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Annual Report 2013

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

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

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

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

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

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

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

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

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

est possible value for our customers.

Clear focus.Uncompromising value-orientation.Groundbreaking innovation.

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

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

the advantages on the pages 16 to 25.

050

100150200250300350400450500

2009 2010 2011 2012 2013

Net revenue

Net revenue from continued operations

in C

HF

mill

ion

in %

EBIT and EBIT margin

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

in C

HF

mill

ion

–10

5

0

5

10

15

2009 2010 2011 2012 2013–4

–2

0

2

4

6

2009 2010 2011 2012 2013

0

20

40

60

80

100Turnover per region

Europa

in %

Asia Rest of worldAmerica

0

50

100

150

200

250

2009 2010 2011 2012 2013400

500

600

700

800Sold volume and employees

Sol

d vo

lum

e in

100

0 to

nnes

Sold volume in 1000 tonnesNumber of employees (FTE)

Num

ber

of e

mpl

oyee

s

0

50

100

150

200

250

300

350

2009 2010 2011 2012 20130

20

40

60

80

100

in %

Shareholders’ equity and equity ratio

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

in C

HF

mill

ion

–10

0

10

20

30

40

50

–10

0

10

20

30

40

50

2009 2010 2011 2012 2013

in %

Net debt and gearing ratio

Net debtNet debt/ shareholders’ equity (gearing ratio)

in C

HF

mill

ion

Key figures at a glance

Further momentous milestones in the transformation programme reached

Strong demand for all strategically-important product groups

Italian mills on the rise, Carmignano benefits from adaption of the product range

Balance sheet bolstered, Group free of net debt; dividend of CHF 3.00

distributed

Papieri project progressing on schedule

Highlights and key figures

in CHF million, unless otherwise specified 2013 2012

Net revenue - Deliveries and services 231.3 279.7EBITDA 11.9 14.7

in % of NetRev 5.1 5.2EBIT before Restructuring 1.8 0.7in % of NetRev 0.8 0.3Restructuring expenses 1.5 2.5EBIT after Restructuring 3.2 3.2Profit / (loss) 0.4 –1.2Earnings per share (in CHF) 0.55 –1.76Free Cash Flow 16.7 8.1Shareholders’ equity 107.8 100.8in % of Total Assets 46.3 40.7Net debt –3.5 18.0Sales in tonnes Total 151,141 187,186Investments in tangible and intangible Assets 7.0 6.5Personnel (FTE) Total (excl. apprentices) 445 545

Table of contents

4 The Cham Paper Group at a glance Profile

Sites and sales volumes

6 The Cham Paper Group’s shares

8 Letter to Shareholders

12 Markets of the Cham Paper Group

14 Experiencing the Cham Paper Group Consumer Goods

Industrial Release

Digital Imaging

28 Sustainability Report

34 Corporate Governance

46 Consolidated financial statements Notes to the consolidated financial statements

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

of Cham Paper Group Holding AG

3 Table of contents

4

The Cham Paper Group at a glance

The speciality paper market

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

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

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

between development, supply and production processes with the clients.

The Cham Paper Group at a glance

Speciality paper 5.3 MTPA

Market size:USD 22 billion

Market size:USD 288 billion

Premium paper5.3 MTPA

Commodity paper361.1 MTPA

Low cyclicality

Cyclicality

• Operating margins• Customer loyalty

Total market size:382 MTPA (USD 310 billion)

Condino mill infrastructure1 paper machine; width: 330 cm

1 film press

2 super calenders

Carmignano mill infrastructure2 paper machines; width: 330 cm

2 in-line coating machines

1 off-line coating machine

2 super calenders

Cham mill infrastructure2 off-line coating machines

1 curtain coater

1 super calender

5

Cham Paper Group Schweiz AGCH-6330 Cham

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

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



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

Turnover in % Turnover in %2013 2012

Europe 76.9% 76.5%

America 4.6% 5.2%

Asia 15.3% 15.8%

Rest of world 3.1% 2.5%

6

The Cham Paper Group’s shares

The Cham Paper Group’s shares

I. Key figures

Number of shares

Number of shares at 31 December 2013 2012 2011 2010 2009

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 77.50

Treasury shares 5,746 41,655 44,302 46,772 48,635

Number of outstanding registered shares 739,254 703,345 700,698 698,228 696,365

Key figures of shares

Key figures at 31 December 2013 2012 2011 2010 2009

Earnings per share from continued operations (in CHF) 0.55 –1.76 –131.83 –2.58 13.14

Earnings/Loss (–) per share group (in CHF) 0.55 –1.76 –131.83 –2.58 22.14

Shareholders’ equity per outstanding share (in CHF) 145.76 143.38 145.80 283.38 309.98

Gross dividend (incl. reduction in nominal value) (in CHF) 3.00 1) 3.00 – 5.00 12.50

Dividend yield (in %) 1.34 1.91 n.a. 2.29 6.60

1) Proposal to the general assembly of 7 May 2014

Stock exchange key figures

Stock exchange price in CHF per share 2013 2012 2011 2010 2009

Highest 245 188 223 236 202

Lowest 167 148 145 200 84

Year end price 224 157 157 218 190

Average of traded shares per day 822 514 583 900 650

Market capitalisation year end (in MCHF) 167 117 117 162 142

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

SPI (Swiss Performance Index).

Swiss Security Number: 193185 / ISIN-Code: CH0001931853

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

7 The Cham Paper Group’s shares

Share price development

1 January 2013 until 28 February 2014

II. Shareholder structure as at 31 December 2013

Major shareholders

Shareholder group Buhofer (BURU Holding AG, Philipp Buhofer, Heinz Buhofer, all Hagendorn) 40.96%

LB (Swiss) Investment AG, Zurich 6.71%

Free float (according to SIX-Definition) 59.04%

Overview

Registered shareholders 891

Registered shares 614,935

Not registered shares 130,065

Shareholders with 1–500 shares 797

Shareholders with 501–5,000 shares 92

Shareholders with more than 5,000 shares 2

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 35).

IV. Information policy

The Cham Paper Group provides information about its

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

report and an annual report that are available in printed

and electronic form. The reports are mailed out upon

express request only, otherwise they are available only

electronically for the purpose of economic and environ-

mental efficiency. Facts relevant for the share price are

announced by way of ad-hoc publications (German and

English).

For continuously updated information on the company,

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

please refer to the Investor Relations section at www.

cham-group.com. 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 develop-

ments.

V. Contact

Share registerFranziska Stöckli

Fabrikstrasse, CH-6330 Cham

[email protected]

Phone +41 41 785 34 03

Media & IR-contactEdwin van der Geest / Philippe Blangey

[email protected] or

[email protected]

Phone +41 43 268 32 32

VI. Financial Calendar

General assembly 7 May 2014, Lorzensaal, Cham

Financial reportingHalf-year report 2014: 21 August 2014

Annual report 2014: 19 March 2015

100

120

160

140

220

240

200

180

260

Jan 2013 May 2013Mar 2013 Jul 2013 Sep 2013 Nov 2013 Jan 2014 Feb 2014

In CHF

8

Philipp BuhoferChairman of the Board of Directors

Letter to Shareholders

Dear Shareholders,

The 2013 business year has seen the Cham Paper Group reach further momentous milestones that form part of the company’s comprehensive transformation programme, which began in 2011. The transfer of the company’s key product groups from Cham to Italy has been successful, and the relevant processes have now been embedded. Both Italian sites have made substantial progress in terms of their profitability and competitiveness, and have come to form a stable in-dustrial backbone for the Group. In Cham, CPG has been focussing on the development and manufac-ture of refined niche applications since Q2 of the year under review. Also, planning is on schedule for the widely-supported conversion of the industrial site at Cham into a new neighbourhood, and the project is now taking shape.

