Annual Report 2011€¦ · 4 The Cham Paper Group at a glance Profile Sites and sales volumes 6 The Cham Paper Group’s shares 8 Letter to Shareholders 12 Interview on the Group’s

Annual Report 2011

Net revenue

Net revenue from continued operations

in M

CH

F

050

100150200250300350400450500

2007 2008 2009 2010 2011

–10

5

0

5

10

15

2007 2008 2009 2010 2011–4

–2

0

2

4

6

in %

EBIT and EBIT margin

Operating profit (EBIT) from continued operationsEBIT as % of net revenue (EBIT margin)

in M

CH

F

Turnover per region

2007 2008 2009 2010 2011

Europa

in %

Asia

0

20

40

60

80

100

Rest of worldAmerica

Sold volume and employees

Sol

d vo

lum

e in

100

0 to

ns

Sold volume in 1000 tonsNumber of employees (FTE)

Num

ber

of e

mpl

oyee

s

0

50

100

150

200

250

2007 2008 2009 2010 2011400

500

600

700

800

Shareholders’ equity and equity ratio

Shareholders’ equityShareholders’ equity as a % of total assets (equity ratio)

in M

CH

F

0

50

100

150

200

250

300

350

2007 2008 2009 2010 20110

20

40

60

80

100

in %

Net debt and gearing ratio

Net debtNet debt/ shareholders’ equity (gearing ratio)

in M

CH

F

0

25

50

75

100

125

150

2007 2008 2009 2010 20110

20

40

60

80

100

120

in %

Key figures at a glance

StrongSwissfrancagainmakesfordifficultyearandforcestheGrouptopursue

reorientationstrategy

Salesrevenuesdropby8.9%(adjustedforcurrencyeffects:+2.4%)

Substantialloss(CHF92.1million)duetohighvalueadjustmentsandprovisions

FavourableprospectsthankstostrongpositionoftheChamPaperGroup’s

products

Conceptforformerindustrialparkunderway

Highlights and key figures

inCHFmillion,unlessotherwisespecified 2011 2010

Net revenue 309.3 339.5Operating profit before depreciation (EBITDA) 11.7 29.3

Asa%ofnetrevenue 3.8 8.6Operating profit (EBIT) before reorganisation –8.1 8.4Asa%ofnetrevenue –2.6 2.5Expensesforreorganisation –80.4 –Operating profit (EBIT) after reorganisation –88.5 8.4Net income/loss (–) for the year –92.1 –1.8Earnings per share (in CHF) –131.83 –2.58Net income/loss (–) for the year –92.1 –1.8Free cash flow –4.2 4.7Shareholders’ equity 102.2 197.9Asa%oftotalassets 39.3 57.5Shareholders’ equity per outstanding share (in CHF) 145.8 283.4Net dept 25.9 19.4Volume (tonnes) 198'978 204'126Investments in tangible and intangible assets 22.1 15.4Number of employees (FTE) 651 659

The Cham Paper Group is a leading manufacturer of coated speciality papers. The Group generates

value-added for its customers by supplying finishing-based functional capabilities and a comprehensive

range of services. Innovation and sustainability in every aspect of our operations is as important to

us as the ongoing basic and further training of our employees.

than PaperOur experienced professionals apply their skills in places where paper can do more than you might

think. We employ innovative solutions to provide effective responses to individual customer needs.

More than 350 years of experience in production of paper form the firm foundation on which the

success of the Cham Paper Group is built. Committed employees manufacture outstanding papers

for a constantly expanding range of applications and uses – always with a view to creating the great-

est possible value for our customers.

Clear focus.Uncompromising value-orientation.Groundbreaking innovation.

Front page: The Wegmüller family (from left to right: Florian, Gloria, Anna, Tim) benefits in their

everyday life from the added value the Cham Paper Group creates. Read how the family experiences

the advantages on the pages 18 to 29.

Table of contents

4 The Cham Paper Group at a glance Profile

Sites and sales volumes

6 The Cham Paper Group’s shares

8 Letter to Shareholders

12 Interview on the Group’s business situation and outlook

16 Markets of the Cham Paper Group

18 Experiencing the Cham Paper Group Consumer Goods

Industrial Release

Digital Imaging

32 Sustainability Report

38 Corporate Governance

52 Consolidated financial statements Notes to the consolidated financial statements

Report of the statutory auditors on the consolidated

financial statements

76 Financial statements of Cham Paper Group Holding AG Notes to the consolidated financial statements

of Cham Paper Group Holding AG

Report of the statutory auditors on the


3 Table of contents

4

The Cham Paper Group at a glance

The speciality paper market

The speciality paper market offers higher margins than the commodity paper segment due

to made-to-measure practicality respectively increased customer convenience. The prices

in the speciality paper market are also more solid as a result of the often close interactions

between development, supply and production processes with the clients.

The Cham Paper Group at a glance

Speciality paper 5.3 MTPA

Market size:USD 22 billion

Market size:USD 288 billion

Premium paper5.3 MTPA

Commodity paper361.1 MTPA

Low cyclicality

Cyclicality

• Operating margins• Customer loyalty

Total market size:382 MTPA (USD 310 billion)

Condino mill infrastructure1 paper machine; width: 330 cm

1 film press

2 super calenders

Carmignano mill infrastructure2 paper machines; width: 330 cm

2 in-line coating machines

1 off-line coating machine

2 super calenders

Cham mill infrastructure2 paper machines; width: 320 cm

2 off-line coating machines

1 curtain coater

1 super calender

5

Cham Paper Group Schweiz AGCH-6330 Cham

Cham Paper Group Italia S.p.A.IT-38083 Condino (TN)

Cham Paper Group Italia S.p.A.IT-35010 Carmignano di Brenta (PD)



Production sites (production and sales) Points of sale (representatives)

Turnover in % Turnover in %2011 2010

Europe 74.8% 79.5%

America 6.2% 6.0%

Asia 16.5% 11.0%

Rest of world 2.5% 3.5%

6

The Cham Paper Group’s shares

The Cham Paper Group’s shares

I. Key figures

Number of shares

Number of shares at 31 December 2011 2010 2009 2008 2007

Number of registered shares 745'000 745'000 745'000 745'000 745'000

Nominal value per registered share (in CHF) 65.00 65.00 77.50 77.50 85.00

Treasury shares 44'302 46'772 48'635 51'640 12'736

Number of outstanding registered shares 700'698 698'228 696'365 693'360 732'264

Kennzahlen der Aktien

Key figures at 31 December 2011 2010 2009 2008 2007

Earnings per share from continued operations (in CHF) –131.83 –2.58 13.14 –0.71 22.05

Earnings/Loss (–) per share group (in CHF) –131.83 –2.58 22.14 –27.44 26.89

Shareholders‘ equity per outstanding share (in CHF) 145.80 283.38 2) 309.98 388.08 435.10

Gross dividend (incl. reduction in nominal value) (in CHF) 0.00 3) 5.00 12.50 n.m.1) 7.50

Dividend yield (in %) n.m. 2.29 6.60 n.m.1) 1.77

1) The spin-off and distribution of 55% of Hammer Retex Holding AG to the shareholders was accepted at the general assembly 24 April 2009. Ludama Holding AG submitted a takeover bid at CHF 109.45/share to the shareholders.

2) After restatment3) Proposal to the general assembly of 25 April 2012

Stock exchange key figures

Stock exchange price in CHF per share 2011 2010 2009 2008 2007

Highest 223 236 202 439 525

Lowest 145 200 84 215 374

Year end price 157 218 190 225 442

Average of traded shares per day 583 900 650 955 1'588

Market capitalisation year end (in MCHF) 117 162 142 168 329

Cham Paper Group Holding AG is listed on the SIX Swiss Exchange in Zurich. The registered shares are included in the

SPI (Swiss Performance Index).

Swiss Security Number: 193185 / ISIN-Code: CH0001931853

Ticker: CPGN / Bloomberg: CPGN SW Equity / Reuters: CPGN.S

7 The Cham Paper Group’s shares

Share price development

1 January 2010 until 31 December 2011

0

50

200

150

100

250

01.01.10 01.07.1001.04.10 01.10.10 01.01.11 01.04.11 01.07.11 01.10.11 01.01.12

In CHF

II. Shareholder structure as at December 31, 2011

Major shareholders

Shareholder group Buhofer (BURU Holding AG, Philipp Buhofer, Heinz Buhofer, all Hagendorn) 40.41%

Cham Paper Group Holding AG, Cham 5.95%

LB (Swiss) Investment AG, Zurich 4.80% 1)

Free float (according to SIX-Definition) 53.64%

1) LB (Swiss) Investment AG, Zurich increased its share in March 2012 from 4.80% to 5.06%.

Overview

Registered shareholders 1'078

Registered shares 663'506

Not registered shares 81'494

Shareholders with 1–500 shares 986

Shareholders with 501–5‘000 shares 83

Shareholders with more than 5'000 shares 9

III. Dividend policy

The Cham Paper Group follows a result-oriented dividend

policy. Normally, 25 to 35% of the operational net profit

is distributed to the shareholders (details see page 39).

IV. Information policy

The Cham Paper Group provides information about its

half-year and annual results in the form of a half-year

report and an annual report that are available in printed

and electronic form. The reports are mailed out upon

express request only, otherwise they are available only

electronically for the purpose of economic and environ-

mental efficiency. Facts relevant for the share price are

announced by way of ad-hoc publications (German and

English).

For continuously updated information on the company,

shares, analyst opinions, media articles, dates and FAQs,

please refer to the Investor Relations section at www.

cham-group.com. An up-to-the-minute investor handbook

also provides an in-depth look at the strategy, markets

and competitor environment of the Cham Paper Group.

On our website you can also subscribe to the e-newslet-

ter so that you, at the same time as the media, are kept

abreast of results and new developments.

V. Contact

Share registerFranziska Stöckli

Fabrikstrasse, CH-6330 Cham

[email protected]

Phone +41 41 785 34 03

Media & IR-contactEdwin van der Geest / Philippe Blangey

[email protected] or

[email protected]

Phone +41 43 268 32 32

VI. Financial Calendar

General assembly 25 April 2012, Saal Heinrich von Hünenberg, Hünenberg

Financial reportingHalf-year report 2012: 17 August 2012

Annual report 2012: 13 March 2013

8

Philipp BuhoferChairman of the Board of Directors

Letter to Shareholders

Dear Shareholders,

The Cham Paper Group contended with a very dif-ficult year. The forex situation forced management to engage in rigorous reorientation that went beyond having to report an operating loss and extended to performing extraordinary value adjustments and ini-tiating substantial job cuts in Switzerland. In the fu-ture, not only will the reorientation of Cham’s indus-trial activities be accorded substantial significance within the Group, the repurposing of the factory grounds in Cham will be a top priority as well.

Growth of successful products vs. restricted competi-tive strengthIn 2011 the Cham Paper Group achieved net revenues

of CHF 309.3 million. This corresponds to a decrease of

8.9% as compared to 2010, or 2.4% when adjusted for

currency effects. At 198'978 tons the sales volume was

slightly below the 2010 figure (204'126 tons).

As in previous years, the Consumer Goods segment

(52% of the Group’s revenues) exhibited an extremely

favourable showing, particularly with regard to sales of

speciality papers for flexible packaging, which achieved

additional growth in excess of 10%. The tobacco papers

also saw increasing demand, particularly in Asia.

In the Industrial Release segment, the Group was forced

to withdraw from markets served from Cham in the sec-

ond half of the year, since the prices being achieved no

longer covered costs. The depressed mood in Europe

was perceptible in this segment. One exception to this

were the products for the glassine papers market from

the Condino mill, whose production output and sales

again exhibited a sharp rise. On the whole, revenues in

the Industrial Release segment fell by 13.8%, afterwards

accounting for only 40.4% of the Group's revenues.

The picture was similar in Digital Imaging (7.6% of Group

revenue): whereas the innovative, leading Transjet papers

for textile printing again showed double-digit growth, the

Cham Paper Group was forced to discontinue serving

many customers in the weak-margin Graphic Arts mar-

ket.

Geographically the Group succeeded in further diversi-

fication, this confirming the decision to invest in sales

teams and partners throughout the world. Sales proceeds

in Asia during the reporting period accounted for 16.5%

(2010: 10.8%) of the Group’s revenues, whereas in 2008

this figure only amounted to 6.5%. Despite this develop-

ment, at 74.8% the European market continues to be the

Group’s key sales mainstay (2010: 79.6%).

Positive free cash flow despite negative operating resultThe Group’s operating result of –CHF 8.1 million is a re-

flection of the difficult situation in which the Group found

itself in the autumn of 2011. Nevertheless, thanks to

stringent inventory management the Group still achieved

a positive operational free cash flow of CHF 4.8 million

(adjusted for the cash outflow for the strategic property

purchase in Cham).

The Cham Paper Group recharts its course

9

René FurlerVice Chairman


Felix ThöniMember

Portfolio optimisation and the reorganisation of pro-duction allocation will substantially improve cost structures and create currency neutralityThe Cham Paper Group brand has a good reputation in

Europe and Asia. However, not all speciality papers re-

quire the same high level of expertise. Price pressure

has mounted continuously, particularly in industrial ap-

plications such as release liners for labels and graphic

arts applications (CCK or clay-coated kraft); the require-

ments made of production efficiency and locational and

cost advantages have become more exacting. Forex

effects have caused profitable production to no longer

be possible for large portions of this market segment in

Switzerland. Relocation to the euro zone is of interest in

terms of sustainability only for part of these products. In

order to ensure a sustainable return to profitability, the

Cham Paper Group is having to quickly withdraw from

less attractive markets in Switzerland and Italy. The utili-

sation of production capacity can be thoroughly reorgan-

ised and optimised on a per-location basis by the simulta-

neous relocation of selected product lines to the mills in

Italy. The Cham Paper Group will continue to focus on the

Consumer Goods, Digital Imaging and Glassine Papers

segments in the future. The Group has managed to show

profitable growth here for years now and the long-term

prospects are also favourable.

On the Cham site the company intends to focus on its

core competency: surface coating. To be sure, the new

curtain-coated speciality papers for the Consumer Goods

segment and the increasingly popular Digital Imaging

products will continue to be produced in Switzerland in

the future as well. In order for the Cham mill with its spe-

cial coating machines to be able to concentrate fully on

the high value-adding and thus less forex-sensitive sur-

face treatment technologies, base paper will be sourced

on the market in the future. In so doing, the Group’s site

in Switzerland will be transformed into a technology,

R&D and coating centre, and specialist solution provider

for a wide variety of industries. The proposed steps will

result in the shutdown of base paper production in Cham.

Plans have been made to decommission the PM4 paper

machine in the first half of 2012 and the PM5 by the end

of 2013.

The large volumes of speciality papers for the tobacco

industry – which currently provide for a significant part

of capacity utilisation in Cham – will be produced in

Carmignano by the end of 2013. The mill in Carmignano

is already focusing completely on Consumer Goods in

general, and on flexible packaging products in particular.

The growing market in China will continue to be supplied

from Europe.

10 Letter to Shareholders

Peter J. SchmidMember

The Condino site will be further expanded and will con-

centrate on the production of glassine papers. During

the past three years sales of these papers has increased

from 37'000 to 45'000 tons. Plans have been made to

expand capacity in excess of 20% by 2014. Site location

and product portfolio optimisation throughout the Group

will result in a substantial improvement in cost structures

and a reduction in the Group’s dependence on the devel-

opment of the Swiss franc. In doing so, the Cham Paper

Group is recreating a basis on which profitable growth

will be possible.

Close cooperation with social partner organisationsThe proposed restructuring of the Cham Paper Group

will lead to a gradual reduction in the number of FTEs

at Cham from the present level of 312 to approximately

100 by the beginning of 2014. The first decommissioning

step will take place with the proposed shutdown of the

first paper machine in the first half of 2012. The second

step will be completed by the end of 2013 with the pro-

posed production shutdown of the second machine. The

Board of Directors and the Executive Management Board

contacted the social partner organisations and cantonal

government agencies early on and carefully planned this

painful process with the involvement of all stakeholders

in a socially responsible manner. A comprehensive redun-

dancy scheme that seeks to reintegrate those affected in

a new situation as quickly as possible and avoid cases of

hardship was enacted in February of 2012. The response

to this redundancy scheme of all those affected has been

positive.

Substantial loss reported – Motion made to waive dividends

The Group’s 2011 trading performance is heavily bur-

dened by a negative operating result and the restructuring

costs. The 2011 financial statements exhibit the negative

impact of the value adjustments of assets and the re-

structuring provisions including the redundancy scheme

totalling CHF 80.4 million. The financial statements also

show a net loss of CHF 92.1 million. In view of this result,

the Board of Directors will motion at the annual general

meeting that a dividend payment should be waived.

From an underutilised industrial park to a new living residential and commercial district of Cham By concentrating on R&D and surface coating technolo-

gies, substantially less land area will be needed and a

large portion of the underutilised industrial park located

in the centre of Cham will be available for other uses.

To this end, the Board of Directors has commissioned a

number of studies to investigate a step-by-step repurpos-

ing of this land area. In the decades to come, new resi-

dential and employment opportunities are to be created

on the 100'000 m² grounds providing direct access to the

A4 and the north-bypass of Cham. Cham Paper will be

working hand in hand with local authorities to ensure that

optimal perspectives are created – for the community of

Cham, its present and future inhabitants and commercial

enterprises, as well as for the Cham Paper Group. The

preparation and planning work for the requisite rezoning

of the factory grounds to a mixed zone (residential and

commercial) has been commenced and will take some

time.

11

Hans SchallerMember

Urs ZieglerMember


Composition of the Board of Directors to be adapted to new tasksRené Furler, vice chairman of the Board of Directors of

the Cham Paper Group and serving in this body for the

past 12 years, will no longer be available for another term

of office. The Board of Directors would like to thank him

for his invaluable work on behalf of the company and

would like to propose that the annual general meeting

elect Niklaus Peter Nüesch to the Board. Nüesch has

many years’ experience in the development of major real

estate projects and will be able to make a significant con-

tribution to developing and repurposing the land area in

Cham.

Outlook and a word of thanksThanks to its sound balance sheet (equity ratio: 39.3%)

and existing cash reserves of CHF 48.8 million, the Cham

Paper Group will be able to deal with the restructuring

and reorientation process through its own resources.

The Group should return to operating in the black in the

course of 2012 if the economy remains stable. With the

planned rezoning of the factory grounds in Cham, sub-

stantial added value is to be created for the company in

the medium term.

We would like to take this opportunity thank our employ-

ees for their great commitment and dedication in 2011.

We would also like to thank our customers and business

partners for the excellent relations, and not least you,

Dear Shareholders, for the confidence and trust you have

placed in us.

Philipp Buhofer

Chairman of the Board of Directors

René Furler

Felix Thöni

Hans Schaller

Peter J. Schmid

Urs Ziegler


Peter StuderCEO

Last year the Cham Paper Group’s Executive Manage-ment Board experienced every conceivable high and low. The clear-cut market success of the Group’s lead-ing products and a breakthrough in the R&D pipeline were in stark contrast to the Group’s powerlessness in the face of the excessive strength and overvalu-ation of the Swiss franc. The strategic reorientation resolved by the Group at the end of 2011 and now in the implementation phase is fraught with risk and ambitious in every respect, yet it also opens up a host of opportunities. CEO Peter Studer and his team pro-vide a brief glimpse of the events of last year, and more importantly of the company’s future.

Peter Studer, what did the “big picture” look like in your markets?Peter Studer (PSt): The year started off well, custom-

ers were confident. Then in summer, when newspapers

were full, day after day, with the European debt crisis, we

began to feel a certain cautiousness in the markets. Less

so in Consumer Goods, but among industrial customers

in the graphic arts market at any rate. Companies again

began to reduce their inventories, but not so suddenly as

they did three years previously in the wake of the finan-

cial crisis.

