <15%

50%

75%

100%

>15%

75%

100%

In 2021 there was a change in CEO. Therefore, in what follows, we will each time present the data for both CEOs separately.

1.Short-term cash bonus (one-year variable)

The results for performance year 2021 are shown in the table below. Compared to 2020, the revenue growth was 27% while the

EBIT growth was 97%. This means that 100% of the short-term cash bonus will be paid out. This amount will be increased by an

exceptional 10% applicable to all personnel as well as a 20% discretionary increase awarded to the current CEO by the Board of

Directors on the basis of reasoned advice from the Nomination and Remuneration Committee.

When Marc Biron became CEO on 1 August 2021, his salary was increased. In calculating his variable pay, we took into account

the average salary he received in 2021.

Marc Biron

Performance criteria

Minimum threshold

performance

Maximum

performance

Measured

performance

Discretionary

increases

Corresponding

remuneration

Corresponding

remuneration

Actual remuneration

outcome

Target revenue

growth

and EBIT growth

Revenue and EBIT

growth

<10%

Revenue and EBIT

growth

>15%

EBIT growth: 27%

Revenue growth: 97%

10 % to all personnel

20% individual

€ 0

€ 74,873

€ 98,832

TOTAL BONUS

€ 98,832

Françoise Chombar was awarded the following short-term variable pay for her performance as CEO until 1 August 2021. She will

receive a pro rata part for seven months.

Melexis Annual Report 2021

Françoise Chombar

Performance criteria

Minimum threshold

performance

Maximum

performance

Measured

performance

Discretionary

increases

Corresponding

remuneration

Corresponding

remuneration

Actual remuneration

outcome

Target revenue

growth

and EBIT growth

Revenue and EBIT

growth

<10%

Revenue and EBIT

growth

>15%

EBIT growth: 27%

Revenue growth: 97%

10 % to all personnel

€ 0

€ 36,458

€ 40,104

TOTAL BONUS

€ 40,104

2.Medium-term cash bonus (two-year variable)

The results for performance year 2021 are shown in the table below. Compared to 2019, the revenue growth was 110% while the

EBIT growth was 32%. This means that 100% of the medium-term cash bonus will be paid out.

When Marc Biron became CEO on 1 August 2021, his salary was increased and the percentages for the medium-term cash bonus

increased from 10% to 12.5%. Françoise Chombar will receive a pro rata part of the medium-term cash bonus for seven months.

Marc Biron

Performance criteria

Minimum threshold

performance

Maximum

performance

Measured

performance

Corresponding

remuneration

Corresponding

remuneration

Actual remuneration

outcome

Target revenue

growth

and EBIT growth

Revenue and EBIT

growth

<10%

Revenue and EBIT

growth

>15%

EBIT growth: 32%

Revenue growth:

110%

€ 0

€ 25,727

TOTAL BONUS

€ 25,727

Françoise Chombar

Performance criteria

Minimum threshold

performance

Maximum

performance

Measured

performance

Corresponding

remuneration

Corresponding

remuneration

Actual remuneration

outcome

Target revenue

growth

and EBIT growth

Revenue and EBIT

growth

<10%

Revenue and EBIT

growth

>15%

EBIT growth: 32%

Revenue growth:

110%

€ 0

€ 18,229

TOTAL BONUS

€ 18,229

3.Long-term cash bonus (three-year variable)

The results for performance year 2021 are shown in the table below. Compared to 2018, the revenue growth was 13% while the

EBIT growth was 7%. This means that 25% of the long-term cash bonus will be paid out.

When Marc Biron became CEO on 1 August 2021, his salary was increased and the percentages for the long-term cash bonus

increased from 10% to 12.5%. Françoise Chombar will receive a pro rata part of the long-term cash bonus for seven months.

Melexis Annual Report 2021

Marc Biron

Performance criteria

Minimum threshold

performance

Maximum

performance

Measured

performance

Corresponding

remuneration

Corresponding

remuneration

Actual remuneration

outcome

Target revenue

growth

and EBIT growth

Revenue and EBIT

growth

<10%

Revenue and EBIT

growth

>15%

EBIT growth: 7%

Revenue growth: 13%

€ 0

€ 25,451

€ 6,363

TOTAL BONUS

€ 6,363

Françoise Chombar

Performance criteria

Minimum threshold

performance

Maximum

performance

Measured

performance

Corresponding

remuneration

Corresponding

remuneration

Actual remuneration

outcome

Target revenue

growth

and EBIT growth

Revenue and EBIT

growth

<10%

Revenue and EBIT

growth

>15%

EBIT growth: 7%

Revenue growth: 13%

€ 0

€ 18,229

€ 4,557

TOTAL BONUS

€ 4,557

b.Other members of the Executive Management

The variable remuneration for the other members of the Executive Management contains a short, medium and long-term

element:

i.Short term: 25% to 30% (depending on whether a certain member of the Executive Management is involved in business

creation or not) is based on performance criteria measured over one financial year

ii.Medium term: 10% is based on performance criteria measured over two financial years

iii. Long term: 10% is based on performance criteria measured over three financial years.

The short-term cash bonus is calculated on yearly established targets on the basis of the following performance criteria, which are

all measured on a Melexis Group consolidated basis, based on IFRS accounting standards:

i.50% based on the global business performance measured through the achievement of the target revenue growth and target

EBIT growth of Melexis over the performance year as indicated in the table below. This KPI ensures a link between the bonus

and the operational result of Melexis

ii.50% based on the individual/team performance measured through achievement of pre-established targets.

An additional 20% (corresponds to max 5% (no business creation) or 6% (business creation) of ABS) was awarded to some

members of the Executive Management on top of the short-term cash bonus at the discretion of the Board of Directors upon

recommendation of the Nomination and Remuneration Committee.

For the medium and long-term cash bonus, Melexis’ performance against approved financial targets regarding revenue growth

and EBIT growth is taken into consideration. This 20% of the cash bonus is paid out subject to the verification of the global

business performance over two (medium-term) or three (long-term) years.

1.Short-term cash bonus (one-year variable)

The results for performance year 2021 are shown in the table below. Compared to 2020, the revenue growth was 27% while the

EBIT growth was 97%. This means that 100% of the short-term cash bonus will be paid out. This amount will be increased by the

exceptional 10% applicable to all personnel.

Melexis Annual Report 2021

Performance criteria

Minimum threshold

performance

Maximum

performance

Measured

performance

Corresponding

remuneration

Corresponding

remuneration

Actual remuneration

outcome

Discretionary

increases

Target revenue

growth

and EBIT growth

Revenue and EBIT

growth

<10%

Revenue and EBIT

growth

>15%

EBIT growth: 27%

Revenue growth: 97%

10% to all personnel

20% discretionary to

some members

€ 0

€ 161,246.75

€ 201,376.84

Individual/team

performance

(+ individual

discretionary)

€ 0

€ 161,246.75

€ 201,376.84

TOTAL BONUS

€ 402,753.67

2.Medium-term cash bonus (two-year variable)

The results for performance year 2021 are shown in the table below. Compared to 2019, the revenue growth was 32% while the

EBIT growth was 110%. This means that 100% of the medium-term cash bonus will be paid out.

Performance criteria

Minimum threshold

performance

Maximum

performance

Measured

performance

Corresponding

remuneration

Corresponding

remuneration

Actual remuneration

outcome

Target revenue

growth

and EBIT growth over

two financial years

Revenue and EBIT

growth

<10%

Revenue and EBIT

growth

>15%

EBIT growth: 32%

Revenue growth:

110%

€ 0

€ 107,447.50

TOTAL BONUS

€ 107,447.50

3.Long-term cash bonus (three-year variable)

The results for performance year 2021 are shown in the table below. Compared to 2018, the revenue growth was 13% while the

EBIT growth was 7%. This means that 25% of the long-term cash bonus will be paid out.

Performance criteria

Minimum threshold

performance

Maximum

performance

Measured

performance

Corresponding

remuneration

Corresponding

remuneration

Actual remuneration

outcome

Target revenue

growth

and EBIT growth over

three financial years

Revenue and EBIT

growth

<10%

Revenue and EBIT

growth

>15%

EBIT growth: 7%

Revenue growth: 13%

€ 0

€ 105,783.50

€

€ 26,445.88

TOTAL BONUS

€ 26,445.88

Share-based remuneration

The remuneration policy of Melexis does not provide for share-based remuneration for directors or executives.

Evolution of the remuneration and performances of Melexis

The table below provides an overview on the annual change of total remuneration, developments and performance of Melexis,

average remuneration of employees and the ratio of the highest and the lowest remuneration on a full-time equivalent basis. To

ensure comparability, the annual change in remuneration is only reported since the implementation of Directive (EU) 2017/828

as regards the encouragement of long-term shareholder engagement.

Melexis Annual Report 2021

2017

2018

2019

2020

2021

Annual change in the remuneration of directors and members of the Executive Management

Fixed remuneration

5.0%

Variable remuneration

155.3%

Annual change in the developments and performances

Performance criteria (EBIT)

15.9%

4.4%

-49.0%

6.9%

96.5%

Performance criteria (revenue)

12.1%

11.3%

-14.5%

4.2%

26.9%

Annual change in the average remuneration of employees*

1.6%

-2.9%

0.7%

4.7%

3.9%

*The average employee remuneration was calculated with the numbers as reported in note 8.9.5.U (Wages and salaries) in this

annual report (Personnel expenses and average number of employees); including variable pay, social security, pension and benefit

costs.

In 2021 the ratio between the highest and lowest remuneration was 41.02 to 1. The highest remuneration of a member of the

Executive Management used for this comparison includes the base salary, pension, and other benefits paid in 2021.

All figures are presented on a Melexis Group consolidated basis in the table above.

Severance payments

No severance payments took place as no management contract with a member of the Executive Management was terminated in

2021.

Use of claw-back provisions

In 2021, no claw-back occurred.

Deviations from the remuneration policy

In order to recognize the great efforts of the personnel to secure the company objectives in the unusually adverse circumstances

in 2021, all personnel were awarded with a 10% increase to their variable pay. This also applies to (the short-term variable pay of)

members of the Executive Management and the CEO and is a deviation from the Remuneration Policy as published on the

website.

Vote of the shareholders

The annual shareholders’ meeting of 11 May 2021 has approved the remuneration report regarding the financial year ending on

31 December 2020 with a 98.07% majority of the 74.53% votes cast validly.

7.7POLICY ON CERTAIN TRANSACTIONS

Conflicts of interest in the Board of Directors

According to article 7:96 of the Belgian Code of Companies and Associations, 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 a financial

nature to him/her. In this event, the respective director may not participate in the deliberation and voting on this agenda item.

In 2021 there was one conflict of interest as per article 7:96 of the Belgian Code of Companies and Associations:

Melexis Annual Report 2021

“Roland Duchâtelet and Françoise Chombar declare that they

have a financial interest that may conflict with that of the

Company in agenda item 4. Under this agenda item the

Company is expected to enter into a cost allocation agreement

for an intended private placement through ABB with Xtrion NV,

the controlling company of Melexis, of which Mr. Duchâtelet and

Ms. Chombar are important shareholders.

In accordance with article 7:96 of the Belgian Companies and

Associations Code (BCAC), the directors concerned cannot

participate in the deliberation or decision and these minutes

must contain the following information: nature of the

transactions, justification of the decisions taken and the

financial consequences of the transactions for the Company.

This information is included above and in agenda item 4.

The statutory auditor of the Company shall be notified of this

conflict of interest.

(...)

4. In the framework of the ABB, the Company will enter into an

agreement with Xtrion NV and Melexis Technologies NV in order

to share the costs of the Transaction (the Cost Sharing

Agreement).

The board of directors resumes the deliberations of the

committee of independent directors in application of article

7:97 BCAC. The other directors have no further comments and

concur with these considerations and the decision of the

committee.

For the application of article 7:96 BCAC, the board of directors

hereby further identifies:

- The nature of the transaction

With the Cost Sharing Agreement to be entered into, the

Company, Xtrion NV and Melexis Technologies wish to share the

costs of the Transaction pro rata to the number of shares they

sell.

- Justification of the decisions taken

The Company takes the opportunity to participate in the

professionally organized ABB process, which it would not be able

to organize for its participation of 1,785 shares alone. Given the

limited number of shares it is selling, it is only taking on a

fraction of the total cost of the Transaction. It would also have to

bear costs for other methods of selling her own shares.

Moreover, the Board of Directors is convinced that the

distribution of costs in accordance with the pro rata number of

shares sold per seller is logical and fair.

- The patrimonial consequences of the transactions for the

Company

The total cost of the Transaction is estimated at EUR

1,840,951. Of this, the Company shall bear 1,835.26 EUR in

accordance with the Cost Sharing Agreement, corresponding to

its pro rata share of the shares to be sold.

DECISION:

The Board of Directors unanimously decides to approve the Cost

Sharing Agreement, substantially in the form as attached as

Exhibit 4.”

Related parties transactions

Pursuant to article 7:97 of the Belgian Code of Companies

and Associations, companies listed on the stock exchange

must follow a special procedure before decisions are taken

or operations are executed concerning related parties.

In 2021, the above mentioned procedure regarding related

parties transactions had to be applied once.

On 2 March 2021 at 2 pm Melexis announced the following

statement via a press release (www.melexis.com/en/go/

investors/xtrion-and-melexis-announce-private-

placement-of-melexis-shares) in accordance with article

7:97 of the Belgian Code of Companies and Associations:

“In application of Article 7:97, §4/1 BCAC, Melexis is disclosing

hereby the fact that the proposed private placement contains

two aspects of related party transactions.

1° Nature of the related party transactions

Melexis, Melexis Technologies and Xtrion are expected to enter

into a placement agreement with the Joint Global Coordinators

pursuant to which the latter will execute the private placement

and facilitate the sale of shares resulting from the ABB. The

three companies will also share the costs of the private

placement amongst them.

2° Information on the related party

Xtrion is the controlling shareholder of Melexis, and as such

qualifies as a related party. The signing of the placement

agreement and the agreement on the cost sharing can be seen as

a related party transaction for Melexis and Melexis Technologies

under the scope of the special procedure of article 7:97 BCAC.

3° Date and value of the transaction

The Parties intend to share the costs of the ABB pro rata the

number of shares of the Company they each sell. These costs

Melexis Annual Report 2021

comprise a.o. the placement fees, tax on stock-exchange

transactions (TST), legal fees and the auditor fees. They have

been estimated (based on the reference closing price of the

Melexis share on Euronext Brussels on February 25 2021 of

EUR 96.70) at a maximum of EUR 1,849,951. These costs will

be shared pro rata the number shares sold by the parties in the

private placement, which will result in an estimated maximum

cost for:

•Melexis of EUR 1,835.26 ; and for

•Melexis Technologies of EUR 354,051.20.

The liabilities undertaken under the Placement Agreement are in

line with market practice for similar transactions and have been

undertaken severally pro rata the shares sold by the respective

parties in the private placement but not jointly.

4° Advice by Committee of Independent Directors and statutory

auditor’s review

In application of article 7:97 BCAC, the Committee of

Independent Directors of Melexis has issued a written advice,

the conclusion of which is:

“In view of the foregoing, the Committee advises to the Board of

Directors that it considers the entering into the Cost Sharing

Agreement and the Placement Agreement by the Company and

by Melexis Technologies is not contrary to the interest of the

Company and not unjustified. The Committee is also of the

opinion that it is highly unlikely that the entering into these

agreements would lead to disadvantages which would outweigh

the advantages outlined above in this advice.”

The Board of Directors of Melexis did not deviate from this

conclusion.

The review by the statutory auditor of Melexis, PwC

Bedrijfsrevisoren CVBA/SCRL in application of Article 7:97,

§4 BCAC concludes as follows: "Based on the procedures

we have performed, as described in this report, we do not

report any exceptions to you."

Other transactions with directors and

Executive Management

As determined by the Melexis Corporate Governance

Charter, members of the Board of Directors and the

Executive Management have to refrain from any action that

could raise an impression of being in conflict with the

interests of the company. Therefore, any transaction

between a director or a member of the Executive

Management and the company has to be reported to the

Chair of the Board of Directors.

In 2021, except for those mentioned above regarding the

private placement, there were no transactions between the

company and its directors or a member of the Executive

Management involving a conflict of interest. All related

party transactions were made on terms equivalent to those

that prevail in arm’s length transactions.

Insider trading

Melexis developed an Insider Trading Policy to comply with

the European and 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 sensitive information related to

the Melexis share.

The purpose of the Melexis Insider Trading Policy is to

prevent the abuse of inside information.

Before trading any company shares, the members of the

Board of Directors and the Executive Management have to

receive the green light from the Compliance Officer and

have to report back once the transaction has been

completed. Furthermore, in compliance with the same

legislation, the members of the Board of Directors and the

Executive Management as well as their closely associated

persons have to notify all their transactions above a certain

threshold in Melexis shares to the Belgian Financial Services

and Markets Authority, who will publish these notices on its

website.

Compliance with the Melexis Insider Trading Policy is

supported and verified by the Compliance Officer.

7.8INTERNAL CONTROL AND RISK

ASSESSMENT PROCEDURES IN

RELATION TO FINANCIAL REPORTING

The internal control and risk assessment procedures in

relation to the process of financial reporting are

coordinated by the CFO. Such procedures have to ensure

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:

•Data on transactions or use of assets of the company are

registered accurately and saved in an automated global

enterprise resource planning (ERP) system by the

different Melexis functions.