As a result of the paper machines in Cham being taken

out of service at the end of June 2012 and March 2013,

net turnover fell as expected by 17.3% to CHF 231.3m

(CHF 279.7m). Sales volumes were down by 19%, with

151,000 tonnes (187,000 tonnes) of speciality paper sold.

In the strategically-important product groups, however,

sales continued to rise. Despite the challenging trans-

fer and associated costs and outlays, operating profits

in Italy proved rather promising. The sale of the Italian

sites that was announced in the summer and cancelled in

November had a one-off negative effect, resulting in as-

sociated costs of approximately CHF 1.5m. EBIT for the

2013 business year amounted to CHF 3.2m (the same as

the previous year) and net profit totalled CHF 0.4m (up

from -1.2m in the preceding year). Free cash flow in the

year under review achieved CHF 16.7m (CHF 8.1m in the

previous year). The Group reduced net debt by a further

CHF 21.6m, meaning that the Group is now free of net

debt and has cash reserves of CHF 53.4m.

Carmignano benefits from adaptation of the product range, Condino continues to growThe two production sites, in Carmignano and Condino,

developed in 2013 as anticipated. Recorded sales were

over 11.3% higher than in the previous year, despite the

extensive tests with Innerliner papers in Carmignano that

initially tied up considerable resources and capacities.

Following the successful relocation, the site was able to

sustainably optimise its product mix during the subse-

quent months. In Condino, demand for our chief product,

Glassine, increased again to reach a good level.

Cham Paper Group achieves continued success


Strong demand for strategically-important product groups and a full development pipelineConsumer Goods: Following the successful transfer of

Tobacco Papers to Carmignano, we have been working

on a range of innovative Innerliners for this segment. The

Innerliner Leaf can be composted and at the same time

is extremely suitable for the new drying systems on our

coating machines. What is more, the Labelcar product

series, used to produce beer labels for example, received

certification for metallisation during the year under re-

view. It is increasingly common for wet-strengthened la-

bels to be metallised, generating strong market growth in

this segment. Our development division is also working

flat out to convert a proportion of the papers for the Flex-

ible Packaging segment to lower grammage.

Industrial Release: Sales in the Glassine product group

increased dramatically once again. The strongest growth

was in Glassine tape. Manufactured in Condino, this pro-

duct takes the form of high-quality papers used to pro-

duce adhesive tapes. Condino is well placed to build fur-

ther on our success in this segment. The focus of our

market strategy will also increasingly lie upon specialities

in the field of Process Liners. The Cham Paper Group not

only manufactures Silicone Base Papers, but also silicon-

ises them itself. Applications range from packaging for

adhesive products to process liners used in the manufac-

ture of a variety of plastic materials. A full development

pipeline has been put in place for this segment. In addi-

tion to sophisticated base papers for the coating plant in

Cham, papers coated on a single side for reflective signs

and labels, in particular for car registration plates, are de-

veloped here.

Digital Imaging: We successfully continued our growth

trajectory in Digital Imaging. Transjet Sportsline – used

for digital sublimation printing on sports textiles – experi-

enced a particularly strong increase in sales. The develop-

ment of two new products has been completed, expand-

ing the product range in Transfer Printing: Transjet Boost

for the new high-speed inkjet printers and Transjet ECO

for the new markets in Asia and South America. The next

stage of development, achieving lower grammage for the

fashion industry, is already underway. The Graphics sec-

tor has also welcomed a new product to market: Promo-

print is the first matt inkjet paper of a new product family,

developed especially for high-speed inkjet printers. Fur-

ther products with a glossy finish are under development.

Barnamic: The market launch of Barnamic continued to

be a high priority for the Group. Used as a stand-alone

packaging solution or as a part of composite material,

these barrier papers are suitable for a variety of food and

non-food applications. Projects with selected key clients

were pursued further, enabling considerable quantities

to be sold for the first time in Q4. Now it is a case of

bringing the scale-up phase to a successful conclusion

and clearing the way for the roll-out of Barnamic in se-

rial production. In the meantime, the development team

is working relentlessly to develop the Barnamic product

portfolio. The focus, in addition to introducing new prod-

ucts, is to use 100% natural, sustainable raw materials.

Urs ZieglerDelegate of the Board of Directors

Felix ThöniMember


Hans SchallerMemberPeter J. SchmidMember

Restructuring frees up more resources and bolsters the balance sheetThe restructuring of the Cham Paper Group also freed

up some financial resources in the 2013 business year.

Thanks to the further reduction of net working capital

by 26.2% and stringent cost controls, we were able to

achieve a free cash flow of CHF 16.7m. Furthermore,

35,000 shares from the Group’s own stock were placed

with investors at market prices by year-end, meaning that

the company accrued an additional CHF 7.7m. Despite

paying out dividends worth CHF 2.1m in May 2013, the

Group was able to reduce its net debt by a further CHF

21.6m. The Group is now free of net debt and has cash

reserves of CHF 53.4m. Our equity ratio rose from 40.7%

in 2012 to 46.3% by the end of 2013.

Strengthening the social partnership in ItalyThe sale of the Italian paper mills in Carmignano and Con-

dino to the Delfort Group, announced on 15 July 2013,

collapsed after talks concerning future contractual condi-

tions between the buyer and the Italian employees’ rep-

resentation in Carmignano proved unsuccessful. At the

end of November, the local factory management came

to an economically viable and progressive consensus

with the employees. The new agreement, which was

approved by the General Assembly of Employees, ena-

bles a significant expansion of the flexibility of the site

in terms of its operating hours, especially on weekends,

while retaining the current remuneration models. The

agreement was reached as a result of the strong desire

of all parties to see the successful restructuring of the

Cham Paper Group secure a significantly improved mar-

ket position of the plant in Carmignano in the long term.

Consequently, both sites in Italy remain under the owner-

ship of the Cham Paper Group. Thanks to the compre-

hensive restructuring of the Cham Paper Group in the last

two years, they are well positioned.

Continued streamlining of management In the wake of the completion of the Group’s comprehen-

sive transformation, it was found that the management

structure could be further streamlined, and the Executive

Committee was disbanded at the end of November 2013.

The three site managers at Carmignano, Condino and

Cham now report directly to the delegate of the Board of

Directors, Urs Ziegler. At a Group level, Urs Ziegler will

continue to be assisted by Luis Mata, Head of Finance

& Controlling, and Franziska Stöckli, Head of Corporate

Services.

Papieri site: vision set out and urban development study commissionedThe Cham Paper Group and the Commune of Cham are

currently working together on the conversion of the fac-

tory site once it is vacated. The most important Cham

stakeholder groups and local communities have been in-

volved in the collaborative planning process. In the first

half of the year, the vision and the guidelines derived for

the new district were set out, which were fully approved

with public involvement. Since October 2013, four quali-

fied architectural firms have been carrying out an urban

development study, and the initial results look promising.