How did this situation impact figures?Patrick Schmid, CFO (PSc): Mid-year our sales revenues

in local currencies were up by 8.8%, yet 3.3% below the

prior-year figure in terms of the Swiss franc. After the

approx. 5% price increases in 2010 we were able to in-

crease our prices by another 8% on average. In doing so,

we were able to offset the significant increases in raw

material costs and, to a small extent, the effect of the

strong Swiss franc. During the second half of the year

we began to lose orders or had to dispense with orders

in hand because the euro prices had dropped below our

contribution margins. We were also forced to inch prices

back step by step; at the end of the year average rev-

enues were only 4.8% above the prior-year figure when

adjusted for currency effects. Fortunately, raw material

prices also dropped further during the second half of the

year. That gives us confidence for 2012.

Interview on the Group’s business situation and outlook


Patrick SchmidCFO

And where were there rays of hope in the market-place?Christine Arnet, Sales Manager (CA): The trend of sub-

stituting paper for aluminium foil continues, particularly in

the BRIC countries. In spring the Indian government en-

acted new laws governing packaging material, forcing the

chewing tobacco industry to switch over its production

within the space of a few weeks. We were ready for this

(grinning) – and had to literally airlift the first 1'500 tons

from Switzerland, the equivalent of no less than 10 jumbo

jets! That makes me confident about the long-term pros-

pects for our speciality papers.

And is R&D able to keep pace with the paradigm shift?Peter Müller, Cham Mill Manager (PM): Yes. After

many years of R&D effort our BARnamic range is now

market-ready. Since the end of 2011 we are able to offer

the food industry papers with water vapour and oxygen

barrier properties. Application engineering projects are

currently under way with existing and a few new custom-

ers. Although sales volumes in 2012 will be small we are

reckoning with significant demand as soon as our cus-

tomers have completed the switchover or the finished

products are on store shelves.

And you decided to upturn the entire company after this most significant market launch in years?PSt: I’ll admit it’s an incredible balancing act. “Upsizing”

so to speak while downsizing makes high demands of

all those involved. During the next two years we will

have to do backbends in order to get the proposed In-

nopark in Cham off the ground and in the air with suc-

cessful projects, satisfied customers and new activities.

At the same time our production people will have to see

to transferring a major part of our product range to Italy

and the requalification of these products with customers

this will entail. In Cham we will have to learn to work with

sourced base paper. And in Italy we will have to succeed

in making the Carmignano mill so efficient that it is able

to perform its new function as the Group’s production

backbone. And that’s not all: we also want to abide by our

sustainability approach embodied in our Vision 2015 and

foster a social agenda while advancing our economic and

ecological agenda.


Peter MüllerMill Manager Cham

Will you succeed?PM: Our team is very seasoned, and I don’t doubt for a

moment that we will achieve our goal. On the contrary, I

am convinced that the focus in Cham, combined with the

pioneering new products and solutions that we are able

to offer in food packaging and Digital Imaging, will set

a lot of new creativity and motivation free. This innova-

tive power will make us strong, not least in the develop-

ment of eco-friendly products. I would like to conclude

by saying that we have been preparing for working with

sourced base paper during peak periods for a long time,

seeing as our coating capacity has long since surpassed

that of the paper machines.

Gerold Zuegg, mill manager in Condino (GZ): In

Condino we have already proven that focussing on larger

quantities combined with a strong team performance re-

sults in the market success we are striving for. By en-

gaging little in the way of financial expense – but all the

more in the way of intelligence and creativity – we have

succeeded in increasing our output of glassine papers by

over 20% in the space of two years and selling it on the

market.

What feedback have you received from customers with regard to the Group’s restructuring?CA: After the initial shock they expressed considerable

understanding for our actions. Many market participants

were astonished or even impressed by our resolve to

navigate the path we had chosen. Despite the regret ex-

pressed by CCK customers, there is appreciation in the

market for being afforded sufficient lead time to plan a

changeover to new suppliers. This is extremely important

to us because we wish to continue doing business with

many of these same customers in other areas.

How are the employees in Cham dealing with the situ-ation?PSc: The identification of the majority of our employees

with the “paper-making bunch” is extremely high. They

are dealing with the situation in an equally loyal and dis-

ciplined manner. This is remarkable, and they deserve

considerable credit for it. For our own part, we will do

everything in our power to find favourable solutions for

everyone under the severance programme. “Work be-

fore money” – that’s our motto here. For us this means

reintegrating those affected in the work process as quick-

ly as possible.


Gerold Zuegg Mill Manager Condino

Will the “paper-making bunch” continue to be com-mitted to the region? PSt: Absolutely. Our relations with the local and cantonal

authorities are excellent. We benefit from our reputation

as an equitable employer. This cooperation will remain in

full force in the future with regard to our speciality paper

activities as well as the transformation of the industrial

park into a new, living residential and commercial district

of Cham.

Christine ArnetSales

16

Consumer Goods

Food Non-Food Tobacco Beverages & Liquids

Industrial Release

Release Liner Tapes Release Liner Labels Industrial Production Facestock (Labels)

Digital Imaging

Large Format Inkjet Graphics Sublimation Print /

Textile Graphics Transpromo Print

Markets of the Cham Paper Group

17

Our consumer goods range includes paper for flexible pack-

aging and label printing. The base papers serve to protect

the contents of the package as well as illustrating the prod-

uct and providing information.

Consumers today demand easily understandable, func-

tional and environment-friendly packaging. One survey* has

shown that 87 % of European consumers prefer paper

packaging. For 93 % of respondents, paper is the most en-

vironment-friendly form of packaging. No fewer than 87 %

like paper packaging because it is simple and safe to handle.

As a quality supplier in the consumer goods sector, we offer

brand name manufacturers innovative paper solutions noted

for their efficiency and safety at all stages of the production

process. The outstanding properties of our papers ensure

brilliant printing results and highly effective presentation of

brand name goods.

* IPSOS consumer survey 2006, in the UK, France, Germany, Poland,

Sweden, Belgium and Spain

Our industrial release solutions consist of the base papers

found in release liners for films, tapes and self-adhesive

labels. These are complemented by papers for process liners

in industrial production as well as facestock papers for the

self-adhesive industry.

The products are used in technical applications, in the auto-

mobile and construction industries, and for labels. The back-

ing papers were developed exclusively for these specific

applications and provide the basis for outstanding release

properties.

Paper is an important raw material in the self-adhesive in-

dustry. Around 70 % of all release liners and 65 % of all the

labels used worldwide are made of paper.

Our team of professionals liaise closely with our customers

to develop tailor-made solutions. These guarantee efficiency,

reliability and consistent quality at all stages of production

and finishing.

The Cham Paper Group commands a leading position in the

world digital imaging market. We supply inkjet papers for

large format digital imaging and industrial inkjet printing. Our

range also includes sublimation papers for digital textile

printing.

The large format inkjet papers are suitable for indoor and

outdoor applications, while coatings for specific purposes

guarantee colours of maximum brilliance. Our sublimation

papers have excellent runnability and transfer qualities.

Compared with offset printing, digital imaging is becoming

increasingly important. Around 10 to 15 % of the world’s

printing is accounted for by digital imaging and the trend is

upward. The advantage of this printing process is its ability

to personalise communications and to produce advertising

tools in small runs at very short notice.

We test our products in the company’s own applications

centre under authentic conditions and offer training courses

for our customers.

Markets of the Cham Paper Group

Consumer Goods

Anna hopes that ice cream treats will soon be available in an eco-friendly wrapper

20

The wrapper of ice cream treats cannot be disposed of as

waste paper or aluminum foil. This bothers Anna Wegmüller and

her brother Tim so much that they almost forget the family’s

TV evening.

Ice cream treats providing for more enjoyment

Consumer Goods

The Wegmüller family has just sat down on the couch

to begin their viewing evening. Before the movie begins

the children get a snack from the kitchen: Anna grabs a

strawberry yogurt while Tim nabs the last chocolate ice

cream cone treat. While Anna disposes of the covering of

her yogurt as aluminum foil her brother is about to throw

the wrapper of his ice cream treat in the waste paper bin.

Anna notices this and stops him: “That contains alumi-

num, meaning you can’t toss it in the paper bin.” Since

13-year-old Anna gave a presentation on sustainability at

school this topic has engaged her more than ever. She

has even succeeded in “infecting” her younger brother.

Yet he has a hard time believing his sister. Instead of

throwing the ice cream wrapper in the trash he takes it

into the living room to ask his father if what Anna is say-

ing is true.

Strict regulations applicable to food packagingAnna is right behind him and explains that the paper used

to make the wrapper has to be coated for hygienic rea-

sons: “Food packaging is subject to exacting regulations.

The products have to be provided with a wrapper that not

only protects them during transportation but preserves

them later on at the point of sale.” The movie evening is

more or less forgotten and they embark on a lively discus-

sion. Father Florian Wegmüller’s company does business

with the Cham Paper Group. That is why he knows about

an innovation in the packaging industry that is soon to be

put on the market: “There is a new technology for coat-

ing paper making it possible to achieve a barrier effect

protecting against oxygen and moisture with the coating

alone. That means no aluminum and plastic are addition-

ally required. That also means you will soon be able to

dispose of your ice cream wrapper in the paper bin.”

“There is a new technology for coating paper making it

possible to achieve a barrier effect protecting against oxygen

and moisture with the coating alone.”

21 Consumer Goods

Wood – a renewable resourceTim is not so easily satisfied with this answer: “Trees

have to be chopped down for paper. And forests are im-

portant for the environment.” Anna interjects: “Yes, but

wood is a renewable resource. And it is in the interest of

paper manufacturers that their most important raw mate-

rial will continue to exist in the future. That’s why protect-

ing forests and woodlands is so important. Paper manu-

facturers source wood only from commercial woodlands

that are replanted. This is evidenced by certifications like

FSC or PEFC. The audits conducted by these independ-

ent organisations guarantee that the chopped-down trees

are replanted.” Now mother Gloria joins in: “That’s right.

And not only that: in the northern hemisphere the tree

population increases 5 per cent every year.” Now Tim is

all out of arguments. But Anna continues nonetheless.

She knows that the supply of waste paper and board is

on the decline. “The production of recycled paper is prof-

itable. Much less energy is consumed in the process as

compared to new paper made of wood since recycled

paper only requires one third the wood that new paper

does.”

Boost for a company’s imageYet Tim still has one objection: “But isn’t the production

of recycled paper much too expensive? Currently com-

panies are more interested in saving money than the

environment.” Anna has just the right answer to this:

“That thinking would be very short-sighted. Nowadays a

company just can’t afford to neglect the environment any

longer. That sort of thing is bad for its image.” And father

Florian Wegmüller adds: “The production of this new pa-

per is easier and consumes less energy, also making the

matter a cost factor. Plus which, eco-friendly packaging

translates into savings when it comes to disposal costs

and taxes.” Now Tim is finally satisfied. Yet the discus-

sion has had a profound effect on him. He vows: “If I

can’t dispose of the ice cream wrapper in the paper bin I’ll

do something else for the environment.” Upon which he

proudly announces: “Mom, you don’t need to drive me to

ice hockey practice tomorrow, I’ll take my bike.”

The Cham Paper Group has developed a sustainable barrier paper for packaging foods that will be available soon: BARnamic. Thanks to a new manufacturing process PVdC and aluminum can now be dispensed with. This translates into shorter production processes since the paper only has to be printed. Benefit to you: lower overheads and energy consumption.

Industrial Release

Florian Wegmüller extends an invitation to the Innovation Workshop

24

Innovations in release and process liners are of vital importance

to Florian Wegmüller. That is why he is taking advantage of

the Labelexpo show in Brussels to gather information on these

new developments.

New business opportunities thanks to hands-on Best Practice advice

Florian Wegmüller, the purchasing manager of Graphix

Lamination Films GLF, became only too acutely aware of

the importance of high-tech films in everyday life during

a business trip last autumn. He distinctly remembers this

trip on account of having to make his way through the

driving rain. It was growing dark and he soon reached

the hotel where he had made reservations for the night.

He then received a call from his boss informing him that

one of his customers in the area had an urgent matter

and needed to see him immediately. Exhausted from

the day’s extremely trying drive through the rain, Florian

entered the address of the restaurant where he was to

meet the customer in his GPS, but this proved to be in

vain: his GPS didn’t show the side street leading to the

restaurant. Florian was about to give up and drive back

when he suddenly saw the sign with the name of the

restaurant flash among the trees.

This has proved to be a watershed event that frequently

pops up in Florian Wegmüller’s mind. Being the head of

purchasing at GLF, he is about to take a key step: GLF

wishes to manufacture premium-quality film material for

traffic and signal signs itself. The goal of this investment

project is to enhance the company’s added value poten-

tial by producing top-quality self-adhesive laminates, thus

enabling the company to tap into new market segments.

Back at his desk at GLF he takes a closer look at the

manufacturing process of these films and quickly discov-

ers that this is a highly complex subject. He decides to

discuss his questions and thoughts with one of his busi-

ness partners, Paul Boser. Florian attended the Cham Pa-

per Group’s Inspiration Days with Boser the year before.

“Why don’t you go to the Labelexpo show in Brussels?

You are sure to get invaluable information on this topic

and see the showcase of new products that are available

on the market,” recommends Boser. “By the way, I’ll be

there, too.”

Visit to Labelexpo, the international venue for the label industry in BrusselsFlorian Wegmüller doesn’t hesitate. The Labelexpo

trade show in Brussels seems to be just the right place

to obtain crucial information at the source, i.e. from key

vendors and converters on highly specific production

processes such as casting and lamination processes.

Plus which, he knows that one of his most reliable and

expert advisors will be exhibiting there: the Cham Paper

Group. Florian has been sourcing silicone-base papers

Industrial Release

25

from Cham Paper for a number of years now. Why? On

account of the high quality Cham Paper offers and also

because of its on-schedule manufacture and delivery and

fair market terms. At Cham Paper’s stand he obtains in-

depth information from the industrial production expert.

Later on at dinner he is enthusiastic when chatting with

his colleague Paul Boser: “The folks at Cham Paper ap-

pear to really have a wealth of experience in this area.

For example, Rico Schönhaus knew exactly not only what

our requirements are but those of our customers as well.

We’ll be getting together again in Switzerland.”

Innovation Workshop in SwitzerlandBack at the office Florian Wegmüller immediately gets

down to business. He invites Rico Schönhaus of the

Cham Paper Group to an in-house workshop. The ex-

perts of GLF are also present. They discuss the specific

requirements that the paper must satisfy for the process

liner. The next meeting takes place already two weeks

later. In the meantime the sample material from Cham

Paper has arrived for the test run at GLF. The experts

from Cham Paper’s Application Engineering Services are

also on hand on this important day. Florian Wegmüller

observes the process with bated breath, waiting for the

reaction of his colleague Kaspar Müller, who is in charge

of the new casting process. After examining the printed

film thoroughly Müller finally nods in approval: “Now that

really looks good! That’s exactly what I had in mind.” The

two men shake hands heartily, followed by the first or-

ders being placed. Now it is up to GLF’s sales manager

to whet customers’ appetite for this new offering. He is

confident: “This should be no problem with attractively-

priced products in this exceptional quality.”

Industrial Release

This speciality paper from the Cham Paper Group has become indispensable in the industry. Innovative processes enable the manufacture of products rang-ing from street signs and carbon fibers to insulation sheeting. The papers used to make these items have been engineered to customer specification. They are used as a substrate in the production process, define the surface finish, and then release the resulting strip from the substrate.

„The folks at Cham Paper know

exactly not only what our

requirements are but those of

our customers as well.“

Digital Imaging

Gloria Wegmüller attracts new sponsors thanks to innovative textile printing

28

When it comes to the success of her son Tim’s ice hockey

team, Gloria Wegmüller gets creative. She is able to attract

new sponsors thanks to the perfect textile print.

Just the right print result translates into new sponsors

Tim Wegmüller’s junior team can look back upon a sen-

sational season. Mother Gloria Wegmüller is proud of her

son. His playing prowess has been crucial in the White

Panthers’ success. Thanks to this and the contacts Gloria

Wegmüller has managed to gain through her law firm,

the interest of sponsors in this young team is on the rise.

However, finalising a contract with a new sponsor is a

rare event. This doesn’t give Gloria Wegmüller a minute’s

rest and she decides to pursue the matter. Full of excite-

ment she relates to her husband what she has learned:

“There is apparently a problem with the rendering of the

logo on the jerseys. That’s why potential sponsors are

hesitant to sign on the dotted line.”

Digital textile printing caters to distinctive ideasFlorian Wegmüller is astonished. He knows the new

digital textile printing process using the Transjet spe-

ciality paper: it is impossible to imagine today’s textile

printing without this sublimation paper. This simple yet

effective process enables the personalised ideas of cus-

tomers to be realised with a little added effort. “The

problem probably lies with the textile printing service.

You ought to organise a meeting with the development

team of the Cham Paper Group. They’re not only experts

when it comes to the manufacture of sublimation paper,

they also assist users so that production applications are

hitch-free.”

Digital Imaging

„Thanks to the expert advice my work can be made much more

efficient and I can offer a more attractive pricing.“

29

Optimal processes make for satisfied customers Gloria Wegmüller follows her husband’s advice and im-

mediately contacts Cham Paper. Already one week later

she accompanies Robert Ackermann, the textile printing

service owner who produces the White Panthers’ jer-

seys, on his visit to the Cham Paper Group’s R&D center.

Now she understands exactly how the printing process

works: the motif is printed onto the sublimation paper

using special inks and then pressed onto the fabric. Heat

and pressure are applied so that the dye is vaporised and

thus applied to the fabric. Robert Ackermann confirms

that he has always struggled with fluctuations in the

color quality. “The reason for this is we can’t draw upon

a single standard in textile printing.” While Robert Ack-

ermann discusses the details of the process with Cham

Paper’s expert and establishes the standard to be applied

in the future, Gloria Wegmüller sits back and relaxes in

her chair. She is only too glad to leave the details to the

pros. The only thing that matters to her is the right end

result for the White Panthers. Robert Ackermann is also

satisfied with the results of the meeting. Thanks to the

expert advice and the recommendations for adapting the

textile printing process his work can be made much more

efficient and he is able to offer more attractive pricing.

The resulting color quality will be optimal right from the

outset. This not only means satisfied customers but does

away with costly corrective print runs.

New sponsors set to venture onto the ice with the teamAlready the next day the printing service sends over new

samples of the White Panther jerseys to Gloria Weg-

müller featuring the existing and proposed new sponsor

logos. With these items in hand Gloria again approaches

potential sponsors. This time her efforts are successful:

the financial backing of the next season is secure and the

quality of the jerseys is perfect. Now it is up to Tim and

his team mates to exhibit a perfect performance on ice.

Florian Wegmüller is confident: “Tim is a veritable pow-

erhouse when he steps onto the ice.”

Digital Imaging

Transjet is more than just a sublimation pa-per for textile printing. The proposed solution begins with selecting the right product for the job and is supplemented with commer-cial advice and process technology tips. This makes for efficient processes custom-adapted to specific customer requirements. Printing services that use Transjet are able to avoid expensive corrective printing runs since they no longer have to rely on a trial-and-error approach. The result: they are able to achieve premium-quality results right from the begin-ning. This not only lowers costs but also enhances their success in the marketplace.