Melexis Annual Report 2021

•Accounting transactions are registered in globally

standardized operating charts of accounts.

•The financial information is prepared and reported in the

first instance by the accounting teams in the different

legal entities of Melexis worldwide.

•Subsequently, the finance managers at the different

Melexis sites will review the prepared and reported local

financial information before sending it to the Global

Finance Department.

•In the Global Finance Department, the financial

information will receive its final review before it is

included in the consolidated financial statements.

•All Melexis sites use the same software for the reporting

of the financial data for consolidation.

•Random checks are made to assure that:

»Transactions have been saved as required for the

preparation of the financial accounts in conformity

with the IFRS accounting principles.

» Transactions have been approved by the

authorized persons of the company.

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 function 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:

•Risks that the company is confronted with are detected

and monitored with the responsible persons of the

different functions of the company.

•By using an automated ERP system, the responsible

persons of the functions have permanent access to the

financial information with regard to their function for

monitoring, controlling and directing purposes with

regard to their business activities.

•Closing the accounts at the end of every month warrants

that the financial consequences of the identified risks are

monitored closely to be able to anticipate possible

adverse evolutions.

•The financial results are also reviewed monthly on a

global level.

•A data protection system based on antivirus software,

internal and external backup of data and the controlling

of access rights to information, protects the company's

information and guarantees the continuity of the financial

reporting. The adequacy and integrity of these IT systems

and procedures are reviewed regularly.

•In accordance with the 2020 Belgian Code on Corporate

Governance, Melexis has set up an internal audit function,

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.

7.9ELEMENTS PERTINENT TO A

TAKE-OVER BID

Capital structure

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.

Restrictions on the transfer of securities

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.

Restrictions on the exercise of voting rights

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

that he is validly admitted to the annual shareholders'

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 attached 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 annual shareholders' meeting using

voting rights attached to securities that have not been

reported in due time 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.

Agreements among shareholders

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.

Melexis Annual Report 2021

Amendments to the Articles of Association

The Articles of Association can be amended by an

Extraordinary General Meeting in accordance with the

Belgian Code of Companies and Associations. 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.

Authorities of the Board of Directors to

issue, buy back or dispose of own shares

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 23 April 2019 to acquire own shares of

the Company, either directly or by a person acting in his or

her own name but on behalf of the Company or by a direct

subsidiary within the meaning of Article 1:14, §2, 1°, 2° and

4° of the Belgian Code of Companies and Associations. The

Company is subject to the following conditions for the

acquisition of own shares in the context of Article 7:215 of

the Belgian Code of Companies and Associations:

•This authorization applies to a number of own shares that

is at most equal to the number of shares as a result of

which, due to the acquisition thereof, the limit of 20%

referred to in Article 620, § 1, first section, 2° of the

Belgian Companies Code would have been achieved.

•The acquisition of a share in the framework of this

authorization must take place at a price per share

between EUR 0,01 and EUR 100,00.

•The par value of the number of own shares to be acquired

that the company wishes to purchase, including the

previously acquired own shares held by the company,

may not exceed twenty per cent (20%) of the share

capital of the company.

•The compensation for the acquisition of these own shares

may not exceed the company's resources that, in

accordance with Article 7:212 of the Belgian Code of

Companies and Associations, are eligible for distribution.

•The acquisition of the shares in the framework of this

authorization will entail the immediate creation of a non-

distributable reserve ‘acquisition of own shares' equal to

the global purchase price of the acquired shares, and this

by means of a withdrawal from the available profit

reserve. The creation of a non-distributable reserve is

only mandatory if and for as long as the shares are held in

portfolio.

This authorization is valid for a period of five (5) years from

the publication of this decision in the Belgian Official

Gazette (10 May 2019). The existing authorizations of the

Board of Directors for the alienation of own shares held in

accordance with article 7:218, §1, of the Belgian Code of

Companies and Associations and article 622, §2, 1° of the

former Belgian Companies Code were awarded for an

indefinite period by the resolutions of the Extraordinary

General Meeting of 22 April 2014:

•The number of own shares disposed of may not exceed

the number of shares in the company that a direct

subsidiary of the company may hold as a legitimate cross-

shareholding within the meaning of article 631, § 1 of the

Companies Code.

•The disposal of a share under this authority shall take

place at the last closing price at which the shares were

quoted on the Brussels stock exchange at the moment of

disposal.

•The shares concerned may only be transferred to Melexis

Technologies NV, whose registered office is situated at

3980 Tessenderlo, Transportstraat 1, RPR Hasselt

0467.222.076, or to a company of which Melexis NV

directly or indirectly holds more than 99% of the dividend

entitled securities.

•The reserves the company has made unavailable for

distribution due to the ‘acquisition of own shares' are

transferred back to reserves available for distribution for

an amount equal to the acquisition value of the disposed

shares.

The Board of Directors is also authorized for an indefinite

period of time to dispose of purchased own shares in

accordance with article 7:218, §2, section 2, 1° of the

Companies Code to the extent that the shares are disposed

of on the regulated market on which they are quoted.

On 31 December 2021, the Melexis Group was not in the

possession of any shares in the registered capital of the

company8.

Melexis Annual Report 2021

8 On 5 March 2021, Xtrion NV, Melexis NV and Melexis Technologies NV sold Melexis shares in a private placement. Xtrion NV

sold a total of 1,444,398 existing shares, reducing its participation in Melexis from 53.6% to 50.0% + 1 share. Melexis and Melexis

Technologies sold all treasury shares, a total of 346,141.

Termination of management agreements

All management agreements with the members of the

Executive Management provide for a severance payments

equal to twelve months' fixed remuneration if the

management agreement is terminated due to a change of

control.

Other elements

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.

7.10AUDITOR

PwC Bedrijfsrevisoren BV, whose registered office is

situated at Culliganlaan 5, 1831 Machelen, listed in the

number 429.501.944, was appointed as statutory auditor of

the company. Ms. Sofie Van Grieken, auditor, was appointed

as the permanent representative of the auditor.

7.11COMPLIANCE WITH THE 2020

BELGIAN CODE ON CORPORATE

GOVERNANCE

Melexis does not grant shares, options or other rights to

acquire shares to the members of its Executive

Management. Contrary to recommendation 7.9 of the Code

2020, the members of the Executive Management are not

required to hold a minimum threshold of shares in the

Company. Melexis strongly believes in the Self-

Determination Theory (Edward L. Deci and Richard M.

Ryan, psychologists at the University of Rochester) arguing

that contingent rewards can have detrimental effects on

intrinsic motivation, creativity and innovation. Within

Melexis, we focus on intrinsic value creation for the

Company; the share price is a result thereof. The financial

numbers which impact the level of the business component

of the variable remuneration, i.e. revenue growth and EBIT

growth, are important elements driving the valuation of the

Company. As such, we believe there is a clear alignment

between shareholders on the one hand and management

and the Melexis community on the other.

Melexis Annual Report 2021

FINANCIAL REPORT

TABLE OF CONTENTS

8.1

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

8.2

CONSOLIDATED INCOME STATEMENT

8.3

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

8.4

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

8.5

CONSOLIDATED STATEMENT OF CASH FLOWS

8.6

RESULT OF OPERATIONS

8.7

LIQUIDITY, WORKING CAPITAL AND CAPITAL RESOURCES

8.8

STATEMENT OF THE BOARD OF DIRECTORS

8.9

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

•

General

•

Statement of compliance

•

Summary of significant accounting policies

•

Overview of Group structure

100

•

Notes

101

Melexis Annual Report 2021

8.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION

in EUR

31 December

2021

2020

ASSETS

Current assets:

Cash, and cash equivalents (Note 8.9.5.A)

34,950,394

58,883,048

Current investments, derivatives (Note 8.9.5.B)

10,356,160

244,971

Accounts receivable - trade (Note 8.9.5.D)

80,229,168

65,099,023

Accounts receivable - related companies (Note 8.9.5.Z.2)

5,179,602

372,415

Assets for current tax (Note 8.9.5.X)

5,976,258

4,695,479

Inventories (Note 8.9.5.E)

144,490,280

123,457,242

Other current assets (Note 8.9.5.F)

10,680,012

10,636,656

Total current assets

291,861,874

263,388,836

Non-current assets:

Deferred tax assets (Note 8.9.5.X)

25,230,552

28,490,331

Other non-current assets (Note 8.9.5.Z.2)

3,140,921

4,202,869

Property, plant and equipment (Note 8.9.5.I)

132,020,095

129,949,108

Intangible assets (Note 8.9.5.G)

4,334,611

4,650,041

Leased assets (Note 8.9.5.H)

4,592,441

2,731,139

Total non-current

assets

169,318,620

170,023,489

TOTAL ASSETS

461,180,495

433,412,325

Melexis Annual Report 2021

in EUR

31 December

2021

2020

LIABILITIES

Current liabilities:

Current portion of long-term debt (Note 8.9.5.M)

—

Lease liabilities (Note 8.9.5.H)

1,718,141

1,632,661

Accounts payable - trade (Note 8.9.5.L)

22,667,627

18,327,737

Accounts payable - related companies (Note

8.9.5.Z.2)

19,785,548

15,759,006

Short-term employee benefits accruals (Note

8.9.5.J)

17,810,905

11,881,630

Accrued taxes (Note 8.9.5.X)

789,822

473,355

Other current liabilities (Note 8.9.5.L)

4,002,058

3,433,130

Deferred income (Note 8.9.5.K)

2,437,459

2,799,357

Total current liabilities

69,211,560

54,306,876

Non-current liabilities:

Long-term debt less current portion (Note 8.9.5.M)

—

62,000,000

Lease liabilities (Note 8.9.5.H)

2,908,663

2,122,166

Deferred tax liabilities (Note 8.9.5.X)

3,824

207,134

Total non-current liabilities

2,912,487

64,329,300

Equity:

Shareholders' capital

564,814

Reserve treasury shares

—

(3,817,835)

Legal reserve

56,520

Retained earnings

393,129,007

324,085,148

Cumulative translation adjustment

(4,694,303)

(6,112,907)

Equity attributable to company owners

389,056,038

314,775,740

Non-controlling interest

410

Total equity (Note 8.9.5.N)

389,056,448

314,776,149

TOTAL EQUITY AND LIABILITIES

461,180,495

433,412,325

The accompanying notes to this consolidated statement of financial position form an integral part of these consolidated

financial statements.

Melexis Annual Report 2021

8.2 CONSOLIDATED INCOME STATEMENT

in EUR

31 December

2021

2020

Total revenue (Note 8.9.5.O)

643,786,021

507,517,322

Cost of sales (Note 8.9.5.Q)

(370,185,495)

(309,529,267)

Gross margin

273,600,526

197,988,055

Research and development expenses (Note 8.9.5.R)

(78,387,958)

(77,690,691)

General and administrative expenses (Note 8.9.5.S)

(32,052,847)

(30,929,601)

Selling expenses (Note 8.9.5.T)

(14,711,311)

(13,834,237)

Income from operations (EBIT)

148,448,410

75,533,526

Financial income (Note 8.9.5.W)

13,199,634

6,225,939

Financial charges (Note 8.9.5.W)

(7,347,737)

(5,846,771)

Profit or loss before tax

154,300,306

75,912,694

Income tax (Note 8.9.5.X)

(23,192,091)

(6,613,382)

Net profit or loss for the period

131,108,216

69,299,312

Earnings per share attributable to the ordinary equity holders of the parent

Earnings per share non-diluted (Note 8.9.5.AB)

3.25

1.72

Earnings per share diluted (Note 8.9.5.AB)

3.25

1.72

The accompanying notes to this consolidated income statement form an integral part of these consolidated financial

statements.

Melexis Annual Report 2021

8.3 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

in EUR

31 December

2021

2020

Net profit or loss

131,108,216

69,299,312

Other comprehensive income

Recyclable items of profit or loss

Cumulative translation adjustment

1,418,523

(1,523,466)

Total other comprehensive income for the period

1,418,523

(1,523,466)

Total comprehensive income (loss) for the period

132,526,739

67,775,846

Total comprehensive income attributable to:

Owners of the parent

132,526,739

67,775,846

Non-controlling interests

—

The amounts included in other comprehensive income are net of tax effects.

Melexis Annual Report 2021

8.4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

in EUR

Number of

Share capital

Legal reserve

Retained

earnings

Reserve

treasury

CTA

Non-

controlling

interest

Total equity

31 December 2019

40,400,000

564,814

56,520

306,855,934

(3,817,835)

(4,589,522)

410

299,070,320

Net income

—

69,299,312

—

69,299,312

CTA movement

—

(81)

—

(1,523,385)

—

(1,523,466)

Dividends

—

(52,070,017)

—

(52,070,017)

31 December 2020

40,400,000

564,814

56,520

324,085,148

(3,817,835)

(6,112,907)

410

314,776,149

Net income

—

131,108,216

—

131,108,216

CTA movement

—

(81)

—

1,418,605

—

1,418,523

Dividends

—

(88,880,000)

—

(88,880,000)

Sale own shares

—

26,815,725

3,817,835

—

30,633,560

31 December 2021

40,400,000

564,814

56,520

393,129,007

—

(4,694,303)

410

389,056,448

In 2020 and 2021, no purchases of own shares took place.

Melexis Annual Report 2021

8.5 CONSOLIDATED STATEMENT OF CASH FLOWS

in EUR

31 December (indirect method)

2021

2020

Cash flows from operating activities

Net profit

131,108,216

69,299,312

Adjustments for operating activities

Deferred taxes (Note 8.9.5.X)

3,259,779

(841,052)

Unrealized financial results (Note 8.9.5.W)

(6,489,626)

(2,212,514)

Accrued income tax (Note 8.9.5.X)

16,817,249

4,549,900

Government grants (Note 8.9.5.P)

844,434

942,039

Depreciation and amortization (Note 8.9.5.V)

42,996,800

44,453,225

Depreciation and amortization leased assets (Note 8.9.5.H)

1,794,991

1,918,352

Financial results (Note 8.9.5.W)

1,954,204

(1,183,820)

Operating profit before working capital changes

192,286,048

116,925,442

Accounts receivable, net (Note 8.9.5.D)

(15,098,538)

(6,973,601)

Other current assets (Note 8.9.5.F)

(2,098,581)

(4,755,575)

Other non-current assets

1,061,712

(4,199,851)

Due from related companies (Note 8.9.5.Z)

(4,807,240)

(236,641)

Due to related companies (Note 8.9.5.Z)

4,026,542

26,206

Accounts payable

4,285,333

2,236,783

Employee benefit liabilities (Note 8.9.5.J)

5,929,275

1,238,783

Other current liabilities (Note 8.9.5.L)

526,044

(870,492)

Other non-current liabilities

(565,208)

389,245

Inventories (Note 8.9.5.E)

(26,700,113)

(210,145)

Interest paid (Note 8.9.5.W)

(112,062)

(482,299)

Prepayment income tax (Note 8.9.5.X)

(16,500,783)

(7,327,146)

Net cash from operating activities

142,232,430

95,760,709

Melexis Annual Report 2021

Cash flows from investing activities

Purchase of property, plant and equipment and intangible assets (Note 8.9.5.I and

8.9.5.G)

(39,088,143)

(24,835,443)

Interest received (Note 8.9.5.W)

5,331

56,297

Investments, proceeds, from current investments

244,971

(166,534)

Net cash used in investing activities

(38,837,842)

(24,945,680)

Cash flows from financing activities

Repayment and proceeds from long-term debts (Note 8.9.5.M)

(62,008,402)

93,563

Repayment leasings (Note 8.9.5.H)

(2,784,317)

(933,825)

Impact of exchange results on financing items

(4,315,933)

2,271,615

Dividend payment (Chapter 8.4)

(88,880,000)

(52,070,017)

Sale of shares

30,633,560

—

Net cash used in financing activities

(127,355,092)

(50,638,664)

Effect of exchange rate changes on cash

27,849

(64,841)

Cash at beginning of the period

58,883,048

38,771,524

Cash at end of the period

34,950,394

58,883,048

Cash at end of the period minus cash at beginning of the period

(23,932,655)

20,111,524

The accompanying notes to this statement of cash flows form an integral part of the consolidated financial statements.

Melexis Annual Report 2021

8.6 RESULT OF OPERATIONS

The following discussion and analysis of the financial

condition and results of operations should be read in

conjunction with the company's financial statements

from previous years.

Revenue

In 2021, total revenue increased by 27% compared to

2020, from EUR 507,517,322 in 2020 to EUR

643,786,021 in 2021. The EUR/USD exchange rate had a

negative impact of 1% on sales.

The increase in sales was propelled by strong demand and

order intake. Structurally, we continue to enjoy strong

momentum of new products and content growth.

APAC continued being the largest region for Melexis,

representing 55% of total sales in 2021, led by China,

Hong Kong and Japan with respectively EUR 79,064,308,

EUR 61,043,570 and EUR 45,630,857 in sales. EMEA,

being the second largest region for Melexis, accounted

for 34% of total sales. NALA comes in third, accounting

for 11% of sales in 2021.

Cost of sales

Cost of sales consists of materials (raw materials and

semi-finished parts), subcontracting, labor, depreciation

and other direct production expenses. The cost of sales

amounted to EUR 370,185,495 in 2021 compared to EUR

309,529,267 in 2020. Expressed as a percentage of total

revenue, the cost of sales decreased from 61% in 2020 to

57.5% in 2021, mainly because of the increase in sales.