Niklaus Peter NüeschMember

The final outcome will be presented in Q2 2014, form-

ing the basis for the subsequent production of the plans.

Voters in Cham are then expected to decide in the first

half of 2015 on the rezoning necessary to carry out the

project.

The costs of the development and planning process of

the Papieri site will largely be covered until 2015 by in-

come from temporary leasing and the operations of Cham

Paper Solutions. A number of new tenants have moved

onto the Cham site in the last 18 months, in view of the

high demand for offices, storage space and parking.

Proposals to the General AssemblyBy concentrating base paper production in Italy, we have

freed up financial resources, which the Board of Direc-

tors has utilised to reduce liabilities to banks and wants to

return to shareholders. The Board therefore recommends

a dividend of CHF 3.00 per share in the form of a tax-

friendly return of capital.

OutlookThe Board of Directors is confident about the continued

profitable growth at the sites in Italy. The small, but high-

ly innovative, unit in Cham still has to prove its worth in

the market. Sales must increase substantially if we are

to become sustainably profitable by 2015. Until then, we

will continue production on the existing site, and subse-

quently the equipment must be moved to a new location.

We want to thank our employees for their considerable

efforts, which have been and continue to be indispensa-

ble in successfully completing the transformation of the

Cham Paper Group. Our thanks go to our clients, partners

and suppliers too for their close collaboration. As for our

esteemed shareholders, we would like to thank you for

the confidence you have placed in us.

On behalf of the Board of Directors of the Cham Paper

Group

Philipp Buhofer

Chairman of the Board of Directors

Urs Ziegler

Delegate of the Board of Directors

12

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 Transpromo Print

Markets of the Cham Paper Group

13

Our consumer goods range includes paper for flexible pack-

aging and label printing. The base papers serve to protect

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

uct and providing information.

Consumers today demand easily understandable, func-

tional and environment-friendly packaging. One survey* has

shown that 87 % of European consumers prefer paper

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

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

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

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

brand name manufacturers innovative paper solutions noted

for their efficiency and safety at all stages of the production

process. The outstanding properties of our papers ensure

brilliant printing results and highly effective presentation of

brand name goods.

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

Sweden, Belgium and Spain.

Our industrial release solutions consist of the base papers

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

labels. These are complemented by papers for process liners

in industrial production as well as facestock papers for the

self-adhesive industry.

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

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

ing papers were developed exclusively for these specific

applications and provide the basis for outstanding release

properties.

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

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

labels used worldwide are made of paper.

Our team of professionals liaise closely with our customers

to develop tailor-made solutions. These guarantee efficiency,

reliability and consistent quality at all stages of production

and finishing.

The Cham Paper Group commands a leading position in the

world digital imaging market. We supply inkjet papers for

large format digital imaging and industrial inkjet printing. Our

range also includes sublimation papers for digital textile

printing.

The large format inkjet papers are suitable for indoor and

outdoor applications, while coatings for specific purposes

guarantee colours of maximum brilliance. Our sublimation

papers have excellent runnability and transfer qualities.

Compared with offset printing, digital imaging is becoming

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

printing is accounted for by digital imaging and the trend is

upward. The advantage of this printing process is its ability

to personalise communications and to produce advertising

tools in small runs at very short notice.

We test our products in the company’s own applications

centre under authentic conditions and offer training courses

for our customers.

Markets of the Cham Paper Group

Consumer Goods

Why Anna questioned Tim’s sweet tooth

16

Hardly a day goes by without Tim Wegmüller consuming sweets,

caramel sticks or gum. His sister Anna has told him about the

amount of waste involved in the consumption of a single packet of

sweets. Tim took it upon himself to look into this and breathed a

sigh of relief when he found out that plastic is not involved in the

process, but waxed paper is instead.

Tim’s guilty pleasure

Consumer Goods

The first small, colourful sweet wrapper lies at the en-

trance to the kitchen. There are two more under the

kitchen table, three in the living room and one more on

the stairs leading up to the bedrooms. Anna Wegmüller is

annoyed. “Tim, do you actually know what a rubbish bin

is and what it’s there for?” she called out in the direction

of his room. Her brother Tim appeared in the doorway.

Another sweet wrapper quickly disappeared beneath his

foot. He looked guilty. “Sorry, that was a bit thoughtless

of me. I’ll sort it out right now.” He picked up his rubbish

bin from under his desk and went through the house pick-

ing up wrapper after wrapper.

Environmental conscience poses difficult questionsWhen he returned with the full bin, Anna sat on his bed

and looked sternly at her brother. She has been the Weg-

müller family’s environmental conscience for many years.

“You are generating a lot of rubbish made from plastic!”

Tim frowned. The sporty teenager loved sweets more

than anything. Was his guilty pleasure really contributing

to the problem of plastic waste? After all, Tim knew that

plastic is hardly recycled and poses an increasing threat

to the environment. Anna now had his attention. “I’ll find

out what is what. The manufacturer will definitely be able

to tell me whether, and in what way, they take the envi-

ronment into account.”

“What we think is plastic is thankfully paper.”

17 Consumer Goods

Tim gives the all-clear A few days later, Tim and Anna were on their way to

school together. Anna said to her brother, “Did you have

much luck in your research?” Tim nodded. “I looked on

the internet and then rang the maker of my favourite

sweets.” “And?” “What we think is plastic is thankfully

paper.” Green-minded Anna knew the advantages of

packaging made of paper: paper is made from wood pulp.

Wood is a renewable raw material – the total opposite to

plastic, which is created from the finite resource of crude

oil. “It isn’t normal paper though,” said Anna sceptically.

“No, of course not. It is a special type of paper with a

waxed surface that stops the contents of the packaging

sticking to the paper.” Before Anna could ask the next

crucial question, Tim added, “The wax is also natural. It’s

mainly made from plant oils.”

Anna has other ideasTim gloats, “I can happily scoff my sweets with a clear

conscience!” Anna turned her critical gaze on her brother

once again, “Well, yes, in terms of the environment, but

not for your teeth. Or are they somehow made from a re-

newable raw material and coated with a protective wax?”

“I’ll have to ask the manufacturer again,” laughed Tim

and gave his sister a playful nudge on the arm.

TWISTINGTWISTING is paper that Cham Paper Group manufactures at its site in Condino (IT).

It is waxed by the clients and then mainly used for packing sweets such as lollipops

or chews. Wax papers are not only recyclable, a recently published study stated that

it can be freely composted. In comparison to plastic film wrappers, the natural wax

paper material also has a number of environmental benefits.

Industrial Release

How paper is replacing the screws in the iPad

20

At a meeting with Cham Paper Group, Florian Wegmüller

learned that paper is being used as a release liner in the manu-

facture of smartphones and tablets. Since state-of-the-art de-

vices are no longer screwed, but glued. He gave his son, Tim, a

little fright with his newly-found knowledge.

Glued, not screwed

Tuesday morning, ten-thirty. Florian Wegmüller met with

Sabine Schmid from Cham Paper Group, his long-serving

customer consultant. Wegmüller is the Purchasing Man-

ager of “Graphix Lamination Films GLF”, a company that

specialises in high-quality, self-adhesive sheets of paper

for an array of industries. He not only obtains the base pa-

per for the production of sheets for paper specialists, but

he also takes a regular interest in innovations in the paper

sector and in Cham Paper Group’s range. And as he has

developed a friendly relationship with Sabine Schmid over

the years, the pair of them use their half-yearly meetings

as a chance to have a quick catch-up.

