Annual Report 2015 - irpages2.equitystory.comirpages2.equitystory.com/champaper/pdf/gb/CPG_GB2015_engl.pdf · Challenging transfer of Digital Imaging production ... development planning

Annual Report 2015

The Cham Paper Group is a leading manufacturer of coated speciality papers. Surface finishing lends papers properties

that generate value added for its customers. The company, which was founded in 1657, has three sites, one in Switzerland

(Cham) and two in Italy (Carmignano and Condino), and a global sales network.

The decision to focus on development and sales and discontinue paper manufacturing in Switzerland has made way for a

new project on the factory site in the centre of Cham. The Cham Paper Group is developing an eleven-hectare quarter

there called the Papieri site.

The Cham Paper Group (ticker symbol: CPGN) is listed on the SIX Swiss Exchange.

Highlights and key figures 3

Letter to the shareholders 4

The Cham Paper Group’s markets 6Business development paper

The Papieri site 10Business development real estate

The Cham Paper Group’s shares 14

Corporate Governance 16

Compensation Report 24

Consolidated financial statements 30Notes to the consolidated financial statements

Financial statements of Cham Paper Group Holding AG 51Notes to the financial statements of Cham Paper Group Holding AG

The Cham Paper Group

Table of Contents

3

Highlights and key figures

Rising revenues in local currency thanks to good market conditions and successful products

Higher costs of pulp due to currencies reduce operating profit

Challenging transfer of Digital Imaging production

Investmens implemented to increase productivity and capacity

Planning dossier submitted for redesign of the Papieri site

Payment of a dividend of CHF 3.00 per share

in CHF million, unless otherwise specified 2015 2014

Sales in tonnes 146,274 142,981

Net revenue 194,258 216,762

EBITDA 9,187 18,800

As a % of net revenue 4.7% 8.7%

EBIT before restructuring 627 8,930

As a % of net revenue 0.3% 4.1%

Restructuring income / (restructuring expenses) 1,795 –3,059

EBIT after restructuring 2,422 5,871

Profit 480 1,841

Earnings per share (in CHF) 0.65 2.48

Free Cash Flow –5,695 –5

Shareholders’ equity 102,088 107,900

As a % of total assets 50.6% 52.8%

(Net debt) / Net cash –1,432 3,095

Investments in tangible and intangible assets 12,073 13,384

Number of employees (FTEs) 389 417

Highlights and key figures

4

Dear Shareholders

The Cham Paper Group has closed another transformative year with a small profit. The financial

year was challenging for the paper division on several levels. Extensive investment in upgrading

machinery to increase capacity and efficiency in Carmignano and the relocation of coating opera-

tions from Cham to Italy resulted in greater restrictions on capacity and higher start-up costs than

originally planned. The appreciation in the US dollar against the Euro also led to sharply increased

cellulose costs, which could not be offset directly via higher prices. In the newly created real es-

tate division, preparations for the transformation of the industrial site into a new quarter proceed-

ed according to plan.

In 2015, the Group achieved revenue of CHF 194.3 mil-

lion. This is 10.4% less than in 2014 (CHF 216.8 million),

however, revenue grew by 2.4% in local currency. The

operating profit came to a modest CHF 2.4 million (previ-

ous year: CHF 5.9 million), while the net result was just

positive, at CHF 0.5 million (CHF 1.8 million). The profit

has therefore improved slightly in the traditionally weaker

second half thanks to the reduction in costs.

The paper division presented a contrasting pictureThe trend in the paper division’s revenue and profits did

not match the opportunities presented by the market.

The extensive investment in paper machine 4 in Carmig-

nano to increase capacity and efficiency was completed

on schedule, however, the start-up processes following

the modifications turned out to be more difficult than ex-

pected and there was a delay in exploiting the increased

production potential. The gains in efficiency are not yet

apparent in the results because of the 10% increase

(caused by movements in exchange rates) in the cost of

cellulose, which accounts for around 50% of manufac-

turing costs. The challenges involved in the relocation of

coating operations for the manufacture of complex digital

imaging products to Italy were underestimated; it was not

possible to keep to the budget or the timetable and this

depressed profitability.

However, demand for the Cham Paper Group’s special-

ity papers was satisfactory to good in all segments. The

three divisions Consumer Goods, Industrial Release and

Digital Imaging are well positioned strategically and their

products are appreciated in the market. Tonnage sold

increased by 2.3% despite the restrictions mentioned

previously, and the paper division’s net revenue reached

CHF 193.4 million. The gross profit decreased from

CHF 28 million to CHF 18.4 million as a consequence, in

particular, of the increase of approximately CHF 9 million

in the cost of cellulose. Thanks to the reduction in the

cost base, a marginally positive operating profit (EBIT) be-

fore restructuring of CHF 0.7 million was achieved (previ-

ous year: CHF 8.6 million); the figure after restructuring

was CHF 2.5 million (CHF 5.6 million).

The real estate division developed as plannedDevelopment of the Papieri site again made major pro-

gress in the financial year 2015: the municipality of Cham

submitted the planning dossier, which had been pro-

duced jointly with the Cham Paper Group, to the respon-

sible cantonal offices for preliminary review. The aim is

to carry out the ballot on the development plan and the

environmental impact assessment in autumn 2016. A

possible scheduling concept was devised parallel to the

development planning process.

The space that has been released on the factory site is

already being used on a short-term basis in a variety of

ways by over 50 different tenants. The first contracts for

new long-term tenants in the commercial area have also

been signed. The relevant construction work has started

and the real estate division generated revenue with third

parties of CHF 0.8 million (previous year: CHF 0.7 million)

and an operating profit (EBIT) of CHF 0.2 million (CHF 0.2

million). The development expenses for the Papieri pro-

ject were capitalised.

Letter to Shareholders

5

Strong balance sheet and constant dividendDespite the dividend payment, the abolition of the mini-

mum EUR/CHF exchange rate and the associated reduc-

tion in the value of Italian assets in CHF, the Cham Paper

Group still has a strong balance sheet. At the end of the

reporting year, the equity ratio amounted to 50.6% (previ-

ous year: 52.8%). The Group is almost free from debt and

has cash reserves of CHF 41.4 million. The site in Cham

is still valued at acquisition cost.

The Board of Directors will propose to the General Meet-

ing of Shareholders that a dividend of CHF 3.00 (previous

year: CHF 3.00) is paid per share, which will be exempt

from capital gains tax for Swiss private investors.

New Delegate of the Board of DirectorsPreparations are being made for a transfer of responsibil-

ities in the Board of Directors of the Cham Paper Group:

Susanne Oste, the previous Head of International Sales at

Ziegler Papier, will be proposed for election to the Board

of Directors at the General Meeting of Shareholders on 4

May 2016. She is to replace Urs Ziegler, who will continue

to make himself available as a member of the Board of

Directors, as Delegate of the Board of Directors. Susanne

Oste has been being introduced to her responsibilities by

Urs Ziegler since January 2016.

Peter Schmid will not stand for re-election. The Board

would like to thank Mr Schmid for his tremendous com-

mitment since 2011.

A cautiously positive outlookThe Board of Directors and the Executive Board are of the

opinion that the Group is well positioned for the future. In

all its three areas of operations, the paper division covers

attractive and expanding markets. The modernised mills

produce more efficiently than ever before and have built

up additional capacity. As a result, the lengthy, demanding

transformation process is drawing to a close. Assuming

that the cost of raw materials stabilises, we are expecting

a clear improvement in the operating profit in the ballpark

of the EBIT achieved in 2014). The real estate division will

develop into a strong second pillar for the Group over the

next decade.

We would like to thank you, our valued shareholders, cus-

tomers and partners, for your trust and our employees for

their tireless commitment.

For the Board of Directors

Philipp Buhofer

Chairman of the Board of Directors

Urs Ziegler

Delegate of the Board of Directors

The Cham Paper Group’s markets

Consumer GoodsThe consumer goods solutions of the Cham Paper Group

consist of papers for flexible packaging and label printing.

The base papers protect the packaged content, present

the product and provide information about it. As a quality

supplier in the consumer goods segment, the Chamber

Paper Group provides brand manufacturers with innova-

tive paper solutions that stand out for their efficiency and

safety in all production processes. The excellent proper-

ties of the paper guarantee superb printing results, ena-

bling brand items to be shown to their best.

A European consumer survey* shows that consumers

love paper. 87% of the surveyed consumers prefer paper

packaging, 93% consider paper the most environmentally

friendly packaging solution and 87% like paper because it

is easy and safe to handle.

* Ipsos consumer survey, carried out in the UK, France, Germany,

Poland, Sweden, Belgium and Spain in 2006

Industrial Release The range in the industrial release segment comprises

base papers for release liners, process liners and face

stock papers. These papers are specially designed for

technical and industrial uses, for the automotive and the

construction industry and for labels and have excellent

release properties. The Cham Paper Group meets spe-

cific customer requirements with tailored solutions that

provide impressive efficiency, reliability and quality in all

production and processing steps.

Paper is an important raw material in the self-adhesive

industry. 70% of all release liners, i.e. the liners of

adhesive foils, adhesive tapes and self-adhesive labels,

and 65% of all labels used worldwide are made from

paper.

Digital Imaging As a leading supplier on the global market for digital imag-

ing papers, the Cham Paper Group supplies inkjet papers

for large-format digital printing and industrial inkjet printing.

The range includes sublimation papers for digital textile

printing. The inkjet papers are suitable for both indoor and

outdoor use and boast maximum colour saturation. The

sublimation papers for textile printing have excellent feed

and transfer properties. The Cham Paper Group tests its

products at its own application centre under real conditions

and provides training courses to customers.

Digital printing continues to gain in importance in relation

to offset printing. Some 10 to 15% of the global printing

volume is digitally printed. The advantages of digital print-

ing include customization, time savings and the ability to

print short runs.

Consumer Goods

Food

Non-Food

Tobacco

Beverages & Liquids

Industrial Release

Release Liner Tapes

Release Liner Labels

Process Liners

Facestock (Labels)

Digital Imaging

Large Format Inkjet Graphics

Sublimation Print / Textile Graphics

High-Speed Inkjet

8

Performance of the paper division

The paper division of the Cham Paper Group reported good demand in

financial year 2015. The Group posted quantitative growth (+2.3%) for the

first time since the relocation of coating operations from Cham to Italy

started. Admittedly revenue fell by almost 13% to CHF 193.4 million due to

movements in exchange rates but it grew by 2.4% in local currency.

However, the marked increase in manufacturing costs

had a negative impact on the operating profit. The year

was also characterised by bottlenecks and delays result-

ing from the extensive modification of paper machine 4 in

Carmignano and the challenging transfer of digital imag-

ing production to Italy.

While customer orders were still rather subdued at the

beginning of the year, demand gradually picked up over

the year. The Cham Paper Group increased or at least

maintained quantities in all segments of its paper divi-

sion. The industrial release segment achieved the great-

est growth, at 7%. Despite supply bottlenecks in the

second half, the consumer goods segment grew by 1%,

while the digital imaging segment stagnated. This was

a consequence of the relocation of production to Italy,

which was much more difficult than had been expected.

Growth was driven by markets outside Europe, with Asia

and America performing particularly well.