Gross margin

The gross margin, expressed as a percentage of total

revenues, increased from 39.0% in 2020 to 42.5% in

2021.

Research and development expenses

Research and development expenses amounted to EUR

78,387,958 in 2021, representing 12.2% of total revenue,

versus EUR 77,690,691 in 2020. The main research and

development activities focused on magnetic sensors,

inductive sensors, pressure sensors, temperature sensors,

optical sensors, tire monitoring sensors, sensor

interfaces, embedded drivers, embedded lighting and

smart drivers.

General, administrative and selling expenses

General, administrative and selling expenses mainly

consisted of salaries and salary related expenses, office

equipment and related expenses, commissions and

advertising expenses. The general, administrative and

selling expenses increased by 4% compared to 2020. The

main variance is attributable to an increase in costs

related to utilities and insurance.

Income from operations

The company recorded an operational income for 2021 of

EUR 148,448,410 compared to EUR 75,533,526 in 2020,

an increase of 97%. The increase in gross margin,

combined with a smaller increase in operating expenses

than in sales, led to an increase in the operating margin

from 14.9% in 2020 to 23.1% in 2021.

Financial result

The net financial result amounted to EUR 5,851,897

profit in 2021 compared to EUR 379,169 profit in 2020.

The (net) interest result amounted to a loss of EUR

524,946 in 2021 compared to a loss of EUR 794,089 in

2020. The currency exchange result (both realized and

unrealized) amounted to a loss of EUR 3,527,217 in 2021,

compared to a gain of EUR 1,306,140 in 2020. The fair

value of the inflation swaps resulted in an unrealized

financial gain of EUR 10,205,720 in 2021 (Note 8.9.5.W).

Income taxes

Income taxes amounted to EUR 23,192,091 in 2021

compared to EUR 6,613,382 in 2020 (Note 8.9.5.X).

Net income

The company recorded a net income for 2021 of EUR

131,108,216, an increase of 89% compared to 2020.

8.7 LIQUIDITY, WORKING CAPITAL

AND CAPITAL RESOURCES

Cash and cash deposits amounted to EUR 34,950,394 as

of 31 December, 2021, compared to EUR 58,883,048 as

of 31 December, 2020.

In 2021, operating cash flow before working capital

changes amounted to EUR 192,286,048 compared to

EUR 116,925,442 in 2020. Net operating cash flow

including working capital changes amounted to EUR

142,232,430. This amount was mainly impacted by

changes in inventories, accounts receivable and accrued

expenses.

The cash flow from investing activities was negative by an

amount of EUR 38,837,842, as a result of investments in

fixed assets amounting to EUR 39,088,143 compensated

by financial fixed assets for an amount of EUR 3,817,835,

interest received for an amount of EUR 5,331 and

Melexis Annual Report 2021

proceeds from current investments for an amount of EUR

244,971. The cash flow from financing activities was

negative by an amount of EUR 127,355,092. This was

mainly the net result of the repayment of long-term debt

for an amount of EUR 62,008,402, the impact of exchange

results on financing items amounting to EUR 4,315,933,

the repayment of leasings amounting to EUR 2,784,317

and the 2020 final and 2021 interim dividend payment

amounting to EUR 88,880,000, compensated by the sale

of treasury shares for an amount of EUR 30,633,560.

8.8 STATEMENT OF THE BOARD OF

DIRECTORS

The Melexis Board of Directors hereby certifies, for and

on behalf of the company, that, to its knowledge:

(a)the financial statements prepared in accordance with

International Financial Reporting Standards give a

true and fair view of the assets, liabilities, financial

position and profit or loss of the company and the

entities included in the consolidation as a whole, and,

(b)the management report includes a fair review of the

development and performance of the business and

the position of the company and the entities included

in the consolidation as a whole, together with a

description of the principal risks and uncertainties

they face.

The consolidated statements were approved and

authorized for issue by the Board of Directors on 28

March 2022 and were signed on its behalf by Marc Biron.

The consolidated statements haven't been changed after

the approval by the Board of Directors.

Marc Biron

Managing Director, Chief Executive Officer (CEO)

Melexis Annual Report 2021

8.9 NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

8.9.1General

Melexis is a limited liability company incorporated under

Belgian law. The company has been operating since 1988.

The company designs, develops, tests and markets

advanced integrated semiconductor devices mainly 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 1 January

2021 to 31 December 2021.

The Melexis Group of companies employed on average

(FTE) 1,482 people in 2021 and 1,449 in 2020.

The registered office of the Group is located at

Rozendaalstraat 12, 8900 Ieper, Belgium. The company is

listed on Euronext.

The consolidated results as included in the press release

were authorized for issue by the Board of Directors

subsequent to the meeting held on 28 January 2022.

8.9.2Statement of compliance

The consolidated financial statements were 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 until 31 December 2021

(collectively “IFRS”). Melexis did not apply any new IFRS

requirements not yet effective in 2021.

8.9.3Summary of significant accounting

policies

The consolidated financial statements of Melexis NV

were prepared according to IFRS as accepted by the EU

on 1 January 2021. The principal accounting policies

adopted when preparing the consolidated financial

statements of Melexis NV were as follows:

Basis of preparation

The consolidated financial statements were prepared

under the historical cost convention, except for

investments available for sale, assets held for sale and

derivative financial instruments, which were stated at

their fair value as disclosed in the accounting policies

hereafter.

Use of estimates and judgments

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

8.9.5.X), useful lives of property, plant and equipment and

intangible assets (Note 8.9.5.G and 8.9.5.I).

Deferred tax assets are recognized for deductible

temporary differences, unused tax losses/tax attributes

carried forward 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/tax attributes. This includes

management's best estimate based on all facts and

circumstances. 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 8.9.5.X).

Please refer to the accounting policies of inventories,

property, plant and equipment, intangible assets and

provisions in this chapter for the assumptions and

estimates.

Presentation currency

The euro has been designated as the presentation

currency of Melexis NV. 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 income

statement. All resulting translation differences are

included in a translation reserve in equity.

Melexis Annual Report 2021

Foreign currency transactions

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 income statement in the period in

which they arise.

Foreign currency translation

Since the introduction of the euro on 1 January 1999, and

in accordance with Belgian law, Melexis NV keeps its

books and prepares its consolidated financial statements

in euro. The functional currency of the subsidiaries is as

follows:

Melexis Inc.

USD

Melexis GmbH

EUR

Melexis Bulgaria EOOD

BGN

Melexis Ukraine

UAH

Melexis Technologies SA

CHF

Melexis NV/BO France

EUR

Sentron AG

CHF

Melefin NV

EUR

Melexis Technologies NV

EUR

Melexis NV/BO Philippines

PHP

K.K. Melexis Japan Technical Research Center

JPY

Melexis Electronic Technology (Shanghai) Co., Ltd

CNY

Melexis (Malaysia) Sdn. Bhd.

MYR

Melexis Technologies NV/BO Malaysia

MYR

Melexis Dresden GmbH

EUR

Melexis France SAS

EUR

Melexis Korea Yuhan Hoesa

KRW

Assets and liabilities of Melexis Inc., Melexis Ukraine,

Melexis Bulgaria EOOD, Sentron AG, Melexis

Technologies SA, K.K. Melexis Japan Technical Research

Center, Melexis NV/BO Philippines, Melexis Electronic

Technology (Shanghai) Co. Ltd, Melexis Technologies NV/

BO Malaysia, Melexis (Malaysia) Sdn. Bhd. and Melexis

Korea Yuhan Hoesa 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.

Principles of consolidation

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 re-

assessed 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 size of the company's voting rights relative to both

the size and dispersion of other parties who hold voting

rights

•Substantive potential voting rights held by the

company and by other parties

•Other contractual arrangements

•Historic patterns in voting attendance.

The consolidated financial statements present the results

of the company and its subsidiaries (“the Group”) as if

they formed a single entity. Inter-company 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 two branch offices being Melexis NV/BO

Philippines, and Melexis NV/BO France. On the other

hand, the subsidiaries being part of the consolidation

scope are Melexis Ukraine, Melexis Inc., Melexis GmbH,

Melexis Bulgaria EOOD, Sentron AG, Melefin NV,

Melexis Technologies NV, Melexis Technologies SA, K.K.

Melexis Japan Technical Research Center, Melexis

Electronic Technology (Shanghai) Co. Ltd, Melexis

(Malaysia) Sdn. Bhd., Melexis Technologies NV/BO

Malaysia, Melexis Dresden GmbH, Melexis France SAS

and Melexis Korea Yuhan Hoesa.

Cash and cash equivalents

Cash includes cash on hand and cash in different bank

accounts. Cash equivalents are short-term, highly liquid

Melexis Annual Report 2021

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.

Hedging

The company can apply hedge accounting for a part of its

financial instruments as defined under IFRS 9.

Derivatives are initially recognized at fair value on the

date a derivative contract is entered into and are

subsequently re-measured to their fair value at the end of

each reporting period. The accounting for subsequent

changes in fair value depends on whether the derivative is

designated as a hedging instrument, and if so, the nature

of the item being hedged. The hedges whereby hedge

accounting is applied are cash flow hedges. At the

inception of the hedge relationship, the Group documents

the economic relationship between hedging instruments

and hedged items including whether changes in the cash

flows of the hedging instruments are expected to offset

changes in the cash flows of hedged items. The Group

documents its risk management objective and strategy

for undertaking its hedge transactions. The table with

outstanding derivatives at year end is disclosed in Note

8.9.5.C.

Inventories

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

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. An item of

property, plant and equipment is initially measured at its

cost. Cost includes:

•Its purchase price, including import duties and non-

refundable purchase taxes, after deducting trade

discounts and rebates

•Any costs directly attributable to bringing the asset to

the location and condition necessary for it to be

capable of operating in the manner intended by

management

•The estimated costs of dismantling and removing the

item and restoring the site on which it is located, unless

those costs relate to inventories produced during that

period.

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.

Depreciation starts when the asset is ready for use.

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.

Investments and other financial assets

(a)Classification

The Group classifies its financial assets in the following

measurement categories:

•Those to be measured subsequently at fair value (either

through OCI or through profit or loss)

•Those to be measured at amortized cost.

The classification depends on the entity's business model

for managing the financial assets and the contractual

terms of the cash flows.

For assets measured at fair value, gains and losses will

either be recorded in profit or loss or OCI. For

investments in equity instruments that are not held for

trading, this will depend on whether the Group has made

an irrevocable election at the time of initial recognition to

account for the equity investment at fair value through

other comprehensive income (FVOCI).

The Group reclassifies debt investments when and only

when its business model for managing those assets

changes.

(b)Recognition and derecognition

Melexis Annual Report 2021

Regular way purchases and sales of financial assets are

recognized on trade date, the date on which the Group

commits to purchase or sell the asset. Financial assets are

derecognized when the rights to receive cash flows from

the financial assets have expired or have been transferred

and the Group has transferred substantially all the risks

and rewards of ownership.

(c)Measurement

At initial recognition, the Group measures a financial

asset at its fair value plus, in the case of a financial asset

not at fair value through profit or loss (FVPL), transaction

costs that are directly attributable to the acquisition of

the financial asset. Transaction costs of financial assets

carried at FVPL are expensed in profit or loss.

Financial assets with embedded derivatives are

considered in their entirety when determining whether

their cash flows are solely payment of principal and

interest.

Debt instruments

Subsequent measurement of debt instruments depends

on the Group's business model for managing the asset

and the cash flow characteristics of the asset. There are

three measurement categories into which the Group

classifies its debt instruments:

•Amortized cost: Assets that are held for collection of

contractual cash flows where those cash flows

represent solely payments of principal and interest are

measured at amortized cost. Interest income from

these financial assets is included in finance income

using the effective interest rate method. Any gain or

loss arising on derecognition is recognized directly in

profit or loss and presented in other gains/(losses)

together with foreign exchange gains and losses.

Impairment losses are presented as separate line item

in the statement of profit or loss.

•FVOCI: Assets that are held for collection of

contractual cash flows and for selling the financial

assets, where the assets' cash flows represent solely

payments of principal and interest, are measured at

FVOCI. Movements in the carrying amount are taken

through OCI, except for the recognition of impairment

gains or losses, interest income and foreign exchange

gains and losses which are recognized in profit or loss.

When the financial asset is derecognized, the

cumulative gain or loss previously recognized in OCI is

reclassified from equity to profit or loss and recognized

in other gains/(losses). Interest income from these

financial assets is included in finance income using the

effective interest rate method. Foreign exchange gains

and losses are presented in other gains/(losses) and

impairment expenses are presented as separate line

item in the statement of profit or loss.

•FVPL: Assets that do not meet the criteria for

amortized cost or FVOCI are measured at FVPL. A gain

or loss on a debt investment that is subsequently

measured at FVPL is recognized in profit or loss and

presented net within other gains/(losses) in the period

in which it arises.

Equity instruments

The Group subsequently measures all equity investments

at fair value. Where the Group's management has elected

to present fair value gains and losses on equity

investments in OCI, there is no subsequent

reclassification of fair value gains and losses to profit or

loss following the derecognition of the investment.

Dividends from such investments continue to be

recognized in profit or loss as other income when the

Group's right to receive payments is established.

Changes in the fair value of financial assets at FVPL are

recognized in other gains/(losses) in the statement of

profit or loss as applicable. Impairment losses (and

reversal of impairment losses) on equity investments

measured at FVOCI are not reported separately from

other changes in fair value.

(d)Impairment

From 1 January 2018, the Group assesses, on a forward-

looking basis, the expected credit losses associated with

its debt instruments carried at amortized cost and FVOCI.

The impairment methodology applied depends on

whether there has been a significant increase in credit

risk.

For trade receivables, the Group applies the simplified

approach permitted by IFRS 9, which requires expected

lifetime losses to be recognized from initial recognition of

the receivables.

Non-current assets held for sale

Non-current assets and disposal groups are classified as

held for sale when:

•They are available for immediate sale

• Management is committed to a plan to sell

•It is unlikely that significant changes to the plan will be

made or that the plan will be withdrawn

•An active program to locate a buyer has been initiated

•The asset or disposal group is being marketed at a

reasonable price in relation to its fair value

•A sale is expected to complete within twelve months

from the date of classification.

Melexis Annual Report 2021

Non-current assets and disposal groups classified as held

for sale are measured at the lower of:

•Their carrying amount immediately prior to being

classified as held for sale in accordance with the

Group's accounting policy

•Fair value less costs of disposal.

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.

Retirement benefits: defined contribution

schemes

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

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.

Melexis does not have intangible assets with indefinite

useful lives.

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, IP is 10 years.

Business combinations

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.

Goodwill

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.

Goodwill is tested yearly for impairment losses.

Research and development costs

According to IAS 38 Par. 57 development costs are

capitalized, only if among others the technical and

economic feasibility can be proven, the future economic

benefits are probable and costs can be reliably measured.

Management has reviewed the development expenses

based on the IFRS criteria and is of the opinion that the

development expenses should be expensed as the

existence of an actual market for the output of Melexis’

development efforts can only be demonstrated in a late

stage of the project cycle.

Equity

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

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.

Melexis Annual Report 2021

Provisions

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.

Warranty claims

Even though Melexis has installed elaborate test

procedures before commencing delivery of its products,

product defects might still arise upon the installation or

the end consumer’s use of the product. If such product

defects materialize, expensive and time-consuming

product modifications might ensue, and further liability

claims might arise. A provision for expected but not yet

known warranties is not recognized because a sufficiently

reliable estimate of the amount is not possible. The

amount recognized for known warranty claims is the best

estimate of the expenditure required to settle the claim

based on historical experience.

Reserves

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

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.

Revenue recognition

Melexis has one major revenue stream. The Group

designs, develops and delivers semiconductors. Sales are

recognized when control over the product has

transferred, being when the products are shipped to or

delivered at the customer. In case customers make a

payment before the transfer of control is met, a contract

liability is recognized as prescribed in the IFRS 15

standard.

The Group is involved in several consignment

arrangements. Revenue is not recognized upon delivery

of a product if the product is held on consignment, but

when the control is transferred to the customer.

The Group does not have contracts where the period

between the transfer of the promised goods or services to

the customer and payment by the customer exceeds one

year. As a consequence, the Group does not adjust any of

the transaction prices for the time value of money.

Variable consideration: some of the contracts contain

commercial discounts and rebates. These incentives are

included in the transaction price. A liability is set up for

the most likely amount of variable consideration that is to

be paid by Melexis in the future. This liability is

recognized when the revenue and the corresponding

accounts receivable position is recognized.

Borrowing costs

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

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.

Income taxes

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.

Melexis Annual Report 2021

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.

Impairment of assets

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.

Segments

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 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 during a committee lead by

the CEO, based on performance assessments. Financial

information on geographical segments is presented in

Note 8.9.5.Y.

Contingencies

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.

Subsequent events

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.

Earnings per share

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.

Financial liabilities

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 and other payables

Trade payables and other short-term monetary liabilities

are initially recognized at fair value and subsequently

carried at amortized cost using the effective interest

method.

Melexis Annual Report 2021

Derivative financial instruments

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 re-measured 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

their fair value can be found in Note 8.9.5.C.

Leasing

IFRS 16 requires lessees to recognize a lease liability

reflecting future lease payments and a ‘right-of-use asset’

for virtually all lease contracts. For lessors, the

accounting stays almost the same. However, as the IASB

has updated the guidance on the definition of a lease (as

well as the guidance on the combination and separation

of contracts), lessors will also be affected by the new

standard. Under IFRS 16, a contract is, or contains, a lease

if the contract conveys the right to control the use of an

identified asset for a period of time in exchange for

consideration. The Group leases various properties and

cars.