A new iPhone When greeting each other, Florian’s gaze fell on the

new iPhone in Sabine’s left hand. “Have you got a new

mobile?” he asked. “I’ve finally said goodbye to my old

phone and got an iPhone,” said Sabine. “And the latest

model too,” said Florian. “It’s even lighter and thinner

than its predecessor.” “Which is what I wanted to talk

about,” added Sabine. “What do you mean? Have I got

fatter?” “No, of course not!” reassured Sabine quickly.

“I’m talking about paper. Or did you know that one of

Cham Paper Group’s products plays a part in the manu-

facturing process of mobiles and tablets?”

Industrial Release

“Paper plays an important part in the manu-

facturing process of electronic devices.”

21

Light and thin thanks to paper Sabine allowed Florian a closer look at her iPhone. “Have

you never asked yourself, how come I can’t see any

screws?” “Of course!” Florian examined the device. “Is

everything glued together? And you supply the release

paper?” Sabine Schmid nodded. “Exactly. We produce

a speciality paper with a treated surface that has been

siliconised externally on both sides, coated with adhesive

and then punched into the appropriate shape. Once the

device is finished, the release liner is removed and the

strongly adhesive surface is exposed. Then the casing

can be attached.”

A screw looseWhen Florian returned home that evening, his son Tim

was sitting on the sofa in the living room with an iPad

and reading. “What are you reading?” his father asked.

“A Dangerous Game by Friedrich Dürrenmatt. For Ger-

man class,” answered the grammar school pupil. “En-

joying it?” “Yes, but I’ve had enough for today.” Tim

put the device down next to him. “Watch out, there is a

screw loose!” exclaimed Florian, pointing to the tablet.

Tim, who guarded his tablet like a treasure, immediately

jumped up. “Where? Where?” he asked, examining his

device. “But there aren’t any screws!” Florian laughed,

“Gotcha!” Reassured, Tim placed his iPad back on the

coffee table. He couldn’t stop a small smile from appear-

ing on his face, “Very funny, Dad. It’s best I don’t tell you

what’s going through my mind about screws and being

loose.”

Industrial Release

RELEASE LINERRelease Liners are specialty papers that are used

as a separating material in adhesive applications

in the most diverse of industrial sectors. Highly

calendered papers, so-called glassines, are silicon-

ised on both sides. The paper supports the simple,

crease-free application of the adhesive tape. Cham

Paper Group’s Release Liners are manufactured at

the Condino (IT) site.

Digital Imaging

Why paper makes all the difference

24

Gloria’s law firm is celebrating its 25 year anniversary. The hosts

would like to give their clients a token of their appreciation in

the form of an individual invitation. Gloria Wegmüller booked an

appointment with a printing firm. In this way she learned how

essential paper is in creating a perfect printing result.

Individual invitation for a lavish celebration

“How time flies,” sighed Felix Gutmann. “It seems only

moments ago that we were still young lawyers daring to

take our first steps into independence. And now here we

are, celebrating the 25th birthday of our law firm.” Gloria

Wegmüller, a partner at “Gutmann, Keller & Partner” for

many years, smiled, “You must see that as a positive.

Finally, another excuse for a huge party!” The partners in

attendance nodded. It was agreed that the clients should

be invited to a tasteful event to toast 25 successful years

of “Gutmann, Keller & Partner”. “You’re right,” said Gut-

mann. “OK, let’s start organising things. First things first,

we should send out the invitations.”

“We are a personal law firm that treats its clients as in-

dividuals. That’s why we should consider an individual

invitation,” said Verena Keller. “Individual printed papers

are very expensive. The quantity determines the price,”

added Alois Fritsche for consideration. Gloria voiced her

thoughts, “I have experience of printing. I’ll look into it.”

High speed inkjet printing enables individual printed papersShe made an appointment over the phone with a well-

known printing firm nearby. The customer consultant lis-

tened carefully to the lawyer’s description at the meeting:

Digital Imaging

“Paper is a determining factor in terms of

the quality of the printed product.”

25

“Your decision to design the invitations for each individ-

ual is the right one in any case. The more personal the

invitation, the more effective it will be. I recommend that

we use high speed inkjet printing to create your order.”

“I take it that it is a digital printing process?”, asked Gloria,

recalling her son Tim’s ice-hockey shirts, which were also

printed digitally. “Yes, that’s right. High speed inkjet print-

ing has developed into a true and, above all, cost-effective

alternative to offset printing for small and medium-sized

orders. This enables documents to be printed individually

without costs spiralling out of control.” Gloria appeared

sceptical. “We are a renowned law firm and our invitation

should be very prestigious. Is digital printing really suitable

for us?”

A successful anniversary The customer consultant showed Gloria a shelf with

printed samples and chose one of them. “You have a

valid question. Actually, paper is a determining factor in

terms of the quality of the printed product. That’s why I

only recommend PROMOPRINT paper to my customers.

It has an impressive performance with an optimal im-

age and colour display, as well as a pleasing feel.” Gloria

Wegmüller carefully inspected the PROMOPRINT paper.

“The printing quality is remarkable and the paper looks

exquisite,” she said.

A few days later, the invitation from “Gutmann, Keller &

Partner” went into print and, shortly after, was posted.

Each guest was addressed personally in the text of the

invitation and on the reverse, there was an individual map

with directions from their home to the event location. The

response to the invitation was overwhelming: more than

half of all the clients celebrated the law firm’s 25th birth-

day with the hosts. At some time after midnight, Felix

Gutmann joined his colleague Gloria Wegmüller: “If I had

known just what a fantastic celebration was awaiting me,

I would have wished the 25 years had gone even quick-

er,” said the firm’s founder with a chuckle. “Here’s to the

next 25 years!” replied Gloria and raised her champagne

glass.

Digital Imaging

PROMOPRINTHigh speed inkjet technology enables new levels of productivity and quality in digital

printing. The speed of printing poses particular challenges to the ink absorption and

drying characteristics of the paper. PROMOPRINT enables Cham Paper Group to

provide a particularly well-suited product line of printing papers coated on both sides,

prints with excellent image resolution and increased ink coverage.

27

Table of contents

28 Sustainability Report Sustainable corporate management

Employees

Customers

Environment

Eco facts & figures

Society


46 Consolidated financial statements Notes to the consolidated financial statements

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

of Cham Paper Group Holding AG

Table of contents

28

Sustainable corporate management

Sustainability Report

The 2013 financial year brought a large number of changes: the Cham Paper Group was able to successfully wrap up its restruc-turing programme in Switzerland, to tap into new business areas and to consistently pursue its corporate sustainability objectives. The planned sale of the sites in Italy did not go ahead, but the economic development of the plants remains favourable. In times of transformation in particular, a corporate management approach that looks towards the needs of stakeholders will prove to be suc-cessful in the long term: our actions are based on the demands of customers, employees, the environment and the neighbours of our sites in Switzerland (Cham) and in Italy (Carmignano and Condino). We understand sustainable corporate management as a process that aims to balance the key factors for success, such as competi-tiveness in the marketplace, resource efficiency and responsible environmental management, innovative products and production, social acceptance and motivated employees, and to secure them in the long term.