Higher manufacturing costs put the EBIT margin under pressurePrices in local currency stagnated at the level of the pre-

vious year. Sustained competitive pressure from com-

petitors whose capacity was less well utilised prevented

us from increasing prices. At the same time, the Cham

Paper Group was confronted with substantially increased

manufacturing costs in 2015. Cellulose prices alone

increased by more than 10% compared with the previous

year because of the adverse USD/EUR exchange rate. To

be sure, the Group succeeded in reducing fixed costs

again by CHF 2 million in local currency – among other

things, the workforce was again, as planned, reduced by

28 full-time posts. However, this was not sufficient to

compensate for the increase in cellulose costs. Conse-

quently, the EBIT margin reduced to 0.4%, far lower than

in the previous year.

Investment in Italian millsThe paper machine 4 in the Italian Carmignano mill was

modified in two stages. The wet section was updated in

the 2014 Christmas break; the installation of a new coat-

ing head and a soft calendaring plant followed in August

2015. Although short-term production restrictions had to

be accepted for the challenging second phase of modifi-

cations, this investment will enhance production quality

and consequently further strengthen the Group’s market

position.

The second major project in 2015 involved the transfer

of digital imaging products from Cham to Carmignano.

This move improved utilisation of the Italian mill; coating

machine 1 has been operating continuously since then.

In contrast to the transfer of the inner liner products in

2013/14, the relocation of digital imaging products was

considerably more complex and more expensive than

planned because these are smaller production units and

new processes had to be introduced.

Business development paper division

9

Food/Non-Food products driving the consumer goods segmentGrowth in the Consumer Goods segment was driven

by the food/non-food product category, which grew by

2.4%. The Cham Paper Group is very well known in this

market segment and also has a very good network of

relationships with brand manufacturers. Sales volume

remained steady in the tobacco segment. The decline in

Europe caused by falling demand for cigarettes was again

offset by demand from Asia. The Cham Paper Group also

sold smaller quantities in the American market for the

first time.

Quantities in the wet glue labels segment declined

slightly in 2015 due to supply bottlenecks during the

modifications to paper machine 4. Thanks to the reno-

vated machine, the mill in Carmignano is now able to

manufacture its products more efficiently and deliver

improved quality.

Industrial release posts growth in EuropeThe industrial release segment reported strong demand

for base papers for self-adhesive applications in 2015.

While the tape segment grew in line with the market, the

Cham Paper Group acquired additional market share in

the industrial applications and labels segments. Produc-

tion of facestock papers was also adversely affected by

the renovations in Carmignano. Nevertheless, the total

quantity was maintained at the level of the previous year.

Growth in the industrial release segment was focused

in the core European market. Outside Europe, the Cham

Paper Group concentrated on speciality papers, which are

exposed to less competitive pressure from local produc-

ers. The industrial release segment is well focused stra-

tegically and has various promising projects in prospect.

Digital imaging launches new productsThe digital imaging segment closed 2015 just below the

previous year’s level. The quantities sold fell by 1.2%,

while revenue decreased by 8.6%.The growth trend of

previous years was not continued, which was primarily

attributable to the transfer of digital imaging products

to Italy. In addition to these internal factors, the perfor-

mance of digital imaging business was also curbed by

growing competition from Asia, particularly in textile sub-

limation printing.

In response to the increasing pressure on prices, a com-

pletely new paper was launched in the fourth quarter of

2015 in the form of TRANSJET® Eco II. The product is to

round off the existing portfolio and contribute to increas-

ing the Group’s market share in this segment again. The

introduction of new grades for textile sublimation printing

is also on the agenda in 2016: in addition to the addition

of a new paper with a lower basis weight to the TRANS-

JET® Eco II line, a new product for industrial customers

is also planned. Prospects for growth are not only intact

in sublimation printing. The preconditions for the success-

ful expansion of the business are also met in the indoor

papers segment following the transfer of production to

the Italian mills.

Speciality papers sales markets

of Cham Paper Group

The Papieri site

A factory site is becoming a new quarter Following relocation of its paper manufacturing, the

Cham Paper Group is focusing on research and develop-

ment work, product sales and holding activities in Cham.

That has made way for a new project on the tradition-

al factory site, which makes up almost a quarter of the

centre of Cham. The company is planning a new quarter

in conjunction with the community of Cham. The Cham

Paper Group laid the foundations for the redesign of the

Papieri site in 2012, when it submitted its application for

rezoning, which the municipal council endorsed. Since

then landholders and politicians have been working to-

gether closely to design the 120,000-square-metre site.

Key interest groups and local residents are also involved

in the process.

Homes, offices, leisure facilities and gastronomic unitsThey all have a shared vision: they want the Papieri site

to be architecturally varied and to pay homage to the

site’s history as a paper plant. It is intended to have an

attractive mix of homes, offices, leisure facilities and gas-

tronomic units and become a popular meeting point for

the entire Cham community. Ecological construction and

energy efficiency are also important to the stakeholders

– the reconditioned hydraulic power station is planned to

meet a portion of the energy needs in the new quarter. It

will be some time yet before the first residents can move

in. Numerous tenants are using the vacated areas in the

meantime, until the renovation and new construction

work begins. The revenues from that interim use of the

site cover a large proportion of the Cham Paper Group’s

project costs.

www.zwischennutzungen- papieriareal.ch

Structure plan

12

Business development real estate

Once again, there was major progress with the development of the Papieri

site in 2015. The municipality of Cham has submitted the planning dossier,

which had been produced jointly with the Cham Paper Group to the re-

sponsible cantonal offices for preliminary review.

The planning dossier for the structural development

on the Papieri site was produced in close collaboration

between the municipality of Cham as well as other own-

ers affected. The dossier comprises the development

plan, the planned changes to building regulations and

zoning as well as an environmental impact assessment.

It included feedback from the residents of Cham, who

were able to examine the master plan including the struc-

tural project as part of a public consultation at the begin-

ning of the year. Overall, the local population view the

project very positively.

Autumn 2016 as the target deadline for the Papieri voteHaving been examined by the municipal commissions

and adopted by the municipal council, the planning dos-

sier was submitted to the canton for a preliminary exam-

ination in October 2015. As soon as the issues arising

from this preliminary examination are dealt with, the plan-

ning dossier will be available to the public for 30 days in

spring 2016. The aim is to hold the referendum on all the

dossiers relating to the development of the Papieri site in

autumn 2016.

Business development real estate

2012

2015

2014

2013

2016

2017

Development of the basic principles

Urban development study contract

Development of the development plan

and rezoning

Vote on development plan and rezoning

Public collaboration

2018

Construction of 1st stage starts

Development of the master plan

Development of the Papieri site

Preparation 1st stage

13

Scheduling concept and interim useParallel to the development plan, the Cham Paper Group

has developed a possible scheduling concept for the

Papieri project, on the basis of which a precise calcula-

tion of the investment required and a financial plan for

development of the site was worked out.

The Cham Paper Group is making the space released on

the factory site available for interim use. Today, over 50

different various third party tenants from various seg-

ments are making use of this offer and additional enquir-

ies are being received on an ongoing basis.

Tenancy agreement for the first renovation project concludedAn initial tenancy agreement for the conversion of a

large part of the former listed factory building (approx-

imately 1,700 m² of commercial space) was signed by

Specialized Europe GmbH. The construction permit for

the agreed basic structure and tenant fit-out was issued,

which means that there is nothing preventing implemen-

tation of the first renovation project on the Papieri site.

The completely redeveloped and renovated factory build-

ing is to be occupied at the end of 2016.

Operating profitThe real estate division generated revenue of CHF 1.4

million in 2015 and an operating profit (EBIT) of CHF 0.2

million. The development expenses for the Papieri project

were capitalised. They come to CHF 2.2 million so far.

Residential useCommercial/services use Public use

Investment propertiesCham Paper GroupFreehold apartmentsfor sale

Percentage use in %

Planned ownership structuresin %

72%

25%

3%

75%

25%

14

I. Key figures

Number of shares at 31 December 2015 2014 2013 2012 2011

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 65.00 65.00 65.00

Treasury shares 11 0 5,746 41,655 44,302

Number of outstanding registered shares 744,989 745,000 739,254 703,345 700,698

Key figures at 31 December 2015 2014 2013 2012 2011

Earnings/Loss (–) per share Group (in CHF) 0.65 2.48 0.55 –1.76 –131.83

Shareholders’ equity per outstanding share (in CHF) 137.03 144.83 145.76 143.38 145.80

Gross dividend (in CHF) 3.001) 3.00 3.00 3.00 –

Dividend yield (in %) 1.16 1.24 1.34 1.91 n.a.

1) Proposal to the general assembly of 4 May 2016

Stock exchange price in CHF per share 2015 2014 2013 2012 2011

Highest 261 274 245 188 223

Lowest 222 209 167 148 145

Year end price 259 241 224 157 157

Average of traded shares per day 305 482 822 514 583

Market capitalisation year end (in MCHF) 193 179 167 117 117

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

Share price development im CHF

The Cham Paper Group’s shares

The Cham Paper Group’s shares

200

210

220

230

240

250

260

280

280

Jan 15 Mar 15 May 15 Jul 15 Sep 15 Nov 15 Jan 16 Mar 16

Cham Paper GroupSPI

15

II. Shareholder structure

Major shareholders

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

41.12%

LB (Swiss) Investment AG, Zurich 7.95%

Free float (according to SIX-Definition) 59.29%

Overview

Registered shareholders 863

Registered shares 631,886

Not registered shares 113,114

Shareholders with 1–500 shares 771

Shareholders with 501–5,000 shares 84

Shareholders with more than 5,000 shares 8

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 17).

IV. Information policy

The annual report of the Cham Paper Group comes out

electronically in German and English; the half-yearly report

is published in German. Since the financial year 2014 a

concise version of the annual report has been printed in

German and sent to the shareholders. It is always the

complete electronic version in German that is to be taken

as definitive. Facts relevant to the share price are pub-

lished in German and English as ad hoc notifications.

Updated information about the company, its share price,

analyst reports, press articles, upcoming events and

answers to frequently asked questions can be found on

our website www.cham-group.com under the heading of

‘Investor Relations’. You can also subscribe to our e-mail

newsletter on our website to be informed of our results

and news when our press releases go out.

V. Contact

Share register

areg.ch ag

Fabrikstrasse 10

4614 Hägendorf

Phone +41 62 209 16 60

Media & IR-contact

Edwin van der Geest

[email protected] oder

[email protected]

Phone +41 43 268 32 32

VI. Financial Calendar

General assembly4 May 2016, Lorzensaal, Cham

Financial reportingHalf-year report 2016: 18 August 2016

Annual report 2016: 27 March 2017

Die Cham Paper Group-Aktie

16

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 2015. 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 50 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 2016 is shown in the organisational chart below.

Corporate Governance

Cham Paper Group Holding AG

Board of Directors

Chief Executive Officer

Urs Ziegler* / Susanne Oste**

Division Real Estate

Andreas Friederich*

Division Paper

Luis Mata*

CPG Schweiz AG

CPG Italia S.p.A.