Rental contracts are typically made for fixed periods of 1

to 9 years. Lease terms are negotiated on an individual

basis and contain a wide range of different terms and

conditions. The weighted average lessee’s incremental

borrowing rate applied to the lease liabilities on 1 January

2021 was between 0.8% and 2.11%.

From 1 January 2019, leases are recognized as a right-of-

use asset and a corresponding liability at the date at

which the leased asset is available for use by the Group.

Each lease payment is allocated between the liability and

finance cost. The finance cost is charged to profit or loss

over the lease period so as to produce a constant periodic

rate of interest on the remaining balance of the liability

for each period. The right-of-use asset is depreciated over

the shorter of the asset’s useful life and the lease term on

a straight-line basis. Assets and liabilities arising from a

lease are initially measured on a present value basis.

Lease liabilities include the net present value of the

following lease payments:

• Fixed payments (including in-substance fixed

payments), less any lease incentives receivable

• Variable lease payments that are based on an index or a

rate

• Amounts expected to be payable by the lessee under

residual value guarantees

• The exercise price of a purchase option if the lessee is

reasonably certain to exercise that option, and

• Payments of penalties for terminating the lease, if the

lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate

implicit in the lease. If that rate cannot be determined, the

lessee’s incremental borrowing rate is used, being the

rate that the lessee would have to pay to borrow the

funds necessary to obtain an asset of similar value in a

similar economic environment with similar terms and

conditions. Right-of-use assets are measured at cost

comprising the following:

• The amount of the initial measurement of the lease

liability

• Any lease payments made at or before the

commencement date less any lease incentives received

Melexis Annual Report 2021

• Any initial direct costs, and

• Restoration costs.

Payments associated with short-term leases and leases of

low-value assets are recognized on a straight-line basis as

an expense in profit or loss. Short-term leases are leases

with a lease term of twelve months or less. Melexis

recognizes the interest expenses of lease liabilities in the

interest paid component in the cash-flow statement.

Melexis opted not to distinguish between lease and non-

lease components and accounted for the full amount of

the lease liability.

Adoption of new and revised standards

The consolidated financial statements of Melexis NV are

prepared according to IFRS as accepted by the EU on 1

January 2021.

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 1 January 2021. The Group has not

applied any new IFRS requirements that are not yet

effective as per 31 December 2021.

The following amendments to standards are mandatory

for the first time for the financial year beginning 1

January 2021 and have been endorsed by the European

Union:

1.Amendments to IFRS 4 Insurance Contracts –

deferral of IFRS 9 (effective 01/01/2021). This

amendment changes the fixed expiry date for the

temporary exemption in IFRS 4 Insurance Contracts from

applying IFRS 9 Financial Instruments, so that entities

would be required to apply IFRS 9 for annual periods

beginning on or after 1 January 2023.

2.Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4

and IFRS 16 Interest Rate Benchmark Reform – Phase 2

(effective 01/01/2021). These amendments address

issues that might affect financial reporting after the

reform of an interest rate benchmark, including its

replacement with alternative benchmark rates. The

amendments are effective for annual periods beginning

on or after 1 January 2021, with earlier application

permitted.

3.Amendment to IFRS 16 Leases Covid 19-

Related Rent Concessions (effective 01/06/2020, with

early application permitted). If certain conditions are met,

the Amendment would permit lessees, as a practical

expedient, not to assess whether particular covid-19-

related rent concessions are lease modifications. Instead,

lessees that apply the practical expedient would account

for those rent concessions as if they were not lease

modifications.

The following new standard and amendments have been

issued, are not mandatory for the first time for the

financial year beginning 1 January 2021 but have been

endorsed by the European Union:

1.IFRS 17 ‘Insurance contracts’ (effective 1

January 2023). This standard replaces IFRS 4, which

currently permits a wide variety of practices in

accounting for insurance contracts. IFRS 17 will

fundamentally change the accounting by all entities that

issue insurance contracts and investment contracts with

discretionary participation features. On 17 March 2020,

IASB decided to defer pop effective date to annual

reporting periods beginning on or after 1 January 2023.

The endorsement includes the amendments issued by the

Board in June 2020, which are aimed at helping

companies implement the Standard and making it easier

for them to explain their financial performance.

The EU regulation provides an optional exemption from

applying the annual cohort requirement that relates to

the timing of the recognition of the profit in the contract,

the contractual service margin, in profit or loss. Entities

making use of the exemption are not applying IFRS as

issued by the IASB and need to disclose the fact.

2.Amendment to IFRS 16 Leases Covid 19-

Related Rent Concessions beyond 30 June 2021

(effective 01/04/2021, with early application permitted).

The amendments extend, by one year, the May 2020

amendment that provides lessees with an exemption

from assessing whether a COVID-19-related rent

concession is a lease modification. In particular, the

amendment permits a lessee to apply the practical

expedient regarding COVID-19-related rent concessions

to rent concessions for which any reduction in lease

payments affects only payments originally due on or

before 30 June 2022 (rather than only payments

originally due on or before 30 June 2021). The

amendment is effective for annual reporting periods

beginning on or after 1 April 2021 (earlier application

permitted, including in financial statements not yet

authorized for issue at the date the amendment is issued).

3.Amendments to IFRS 3 Business Combinations;

IAS 16 Property, Plant and Equipment; IAS 37 Provisions,

Melexis Annual Report 2021

Contingent Liabilities and Contingent Assets as well as

Annual Improvements (effective 1 January 2022). The

package of amendments includes narrow-scope

amendments to three Standards as well as the Board’s

Annual Improvements, which are changes that clarify the

wording or correct minor consequences, oversights or

conflicts between requirements in the Standards.

◦Amendments to IFRS 3 Business Combinations

update a reference in IFRS 3 to the Conceptual

Framework for Financial Reporting without changing the

accounting requirements for business combinations.

◦Amendments to IAS 16 Property, Plant and

Equipment prohibit a company from deducting from the

cost of property, plant and equipment amounts received

from selling items produced while the company is

preparing the asset for its intended use. Instead, a

company will recognize such sales proceeds and related

cost in profit or loss.

◦Amendments to IAS 37 Provisions, Contingent

Liabilities and Contingent Assets specify which costs a

company includes when assessing whether a contract will

be loss-making.

◦Annual Improvements 2018-2020 make minor

amendments to IFRS 1 First-time Adoption of

International Financial Reporting Standards, IFRS 9

Financial Instruments, IAS 41 Agriculture and the

Illustrative Examples accompanying IFRS 16 Leases.

The following amendments have been issued, but are not

mandatory for the first time for the financial year

beginning 1 January 2021 and have not been endorsed by

the European Union:

1.Amendments to IAS 1 ‘Presentation of Financial

Statements: Classification of Liabilities as current or non-

current’ (effective 01/01/2023), affect only the

presentation of liabilities in the statement of financial

position — not the amount or timing of recognition of any

asset, liability income or expenses, or the information that

entities disclose about those items. They:

◦Clarify that the classification of liabilities as

current or non-current should be based on rights that are

in existence at the end of the reporting period and align

the wording in all affected paragraphs to refer to the

"right" to defer settlement by at least twelve months and

make explicit that only rights in place "at the end of the

reporting period" should affect the classification of a

liability;

◦Clarify that classification is unaffected by

expectations about whether an entity will exercise its

right to defer settlement of a liability; and make clear that

settlement refers to the transfer to the counterparty of

cash, equity instruments, other assets or services.

2.Amendments to IAS 1 Presentation of Financial

Statements and IFRS Practice Statement 2: Disclosure of

Accounting policies (effective 1 January 2023). The

amendments aim to improve accounting policy

disclosures and to help users of the financial statements

to distinguish between changes in accounting estimates

and changes in accounting policies. The IAS 1 amendment

requires companies to disclose their material accounting

policy information rather than their significant

accounting policies. Further, the amendment to IAS 1

clarifies that immaterial accounting policy information

need not be disclosed. To support this amendment, the

Board also amended IFRS Practice Statement 2, ‘Making

Materiality Judgements’, to provide guidance on how to

apply the concept of materiality to accounting policy

disclosures. The amendments are effective for annual

reporting periods beginning on or after 1 January 2023.

Earlier application is permitted (subject to any local

endorsement process).

3.Amendments to IAS 8 Accounting policies,

Changes in Accounting Estimates and Errors: Definition

of Accounting Estimates (effective 1 January 2023). The

amendment to IAS 8, ‘Accounting Policies, Changes in

Accounting Estimates and Errors’, clarifies how

companies should distinguish changes in accounting

policies from changes in accounting estimates. The

amendments are effective for annual reporting periods

beginning on or after 1 January 2023. Earlier application

is permitted (subject to any local endorsement process).

4.Amendments to IAS 12 Income Taxes: Deferred

Tax related to Assets and Liabilities arising from a Single

Transaction (effective 1 January 2023). The amendments

clarify how companies account for deferred tax on

transactions such as leases and decommissioning

obligations. The main change in the amendments is an

exemption from the initial recognition exemption of IAS

12.15(b) and IAS 12.24. Accordingly, the initial

recognition exemption does not apply to transactions in

which equal amounts of deductible and taxable

temporary differences arise on initial recognition. The

amendments are effective for annual reporting periods

beginning on or after 1 January 2023. Early adoption is

permitted.

5.Amendments to IFRS 17 Insurance contracts:

Initial Application of IFRS 17 and IFRS 9 – Comparative

Melexis Annual Report 2021

Information (issued on 9 December 2021, effective 1

January 2023). The amendment is a transition option

relating to comparative information about financial

assets presented on initial application of IFRS 17. The

amendment is aimed at helping entities to avoid

temporary accounting mismatches between financial

assets and insurance contract liabilities, and therefore

improve the usefulness of comparative information for

users of financial statements.

At any time, management aims at providing a fair

representation of the financial statements to its

stakeholders according to IFRS legislation. In case of

changes in IFRS legislation that materially impact, but are

not yet adopted by Melexis, management ensures timely

disclosure of the impact on Melexis’ financial statements.

There is no impact expected.

The Group elected not to adopt early the new Standards,

Interpretations and Amendments, which have been

issued but are not yet effective as per 31 December 2021.

6.9.4Overview of Group structure

Please refer to chapter 9.1 for the shareholder structure.

100

Melexis Annual Report 2021

8.9.5Notes

A.CASH AND CASH EQUIVALENTS

in EUR

31 December

2021

2020

Cash at bank and in hand

34,950,394

58,883,048

Total

34,950,394

58,883,048

B.CURRENT INVESTMENTS, DERIVATIVES

in EUR

31 December

2021

2020

Current investments, derivatives

10,356,160

244,971

The amount of current investments recognized by Melexis as per 31 December 2021 fully relates to derivative financial

assets which are all measured for at fair value. Changes in the fair value of these derivatives are recognized in profit or loss by

Melexis. More information on the actual gains and losses recognized in the profit and loss statement of Melexis can be found

in Note 8.9.5.W.

There were no outstanding derivatives as per 31 December 2021 for which Melexis has elected to apply hedge accounting by

designating the derivative as a hedging instrument in an eligible relationship.

No outstanding derivatives were classified as a liability under Derivative financial instruments.

A detailed overview of the outstanding derivatives, categorized under Current investments, is included in Note 8.9.5.C.

C.DERIVATIVES

Notional amounts

The following table presents the evolution of the aggregate notional amounts of the Group's outstanding derivative financial

instruments:

31 December

2021

2020

Outstanding FX hedge contracts on 31 December not exceeding 1 year

USD

50,000,000

55,000,000

Outstanding inflation hedge contracts, exceeding 1 year

EUR

30,000,000

—

FX hedge contracts are entered into in order to hedge (part of) the outstanding balance sheet exposure in foreign currency

(USD) while inflation hedge contracts are used to hedge Belgian salaries.

Melexis Annual Report 2021

101

Fair value

The fair value of derivatives is based upon mark to market valuations. All derivative financial instruments are measured at

fair value derived from level 2 input criteria. For FX swaps, this is calculated using the forward rate of the appropriate

currency pair on 31 December.

The following table presents an overview of the fair value of outstanding derivatives, classified as an asset under Current

investments, Derivatives:

in EUR

31 December

2021

2020

Assets

Fair value

Outstanding FX swaps - level 2

150,440

244,971

Outstanding inflation swaps - level 2

10,205,720

—

Total, classified under Current investments (see also Note 8.9.5.B)

10,356,160

244,971

D.TRADE RECEIVABLES

Trade receivables are measured at fair value and are subsequently measured at amortized cost, less allowance for credit

losses. Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their

fair value. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs.

in EUR

31 December

2021

2020

Trade accounts receivable

80,297,319

65,313,272

Allowance for doubtful accounts

(68,151)

(214,248)

Total

80,229,168

65,099,023

As of 31 December 2021, trade receivables of EUR 6,834,434 were past due.

The aging analysis of these receivables, including allowance for doubtful accounts, is as follows:

in EUR

31 December

2021

2020

Not due

73,394,734

61,313,256

<30 days

5,794,097

3,557,352

>30 <60 days

209,953

517,564

>60 days

830,384

(289,149)

Total

80,229,168

65,099,023

102

Melexis Annual Report 2021

In the following aging analysis, the distinction is made between the receivables for which an allowance for doubtful accounts

is made and the receivables for which no allowance for doubtful accounts is needed:

in EUR

31 December 2021

Allowance for

doubtful accounts

No allowance for

doubtful accounts

Total

receivables

Not due

—

73,394,734

<30 days

—

5,794,097

>30 <60 days

—

209,953

>60 days

68,151

762,234

830,384

Total

68,151

80,161,017

80,229,168

The credit control department reviews on a regular basis the outstanding balances of customers. When there is a significant

increase in the credit risk of a customer, an allowance for doubtful accounts is made. The analysis of the increased credit risk

is performed according to the credit loss model of IFRS 9. The output of the analysis did not result in material amounts to be

accounted for. More information on the credit loss analysis can be found in note 8.9.5 AM.

Melexis uses an early warning system to detect potential bad debtors. In this system, the most recent available financial

information of the customer (with focus on credit ratios) is combined with an analysis of their (future) order and payment

behavior. The analysis is done on a weekly basis and thoroughly investigated by the credit control team. No additional

impairment or credit losses needed to be taken in 2021.

E.INVENTORIES

Inventory is written off when no sales are expected or when the goods contain defects. In 2021, EUR 5,669,071 of additional

inventory was written off. EUR 6,322,862 of the inventory written off during the previous year was reversed because it had

been scrapped or sold. Work in progress consists of material that is being worked on in probing, assembly and final test.

in EUR

31 December

2021

2020

Raw materials and supplies, at cost

14,954,778

15,831,288

Work in progress, at cost

117,783,017

102,144,375

Finished goods, at cost

17,609,166

11,992,051

Reserve for obsolete stock

(5,856,680)

(6,510,471)

Net

144,490,280

123,457,242

F.OTHER CURRENT ASSETS

in EUR

31 December

2021

2020

Other receivables

7,713,241

7,432,262

Prepaid expenses

2,966,771

3,204,395

Total

10,680,012

10,636,656

The other receivables mainly relate to VAT.

Melexis Annual Report 2021

103

Prepaid expenses are expenses paid in advance for the whole year, for example insurance fees, license fees, etc. These

increase at the beginning of the year and decrease towards the end.

G.INTANGIBLE ASSETS

in EUR

31 December

Licenses

Total

Acquisition value

Balance end of previous period

21,869,776

1,264,810

23,134,586

Additions of the period

1,498,803

—

1,498,803

Retirements (-)

(61,351)

—

(61,351)

CTA

118,576

—

118,576

Total

23,425,804

1,264,810

24,690,614

Depreciation

Balance end of previous period

17,219,735

1,264,810

18,484,545

Additions of the period

1,823,955

—

1,823,955

Retirements (-)

(61,351)

—

(61,351)

Transfers

—

CTA

108,855

—

108,855

Total

19,091,193

1,264,810

20,356,003

NET BOOK VALUE

4,334,611

—

4,334,611

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 amortization expenses are included in the statement of comprehensive income mainly as cost of sales (note

8.9.5.Q) and research and development expenses (note 8.9.5.R).

104

Melexis Annual Report 2021

H.LEASED ASSETS AND LIABILITIES

This note provides information for leased assets where Melexis is a lessee. The balance sheet shows the following amounts

related to leased assets:

in EUR

31 December

Land and building

Furniture and

vehicles

Total

Leased assets

Beginning of the period

5,966,029

362,327

6,328,356

Additions of the year

3,345,370

343,516

3,688,886

Retirements*

(2,068,026)

(74,759)

(2,142,785)

Transfers

9,606

(1,328)

8,278

CTA

162,455

—

162,455

End of the period

7,415,435

629,756

8,045,191

Accumulated depreciation

Beginning of the period

3,444,468

152,749

3,597,217

Additions of the period

1,601,697

111,806

1,713,503

Retirements

(1,977,034)

(7,388)

(1,984,422)

Transfers

1,442

—

1,442

CTA

125,008

—

125,008

End of the period

3,195,581

257,167

3,452,748

NET BOOK VALUE

4,219,854

372,589

4,592,443

Additions and retirements mainly relate to building rental contract modifications.