The Cham Paper Group therefore has the principles of quality, in-novation, safety and environmental performance firmly anchored in all of its business practices. In our Vision 2015, we set out specific objectives that we are now pursuing, routinely assessing compli-ance with our quality, environmental and safety standards (ISO 9001, ISO 14001, OHSAS 18001 and other quality hallmarks).

This is the third time that we have informed our stakeholders in a transparent manner – by means of this Sustainability Report – of our successes, the challenges that face us and future initiatives in economic, ecological and social aspects. The report for 2013 com-plies with the specifications contained in Version G3, Level C of the Global Reporting Initiative (GRI), which was audited and approved by the GRI. The GRI is the world’s leading standard for comparable sustainability reporting (www.globalreporting.org).


Vision 2015

In its Vision 2015, the Cham Paper Group has committed itself to meeting the following targets:(based on average values 2005-2009)

Energy and water• 8%overallreductioninenergyconsumptionby2015• 15%overallreductioninwastewateroutputby2015• 30%overallreductioninsludgeoutputby2015

Sustainable forest management / chain of custody• Establishmentandcertificationofachainofcustodyforallplants(FSC)• Pulpfromcontrolledwoodinallplants

Sustainable products – Grüne Linie (“Green Line”)• Catalogueofcriteria/differentiatorsestablishedtodefine“sustainability“• Firstsuchproductslaunched• Sustainabilityevidenced,e.g.bywayoftheLifeCycleAssessment(LCA)1

Occupational health and safety management• 40%reductioninoverallaccidentfrequencyby2015• Occupationalhealthandsafetyrepresentativesactiveinallplants• 15%reductioninabsencerateby2015• Workplacehealthmanagementactiveinallplants2

Credibility of what we say• Performanceindicatorsreviewedforcompliancewithcorporategovernanceandperformancerules(ICS)

1 and 2: targets are currently under review

29

2013 was also a year marked by significant changes: due to the partial closure of the site in Cham, the number of employees in Switzerland was reduced to 125, 19 of whom are women and an-other 19 are on part-time contracts. The downsizing of the compa-ny’s workforce and the increased uptake of voluntary redundancy (19 employees) have tied up resources. As for the employees who have left the company, the Cham Paper Group has offered integra-tion support and guidance in accordance with its existing social plan, and is endeavouring to help minimise the social impact of redundancy for those involved. Whereas in Switzerland 64% of employees are covered by a collective agreement, this is the case for all employees in Italy. This factor also played a role in the ne-gotiations with the Delfort Group concerning the sale of the CPG sites in Italy, which ultimately could not be completed as desired.

The Cham Paper Group relies on the knowledge and expertise of its employees and the transfer of knowledge within the company, and therefore makes every effort to retain its skilled members of staff. Despite the recent developments, the Group strives to pro-vide an in-depth programme of continuing professional develop-ment to strengthen its core skills and to ensure open and fair dia-logue within the company. Due to the restructuring, the strategic priorities governing training and professional development have not been finalised. The current changes have also meant that it has been difficult to attract young, skilled employees, hence talent management was a focal point during the year under review.

Top priority: health and safety Protecting our employees’ health and providing a safe place to work continues to take precedence over any other personnel mat-ter. We maintain a certified management system for occupational health and safety in accordance with the international OHSAS 18001 standard, implemented within the company by a special occupational health and safety organisational unit, which was re-defined for Cham in mid-2013. The pivotal positions in this unit are the safety officer, the core team, an external specialist health and safety body, a safety coordinator, as well as the contact persons for occupational health and safety. In Italy, health and safety man-agers have resolved to halve the number of accidents at work dur-ing the next two years. We therefore carried out safety campaigns and an increased number of inspections in the year under review. In keeping with this focus on health and safety, our colleagues in Italy have been devoting their attention to the introduction of the HACCP – Hazard Analysis and Critical Control Points – concept in training sessions.

Employees


30

Creating confidence through quality and communicationCustomer requirements and a cooperative relationship based on trust take the highest priority at the Cham Paper Group. Our repu-tation is built on our quality products and services, our capacity for innovation and our partnership-based dialogue with customers and suppliers. Since the second paper machine in Cham was decom-missioned in 2013, paving the way for restructuring CPG Switzer-land from a paper manufacturer into a finishing specialist, we have maintained open communication. This has been recognised by our customers and played a contributing role in the successful conclu-sion of the transformation process.

CPG Switzerland is now in the process of establishing new seg-ments. Barrier Applications, Coating Solutions and Textile Solu-tions will complement the existing Digital Imaging (DI) segment, which is currently showing the greatest potential. With the shut-down of the two paper machines, the structure of our customer base has changed. Each year, we deliver to between 600 and 800 customers from our site in Cham. These now primarily comprise paper distributors, a certain number of converters (processors) and end clients (direct printers).

New productsIn 2013, the Transjet range (DI) brought a new product to the market – Transjet Boost NXT 834. This high-quality paper dries extremely quickly and was specially developed for industrial ma-chines and processes with very high print speeds, and is used in the production of fashion wear, for example.

As for commercial inkjet printing (DI), the new Promoprint product family was unveiled. In contrast to all other CPG products, which are coated on a single side, these high-quality papers are coated on both sides, enabling printing on the front and back of the paper. Promoprint products are used in the commercial printing of direct mail campaigns, catalogues, brochures and leaflets with custom-ised content, such as trade magazines and books with small print runs.

One of the effects resulting from the Group’s new direction was the creation of new service units. The Textile Solutions unit sup-ports manufacturers of sports clothing with any questions they have on the topic of digital sublimation. In collaboration with cus-tomers, the Coating Solutions unit develops and refines finishing and coating innovations, and produces samples and small volumes of finished products. In addition to price and functionality, an envi-ronmentally-friendly design plays an important part in all products.

Our portfolio: reliable and high-quality We seek to offer our customers innovative and high-performance products that present no health risks and are manufactured in an environmentally-friendly manner. This aspect is highly relevant in

Consumer Goods in particular. The Cham Paper Group ensures uniform quality management across the Group. Our integrated quality management system incorporates aspects of quality (ISO 9001), the environment (ISO 14001), occupational health and safe-ty (OHSAS 18001) and the FSC (sustainably-produced wood prod-ucts). In Consumer Goods, a Hygiene Management System (HMS) was also introduced in Italy, which may also be adopted at the site in Switzerland at some point, should the need arise. The HMS and its associated measures ensure that all products fulfil the neces-sary requirements with regard to properties and processability. In Consumer Goods, all products are also required to fulfil the legal stipulations governing food packaging.

Our culture of dialogue: open and transparent We maintain open, transparent and proactive communication with customers, keeping them informed about our innovations and our commitment. The Cham Paper Group supplies all of its products with information on safety relating to general environmental is-sues. In addition, we provide data sheets, technical specifications and detailed explanatory notes. We also issue details about formu-lations and individual components for products with special uses. All this information enables our customers to assess the environ-mental impact of our products. The Cham Paper Group generally seeks to use raw materials that have the lowest possible negative impact on the environment. The effects that our manufacturing processes have on the environment in terms of resource and en-ergy consumption are recorded in detail. We specifically inform our customers whether the pulp used originates from sustainably managed forests (FSC), whether the raw materials or additives are suitable for direct food contact and whether they comply with the respective product requirements. Furthermore, our customers know that practically all CPG papers can be recycled in the form that they leave the production site.