30

31

Table of contents

32 Sustainability Report The foundation of sustainability – sustainable

corporate management

Innovation for our customers

Environmental considerations writ large

Partnership with employees – also in difficult times

Our social responsibility


52 Consolidated financial statements Notes to the consolidated financial statements

Report of the statutory auditors on the consolidated


76 Financial statements of Cham Paper Group Holding AG Notes to the consolidated financial statements

of Cham Paper Group Holding AG

Report of the statutory auditors on the


Table of contents

32

The foundation of sustainability – sustainable corporate management

Sustainability Report

The Cham Paper Group stands for a long corporate tradition in Switzerland. The Group also enjoys an excellent reputation throughout Europe and Asia. We seek to secure these achieve-ments in the future by way of a balanced, sustainable corporate management, particularly so that we may be able to navigate diffi-cult times. For us this means taking a long-term view in everything we do and striving for economic success coupled with resource ef-ficiency and social acceptance. That is why we at the Cham Paper Group take a responsible approach in dealing with the needs of our customers, our employees and our neighbours in Cham (Switzer-land), Condino and Carmignano (Italy).

Our sustainable business practices are based on a management system with clear-cut quality, innovation and safety principles satisfying the requirements of ISO 9001, ISO 14001 and OHSAS 18001. In our products and services we are mindful of the signifi-cance of environmental and quality seals of approval, one example of this being the FSC. Our customers and employees are the key source of inspiration for our continued development and growth. They give us the impetus to achieve the maximum by virtue of their loyalty, open feedback and creativity. At the 2012 Inspiration Days, the second time this event is taking place, we would like to share new ideas with our customers and better understand their wishes by way of direct dialogue.

Our commitment to sustainability is a component part of our Vision 2015. This sustainability chapter delineates the key issues for us as they relate to the environment, our customers and our employ-ees, and society, and shows how we dealt with these issues dur-ing fiscal year 2011. At the same time it provides insight into our proposed goals and initiatives for the new few years to come. The turbulence occurring at the end of 2011 in particular has prompted us to take a closer look at what we have achieved and show the goals and perspectives of the path newly charted by us.

The sustainability report contained in the 2011 annual report is based on the guidelines of the Global Reporting Initiative (GRI) (version G3) for the first time. The GRI is the leading international standard for sustainability reporting enabling comparisons to be drawn with regard to economic, ecological and social aspects (www.globalreporting.org). By applying these guidelines the Cham Paper Group is seeking to inform its stakeholder groups in a com-prehensive and transparent manner about the company’s sustain-ability orientation. The annual report, together with the detailed GRI content index (see http://www.cham-group.com/en/nach-haltigkeitsbericht.html), complies with application level C, which has been reviewed and assured by the GRI.


Vision 2015

In its Vision 2015 the Cham Paper Group makes the following commitments:(basis average values 2005–2009)

Energy and water• Achieve 8% overall reduction in energy consumption by 2015.• Achieve 15% overall reduction in waste water output by 2015.• Achieve 30% overall reduction in sludge output by 2015.

Sustainable forest management / chain of custody• Establishment and certification of the chain of custody for all plants (FSC).• For pulp: FSC-controlled wood in all plants.

Sustainable products – “Green Line”• Catalogue of criteria / differentiators established for defining “sustainability”.• First such products launched.• Sustainability evidenced, e.g. by way of Life Cycle Assessment (LCA).

Occupational health & safety management• Achieve 40% overall reduction in accident frequency by 2015.• Contacts for occupational safety (KOPAS) active in all plants.• Achieve 15% reduction in absence rate by 2015.

Walking the talk – The credibility of what we say• Key figures reviewed for compliance with corporate governance and performance rules (ICS).

33

Our motto “More than paper” expresses our endeavour to create sustainable added value for our customers. In doing so, we rely on new, innovative products and provide integrated user-oriented system solutions. At the Cham site in Switzerland we intend to ex-pand and consolidate this solution competency in the future, while maintaining our high standard of quality with our production fa-cilities in Italy. The positive responses we have received from our customers are a confirmation of our decision to pursue this new direction. They appreciate the advance information on projected changes and the resulting opportunities with regard to our pro-duct portfolio. The needs of our customers and an active dialogue with them are of central importance to us. We have been seeking increased contact with them particularly in view of the changes initiated by us during the year under review. In June 2012 we will be hosting the Cham Paper Group Inspiration Days for the second time. We wish to use this platform to engage in exchanges on creative ideas with our customers and business partners and show them the new focus of our products and services.

Exacting quality and safety standards Our range of products covers the Consumer Goods, Industrial Release and Digital Imaging segments. Yet the requirements to be satisfied by the products in these three segments differ as greatly as the needs of our customers. By offering complementary services like supply chain management and value chain manage-ment we seek to satisfy this broad range of requirements and offer our customers an all-in-one integrated service. Consumer Goods: stringent statutory regulations apply to food packaging. Industrial Release: properties ranging from stability and consistent quality in processing and finishing to the desired functionality in use and optimal logistics are decisive. Digital Imaging: the demand for inno-vative solutions takes front and centre stage, e.g. for large-format inkjet papers for indoor and outdoor applications.

Each product is systematically analysed and optimised during all phases from development to production to disposal with regard to its quality and safety. The basis for these activities: the specifica-tions of ISO 9001, ISO 14001 and OHSAS 18001, according to which the Cham Paper Group is certified. In 2011 no cases were reported in which any rules or regulations relating to quality and safety were violated.

Dialogue – The motor of continuing developmentHigh product quality is our capital and the foundation on which the satisfaction of our customers is based. Thanks to our broad network we engage in in-depth personal dialogue with them and seek direct contact at trade shows and forums. We utilise their feedback to constantly optimise our product portfolio and range of services, and also to improve our production standards. Example: at the request of one customer a hygiene management system was examined in 2011 that will be implemented throughout our production operations in Italy. We also conduct a supplier evalua-tion with our key customers once a year. We have plans to extend surveys of this type to a larger group of customers.

Transparent information on our products In 2011 Fukushima was an issue for us as well. Customers wanted to be sure that no radioactive contaminated raw materials are used that end up in the final products by way of the packaging material (example: hazard posed to animal feed and the downstream food chain by contaminated packaging material). In every case we were able to preclude radioactive contamination entirely and actively communicated on this issue in an open manner at all times.

For more transparency we provide technical factsheets on our products. Responses to customer queries about BfR1) or FDA2) ap-proval can be backed up by the relevant documents. Queries with regard to REACH2) or the German Packaging Ordinance (transposi-tion of the EU Packaging Directive) are responded to us in writing. We have contractual agreements with some customers on the disclosure of our proprietary formulations. The FSC logo on our orders of materials, delivery slips, invoices and the products them-selves point to our adherence to environmental aspects. In order to ensure the reliable use of our products we always indicate the applications for which a product is designated and warrant compli-ance with statutory requirements.

Innovation for our customers


1) German Federal Institute for Risk Assessment2) U.S. Food and Drug Administration 3) EU Chemicals Directive

34

Resource efficiency and responsible environmental management are component parts of our philosophy. The critical environmental considerations of paper production are: first and foremost the out-put of waste water and the consumption of energy and chemicals. In order to minimise these factors, we have invested substantially in the innovation and development of new products and in improv-ing our production processes. We intend to expand and fortify our innovative capability in the future.

Products that contribute to a smaller ecological footprintIn all product categories we work hand in glove with specialists and in our laboratories to constantly improve compliance with eco-logical and sustainability requirements. Example: the aluminium in-nerliners typically used in cigarette packs in the cigarette industry were successfully replaced with a new metallised innerliner em-ploying a new process. In the vacuum metallisation process used to produce innerliners a paper web is coated with aluminium that has been vaporised in a vacuum. This new process enables twice the quantity of metallised paper to be produced using the same quantity of aluminium. In our endeavour to reduce our ecological footprint we have achieved other advances in the manufacturing of flexible packaging and with our BARnamic product line. Here we always use renewable raw materials where possible in order to produce papers that exhibit barrier properties protecting against the action of water vapour and/or oxygen. This has enabled pack-aging materials made of aluminium or containing halogens (e.g. PVdC) etc. to be replaced.

Resource-efficient production Innovative and eco-friendly products are not really sustainable un-less the direct and indirect consumption of energy and materials is as economical as possible and compliance is maintained with relevant environmental regulations. In the production of our prod-ucts we recycle the resulting paper waste back into the production process. This makes sense from both an ecological and economic point of view and is very successfully practiced within the Cham Paper Group. In so doing, we also optimise our operational proc-esses with the goal of minimising our ecological footprint. By en-gaging in targeted measures at Cham during fiscal year 2011 such as replacing the lighting in one of the production sheds, optimising the white water pumps, providing for new LED lighting in the park-ing area, shutting down the eaves gutter heating, and reclaiming the heat in waste emissions we were able to achieve savings total-ling 1'160'000 kWh of electrical energy, 1'683'000 kWh of thermal energy, and 333 metric tons of CO2. By virtue of the future down-sizing of operations at Cham, production will be reoptimised so as to ensure continued efficient energy use. Our goals will continue to remain ambitious and are aimed at an annual reduction of 1% of specific fuel (20 kWh/t) and power consumption (9 kWh/t).

Environmental considerations writ large


35

Eco facts & figures

Eco facts & figures 2011 2010

Materials

Sourced raw materials in t (contained directly in the final product) 1)

FSC-controlled wood pulp 160'730 164'110

FSC-certified pulp 8'080 n/a

Chemicals 83'909 78'431

Sourced semi-finished products in t (contained directly in the final product)

Sourced base paper 353 612

Direct energy consumption in MWh (direct)

Non-renewable energy

Natural gas 640'832 663'062

Indirect energy consumption (electricity) in MWh

Non-renewable energy

Nuclear energy 53'095 54'646

Fossil fuels 183'804 186'713

Renewable energy

Hydroelectric power 33'365 33'965

Wind power generation 1'774 1'788

Biomass 1'656 1'669

Total energy consumption 187'234 190'170

Water usage in thousand m3 2)

Industrial and process water 6'451 6'607

Cooling water 12'902 13'214

Drinking water 91 87

Total water usage 19'444 19'908

Waste water in thousand m3

Via the company’s own and municipal water treatment plants 670 848

Via the company’s own treatment plant 4'656 4'666

Total waste water emissions 5'326 5'514

Greenhouse gas emissions in t CO2

Direct emissions (scope 1)

From the use of natural gas 129'422 133'912

Indirect emissions (scope 2)

From electricity 53'241 53'818

Waste according to type and disposal method in t

Waste for reuse/recycling 2'939 11'253

Sludge 6'124 6'341

Non-hazardous waste 336 420

Special waste total 73 5 3)

1) The paper waste created during production (offcuts, broke) is recycled to produce the same paper variety. For details on the portion of quantities recycled in

this manner, please refer to the comprehensive GRI index on the Internet. 2) Industrial and process water is treated and reused as part of the production process. Concrete targets for further optimisation of the water cycle are contained

in Vision 2015. 3) No data is available for Italy.


36

In 2011 the Cham Paper Group had a combined workforce of 690, of which 355 were located in Switzerland and 335 in Italy. A total of 32 employees were employed part time and 27 had a fixed-term employment contract. The 2011 fluctuation rate of 9% in Italy and 4.2% in Switzerland was lower than in the previous year. Due to the upcoming partial shutdown of base paper production in Cham and the resulting organisational changes, shifts in the composition of the workforce are to be reckoned with at all sites during the coming year. In order to secure our technological and innovative capability in the future, we consider it key to secure the transfer of existing expertise within the company and more strongly integrate the up-and-coming generation of professionals.

United we are strong thanks to transparency and participation The Cham Paper Group is relying on partnership with its employ-ees to weather the coming challenges, particularly in turbulent times. We go to every effort to develop prospects: only in this manner can we cater to individual needs and treat all employees in an equitable manner. We foster an open communication cul-ture and the exchange of views with social partner organisations. In Italy 100% of the workforce falls under collective bargaining agreements. In Switzerland, a country that does not have such a strong union tradition, only 61.4% were covered by such agree-ments in 2011. Being listed on the stock exchange, we complied with the SIX guidelines pertaining to the notice period applicable to ad-hoc publicity when announcing the proposed job cuts in the 4th quarter of 2011. The company employees’ representatives and the representatives of other union social organisations (e.g. Schweizerischer Papier- und Kartonarbeitnehmerverband (SPV) [Swiss Paper and Card Employees’ Association], Syna and Unia) were informed in an open manner, and in the course of a consulta-tion procedure (21 days) were afforded the opportunity to exam-ine the strategic options being considered by Cham's executive management and the findings obtained in the studies that had been conducted. The employees’ representatives and the social organisations were also involved in architecting the redundancy scheme. In doing so, all parties went to every effort to seek flex-ible solutions and supported implementing suitable measures in the near term so as to improve the company’s economic situa-tion. Some of the actions taken: introduction of shortened working hours, this having been decided as the result of a fall in demand in markets and the resulting undercapacity utilisation in the mills. The employees’ representatives exhibited solidarity in supporting this measure and as a consequence prevented lay-offs through the end of the year under review. A gradual reduction of the number of employees will be put into effect starting in 2012, following the negotiated redundancy scheme.

Health and safety always take front and centre stage Health and safety have always played a key role for us; all pro-duction facilities of the Cham Paper Group are certified to OHSAS 18001. We always have our eye on these issues thanks to our triple-tier risk control and our Health & Safety Department. Hazards and risks are analysed by way of tours and inspections on site, performing assessments of incidents and accidents, and by con-ducting preliminary evaluations for new construction, conversion and retrofitting projects. Materials are regularly examined for their safety and are replaced where necessary. Employees receive in-struction and training on safety and security topics, and refresher sessions to ensure that they remain current. The KOPAS (contacts for safety in the workplace) provide employees with direct points of contact for health and safety issues. There were no work-relat-ed fatalities in Italy or Switzerland in 2011 (for more details about the accident statistics please refer to the GRI index). Health and work-life balance issues have been covered in Cham by workplace health management (WHM) since 2009, it being responsible for absence management, prevention topics, assistance of employ-ees who have fallen ill or suffered an accident, sheltered workplac-es, reintegration in the work process etc. In 2011 these activities were supplemented by projects for promoting an improved work-life balance such as the “Bike to Work” initiative, vitamin days or sun cream campaigns.

Education & training and CPD – an investment in the future Recognising talent and fostering it is one of the Cham Paper Group’s prime objectives. Brief weekly exchanges between em-ployees and their supervisors are just as important as annual per-formance interviews. A job performance interview was conducted with all employees at Cham (100%) in 2011. Our employees can complement the resulting goal and development agreements by way of targeted in-house and external basic and continuing educa-tion and training measures, the attending costs being assumed by the Cham Paper Group in part or in full. We offer employees who will be retiring soon the option of attending special retirement preparation seminars.

We believe in supporting our employees, particularly in times of proposed manpower cuts, this applying to those who are forced to leave the company as well as those who are left behind. Em-ployees affected by job cuts are supported by way a new place-ment course providing for career development and an opportunity to take inventory of their personal situation and by an in-house job centre established by the company specifically to help employees find a new situation. The Cham Paper Group’s job centre works closely with the regional job placement centres and lends active support in finding new employment. Further concrete CPD goals have not been definitively formulated for the next few years to come owing to the uncertainties abounding at the present.

Partnership with employees – also in difficult times


37

We also seek to fulfil our obligations when it comes to social responsibility. This extends to an above-board and equitable ap-proach in dealing with partners and suppliers, the ties to the sur-rounding regions of our sites, and the implementation of compli-ance standards.

Ensuring environmental quality by working together with suppliers Relations with our ca. 1'100 suppliers are based on trust and close cooperation. In the case of our pulp suppliers in particular we are vigilant when it comes to environmental labels like FSC and com-pliance with ISO guidelines. In Switzerland the entire quantity of sourced pulp complies with the minimum standard of FSC-con-trolled wood. In Italy this figure has reached ca. 90%. Our top 45 suppliers are 100% ISO 9001-certified. Plans have been made to source 100% FSC-controlled wood pulp in the future (future mini-mum standard) and, in addition to ecological aspects, also include social criteria more strongly in the sourcing process.

In dialogue with our neighboursBeing an ecologically minded and responsible employer, the Cham Paper Group also maintains a vigorous dialogue with the neigh-bouring communities of its production sites. In Cham in particular, where an increasing number of buildings have been constructed in the immediate vicinity and residential communities have grown up, we fostered mutual understanding in 2011 by enabling these community stakeholders to take a peak at what we do, e.g. on our open door day. Complaints of odour and noise emissions of the production facility are rare. Sizable nuisances are perceived in the delivery of raw materials by rail and the removal of finished products by truck, there having been repeated complaints in the past. At the Cham site the problem of the high-pitched scraping noise has been countered in part by investing in an automated lubrication system of the track facilities. By additionally investing over one million Swiss francs in silencers, sound absorbing panels, air handling systems and the adaptation of production facilities, the noise level around the mill has been additionally lowered. The response to these actions in the neighbouring vicinity has been positive and is a significant foundation for mutual understanding, also with regard to the gradual shutdown of base paper production in Cham starting in 2012.

Complaints were also received from the surrounding community at the Carmignano site in Italy on account of incoming and out-going deliveries. However, sizable infrastructure investments are required to improve the situation. We are in dialogue with the local authorities and the first action plans have been developed. Other goals in this area are laid down in our Vision 2015.

Implementation of compliance standardsWe attach high priority to adherence to statutory requirements and compliance standards, this being embodied in our governance guidelines. With these guidelines we wish to ensure that a culture is lived at the Cham Paper Group that embodies equitable and fair treatment among all employees at all levels and that our corporate and business activities are guided by respect and trust. The values set out in our governance guidelines are integrated in the general employment terms as an obligatory element and are binding on each and every employee. Other cornerstones for securing our ba-sic values are: expense regulations and guidelines, organisational regulations and the internal regulations. They contain detailed spe-cifics of our leadership and communication approach, our authority matrix and guidance for dealing with insider information. All em-ployees are acquainted with the applicable rules and regulations by way of freely accessible information on the company’s website and by way of internal information bulletins that are issued on a regular basis. Employees comply with them in dealings with cus-tomers and suppliers alike. In 2011 no legal action was brought against the Cham Paper Group for anti-competitive behaviour or anti-trust or monopoly practices. Nor were any sanctions or fines imposed by government authorities or courts for non-compliance with statutory provisions or environmental regulations and targets.

Our social responsibility



The Cham Paper Group is committed to contemporary corporate governance. The statements below comply with the current Direc-tive on Information Relating to Corporate Governance (DCG) of the SIX Swiss Exchange and describe the principles and regulations relating to the organisation, management and monitoring of Cham Paper Group Holding AG and its subsidiaries as at 31 December 2011. These principles are contained in the Articles of Association and in the Organisational Regulations of the Board of Directors.

1. Group structure and shareholders

1.1 Group structureCham Paper Group Holding AG, with its headquarters in 6330 Cham, is a public limited company organised according to the laws of Switzerland. In its capacity of a holding company it holds, either directly or indirectly, all companies belonging to the Group. The scope of consolidation does not include any listed companies. The unlisted companies that are part of the scope of consolidation of Cham Paper Group Holding AG are presented on page 73 of the consolidated financial statements with details of each company, its registered office, share capital and shareholdings. The Group’s operational management structure as at 1 January 2012 is shown in the organisational chart below.

1.2 Significant shareholdersAs of 31 December 2011, 1'078 shareholders were entered in the share register of Cham Paper Group Holding AG (2010: 1'100 shareholders). The following shareholders and shareholder groups, known to Cham Paper Group Holding AG from the share register and from the disclosures of participating interests in the Swiss Official Gazette of Commerce, each held more than three per cent of the share capital as at 31 December 2011 and 2010:

2011 2010

Buhofer shareholder group (BURU Holding AG, Philipp Buhofer, Heinz Buhofer, all Hagendorn 40.41% 40.22%

Cham Paper Group Holding AG, Cham 5.95% 6.28%LB (Swiss) Investment AG, Zurich 4.80% 1) 4.01%

1) LB (Swiss) Investment AG, Zurich increased its share in March 2012 from

4.80% to 5.06%.