The balance sheet shows the following amounts related to lease liabilities:

in EUR

31 December

Current liabilities

Non-current

liabilities

Total

Beginning of the period

1,632,661

2,122,166

3,754,827

End of the period

1,718,141

2,908,663

4,626,804

The table below shows the duration of the outstanding lease contracts:

in EUR

31 December

Land and building

Furniture and

vehicles

Total

< 1 year

1,585,308

132,833

1,718,141

> 1 year < 3 years

2,684,874

223,789

2,908,663

TOTAL

4,270,182

356,622

4,626,804

Melexis Annual Report 2021

105

The statement of profit and loss shows the following amounts relating to leases:

in EUR

Depreciation charges leased buildings

1,680,133

Depreciation charges leased vehicles

114,859

Interest expense (included in finance cost)

47,113

Expenses related to short-term leases or low-value assets (included in admin expenses)

667,331

I.PROPERTY, PLANT AND EQUIPMENT

in EUR

31 December

Land and

building

Machinery and

equipment

Furniture and

vehicles

Fixed assets

under

construction

Total

Cost

Beginning of the period

57,413,663

327,215,368

21,530,377

21,000,870

427,160,278

Additions of the period

624,694

1,733,725

1,911,363

26,029,730

30,299,511

Retirements (-)

(8,220)

(9,630,537)

(1,377,980)

(580,687)

(11,597,424)

Transfers

13,883,987

19,729,800

1,742,301

(35,356,087)

—

CTA

383,183

2,057,341

148,143

6,999

2,595,666

End of the period

72,297,306

341,105,696

23,954,203

11,100,825

448,458,030

Accumulated depreciation

Beginning of the period

22,183,832

259,010,579

16,016,760

—

297,211,171

Additions of the period

2,670,556

22,453,283

2,598,987

—

27,722,826

Retirements (-)

(8,220)

(9,198,086)

(1,292,521)

—

(10,498,827)

CTA

164,950

1,719,100

118,717

—

2,002,767

End of the period

25,011,118

273,984,876

17,441,943

—

316,437,937

NET BOOK VALUE

47,286,188

67,120,820

6,512,260

11,100,825

132,020,093

Additions of the year mainly relate to test equipment and infrastructure under construction.

Retirements: no material amount of compensation from third parties has been included in the consolidated statement of

comprehensive income.

Fixed assets under construction: this mainly relates to the construction in progress of test equipment and infrastructure.

Retirements are mainly linked to items with zero net book value which are not in use anymore by the company.

There are currently no restrictions in title for any of our PPE assets nor are they pledged as security for liabilities. The

purchase commitments related to PPE assets are disclosed in note 8.9.5.AC.

106

Melexis Annual Report 2021

J.ACCRUED EXPENSES, ACCRUED CHARGES, PAYROLL AND RELATED TAXES

in EUR

31 December

2021

2020

Holiday pay and year-end bonus

14,896,706

8,403,533

Other social accruals

950,028

711,305

Remuneration

830,439

1,462,568

Social security

297,206

377,234

Direct and indirect taxes

836,525

926,989

Total

17,810,905

11,881,630

The increase in bonus accrual is directly linked to an increase in the operational result of Melexis: 50% of the bonus accrual is

based on the global business performance measured through the achievement of the target revenue growth and target EBIT

growth of Melexis over the performance year.

K.DEFERRED INCOME

in EUR

31 December

2021

2020

Capital grants

278,474

340,518

Deferred income

2,158,985

2,458,838

Total

2,437,459

2,799,357

The capital grant is attributed to the consolidated statement of comprehensive income pro rata the depreciation of the new

machinery and equipment related to the investment grant.

The deferred income relates to shipments that were not delivered at the customer before year end. As this performance

obligation was not met, revenue was not recognized at year end but will be recognized when the shipment will be delivered to

the customer. The performance obligation was met shortly after year end and revenue was recognized in January of the next

year. A contract liability is recognized in case a payment for a customer is due before a related performance obligation is

satisfied.

L.ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES

Trade payables are non-interest bearing and are normally settled on 30-day terms.

Other current liabilities comprise the following:

Melexis Annual Report 2021

107

in EUR

31 December

2021

2020

Accrued real estate withholding tax

362,000

125,000

Accrued financial services

346,076

537,809

Accrued design services

1,368,772

857,174

Accrued management services

193,913

327,865

Accrued HR services

659,967

167,437

Accrued insurances

439,633

147,122

Accrued IT services

20,041

—

Accrued licenses and royalties

6,000

264,000

Accrued other employee costs

199,000

99,699

Accrued utilities

—

86,457

Other

406,656

820,567

Total

4,002,058

3,433,130

M.LONG AND SHORT-TERM DEBT

in EUR (unless stated otherwise)

31 December

2021

2020

Unsecured loans

Unsecured loan at floating interest rate; maturing in 2028

—

37,000,000

Unsecured loan at floating interest rate; maturing in 2028

—

15,000,000

Unsecured loan at floating interest rate; maturing in 2028

—

10,000,000

Total debt

—

62,000,000

All long and short-term debt was paid back in 2021.

As of 31 December 2021 and for Melexis consolidated, there are the following financial covenants:

•Net debt/EBITDA ratio ≤ 3.5

•Tangible net worth/total assets ≥ 30%

As per 31 December 2021, Melexis is respecting all its financial covenants and expects that this will remain the case in the

future. There are no major differences between the fair value and carrying amount of the debt, since the interest payable on

those borrowings is close to current market rates. They are classified as level 3 fair values in the fair value hierarchy due to

the use of unobservable inputs.

108

Melexis Annual Report 2021

N.SHAREHOLDERS' EQUITY AND RIGHTS

ATTACHED TO THE SHARES

Shareholder's capital

As of 31 December 2021, the common stock consisted of

40,400,000 issued and outstanding ordinary shares

without face value, unchanged from last year.

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 the Belgian Code of Companies and

Associations, 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 the Belgian Code of Companies and Associations,

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 that certain conditions set

forth in the Belgian Code of Companies and Associations

are met.

In the event of a liquidation of the company, the proceeds

from the sale of assets remaining after payment of all

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.

On 5 March 2021, Xtrion NV, Melexis NV and Melexis

Technologies NV sold Melexis shares in a private

placement. Xtrion NV sold a total of 1,444,398 existing

shares, reducing its participation in Melexis from 53.6%

to 50.0% + 1 share. Melexis and Melexis Technologies

sold all treasury shares, a total of 346,141. The total

impact on equity is an increase of EUR 30,633,479.

Reserves

Reserve treasury shares: for own shares repurchased by

the company or entities belonging to the 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 IFRS 9, are recognized in a

hedging reserve. For more details about the fair value of

the hedging instruments through equity, please refer to

note 8.9.5.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 8.9.5.C.

Legal reserve: the part of the retained earnings that

cannot 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.

Melexis Annual Report 2021

109

O.PRODUCT SALES

The product sales are as follows:

in EUR

31 December

2021

2020

Product sales

643,786,021

507,517,322

Total

643,786,021

507,517,322

For the revenue from product sales, please refer to the operating segments section in note 8.9.5.Y.

P.GOVERNMENT GRANTS

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.

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.

in EUR

31 December

2021

2020

Grants for research and development

779,558

917,259

Investment grants in building, machinery and employment grants

158,610

122,703

Total

938,168

1,039,962

Grants for research and development are recognized as a reduction of other expenses included in total research and

development expenses, see note 8.9.5.R.

Investment grants in building, machinery and employment grants are recognized as a reduction of purchases included in total

cost of sales, see note 8.9.5.Q.

Q.COST OF SALES

Cost of sales includes the following expenses:

in EUR

31 December

2021

2020

Purchases

278,690,472

228,561,253

Transportation costs

5,797,806

4,036,925

Salaries

36,377,591

31,629,106

Depreciation and amortization (*)

31,657,625

32,126,516

Maintenance

8,297,365

5,680,277

Utilities

5,303,087

3,499,891

Other direct production costs

4,061,549

3,995,300

Total

370,185,495

309,529,267

110

Melexis Annual Report 2021

(*) Includes accruals for write-offs on inventory for the amount of EUR 5,669,071 and reversal of accruals for write-offs in

previous year for EUR 6,322,862. This accrual reversal refers to inventory written off in previous years that we scrapped

or sold in 2021. Consequently, the net impact on the consolidated income statement of 2021 is EUR 653,791.

Cost of sales increased in 2021 due to an increase in sales. The higher cost of sales can mainly be attributed to higher

purchases.

R.RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses include the following expenses:

in EUR

31 December

2021

2020

Salaries

48,758,047

48,776,724

Depreciation and amortization

8,025,468

8,547,337

External services

9,410,664

7,801,108

Fees

5,224,622

5,822,438

Prototype wafers

1,071,796

1,476,306

Rent and maintenance

576,549

829,281

Subsidies

(779,558)

(917,259)

Travel

344,958

476,311

Engineering purchases

5,755,412

4,878,445

Total

78,387,958

77,690,691

Melexis Annual Report 2021

111

S.GENERAL AND ADMINISTRATIVE EXPENSES

General and administration expenses include the following expenses:

in EUR

31 December

2021

2020

Salaries

10,337,980

9,540,822

Depreciation and amortization

4,541,871

5,156,327

External services

4,688,071

5,237,699

Fees

2,826,743

2,457,737

Maintenance

2,594,503

2,362,418

Insurances

1,689,651

1,367,839

Utilities

2,657,408

2,182,915

Travel

175,366

182,356

Other

2,541,254

2,441,488

Total

32,052,847

30,929,601

T.SELLING EXPENSES

Selling expenses include the following expenses:

in EUR

31 December

2021

2020

Salaries

10,204,912

9,530,164

Depreciation and amortization

566,827

541,397

Commissions

1,378,082

1,211,464

External services

1,333,611

1,364,391

Travel

308,362

361,072

Other

919,517

825,749

Total

14,711,311

13,834,237

112

Melexis Annual Report 2021

U.PERSONNEL EXPENSES AND AVERAGE NUMBER OF EMPLOYEES

in EUR

31 December

2021

2020

Wages and salaries

105,678,530

99,476,816

Total

105,678,530

99,476,816

The average number of employees (FTE) was 1,482 in 2021 and 1,449 in 2020. For more details on the compensation of key

management, see chapter 7.

V.DEPRECIATION AND AMORTIZATION EXPENSES

Depreciation and amortization include the following expenses:

in EUR

31 December

2021

2020

Cost of sales

31,657,625

32,126,516

Research and development

8,025,468

8,547,337

General and administration

4,541,871

5,156,327

Selling

566,827

541,397

Total

44,791,791

46,371,577

W.NET FINANCIAL RESULT

in EUR

31 December

2021

2020

Financial income

13,199,634

6,225,939

Interest income

5,331

56,297

Exchange differences

2,898,036

6,169,469

Result on financial instruments excluding fair value adjustments

90,445

—

Fair value adjustment inflation swaps

10,205,720

—

Other

102

173

Financial charges

(7,347,737)

(5,846,771)

Interest charges

(530,277)

(850,386)

Bank charges

(297,676)

(133,055)

Exchange differences

(6,425,253)

(4,863,329)

Fair value adjustment FX swaps

(94,531)

—

Net financial results

5,851,897

379,168

X.INCOME TAXES

The income tax expenses can be broken down as follows:

Melexis Annual Report 2021

113

in EUR

31 December

2021

2020

Current tax expenses

20,135,622

7,584,558

Deferred tax expenses

3,056,469

(971,176)

Total

23,192,091

6,613,382

Accrued income taxes and prepayments increased

compared to last year due to an increase in taxable result.

Intra-group transactions resulted in intangible assets in

the Melexis Technologies SA and Melexis Bulgaria EOOD

statutory (standalone) financial statements. These assets,

although eliminated in consolidated figures, result in tax

deductible amortization charges in the hands of these

companies. Deferred tax effects linked to these

transactions could amount to approximately EUR 3.9

million at year end 2021.

As from financial year 2016, the Board of Directors

deemed it expedient to start capitalizing research and

development efforts in Melexis Technologies NV’s

standalone/tax financial statements. Such approach is

found to be a best practice approach from a Belgian

accounting and tax perspective. Deferred tax effects

linked thereto amount to approximately EUR 23.2 million

at year end 2021.

Added to deferred tax effects linked to available tax

offsets carried forward in the hands of Melexis NV and

Melexis Technologies 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 amounts to EUR

26.1 million at year end 2021.

As in previous years, the company assessed to what

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 took 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 its customers. Deferred tax amounts

recognized in financial statements per 31 December

2021 are based on management’s best estimate covering

expected business performance in the foreseeable future.

Taking into account these considerations, the Board of

Directors decided to recognize as per 31 December 2021

a cumulative deferred tax asset of EUR 25,230,552.

Accordingly, the unrecognized deferred tax asset

amounts to approximately EUR 0.9 million at year end

2021.

Furthermore, a deferred tax liability of EUR 3,824 was

recognized at year end 2021 related to temporary

differences in FX recognition.

Consolidated figures show a current tax receivable

amounting to EUR 5,976,258 and a current tax liability

amounting to EUR 789,822. The most important

components of the current tax receivable are the

overpayment of Swiss taxes for financial year 2019

amounting to EUR 1.0 million, the overpayment of

German taxes for financial year 2020 amounting to EUR

1.0 million and the overpayment of Belgian taxes for

financial years 2020 and 2021 amounting to EUR 2.8

million.

114

Melexis Annual Report 2021

Components of deferred tax assets are as follows:

in EUR

1 Jan 2021

Charged to

income

statement

Charged to

equity

31 Dec 2021

Tax amortization charges

26,467,000

(279,000)

—

26,188,000

Fair value adjustments to financial instruments

(61,243)

(2,527,797)

—

(2,589,040)

Tax losses carried forward

1,656,000

(721,000)

—

935,000

Miscellaneous

428,574

268,018

—

696,592

Total

28,490,331

(3,259,779)

—

25,230,552

Financial instruments refer to our FX and inflation derivatives used for hedging purposes. For more information on these

derivatives please refer to note 8.9.5.C.

Deferred tax assets expected to be recovered within 12 months amount to EUR 14.6 million. Deferred tax assets expected

to be recovered after more than 12 months amount to EUR 10.6 million.

Components of deferred tax liabilities are as follows:

in EUR

1 Jan 2021

Charged to income

statement

31 Dec 2021

Miscellaneous

(207,134)

203,310

(3,824)

Total

(207,134)

203,310

(3,824)

Melexis Annual Report 2021

115

Reconciliation of the expected tax expenses and the consolidated income taxes is as follows:

in EUR

31 December

2021

2020

Income before taxes

154,300,306

75,912,694

Expected taxes at domestic rate

38,575,077

18,978,173

Effective taxes

23,192,091

6,613,382

Difference to be explained

(15,382,986)

(12,364,791)

Explanation of the difference

Difference in foreign tax percentages and other tax regimes

(2,875,692)

(579,406)

Tax effect of non-deductible items

385,625

347,371

Tax effect of non-taxable income

(61,791)

(165,175)

Tax effect of patent/innovation income deduction

(8,393,736)

(7,704,829)

Tax effect of investment deduction

(3,843,307)

(3,235,331)

Tax losses carried forward

(479,572)

(992,818)

Current tax adjustments relating to prior years

146,210

(208,239)

Miscellaneous

442,663

297,533

Unrecognized deferred tax assets for the current period

—

360,553

Change of recognition of deferred tax assets (decrease + / increase - )

(703,385)

(484,450)

Total

(15,382,986)

(12,364,791)

Difference

Y.OPERATING SEGMENTS

Business segments

Melexis' products and production processes that are

regularly evaluated have only one operating segment.

Information about transactions with major

customers

The following table summarizes sales per customer for

the 10 most important customers. It consists of the sales

to end customers and not to subcontractors or

distributors. All of these customers were included in the

analysis of credit risk performed according to the credit

loss model of IFRS 9. The output of this analysis did not

result in material amounts to be accounted for. Please

refer to note 8.9.5.AM for more information.

in %

31 December

2021

2020

Customer A

Customer B

Customer C

Customer D

Customer E

Customer F

Customer G

Customer H

Customer I

Customer J

Total

116

Melexis Annual Report 2021

Information about geographical areas

The Melexis Group's activities are conducted predominantly in EMEA (Europe, Middle-East and Africa), APAC (Asia Pacific)

and NALA (North and Latin America). The origin of all revenue is in Belgium, as the invoicing entity is located in Belgium.

The following table summarizes sales by destination, determined by the customer's billing address:

in EUR

31 December

2021

2020

Europe, Middle East and Africa

218,612,188

175,193,303

Germany

87,366,434

74,687,422

France

16,707,034

11,789,880

United Kingdom

8,171,188

7,707,698

Poland

13,247,390

12,306,519

Switzerland

19,723,510

16,366,765

Ireland

643,296

780,334

Czech Republic

5,806,874

4,902,922

Austria

11,470,309

11,364,502

Netherlands

270,120

773,287

Romania

16,868,186

11,736,171

Bulgaria

4,475,567

3,507,386

Spain

2,082,092

1,843,096

Hungary

5,288,011

3,883,092

Italy

9,103,728

5,048,951

Other

17,388,450

8,495,278

North and Latin America

68,834,039

55,064,260

United States

43,547,279

35,050,745

Canada

5,639,494

4,466,624

Mexico

19,608,794

15,502,540

Brazil

38,473

44,351

Asia Pacific

356,339,794

277,259,760

Japan

45,630,857

40,964,411

China (excluding Hong Kong)

79,064,308

63,762,467

Hong Kong

61,043,570

46,028,880

Thailand

55,662,545

38,246,179

South Korea

36,020,347

30,052,072

Philippines

23,628,359

21,264,842

Taiwan

26,743,507

19,748,914

India

6,686,814

4,644,659

Singapore

20,653,562

10,982,045

Other

1,205,924

1,565,291

Total

643,786,021

507,517,323

Melexis Annual Report 2021

117

Z.RELATED PARTIES

1.Shareholder structure and identification of major related parties

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 EOOD

Bulgarian entity

Melexis Ukraine

Ukrainian entity

Melexis Technologies SA

Swiss entity

Melexis NV/BO France

French branch

Sentron AG

Swiss entity

Melefin NV

Belgian entity

Melexis Technologies NV

Belgian entity

Melexis NV/BO Philippines

Philippine branch

K.K. Melexis Japan Technical Research Center

Japanese entity

Melexis Electronic Technology (Shanghai) Co., Ltd

Chinese entity

Melexis (Malaysia) Sdn. Bhd.