As a rule, information about products is provided to customers when they visit us on site or at trade fairs, in the form of sample folders, brochures, special product leaflets and magazines or pub-lished on the CPG website. Conversely, our clients always have the option to make suggestions or submit a complaint by speak-ing directly to one of our customer service advisors by telephone, email or via the contact form on the website.

We are also interested to know what our customers think of us, so we conduct a customer survey every two to three years. The latest survey, which was carried out in 2012 and had a response rate of 42.5%, revealed high levels of satisfaction and strong customer loyalty. In times of transformation in particular, close contact with customers has been of great importance, which has made it pos-sible to incorporate and implement customer suggestions, thereby earning their trust.

Customers


31

Environment


In the paper industry, waste water production, energy consump-tion and the use of chemicals all have an impact on the environ-ment. Material usage and above all loss of material in waste water and the waste resulting from the production process all feature prominently on the company’s eco-balance sheet. In 2013, we made considerable progress in the area of the environment. Our objective is to reduce our use of resources in accordance with our Vision 2015.

The last two financial years have been marked by the termination of base paper production in Switzerland and the conversion of the Cham site to focusing entirely on finishing processes. Our cur-rent production process in Cham involves purchasing externally-produced base paper and then applying finishes using our coat-ing machines. We have adapted the electrical power distribution, building heating, water supply, compressed air distribution and lighting in line with the new requirements, thereby minimising the environmental footprint of the various sub-processes. To keep the impact as low as possible, we continue to invest in sustainable processes and the development of innovative products, such as the Barnamic packaging solution, for which we were awarded the 2012 Innovation Prize for the Canton of Zug. Our products are also 100% compliant with the FSC-controlled wood standard.

Playing our part in resource efficiency Our current production process is proving to be less water-inten-sive than before. The consumption balance is positive, largely thanks to the adaptation of our production facilities to the new situation in Cham. In 2013, we successfully rolled out a new con-cept for the cleaning and disposal of waste water in our standard process at the site. The competent environmental protection au-thority has confirmed that the new process meets the statutory requirements.

In terms of energy consumption and greenhouse gas emissions, we took a big step forward in 2013: the main factors in CO2 emis-sions through natural gas combustion are the drying of coatings, the preparation and delivery of coating colours, the powering of production facilities and building heating. The natural gas-powered steam piping network in Cham was substantially modified and adapted to the reduced operations in 2013. Moreover, we man-aged to greatly improve emission values with the use of a new steam generation plant. The condensate and feed water treatment system has also been modernised. At the same time, our energy consumption has been reduced. An energy-saving group created specifically for this purpose continuously monitors whether we are achieving the goals that we set ourselves – to reduce electricity (kWh/t paper) and gas consumption by 1% each year.

With the relocation of plotter roll production from Baar to Cham at the beginning of 2014, we have simplified logistics in Switzerland so that we can make savings in terms of HGV transport in the future. In Italy, plans for a biomass plant are coming along. The project is expected not only to reduce pollution, but to secure jobs simultaneously.

During the year under review, no fines or penalties were levied against the Cham Paper Group for non-compliance with environ-mental legislation. Due to a leak, a discharge of waste water into the river Lorze occurred in Cham. The regulatory requirements resulting from the subsequent investigation were promptly met, however, and the problem was demonstrably resolved in due form – without any financial penalty being imposed. Finally, in 2013, the Cham Paper Group was re-certified to the ISO 14001 standard.

32

Eco facts & figures

Eco facts & figures 2013 2012

Materials in tonnes (t) 184,571 248,715

Sourced raw materials in tonnes (contained directly in the final product)

FSC-controlled wood pulp 116,173 153,290

FSC-certified pulp 10,735 16,281

Chemicals 51,768 78,050

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

Sourced base paper (at Cham only) 5,895 1,094

Energy consumption MWh 601,047 750,996

Fuels (natural gas) 461,079 571,480

Electricity 139,968 179,516

Renewable portion % 30 36

CO2 emissions in tCO2e 151,575 176,916

Scope 1 (consumption of natural gas) 1) 93,211 115,529

Scope 2 (electricity) 2) 58,365 61,387

Consumption of water in thousands of m3 4,737 6,217

Industrial and process water 2,567 3,834

Cooling water 2,111 2,314

Drinking water 59 70

Waste water in thousands of m3 3,630 4,411

Via the company’s own treatment plant 3) 4) 3,630 4,411

Waste according to type and disposal method in tonnes 18,676 18,860

Waste for reuse/recycling 14,108 12,239

Sludge 4,375 6,339

Non-hazardous landfill waste 146 207

Special waste total 47 75

1) Direct greenhouse gas emissions in CO2 equivalents coming from the company’s own sources2) Indirect greenhouse gas emissions in CO2 equivalents associated with the generation of electricity3) Cooling water at the Carmignano (Italy) site is disposed of via the company’s own waste water treatment plant4) Waste water at the Cham site has been fed into the municipal sewage treatment system since April 2013


33Sustainability Report

As a contemporary and cutting-edge company, we are more than just a production facility and employer: we see ourselves as a part of society that may quite rightly be expected to make responsible decisions in the interest of public welfare and social engagement. This is a responsibility that we want to live up to. We maintain vi-brant relationships with our suppliers, representatives of the com-munities where we operate and the immediate neighbours of our sites.

Commitment to the social environmentAs part of our restructuring programme, production in Cham was modified in 2013. We have overcome the associated new chal-lenges in energy and water supply and sewage disposal in close and trustful cooperation with the community. The partial closure at this location has also led directly to improvements for local resi-dents, particularly with regard to noise and odour pollution.

Many questions arose concerning the conversion of the “Papieri” site, in connection with the redesignation of the Cham site. The “Papieri” project group convened in autumn 2012, consisting of representatives of the Cham Paper Group and the municipality of Cham. The latter agreed to promote the urban development of the area in the form of a collaborative planning process. In Decem-ber 2012, the people of Cham voted on a loan application and the procedure at the municipal meeting, on the condition that a broad-based participatory process takes place, which is supported by the Cham Paper Group. All pending matters related to the changes at the sites were ironed out in 2013 in constructive collaboration with the authorities. In spring, more workshops on the conversion of the site were held. The ideas and concepts raised by the local populace have been incorporated into the test planning, and four specialist planners were invited toward the end of year. Now it is time to bring aspects such as population density and development structure, stage planning and interim use, the mix of use, the open space and traffic in line with the needs of the municipality of Cham and the land owner, CPG. The concept is expected to be unveiled in mid-2014.

Due to the planned conversion of the site in Cham, we now need to find a new location for our industrial operations. To save our em-ployees the need to travel far and therefore increase the accept-ance of the new place of work, sites were sought and evaluated within a radius of just 25 km from Cham; this project was success-fully completed in April with the presentation of several options.

In Italy, 2013 marked the introduction of the due diligence process with the Delfort Group. Even though the sale of the Italian sites did not go ahead, the negotiations caused postponements and delays to many planned activities, including the cooperative planning that began in 2012 with the adjacent sawmill and forestry for the con-struction of a shared biomass plant in Condino.