* Member of the Executive Board

** planned hand-over according to proposal to the general assembly of 4 May 2016

Management structure

17

1.2 Significant shareholdersAs of 31 December 2015, 863 shareholders were entered in the share register of Cham Paper Group Holding AG (2014: 853 share-holders). 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 2015 and 2014:

2015 2014

BURU shareholder group (BURU Holding AG, Philipp Buhofer, Heinz Buhofer, all Hagendorn) 41.12% 41.12%

LB (Swiss) Investment AG, Zurich 7.95% 7.92%

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 2015. 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 14 and 15.

As of 31 December 2015 Cham Paper Group Holding AG therefore held 11 registered shares in the company’s own holdings (31 De-cember 2014: 0 registered shares in the company’s own holdings). This corresponds to 0.00% of the share capital of Cham Paper Group Holding AG.

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

2.3 Changes in capitalIn FY 2015 and 2014 no changes were made to the company’s cap-ital. As of 31 December 2015 and 2014 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 Hold-ing 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.

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 54 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 normally pursues a dividend poli-cy according to which 25% to 35% of the net operating profit is designated for distribution. The proposal made by the Board of Directors to the General Meeting of Shareholders pertaining to the appropriation of the available earnings always takes account of the company’s current financial situation.


* Member of the Executive Board

** planned hand-over according to proposal to the general assembly of 4 May 2016

18

3. Board of Directors

3.1 Members of the Board of DirectorsThe Board of Directors of Cham Paper Group Holding AG is composed of four non-executive members and one executive member. With the exception of Urs Ziegler, who on 5 December 2012 was appointed as a Delegate and elected to the Group as a member of the Executive Board, none of the serving members of the Board of Directors belonged to the Executive 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 2016 Member Member

Felix Thöni Vice Chairman 2008 2016 Chairman –

Urs Ziegler Delegate 2007 2016 – –

Peter J. Schmid Member 2011 2016 Member Chairman

Niklaus Peter Nüesch Member 2012 2016 – –

Name

Year of birth, nationality

Position

Professional background

Education

Activities in governing and

supervisory bodies

Name


Position


Education


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 procurement, Executive Management Board member, Delegate and Chairman of the Board of Directors 1984–1987: Purchasing, Metro International, Baar, Switzerland, Düsseldorf, Germany, and Hong Kong

Bachelor of Economics & Business Administration, HWV Lucerne

Chairman of the Board of Directors, Kardex AG, ZurichChairman of the Board of Directors, Rapid Holding AG, DietikonChairman of the Board of Directors, DAX Holding AG, HagendornChairman of the Board of Directors, Lorzengrund Immobilien AG, HagendornDelegate of the Board of Directors, BURU Holding AG, HagendornBoard member in various SMEs

Felix Thöni

1959, Swiss citizen

Vice Chairman of the Board of Directors since 2013

Since 2010: Member of Board of Directors / Management Consultant2003–2009: Charles Vögele Group, Pfäffikon, CFO1992–2002: Gavazzi Group, Steinhausen, CFO1988–1991: Schindler Management AG, Ebikon, Area Controller

Equivalent of PhD of Economics, University of St. Gallen

Delegate of the Board of Directors Kardex Group, ZurichMember of the Board of Directors, Renergia Zentralschweiz AG, Perlen/Root


19

Name


Position


Education

Urs Ziegler

1948, Swiss citizen

Delegate of the Board of Directors since 2012Member of the Board of Directors since 2007

1980–2009: Ziegler Papier AG, Grellingen, CEO1975–1980: Eldag AG, Zurich, Director of Customer Projects and Consultancy1975–1980: COC AG, Zurich, Director of Business Management and IT Organisation1973–1975: Eldag AG, Basel, Financial Accounting

Equivalent of MA in Economics, University of St. Gallen

Name


Position


Education


supervisory bodies

Peter J. Schmid

1961, Swiss citizen

Member of the Board of Directors since 2011

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 AGChairman of the Board of Directors of Lapp Kabel AGBoard member in various SMEs

Name


Position


Education


supervisory bodies

Niklaus Peter Nüesch

1953, Swiss citizen

Member of the Board of Directors since 2012

Since 2013: Nüesch Development (Asia) Ltd. CEO Since 2009: Planner Empredimentos Ltda., Sao Paolo, Brazil, managing partnerSince 1996: Nüesch Development AG, St. Gallen, partnerSince 1988: Management Consultant1979-1982: GLP Guhl+Lechner+Philipp, Architects and Planners, Zurich, project manager in urban development and residential construction projects

Equivalent of MSc Architecture from the Swiss Federal Institute of Technology, Zurich (ETHZ)MBA, INSEAD, Fontainebleau, France

Board chairman, Nüesch Development AG, St. GallenBoard member, Rapid Holding AG, DietikonBoard member, Schindler Aufzüge AG, EbikonBoard member in various SMEs


20

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 ac-tivities in executive management and supervisory bodies or per-manent management and consultancy functions for significant interest groups.

3.3 Elections and term of officeMembers of the Board of Directors and its chair are elected by the shareholders at the General Meeting of Shareholders for a term of one year, one year being the period from one General Meeting of Shareholders to the close of the next. If elections are held to elect replacements 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 permis-sible. There is no limit to the number of terms of office that any one member 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 mem-bers is limited to and seven. The average time the present Board of Directors members have served is approximately seven and a half years, their average age being ca. 60.

The Board of Directors elects a vice-chair from among its own members. His role is to act as a deputy to the chair in the event of the chair's inability to attend or non-availability.

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 Compensation Report and the Annual Report,

preparation and conducting of the General Meeting of Share-holders, 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 policy

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

• Appointing the members of the Board of Directors for subidiaries

• 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 has established three permanent commit-tees from among its members, the Audit Committee, the Compen-sation and Nomination Committee and the Real Estate Commit-tee, to deal with clearly defined subject areas. These 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 supervisory function.

Audit CommitteeThe Audit Committee assists the Board of Directors in performing its duties of ultimate financial supervision of the company and in managing its interactions with the external auditors. The members of the Audit Committee are appointed by the Board of Directors from among its own members. The main tasks of the Audit Com-mittee are:• Auditing the financial statements and the half-year reports of

Cham Paper Group Holding AG in tandem with the Executive 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 rath-er assesses the aforementioned matters and prepares the indi-vidual and consolidated financial statements for approval by the Board of Directors. Meetings are attended by the Delegate of the Board, the Head of Finance & Administration 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 2015 three meetings were held, each last-ing approximately half a day. Representatives of the external audi-tors attended all three meetings.

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


21

Compensation and Nomination CommitteeThe members of the Compensation and Nomination Committee are elected by the General Meeting of Shareholders. The Com-pensation and Nomination Committee establishes the principles for compensation of the Board of Directors, the Delegate of the Board and members of the Executive Board. It also establishes the guidelines for the selection of candidates for membership on the Board of Directors and the Executive Board. The main tasks of the Compensation and Nomination Committee are:• Establishing the compensation principles for the Board of Direc-

tors, the Delegate of the Board and the Executive Board mem-bers

• Establishing the financial compensation for the Board of Direc-tors, the Delegate of the Board and the Executive Board mem-bers

• Determining the total amount as well as the additional amount of compensation for the members of the Board of Directors and the Management Board,

• Drafting of the Compensation report,• Evaluating the performance of the Delegate of the Board• 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 Delegate of the Board, Executive Board members and se-lecting 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 Peter J. Schmid (Chairman) and Philipp Buhofer. In FY 2015, three meet-ings were held, each lasting about half a day.

Real Estate CommitteeThe Real Estate Committee consists of two members of the Board of Directors and may be increased by between one and a maxi-mum of three experts who are not part of the Board of Directors. Under the leadership of the Chairman of the Board of Directors, the Real Estate Committee discusses and monitors the Executive Board in the area of real estate and all aspects associated with the planning and implementation of the "Papieri" project.

The Real Estate Committee receives regular reports on the course of business in the real estate sector and has the professional au-thority to review management in the real estate sector. It reports to the Board of Directors. The Organisational Regulations indicate the form in which information is prepared and applications or deci-sions in this committee are taken.

The Committee is made up of Philipp Buhofer, Niklaus Peter Nüesch and as external real estate experts Claude Ebnöther, Dölf Biasotto and Andreas Binkert

Eight meetings and one workshop were held in FY 2015, 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 consul-tation with the Delegate of the Board. 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 meetings. Apart from the Board of Directors members, meetings are also attended by the Head of Finance & Administration and, depending on the agenda, by other members of the Management Teams.Depending on the matter being discussed, the Board of Direc-tors may also invite other third parties to be present at meet-ings. 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 deliberations and decisions of the meetings. In 2015 the Board of Directors held five meetings, of which two were half-day meetings and three were full-day meetings. One of these meetings was convened as an extraordinary meetings.

3.4.4 Delegation of Authority within the Board of Directors and the Executive BoardThe Board of Directors of Cham Paper Group Holding AG dele-gates operational management completely to the Delegate of the Board. By the same token, the Delegate of the Board is respon-sible for operational management. He is assisted in carrying out this task by members of the Management Teams in Switzerland and Italy who report directly to him. The authorities and responsi-bilities of the Delegate are determined in particular by the budget approved by the Board of Directors, the Organisational Regulations and the established strategy. The Organisational Regulations can be consulted on the website, under Investor Relations/Corporate Governance1.

1 http://ir.champaper.ch/cgi-bin/show.ssp?id=770&companyName=cham-

paper&language=English


22

3.4.5 Information and control instrumentsThe Board of Directors exercises its ultimate supervision of the Executive Board by way of a structured reporting system as well as management accounting and budgeting processes. Generally, the Head of Finance & Administration also attends the meetings of the Board of Directors. At meetings he presents and comments on day-to-day business, provides a detailed view of finances, and informs the Board of Directors regarding current operative issues in the core businesses. Together with the Delegate, he also re-ports on developments in key markets and projects and draws 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 compre-hensive 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 state-ment, cash flow statement, net working capital, and key produc-tion and sales figures for Cham Paper Group Holding AG and its subsidiaries (Cham Paper Group Schweiz AG, Cham Paper Group Italia S.p.A.).

The Board of Directors committees meet regularly with the Dele-gate, the Head of Finance & Administration and external consult-ants, including representatives of the external auditors. The exter-nal 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 and the compensation report to the Audit Committee and discuss its find-ings 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 Management Teams exept the Delegate of the Board of Directors. However, the Chairman of the Board of Direc-tors and individual Board members regularly consult with the Dele-gate of the Board and, as needed, with individual members of the Management Teams. Additionally, once a year a joint workshop is conducted with the Board of Directors and the Executive 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 reg-ulation 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. Assessment of the effectiveness of controls, identification of weaknesses and the adoption of corrective measures are carried out by the Man-agement Teams. The Head of Finance & Administration reports regularly to the Audit Committee on the effectiveness of the in-ternal control system. The external auditors perform verification of the existence of an internal control system and report in a compre-hensive manner to the Audit Committee or the Board of Directors, assessing the internal control system and the auditors’ findings. These principles for establishing and implementing the internal control system and performing risk assessment are contained in the Board of Directors’ 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 Delegate and the Management Teams in the course of their annual risk assessment. The manual contains a risk matrix in which identified risks are entered in accordance with their probability of occurrence and the potential possible ex-tent 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 individual risks in detail and possible actions for mit-igating 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 49 and 50.