Malaysian entity

Melexis Technologies NV/BO Malaysia

Malaysian branch

Melexis Dresden GmbH

German entity

Melexis France SAS

French entity

Melexis Korea Yuhan Hoesa

South Korean entity

•Xtrion NV owns 50% + 1 share of the outstanding

Melexis shares. The shares of Xtrion NV are controlled

directly and/or indirectly by Mr. Roland Duchâtelet,

Mr. Rudi De Winter and Ms. Françoise Chombar. Mr.

Duchâtelet and Ms. Chombar are directors at Melexis

NV.

•Elex NV is 99.9% owned by Mr. Roland Duchâtelet.

One share is held by Mr. Roderick Duchâtelet.

•Xtrion NV owns 48.4% of the outstanding shares of X-

FAB Silicon Foundries SE, producer of wafers, which

are the main raw materials for the Melexis products. X-

FAB Silicon Foundries SE sells the majority of its

products also to third parties. X-FAB Silicon Foundries

SE is listed on Euronext Paris since 2017.

•Melexis, as in prior years, purchases part of its test

equipment from the Xpeqt Group. Xpeqt Group

develops, produces and sells test systems for the

semiconductor industry. Xpeqt Group is owned by

Xtrion NV for 99.99%. One share is held by Ms.

Françoise Chombar and one share is held by Mr. Roland

Duchâtelet.

•Xtrion NV owns 86% of the outstanding shares of X-

CelePrint Ltd.

•Xtrion NV owns 70.6% of the outstanding shares of X

Display Company Technology Ltd.

•Xtrion NV owns 24% of the outstanding shares of

Anvo- Systems Dresden GmbH.

•Elex NV owns 99.9% of the outstanding shares of

Fremach International NV.

Please refer to chapter 7 for the potential conflicts of

interest and the remuneration of key management.

118

Melexis Annual Report 2021

2.Outstanding balances at year end

As of 31 December 2021 and 2020, the following balances were outstanding:

Receivables

in EUR

31 December

2021

2020

From

Elex NV

2,033

Xtrion NV

4,840

—

Fremach Group

—

2,643

X-FAB Group

5,164,721

356,313

Xpeqt Group

8,007

11,426

Total

5,179,602

372,415

Payables

in EUR

31 December

2021

2020

Elex NV

137,033

92,107

Xtrion NV

112,430

28,658

X-FAB Group

18,564,840

14,848,994

Xpeqt Group

972,585

789,778

Anvo-Systems Dresden GmbH

(1,340)

(531)

Total

19,785,548

15,759,006

Long-term receivables, part of other non-current assets

in EUR

31 December

2021

2020

From

X-FAB Group

—

4,199,930

Total

—

4,199,930

The long-term receivable from the X-FAB group was related to a pre-financing agreement for specialized equipment

purchased and owned by X-FAB.

Melexis Annual Report 2021

119

3.Transactions during the year

Sales/purchases of goods and equipment

In the course of the year, following transactions have taken place:

in EUR

31 December

2021

2020

Sales to

Fremach Group (mainly integrated circuits or ICs)

24,375

40,255

Xpeqt Group

1,040

1,967

X-FAB Group (mainly test and assembly services)

10,531

—

31 December

2021

2020

Purchases from

X-FAB Group (mainly wafers)

211,306,745

163,281,329

Xpeqt Group (mainly equipment and goods)

5,164,048

2,736,553

Xtrion NV (mainly IT infrastructure)

828,240

507,829

Sales/purchases of services

31 December

2021

2020

Sales to

Elex NV (infrastructure office building)

20,160

Xpeqt Group (infrastructure office building)

99,299

92,913

Xtrion NV (infrastructure office building)

91,445

48,000

X-FAB Group

526,708

613,195

Anvo-Systems Dresden GmbH

95,951

59,335

31 December

2021

2020

Purchases from

Xtrion NV (mainly IT, R&D services and related support)

2,790,114

2,178,893

Elex NV (support services)

1,130,711

85,123

Xpeqt Group

2,651,307

3,323,743

X-FAB Group

6,172,673

2,975,761

X-CelePrint Ltd

12,000

81,625

The Board of Directors and the Audit Committee have reviewed and analyzed the major transactions and concluded that

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.

120

Melexis Annual Report 2021

AA.REMUNERATION OF BOARD OF DIRECTORS

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 51,611 remuneration in 2021. The other

directors are not remunerated.

AB.EARNINGS PER SHARE

Net earnings per share are calculated by dividing the net

result for the period attributable to ordinary

shareholders of EUR 131,108,216 in 2021 and EUR

69,299,312 in 2020 by the weighted average number of

ordinary shares outstanding during the period

(40,400,000 in 2021 and 40,400,000 in 2020).

The average number of ordinary shares outstanding

diluted and non-diluted are the same.

No material share transactions or potential share

transactions occurred after the balance sheet date.

On 28 January 2022, the Board of Directors decided to

propose to the annual shareholders’ meeting to pay out

over the result of 2021 a total dividend of 2.60 EUR gross

per share. This amount contains an interim dividend of

EUR 1.30 per share, which was paid in October 2021 as

interim dividend, and a final dividend of EUR 1.30 per

share which will be payable after approval by the annual

shareholders’ meeting.

AC.COMMITMENTS & ESTIMATED LIABILITIES

Purchase commitments

As of 31 December 2021, the company had purchase

commitments for tangible fixed assets amounting to EUR

8,634,268 mainly related to the Sofia building expansion

and test equipment for the production sites.

AD.BUSINESS COMBINATIONS

No business combinations in 2021.

AE.LITIGATION

The company is currently not involved in any litigations.

AF.AUDITOR’S SERVICES

On a consolidated basis, the audit fees required by law

amounted to EUR 209,384.

AG.RESERVES POST-RETIREMENT BENEFITS

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 1,100,928 in 2021 compared to EUR

1,193,979 in 2020.

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, equal to 3.75% on employee contributions and

3.25% on employer contributions for contributions until

2015 and 1.75% on all contributions as from 2016. Since

the minimum guaranteed reserves were entirely covered

by plan assets by the insurance company, no amounts

were recognized in the statement of financial position on

31 December 2021 and 2020.

AH.SUBSEQUENT EVENTS

It goes without saying that our most important concern

today is our people in Kyiv. We are in close contact with

local colleagues throughout these challenging times and

we are committed to help them.

A dedicated taskforce set up at the end of December is

monitoring the situation and supporting our colleagues.

Contingency plans have been put in place.

In Kyiv we have a team of around 60 people who are

working on R&D activities. There is no immediate impact

on our manufacturing operations and current product

delivery engagements. As such, these events qualify as a

non-adjusting event, with no impact on the 2021 figures.

For subsequent events related to COVID-19, please refer

to note 8.9.5.AM.

No other subsequent events have taken place.

Melexis Annual Report 2021

121

AI.LIST OF SUBSIDIARIES CONSOLIDATED

Subsidiary

Place of

incorporation

Principal activities

Ownership

interest

Melexis Inc.

USA

R&D, Sales & Applications

100%

Melexis GmbH

Germany

R&D, Manufacturing, Sales

& Applications

100%

Melexis Ukraine

Ukraine

R&D

100%

Melexis Bulgaria EOOD

Bulgaria

R&D, Manufacturing

100%

Sentron AG

Switzerland

R&D

100%

Melefin NV

Belgium

Treasury

100%

Melexis Technologies NV

Belgium

R&D, Sales & Applications

100%

Melexis Technologies SA

Switzerland

R&D, Sales & Applications

100%

K.K. Melexis Japan Technical Research Center

Japan

Sales & Applications

100%

Melexis Electronic Technology (Shanghai) Co., Ltd

China (Shanghai)

Sales & Applications

100%

Melexis (Malaysia) Sdn. Bhd.

Malaysia

Manufacturing

99.9%

Melexis Dresden GmbH

Germany

R&D

100%

Melexis France SAS

France

Manufacturing

100%

Melexis Korea Yuhan Hoesa

South Korea

Sales & Applications

100%

AJ.RISK FACTORS

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.

a.Risks related to the company

Operating history; inability to forecast revenues

accurately

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.

122

Melexis Annual Report 2021

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. Furthermore, 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.

Manufacturing

The Group has multiple manufacturing sites around the

world. These sites are exposed to risks related to

interruptions of our manufacturing processes, such as

political upheavals, natural disasters, occupational

accidents and pandemics. These could impede the

Group's ability to manufacture at these sites on the

planned scale or to export products manufactured at

those sites, which in turn can impact our financial

condition and results of operations. Contingency plans

are in place in order to be able to respond adequately to

crisis situations.

Dependence on data and IT systems

The Group heavily depends on the reliability and security

of its IT systems: networks, infrastructure, operating

systems and databases. These systems are subject to

attempted security breaches and other cybersecurity

threats, a risk that is becoming more important with the

rise in the level of threats to data security. If successful,

this could adversely impact our business and result in an

immediate loss of revenue for the Group. To mitigate

these risks, an array of precautionary measures were put

in place.

Currency fluctuations

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 note 8.9.5.AK

for more information about the impact of foreign

currencies.

Credit risk on short-term investments

The company is subject to risks of financial losses on

investments in marketable securities and short-term

deposits.

Managing growth

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.

Risk of potential future acquisitions

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 operations 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

Melexis Annual Report 2021

123

company's business, result of operations and financial

condition, and the market price of the shares will not be

materially adversely affected.

Dependence on key personnel; ability to recruit

and retain qualified personnel

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.

Products may contain defects

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.

Evolving distribution channels

The majority of sales to the large automotive accounts

are generated by direct sales people. However, over time,

increasingly more sales of ASSPs have been generated via

the representative and distribution network of Melexis.

As the majority of the Melexis ASSPs 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.

Protection and enforcement of intellectual

property rights

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 for applications or that, if patents are

issued, they will not be challenged, invalidated or

circumvented, or that rights granted thereunder will

provide meaningful protection or other commercial

advantage to the company. Likewise, there can be no

assurance that the company will be able to preserve any

of its other intellectual property rights in the future.

Claims

Melexis receives, on a regular basis, claims from

customers, and might receive claims from competitors as

well. These claims are being recognized as a liability in the

Consolidated Statement of Financial Position. The

company uses all possible resources to limit the risk for

the company. More information on the pending claims

can be found in note 8.9.5.AE Litigation.

The importance of significant customers

Melexis' biggest customer accounts for 14% of total sales.

No other customers have sales over 10% of total sales.

For the year ended 31 December 2021, the 10 most

important customers accounted for 45% of total sales

(see note 8.9.5.Y).

Significant supplier

Melexis sources the majority of its wafers from X-FAB, a

related party that is controlled by Melexis' largest

shareholder, Xtrion NV (see also Related Parties in Note

124

Melexis Annual Report 2021

8.9.5.Z). Conditions of the commercial relations between

X-FAB and Melexis are in line with those that would have

been agreed upon between independent parties in

comparable circumstances. The arm's length character of

these conditions are analyzed, determined, and tested in

accordance with the principles and best practices in this

respect as detailed in the OECD's 2017 Transfer Pricing

Guidelines for Multinational Enterprises and Tax

Administrations. Notwithstanding due care taken in the

Group's transfer pricing analysis, there can be no

assurance that the tax authorities or courts will not take a

position contrary to the Group's position.

To reduce the risk of dependency on one supplier,

Melexis also sources from two other Asian wafer fabs. For

packaging services, Melexis sources from several Asian

vendors.

Significant shareholders

The main shareholder holds 50% + 1 share 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 chapter 8.9.

b.Risks related to the business

The semiconductor market

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 industry

As a semiconductor company with most of its revenue

coming from the automotive industry, Melexis sales are

impacted by, among others, the amount of vehicles

produced and sold worldwide.

The demand for vehicles is influenced by the economic

and geopolitical situation in different regions. Macro-

economic risks and trade tensions can lead to reduced

purchasing power, causing the demand for vehicles to

drop.

Other factors that can lead to a reduced demand for

vehicles include a shift in consumer purchase behavior,

uncertainty amongst consumers on what type of car to

buy and new forms of mobility such as car sharing and

robotaxis.

Intense competition

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 V). 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, Microchip

Technology, AMS, Elmos, Infineon Technologies, TDK

(Micronas), NXP, ST Microelectronics, On Semiconductor

and Texas Instruments.

Melexis Annual Report 2021

125

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 with the car manufacturers.

The company's current and potential competitors could

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. Furthermore, 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.

Rapid technological change

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.

Purchasing

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 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.

126

Melexis Annual Report 2021

Melexis sources the majority of its wafers from a related

party (see also Related Parties in Note 8.9.5.Z), but

sources from two Asian wafer fabs as well, to reduce the

risk of dependency on one supplier. For the packaging

services, Melexis sources from several Asian vendors.

Geopolitical environment

Uncertain political landscapes and tensions in global

trade could have a significant impact on Melexis’ business

by causing a reduced free trade of goods and services and,

as a consequence, disruptions in the supply chain.

Examples of such situations include increased

protectionism, technology wars and rising populism.

c.Risks related to the trading on

Euronext

Possible volatility of share price

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. Furthermore, 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 Annual Report 2021

127

AK.SENSITIVITY ANALYSIS ON FINANCIAL RISK

Melexis is mainly sensitive to foreign currency rate and interest rate risks.

Foreign currency risk

The Group has transactional currency exposures. Such exposure arises from sales or purchases by an operating unit in

currencies other than the unit's functional currency, especially in USD. In 2021, approximately 42% of the Group's sales are

denominated in USD and approximately 46% of the Group's costs are denominated in USD.

The following table demonstrates the sensitivity to a reasonably possible change in the EUR/USD exchange rate of the

Group's result before tax, with all other variables held constant.

FY 2021

Increase/decrease in

EUR/USD rate

Effect on profit or loss

before taxes (in EUR)

Reference rate: 1.18 (average FY 2021)

+0.05

(1.23)

(1,736,826)

-0.05

(1.13)

1,890,342

On 31 December 2021, the following financial assets and liabilities were present, shown in USD and CHF:

31 Dec 2021 (in USD)

31 Dec 2021 (in CHF)

Financial assets

50,429,155

200,999

Cash and cash equivalents

17,282,282

195,077

Trade and other receivables

33,146,873

5,922

Financial liabilities

21,955,532

743,036

Trade and other payables

21,955,532

743,036

Loans and borrowings

An increase/decrease of the EUR/USD rate of +/- 500 base points (reference rate = 1.13) would have an impact on the

balance sheet value of -1,062,914 EUR/ +1,161,096 EUR on 31 December 2021.

An increase/decrease of the EUR/CHF rate of +/- 500 base points (reference rate = 1.03) would have an impact on the

balance sheet value of +24,221 EUR/ -26,684 EUR on 31 December 2021.

The portion of other non-functional currencies (other than USD and CHF) is not material.

Interest rate risk

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.

On 31 December 2021, the Group had no long-term debt obligations.

128

Melexis Annual Report 2021

AL.FINANCIAL INSTRUMENTS

Financial risk management

Melexis operates internationally, which could give an

exposure to market risks from changes in interest and

foreign exchange rates. Melexis can use derivative

financial instruments to manage the foreign exchange

risks, interest risks and inflation risk.

Risk management policies have been defined on Group

level, and are carried out by the local companies of the

Group. COVID-19 had no impact on the existing risk

management procedures.

(1)Credit risks

Credit 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 Group has no significant concentration of

credit risk with any single counterparty or group of

counterparties having similar characteristics. For more

information on the impact of COVID-19 on credit risk,

please refer to note 8.9.5.AM.

(2)Interest rate risk

On 31 December 2021, the Group does not use

derivatives to manage interest rate risks of the

outstanding bank debt.

(3) Liquidity risk

Liquidity risk arises from the possibility that the Group is

unable to meet its financial obligations upon maturity,

due to the inability to convert assets into cash without

incurring a loss. To prevent this, the Group keeps a

significant cash reserve in combination with multiple

unused committed credit lines.

(4)Foreign exchange risk

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 risk. The

table with outstanding derivatives per 31 December is

taken up in note 8.9.5.C.

(5)Inflation risk

The inflation risk of the Group arises from the possibility

that the salaries will increase due to inflation. The Group

uses inflation hedge contracts to hedge Belgian salary

payments. For more information please refer to note

8.9.5.C.

Fair value of financial instruments

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 31 December

2021 was minimal since their deviation from their

respective fair values was not significant.