At the Cham Paper Group’s sites, the company provides funding and support to local institutions and associations such as the vol-unteer fire brigade, which is permitted to carry out drills on the factory site in the interest of both parties. We also support local volleyball and football teams, in addition to a local magazine. At our Carmignano site, the company offers school and university stu-dents a number of fascinating training placements, so that they can gain some initial professional experience.

Compliance Compliance is an established part of our corporate thinking and firmly anchored in clearly formulated governance guidelines that apply throughout the company. With these guidelines we seek to ensure that the culture at the Cham Paper Group embodies eq-uitable and fair treatment among all employees at all levels and that our actions are guided by respect and trust. The values set out in our governance guidelines form an obligatory part of our general employment terms, which are binding on each and every employee. A separate code of practice is set to be introduced in Italy in 2014.

Guidance is key in our day-to-day work so that we are able to maintain compliance with statutory requirements and regulatory standards and live up to our own values. Other cornerstones for securing our basic values are our expenses regulations and guide-lines, organisational regulations and our internal regulations. They contain detailed practical specifics of our leadership and communi-cation approach, our authority matrix and guidance for dealing with insider information. The content of our organisational regulations is freely accessible on our website. Additionally, we provide internal guidance pertaining to compliance issues. In doing so, we ensure that all the employees of the Cham Paper Group are thoroughly acquainted with our compliance culture and that they abide by it in relations with customers and suppliers.

In 2013 no legal action was initiated for anti-competitive behaviour or anti-trust or monopoly practices. No sanctions or fines were imposed on our Swiss or Italian sites by government authorities or courts for non-compliance with statutory provisions or environ-mental regulations and targets.

Society


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 2013. 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 66 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 2014 is shown in the organisational chart below.

Corporate Governance

Cham Paper Group Holding AG

Board of Directors

Delegate of the Board of Directors

Urs Ziegler*

Corporate Services

Franziska Stöckli

Head of Finance & Controlling

Luis Mata

CPG Schweiz AG

CPG Italia S.p.A.

*Executive Management Board


1.2 Significant shareholdersAs of 31 December 2013, 891 shareholders were entered in the share register of Cham Paper Group Holding AG (2012: 887 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 2013 and 2012:

2013 2012

BURU shareholder group (BURU Holding AG, Philipp Buhofer, Heinz Buhofer, all Hagendorn) 40.96% 40.89%

LB (Swiss) Investment AG, Zurich 6.71% 5.61%Cham Paper Group Holding AG, Cham 0.77% 5.59%

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 2013. The share capital is di-vided into 745,000 fully paid-up registered shares with a par value of CHF 65.00 per share. All shares have the same voting rights and are entitled to the same dividend. There is only one category of registered shares.

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

Cham Paper Group Holding AG suspended the share buy-back program initiated in FY 2008 in April of 2009. In FY 2013 the com-pany divested the majority of the shares acquired as part of this share buy-back programme. The outstanding shares remain in the company portfolio and will not be cancelled. As of 31 December 2013, Cham Paper Group Holding AG held 5,746 registered shares in the company’s own holdings (31 December 2012: 41,655 reg-istered shares in the company’s own holdings). This corresponds to 0.77% 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 2013 and 2012 no changes were made to the company’s cap-ital. As of 31 December 2013 and 2012 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 70 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.


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 was appointed as a Delegate and elected to the group as a member of the Executive Management Board, none of the serving members of the Board of Directors belonged to the Executive Management Board of Cham Paper Group Holding AG or that of any of its subsidiaries or engaged in any significant business relations with any of its subsidiaries during any of the three financial years preceding the reporting period.

Name Position

Election to the Board of Directors End of term Audit Committee

Compensation and Nomination Committee

Philipp Buhofer Chairman 2004 2014 Member Member

Felix Thöni Vice Chairman 2008 2014 Chairman –

Urs Ziegler Delegate 2007 2014 – Member

Peter J. Schmid Member 2011 2014 Member Chairman

Niklaus Peter Nüesch Member 2012 2014 – –


Name

Year of birth, nationality

Position

Professional background

Education

Activities in governing and

supervisory bodies

Philipp Buhofer

1959, Swiss citizen

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

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

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

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

Name


Position


Education


supervisory bodies

Felix Thöni

1959, Swiss citizen

Vice Chairman of the Board of Directors since 2013

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

Equivalent of PhD of Economics, University of St. Gallen

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

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

Equivalent of MA in Economics, University of St. Gallen


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 2009: Planner Empredimentos Ltda., Sao Paolo, Brazil, managing partnerSince 1996: Nüesch Development AG, St. Gallen, CEO and 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. GallenChairman of the advisory committee, Nordeck Holding GmbH & Co. KG, Hanover (Germany)Board member, Rapid Holding AG, DietikonBoard member, Schindler Aufzüge AG, EbikonBoard member in various SMEs


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

3.3 Elections and term of officeMembers of the Board of Directors are elected by the sharehold-ers at the General Meeting of Shareholders for a term of one year, one year being the period from one General Meeting of Sharehold-ers to the close of the next. If elections are held to elect replace-ments for board members mid-term, those so elected complete the term of office of the members they are replacing. Elections take place on an individual basis. Re-election is permissible. There is no limit to the number of terms of office that any one mem-ber may serve. However, upon reaching the age of 70 Board of Directors members must lay down their office at the next General Meeting of Shareholders. The shareholders have the right to vote Board of Directors members out of office at the General Meeting of Shareholders. The number of Board of Directors members is limited to between five and seven. The average time the present Board of Directors members have served is approximately five and a half years, their average age being ca. 58.

In accordance with the Ordinance Against Excessive Compensa-tion in Publicly Listed Companies (VegüV) entered into force as at 1 January 2014, shareholders get the opportunity from 2014 to elect the chair of the Board of Directors as well as each member of the Compensation and Nomination Committee.

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:

• DefiningtheGroup’sorganisationalandstrategicdirection• Ultimate supervision of the Group’s business operations and

monitoring of its performance• Approvalofsignificantacquisitionsanddisposals• EstablishingsystemsandproceduresfortheGroup’saccount-

ing and financial control and planning• EstablishingtheGroup’sbusinesspolicy,inparticularitsinvest-

ment and financial policy• Approvalofbudgetsincludinginvestmentsandfinancialplans• DraftingtheAnnualReport,preparationandconductingofthe

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

• Establishing the key principles of corporate governance andguidelines for the Group’s information and communication policy

• Appointmentanddismissalofpersonschargedwiththeman-agement and representation of the Group and designating au-thorised signatories

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

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

• Auditing the financial statements and the half-year reports ofCham Paper Group Holding AG in tandem with the Executive Management Board and the external auditors

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

• Assessingthepresenceofaneffectiveinternalcontrolsystemincluding risk management

• Evaluatingandselectingexternalauditorstobenominatedforelection by the General Meeting of Shareholders

• Assessingtheperformanceoftheexternalauditorsandverify-ing their independence

• Reviewingthefeesoftheexternalauditorsandthecompatibil-ity of their auditing activities with any other consulting activities in which they may be engaged

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

• DecidingwhethertheBoardofDirectorscanberecommendedto submit the consolidated financial statements and the financial statements of Cham Paper Group Holding AG to the General Meeting of Shareholders for adoption by it.