In the notification to the SIX Swiss Exchange of 3 November 2009, Philipp Buhofer was disclosed as acting jointly or as an organised group in concert with BURU Holding AG (Buhofer shareholder group). His personal holding as of 31 December 2011 amounted to 0.74% of the share capital of Cham Paper Group Holding AG.

Cham Paper Group Holding AG

Board of Directors

CEO

Peter Studer

Corp. Communications & Services

Franziska Stöckli

CFO

Patrick Schmid

Sales

Christine Arnet

Mill ManagerCham

Peter Müller

Mill ManagerCarmignano

Peter Studer(ad interim)

Mill ManagerCondino

Gerold Zuegg

Corporate Governance


In the notification to the SIX Swiss Exchange of 9 April 2010, Heinz Buhofer was disclosed as acting jointly or as an organised group in concert with BURU Holding. As such, he belongs to the Buhofer shareholder group. His personal holding as of 31 December 2011 amounted to 0.39% of the share capital of Cham Paper Group Holding AG. In the notification of 9 April 2010, the shareholders of BURU Holding AG that are not shareholders of Cham Paper Group Holding AG were disclosed to the SIX Swiss Stock Exchange 1).

As far as Cham Paper Group Holding AG is aware, the significant shareholders of the company have not entered into any sharehold-ers' agreements among themselves nor have they entered into any agreements regarding the exercise of voting rights or other rights related to the shares of Cham Paper Group Holding AG.

1.3 Cross-shareholdingsCham Paper Group Holding AG does not have any cross-share-holdings in other companies exceeding the maximum limit of 5% in terms of capital or voting rights.

2. Capital structure

2.1 Share capitalThe nominal share capital of Cham Paper Group Holding AG was CHF 48'425'000 as at 31 December 2011. The share capital is di-vided into 745'000 fully paid-up registered shares with a par value of CHF 65.00 per share. All shares have the same voting rights and are entitled to the same dividend. There is only one category of registered shares.

The shares of Cham Paper Group Holding AG are listed on the SIX Swiss Exchange and are traded in the small & mid caps segment (securities number: 193185, ISIN code: CH0001931853, ticker symbol: CPGN). For further information about the shares of Cham Paper Group Holding AG, please refer to pages 6 and 7.

Cham Paper Group Holding AG suspended the share buy-back program initiated in FY 2008 in April of 2009. The Group did not ac-quire any other shares via this share buy-back program in FY 2011. The treasury shares acquired as part of this program have not been voided. As of 31 December 2011, Cham Paper Group Holding AG held 44'302 registered shares in the company's own holdings (31 December 2010: 46'772 registered shares in the company's own holdings). This corresponds to 5.95% of the share capital of Cham Paper Group Holding AG.

2.2 Conditional and approved capitalThere is no conditional or approved capital.

1) The individual disclosure notifications published during the year are publicly

accessible at www.six-exchange-regulation.com/publications/published_noti-

fications/major_shareholders_en.html.

2.3 Changes in capitalIn FY 2011 no changes were made to the company’s capital. As of 31 December 2011 the nominal share capital of Cham Paper Group Holding AG amounted to CHF 48'425'000. The par value of the registered shares amounted to CHF 65.00.

At the 98th General Meeting of Shareholders on 29 April 2010, and based on the specially qualified auditor's report, the shareholders decided to reduce the share capital of Cham Paper Group Holding AG of CHF 57'737'500 by CHF 9'312'500 to CHF 48'425'000 by reducing the par value of the 745'000 registered shares from CHF 77.50 to CHF 65.00 per share, to use the reduction amount of CHF 12.50 per share as a disbursement to shareholders, and to amend the Articles of Association accordingly.

In FY 2009 no changes were made to the company’s capital. As of 31 December 2009 the nominal share capital of Cham Paper Group Holding AG amounted to CHF 57'737'500. The par value of the registered shares amounted to CHF 77.50.

For further information about the development of the share capital structure of Cham Paper Group Holding AG during the last two years, please refer to the tables on page 59 of the financial state-ments of Cham Paper Group Holding AG.

2.4 Participation and dividend right certificatesCham Paper Group Holding AG has not issued any participation certificates or dividend right certificates.

2.5 Restrictions on transferability and nominee entriesTransfer of the registered shares of Cham Paper Group Holding AG is not subject to any restrictions. The only requirement for entry in the share register is a declaration that the shareholder has acquired the shares in his or her own name and on his or her own account. Otherwise there are no other entry restrictions.

2.6 Convertible bonds and optionsCham Paper Group Holding AG has no outstanding convertible bonds nor has it issued any tradable options.

2.7 Dividend policy and appropriation of available earningsCham Paper Group Holding AG pursues a dividend policy accord-ing to which 25% to 35% of the net operating profit is designated for distribution. This ensures that profits are largely plowed back into the company for financing its long-term growth. The proposal made by the Board of Directors to the General Meeting of Share-holders pertaining to the appropriation of the available earnings always takes account of the company’s current financial situation.


3. Board of Directors

3.1 Members of the Board of DirectorsThe Board of Directors of Cham Paper Group Holding AG is composed of six non-executive members. None of the serving members of the Board of Directors belonged to the Executive Management Board of Cham Paper Group Holding AG or that of any of its subsidiaries or engaged in any significant business relations with any of its subsidiaries during any of the three financial years preceding the reporting period.

Name Position

Election to the Board of Directors End of term Audit Committee

Compensation and Nomination Committee

Philipp Buhofer Chairman 2004 2012 Member Member

René Furler Vice Chairman 2000 2012 – Chairman

Urs Ziegler Member 2007 2012 – Member

Felix Thöni Member 2008 2012 Chairman –

Hans Schaller Member 2009 2012 Member –

Peter J. Schmid Member 2011 2012 Member –

Name

Year of birth, nationality

Position

Professional background

Education

Activities in governing and

supervisory bodies

Philipp Buhofer

1959, Swiss citizen

Chairman of the Board of Directors since 2006Member of the Board of Directors since 2004

Since 1997: independent businessman and Board of Directors member 1987–1997: EPA AG, Zurich, Group Head Purchasing and Sales, overall responsibility for procure-ment, Executive Management Board member, Delegate and Chairman of the Board of Directors 1984–1987: Purchasing, Metro International, Baar, Switzerland, Düsseldorf, Germany, and Hong Kong 1978–1981: professional pilot in Louisiana, South Carolina, USA

Business Economics degree from the School of Economics and Administration of Lucerne

Chairman of the Board of Directors, Kardex AG, ZurichChairman of the Board of Directors, Rapid Holding AG, DietikonDelegate of the Board of Directors, BURU Holding AG, HagendornCo-owner of DAX Holding AG, HagendornBoard member in various SMEs


Name


Position


Education


supervisory bodies

René Furler

1949, Swiss citizen

Vice Chairman of the Board of Directors since 2008Member of the Board of Directors since 2000

Since 2001: Chairman of the Executive Board, HG COMMERCIALE, Zurich1999–2001: CEO, ZZ Wancor AG, Regensdorf 1994–1999: Head of Construction Materials Division, Zürcher Ziegeleien AG (now Conzzeta), Zurich1985–1994: Head of Construction Materials, Hard AG, Volketswil1980–1984: field service representative, Product Manager Construction Materials, Zürcher Ziegeleien AG (now Conzzeta), Zurich

Equivalent of MEng from ETH ZurichEquivalent of MA in Economics, University of ZurichEquivalent of DSc, ETH Zurich

Member of the Board of Directors, Alcover AG, Zug Member of the Board of Directors, SIA Haus AGBoard member of various subsidiaries of HG COMMERCIALE, Zurich

Name


Position


Education


supervisory bodies

Urs Ziegler

1948, Swiss citizen

Member of the Board of Directors since 2007

1980–2009: CEO, Ziegler Papier AG, Grellingen1975–1980: Director of Customer Projects and Consultancy, Eldag AG, Zurich 1975–1980: Director of Business Management and IT Organisation, COC AG, Zurich 1973–1975: Financial Accounting, Eldag AG, Basel

Equivalent of MA in Economics, University of St. Gallen

Member of the Board of Directors, Ziegler Papier AG

Name


Position


Education

Activities in governing and super-

visory bodies

Felix Thöni

1959, Swiss citizen


Since 2010: Member of Board of Directors / Management Consultant2003–2009: CFO, Charles Vögele Group, Pfäffikon1992–2002: CFO, Gavazzi Group, Steinhausen1988–1991: Area Controller, Schindler Management AG, Ebikon

Equivalent of PhD of Economics, University of St. Gallen

Member of the Board of Directors, Raiffeisenbank Cham, ChamVice Chairman of the Board of Directors and member of the Executive Committee of Kardex Group, ZurichMember of the Board of Directors, Renergia Zentralschweiz AG, Emmenbrücke


Name


Position


Education


supervisory bodies

Hans Schaller

1944, Swiss citizen


2003–2009: CEO, Chemie+Papier Holding, Perlen1996–2002: CEO, Perlen Group, Perlen1983–1996: CEO, Gipsunion AG, Holderbank1980–1982: CFO, Gipsunion AG, Holderbank1978–1980: Business Controller Europe, Kontron AG, Zurich1973–1978: Project Manager Consultancy, Hayek Engineering AG, Zurich1970–1973: Market Research Manager, British American Tobacco, Geneva

Equivalent of MA in Economics, University of St. Gallen

Member of the Board of Directors, Healthco-Breitschmid AG, KriensMember of the Board of Directors, Curaden International AG, Kriens

Name


Position


Education


supervisory bodies

Peter J. Schmid

1961, Swiss citizen


Since 2004: attorney-at-law with own law firm (Schmid Rechtsanwälte)1992–2003: attorney-at-law

Completion of legal education at the Universities of Geneva and BernMaster of Laws in International Trade and Finance (Tulane University, New Orleans, Louisiana, USA)

Chairman of the Board of Directors of Immark AGChairman of the Board of Directors of Helvetic Trust Estates AGMember of the Board of Directors of AZAD Fine Chemicals AGMember of the Board of Directors of ASATONA AG

3.2 Other activities and interestsWith the exception of the positions mentioned under 3.1, the members of the Board of Directors are not engaged in any activi-ties in executive management and supervisory bodies or perma-nent management and consultancy functions for significant inter-est groups.

3.3 Elections and term of officeMembers of the Board of Directors are elected by the sharehold-ers at the General Meeting of Shareholders for a term of one year, one year being the period from one General Meeting of Sharehold-ers to the close of the next. If elections are held to elect replace-

ments for board members mid-term, those so elected complete the term of office of the members they are replacing. Elections take place on an individual basis. Re-election is permissible. There is no limit to the number of terms of office that any one mem-ber may serve. However, upon reaching the age of 70 Board of Directors members must lay down their office at the next General Meeting of Shareholders. The shareholders have the right to vote Board of Directors members out of office at the General Meeting of Shareholders. The number of Board of Directors members is limited to between five and seven. The average time the present Board of Directors members have served is approximately five years, their average age being ca. 59.


3.4 Internal organisation

3.4.1 Allocation of responsibilities within the Board of DirectorsThe Board of Directors has the ultimate authority to make deci-sions except where this is reserved to shareholders by operation of the law or the Articles of Association. The Board of Directors is responsible for the overall direction, supervision and control over executive management. It enacts guidelines for the company’s business policy and informs itself regularly about the company’s performance and business situation. The main responsibilities of the Board of Directors are:

• Defining the Group’s organisational and strategic direction• Ultimate supervision of the Group’s business operations and

monitoring of its performance• Approval of significant acquisitions and disposals• Establishing systems and procedures for the Group’s account-

ing and financial control and planning• Establishing the Group’s business policy, in particular its invest-

ment and financial policy• Approval of budgets including investments and financial plans• Drafting the Annual Report, preparation and conducting of the

General Meeting of Shareholders, and the implementation of the resolutions adopted by it

• Establishing the key principles of corporate governance and guidelines for the Group’s information and communication poli-cy

• Appointment and dismissal of persons charged with the man-agement and representation of the Group and designating au-thorised signatories

• Establishing the organisation and monitoring of the internal con-trol system

• Informing the competent authorities in the event of excess liabilities over assets

3.4.2 Board of Director committeesThe Board of Directors is assisted by two committees.

Audit CommitteeThe Audit Committee assists the Board of Directors in perform-ing its duties of ultimate financial supervision of the company and in managing its interactions with the external auditors. The main tasks of the Audit Committee are:

• Auditing the consolidated financial statements and the financial statements of Cham Paper Group Holding AG in tandem with the Executive Management Board and the external auditors

• Evaluating the appropriateness and effectiveness of the ac-counting and reporting principles used for consolidation

• Assessing the presence of an effective internal control system including risk management

• Evaluating and selecting external auditors to be nominated for election by the General Meeting of Shareholders

• Assessing the performance of the external auditors and verify-ing their independence

• Reviewing the fees of the external auditors and the compatibil-ity of their auditing activities with any other consulting activities in which they may be engaged

• Reviewing information concerning corporate governance for compliance with the guidelines of the SIX Swiss Exchange

• Deciding whether the Board of Directors can be recommended to submit the consolidated financial statements and the financial statements of Cham Paper Group Holding AG to the General Meeting of Shareholders for adoption by it.

The Audit Committee has no decision-making authority, but it rather assesses the aforementioned matters and prepares the individual and consolidated financial statements for approval by the Board of Directors. Meetings are attended by the CFO, and in part also by the CEO and, as necessary, by representatives of the external auditors. The Audit Committee meets at least once every six months, more frequently as may prove necessary. In FY 2011 three meetings were held, each lasting approximately half a day. Representatives of the external auditors attended all three meetings.

The Audit Committee consists of Felix Thöni (Chairman), Philipp Buhofer, Hans Schaller and Peter J. Schmid. Because of their pro-fessional background, the members of the Audit Committee have sufficient experience and competency in accounting and financial management to be able to perform their responsibilities.

Compensation and Nomination CommitteeThe Compensation and Nomination Committee establishes the principles for compensation of the Board of Directors, the CEO and members of the Executive Management Board. It also establishes the guidelines for the selection of candidates for membership on the Board of Directors and the Executive Management Board. The main tasks of the Compensation and Nomination Committee are:

• Establishing the compensation principles for the Board of Direc-tors, the CEO and the Executive Management Board members

• Establishing the financial compensation for the Board of Direc-tors, the CEO and the Executive Management Board members

• Evaluating the performance of the CEO• Evaluating the performance of the Board of Directors• Establishing the principles for the selection of candidates for

election to the Board of Directors and selecting candidates• Establishing the principles for the selection of the successor to

the CEO, Executive Management Board members and selecting candidates

• Reviewing the status of the pension fund of Cham Paper Group Holding AG and its subsidiaries


The Compensation and Nomination Committee has no decision-making authority, but it rather assesses the aforementioned mat-ters and prepares them for approval by the Board of Directors. The Compensation and Nomination Committee meets at least once every six months, and more frequently as may prove necessary. The Compensation and Nomination Committee consists of René Furler (Chairman), Philipp Buhofer and Urs Ziegler. In FY 2011, two meetings were held, each lasting about half a day.

3.4.3 Functioning of the Board of Directors and its committeesThe Board of Directors meets at the invitation of the Chairman as often as the conduct of business demands, however at least once every quarter. In addition, extraordinary meetings or decisions by way of circular also take place as required. The Board of Directors meets once a year for a strategy seminar. Decisions are made by the entire Board of Directors. The Chairman generally chairs the Board of Directors meetings and casts the tie-breaking vote in the event of ties. He also plans and runs these meetings. Meetings of the Board of Directors and their agendas are prepared by the Chairman in consultation with the CEO. Each member of the Board of Directors may convene a meeting or request that an item be placed on the agenda. The members of the Board of Directors are sent the agendas and documentation in advance of the meet-ings. Apart from the Board of Directors members, meetings are also attended by the CEO and CFO and, depending on the agenda, by other Executive Management Board members. Depending on the matter being discussed, the Board of Directors may also invite other third parties to be present at meetings. When dealing with matters that relate only to Cham Paper Group Holding AG or that are of a particularly confidential nature, only Board of Directors members are in attendance. Minutes are taken of the delibera-tions and decisions of the meetings. In 2011 the Board of Directors held nine meetings, of which five were half-day meetings and four were full-day meetings. Two of these meetings were convened as extraordinary meetings. An external legal counsel was present at three meetings.

The Board of Directors has established two permanent commit-tees from among its members, the Audit Committee and the Com-pensation and Nomination Committee, to deal with clearly defined subject areas. These two committees primarily have an advisory and monitoring function and they report to the Board of Directors so as to enable it to prepare its decisions or exercise its supervi-sory function. The members of both committees are appointed by the Board of Directors.

The Board of Directors is a constituent body; it elects the Chairman and Vice Chairman from among its members. The Vice Chairman's role is to represent the Chairman if he is unable to attend or is otherwise engaged.

3.4.4 Delegation of Authority within the Board of Directors and the Executive Management BoardThe Board of Directors of Cham Paper Group Holding AG del-egates operational management completely to the CEO. By the same token, the CEO is responsible for operational management. The CEO is assisted in carrying out this task by members of the Executive Management Board who report directly to him. The au-thorities and responsibilities of the Executive Management Board are determined in particular by the budget approved by the Board of Directors, the Organisational Regulations (http://ir.champaper.ch/cgi-bin/show.ssp?id=770&companyName=champaper&language=English) and the established strategy.

3.4.5 Information and control instrumentsThe Board of Directors exercises its ultimate supervision of the Executive Management Board by way of a structured reporting system as well as management accounting and budgeting pro-cesses. Generally, the CEO, the CFO, the Sales Manager and the Cham Mill Manager attend the meetings of the Board of Directors. At meetings they present and comment on day-to-day business, provide a detailed view of finances, and inform the Board of Direc-tors about current operational issues in the core businesses. They also report on developments in key markets and projects and draw the Board of Directors’ attention to existing and imminent risks. Apart from materials on the course of business, financial results, market developments and other significant events in the Group, the Board of Directors also receives the following comprehensive written reports on a periodical basis, these items being provided to the Board in a timely manner prior to its meetings:

• Finance Report monthly• Quarterly Report quarterly• Half-year Report bi-annually• Annual Report annually• Business Plan Report annually• Budget Report annually• Forecast Report three times per year (in April, July and October)

The monthly financial report contains an overview including com-ments and a variance analysis on the current-year budget and prior-year figures with regard to the balance sheet, income statement, cash flow statement, net working capital, and key production and sales figures for Cham Paper Group Holding AG and its subsidi-aries (Cham Paper Group Management AG, Cham Paper Group Schweiz AG, Cham Paper Group Italia S.p.A.).


The Board of Directors committees meet regularly with members of the Executive Management Board and external consultants, including representatives of the external auditors. The external auditors are accountable to the Audit Committee, the Board of Directors, and ultimately to the shareholders. Upon completing an audit, the external auditors submit the financial report to the Audit Committee and discuss its findings with it. The auditors report in a comprehensive manner to the Board of Directors, in so doing assessing reporting and accounting, the internal control system, and the performance and results of the audit.

As a general principle, no Board of Directors members take part in meetings of the Executive Management Board. However, the Chairman of the Board of Directors and individual Board mem-bers regularly consult with the CEO and, as needed, with other Executive Management Board members. Additionally, once a year a joint workshop is conducted with the Board of Directors and the Executive Management Board at which the strategy and business plan for the next three years is discussed and established.