AM.COVID-19

Melexis has been closely monitoring and responding to

the COVID-19 evolutions around the world since January

2020. More than ever, the health and safety of our people

and our other stakeholders are our foremost concern. We

have a Melexis COVID-19 taskforce in place which

worked intensely to plan for and react to the outbreak in

a timely fashion. Specific measures – such as working

from home, social distancing and business continuity

planning – have been implemented in all facilities

worldwide.

Melexis Annual Report 2021

129

Business and financial impact

COVID-19 remains a risk for Melexis’ supply chain, for

example by causing a delay in delivery of equipment,

wafers, packaging services, etc. due to mitigation

measures taken by governments and bottlenecks in

production, transportation and customs activities. Supply

chain and business contingency planning ensures that our

manufacturing sites keep running under the best

achievable circumstances.

Despite the pandemic, Melexis posted a year-over-year

sales growth of 27%.

Balance sheet

On 31 December 2021, the cash position amounted to

EUR 34,950,394 and the bank debt of EUR 62,000,000

had been paid off. Unused committed credit lines were

147 million EUR. The inventory increased with EUR 21

million compared with end 2020.

Based on our strong results and cash flow position in

2021, no impairment was deemed required. Melexis will

continue to respect all covenants on its active credit lines.

Deferred tax asset

Given our full-year guidance and in line with the above-

mentioned redundancy of impairment, there are no issues

noticed in regard to the recoverability of the Deferred tax

asset on our balance sheet.

Expected credit losses

Due to COVID-19, the credit control department

increased their focus on the outstanding balances of

customers. When there is a significant increase in the

credit risk of a customer, an allowance for doubtful

accounts is made. The analysis of the increased credit risk

is performed according to the credit loss model of IFRS 9.

The output of the analysis did not result in material

amounts to be accounted for.

The amount of credit losses written off in our

consolidated statement of financial position is negligible

(less than EUR 220,000). An analysis of the expected

credit losses booked in the current financial year is made

on a yearly basis. This analysis does not show any material

impact of the COVID-19 pandemic on expected credit

losses.

Furthermore, we did not see any impact on our

customers’ payment behavior that could lead to customer

credit losses in the future. As a result, no provisions for

future credit losses were foreseen. We will continue to

monitor this in the future and accruals will be taken if

material expected customer credit losses appear.

Outstanding receivables

There is no impact of the COVID-19 pandemic on our

outstanding receivables. On the contrary, the percentage

of receivables outstanding for more than 30 days is lower

than in previous years. We have increased our focus on

outstanding receivables in light of the COVID-19

situation. Our proactive follow-up on the outstanding

receivables and our actions taken to get receivables paid

according to agreed terms resulted in no visible impact of

the COVID-19 pandemic on our outstanding receivables.

Inventories

There has been no impact of the COVID-19 pandemic on

our inventories.

Outlook

Melexis expects sales in the first quarter of 2022 to be in

the range of EUR 177 to 183 million.

For the full year 2022, Melexis expects sales growth

between 12% and 17%, with a gross profit margin around

42% and an operating margin around 23% at the midpoint

of the sales guidance, all taking into account a EUR/USD

exchange rate of 1.13.

For the full year 2022, Melexis expects CAPEX to be

around 45 million EUR.

AN. CLIMATE CHANGE

The world needs to continue the fight against climate

change and seek solutions for both CO2 and power

consumption reduction. The call for green products has

never been greater than today, a demand that will only

increase in the coming years in all markets and impact

mobility and energy consumption. The European Green

Deal is striving to make Europe the first climate-neutral

continent and will pave the way for a better future.

Melexis is especially well positioned to contribute to the

electrification trend in the automotive industry that is

currently seeing an acceleration on the back of a

heightened and justified attention to combating climate

change. A decline in demand for Melexis' products, a large

part of which support the transition to a lower carbon

economy, is unlikely. Therefore, we have not impaired any

assets in 2021.

Melexis is continuously looking for ways to reduce

emissions and energy by designing sustainable products

for our customers who are also increasingly looking to

minimize their impact on the environment. To do so,

Melexis adheres to the Greenhouse Gas or GHG Protocol

and is now measuring its scope 1 and 2 emissions. In

consultation with an external consultant, all our sites

have now been assessed and their baseline

130

Melexis Annual Report 2021

measurements regarding CO2 emissions have been

determined. These initial values provide the starting point

for annual comparisons and allow for the establishment

of future key performance indicators. Besides that,

Melexis continuously evaluates the possible impact of

climate change in its business creation process. For more

information on our initiatives with regard to a lower

carbon economy, please refer to chapter 6 of this annual

report.

An important environmental risk that Melexis faces is

linked primarily to climate change, such as the higher

occurrence of natural hazards. Melexis is mapping,

proactively and together with our suppliers, business

continuity risks including natural hazards, at every stage

of the supply chain and ensuring mitigation of the main

risks.

Another risk related to climate change is the potential

need for increased expenditures and investments by

players in the semiconductor industry to ensure

compliance with new regulations to reduce the CO2

footprint. The production of wafers for instance is very

energy and water intensive. Moreover, the environmental

footprint of transportation of ICs is high, given the global

nature of the semiconductor supply chain. Therefore,

regulation in view of climate change could put pressure

on the industry and lead to substantial increases in the

cost of doing business. In 2021, expenses related to

climate change were not material.

There is no substantial impact of climate change

considerations on the financial judgments and estimates

made in this annual report.

Melexis Annual Report 2021

131

SHAREHOLDER INFORMATION

•

Listing

Euronext

•

Reuters ticker

MLXS.BR

•

Bloomberg ticker

MELE BB

9.1SHAREHOLDER STRUCTURE

Situation on 31 December 2021*

Company

Number of shares

Participation rate

Xtrion NV

20,200,001

50%

Public

20,199,999

50%

Total

40,400,000

100%

The shareholder structure changed on 5 March 2021 due to a

private placement of Melexis shares.

9.2SHARE INFORMATION

•

First day of listing

10 October 1997

•

Number of shares outstanding on 31 December 2021

40,400,000

•

Market capitalization on 31 December 2021

4,233,920,000 EUR

(in EUR)

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

Earnings per share

3.25

1.72

1.49

2.86

2.75

2.38

2.45

2.10

1.37

1.25

1.06

Net cash from

operating activities

3.52

2.37

2.34

2.47

2.80

2.67

2.85

2.35

1.75

1.41

1.35

Gross dividend

2.60

2.20

1.30

2.20

2.10

2.00

1.90

1.00

0.70

0.65

0.60

Year end price

104.80

79.90

67.05

50.90

84.37

63.65

50.18

37.50

23.18

12.88

10.37

Year's high

109.60

82.30

72.65

92.83

87.37

65.88

59.47

37.54

24.44

13.40

13.84

Year's low

79.70

46.10

47.66

45.62

64.41

40.94

37.70

23.10

13.19

10.60

8.35

Average volume of

shares traded/day

81,014

85,165

126,252

107,094

54,966

59,810

73,249

35,665

22,741

22,958

34,818

132

Melexis Annual Report 2021

9.3 CONTACT INFO

Investor Relations

investor@melexis.com

Rozendaalstraat 12, B-8900 Ieper, Belgium

www.melexis.com/en/investors

9.4FINANCIAL CALENDAR 2022

27 April 2022

Announcement of Q1 results

10 May 2022

Annual Shareholders' Meeting

27 July 2022

Announcement of half-year results

26 October 2022

Announcement of Q3 results

1 February 2023

Announcement of full-year results

9.5DIVIDEND POLICY

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 per share out of distributable

reserves:

2016:EUR 1.30 interim dividend

EUR 0.70 final dividend

2017:EUR 1.30 interim dividend

EUR 0.80 final dividend

2018: EUR 1.30 interim dividend

EUR 0.90 final dividend

2019:EUR 1.30 interim dividend

2020:EUR 1.30 interim dividend

EUR 0.90 final dividend

2021:EUR 1.30 interim dividend

EUR 1.30 final dividend

(approval by the annual shareholders’ meeting

on 10 May 2022)

Melexis Annual Report 2021

133

EXCERPTS FROM THE MELEXIS NV

STATUTORY

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 shareholders’ meeting 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 31 December 2021. 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 31 December 2021 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.

134

Melexis Annual Report 2021

Condensed non-consolidated statement of financial position

in 1,000 EUR

ASSETS

2021

2020

FIXED ASSETS

1,319,775

1,324,318

II. Intangible assets

139

213

III. Tangible assets

31,600

36,065

A. Land and buildings

13,035

13,962

B. Plant machinery and equipment

14,359

19,938

C. Furniture and vehicles

1,685

1,571

F. Assets under construction and advanced payments

2,521

594

IV. Financial assets

1,288,036

1,288,040

A. Affiliated companies

1,287,996

1. Participations

1,287,996

B. Other enterprises linked by participating interests

—

1. Participations

—

C. Other financial assets

2. Receivables and caution money

CURRENT ASSETS

4,134

3,786

V. Amounts receivable after more than one year

1. Other receivables

VII. Amounts receivable within one year

1,568

2,060

A. Trade receivables

429

B. Other receivables

1,534

1,631

VIII. Cash investments

—

A. Own shares

—

B. Other investments and deposits

—

IX. Cash deposits

328

207

X. Deferred assets and accrued income

2,198

1,495

TOTAL ASSETS

1,323,909

1,328,104

Melexis Annual Report 2021

135

Condensed non-consolidated statement of financial position (continued)

in 1,000 EUR

2021

2020

SHAREHOLDERS' EQUITY

731,657

832,946

I. Capital

565

A. Outstanding capital

565

IV. Reserves

3,894

A. Legal reserve

B. Reserves not available for distribution

—

3,838

1. In respect of own shares held

—

3,838

V. Retained earnings

730,777

828,205

VI. Investment grants

259

282

DEBTS

592,252

495,158

VIII. Long-term debt

—

D. Banks

—

IX. Amounts payable within one year

590,353

492,808

A. Current portion of amounts payable after more than one year

—

C. Trade debts

2,391

2,137

1. Trade payables

2,391

2,137

E. Taxes, remuneration and social security

4,261

3,678

1. Taxes

224

778

2. Remuneration and social security

4,017

2,900

F. Other amounts payable

583,700

486,992

X. Accrued charges and deferred income

1,896

2,350

TOTAL LIABILITIES

1,323,909

1,328,104

136

Melexis Annual Report 2021

Condensed non-consolidated statement of comprehensive income

in 1,000 EUR

2021

2020

I. Operating income

62,745

58,188

A. Turnover

60,275

55,691

C. Other operating income

2,469

2,497

II. Operating charges

(53,877)

(50,720)

B. Services and other goods

15,601

13,873

C. Remuneration, social security charges and pensions

26,926

24,360

D. Depreciations

11,098

12,233

E. Amounts written off stocks, contracts in progress and trade receivables

—

G. Other operating charges

253

254

III. Operating result

8,868

7,468

IV. Financial income

166

60,653

B. Income from current assets

142

60,506

C. Other financial income

147

V. Financial charges

(5,072)

(5,622)

A. Debt charges

4,958

5,603

C. Other financial charges

114

VI. Result of the year before taxes

3,962

62,499

VII. Income taxes

(188)

(302)

A. Taxes

188

302

B. Regularization

—

VIII. Result of the year

3,774

62,197

IX. Profit of the year available for appropriation

3,774

62,197

Melexis Annual Report 2021

137

Appropriation of the result

in 1,000 EUR

2021

2020

A. Result to be appropriated

831,979

917,083

1. Result of the period available for appropriation

3,774

62,197

2. Result carried forward

828,205

854,886

B. Transfers from capital and reserves

3,837

—

C. Transfers to capital and reserves

—

1. To other reserves

—

D. Result to be carried forward

730,777

828,205

1. Result to be carried forward

730,777

828,205

F. Distribution of profit

(105,040)

(88,878)

1. Dividends

(105,040)

(88,878)

138

Melexis Annual Report 2021

GLOSSARY

Earnings per share

Profit attributable to equity holders of Melexis divided by

the weighted average number of ordinary shares

Earnings per share diluted

Profit attributable to equity holders of Melexis divided by

the fully diluted weighted average number of ordinary

Revenue

Product sales + revenues from research and development

EBIT (Earnings before interests and taxes)

Turnover/Sales - cost of sales - research and development

expenses - general and administrative expenses - selling

expenses - other operating expenses

EBITDA (Earnings before interests and

taxes + depreciation, amortization and

impairment)

EBIT + depreciation, amortization and impairment

Shareholders' equity

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

Net indebtedness

Current portion of long-term debt + long-term debt less

current portion + bank loans and overdrafts - current

investments - cash and cash equivalents

Working capital

(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 cash from operating activities

Net result +/- adjustments for operating activities +/-

changes in working capital

Capital expenditure (CAPEX)

Investments in property, plant and equipment

ROE (Return on equity)

Net income/Shareholders' equity

Liquidity

Current assets/current liabilities

Solvency

Shareholders' equity/total assets

Tangible net worth

Total assets - liabilities - intangible assets.

Melexis Annual Report 2021

139

LIST OF USED ACRONYMS

ADAS

Advanced driver-assistance system

AEC

Automotive electronics council

APAC

Asia Pacific region

AR-HUD

Augmented-reality head-up display

ASIC

Application-specific integrated circuit

ASIL

Automotive safety integrity level

ASSP

Application-specific standard product

AWD

All-wheel drive

BLDC

Brushless DC (direct current)

BMC

Body control module

BMS

Battery management system

BOM

Bill of materials

CAN FD

Controller area network with flexible data rate

CEO

Chief executive officer

CFO

Chief financial officer

CMOS

Complementary metal oxide semiconductor

CTA

Cumulative translation adjustments

Direct current

DMS

Driver monitoring system

DRC

Democratic Republic of Congo

DSP

Digital signal processor

DVK

Development kit

ECHA

European chemical agency

ECU

Electronic control unit

EGR

Exhaust gas recirculation

ELV/WEEE

End-of-life vehicles/Waste electrical and electronic

equipment

EMC

Electromagnetic compatibility

EMEA

Europe, Middle East and Africa

EMI

Electromagnetic interference

EPA

Electric power-assisted steering

EPS

Electronic power steering

ESD

Electrostatic discharge

ESP

Electronic stability program

Electric vehicle

EVAP

Evaporation

FAE

Field application engineers

FIR

Far-infrared

FOV

Field of view

GAAP

Generally Accepted Accounting Principles

GHG

Greenhouse gases

GPU

Graphics processing unit

GRI

Global reporting initiative

HVAC

Heating, ventilation and air conditioning

IATF

International automotive task force

IAS(B)

International accounting standards (board)

Integrated circuit

ICE

Internal combustion engine

IFRS

International financial reporting standards

IMC

Integrated magnetic concentrator

IOT

Internet of things

Intellectual property

IRBP

Infrared bandpass

ISO

International organization for standardization

ISO/TS

International organization for standardization/

technical specification

KPI

Key performance indicator

LED

Light-emitting diode

LIN

Local interconnect network

MAP

Manifold absolute pressure

MEMS

Micro-electromechanical system

NALA

North America and Latin America

NFET

Negative-channel field effect transistor

OBC

On-board charger

OCD

Overcurrent detection

OEM

Original equipment manufacturer

OLED

Organic light-emitting diode

OSIC

Oxygen sensor integrated circuit

PBB

Polybrominated biphenyl

PBDE

Polybrominated diphenyl ether

PCB

Printed circuit board

PWM

Pulse width modulation

QVGA

Quarter video graphics array

R&D

Research & development

REACH

Registration, evaluation, authorization and restriction

of chemicals

Radio frequency

RGB

Red, green and blue

ROHS

Restriction on the use of hazardous substances

ROM

Read-only memory

SDG

Sustainable development goals

SENT

Single edge nibble transmission

SIP

Single-in-line package

SMP

Single-mold package

SOI

Silicon-on-insulator

SOT

Small outline transistor

STEM

Science, technology, engineering and mathematics

SVHC

Substances of very high concern

SWTW

Semiconductor wafer test workshop

TOF

Time-of-flight

TPMS

Tire pressure monitoring system

TRS

Transmission range selection

VCSEL

Vertical-cavity surface-emitting laser

VGA

Video graphics array

140

Melexis Annual Report 2021

GRI CONTENT INDEX

For some years now, Melexis has been inspired by the GRI Standards. Following several internal stakeholder workshops

within our company, Melexis has identified the relevant material GRI topics as seen in the table below and reports on them

throughout this annual report. Fully in line with the Belgian law of 3 September 2017 (detailing the publication of non-

financial information and information regarding diversity by large companies and groups), we will continue to report our

sustainability efforts in accordance with the GRI Standards: Core option.

GRI STANDARD

DISCLOSURE

PAGE NUMBER/URL

GRI 101: Foundation 2016

GRI 101 does not include any disclosures.

Not applicable.