23 Corporate Governance

4. Executive Board

4.1 Chief Executive Officer

Name


Position


Education

Urs Ziegler

1948, Swiss citizen

Chief Executive Officer since 2012 Member of the Board of Directors since 2007

1980–2009: Ziegler Papier AG, Grellingen, CEO1975–1980: 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

4.2 Head of Paper Division

Name


Position


Education

Luis Mata

1981, Spanish citizen

Head of Paper Division & Sales Director Consumer GoodsMember of Executive Board since July 2015

2012-2015: Cham Paper Group, Cham, Head of Finance & Controlling2010-2012: Cham Paper Group Schweiz AG, Cham, Head of Finance & Controlling2008-2010: Cham Paper Group Schweiz AG, Cham, Head of Finance Team2000-2008: Cham Paper Group Schweiz AG, Cham, Deputy to Head of Finance & Controlling

MA Controlling, IFZ ZugBachelor of Economics & Business Administration, HWZ Zurich

4.3 Head of Real Estate Division

Name


Position


Education

Andreas Friederich

1975, Swiss citizen

Head of Real Estate DivisionMember of Executive Board since July 2015

2011-2014: Ernst Basler + Partner, Zurich, Deputy site development2007-2011: Ernst Basler + Partner, Zurich, Project Manager 2004-2007: Project Manager in several architecture firms

Equivalent of MSc Architecture, ETH ZurichMAS in Real Estate, University Zurich


4.4 Other activities and interestsWith the exception of the positions mentioned under 4.1, Execu-tive Board members do not engage in any other activities or asso-ciated interests.

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

5. Compensation report

ContentA description of the principles of the compensation system of the Cham Paper Group is provided below, including details on the compensation of the Board of Directors and the Executive Board for FY 2014 and 2015. The report satisfies the provisions of the Or-dinance Against Excessive Compensation in Publicly Listed Com-panies (VegüV), which entered into force on 1 January 2014, and the associated provisions of the Swiss Code of Obligations. The report substantially follows the recommendations of the Swiss Code of Best Practice for Corporate Governance issued by econo-miesuisse and the Directive on Information Relating to Corporate Governance (DCG) published by SIX Swiss Exchange Ltd.

5.1 Content and method for establishing compensation and shareholding schemes

Compensation philosophy and principles set out in the Group’s articles of associationThe Cham Paper Group endeavours to pursue a compensation policy which provides for the transparent compensation of the members of its Board of Directors and Executive Board that is in line with fair market conditions. In establishing the amount of com-pensation, the company’s size and the complexity of the demands made on members of staff are to be duly taken into account.

Board of DirectorsFor their work the members of the Board of Directors receive a fixed compensation that can be disbursed in cash or in shares (cf. section 5.2 Employee share ownership scheme) plus a lump-sum expense allowance. The compensation principles and the amount of compensation payable to the members of the Board of Directors are reviewed annually by the HR and Compensation Committee and established by the Board of Directors acting on a proposal from the Committee (cf. section 3.4.2 Board of Directors committees). The individual members have the right to be involved in the amount of compensation established for them. Salary com-parisons or benchmarks are not systematically taken into account. No external consultants were involved in the drafting of the com-pensation principles currently in force.

Consultancy briefs for individual board members who are eligible for additional compensation are granted by the board in plenum and require the consent of a majority of the members. Such con-sultancy briefs are clearly defined and are limited in time.

The chairman currently receives a base salary including flat-rate expenses of TCHF 120, the vice-chairman receiving a base sal-ary including lump-sum expenses of TCHF 40. The other board members receive a base salary of TCHF 30, which also includes a lump-sum expense allowance. The lump-sum expense allowance compensates the board members for travel and other necessary out-of-pocket expenses incurred by them in going about their work on behalf of the board. The attendance fees vary according to the number of meetings of the Board of Directors and its committees. For each board member, the attendance fees amount to TCHF 3 for an all-day meeting and TCHF 1.5 for a half-day meeting. For the committee meetings, the chairman receives an attendance fee of TCHF 4 for an all-day meeting and TCHF 2 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 disbursed to current and former members of the Executive Board for FY 2014 and 2015 are stated in section 5.5 Compensation of the Board of Directors and the Executive Board on page 26 and 27.

Chief Executive Officer / Executive BoardFor attending to his operative tasks, the CEO receives a month-ly base salary in cash whose amount is proposed by the HR and Compensation Committee and is subject to the approval of the Board of Directors. As provided for in the articles of association, part of the annual salary of the CEO and the Executive Board can be variable. The variable portion may not be higher than the fixed base salary.

The performance incentive compensation includes a bonus plan under which annual performance bonuses may be paid to the members of the Executive Board. The current regulations on the payment of bonuses contains the following provisions on the form and establishment of bonuses: the amount of these bonuses de-pends on the achievement of corporate targets and individual tar-gets, both of which are established in advance. The targets include quantitative and qualitative factors. The performance incentive bo-nus is established for each member who is entitled to a bonus as a percentage of their base salary, the bonus amounting to a maximum of 30% of the base salary.

The quantitative performance target is based on the achievement of the target EBIT. It is limited by an upper and lower cap and weighted at 70%. If the target achievement falls below 80% of the quantitative goal, no bonus is payable. The maximum bonus is disbursed for a target achievement of 150% or more. This is 50% above the target bonus.


The qualitative targets extend to performance goals that, although they are of a qualitative nature, must be accompanied by clearly measurable criteria. They are accorded a 30% weighting in the cal-culation of the bonus. The performance incentive bonuses are paid out in April of the following year in cash or optionally in the form of shares (cf. section 5.2, Employee share ownership scheme).

For the year under review bonuses in the amount of TCHF 57 were defined and will be paid in the following year. For details on the compensation of the CEO and the Executive Board for FY 2014 and 2015, please refer to section 5.5 Compensation of the Board of Directors and the Executive Board on page 26 and 27.

5.2 Employee share ownership scheme During FY 2010, an employee share ownership scheme was in-troduced for the members of the Board of Directors and the Ex-ecutive Board. To date, the shares for this programme have been issued from the company’s own treasury holdings.

Under the employee share ownership scheme, the members of the Board of Directors establish at the beginning of the financial year what portion of their compensation they would like to receive in shares for the current year (25%, 50%, 75% or 100%). This por-tion may be changed during the course of the year, this applying to the remainder of the year. The allocation of shares usually takes place on 31 December of the respective year. The portion of their compensation designated by the members of the Board of Direc-tors multiplied by a factor of 1.2 is used as the basis for calculating the number of shares to be allocated to them. The share price applicable to the allocation of shares is based on the weighted average price in effect during the preceding month, generally No-vember. Upon allocation, the shares remain blocked for one year. During this blocking period the share owners are precluded from exercising their voting rights for the shares in question. All Board of Directors members are eligible for participation in the scheme who have worked on a full-time basis during the respective finan-cial year. The portion of compensation drawn in cash is subject to disbursement on a semi-annual basis.

The members of the Executive Board have the option of receiving the performance bonuses due them, insofar as these have been agreed, 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 subsequent year. The amount of the respective per-formance incentive bonus multiplied by a factor of 1.2 is used as the basis for calculating the number of shares to be allocated. The share price applicable to allocation is based on the weighted aver-age price in effect during the preceding month, generally March. Upon allocation, the shares remain blocked for one year. During this blocking period the share owners are precluded from exer-cising their voting rights for the shares in question. All members of the Executive Board are eligible for participation who are in the company’s employ on 31 March of the subsequent year.

The figures reported in section 5.5 already contain a factor of 1.2, the withholding tax of 5.66% is not taken into account. The shares are valued at the price in effect at the end of the year.

5.3 Allocation of shares during the year under review During the year under review, 115 shares of Cham Paper Group Holding AG were allocated to members of the Board of Directors or persons related to them. No shares were allocated to members of the Executive Board or persons related to them during the re-porting year.

5.4 Employment contracts and severance pay No employment contracts with notice periods of more than twelve months have been agreed with members of the Board of Directors or the Executive Board, nor have any agreements on severance pay or any other payments associated with departure. Nor was any such compensation paid during the year under review.

26

5.5. Compensation of the Board of Directors and Executive Board members

This section is subject to review by the auditors (cf. Article 17 of the Ordinance Against Excessive Compensation in Publicly Listed Com-panies (VegüV)).

Compensation of the Board of Directors Compensation disbursed to current and former members of the Board of Directors in FY 2014 and 2015:

Compensation Board of Directors 2015 Position

Base salary 1)

TCHF

Attendance fee 1)

TCHF

Consulting fee 2)

TCHF

Employee benefits

TCHFTotalTCHF

Thereof in shares 3)

TCHFNumber of

shares 3)

Philipp Buhofer Chairman 120 23 56 0 199 0% 0

Felix Thöni Vice Chairman 42 17 3 4 66 25% 61

Niklaus Peter Nüesch Member 30 9 20 0 59 0% 0

Peter Schmid Member 31 22 22 3 78 25% 54

Urs Ziegler Member 30 15 0 1 46 0% 0

Total Board of Directors 253 86 101 8 448 – –

Compensation Board of Directors 2014 Position

Base salary 1)

TCHF

Attendance fee 1)

TCHF

Consulting fee 2)

TCHF

Employee benefits

TCHFTotalTCHF

Thereof in shares 3)

TCHFNumber of

shares 3)

Philipp Buhofer Chairman 125 30 45 0 200 25% 161

Felix Thöni Vice Chairman 43 20 0 4 67 50% 132

Niklaus Peter Nüesch Member 30 15 15 0 60 0% 0

Peter Schmid Member 31 27 20 4 82 25% 63

Urs Ziegler Member 30 16 0 3 49 0% 0

Total Board of Directors 259 108 80 11 458 – –

1) Gross amounts (including employee contributions) including the share portion with a factor 1.2 valued at the year-end price of CHF 259.25, (see section 5.2

Employee share ownership scheme). 2) The additional services relate to general legal advice and compensation for fixed-term engagements associated with projects.3) The share portion and the number of shares are in relation to the total of the base salary plus attendance fees.



Compensation of Senior ManagementThe compensation of senior management in the financial years 2015 and 2014 was as follows:

Compensation senior management 2015 PositionBase salary 1)

TCHF

Bonuses and other remune-ration sums 2)

TCHF

Payments to pension funds

TCHFTotalTCHF

Maximum remuneration, Urs Ziegler 3) CEO 288 0 20 308

Total to other Members 4) 187 57 31 275

Total to senior management 475 57 51 583

Compensation senior management 2014 PositionBase salary 1)

TCHF

Bonuses and other remune-ration sums 5)

TCHF

Payments to pension funds

TCHFTotalTCHF

Maximum remuneration, Urs Ziegler 3) CEO 234 51 24 309

Total to senior management 234 51 24 309

1) Gross amounts (including employee contributions). 2) Bonus for the work as senior management members.3) The compensation for his work as Board of Directors member is included in the Compensation of the Board of Directors table.4) As of 1 July 2015 senior management has been expanded to three members. Additional members: Luis Mata (Head of Paper Division), Andreas Friederich

(Head of Real Estate Division). This led to an increased total compensation of senior management in the year under review. 5) One-off compensation in the form of a transfer of 230 treasury shares at a price of CHF 220/share.