3.4.6 Risk assessment and internal control system for financial reportingIn view of article 728a of the Swiss Code of Obligations, which went into effect on 1 January 2008, the Group introduced a uni-form internal control system (ICS) for financial reporting. In this context, fundamental relevant accounting and reporting risks were identified and analysed with regard to their probability of occur-rence and damage potential. Key internal controls were identified and documented for the risks identified in this risk assessment as having a high probability of occurrence and posing a high damage potential. The key controls identified were documented both at the level of the overall company and at the level of the various business processes and systems of the subsidiaries. Key controls relate to control activities in the allocation of authority and the re-gulation of control measures. Key controls must be documented at minimum by process descriptions and by details pertaining to the control objectives and control and risk descriptions. Assess-ment of the effectiveness of controls, identification of weakness-es and the adoption of corrective measures are carried out by the Executive Management Board. The CFO reports regularly to the Audit Committee on the effectiveness of the internal control sys-tem. The external auditors perform verification of the existence of an internal control system and report in a comprehensive manner to the Audit Committee or the Board of Directors, assessing the internal control system and the auditors’ findings. These princi-ples for establishing and implementing the internal control system and performing risk assessment are contained in the Board of Di-rectors' regulations governing the internal control system.

In addition to the internal control system, the Cham Paper Group has had a risk management manual since September of 2009 that is updated by the Executive Management Board in the course of its annual risk assessment. The manual contains a risk matrix in which identified risks are entered in accordance with their prob-ability of occurrence and the potential possible extent of damage or loss posed by them. The risk matrix forms the basis for the risk catalogue, also contained in the manual, which describes the indi-vidual risks in detail and possible actions for mitigating them. The most significant risks for the year under review and the actions that have been adopted and initiated to counteract these risks are described in the notes of the consolidated financial statements on page 72.


4. Executive Management Board

4.1 Members of the Executive Management Board As of 31 December 2011, the members of the Executive Management Board of the Cham Paper Group were as follows:

Name


Position


Education


supervisory bodies

Peter Studer

1968, Swiss citizen

CEO, Cham Paper Group, Cham

Since 2010: CEO, Cham Paper Group, Cham2009–2010: COO, Cham Paper Group, Cham2007–2009: Managing Director, Papierfabriken Cham-Tenero AG, Cham2004–2007: Vice Director of Research and Development, Cham Paper Group, Cham2000–2004: Kimberly-Clark, Balsthal and Reigate, England, Executive Management Board member and Head of Research and Development1997–2000: Swiss Federal Department of Defense, Civil Protection and Sports, Berne1995–1997: Development engineer, MPA (Sihl), Bern

Equivalent of MSc in Chemistry, University of Applied Sciences, School of Engineering and Informatics, Burgdorf, SwitzerlandEquivalent of MBA, University of Applied Sciences, School of Engineering and Architecture, Bern

Board member, Association of Swiss Pulp, Paper and Cardboard Manufacturers (ZPK), ZurichBoard member, Employer's Federation of Swiss Paper Industries (ASPI), ZurichBoard member, Zug Technology Forum (TFZ), ZugBoard member, Industry Group, Zug Chamber of Commerce

Name


Position


Education

Patrick Schmid

1968, Swiss citizen

CFO, Cham Paper Group, Cham

Since 2010: CFO, Cham Paper Group, Cham2005–2010: Head of Finance & Controlling, Papierfabriken Cham-Tenero AG, Cham2001–2005: Head of ERP Subproject, Papierfabriken Cham-Tenero AG, Cham1998–2001: Head of Financial Accounting, Papierfabriken Cham-Tenero AG, Cham1995–1998: Assistant to Head of Controlling/Finance and central office of Industrieholding Cham AG, Cham

Business Economics degree, Economics program, Lucerne University of Applied Sciences and ArtsGraduate diploma in Corporate Finance, Lucerne University of Applied Sciences and Arts/University of Applied Sciences of Central Switzerland


Name


Position


Education


supervisory bodies

Peter Müller

1971, German citizen

Mill Manager, Cham, Switzerland

Since 2009: Mill Manager, Cham Paper Group Schweiz AG, ChamSince 2007: Head of Production and Engineering, Papierfabriken Cham-Tenero AG, Cham2003–2007: Head of Paper Manufacture, Papierfabriken Cham-Tenero AG, Cham2002–2003: Production Manager, Hunsfos Fabrikker AS, Norway2001: Hired into the Cham Paper Group

Equivalent of PhD in Chemistry, Technical University, Darmstadt, GermanyMBA, City University, Bellevue, Washington, USA

Chairman of the board of Gesellschaft für Erdgastransporte Schweiz (GETS) AG

Name


Position


Education

Christine Arnet

1964, Swiss citizen

Sales Director Cham Paper Group

Since 2011: Cham Paper Group, Cham, Sales Director Cham Paper Group2006–2011: Vetropack AG, Bülach, Head of Marketing & Sales of Vetropack Schweiz AG1999–2006: Papierfabriken Cham-Tenero AG, Cham, Area Sales Manager1997–1998: Sihl+Eika Papier AG, Zurich, Head of Graphic Papers1996–1997: Nordpapier AG, Baar, Head of Sales Back Office1995–1996: Schück Söhne AG, Rüschlikon, Head of Submissions and Quality Management1992–1995: Sheaffer Pen (UK) Ltd., Erlenbach, Sales Manager Switzerland

Lic. phil. I, University of Zurich, Romance Languages and LiteratureSwiss Federal Diploma in Sales Management

Name


Position


Education

Gerold Zuegg

1949, Italian citizen

Mill Manager, Condino, Italy

Since 1992: Mill Manager, Cham Paper Group Italia S.p.A., Condino1985–1992: Production Manager, Cartiera di Carmignano S.p.A., Condino1981–1985: Head Coating and Reeling & Cutting, Cartiera del Garda (Bertelsmann Group)1977–1981: Production Manager, Cartiera di Carmignano S.p.A., Carmignano

Paper Engineering, University of Applied Sciences, Munich, Germany


4.2 Other activities and interestsWith the exception of the positions mentioned under 4.1, Execu-tive Management Board members do not engage in any other ac-tivities or associated interests.

4.3 Management contractsCham Paper Group Holding AG has not entered into any manage-ment contracts with third parties.

5. Compensation, shareholdings and loans

5.1 Content and method of determining compensation and shareholding schemes

Board of DirectorsThe compensation principles and the amount of compensation payable to Board of Directors members are revised periodically by the Compensation and Nomination Committee and determined by the Board of Directors acting on a proposal from the Compensa-tion and Nomination Committee. The amount of compensation payable to Board of Directors members was last adjusted in July 2009. Consultancy briefs for members of the Board of Directors subject to additional compensation are granted by the entire Board of Directors and require the consent of a majority of the members. Such consultancy briefs are clearly defined and limited in time.

The members of the Board of Directors receive an annual com-pensation in keeping with their duties on the Board. The annual compensation is based on a base salary including an expense al-lowance plus attendance fees. The base salary depends on the individual’s position on the Board of Directors. The Chairman of the Board of Directors receives a base salary including an expense allowance of CHF 170'000. The Vice Chairman of the Board of Directors receives a base salary including an expense allowance of CHF 40'000. The other members of the Board of Directors receive a base salary of CHF 30'000, which also includes an expense al-lowance. The expense allowances compensate the members of the Board of Directors for travel and other necessary out-of-pocket expenses incurred in the performance of their activities on the Board. The attendance fees vary according to the number of meet-ings of the Board of Directors and its committees. For each mem-ber of the Board of Directors, the attendance fees amount to CHF 3'000 for an all-day meeting and CHF 1'500 for a half-day meeting. For the committee meetings, the attendance fees amount to CHF 4'000 for an all-day meeting and CHF 2'000 for a half-day meeting. The attendance fees for the other committee members are equal to those of the Board of Directors meetings.

The overall amount of compensation of the members of the Board of Directors and the compensation of current and former members of the Board of Directors for FY 2011 and 2010 are stated on page 80 of the financial statements of Cham Paper Group Holding AG.

Executive Management BoardThe principles of compensation of the CEO and other Executive Management Board members are annually revised and established by the Compensation and Nomination Committee. The targets and amount of the performance bonus for the CEO and the Executive Management Board are drafted in the Compensation and Nomi-nation Committee and approved by the Board of Directors. They are valid for one financial year. Once the financial year has ended, target achievement is determined and assessed by the same peo-ple who set the targets. The performance bonuses are paid out in April of the following financial year and/or optionally in the form of shares (cf. section 5.2, Shareholding plan. It also falls within the discretion and remit of the Board of Directors to reward members of the Executive Management Board for out-of-the-ordinary tasks performed by them (e.g. conducting of strategic projects) by way of one-off special bonuses. As in the case of performance-based bonuses, the general conditions for awarding special bonuses are formulated in the Compensation and Nomination Committee and are approved by the Board of Directors.

Compensation of the CEO and other Executive Management Board members consists of a base salary and a performance bonus. The base salary comprises a gross salary (compensation before deduction of employee social security contributions), ex-pense allowances and remuneration in kind (company car). Annual performance bonuses are paid to Executive Management Board members under a bonus plan. The amount of these bonuses de-pends on the achievement of the corporate targets and individual targets, both of which are established in advance. The perform-ance bonus is determined for each Executive Management Board member as a percentage of that member’s gross salary. For the CEO, the bonus amounts to a maximum of 40% of his or her gross salary, and amounts to a maximum of 30% of the gross salary of the other Executive Management Board members. No bonus is payable if the minimum criteria for target achievement are not satisfied. The bonus is capped by the maximum criteria. The tar-gets include quantitative and qualitative performance targets. The quantitative performance targets are based on the achievement of the following targets: operating profit, free cash flow and key net working capital figures. These items have a weighting of 70%. The qualitative targets extend to performance goals that must feature clearly measurable criteria. They are accorded a 30% weighting. The performance bonuses are paid out in April of the following year or optionally in the form of shares (cf. section 5.2, Sharehold-ing plan).

The total amount of compensation of Executive Management Board members, compensation of former Executive Management Board members and the highest compensation paid to any one member of the Executive Management Board for FY 2011 and 2010 are stated on page 80 f. of the financial statements of Cham Paper Group Holding AG.


5.2 Shareholding planDuring FY 2010, a shareholding plan was introduced for the mem-bers of the Board of Directors and the Executive Management Board. The shares for this program are issued from the company’s own holdings.

Under the shareholding plan, the members of the Board of Direc-tors establish at the beginning of the financial year what share of their compensation they would like to receive in the form of shares for the current year (25%, 50%, 75% or 100%). This share may be changed during the course of the year, this applying to the re-mainder of the year. The allocation of shares usually takes place on 31 December of the respective year. The share price applicable to the allocation of shares is based on the weighted average price in effect during the preceding month, generally November. Upon al-location, the shares remain blocked for one year. During this vest-ing period they do not entitle to payment of a dividend or entitle the holder to a vote. All Board of Directors members are eligible for participation in the plan who have worked on a full-time basis during the respective financial year. The portion of compensation drawn in cash is subject to disbursement on a quarterly basis.

The members of the Executive Management Board have the op-tion of receiving the performance bonuses due them in the form of shares, either in whole or in part (25%, 50%, 75% or 100%). The allocation of shares usually takes place on 30 April of the fol-lowing year. The share price applicable to the allocation of shares is based on the weighted average price in effect during the pre-ceding month, generally March. Upon allocation, the shares re-main blocked for one year. During this vesting period they do not entitle to payment of a dividend or entitle the holder to a vote. All members of the Executive Management Board are eligible for participation who are in the company’s employ on 31 March of the following year.

5.3 Allocation of shares during the year under reviewDuring the year under review, 2'067 shares of Cham Paper Group Holding AG were allocated to members of the Board of Directors or related parties. During the same period 403 shares were allo-cated to members of the Executive Management Board or related parties.

5.4 Termination benefitsDuring the year under review, no termination benefits were dis-bursed or agreed.

6. Shareholders' rights of participation

The shareholders' rights of participation are defined in the Ar-ticles of Association of Cham Paper Group Holding AG. The fol-lowing remarks contain extracts from the Articles of Association of Cham Paper Group Holding AG. A full version of the Articles of Association can be consulted on the website, under Investor Relations/Corporate Governance/Articles of Association, or: http://ir.champaper.com/cgi-bin/show.ssp?id=730&companyName=champaper&language=English.

6.1 Restrictions on voting rights and representationEach registered share entitles to one vote at the General Meet-ing of Shareholders of the company. This notwithstanding, voting rights may be exercised only by persons whose registered shares are entered in the share register of Cham Paper Group Holding AG as having voting rights. According to Swiss corporate law, registra-tion is subject to a declaration that the shareholder has acquired the shares in his or her own name and on his or her own account. According to the Articles of Association, the Board of Directors may refuse to make an entry with voting rights in the share regis-ter only under the following circumstances:

• provided that, and for as long as, acceptance of the applicant as a shareholder with voting rights might hinder the company in providing evidence of Swiss control as required by Swiss fed-eral law, in particular the Federal Law on the Acquisition of Real Estate by Non-Residents, or

• where the applicant, despite having been requested by the com-pany to do so, does not expressly declare himself or herself to be acquiring the shares in his or her own name and on his or her own account.

No restrictions on voting rights of this kind were made in 2011 and 2010.

A shareholder may be represented at the General Meeting of Shareholders only by an authorised legal representative, another shareholder entitled to vote, Cham Paper Group Holding AG as the statutory representative, an independent voting representative or a custodial representative.

6.2 Voting quorumsThe Articles of Association of Cham Paper Group Holding AG do not stipulate any special quorums that go beyond the provisions of Swiss corporate law.

50

6.3 Convocation of the General Meeting of ShareholdersThe General Meeting of Shareholders is convened in accordance with statutory requirements.

6.4 AgendaShareholders who represent shares with a par value of at least one million Swiss francs may make written requests for proposals for items to be placed on the agenda. Such proposals must be submit-ted in writing to the Board of Directors at least sixty days prior to the General Meeting of Shareholders.

6.5 Entry in the share registerShareholders may request that they be entered in the share reg-ister at any time. As a general rule, shareholders may be entered in the share register up to one week before the General Meeting of Shareholders.

7. Change of control and defense measures

7.1 Obligation to submit a bidThere are no provisions in the Articles of Association concerning the obligation to submit a bid. Legal provisions apply in this regard.

7.2 Change-of-control clauseThere are no change-of-control clauses with members of the Board of Directors or with members of the Executive Manage-ment Board.

8. Auditors

8.1 Retainership and term of office of the lead auditorPriceWaterhouseCoopers, Zug, has been retained as the statutory auditors and Group auditors since 2010. Norbert Kühnis, the re-sponsible lead auditor, assumed his office in the same year (2010). The retainership of the auditors is decided each year and must be renewed annually. The Group auditor and the statutory auditors are re-elected each year by the General Meeting of Shareholders.

8.2 Auditing fees and additional feesThe following fees were invoiced by PriceWaterhouseCoopers, Zug, or Ernst & Young AG, Zurich (in 2010), for its services ren-dered as Group auditors and statutory auditors of Cham Paper Group Holding AG and its subsidiaries:

2011 TCHF

2010 TCHF

Ordinary audits 171 186Audit-related fees 0 0Tax advisory services 0 43Total 171 229

Fees for audit services cover those services which must be per-formed every year in order to render an assessment on the consol-idated financial statements and to draw up reports on the financial statements of the subsidiaries as required by local law.

Fees for audit-related services cover other verification services by the auditors that do not necessarily have to be provided by the Group auditor.

Fees for tax services extend to all services that are provided by the tax section of the Group auditor apart from those related to the audit itself. Tax services cover compliance with tax legislation, tax planning and tax advice.

8.3 Information tools of the external auditorsThe auditors normally attend the meetings of the Audit Commit-tee. They report orally and in writing on the findings of their au-dits. Evaluation and monitoring of the auditors is performed by the Audit Committee, which makes recommendations to the Board of Directors. In particular, the Audit Committee evaluates the per-formance, fees, and independence of the statutory auditors. In 2011, the auditors attended a total of three half-day meetings of the Audit Committee.


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9. Information policy

The Cham Paper Group provides information about its half-year and annual results in the form of a half-year report and an annual report that are available in printed and electronic form. The reports are mailed out upon express request only, otherwise they are avail-able only electronically for the purpose of economic and environ-mental efficiency. Facts relevant for the share price are announced by way of ad-hoc publications (German and English).

For continuously updated information on the company, shares, analyst opinions, media articles, dates and FAQs, please refer to the Investor Relations section at www.cham-group.com. An up-to-the-minute investor handbook also provides an in-depth look at the strategy, markets and competitor environment of the Cham Paper Group. On our website you can also subscribe to the e-newsletter so that you, at the same time as the media, are kept abreast of results and new developments.

10. Contact addresses and calendar

Share registerFranziska StöckliFabrikstrasse, CH-6330 [email protected]: +41 (41) 785 34 03

Media and Investor RelationsEdwin van der Geest / Philippe [email protected] [email protected]: +41 (43) 268 32 32

General Meeting of Shareholders25 April 2012, Saal Heinrich von Hünenberg, Hünenberg

Financial reporting2012 Half-year Results: 17 August 20122012 Annual Report: 13 March 2013


52 Consolidated financial statements

Cham Paper Group – Consolidated financial statements

Consolidated income statement

01 January – 31 DecemberNotes

2011TCHF

2010TCHF

Change%

Net revenue 3 309'276 339'517 –8.9%

Cost of goods and services sold –284'904 –301'010 –5.4%

Gross profit 24'372 38'507 –36.7%

Administrative and general expense –18'522 –16'696 10.9%

Marketing, sales, research and development expense –15'647 –17'015 –8.0%

Other operating expense 6 –1'035 –1'385 –25.3%

Other operating income 6 2'757 4'954 –42.4%

Operating loss (–) / -profit (EBIT) before restructuring –8'075 8'365 n/a

Restructuring expense 7 –80'449 – n/a

Operating loss (–) / -profit (EBIT) after restructuring –88'524 8'365 n/a

Financial result 8 –2'342 –2'454 –4.6%

Foreign currency effects 204 –4'154 n/a

Net loss (–) / income before taxes –90'662 1'757 n/a

Income taxes 9 –1'424 –3'554 59.9%

Net loss (–) for the year –92'086 –1'797 –5'072.5%

Attributable to: Shareholders of Cham Paper Group Holding AG –92'086 –1'797

Earnings per share, undiluted and diluted CHF CHF

Loss (–) per share, undiluted 10 –131.83 –2.58

Total 10 –131.83 –2.58

The notes form an integral part of the consolidated financial statements.


Consolidated balance sheet

Notes31.12.2011

TCHF31.12.2010 1)

TCHF

Assets

Cash and cash equivalents 11 48'751 61'747

Trade accounts receivable 13 61'801 60'950

Inventories 14 44'543 59'831

Other short-term receivables 15 7'478 7'323

Accrued income and prepaid expenses 2'086 2'093

Total current assets 164'659 191'944

Tangible fixed assets 16 90'530 142'306

Intangible assets 17 3'435 5'399

Financial assets 635 634

Deferred tax assets 9 942 3'526

Total non-current assets 95'542 151'865

Total assets 260'201 343'809

LiabilitiesTrade accounts payable 32'305 37'327

Current financial liabilities and derivative financial instruments 18 39'434 33'181

Other current liabilities 19 5'049 4'722

Accrued expenses and deferred income 12'144 11'923

Current provisions 20 10'663 –

Total current liabilities 99'595 87'153

Non-current financial liabilities 18 35'821 48'577

Other non-current liabilities 498 651

Deferred tax liabilities 2'108 3'366

Pension plan obligations 21 4'326 4'796

Non-current provisions 20 15'690 1'400

Total non-current liabilities 58'443 58'790

Total liabilities 158'038 145'943

Share capital 22 48'425 48'425

Capital reserves 42'062 42'682

Treasury shares 22 –13'610 –14'630

Retained earnings 25'286 121'389

Total shareholders’ equity 102'163 197'866

Total liabilities 260'201 343'809

1) The previous year’s figures have been adjusted due to a restatement (cf. note 1.2 Consistency in presentation and valuation / errors in

previous annual financial statements (restatement)).