General disclosures

GRI 102: General

disclosures 2016

102-1 Name of the organization

102-2 Activities, brands, products, and services

102-3 Location of headquarters

102-4 Location of operations

2.2

102-5 Ownership and legal form

102-6 Markets served

3.3

102-7 Scale of the organization

6.3.1

102-8 Information on employees and other workers

6.3.1

102-9 Supply chain

6.7

102-10 Significant changes to the organization and its supply chain

6.7.2

102-11 Precautionary principle or approach

6.6.4

102-12 External initiatives

6.5

102-13 Membership of associations

2.4

102-14 Statement from senior decision-maker

102-15 Key impacts, risks, and opportunities

6.4.1

6.4.3

6.6.1

6.6.3

6.6.4

6.6.5

6.7.1

6.7.2

6.8.2

7.2

7.8

8.9

102-16 Values, principles, standards, and norms of behavior

6.8

102-17 Mechanisms for advice and concerns about ethics

6.8.5

102-18 Governance structure

Melexis Annual Report 2021

141

GRI 102: General

Disclosures 2016

102-21 Consulting stakeholders on economic, environmental, and social

topics

6.1

102-22 Composition of the highest governance body and its

committees

102-23 Chair of the highest governance body

102-24 Nominating and selecting the highest governance body

102-25 Conflicts of interest

102-26 Role of highest governance body in setting purpose, values, and

strategy

102-27 Collective knowledge of highest governance body

102-28 Evaluating the highest governance body’s performance

102-30 Effectiveness of risk management processes

102-35 Remuneration policies

6.3.1

6.3.3

102-36 Process for determining remuneration

6.3.1

6.3.3

102-38 Annual total compensation ratio

102-40 List of stakeholder groups

6.2

102-41 Collective bargaining agreements

6.4.2

102-42 Identifying and selecting stakeholders

6.2

102-43 Approach to stakeholder engagement

6.2

6.6.6

102-44 Key topics and concerns raised

6.2

102-45 Entities included in the consolidated financial statements

8.9.5

102-46 Defining report content and topic boundaries

6.1

102-47 List of material topics

6.1

102-50 Reporting period

102-51 Date of the most recent report

The most recent report

was the 2020 annual

report.

102-52 Reporting cycle

Annual

102-53 Contact point for questions regarding the report

102-54 Claims of reporting in accordance with the GRI Standards

102-55 GRI content index

Economic disclosures

GRI 201: Economic

Performance 2016

201-1 Direct economic value generated and distributed

8.6

201-2 Financial implications and other risks and opportunities due to

climate change

6.6.1

6.6.4

6.6.7

8.9.5.AN

201-3 Defined benefit plan obligations and other retirement plans

6.3.1

8.9.3

8.9.5.AG

201-4 Financial assistance received from government

8.5

8.9.3

8.9.5.P

GRI 203: Indirect

Economic

Impacts 2016

203-1 Infrastructure investments and services supported

8.9.5

203-2 Significant indirect economic impacts

8.9.5

142

Melexis Annual Report 2021

Material topics

GRI 205: Anti-

corruption

2016

205-1 Operations assessed for risks related to corruption

6.8.2

205-2 Communication and training about anti-corruption policies

and procedures

6.8.2

205-3 Confirmed incidents of corruption and actions taken

6.8.2

GRI 301: Materials

2016

301-1 Materials used by weight or volume

6.6.2

6.6.4

6.6.5

301-2 Recycled input materials used

6.6.2

6.6.4

6.6.5

301-3 Reclaimed products and their packaging materials

6.6.2

6.6.4

6.6.5

GRI 302: Energy

2016

302-1 Energy consumption within the organization

6.6

302-3 Energy intensity

6.6

302-4 Reduction of energy consumption

6.6

GRI 303: Water

2016

303-1 Water withdrawal by source

6.6.2

6.6.3

6.6.4

GRI 305: Emissions

2016

305-1 Direct (scope 1) GHG emissions

6.6

305-2 Energy indirect (scope 2) GHG emissions

6.6

305-4 GHG emissions intensity

6.6

305-5 Reduction of GHG emissions

6.6

GRI 306: Waste

2020

306-3 Waste generated

6.6.2

6.6.3

6.6.4

GRI 308: Supplier

environmental

assessment

2016

308-1 New suppliers that were screened using environmental criteria

6.7.3

GRI 401:

Employment 2016

401-1 New employee hires and employee turnover

6.3.1

401-2 Benefits provided to full-time employees that are not provided to

temporary or part-time employees

6.3.1

401-3 Parental leave

6.3.1

GRI 403:

Occupational

health and safety

2018

403-1 Occupational health and safety management system

6.4

403-2 Hazard identification, risk assessment, and incident

investigation

6.4

403-3 Occupational health services

6.4

403-4 Worker participation, consultation, and communication on

occupational health and safety

6.4

403-5 Worker training on occupational health and safety

6.4

403-6 Promotion of worker health

6.4

403-7 Prevention and mitigation of occupational health and safety

impacts directly linked by business relationships

6.4

403-9 Work-related injuries

6.4

403-10 Work-related ill health

6.4

GRI 404: Training

and education 2016

404-1 Average hours of training per year per employee

6.3.2

404-2 Programs for upgrading employee skills and transition

assistance programs

6.3.2

Melexis Annual Report 2021

143

GRI 405: Diversity

and equal

opportunity 2016

405-1 Diversity of governance bodies and employees

6.3.3

405-2 Ratio of basic salary and remuneration of women to men

6.3.3

GRI 408: Child labor

2016

408-1 Operations and suppliers at significant risk for incidents of

child labor

6.8.1

GRI 409: Forced or

compulsory labor

409-1: Operations and suppliers at significant risk for incidents of

forced or compulsory labor

6.8.1

GRI 413: Local

communities 2016

413-1 Operations with local community engagement, impact

assessments, and development programs

6.5

GRI 414: Supplier

social assessment

2016

414-1 New suppliers that were screened using social criteria

6.7.3

144

Melexis Annual Report 2021

ABOUT THIS REPORT

Melexis NV Headquarters

Rozendaalstraat 12

B-8900 Ieper

Belgium

Phone: +32 57 22 61 31

Web: www.melexis.com

Contact Investor Relations

E-mail: investor@melexis.com

Web: www.melexis.com/en/investors

Responsible editor

Marc Biron, Managing Director

Annual report

This annual report has been compiled internally with the utmost care. If we

have overlooked something or if you have any question regarding this

report, please feel free to contact us via investor@melexis.com.

This annual report covers the period 1 January - 31 December 2021. You

can find the financial report as of page 80. The report has also been made

compliant with the Belgian law of 3 September 2017 detailing the

publication of non-financial information and information regarding diversity

by certain large companies and groups. For this information, Melexis has

been inspired by the Global Reporting Initiative Standards: Core option. We

are committed to report on our sustainability efforts increasingly over the

next few years. You can find the GRI content index on pages 141-144.

Design and layout

www.magelaan.be

Melexis Annual Report 2021

145

MELEXIS NV

Statutory auditor's report to the general shareholders’

meeting on the consolidated accounts for the year

ended 31 December 2021

5 April 2022

STATUTORY AUDITOR'S REPORT TO THE GENERAL SHAREHOLDERS’ MEETING

OF MELEXIS NV ON THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED

31 DECEMBER 2021

________________________________________________________________________

We present to you our statutory auditor’s report in the context of our statutory audit of the

consolidated accounts of Melexis NV (the “Company”) and its subsidiaries (jointly “the

Group”). This report includes our report on the consolidated accounts, as well as the other

legal and regulatory requirements. This forms part of an integrated whole and is indivisible.

We have been appointed as statutory auditor by the general meeting d.d. 12 May 2020,

following the proposal formulated by the board of directors and following the

recommendation by the audit committee and the proposal formulated by the works’ council.

Our mandate will expire on the date of the general meeting which will deliberate on the

annual accounts for the year ended 31 December 2022. We have performed the statutory

audit of the Company’s consolidated accounts for 5 consecutive years.

Report on the consolidated accounts

Unqualified opinion

We have performed the statutory audit of the Group’s consolidated accounts, which

comprise the consolidated statement of financial position as at 31 December 2021, the

consolidated income statement and the consolidated statement of comprehensive income,

the consolidated statement of changes in equity and the consolidated statement of cash

flows for the year then ended, and notes to the consolidated financial statements, including

a summary of significant accounting policies and other explanatory information, and which

is characterised by a consolidated statement of financial position total of EUR 461.180.495

and a profit for the year of EUR 131.108.216.

In our opinion, the consolidated accounts give a true and fair view of the Group’s net equity

and consolidated financial position as at 31 December 2021, and of its consolidated

financial performance and its consolidated cash flows for the year then ended, in

accordance with International Financial Reporting Standards as adopted by the European

Union and with the legal and regulatory requirements applicable in Belgium.

Basis for unqualified opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as

applicable in Belgium. Furthermore, we have applied the International Standards on

Auditing as approved by the IAASB which are applicable to the year-end and which are not

yet approved at the national level. Our responsibilities under those standards are further

described in the “Statutory auditor’s responsibilities for the audit of the consolidated

accounts” section of our report. We have fulfilled our ethical responsibilities in accordance

with the ethical requirements that are relevant to our audit of the consolidated accounts in

Belgium, including the requirements related to independence.

We have obtained from the board of directors and Company officials the explanations and

information necessary for performing our audit.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide

a basis for our opinion.

PwC Bedrijfsrevisoren BV - PwC Reviseurs d'Entreprises SRL - Financial Assurance

Services

Maatschappelijke zetel/Siège social: Culliganlaan 5, B-1831 Diegem

Vestigingseenheid/Unité d'établissement: Generaal Lemanstraat 67, B-2018 Antwerpen

T: +32 (0)3 259 3011, F: +32 (0)3 259 3099, www.pwc.com

BTW/TVA BE 0429.501.944 / RPR Brussel - RPM Bruxelles / ING BE43 3101 3811 9501 -

BIC BBRUBEBB /

BELFIUS BE92 0689 0408 8123 - BIC GKCC BEBB

Key audit matter

A key audit matter is a matter that, in our professional judgement, was of most significance

in our audit of the consolidated accounts of the current period. This matter was addressed

in the context of our audit of the consolidated accounts as a whole, and in forming our

opinion thereon, and we do not provide a separate opinion on this matter.

Key audit matter regarding assumptions and estimates on tax positions

Description of the key audit matter

The global organisation and the business nature of Melexis’ operations, results in complex

tax accounting. The group operates across multiple countries and is subject to periodic

challenges by local tax authorities on a range of income tax matters during the normal

course of business. Income tax legislation is open to different interpretations and the

income tax treatment of some items might be uncertain as it is subject to judgement (ref

notes 8.9.3 and 8.9.5.X). Income tax audits can require several years to conclude and

transfer pricing decisions may impact the group’s income tax positions.

Given the level of complexity involved, we consider assumptions and estimates on tax

positions to be a key audit matter.

How our audit addressed the key audit matter

The audit engagement team, with the support of income tax and transfer pricing specialists,

evaluated and tested the group’s current and deferred income tax positions, and the

transfer pricing policy in each significant jurisdiction.

Responsibilities of the board of directors for the preparation of the consolidated

accounts

The board of directors is responsible for the preparation of consolidated accounts that give

a true and fair view in accordance with International Financial Reporting Standards as

adopted by the European Union and with the legal and regulatory requirements applicable

in Belgium, and for such internal control as the board of directors determine is necessary to

enable the preparation of consolidated accounts that are free from material misstatement,

whether due to fraud or error.

In preparing the consolidated accounts, the board of directors is responsible for assessing

the Group’s ability to continue as a going concern, disclosing, as applicable, matters related

to going concern and using the going concern basis of accounting unless the board of

directors either intend to liquidate the Group or to cease operations, or has no realistic

alternative but to do so.

Statutory auditor’s responsibilities for the audit of the consolidated accounts

Our objectives are to obtain reasonable assurance about whether the consolidated

accounts as a whole are free from material misstatement, whether due to fraud or error, and

to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level

of assurance but is not a guarantee that an audit conducted in accordance with ISAs will

always detect a material misstatement when it exists. Misstatements can arise from fraud or

error and are considered material if, individually or in the aggregate, they could reasonably

be expected to influence the economic decisions of users taken on the basis of these

consolidated accounts.

In performing our audit, we comply with the legal, regulatory and normative framework

applicable to the audit of the consolidated accounts in Belgium. A statutory audit does not

provide any assurance as to the Group’s future viability nor as to the efficiency or

effectiveness of the directors’ current or future business management at Group level.

As part of an audit in accordance with ISAs, we exercise professional judgement and

maintain professional scepticism throughout the audit. We also:

•Identify and assess the risks of material misstatement of the consolidated accounts,

whether due to fraud or error, design and perform audit procedures responsive to

those risks, and obtain audit evidence that is sufficient and appropriate to provide a

basis for our opinion. The risk of not detecting a material misstatement resulting from

fraud is higher than for one resulting from error, as fraud may involve collusion,

forgery, intentional omissions, misrepresentations, or the override of internal control;

•Obtain an understanding of internal control relevant to the audit 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 Group’s internal control;

•Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by the board of directors;

•Conclude on the appropriateness of the board of directors’ use of the going concern

basis of accounting and, based on the audit evidence obtained, whether a material

uncertainty exists related to events or conditions that may cast significant doubt on

the Group’s ability to continue as a going concern. If we conclude that a material

uncertainty exists, we are required to draw attention in our statutory auditor’s report

to the related disclosures in the consolidated accounts or, if such disclosures are

inadequate, to modify our opinion. Our conclusions are based on the audit evidence

obtained up to the date of our statutory auditor’s report. However, future events or

conditions may cause the Group to cease to continue as a going concern;

•Evaluate the overall presentation, structure and content of the consolidated

accounts, including the disclosures, and whether the consolidated accounts

represent the underlying transactions and events in a manner that achieves fair

presentation;

•Obtain sufficient and appropriate audit evidence regarding the financial information

of the entities or business activities within the Group to express an opinion on the

consolidated financial statements. We are responsible for the direction, supervision

and performance of the Group audit. We remain solely responsible for our audit

opinion.

We communicate with the audit committee regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant

deficiencies in internal control that we identify during our audit.

We also provide the audit committee with a statement that we have complied with relevant

ethical requirements regarding independence, and to communicate with them all

relationships and other matters that may reasonably be thought to bear on our

independence, and where applicable, related safeguards.

From the matters communicated with the audit committee, we determine those matters that

were of most significance in the audit of the consolidated accounts of the current period and

are therefore the key audit matters. We describe these matters in our auditor’s report

unless law or regulation precludes public disclosure about the matter.

Other legal and regulatory requirements

Responsibilities of the board of directors

The board of directors is responsible for the preparation and the content of the directors’

report on the consolidated accounts, the non-financial information and the other information

included in the annual report on the consolidated accounts.

Statutory auditor’s responsibilities

In the context of our mandate and in accordance with the Belgian standard which is

complementary to the International Standards on Auditing (ISAs) as applicable in Belgium,

our responsibility is to verify, in all material respects, the directors’ report on the

consolidated accounts, the separate report on non-financial information and the other

information included in the annual report on the consolidated accounts and to report on

these matters.

Aspects related to the directors’ report on the consolidated accounts and to the

other information included in the annual report on the consolidated accounts

In our opinion, after having performed specific procedures in relation to the directors’ report

on the consolidated accounts, this directors’ report is consistent with the consolidated

accounts for the year under audit and is prepared in accordance with article 3:32 of the

Companies' and Associations' Code.

In the context of our audit of the consolidated accounts, we are also responsible for

considering, in particular based on the knowledge acquired resulting from the audit,

whether the directors’ report on the consolidated accounts and the other information

included in the annual report on the consolidated accounts is materially misstated or

contains information which is inadequately disclosed or otherwise misleading. In light of the

procedures we have performed, there are no material misstatements we have to report to

you.

The non-financial information required by virtue of article 3:32, §2 of the Companies' and

Associations' Code is included in the directors’ report on the consolidated accounts. The

Company has prepared the non-financial information, based on the Global Reporting

Initiative (GRI) framework. However, in accordance with article 3:80, §1, 5° of the

Companies' and Associations' Code, we do not express an opinion as to whether the non-

financial information has been prepared in accordance with the Global Reporting Initiative

(GRI) framework as disclosed in the consolidated accounts.

Statement related to independence

•Our registered audit firm and our network did not provide services which are

incompatible with the statutory audit of the consolidated accounts, and our registered

audit firm remained independent of the Group in the course of our mandate.

•The fees for additional services which are compatible with the statutory audit of the

consolidated accounts referred to in article 3:65 of the Companies' and Associations'

Code are correctly disclosed and itemised in the notes to the consolidated accounts.

European Uniform Electronic Format (ESEF)

We have also verified, in accordance with the draft standard on the verification of the

compliance of the financial statements with the European Uniform Electronic Format

(hereinafter “ESEF”), the compliance of the ESEF format with the regulatory technical

standards established by the European Delegate Regulation No. 2019/815 of 17 December

2018 (hereinafter: “Delegated Regulation”).

The board of directors is responsible for the preparation, in accordance with ESEF

requirements, of the consolidated financial statements in the form of an electronic file in

ESEF format (hereinafter “digital consolidated financial statements”) included in the annual

financial report.

Our responsibility is to obtain sufficient appropriate evidence to conclude that the format

and marking language of the digital consolidated financial statements comply in all material

respects with the ESEF requirements under the Delegated Regulation.

Based on the work we have performed, we believe that the format of and marking of

information in the digital consolidated financial statements included in the annual financial

report of Melexis NV per 31 December 2021 comply in all material respects with the ESEF

requirements under the Delegated Regulation.

Other statements

•This report is consistent with the additional report to the audit committee referred to

in article 11 of the Regulation (EU) N° 537/2014.

Antwerp, 5 April 2022

The statutory auditor

PwC Reviseurs d'Entreprises SRL/PwC Bedrijfsrevisoren BV

represented by

Sofie Van Grieken

Réviseur d’Entreprises/Bedrijfsrevisor