The following total amounts for the compensation of the Board of Directors and senior management were approved at the 2015 annual general meeting:Total to Board of Directors: CHF 750,000 Total to senior management: CHF 1,150,000

28

The content and method of determining compensation and share-holding schemes are described on page 49.

The compensation paid to the members of the Board of Direc-tors was lower compared to 2014 because fewer meetings took place in FY 2015 and a lower part of compensation was received in shares.

Loans and creditsNo loans or credits were granted to active or former members of the Board of Directors or the Executive Board or to persons related to them, and as of 31 December 2015 none are outstanding.

6. Shareholders’ rights of participation

The shareholders’ rights of participation are defined in the Articles of Association of Cham Paper Group Holding AG. The following remarks refer to the Articles of Association of Cham Paper Group Holding AG. A full version of the Articles of Association can be con-sulted on the website, under Investor Relations/Corporate Govern-ance/Articles of Association2.

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 feder-al 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 2015 and 2014.

2 http://ir.champaper.com/cgi-bin/show.ssp?id=730&companyName=

champaper&language=English

The shareholder can be represented at the General Meeting of Shareholders by an authorised legal representative, another share-holder entitled to vote or the independent proxy elected by the General Meeting of Shareholders. The independent proxy is re-quired to cast the votes entrusted to him by shareholders accord-ing to their instructions.

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.

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 sub-mitted 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 re gister at any time. As a general rule, shareholders may be entered in the share register up to two 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 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.


29

8.2 Auditing fees and additional feesThe following fees were invoiced by PriceWaterhouseCoopers, Zug, for its services rendered as Group auditors and statutory audi-tors of Cham Paper Group Holding AG and its subsidiaries:

2015 TCHF

2014 TCHF

Ordinary audits 155 141Additional fees 47 15Total 202 156

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.

Additional fees cover other advisory services by the auditors that do not necessarily have to be provided by the Group auditor.

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 2015, the auditors attended a total of three half-day meetings of the Audit Committee.

9. Information policy

The Annual Report of the Cham Paper Group is published in elec-tronic form in German and in English, the Half-year Report in Ger-man only. From FY 2014 a short version of the annual report is available in printed form and mailed out to the shareholders. It is always the full version of the report in German which is legally binding. 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. 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 register

areg.ch agFabrikstrasse 104614 HägendorfTelefon +41 62 209 16 60

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

General Meeting of Shareholders4 May 2016, Lorzensaal, Cham

Financial reporting2016 Half-year Results: 18 August 20162016 Annual Report: 27 March 2017


30 Consolidated financial statements

Cham Paper Group – Consolidated financial statements

Consolidated income statement

1 January – 31 December Notes2015

TCHF2014 1)

TCHFChange

%

Net revenue 3 194,258 216,762 –10.4%

Cost of goods and services sold –176,195 –187,879 –6.2%

Gross profit 18,063 27,389 –34.1%

Administrative and general expense –9,328 –9,884 –5.6%

Marketing, sales, research and development expense –8,784 –10,641 –17.5%

Other operating expense 6 –570 –713 –20.1%

Other operating income 6 1,246 1,285 –3.0%

Operating profit (EBIT) before restructuring 627 8,930 –93.0%

Restructuring expenses 7 1,795 –3,059 n.a.

Operating profit (EBIT) after restructuring 2,422 5,871 –58.7%

Financial result 8 –568 –1,028 –44.7%

Foreign currency effects –1,142 –497 129.8%

Net income before taxes 712 4,346 –83.6%

Income taxes 9 –232 –2,505 –90.7%

Net gain for the year for the Group 480 1,841 –73.9%

Earnings per share Notes2015CHF

2014CHF

Gain per share, undiluted / diluted 10 0.65 2.48

Total 10 0.65 2.48

1) Values of the preceding period were adjusted due to the newly-created real estate division

and the amendment of the accounting and reporting principles (article 1.2)

The Notes form an integral part of the consolidated financial statements. This annual report is issued in German and English. The German

version is binding. The report of the statutory auditor (PricewaterhouseCoopers AG, Zug) on the consolidated financial statements is

available on page 52 f. of the German version.


Consolidated balance sheet

Notes31.12.2015

TCHF31.12.2014

TCHF

Assets

Cash and cash equivalents 11 41,462 37,974

Trade accounts receivable 13 37,671 35,466

Other current receivables 14 4,240 2,508

Inventories 15 35,139 42,004

Accrued income and prepaid expenses 203 496

Total current assets 118,715 118,448

Tangible fixed assets 16 82,177 84,178

Intangible assets 17 734 1,487

Financial assets 55 61

Deferred tax assets 9 63 125

Total non-current assets 83,029 85,851

Total assets 201,744 204,299

LiabilitiesTrade accounts payable 33,849 29,880

Current financial liabilities 18 33,129 25,911

Other current liabilities 2,525 3,534

Current provisions 19 2,077 4,123

Accrued expenses and deferred income 6,631 8,862

Total current liabilities 78,211 72,310

Non-current financial liabilities 18 9,765 8,968

Other non-current liabilities 0 40

Deferred tax liabilities 2,589 2,242

Pension plan obligations 20 3,548 4,189

Non-current provisions 19 5,543 8,650

Total non-current liabilities 21,445 24,089

Total liabilities 99,656 96,399

Share capital 21 48,425 48,425

Capital reserves 38,220 38,051

Treasury shares 21 –2 0

Retained earnings 15,445 21,424

Total shareholders’ equity 102,088 107,900






Consolidated cash flow statement


TCHF2014

TCHF

Gain 480 1,841

Depreciation 5 8,560 9,869

(Reversal of impairments) / impairments –1,505 512

(Gain) / loss from disposal of property and equipment 6 –241 21

(Decrease) / increase in provisions (including deferred taxes) –4,531 1,817

(Decrease) in pension plan obligations 20 –219 –167

Other non-cash items 571 154

(Increase) / decrease in trade accounts receivable –5,275 9,700

Decrease in inventories 3,657 2,877

(Increase) / decrease in trade accounts payable 6,646 –10,960

(Increase) / decrease in other receivables, accrued income and prepaid expenses –1,438 542

(Decrease) in other liabilities, accrued expenses and deferred income –2,263 –2,968

Cash flow from operating activities 4,442 13,238

Purchase of tangible fixed assets 16 –11,878 –13,313

Proceeds from the disposal of tangible fixed assets 16 1,936 39

Purchase of intangible assets 17 –195 –71

Divestments of financial assets 0 102

Cash flow from investment activities –10,137 –13,243

Repayment (–) of current financial liabilities 6,996 –9,547

Repayment (–) in non-current financial liabilities 4,355 –4,758

Acquisition of treasury shares –1,100 0

Disposal of treasury shares 1,179 1,139

Cash dividend –2,225 –2,233

Cash flow from financing activities 9,205 –15,399

Translation effects on cash and cash equivalents –22 –26

Increase / (decrease) in cash and cash equivalents 3,510 –15,404

Cash and cash equivalents as at 1 January 37,974 53,404

Cash and cash equivalents as at 31 December 41,462 37,974

Free Cash Flow Notes2015

TCHF2014

TCHF

Total Cash flow from operating activities 4,442 13,238

Total Cash flow from investment activities –10,137 –13,243

Free Cash Flow –5,695 –5





Shareholders’ equity statement

Retained earnings reserves

Share capitalTCHF

Capital reserves

TCHF

Treasury sharesTCHF

Translation effects

TCHF

Fair value reserves

TCHF

Retained earnings

TCHFTotal

TCHF

Balance as at 1 January 2014 48,425 37,523 –747 –8,021 0 30,575 107,755

Net profit for the year for the Group 0 0 0 0 0 1,841 1,841

Dividend 0 0 0 0 0 –2,233 –2,233

Disposition of treasury shares 0 489 701 0 0 0 1,190

Employee share ownership scheme 0 39 46 0 0 0 85

Translation effects 0 0 0 –738 0 0 –738

Balance as at 31 December 2014 48,425 38,051 0 –8,759 0 30,183 107,900

Retained earnings reserves

Share capitalTCHF

Capital reserves

TCHF

Treasury sharesTCHF

Translation effects

TCHF

Fair value reserves

TCHF

Retained earnings

TCHFTotal

TCHF

Balance as at 1 January 2015 48,425 38,051 0 –8,759 0 30,183 107,900

Net profit for the year for the Group 0 0 0 0 0 480 480

Dividend 0 0 0 0 0 –2,225 –2,225

Acquisition of treasury shares 0 0 –1,100 0 0 0 –1,100

Disposal of treasury shares 0 159 1,020 0 0 0 1,179

Employee share ownership scheme 0 10 78 0 0 0 88

Translation effects 0 0 0 –4,234 0 0 –4,234

Balance as at 31 December 2015 48,425 38,220 –2 –12,993 0 28,438 102,088




34 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 2015.

The consolidated financial statements of the Cham Paper Group were approved by the Board of Directors on 22 March 2016 and are subject to approval by the general meeting of shareholders on 4 May 2016.

1.2 Amendment of the accounting and reporting principles

First application of Swiss GAAP FER 31The Cham Paper Group applies Swiss GAAP FER 31 for the first time in this reporting period. At the same time, the rules on the recognition of revenue pursuant to the revised Swiss GAAP FER conceptual framework and Swiss GAAP FER 3, which come into effect on 1 January 2016, were applied prematurely. They were applied in full and retrospectively.

Segment reporting According to Swiss GAAP FER 31 (8), the segment report used at the highest management level for corporate management is to be disclosed at the level of segment revenue and segment profits (EBIT). The segment revenues and segment profits for the “spe-ciality papers” and “real estate” divisions are shown with the first application of Swiss GAAP FER 31.In this connection, rental income in the income statement is now shown under “net revenue” instead of under “other operating income”. The effect of TCHF 744 was adjusted accordingly for 2014 in compliance with the conceptual framework of Swiss GAAP FER.

Sale of waste paper It is consistent with best practice in the sector to report the sale of waste paper under “costs of sold products and services” instead of under “other operating income”. The effect of TCHF 750 was adjusted accordingly for 2014 in compliance with the conceptual framework of Swiss GAAP FER.

Additional innovations of Swiss GAAP FER 31. The other innovations contained in Swiss GAAP FER 31 have no impact on the consolidated balance sheet and income statement. The additional disclosures can be found in the notes as follows: Income taxes: note 9Profit per investment: note 10Financial liabilities: note 18Share-based remuneration: note 21

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 possi-bility 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.

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.

35Notes to the consolidated financial statements

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

Transactions in foreign currencies at 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 subsidia-ries in foreign currencies are translated into Swiss francs as fol-lows: balance sheet items are translated at the year-end exchange rate, whilst shareholders’ equity is translated at historical rates and items in the income statement and cash flow statement are translated at the average rate for the year.The translation effects resulting from the translation of the balance sheet and income statement are recognised in shareholders’ equity. When a com-pany 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:

Exchange rates

Year-end exchange rates applicable to balance sheet

Average exchange rates for the year applicable to

income statement and cash flow statement

CHF for 2015 2014 2015 2014

1 EUR 1.08 1.20 1.07 1.22

1 USD 0.99 0.99 0.96 0.91

1 GBP 1.47 1.54 1.47 1.51

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 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.