Consolidated cash flow statement

Notes2011

TCHF2010

TCHF

Net loss (–) –92'086 –1'797

Depreciation 5 19'762 20'894

Impairments 7 54'073 –

Net loss / income (–) from disposal of property and equipment 6 230 –231

Increase in provisions (including deferred taxes) 26'319 2'495

Decrease (–) in pension plan obligations 21 –368 –177

Other non-cash items 313 –55

Increase (–) / decrease in trade accounts receivable –1'703 3'209

Decrease / increase (–) in inventories 14'678 –8'075

Decrease (–) / increase in trade accounts payable –4'469 4'096

Increase (–) in other receivables, accrued income and prepaid expense –737 –2'379

Increase / decrease (–) in other liabilities, accrued expenses and deferred income 1'547 –71

Cash flow from operating activities 17'559 17'909

Purchase of tangible fixed assets 16 –19'462 –11'211

Proceeds from the disposal of tangible fixed assets 16 329 1'463

Purchase of intangible assets 17 –2'662 –4'157

Proceeds from the disposal of securities – 706

Cash flow from investment activities –21'795 –13'199

Repayment (–) of current financial liabilities –9'200 –9'834

Increase / repayment (–) of non-current financial liabilities 4'000 –1'357

Payment of dividend in cash –3'482 –

Capital reduction – –8'705

Cash flow from financing activities –8'682 –19'896

Translation effects on cash and cash equivalents –78 –727

Decrease (–) in cash and cash equivalents –12'918 –15'186

Cash and cash equivalents as at 1 January 11 61'747 77'660

Cash and cash equivalents as at 31 December 11 48'751 61'747



Shareholders’ equity statement

Retained earnings

Sharecapital

TCHF

Capital reserves

TCHF

Treasuryshares TCHF

Cumulative foreign

currency translation

adjustments TCHF

Fair value reserves

TCHF

Retained earnings

TCHFTotal

TCHF

Balance as at 1 January 2010 before restatement 57'738 42'502 –15'448 –690 – 131'759 215'861

Restatement 1) – – – – – –864 –864

Balance as at 1 January 2010 after restatement 57'738 42'502 –15'448 –690 – 130'895 214'997

Cash flow hedges

Change in fair value recognised in equity – – – – –309 – –309

Net loss for the year for the Group – – – – – –1'797 –1'797

Par value reduction –9'313 608 – – – – –8'705

Shareholding plan – –428 818 – – – 390

Translation effects – – – –6'710 – – –6'710

Balance as at 31 December 2010 48'425 42'682 –14'630 –7'400 –309 129'098 197'866

Retained earnings

Sharecapital

TCHF

Capital reserves

TCHF

Treasuryshares TCHF

Cumulative foreign

currency translation

adjustments TCHF

Fair value reserves

TCHF

Retained earnings

TCHFTotal

TCHF

Balance as at 1 January 2011 48'425 42'682 –14'630 –7'400 –309 129'098 197'866

Cash flow hedgesChange in fair value recognised in equity – – – – 3'938 – 3'938

Realised gains transferred to income statement – – – – –3'629 – –3'629

Net loss for the year for the Group – – – – – –92'086 –92'086

Cash dividend – – – – – –3'482 –3'482

Shareholding plan – –620 1'020 – – – 400

Translation effects – – – –844 – – –844

Balance as at 31 December 2011 48'425 42'062 –13'610 –8'244 – 33'530 102'163

1) The previous year’s figures have been adjusted due to a restatement (cf. note 1.2 Consistency in presentation and valuation / errors in

previous annual financial statements (restatement)).


56

Notes to the consolidated financial statements

Notes to the consolidated financial statements

1. Valuation and accounting methods

1.1 General remarksThe consolidated financial statements of Cham Paper Group Hold-ing AG and its subsidiaries (“Group” or “Cham Paper Group”) have been prepared in accordance with Swiss Financial Reporting Standards (Swiss GAAP FER) and comply with the requirements of Swiss law. The internal structuring, valuation and disclosure regulations drafted on this basis have been applied consistently. The consolidated financial statements provide a true and fair view of the company’s net assets and financial and earnings situation. They are based on historical costs with the exception of certain items such as derivative financial instruments and securities, which are carried on the balance sheet at their current value. In preparing these consolidated financial statements, all Swiss GAAP FER standards relevant for the Cham Paper Group were applied that are valid for the reporting periods from 1 January 2011.

The consolidated financial statements of the Cham Paper Group were approved by the Board of Directors on 13 March 2012 and are subject to approval by the General Meeting of Shareholders on 25 April 2012.

1.2 Consistency in presentation and valuation / errors in previous annual financial statements (restatement)In the sale of the subsidiary Hunsfos Fabrikker AS in 2008, it was agreed with the purchaser that the non-operating properties (land and buildings) would remain with Cham Paper Group AG. The tan-gible fixed assets of Cham Paper Group AG were reported accord-ingly under “non-current assets”.

Afterwards the purchaser refused to perform its contractual obliga-tions with regard to the land registry and did not transfer title of the properties to Cham Paper Group AG. As a result of the bankruptcy of Hunsfos Fabrikker AS in September of 2011, it has become evident that the transfer of the properties as provided for in the sales agreement can no longer be duly executed and that as a con-sequence these properties have no longer belonged to the Cham Paper Group since the sale of this holding.

In compliance with Swiss GAAP FER pertaining to consistency in presentation and valuation / errors in previous annual financial statements, the tangible fixed assets have been adjusted accord-ingly via the shareholders’ equity with retroactive effect as of 1 January 2010.

Balance as at 01.01.2010

Value before restatement

TCHFRestatement

TCHF

Value after restatement

TCHF

Current assets 214'196 – 214'196

Non-current assets 176'285 –864 175'421

Total assets 390'481 –864 389'617

Current liabilities 97'974 – 97'974

Non-current liabilities 76'646 – 76'646

Total liabilities 174'620 – 174'620

Shareholders’ equity 215'861 –864 214'997

Total liabilities 390'481 –864 389'617

Balance as at 31.12.2010

Value before restatement

TCHFRestatement

TCHF

Value after restatement

TCHF

Current assets 191'944 – 191'944

Non-current assets 152'729 –864 151'865

Total assets 344'673 –864 343'809

Current liabilities 87'153 – 87'153

Non-current liabilities 58'790 – 58'790

Total liabilities 145'943 – 145'943

Shareholders’ equity 198'730 –864 197'866

Total liabilities 344'673 –864 343'809

1.3 Scope and method of consolidationThe consolidated financial statements of the Cham Paper Group are composed of the consolidated financial statements of Cham Paper Group Holding AG and its subsidiaries. The subsidiaries forming the scope of consolidation are listed in note 27.

Subsidiaries are companies that are directly or indirectly controlled by Cham Paper Group Holding AG. “Control” refers to the pos-sibility of exercising control over financial and operational business activities so as to be able to accordingly derive a benefit from it. This is usually the case when Cham Paper Group Holding AG di-rectly or indirectly owns more than 50% of the voting rights of a company. The minority shareholder interests in the net assets and the operating result are reported separately. Companies acquired or sold during the financial year are included in the consolidated financial statements from or until the date of transfer of control. The purchase method is used for the consolidation of capital. When a company is acquired, net assets are valued at their cur-rent market value. Any surplus result from the difference between the purchase costs and the revalued net assets of the company acquired is designated as “goodwill”. Goodwill is offset against shareholders’ equity at the time of acquisition without any impact on income. The effects of theoretical capitalisation are shown in the notes to the consolidated financial statements.

57 Notes to the consolidated financial statements

Internal Group transactions and relationships and intercompany gains are eliminated.

Investments in associates on which Cham Paper Group Holding AG has only a significant influence (usually with voting rights be-tween 20% and 50%) but over which it does not exercise any control are recognised on the balance sheet according to the eq-uity method and reported as investments in associates. The share of Cham Paper Group Holding AG in the results of the associates is reported, less the respective taxes, in a separate item in the income statement. Minority stakes of less than 20% are shown at historical cost less impairments.

1.4 Foreign currency translationThe individual subsidiaries prepare their financial statements in local currencies. The local currency (functional currency) corre-sponds to the currency of the primary economic environment in which the company operates.

Transactions in foreign currencies at the subsidiaries are translated at the daily exchange rate prevailing at the time of the transaction. Gains and losses from foreign currency transactions and from ad-justments to foreign currency holdings on the reporting date are recognised in income. Foreign currency effects on long-term inter-nal Group loans of an equity nature are recognised in shareholders’ equity without any impact on income.

The reporting currency in the consolidated financial statements is the Swiss franc. The financial statements of the foreign subsidiar-ies in foreign currencies are translated into Swiss francs as fol-lows: Balance sheet items are translated at the year-end exchange rate, while shareholders’ equity is translated at historical rates and items in the income statement and cash flow statement are trans-lated at the average exchange rate for the year. The translation effects resulting from the translation of the balance sheet and in-come statement are recognised in shareholders' equity. When a company is sold, the cumulative translation effects are recognised in the income statement as part of the gain or loss from the sale of the company.

For the major currencies, the following exchange rates are used:

Year-end exchange rates applicable to balance sheet

Average exchange rates for the year applicable to

income statement and cash flow statement

CHF for 2011 2010 2011 2010

EUR 1.00 1.22 1.25 1.23 1.38

USD 1.00 0.94 0.94 0.89 1.04

GBP 1.00 1.46 1.46 1.42 1.61

1.5 Recognition of revenueRevenue consists of all the proceeds from sales derived from the delivery of products and services to third parties less price reduc-tions and rebates, discounts, transport costs and value added tax. As a general principle, proceeds from sales are recognised in the income statement as soon as products have been shipped and the associated benefits and risks have passed to the purchaser or the service has been provided. Revenues that reduce the cost of goods and services sold are offset against the respective item.

1.6 Cash and cash equivalentsCash and cash equivalents comprise cash on hand, cash in bank accounts and postal accounts as well as short-term bank deposits such as call money and time-deposit investments with an original time to maturity of three months or less and which are convertible to known amounts of cash at any time. This definition is also used for the consolidated cash flow statement. Cash and cash equiva-lents are reported at nominal values.

1.7 SecuritiesThe securities of current assets are reported at fair value. For list-ed securities, this corresponds to the stock market price on the balance sheet reporting date. Non-listed securities of current as-sets are presented at acquisition cost less any value adjustments. Changes in value are shown in the result for the period.

1.8 Derivative financial instruments and hedging transactionsThe Group uses derivative financial instruments primarily to hedge risks related to changes in interest rates, foreign currencies and pulp prices. Derivative financial instruments primarily comprise for-ward exchange contracts, interest futures and pulp swaps.

Derivative financial instruments are differentiated according to var-ious motives: Derivatives held for trading purposes are reported at the value prevailing on the reporting date. The changes in value since the last valuation are recognised in the result for the peri-od. Derivatives held for hedging purposes are also valued at fair values. The changes in value of derivatives classified as hedging instruments for future cash flows are recognised in shareholders’ equity in the “Fair value reserves” item without any impact on in-come. The changes in value of the hedging transaction recognised in shareholders' equity are recognised in the income statement for the period in which the cash flow from the hedged underlying transaction is recognised.


1.9 Trade accounts receivableTrade accounts receivable are recognised at the original invoiced amounts less allowances for bad debts. Allowances for bad debts are established for receivables when there is an objective indica-tion that they cannot be recovered. The carrying amount of trade accounts receivable is reduced by the allowances, and the respec-tive projected loss is expensed to net revenue in the consolidated income statement. Trade accounts receivable that are uncollect-ible are derecognised via allowances or via the income statement.

1.10 InventoriesInventories are carried at the lower of acquisition or production cost or net market value. The measurement is based on the av-erage value method. The production costs of work in progress and finished goods include raw and ancillary materials, direct la-bor costs, other directly allocatable costs as well as production overheads associated with manufacturing. Financing costs are not included in production costs. Discounts are recognised as procure-ment price reductions. The net market value is the estimated sales proceeds less the product's costs of completion and sale. The val-ues of inventories that are difficult to sell and inventories with a lower net market value are adjusted. The Group determines the value adjustments for inventories that are difficult to sell using past experience. The corresponding expected loss is expensed to the “cost of goods and services sold” item in the consolidated income statement. If it is foreseeable that the value-adjusted inventories can be used, their value is retroactively adjusted by writing up the inventory asset to the lower of the estimated net market value or the original acquisition or production cost.

Prepayments received from customers for inventories are report-ed under other current liabilities. Prepayments effected for the delivery of inventory asset items are recognised under inventories.

1.11 Financial assetsFinancial assets are shown at historical cost less impairments. Im-pairments are recognised in the period result in income.

1.12 Tangible fixed assetsTangible fixed assets are carried at their acquisition or production cost less depreciation and any impairment. Tangible fixed assets are depreciated on a straight-line basis over the following estimat-ed useful lives:

Years Years

Buildings and plants 25 Plant equipment 5

Machinery, equipment 10 Vehicles 5

Production machinery 20 Hardware 5

Where during the review for impairment to tangible fixed assets a change in an asset’s useful life is determined, the remaining carry-ing amount is to be depreciated systematically over the newly esti-mated useful life.

Land and undeveloped properties are not depreciated. They are not land reserves held for profitability purposes. Where tangible fixed assets consist of significant components that have different useful lives, the components are depreciated separately. Repair and main-tenance costs are expensed as incurred without increasing the pre-vious market value or value-in-use. An expenditure that increases the market value or useful life of a tangible fixed asset is capitalised and depreciated over a maximum period of ten years.

Leases of tangible fixed assets in which the Group essentially as-sumes all the risks and rewards of ownership are classified as fi-nance leases. Tangible fixed assets acquired by means of finance leases are capitalised at the inception of the lease at the lower of acquisition cost or net market value of the leased property or the present value of the future lease payments, and are subsequently depreciated over the shorter of the lease term or their expected useful life. The corresponding lease obligations, net of any financing charges, are included in the current or non-current portion of finan-cial liabilities depending on when they become due.

1.13 Goodwill and intangible assetsGoodwill arising from acquisitions is offset against shareholders’ equity at the time of acquisition without any impact on income. The effects of theoretical capitalisation are shown in the notes to the consolidated financial statements.


Acquired intangible assets include software, trademark rights and licenses and are recognised where they yield a measurable eco-nomic benefit for the company over more than one year. Report-ing is done at acquisition cost less straight-line depreciation over a maximum of five years, taking any value impairments into ac-count. Intangibles associated with the acquisition of a company are reported as intangible assets at their fair value as at the date of acquisition. They are amortised on a straight-line basis over the respective useful life of a maximum of five years, taking any value impairments into account. The respective estimated useful life of intangible assets is reviewed on a regular basis.

1.14 ImpairmentAll assets are subjected to an impairment test on each reporting date. If there are indications for a possible impairment of the value of an asset, the recoverable amount of the asset value is deter-mined and an evaluation of the impairment is undertaken. If the estimated recoverable amount of the asset value – which repre-sents the higher of either the net market value or value in use – is less than the carrying amount, then the carrying amount of the asset value is effectively reduced to the estimated recoverable amount in the same period in which the adjustment of the value takes place. The net market value is the price that can be realised in an arm’s length transaction less associated sales expenses. The value in use is calculated on the basis of the estimated future cash flow expected to result from the use of the asset, including any cash flow at the end of the asset’s useful life, and discounted us-ing an appropriate long-term interest rate.

1.15 LiabilitiesLiabilities are measured at their nominal value. Current financial liabilities are either due or renewable within one year unless the Group has an unrestricted right to extend the maturity by more than twelve months beyond the balance sheet date.

1.16 Current valuesThe current value (fair value or net market value) is the amount for which an asset, liability, or financial instrument could be ex-changed between knowledgeable and willing parties in an arm’s length transaction. The current value of publicly traded and trad-able financial instruments is determined on the basis of their stock exchange prices. The current value of financial instruments not publicly traded is determined using recognised valuation methods such as the discounted cash flow method. It is assumed that the amortised costs of financial assets and liabilities with a residual life of less than one year roughly approximate their current value.

1.17 TaxesIncome taxes comprise all current and deferred taxes levied on the subsidiaries' taxable results in accordance with local tax regulations including the withholding tax payable on profit distributions within the Group. Income taxes are recognised in the income statement except for deferred taxes on transactions that are recognised di-rectly in shareholders' equity. Capital and real estate taxes are re-ported under other operating expense.

Deferred income tax assets and liabilities are recorded for the ef-fects under income tax law of all temporary differences arising between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes to the Group. Deferred income taxes are determined using tax rates that apply, or have been announced, on the balance sheet date in the countries where the Group operates. Deferred tax assets from tax loss carryovers are recognised only when it appears highly probable that future tax-able profits will be available against which the tax loss carryovers can be offset.

Assets and liabilities from current and deferred income taxes are offset against one other as long as the corresponding income taxes are levied by the same tax authority and a legally enforceable right for offsetting exists.


1.18 ProvisionsProvisions are established when a legal or constructive obligation exists as a result of past events where the obligation will likely lead to a cash outflow and a reliable estimate of this outflow can be made. The provisions established constitute the best possible esti-mate of the final obligation. Non-current provisions are discounted to their present value to the extent that their effects are material. Restructuring provisions are recorded if the Group has a detailed formal restructuring plan and the Board of Directors has made a decision to implement it. The breakdown into current and non-current provisions is based on the assumption that their utilisation is probable within one year or later.

1.19 Contingent liabilitiesPotential liabilities whose existence has yet to be confirmed by future events, or obligations whose amount cannot be reliably esti-mated are disclosed as contingent liabilities in the notes. Valuation is done on the basis of probability and the amount of the future claims and costs.

1.20 Pension plan obligationsThe employee benefit obligations of the subsidiaries for retire-ment, death and disability are in accordance with statutory require-ments and provisions in the respective countries. The majority of the Group's employees is covered by defined benefit or defined contribution pension plans. The Swiss organisations of the Group have legally independent pension institutions that are financed by way of employer and employee contributions. Any actual econom-ic impact on the company exerted by pension funds is calculated on the reporting date. Any economic benefit is capitalised provided that this is used for the company’s future provident expenses. An economic obligation is recognised as a liability where the require-ments for creating a provision are satisfied. Where freely dispos-able employer contribution reserves exist, they are recognised as an asset. The economic impacts of overfunding and underfunding in the pension funds on the Group and the change in any employer contribution reserves are recognised in personnel expense in ad-dition to the contribution accrued to the period. The pension plans for the subsidiaries in Italy are also valued as provisions or are treated as defined contribution plans.

1.21 Treasury sharesTreasury shares are recognised as a reduction in shareholders' eq-uity. The purchase costs, proceeds from a resale and other move-ments are presented as a change in shareholders' equity. Treasury shares are non-voting shares and are not entitled to dividends.

1.22 Research and developmentResearch and development costs are recognised in full in income. These costs are contained in the “Marketing, sales, research and development expense” item.

2. Changes in the scope of consolidation

The scope of consolidation remains unchanged as compared to that in effect as at 31 December 2010.


3. Segment reporting

The Group develops, produces and sells speciality papers. The Group's geographical segments are structured on the basis of the location of the countries and the similarities of the economic environment. This results in four regions: Europe, the Americas, Asia, and Rest of the World.

2011 Europe Americas Asia Rest of World Total TCHF

Net revenue with third parties 1) 231'359 19'374 50'892 7'651 309'276

2010 Europe Americas Asia Rest of World Total TCHF

Net revenue with third parties 1) 270'217 20'070 36'751 12'479 339'517

1) Allocated according to sales destination

4. Personnel expense

2011TCHF

2010TCHF

Wages and salaries –46'171 –48'177

Employee benefits (incl. pension plan expense) –10'924 –12'921

Other personnel expense –956 –1'432

Total personnel expense –58'050 –62'530

Personnel expense is included on the consolidated income statement in the costs of the respective items. As of 31 December 2011, the Group had a headcount of 651 FTEs (2010: 659 FTEs).

5. Depreciation and amortisation

2011TCHF

2010TCHF

Depreciation of tangible fixed assets –18'114 –20'041

Amortisation of intangible assets –1'648 –853

Total depreciation and amortisation –19'762 –20'894

Depreciation and amortisation are included in the consolidated income statement in the costs of the respective items.


6. Other operating income/expenses

2011TCHF

2010TCHF

Disbursed insurance benefits 863 2'528

Net gains from disposal of tangible fixed assets 66 920

Reversal of provisions – 598

Grants 626 342

Other income 1'202 566

Total other operating income 2'757 4'954

Capital and real estate taxes –345 –452

Net losses on disposal of tangible fixed assets –296 –689

Other expense –394 –244

Total other operating expense –1'035 –1'385

7. Restructuring expenses

2011TCHF

2010TCHF

Impairment of tangible fixed assets –51'097 –

Impairment of intangible assets –2'976 –

Value adjustment of inventories –1'393 –

Restructuring provisions –24'983 –

Restructuring expenses –80'449 –

In FY 2011 restructuring expenses totalling TCHF 80'449 arose in connection with the reorientation of the Cham Paper Group. The impair-ment of tangible fixed assets of TCHF 51'097 is the result of discontinuing base paper production and changing over to surface coating only, and the repurposing of the factory buildings at the Cham site. The impairment of intangible assets of TCHF 2'976 is the result of the change in use of the software applications by redimensioning the production sites. The value adjustment of inventories of TCHF 1'393 was also a result of discontinuing base paper production at the Cham site. Restructuring will take up to two years and affect approxi-mately 212 employees. The restructuring provisions of TCHF 24'983 include costs for redundancy welfare plans, clearing and disposal work, and expenses incurred in connection with the premature termination of contracts.

8. Financial income and expense

2011TCHF

2010TCHF

Interest income from cash and cash equivalents 136 168

Interest income on available-for-sale financial assets – 7

Other financial income 27 30

Total financial income 163 205


Interest expense of bank loans and mortgage notes –2'298 –2'315

Gains on interest derivatives, net 283 201

Other financial expense –490 –545

Total financial expense –2'505 –2'659

Financial result –2'342 –2'454

9. Income taxes

2011TCHF

2010TCHF

Current income taxes –37 –405

Deferred income taxes –1'387 –3'149

Total income taxes –1'424 –3'554

The expected tax rate applied to the calculation of the deferred income taxes items is based on the pre-tax profit of the individual subsidi-aries, amounting in 2011 to 15.84% (2010: 16.01%) for the companies in Switzerland and 31.4% (2010: 31.4%) for the companies in Italy.

As of 31 December 2011, the deferred tax assets amounted to TCHF 942 (2010: TCHF 3'526), of which TCHF 0 (2010: TCHF 3'150) was attributable to capitalised tax loss carryovers.

Deferred tax assets from tax loss carryovers are recognised only when it appears highly probable that future taxable profits will be avail-able against which the tax loss carryovers can be offset. As of 31 December 2011, the Group had tax-deductible loss carryovers of TCHF 151'827 (2010: TCHF 70'469). The tax-deductible loss carryovers expire as follows:

Tax loss carryovers

2011TCHF

Tax effect2011

TCHF

Tax loss carryovers

2010TCHF

Tax effect2010

TCHF

Total tax-deductible loss carryovers 151'827 23'890 70'469 11'612

Recognised as deferred tax assets – – –19'675 –3'150

Non-recognised tax-deductible loss carryovers 151'827 23'890 50'794 8'462

Recognised tax-deductible loss carryovers according to due date:

Within 1 year – – – –

Between 1 and 5 years – – 19'675 3'150

After 5 years – – – –

Total recognised tax-deductible loss carryovers – – 19'675 3'150

Non-capitalised tax-deductible loss carryovers according to due date:

Within 1 year – – 783 220

Between 1 and 5 years 62'862 9'957 44'332 7'273

After 5 years 88'965 13'933 5'679 969

Total non-recognised tax-deductible loss carryovers 151'827 23'890 50'794 8'462

Due to the uncertainties about whether sufficient taxable profits can be realised in the future, no new tax-deductible loss carryovers were recognised as deferred tax assets in FY 2011 or FY 2010. Tax-deductible loss carryovers in the amount of TCHF 783 expired in FY 2011 (2010: TCHF 0).


10. Earnings per share

The undiluted earnings per share are calculated by dividing the net income as of the end of the reporting period on 31 December 2011 and 2010 allocatable to the shareholders by the weighted average number of dividend-bearing shares outstanding during this period. In so doing, the average number of treasury shares held by Cham Paper Group Holding AG and blocked shares are deducted from the number of shares issued.

2011 2010

Weighted average number of registered shares outstanding 698'497 696'365

Share of result of shareholders of Cham Paper Group Holding AG (in TCHF) –92'086 –1'797

Loss per share, undiluted (in CHF) –131.83 –2.58

There were no diluting effects in 2011 and 2010.

11. Cash and cash equivalents

2011TCHF

2010TCHF

Cash on hand, cash in bank accounts and in postal accounts 48'751 41'747

Short-term bank deposits – 20'000

Total cash and cash equivalents 48'751 61'747

12. Derivative financial instruments

Derivative financial instrumentsThe Group uses derivative financial instruments as part of its Group-wide risk management. The derivative financial instruments are reported at their current values. The following table shows the market value (gross) of the derivative financial instruments as at 31 De-cember 2011 and 2010 by type of contract and asset category:

2011 Contract or nominal value

not recognisedTCHF

Positive market value

recognised TCHF

Negative market value

recognised TCHF

Held for trading purposes

Interest rate derivatives – interest futures 10'092 – 274

Foreign currency derivatives – forward exchange contracts 21'879 16 –

Total derivative financial instruments 31'971 16 274

2010 Contract or nominal value

not recognisedTCHF

Positive market value

recognised TCHF

Negative market value

recognised TCHF

Held for trading purposes

Interest rate derivatives – interest futures 13'028 – 566

Held for hedging purposes

Raw material derivatives – pulp swaps 45'554 – 369

Total derivative financial instruments 58'582 – 935

Contract or nominal values show the outstanding transaction volume as at the balance sheet date.


Raw material derivatives hedge the cash flow risks of future planned pulp purchases by means of swap transactions. The amount and the timeline of the hedged future planned pulp purchases are based on contractually agreed delivery quantities and dates for speciality papers over a planned timeframe of a maximum of twelve months. As of 31 December 2011, the Group hedged no future planned pulp pur-chases (2010: 60'000 tons). In January the Group hedged future planned pulp purchases of a total of 25'200 tons by way of two contracts.

The net gain from hedging transactions recognised in the consolidated income statement under the cost of goods and services sold amounted to TCHF 3'629 in FY 2011 (2010: TCHF 0).

13. Trade accounts receivable

2011TCHF

2010TCHF

Trade accounts receivable from product deliveries, gross 65'912 65'206

Allowances for bad debts –4'111 –4'256

Total trade accounts receivable, net 61'801 60'950

Insured receivables 53'080 49'682

14. Inventories

2011TCHF

2010TCHF

Raw materials 11'745 15'920

Work in progress and finished goods 29'991 33'721

Cunsumables and supplies 1'957 2'503

Spare parts 2'749 6'357

Advanced payments to suppliers 227 3'425

Value adjustments for inventories –2'126 –2'095

Total inventories 44'543 59'831

The values of inventories that are difficult to sell and inventories with a lower net market value are adjusted. The Group determines the value adjustments for inventories that are difficult to sell using past experience.

In the context of the restructuring of the Cham Paper Group, consumables & supplies and spare parts in the amount of TCHF 1'393 were value-adjusted.

15. Other current receivables

2011TCHF

2010TCHF

VAT receivables 2'622 3'073

Payroll receivables 802 1'821

Other receivables 4'054 2'429

Other current receivables 7'478 7'323


16. Tangible fixed assets

2011Unde-

veloped properties

TCHF

Land and buildings

TCHF

Machinery, equipment

and vehiclesTCHF

Production equipment

TCHF

Const-ruction in progress

TCHFTotalTCHF

Acquisition costs as at 1 January 478 82'760 201'755 199'411 3'296 487'700

Transfers between categories 1) –47 47 3'402 2'044 –5'446 –

Additions – 10'109 4'624 1 4'728 19'462

Disposals –431 –21 –2'148 –11'277 – –13'877

Exchange differences – –594 –2'879 –1'074 –39 –4'586

Acquisition costs as at 31 December – 92'301 204'754 189'105 2'539 488'699

Cumulative depreciation as at 1 January – –45'590 –159'953 –139'851 – –345'394

Depreciation – –1'874 –9'240 –7'000 – –18'114

Impairment – –11'565 –11'716 –27'816 – –51'097

Disposals – – 2'125 11'193 – 13'318

Exchange differences – 297 2'280 541 – 3'118

Cumulative depreciation as at 31 December – –58'732 –176'504 –162'933 – –398'169

Carrying amount as at 31 December – 33'569 28'250 26'172 2'539 90'530

Carrying amount as at 1 January 478 37'170 41'802 59'560 3'296 142'306

1) Transfers between various categories of tangible fixed assets as a result of the completion of construction in progress

2010Unde-

veloped properties

TCHF

Land and buildings

TCHF

Machinery, equipment

and vehiclesTCHF

Production equipment

TCHF

Const-ruction in progress

TCHFTotalTCHF

Acquisition costs as at 1 January before restatement 478 88'216 231'186 222'956 1'816 544'652

Restatement 1) – –864 – – – –864

Acquisition costs as at 1 January after restatement 478 87'352 231'186 222'956 1'816 543'788

Transfers between categories 2) – – 2'460 775 –3'235 –

Additions – 429 5'067 901 4'814 11'211

Disposals – – –12'895 –15'955 – –28'850

Exchange differences – –5'021 –24'063 –9'266 –99 –38'449

Acquisition costs as at 31 December 478 82'760 201'755 199'411 3'296 487'700

Cumulative depreciation as at 1 January – –45'924 –180'391 –151'944 – –378'259

Depreciation – –2'093 –10'293 –7'655 – –20'041

Disposals – – 12'231 15'404 – 27'635

Exchange differences – 2'427 18'500 4'344 – 25'271

Cumulative depreciation as at 31 December – –45'590 –159'953 –139'851 – –345'394

Carrying amount as at 31 December 478 37'170 41'802 59'560 3'296 142'306

Carrying amount as at 1 January 478 41'428 50'795 71'012 1'816 165'529

1) The previous year’s figures have been adjusted due to a restatement (cf. note 1.2 Consistency in presentation and valuation / errors in previous annual

financial statements (restatement)).2) Transfers between various categories of tangible fixed assets as a result of the completion of construction in progress


The assets were examined on the balance sheet reporting date for any signs of impairment. The requisite value adjustments pursuant to Swiss GAAP FER 20 were made. Impairments in the amount of TCHF 51'097 were performed in association with the restructuring of the Cham Paper Group.

The carrying values of the pledged tangible fixed assets for financial liabilities amount to TCHF 48'403 (2010: TCHF 58'385).

The fire insurance value of tangible fixed assets amounts to TCHF 766'347 (2010: TCHF 929'375). Tangible fixed assets are insured at their reinstatement value.

17. Intangible assets

2011 SoftwareTCHF

TotalTCHF

Acquisition costs as at 1 January 11'959 11'959

Additions 2'662 2'662

Disposals – –

Exchange differences –26 –26

Acquisition costs as at 31 December 14'595 14'595

Cumulative amortisation as at 1 January –6'560 –6'560

Amortisation –1'648 –1'648

Impairment –2'976 –2'976

Disposals – –

Exchange differences 24 24

Cumulative amortisation as at 31 December –11'160 –11'160

Carrying amount as at 31 December 3'435 3'435

Carrying amount as at 1 January 5'399 5'399

2010 SoftwareTCHF

TotalTCHF

Acquisition costs as at 1 January 13'973 13'973

Additions 4'157 4'157

Disposals –5'970 –5'970

Exchange differences –201 –201

Acquisition costs as at 31 December 11'959 11'959

Cumulative amortisation as at 1 January –11'784 –11'784

Amortisation –853 –853

Disposals 5'880 5'880

Exchange differences 197 197

Cumulative amortisation as at 31 December –6'560 –6'560

Carrying amount as at 31 December 5'399 5'399

Carrying amount as at 1 January 2'189 2'189

The assets were examined on the balance sheet reporting date for any signs of impairment. The requisite value adjustments pursuant to Swiss GAAP FER 20 were made. Impairments in the amount of TCHF 2'976 were performed in association with the restructuring of the Cham Paper Group.


Effects of theoretical capitalisation of goodwillIf goodwill were capitalised and amortised over five years by way of regular amortisation, the following theoretical values would result under Swiss GAAP FER:

2011TCHF

2010TCHF

Goodwill at the time of acquisition (11.09.2008) 2'322 2'322

Cumulative theoretical amortisation 1'546 1'083

Theoretical impairment – –

Theoretical closing balance, goodwill, 31 December 776 1'239

Theoretical effect on pre-tax result 464 464

18. Financial liabilities

2011TCHF

2010TCHF

Short-term bank loans 31'486 22'294

Short-term portion of long-term bank loans 7'674 10'322

Derivative financial instruments 274 565

Total current financial liabilities 39'434 33'181

Long-term bank loans – 3'123

Mortgage notes 35'821 45'454

Total non-current financial liabilities 35'821 48'577

Total amount of secured financial liabilities 48'403 58'385

The financial liabilities are secured by mortgage notes on land, buildings and production equipment.

Finance lease liabilitiesThere were no finance lease liabilities as of 31 December 2011 or 31 December 2010.

19. Other current liabilities

2011TCHF

2010TCHF

VAT liabilities 559 137

Payroll liabilities 2'089 2'297

Tax liabilities 146 1'161

Other current liabilities 2'255 1'127

Total other current liabilities 5'049 4'722


20. Provisions

2011Restructuring

TCHFOtherTCHF

TotalTCHF

As at 1 January – 1'400 1'400

Additions 24'983 – 24'983

Reversals – – –

Utilisation – – –

Exchange differences –30 – –30

As at 31 December 24'953 1'400 26'353

Shown on the consolidated balance sheet as:

Current provisions 10'663 – 10'663

Non-current provisions 14'290 1'400 15'690

2010Restructuring

TCHFOtherTCHF

TotalTCHF

As at 1 January 200 2'102 2'302

Additions – – –

Reversals –200 –420 –620

Utilisation – –282 –282

Exchange differences – – –

As at 31 December – 1'400 1'400

Shown on the consolidated balance sheet as:

Current provisions – – –

Non-current provisions – 1'400 1'400

Various restructuring expenses have been incurred in the restructuring of the Cham Paper Group. This extends in particular to costs for redundancy welfare plans, clearing and disposal work, and expenses incurred in connection with the premature termination of contracts.

The other provisions contain deferrals for construction measures.


21. Pension plan obligations

The majority of the Group's employees are covered by pension plans that are co-financed by the subsidiaries. As a rule, the pension plans are financed through employee and employer contributions to foundations that are independent of the Group. The benefits from these plans vary depending on the legal, tax and economic situations of the country in which the employees are hired. The Group’s occupational pension scheme in Switzerland is a legally independent pension fund. In addition to the legally regulated social insurance plans, within the Group in Italy there is an independent post-employment benefit plan. A liability is reported on the consolidated balance sheet since this pension plan has no separate assets to cover its obligations.

Economic benefit / economic obligation and pension plan expense

Overfunding/ underfunding

Economic share of organisation

Change as compared

to previous year or

recognised in income during FY

Amounts ac-crued during

period

Pension plan expense share of personnel

expense

31.12.11TCHF

31.12.11TCHF

31.12.10TCHF

2011TCHF

2011 TCHF

2011 TCHF

2010TCHF

Corporate welfare funds / corporate pension funds – – – – – – –

Pension funds without any overfunding/underfunding – – – – 1'772 1'772 1'795

Pension funds with overfunding – – – – – – –

Pension funds with underfunding – – – – – – –

Pension plans without assets of their own – –4'326 –4'796 368 – 201 235

Total – –4'326 –4'796 368 1'772 1'973 2'030

In 2011 and 2010 there was no overfunding/underfunding or changes recognised in income. The contributions accrued to the period amounted to TCHF 1'772 in 2011 (2010: TCHF 1'795).

No employer contribution reserves existed in 2011 or 2010.

As of 31 December 2011, there were no obligations toward pension plans.

22. Share capital and treasury shares

2011Number of

registered shares Par value per share

CHF

Carrying amount

TCHF

Total registered shares issued 745'000 65.00 48'425

Total treasury shares 44'302 65.00 –13'610

Total shares outstanding 700'698 65.00 –

2010Number of

registered shares Par value per share

CHF

Carrying amount

TCHF

Total registered shares issued 745'000 65.00 48'425

Total treasury shares 46'772 65.00 –14'630

Total shares outstanding 698'228 65.00 –

At the 99th General Meeting of Shareholders on 27 April 2011, the shareholders of Cham Paper Group Holding AG approved the distribu-tion of a cash dividend of CHF 5.00 per share payable out of the legal reserves from capital contributions. The dividend in the total amount of TCHF 3'482 was disbursed to the shareholders.


At the 98th Annual General Meeting on 29 April 2010, the shareholders of Cham Paper Group Holding AG decided to reduce the com-pany's share capital from TCHF 57'738 to TCHF 48'425 by reducing the par value of the 745'000 registered shares from CHF 77.50 to CHF 65.00 per share. The decrease in par value of TCHF 9'313 was disbursed to the shareholders.

The non-distributable, statutory or legal reserves amounted to TCHF 16'739 as of 31 December 2011 (2010: TCHF 19'500).

Treasury sharesThe number of treasury shares as at 31 December 2011 and 2010 was:

2011 2010

Holdings as at 1 January 46'772 48'635

Employee share ownership plan –2'470 –1'863

Purchases – –

Sales – –

Holdings as at 31 December 44'302 46'772

23. Non-recognised commitments and contingencies

Operating lease commitmentsThe subsidiaries hold numerous contracts for operating leases, mainly for equipment and vehicles as well as for the lease of an external warehouse. Total expenses in FY 2011 for operating leases amounted to TCHF 805 (2010: TCHF 678). Future minimum payments under non-cancellable operating leases are due as follows:

2011TCHF

2010TCHF

Within 1 year 771 760

Between 1 an 5 years 1'016 1'121

Total 1'787 1'881

Capital commitmentsAs part of ordinary business operations, the subsidiaries entered into various contractual commitments for the purchase of tangible fixed assets and intangible assets as follows:

2011TCHF

2010TCHF

Capital commitments for tangible fixed assets 1'109 903

Capital commitments for intangible assets – 1'468

Total 1'109 2'371

Guarantee obligationsAs of 31 December 2011, guarantees given as part of ordinary business operations amounted to TCHF 868 (2010: TCHF 766).


24. Related party transactions

Subsidiaries and associates An overview of subsidiaries and associates is set out in note 27. Transactions between the parent company and the subsidiaries as well as those between the subsidiaries of the Group have been eliminated in the consolidated financial statements.

Share ownershipAs of 31 December 2011, the Board of Directors members and their related parties owned a total of 316'485 registered shares of Cham Paper Group Holding AG (31 December 2010: 314'253 registered shares). As of 31 December 2011, four Executive Management Board members owned a total of 633 registered shares of Cham Paper Group Holding AG (31 December 2010: three members with a total of 150 registered shares).