1.8 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 uncollecti-ble are derecognised via allowances or via the income statement.The company insures receivables of the paper division with a credit insurance to minimise the risk of default.

1.9 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-bour 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 reported under “other current liabilities”. Prepayments effected for the de-livery of inventory asset items are recognised under “ inventories”.

36 Notes to the consolidated financial statements

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

1.11 Tangible fixed assetsTangible fixed assets are carried at their acquisition or production cost less depreciation and any impairments. 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

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 depreciation 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 fall due.

1.12 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 economic benefit for the company over more than one year. Re-porting is done at acquisition cost less straight-line depreciation over a maximum of five years, taking any value impairments into account. 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.

1.13 ImpairmentAll assets are subjected to an impairment test on each reporting date. If there are indications of 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.

1.14 Liabilities and financial 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 reporting date.

1.15 Current valuesThe current value (fair value or net market value) is the amount for which an asset, liability or financial instrument could be exchanged between knowledgeable and willing parties in an arm’s length transaction. The current value of publicly traded and tradable finan-cial instruments is determined on the basis of their stock exchange prices. The current value of financial instruments not publicly trad-ed 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.


1.16 TaxesIncome taxes comprise all current and deferred taxes levied on the subsidiaries’ taxable results in accordance with local tax regu-lations including the withholding tax payable on profit distributions within the Group. Income taxes are recognised in the income state-ment except for deferred taxes on transactions that are recognised directly in shareholders’ equity. Capital and real estate taxes are reported under “other operating expense”.

The assets and liabilities for deferred income taxes are recorded for the effects under income tax law of all temporary differences arising between the tax base of assets and liabilities and their carry-ing amounts for financial reporting purposes to the Group. Deferred income taxes are determined using the tax rates that apply, or have been announced, on the balance sheet date in the countries where the Group operates. Future tax savings from offsettable losses car-ried over will not be carried as assets. The benefit of these loss carryovers will be posted upon realisation.

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.

1.17 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-cur-rent provisions is based on the assumption that their utilisation is probable within one year or later.

1.18 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.

1.19 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 are 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 addi-tion to the contribution accrued to the period. The pension plan for the subsidiaries in Italy are also valued as provisions or are treated as a defined contribution plan.

1.20 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.

1.21 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

In 2014 the companies Cham Paper Group AG and Industriever-waltungsgesellschaft Cham AG were merged into the Cham Paper Group Holding AG.

38

3. Segment reporting

January - December 2015Speciality paper

TCHFReal Estate

TCHFHolding

TCHFEliminations

TCHFTotalTCHF

Net revenues, third party 1)

– Europe 148,356 813 – – 149,169

– Americas 12,871 – – – 12,871

– Asia 25,645 – – – 25,645

– Rest of world 6,573 – – – 6,573

Total net revenues, third party 193,445 813 – – 194,258

Net revenues, with other segments – 600 1,048 –1,648 –

Total net revenues 193,445 1,413 1,048 –1,648 194,258

Operating profit (EBIT) before restructuring 715 244 –332 – 627

– In % of net revenues 0.4% 17.3% – – 0.3%

January - December 2014Speciality paper

TCHFReal Estate

TCHFHolding

TCHFEliminations

TCHFTotalTCHF

Net revenues, third party 1)

– Europe 171,471 744 – – 172,215

– Americas 11,997 – – – 11,997

– Asia 25,392 – – – 25,392

– Rest of world 7,158 – – – 7,158

Total net revenues, third party 216,018 744 – – 216,762

Net revenues, with other segments – – 1,174 –1,174 –

Total net revenues 216,018 744 1,174 –1,174 216,762

Operating profit (EBIT) before restructuring 8,626 163 141 – 8,930

– In % of net revenues 4.0% 21.9% – – 4.1%

1) Allocated according to sales destination

4. Personnel expense

2015TCHF

2014TCHF

Wages and salaries –21,925 –27,029

Employee benefits (incl. pension plan expense) –6,267 –7,428

Other personnel expense –535 –535

Total personnel expense excluding travel expenses –28,727 –34,992

Personnel expense is included in the consolidated income statement in the costs of the respective items. As of 31 December 2015, the Group had a headcount of 388.8 FTEs (2014: 417.3 FTEs).

5. Depreciation and amortisation

2015TCHF

2014TCHF

Depreciation of tangible fixed assets –7,640 –8,901

Amortisation of intangible assets –920 –968

Total depreciation and amortisation –8,560 –9,869

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




6. Other operating income/expenses

2015TCHF

2014TCHF

Net gains on disposal of tangible fixed assets 244 37

Contract manufacturing 155 77

Other income 847 1,171

Total other operating income 1,246 1,285

Capital and real estate taxes –567 –655

Net losses on disposal of tangible fixed assets –3 –58

Total other operating expense –570 –713

7. Restructuring expenses

2015TCHF

2014TCHF

Impairment of tangible fixed assets 0 –1,149

Reversal of impairment of tangible fixed assets 1,505 1,123

Restructuring provisions 0 –3,033

Reversal of restructuring provisions 290 0

Total restructuring expenses 1,795 –3,059

In FY 2015 a reversal of impairment was booked due to the sale of tangible fixed assets, which had been value adjusted in 2011. The assets were sold at a value of TCHF 1,505.

Restructuring provisions in the amount of TCHF 290 were reversed in connection with the restructuring operations in FY 2015.

In FY 2014 restructuring expenses totalling TCHF 3,059 were incurred. The impairment of tangible fixed assets of TCHF 1,149 was the result of the abandonment of surface coating operations in Switzerland. As a result, the coating lines were revalued at their estimated net market value. This resulted in dispensing with the previous impairments in the amount of TCHF 1,123. The restructuring will affect approx. 40 employees. The restructuring provisions of TCHF 3,033 include costs for redundancy welfare plans.

8. Financial income and expense

2015TCHF

2014TCHF

Interest income from cash and cash equivalents 44 79

Gains on interest rate derivatives, net 9 0

Other financial income 71 40

Total financial income 124 119

Interest expense of bank loans and mortgage notes –312 –514

Impairment of financial assets 0 –258

Other financial expense –380 –375

Total financial expense –692 –1,147

Financial result –568 –1,028

40

9. Income taxes

2015TCHF

2014TCHF

Current income taxes 292 –2,294

Deferred income taxes –524 –211

Total income taxes –232 –2,505

The expected tax rate applied to the calculation of the deferred income taxes items is based on the pre-tax profit of the individual sub-sidiaries, amounting to 14.92% in 2015 (2014: 14.92%) for the companies in Switzerland and 27.93% (2014: 31.40%) for the companies in Italy.

As of 31 December 2015, the deferred tax assets amounted to TCHF 63 (2014: TCHF 125), which contained no capitalised tax loss car-ryovers (2014: CHF 0).

Deferred tax claims from tax loss carryovers are not carried as assets. The benefit of these loss carryovers will be posted upon realisation.

As of 31 December 2015, the Group had tax-deductible loss carryovers of TCHF 93,253 (2014: TCHF 90,673). The tax-deductible loss carryovers expire as follows:

Tax loss carryovers

2015TCHF

Tax effect2015

TCHF

Tax loss carryovers

2014TCHF

Tax effect2014

TCHF

Within 1 year 0 0 0 0

Between 1 and 5 years 79,761 11,901 80,101 11,951

After 5 years 13,492 2,383 10,572 1,577

Total tax-deductible loss carryovers 93,253 14,284 90,673 13,528

In FY 2015 no tax-deductible loss carryovers expired (2014: none).

The weighted average tax rate applied is based on the operating result for the period and is influenced by the change of loss carryovers as follows:

2015TCHF

2014TCHF

Expected average tax rate 18.8% 50.5%

Operating result for the period 712 4,346

Income taxes at expected tax rate –134 –2,194

Non-recognition of tax loss carryovers –809 –655

Use of unrecognised tax loss carryovers 53 1,709

Other effects 658 –1,365

Total income tax expense –232 –2,505

Effective income tax rate 32.6% 57.6%

The expected tax rates can vary, if individual entities post a loss.



10. Earnings per share

The undiluted earnings per share are calculated by dividing the net income as of the reporting period ended on 31 December 2015 and 2014 allocatable to the shareholders by the weighted average number of dividend-bearing shares outstanding during this period. In doing so, the average number of treasury shares held by Cham Paper Group Holding AG and blocked shares are deducted from the number of shares issued.

2015 2014

Weighted average number of registered shares outstanding 742,865 743,204

Results share of shareholders of Cham Paper Group Holding AG) (in TCHF) 480 1,841

Earnings per share, undiluted (in CHF) 0.65 2.48

There were no diluting effects in 2015 and 2014.

11. Cash and cash equivalents

2015TCHF

2014TCHF

Cash on hand, cash in bank accounts and in postal accounts 41,373 22,974

Derivative financial instruments 89 0

Short-term bank deposits 0 15,000

Total cash and cash equivalents 41,462 37,974

12. Derivative financial instruments

The 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 December 2015 and 2014 by type of contract and asset category:

2015

Contract or nominal value not recognised

TCHF

Positive market value recognised

TCHF

Negative market value recognised

TCHF

Held for trading purposes

Interest rate derivatives – interest rate futures 3,248 10 0

Foreign currency derivatives – forward exchange contracts 36,158 79 9

Total derivative financial instruments 39,406 89 9

2014

Contract or nominal value not recognised

TCHF

Positive market value recognised

TCHF

Negative market value recognised

TCHF

Held for trading purposes

Foreign currency derivatives – forward exchange contracts 2,405 0 1

Total derivative financial instruments 2,405 0 1

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

42

13. Trade accounts receivable

2015TCHF

2014TCHF

Trade accounts receivable from product deliveries, gross 41,098 39,612

Allowances for bad debts –3,427 –4,146

Total trade accounts receivable, net 37,671 35,466

Insured receivables 31,815 25,255

14. Other current receivables

2015TCHF

2014TCHF

VAT receivables 1,745 684

Social security receivables 100 153

Other receivables 2,395 1,671

Other current receivables 4,240 2,508

15. Inventories

2015TCHF

2014TCHF

Raw materials 10,395 12,239

Work in progress and finished goods 19,688 24,387

Consumables and supplies 1,439 1,980

Spare parts 3,617 3,398

Total inventories 35,139 42,004

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. The value adjustment of finished goods as at 31 Decem-ber 2015 amounted to TCHF 2,269 (2014: TCHF 1,889).



16. Tangible fixed assets

2015

Undeveloped properties

TCHF

Machinery, equipment and

vehicles TCHF

Production equipment

TCHF

Construction in progress

TCHFTotal TCHF

Acquisition costs as at 1 January 93,761 196,733 185,202 9,572 485,268

Transfers between categories 0 7,578 –1 –7,577 0

Additions 1,268 8,542 253 1,815 11,878

Disposals –1,632 –20,451 –56,851 0 –78,934

Exchange differences –2,774 –13,869 –4,679 –946 –22,268

Acquisition costs as at 31 December 90,623 178,533 123,924 2,864 395,944

Cumulative depreciation as at 1 January –61,264 –174,085 –165,740 0 –401,089

Depreciation –629 –5,540 –1,471 0 –7,640

Reversal of Impairment 0 0 1,505 0 1,505

Disposals 1,498 20,395 55,346 0 77,239

Exchange differences 1,491 11,806 2,921 0 16,218

Cumulative depreciation as at 31 December –58,904 –147,424 –107,439 0 –313,767

Carrying amount as at 31 December 31,719 31,109 16,485 2,864 82,177

Carrying amount as at 1 January 32,497 22,647 19,462 9,572 84,178

2014

Undeveloped properties

TCHF

Machinery, equipment and

vehicles TCHF

Production equipment

TCHF

Construction in progress

TCHFTotal TCHF

Acquisition costs as at 1 January 93,527 204,756 189,837 961 489,081

Transfers between categories 0 336 0 –336 0

Additions 758 3,459 61 9,035 13,313

Disposals 0 –9,156 –3,801 0 –12,957

Exchange differences –524 –2,662 –895 –88 –4,169

Acquisition costs as at 31 December 93,761 196,733 185,202 9,572 485,268

Cumulative depreciation as at 1 January –60,713 –178,021 –169,224 0 –407,958

Depreciation –679 –6,440 –1,782 0 –8,901

Impairments –149 –956 –190 0 –1,295

Reversal of Impairment 0 0 1,123 0 1,123

Disposals 0 9,110 3,787 0 12,897

Exchange differences 277 2,221 546 0 3,044

Cumulative depreciation as at 31 December –61,264 –174,086 –165,740 0 –401,090

Carrying amount as at 31 December 32,497 22,647 19,462 9,572 84,178

Carrying amount as at 1 January 32,814 26,735 20,613 961 81,123

There were no signs of impairments on tangible fixed assets in FY 2015 (2014: TCHF 1,295). There were no reversals of impairments in FY 2015 (2014: TCHF 1,123).

As at 31 December 2015 no tangible fixed assets were pledged for financial liabilities.(2014: The carrying values of the pledged tangible fixed assets for financial liabilities amount to TCHF 45,314).

44

17. Intangible assets

2015Software

TCHFTotalTCHF

Acquisition costs as at 1 January 10,797 10,797

Additions 195 195

Disposals –215 –215

Exchange differences –157 –157

Acquisition costs as at 31 December 10,620 10,620

Cumulative amortisation as at 1 January –9,310 –9,310

Amortisation –920 –920

Disposals 215 215

Exchange differences 128 128

Cumulative amortisation as at 31 December –9,887 –9,887

Carrying amount as at 31 December 733 733

Carrying amount as at 1 January 1,487 1,487

2014Software

TCHFTotalTCHF

Acquisition costs as at 1 January 12,363 12,363

Additions 71 71

Disposals –1,608 –1,608

Exchange differences –29 –29

Acquisition costs as at 31 December 10,797 10,797

Cumulative amortisation as at 1 January –9,890 –9,890

Amortisation –968 –968

Impairments –83 –83

Disposals 1,608 1,608

Exchange differences 23 23

Cumulative amortisation as at 31 December –9,310 –9,310

Carrying amount as at 31 December 1,487 1,487

Carrying amount as at 1 January 2,473 2,473

In FY 2015 there were no signs of impairment on intangible fixed assets. (2014: TCHF 83).

Effects of theoretical capitalisation of goodwillAs per 11 September 2008 the company has offset a goodwill of TCHF 2,322 against shareholder's equity without any impact on income.If goodwill were depreciated over five years, it would have no theoretical impact on the result before taxes in the year under review.



18. Financial liabilities

2015TCHF

2014TCHF

Short-term bank loans 33,129 25,911

Total current financial liabilities 33,129 25,911

Mortgage notes 9,765 8,968

Total non-current financial liabilities 9,765 8,968

Total amount of secured financial liabilities 18,647 13,676

Contractual maturity repayment2015

TCHF2014

TCHF

Within 1 year 33,129 25,910

Between 1 to 5 years 9,765 8,968

Total financial liabilities 42,894 34,878

Average interest rates for financial liabilities2015

TCHF2014

TCHF

Within 1 year 0.520% 0.9820%

Between 1 to 5 years 1.111% 1.1200%

The financial liabilities are denominated in the following currencies2015

TCHF2014

TCHF

EUR 42,894 34,878

Total financial liabilities 42,894 34,878

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

There were no finance lease liabilities as at 31 December 2015 and 31 December 2014.

In the year under review as well as in the preceding year no financial liabilities existed, which included elements of shareholder's equity as well as liabilities.

46

19. Provisions

2015Restructuring

TCHFTax provisions

TCHFTotalTCHF

As at 1 January 11,811 962 12,773

Additions 0 0 0

Reversals –290 –311 –601

Utilisation –4,452 0 –4,452

Exchange differences 0 –100 –100

As at 31 December 7,069 551 7,620

Shown on the consolidated balance sheet as:

Current provisions 2,077 0 2,077

Non-current provisions 4,992 551 5,543

2014Restructuring

TCHFTax provisions

TCHFTotalTCHF

As at 1 January 10,656 0 10,656

Additions 3,033 972 4,005

Reversals 0 0 0

Utilisation –1,878 0 –1,878

Exchange differences 0 –10 –10

As at 31 December 11,811 962 12,773

Shown on the consolidated balance sheet as:

Current provisions 4,123 0 4,123

Non-current provisions 7,688 962 8,650

Various restructuring expenses were incurred in 2011 and 2014 in connection with the restructuring of the Cham Paper Group. This ex-tends in particular to costs for redundancy welfare plans and clearing and disposal work.

The tax provisions recognised in 2015 and 2014 pertain to potential back tax demands.

In all cases the probability of occurrence is estimated at over 50%.



20. 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

Over-funding/under-

fundingEconomic share of

organisation

Change as compared

to previous year or

recognised

Amounts accrued

during period

Pension plan expense share of

personnel expense

31.12.15TCHF

31.12.15TCHF

31.12.14TCHF

2015TCHF

2015 TCHF

2015TCHF

2014TCHF

Pension funds with overfunding (Switzerland) 1,937 0 0 0 443 443 583

Pension plans without assets of their own (Italy) 0 –3,548 –4,189 64 0 73 85

Total 1,937 –3,548 –4,189 64 443 516 668

The calculations are based on provisional interim financial statements of the pension scheme in accordance with Swiss GAAP FER 26. The pension scheme will conduct a partial liquidation in 2016 as a result of the restructuring of the company.

No employer contribution reserves existed in 2015 and 2014.

As at 31 December 2015 there were obligations toward pension plans in the amount of TCHF 66 (2014: TCHF 88).

21. Share capital and treasury shares

2015

Registered shares

Number

Nominal amount per share

CHFShare capital

TCHFTreasury shares

NumberTreasury shares

TCHF

As at 1 January 745,000 65 48,425 0 0

Acquisition – – – 5,000 1,100

Disposal – – – 4,989 1,098As at 31 December 745,000 65 48,425 11 2

2014

Registered shares

Number

Nominal amount per share

CHFShare capital

TCHFTreasury shares

NumberTreasury shares

TCHF

As at 1 January 745,000 65 48,425 5,746 747

Acquisition – – – – –

Disposal – – – –5,746 –747As at 31 December 745,000 65 48,425 0 0

At the 103nd general meeting of shareholders on 29 April 2015, the shareholders of Cham Paper Group Holding AG approved the distri-bution of a cash dividend of CHF 3.00 per share payable from the capital contribution reserves. The cash dividend totalling TCHF 2,225 was distributed to the shareholders.

At the 102nd general meeting of shareholders on 7 May 2014, the shareholders of Cham Paper Group Holding AG approved the distri-bution of a cash dividend of CHF 3.00 per share payable from the capital contribution reserves. The cash dividend totalling TCHF 2,233 was distributed to the shareholders.

The non-distributable reserves required by law or reserves stipulated in the Group’s articles of association amounted to TCHF 15,768 as at 31 December 2015 (2014: TCHF 15,807).

48

Treasury sharesNumber of treasury shares as at 31 December 2015 and 2014:

2015 2014

Holdings as at 1 January 0 5,746

Employee share ownership scheme –353 –356

Purchases 5,000 0

Sales –4,636 –5,160

Remuneration through treasury shares 0 –230

Holdings as at 31 December 11 0

In FY 2015, 5,000 treasury shares were purchased at an average price of CHF 220 (2014: no purchases). 4,636 treasury shares were sold at an average sale price of CHF 254.41. (2014: 5,160 treasury shares at an average sale price of CHF 221). 238 treasury shares were allocated to members of senior management/senior employees at an average price of CHF 247.00 (2014: 230 treasury shares at a price of CHF 229.50). On the basis of the employee share ownership scheme, members of the Board of Directors were allocated 115 treasury shares in FY 2015 (2014: 356) at the average share price in the month of November 2015 of CHF 251.00 (2014: CHF 240.00).

22. 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 2015 for operating leases amounted to TCHF 560 (2014: TCHF 728). Future minimum payments under non-cancellable operating leases are due as follows:

2015TCHF

2014TCHF

Within 1 year 311 422

Between 1 and 5 years 160 440

Total 471 862

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:

2015TCHF

2014TCHF

Capital commitments for tangible fixed assets 222 8,485

Total 222 8,485

Guarantee obligationsAs at 31 December 2015, guarantees given as part of ordinary business operations amounted to TCHF 207 (2014: TCHF 3,781).



23. Related party transactions

Subsidiaries and associatesAn overview of subsidiaries and associates is set out in Note 26. 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 ownershipFor information on the employee share ownership scheme of the Board of Directors and the Executive Board, please refer to the Notes of the financial statements of the Cham Paper Group Holding AG on page 55.

Employee share ownership schemeFor information on the employee share ownership scheme of the Board of Directors and the Executive Board, please refer to the Notes of the financial statements of the Cham Paper Group Holding AG on page 26 and 27.

Compensation of the Board of Directors and the Executive BoardThe members of the Board of Directors can determine at the beginning of the year whether they would like to receive 25%, 50%, 75% or 100% of their compensation in shares. The portion of their compensation designated by the members of the Board of Directors multiplied by a factor of 1.2 is used as the basis for calculating the number of shares to be allocated to them. 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. The blocking period of the allocated shares is one year, during which the voting rights of the blocked shares cannot be exercised. However, the allocated shares are entitled to dividends. All Board of Directors members are eligible for participation in the scheme who have worked on a full-time basis during the respective financial year.

Due to the employee share ownership scheme, members of the Board of Directors were allotted 115 treasury shares in 2015 (2014: 356) at the average share price in effect in November 2015 of CHF 251.00 (2014: CHF 240.00).

The members of the Executive Board have the option of receiving the performance bonuses due them, insofar as these have been agreed, 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 subsequent year. The amount of the respective performance incentive bonus multiplied by a factor of 1.2 is used as the basis for calculating the number of shares to be allocated. The share price applicable to allocation is based on the weighted average price in effect during the preceding month, generally March. The blocking period of the allocated shares is one year, during which the voting rights of the blocked shares cannot be exercised. However, the allocated shares are entitled to dividends. All members of the Executive Board are eligible for participation who are in the company’s employ on 31 March of the subsequent year.