Employee share ownership planUnder an employee share ownership plan that was introduced in FY 2010, Cham Paper Group Holding AG allotted members of the Board of Directors 2'067 treasury shares in 2011 (2010: 1'863) at an average share price of CHF 153.00 in effect in November (2010: CHF 209.00). The members of the Executive Management Board were allotted 403 (2010: none) shares at an average share price in ef-fect in March of CHF 210.00 in lieu of a cash bonus.

Compensation of the members of the Board of Directors and the Executive Management BoardFor information on the compensation of the Board of Directors and the Executive Management Board, please refer to page 80 and 81 of the financial statements of Cham Paper Group Holding AG.

25. Risk management

Group’s risk managementRisk management is a fundamental element of business practice as well as an integral part of the Group's business planning. In order to sustainably achieve corporate objectives, the Group uses various risk management and control systems that are set up not only for the early identification and analysis of risks but also for taking appropriate countermeasures. Strategic and operative risks are considered. Risk management, the internal control system and quality management are closely linked and coordinated.

A formal, enterprise-wide risk assessment is performed by the Executive Management Board at least once a year. Significant operational risks are defined in a detailed risk catalogue and risk matrix and analysed according to their probability of occurrence and possible extent of damage or loss. This assessment enables the causes and suitable measures per risk to be derived for the purpose of mitigating or eliminating the risk.

The Board of Directors of Cham Paper Group Holding AG has approved the risk assessment and monitors the implementation of the ac-tions defined in the catalogue of countermeasures by the Executive Management Board. In the event of the emergence of unexpected individual risks, the Board of Directors is also immediately informed of the risks identified and the actions taken and processes imple-mented by the Executive Management Board to mitigate or eliminate them.

In the risk assessment of 2011 the following significant risks among others were identified:

Exchange rate risk: Since 2009 the exchange rate of the Swiss franc against the euro has developed to the detriment of the Cham Paper Group. The Swiss mill in particular is confronted with deteriorating margins and the imminent loss of market share because sales prices cannot be downwardly adjusted any further in many cases. In order to minimise the impact of brief exchange rate fluctuations, the Group has developed and implemented a hedging concept. In addition, "natural" hedging has been established during the past couple of years and purchases are made in the currency in which sales are made, where possible. In view of the increasing strength of the Swiss franc as compared to the euro, the Group Executive Board was forced in the second half of 2011 to initiate restructuring within the Group and gradually shift base paper production to the Italian mills.


Market / economy: The earnings situation of the Cham Paper Group is subject to cyclical fluctuations in the world economy that may lead to sales revenues drops, unrecoverable debts and overcapacity in markets. Factors like these make it impossible for the company to pass on increases in energy and raw materials costs to customers completely or in the near term. The Cham Paper Group seeks to minimise these risks by systematically diversifying its customer portfolio and continuously monitoring markets. In order to respond to changes in the market in a timely manner, the Group maintains an early warning system featuring an integrated contingency plan to address possible scenarios. Furthermore, capacities in the Group were adapted in line with sales possibilities during the year under review.

Raw materials: The past few years have seen substantial increases in the prices of raw materials such as pulp, chemicals and energy. Plus which, the hazard is increasingly posed of resources intermittently becoming scarce. In order to prevent these bottlenecks, the Group makes every effort to establish and vet several suppliers for a product, where possible. Annual supply contracts are also concluded to cover requirements in the medium term. In order to address its energy requirements, the Group pursues a strategy of keeping prices stable and plannable by way of long-term agreements and the Group’s own energy generation capability. Where useful, the Group re-sorts to derivative financial instruments like pulp swaps to cushion the volatility of prices. In so doing, it pays contractually fixed prices for contractually fixed quantities of pulp and in return receives variable payments according to the market price of the contractually fixed quantities of pulp. The amount and the timeline of future planned pulp purchases hedged in this manner are based on delivery quantities and dates contractually agreed with individual customers for whose production operations the pulp is required.

26. Events after the balance sheet date

After the balance sheet reporting date and until the approval of the consolidated financial statements by the Board of Directors on 13 March 2012 there were no significant events that might negatively impact the statements made in the 2011 financial statements or that would have to be disclosed here.

27. Subsidiaries

Company as at 31 December 2011 Registered office Activity Currency

Sharecapital

in TCHF

Directholdingas a %

Indirect holdingas a %

Financial holding company

Industrieverwaltungsgesellschaft Cham AG CH Cham s CHF 50 100% –

Cham Paper Group

Cham Paper Group AG CH Cham s CHF 10'000 100% –

Cham Paper Group Schweiz AG CH Cham l n CHF 85'000 – 100%

Cham Paper Group Immobilien AG CH Cham s CHF 5'000 – 100%

Cham Paper Group Italia S.p.A. IT Carmignano l n EUR 25'000 – 100%

Cham Paper Group Management AG CH Cham s CHF 100 – 100%

Cham Paper Group Deutschland GmbH DE Düsseldorf l EUR 26 – 100%

Cham Paper Group (France) S.à.r.l. FR Paris l EUR 32 – 100%

Cham Paper Group (UK) Ltd. GB Forest Row l GBP 10 – 100%

Condino Energia S.r.l. IT Condino n EUR 2'000 – 100%

s Holding company, financing and servicesn Research, development and productionl Sale and distribution

All companies are fully consolidated.

74

Report of the statutory auditor on the consolidated financial statements

Report of the statutory auditor on the consolidated financial statements

75 Report of the statutory auditor on the consolidated financial statements

76

Financial statements of Cham Paper Group Holding AG

Financial statements of Cham Paper Group Holding AG

Income statement

1 January – 31 DecemberNotes

2011TCHF

2010TCHF

Dividend and participation income 3 5'561 41'033

Income from securities and financial investments, net 4 53

Interest income from cash and cash equivalents 104 60

Interest income from subsidiaries 1'511 650

Gains from treasury shares – 35

Total income 7'180 41'831

Value adjustments for treasury shares 6 –1'178 –

Disposal loss on treasury shares –617 –

Other financial expense –16 –16

Administrative expense –3'292 –1'365

Impairment of participations 4 –130'000 –

Tax expense 5 680 –69

Total expense –134'423 –1'450

Net loss (–) / income for the year –127'243 40'381

The notes form an integral part of these financial statements.

77 Financial statements of Cham Paper Group Holding AG

Balance sheet

As at 31 December, prior to appropriation of available earningsNotes

31.12.2011TCHF

31.12.2010TCHF

Assets

Cash and cash equivalents 36'329 49'530

Treasury shares 6 6'690 8'887

Short-term receivables 1'983 150

Short-term receivables subsidiaries 791 –

Prepaid expenses 35 192

Total current assets 45'828 58'759

Participations 4 13'745 143'745

Loans to subsidiaries 7 68'094 50'533

Total non-current assets 81'839 194'278

Total assets 127'667 253'037

Liabilities

Liabilities 27 8

Liabilities to subsidiaries 4'323 974

Loans from subsidiaries 2'677 –

Accrued expenses 874 1'564

Total Liabilities 7'901 2'546

Shareholders' equity

Share capital 48'425 48'425

Legal reserves from capital contributions 23'983 27'465

Other legal reserves 22'815 22'815

Reserves for treasury shares 13'610 14'630

Free reserves 127'869 86'849

Retained earnings brought forward 10'307 9'926

Net loss (–) / income for the year –127'243 40'381

Total shareholders' equity 8 119'766 250'491

Total liabilities and shareholders' equity 127'667 253'037

The notes form an integral part of these financial statements.

78 Notes to the Financial Statements of Cham Paper Group Holding AG

Notes to the Financial Statements of Cham Paper Group Holding AG

1. IntroductionThe financial statements of Cham Paper Group Holding AG, Fabrikstrasse, 6330 Cham, Switzerland, comply with the requirements of the Swiss Code of Obligations.

2. Valuation and accounting methodsSecurities (with the exception of treasury shares) are reported at the lower of acquisition cost or market value. All other assets, including participations and loans, are posted at acquisition cost less suitable value adjustments. All liabilities are valued at nominal values. Assets and liabilities denominated in a foreign currency are translated into Swiss francs at year-end exchange rates except for participations, which are translated at historical rates. Transactions in foreign currencies during the year are carried out at the exchange rates prevailing on the transac-tion dates. Exchange rate gains and losses are posted on the income statement with the exception of unrealised gains, which are set aside.

3. Participation incomeParticipation income in FY 2011 consists of dividends from subsidiaries of TCHF 5'561 (2010: net income of TCHF 41'033).

4. ParticipationsThe participations of Cham Paper Group Holding AG in subsidiaries are listed in note 27 of the consolidated financial statements.

The participations of Cham Paper Group Holding AG were depreciated as at 31 December 2011 by TCHF 130'000 (2010: TCHF 0). The measurement was based on the mean value method.

5. Tax expenseIn FY 2011, the company registered a tax income amounting to TCHF 680 (2010: tax expense of TCHF 69), of which TCHF 680 (2010: TCHF 0) were attributable to the sale of Hammer Retex in FY 2009.

6. Treasury sharesIn FY 2011, no treasury shares were purchased or sold (2010: no purchase and sale of treasury shares).

Due to the new employee share ownership plan, non-executive members of the Board of Directors were allotted 2'067 treasury shares at the average share price of CHF 153.00 in effect in November 2011. Executive Management Board members were allotted 403 treasury shares at the average share price of CHF 210.00 in effect in March 2011.

In 2011 treasury shares were adjusted to their lower market value (2010: no value adjustment). The number of treasury shares as at 31 December 2011 amounted to 44'302 (2010: 46'772). The number of treasury shares held by Cham Paper Group Holding AG was determined in accordance with the requirements of art. 659b of the Swiss Code of Obligations. Treasury shares are not entitled to dividends.

7. Subordinated loanA subordinated loan of TCHF 3'000 (2010: none) is reported under “loans to subsidiaries”.


8. Changes in shareholders’ equity

Share capitalTCHF

Reserves from capital

contributionsTCHF

General legal reserves

TCHF

Reserves for treasury

sharesTCHF

Free reservesTCHF

Retained earnings brought forward

TCHFTotalTCHF

Balance as at 1 January 2010 57'738 – 50'280 15'448 35'423 59'926 218'815

Reclassification of reserves from capital contributions – 27'465 –27'465 – – – –

Allocation to free reserves – – – – 50'000 –50'000 –

Adjustment of reserves for treasury shares – – – –818 818 – –

Reduction of share capital –9'313 – – – 608 – –8'705

Net income of the year – – – – – 40'381 40'381

Balance as at 31 December 2010 48'425 27'465 22'815 14'630 86'849 50'307 250'491

Allocation to free reserves – – – – 40'000 –40'000 –

Adjustment of reserves for treasury shares – – – –1'020 1'020 – –

Dissolution of reserves from capital contributions – –3'482 – – – 3'482 –

Dividends – – – – – –3'482 –3'482

Net loss of the year – – – – – –127'243 –127'243

Balance as at 31 December 2011 48'425 23'983 22'815 13'610 127'869 –116'936 119'766

As of 31 December 2010, the share capital of Cham Paper Group Holding AG consisted of 745'000 registered shares with a par value of CHF 65.00 each. The share capital decreased from TCHF 57'738 on 31 December 2009 to TCHF 48'425 on 31 December 2010 due to the reduction of the share capital on account of the decrease in par value of the 745'000 registered shares from CHF 77.50 to CHF 65.00 per share. The decrease in par value of TCHF 9'313 was disbursed to the shareholders.

9. Significant shareholdersAccording to the information available, the following shareholders held more than 3% of the shares of Cham Paper Group Holding AG as at 31 December 2011: Buhofer shareholder group (BURU Holding AG, Philipp Buhofer, Heinz Buhofer, all Hagendorn) with 40.41% (2010: BURU Holding AG, Philipp Buhofer, Heinz Buhofer, all Hagendorn, with 40.22%), LB (Swiss) Investment AG, Zurich, with 4.80% (2010: 4.01%). In March 2012 LB (Swiss) Investment AG, Zurich, increased its share from 4.80% to 5.06%.

Cham Paper Group Holding AG is not aware of any shareholders' agreements or other arrangements between the significant sharehold-ers of the company regarding the registered shares of Cham Paper Group Holding AG held by them or regarding the exercise of share-holders' rights.


10. Compensation of the Board of Directors and Executive Management Board members

Compensation of the Board of Directors members All members of the Board of Directors are non-executive members. The total compensation of the members of the Board of Directors of Cham Paper Group Holding AG and the compensation of the current and former members of the Board of Directors for FY 2010 and 2011 were as follows:

Compensation of Board of Directors 2011 FunctionBase salary

TCHF

Attendance fee

TCHF

20% surcharge on subscription

of shares 1) TCHF

ConsultancyTCHF

TotalTCHF

Philipp Buhofer 2) Chairman 172 26 35 96 329

René Furler Vice Chairman 42 32 7 – 81

Hans Schaller 2) Member 31 25 5 7 68

Peter Schmid 2) 3) Member 21 21 4 127 173

Felix Thöni 2) 4) Member 31 30 3 115 179

Urs Ziegler 2) Member 35 24 – 3 62

Total disbursed to Board of Directors members 332 158 54 348 892

Compensation of Board of Directors 2010 FunctionBase salary

TCHF

Attendance fee

TCHF

20% surcharge on subscription

of shares 1) TCHF

ConsultancyTCHF

TotalTCHF

Philipp Buhofer Chairman 188 30 41 – 259

René Furler Vice Chairman 45 27 7 – 79

Hans Schaller Member 33 31 3 – 67

Felix Thöni 4) Member 33 33 3 164 233

Urs Ziegler Member 37 24 11 – 72

Total compensation of Board of Directors members 336 144 65 164 709

1) The subscription of shares was calculated with a surcharge of 20%.2) Consultancy fee for a fixed term of engagement relating to the strategic orientation of the Cham Paper Group.3) Consultancy fee for general legal advice in connection with the new strategic and organisational development of the Cham Paper Group.4) Felix Thöni receives a consultancy fee for a mandate relating to the Finance & Controlling Department and for special projects.

Compensation of the Executive Management Board members

The total compensation of the Executive Management Board members for FY 2011 and 2010 was as follows:

Current membersTCHF

Members resig-ning during FY

TCHF

Total2011

TCHF

Total2010

TCHF

Base salary 1'112 288 1'400 1'657

Bonuses 1) 200 – 200 238

Reimbursement for strategic projects 54 – 54 –

Payments to pension plans 165 12 177 191

Total compensation of Executive Management Board members 1'531 300 1'831 2'086

1) The calculation of bonuses is based on the results of the preceding year. According to the employee shareholding plan the bonuses may be partially paid in the form of shares.


The content and method of determining compensation and shareholding schemes are described on page 48 f.

The highest compensation paid to an Executive Management Board member in FY 2011 was TCHF 468 to Peter Studer, CEO of the Cham Paper Group (2010: Peter Studer, CEO of the Cham Paper Group, TCHF 467).

In the course of FY 2011, compensation totaling TCHF 300 (2010: TCHF 684) was disbursed to resigning members of the Executive Man-agement Board.

No loans were granted to members of the Board of Directors or the Executive Management Board in FY 2011 and 2010.

11. Share ownership of Board of Directors and Executive Management Board members

As of 31 December 2011, the Board of Directors members and their related parties owned a total of 318'485 registered shares of Cham Paper Group Holding AG (31 December 2010: 314'253 registered shares). Related parties are spouses, children under 18 years of age and, as applicable, other close relatives, companies belonging to or controlled by these persons, and legal entities or individuals acting as their trustees. Direct and indirect share ownership by current Board of Directors members is set out below:

Name Function31 December 2011

Number of registered shares31 December 2010

Number of registered shares

Philipp Buhofer 1) Chairman 301'049 299'673

René Furler Vice Chairman 848 595

Hans Schaller Member 278 86

Peter Schmid Member 2'141 n/a

Felix Thöni Member 559 289

Urs Ziegler Member 13'610 13'610

1) Of which 292'613 (2010: 256'196) registered shares held via BURU Holding AG and 2'894 (2010: 39'311) registered shares by relatives

As of 31 December 2011, the Executive Management Board members and their related parties owned a total of 633 registered shares of Cham Paper Group Holding AG (31 December 2010: 150 registered shares). Share ownership of the Executive Management Board members is set out below:

Name Function31 December 2011

Number of registered shares31 December 2010

Number of registered shares

Peter Studer CEO 184 70

Patrick Schmid CFO 189 –

Peter Müller Mill Manager Cham 230 50

Gerold Zuegg Mill Manager Condino 30 30

12. Information about risk assessment

The Board of Directors of Cham Paper Group Holding AG evaluates corporate risk applying a systematic risk identification and analysis process. Based on detailed risk catalogues and risk matrices, specific risks are defined and evaluated by the Executive Management Board and a corresponding catalogue of countermeasures is developed. The Board of Directors of Cham Paper Group Holding AG has approved the risk assessment and monitors the implementation of the actions defined in the catalogue of countermeasures by the Ex-ecutive Management Board. In the event of the emergence of unexpected individual risks, the Board of Directors is also immediately informed of the risks identified, the actions taken and the processes implemented by the Executive Management Board to mitigate or eliminate them.


Proposed appropriation of available earnings

2011CHF

2010CHF

Balance brought forward from previous year 10'306'893 9'925'973

Net loss (–) / income for the year –127'243'774 40'380'920

Reversal of legal reserves from capital contributions – 3'481'825

Total available loss (–) / earnings –116'936'881 53'788'718

Appropriation of available earnings

Allocation to free reserves – –40'000'000

Reversal of free reserves 120'000'000 –

Dividend – –3'481'825

Balance to be carried forward 3'063'119 10'306'893

Total disbursed as dividend – 3'481'825

Minus portion consisting of reserves from capital contributions – –3'481'825

Portion consisting of other reserves and available earnings – –

The Board of Directors proposes to the general meeting of shareholders to approve a reversal of free reserves in the amount of CHF 120'000'000 to cover the net loss.

The FY 2011 is heavily burdened by the negative operational result and the restructuring expenses. In view of this result the Board of Directors proposes to the general meeting of shareholders not to disburse a dividend.

83 Report of the statutory auditor on the financial statements

Report of the statutory auditor on the financial statements

84 Report of the statutory auditor on the financial statements

85

Sustainability Report – GRI Statement

Sustainability Report – GRI Statement

This annual report is issued in German and English. The German version is binding.

Publisher– Cham Paper Group Holding AG, Cham

Idea, design, copy and production– Dynamics Group AG, Zurich

Consulting Sustainability Report– Sustainserv, Zurich and Boston

Photography– Scanderbeg Sauer Photography, Zurich– Marc Wetli, Zurich– Iris C. Ritter, Zurich– Hugo Raeber, Cham

Printing and productionPrinted with a net zero carbon footprint at Neidhart & Schön Group AG

DisclaimerMany of the statements made in this annual report are forward-looking statements relating to future events and/or future perform-ance, including without limitation, statements regarding expec-tations, beliefs, intentions or future strategies that are signified by the words “expects”, “anticipates”, “intends”, “believes”, “plans” or similar language. These forward-looking statements are only predictions and estimates regarding future events and circumstances. Actual results may differ substantially from those anticipated in these forward-looking statements.

Publishing details

Cham Paper Group Holding AGFabrikstrasse

CH-6330 Cham

Phone +41 41 785 33 33

Internet www.cham-group.com

E-mail [email protected]

Documents

Annual Report 2011€¦ · 4 The Cham Paper Group at a glance Profile Sites and sales volumes 6 The Cham Paper Group’s shares 8 Letter to Shareholders 12 Interview on the Group’s