Members of the senior management were allotted 238 treasury shares in FY 2015 at the average share price in effect in March 2015 of CHF 247.00 (2014: no remuneration in the form of shares).

24. Risk management

Risk 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 Board at least once a year. Significant operational risks are de-fined 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.

50

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

Currency risk: Over the last years the exchange rate of EUR/CHF and USD/EUR have developed to the detriment of the Cham Paper Group. The weakness of the Euro against the Swiss Franc minimises the margin of the Group’s unit in Switzerland. In addition, the reporting currency of the consolidated financial statements is the Swiss Franc, which was negatively impacted by the decision of the SNB (Swiss National Bank) to discontinue the minimum exchange rate for the Euro at the beginning of 2015. The strength of the US Dollar against the Euro makes raw material prices more expensive in Italy since pulp is traded in US Dollars. The company banks on natural hedging by offsetting purchases and sales against one another in the principal currencies USD and EUR. In addition, production operations have been transferred to the euro zone during the past couple of years so that currency neutrality can be maintained in the reporting of production costs. Market / economy: The earnings situation of the Cham Paper Group is subject to cyclical fluctuations in the world economy which 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 ad-dress possible scenarios. Furthermore, capacities in the Group were adapted in line with sales possibilities during the year under review. 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 measures by the Executive Board. In the event of the emergence of unexpected individual risks, the Board of Directors is also immediately informed of these risks and the actions taken and processes implemented by the Executive Board to mitigate or eliminate them.

25. Events after the reporting date

After the balance sheet reporting date and until the approval of the consolidated financial statements by the Board of Directors on 22 March 2016 there were no significant events that would negatively impact the statements made in the 2015 financial statements or that would have to be disclosed here.

26. Subsidiaries

Company as at 31 December 2015Registered office Activity Currency Share captial

TCHF

Directholding

in %

Indirect holding

in %

Cham Paper Group Schweiz AG CH Cham s l n CHF 21,000 100% –

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

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

Cham Paper Group Asia Pte Ltd. SG Singapore l SGD 0 100% –

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

No changes in Group structure on the previous year.

All companies are fully consolidated.


51Financial statements of Cham Paper Group Holding AG

Financial statements of Cham Paper Group Holding AG

Income statement


TCHF2014

TCHF

Royalties 1,048 1,174

Interest income from subsidiaries 342 197

Financial income 208 590

Other income 99 0

Personnel expenses –371 –352

Depreciation 2 –800 –800

Other financial expense –1,108 –680

Financial expense –28 –10

(Net loss) / Net gain before taxes –610 119

Direct taxation 0 0

(Net loss) / Net gain –610 119

The Notes form an integral part of the financial statements. This annual report is issued in German and English. The German version is

binding. The report of the statutory auditor (PricewaterhouseCoopers AG, Zug) on the financial statements is available on page 60 f. of

the German version.

52 Financial statements of Cham Paper Group Holding AG

Balance sheet

As at 31 December, prior to appropriation of available earnings Notes31.12.2015

TCHF31.12.2014

TCHF

Assets

Cash and cash equivalents 35,859 34,798

Short-term receivables from third parties 115 127

Short-term receivables from subsidiaries 106 98

Accrued income and prepaid expenses 18 15

Total current assets 36,098 35,038

Loans to subsidiaries 12,000 15,000

Participations 3 62,691 62,691

Intangible assets 800 1,600

Total non-current assets 75,491 79,291

Total assets 111,589 114,329

Liabilities

Trade accounts payable to third parties 177 40

Accrued expenses and deferred income 226 269

Current provisions 730 727

Total current liabilities 1,133 1,036


Shareholders’ equity

Share capital 48,425 48,425

Statutatory capital reserves (capital contribution reserves) 17,415 19,640

Statutatory retained earnings 22,815 22,815

Unrestricted reserves 21,479 21,479

Retained earnings brought forward 934 815

Net income for the year –610 119

Treasury shares 4 –2 0

Total shareholders’ equity 5 110,456 113,293

Total liabilities and shareholders’ equity 111,589 114,329

The Notes form an integral part of the financial statements. This annual report is issued in German and English. The German version is

binding. The report of the statutory auditor (PricewaterhouseCoopers AG, Zug) on the financial statements is available on page 60 f. of

the German version.

53Notes to the Financial Statements of Cham Paper Group Holding AG

GENERAL REMARKS

The financial statements of Cham Paper Group Holding AG, Fabrikstrasse, 6330 Cham, Switzerland, have been prepared in accordance with the provisions governing commercial accounting in the Swiss Code of Obligations. The classification used in the balance sheet and income statement (including the previous year) was redefined because of the first-time adoption of the new accounting law. The key balance sheet items are accounted for as follows

VALUATION PRINCIPLES

Cash and cash equivalents are reported at nominal values. Securities and 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 transaction dates. Exchange rate gains and losses are posted on the income statement with the exception of unrealised gains, which are set aside.

DETAILS TO SINGLE POSITIONS

1. Participation income

In 2015 no participation income was realised (2014: none).

2. Depreciations and impairments on non-current assets

In FY 2015 TCHF 800 were amortised on intangible assets (2014: TCHF 800).Intangible assets are generally being amortised over five to ten years.

3. Participations

Company as at 31 December 2015Registered office Activity Currency Share captial

TCHF

Directholding

in %

Indirect holding

in %

Cham Paper Group Schweiz AG CH Cham s l n CHF 21,000 100% –

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

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

Cham Paper Group Asia Pte Ltd. SG Singapore l SGD 0 100% –

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

No changes in Group structure on the previous year.All companies are fully consolidated.

In 2014 the companies Cham Paper Group AG and Industrieverwaltungsgesellschaft Cham AG were merged into the Cham Paper Group Holding AG.

Notes to the Financial Statements of Cham Paper Group Holding AG

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

4. Treasury shares

5,000 treasury shares were bought in FY 2015 at an average price per share of CHF 220.00 (2014: no acquisitions). A total of 4,636 treasury shares were sold at an average price per share of CHF 254.41 (2014: 5,160 treasury shares at an average price per share of CHF 221.00). 238 treasury shares were assigned to members of the senior management, instead of bonuses, at a price of CHF 247.00 (2014: 230 treasury shares at a transaction price of CHF 229.50). Due to the employee share ownership scheme, members of the Board of Directors were allotted 115 treasury shares in 2015 at the average share price in effect in November 2015 of CHF 251.00 (2014: CHF 240.00) instead of compensation.

As at 31 December 2015 the Cham Paper Group Holding AG held 11 treasury shares (2014: none).

5. Changes in shareholders’ equity

Share capital

TCHF

Statutatory capital

reserves TCHF

Statutatory retained earnings

TCHF

Unrestricted reserves

TCHF

Retained earnings brought forward

TCHF

Treasury shares TCHF

Total TCHF

Balance as at 1 January 2014 48,425 21,873 22,815 20,732 5,747 747 120,339

Merger loss – – – – –4,932 – –4,932

Adjustment of reserves for treasury shares – – – 747 – –747 –

Reversal of legal capital contribution reserves – –2,233 – – 2,233 – –

Cash dividend – – – – –2,233 – –2,233

Net income for the year – – – – 119 – 119

Balance as at 31 December 2014 48,425 19,640 22,815 21,479 934 – 113,293

Balance as at 1 January 2015 48,425 19,640 22,815 21,479 934 – 113,293

Treasury shares – – – – – –2 –2

Reversal of legal capital contribution reserves – –2,225 – – 2,225 – –

Cash dividend – – – – –2,225 – –2,225

Net income for the year – – – – –610 – –610

Balance as at 31 December 2015 48,425 17,415 22,815 21,479 324 –2 110,456

As at 31 December 2015 and 31 December 2014, the share capital of Cham Paper Group Holding AG consisted of 745,000 registered shares with a par value of CHF 65.00 each.

Number of full-time positionsOn average the number of FTEs was below 10 (2014: <10).

Liabilities towards pensions plansLiabilities towards pension plans as of 31 December 2015 totalled TCHF 16 (as at 31 December 2014: TCHF 16) in the amount of TCHF 88 (2013: TCHF 127).

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 2015: BURU shareholder group (BURU Holding AG, Philipp Buhofer, Heinz Buhofer, all Hagendorn) with 41.12% (2014: 41.12%) and LB (Swiss) Investment AG, Zurich, with 7.95% (2014: 7.92%).

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

55Notes to the Financial Statements of Cham Paper Group Holding AG

Share ownership of Board of Directors and Executive Board membersAs at 31 December 2015, the Board of Directors members and their related parties owned a total of 328,061 registered shares of Cham Paper Group Holding AG (31 December 2014: 327,846 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 2015Number of shares

31 December 2014Number of shares

Philipp Buhofer 1) Chairman 306,317 306,317

Felix Thöni Vice Chairman 5,070 5,009

Niklaus Peter Nüesch Member 0 0

Peter Schmid Member 2,508 2,454

Urs Ziegler Member 14,166 14,066

Luis Mata Management Member 898 –

Andreas Friederich Management Member 0 –

1) Of which 303,262 (2014: 302,762) registered shares held via BURU Holding AG and 2,894 (2014: 2,894) registered shares held by relatives.

Additional disclosures, cash flow statement and financial reportThe Cham Paper Group opts not to provide additional disclosures, the cash flow statement and the financial report in accordance with article 961d (1) of the Swiss Code of Obligations, since the Group prepares consolidated accounts in accordance with recognised ac-counting standards.

56

Proposed appropriation of available earnings

2015CHF

2014CHF

Retained earnings brought forward from previous year 933,968 5,747,127

Merger loss – –4,932,121

Net income for the year –609,950 118,962

Reversal of legal capital contribution reserves 2,235,000 2,224,581

Total available earnings 2,559,018 3,158,549

Appropriation of available earnings

Dividend –2,235,000 –2,224,581

Balance to be carried forward to new account 324,018 933,968

Total distributed as dividend 2,235,000 2,224,581

Minus portion consisting of the capital contribution reserves –2,235,000 –2,224,581

Portion consisting of other reserves and available earnings – –

The Board of Directors proposes that the general meeting of shareholders should approve a distribution from the capital contribution reserves of CHF 3.00 per share.

Treasury shares are not entitled to dividends. The Cham Paper Group Holding AG held 11 treasury shares as at 31 December 2015.

The share capital with dividend entitlement can vary owing to purchases and/or sales of treasury shares between 1 January 2016 and the record date, thus the dividends paid out may vary likewise. The profit appropriation of the previous year was adjusted to the actual dividend payout.

Notes to the Financial Statements of Cham Paper Group Holding AG

57Publishing details

Publishing details

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

DisclaimerMany of the statements made in this annual report are for-ward-looking statements relating to future events and/or future performance, including without limitation, statements regarding expectations, beliefs, intentions or future strategies that are signi-fied by the words “expects”, “anticipates”, “intends”, “believes”, “plans” or similar language. These forward-looking statements are only predictions and estimates regarding future events and circum-stances. Actual results may differ substantially from those antici-pated in these forward-looking statements.

Cham Paper Group Holding AGFabrikstrasse

CH-6330 Cham

Phone +41 41 785 33 33

Internet www.cham-group.com

E-mail [email protected]

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