The Audit Committee has no decision-making authority, but it rather assesses the aforementioned matters and prepares the individual and consolidated financial statements for approval by the Board of Directors. Meetings are attended by the Delegate of the Board, the Head of Finance & Controlling 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 2013 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.

Compensation and Nomination CommitteeThe Compensation and Nomination Committee establishes the principles for compensation of the Board of Directors, the Del-egate of the Board and members of the Executive Management Board. It also establishes the guidelines for the selection of can-didates for membership on the Board of Directors and the Execu-tive Management Board. The main tasks of the Compensation and Nomination Committee are:

• EstablishingthecompensationprinciplesfortheBoardofDirec-tors, the Delegate of the Board and the Executive Management Board members

• EstablishingthefinancialcompensationfortheBoardofDirec-tors, the Delegate of the Board and the Executive Management Board members

• EvaluatingtheperformanceoftheDelegateoftheBoard• EvaluatingtheperformanceoftheBoardofDirectors• Establishing the principles for the selection of candidates for

election to the Board of Directors and selecting candidates• Establishingtheprinciplesfortheselectionofthesuccessorto

the Delegate of the Board, Executive Management Board mem-bers and selecting candidates

• ReviewingthestatusofthepensionfundofChamPaperGroupHolding 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), Philipp Buhofer and Urs Ziegler. In FY 2013, two meetings were held, each lasting about half a day.

3.4.3 Functioning of the Board of Directors and its committeesThe Board of Directors meets at the invitation of the Chairman as often as the conduct of business demands, however at least once every quarter. In addition, extraordinary meetings or decisions by way of circular also take place as required. The Board of Directors meets once a year for a strategy seminar. Decisions are made by the entire Board of Directors. The Chairman generally chairs the Board of Directors meetings and casts the tie-breaking vote in the event of ties.

He also plans and runs these meetings. Meetings of the Board of Directors and their agendas are prepared by the Chairman in consultation with the 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 meet-ings. Apart from the Board of Directors members, meetings are also attended by the Head of Finance and Controlling and, depend-ing 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 2013 the Board of Directors held nine meetings, of which three were half-day meetings and six were full-day meetings. Three of these meetings were convened as extraordinary meetings.

Up to now, members of both committees were appointed by the Board of Directors. From 2014, the members of the Compensation and Nomination Committee are elected by the General Meeting of Shareholders. The Board of Directors will continue to determine the members of the Audit Committee itself.

To date, the Board of Directors has determined its members itself and elected a chair and vice-chair from among its own members. From 2014, the members and the chair of the Board of Direc-tors are each elected only for one year by the General Meeting of Shareholders. The vice-chair will continue to be elected by the Board of Directors from among its own members. His role is to act as deputy to the chair in the event of the chair’s inability to attend or non-availability.

3.4.4 Delegation of Authority within the Board of Directors and the Executive Management BoardThe Board of Directors of Cham Paper Group Holding AG 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=champ

aper&language=English


3.4.5 Information and control instrumentsThe Board of Directors exercises its ultimate supervision of the Executive Management Board by way of a structured reporting system as well as management accounting and budgeting pro-cesses. Generally, the Head of Finance & Controlling 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 Dele-gate, he also reports on developments in key markets and projects and draws the Board of Directors’ attention to existing and immi-nent 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:

• FinanceReport monthly• QuarterlyReport quarterly• Half-yearReport bi-annually• AnnualReport annually• BusinessPlanReport annually• BudgetReport annually• ForecastReport threetimesperyear (in April, July and October)

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

The Board of Directors committees meet regularly with the Del-egate, the Head of Finance & Controlling and external consultants, including representatives of the external auditors. The external auditors are accountable to the Audit Committee, the Board of Directors, and ultimately to the shareholders. Upon completing an audit, the external auditors submit the financial report to the Audit Committee and discuss its findings with it. The auditors report in a comprehensive manner to the Board of Directors, in so doing as-sessing 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 Del-egate 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 Com-mittee 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 regulation 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 ef-fectiveness of controls, identification of weaknesses and the adop-tion of corrective measures are carried out by the Management Teams. The Head of Finance & Controlling reports regularly to the Audit Committee on the effectiveness of the internal control sys-tem. The external auditors perform verification of the existence of an internal control system and report in a comprehensive manner to the Audit Committee or the Board of Directors, assessing the internal control system and the auditors’ findings. These principles for establishing and implementing the internal control system and performing risk assessment are contained in the Board of Direc-tors’ 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 extent of dam-age 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 mitigating them. The most significant risks for the year under review and the ac-tions that have been adopted and initiated to counteract these risks are described in the Notes of the consolidated financial state-ments on page 65.


4. Executive Management Board

4.1 Delegate of the Board

Name


Position


Education

Urs Ziegler

1948, Swiss citizen

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

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

Equivalent of MA in Economics, University of St. Gallen

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

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

5. Compensation, shareholdings and loans

5.1 Content and method of determining compensation andshareholding schemes

Board of DirectorsThe compensation principles and the amount of compensation payable to Board of Directors members are revised annually by the Compensation and Nomination Committee and determined by the Board of Directors acting on a proposal from the Compensation and Nomination Committee. Salary comparisons or benchmarks are not systematically taken into account. No external consultants were involved in the drafting of the compensation principles cur-rently in force. The amount of compensation payable to Board of Directors members was last adjusted in March 2013. Consultancy briefs for members of the Board of Directors subject to additional compensation are granted by the entire Board of Directors and re-quire the consent of a majority of the members. Such consultancy briefs are clearly defined and limited in time.

The members of the Board of Directors receive an annual com-pensation in keeping with their duties on the Board. The annual compensation is based on a base salary including an expense al-lowance as well as attendance fees. The base salary depends on the individual’s position on the Board of Directors. The Chairman of the Board of Directors receives a base salary including an expense allowance of CHF 120,000. The Vice Chairman of the Board of Directors receives a base salary including an expense allowance of CHF 40,000. The other members of the Board of Directors receive a base salary of CHF 30,000, which also includes an expense al-lowance. The expense allowances compensate the members of the Board of Directors for travel and other necessary out-of-pocket expenses incurred in the performance of their activities on the Board. The attendance fees vary according to the number of meet-ings of the Board of Directors and its committees. For each mem-ber of the Board of Directors, the attendance fees amount to CHF 3,000 for an all-day meeting and CHF 1,500 for a half-day meeting. For the committee meetings, the attendance fees amount to CHF 4,000 for an all-day meeting and CHF 2,000 for a half-day meeting. The attendance fees for the other committee members are equal to those of the Board of Directors meetings. The overall amount of compensation of the members of the Board of Directors and the compensation of current and former members of the Board of Directors for FY 2013 and 2012 are stated on page 70 f. of the financial statements of Cham Paper Group Holding AG.


Delegate of the BoardThe Delegate of the Board of Directors receives for the perfor-mance of his operative tasks a monthly base salary in cash whose amount is proposed by the Compensation and Nomination Com-mittee and subject to the approval of the Board of Directors. No performance-related bonus has been agreed with him for the year under review. For details on the compensation of the Delegate of the Board, please refer to page 70 f. of the financial statements of Cham Paper Group Holding AG.

The compensation of the Delegate of the Board, the compensation of former Executive Committee members and the highest com-pensation paid to any one member of the Executive Management Board and the Executive Committee respectively for FY 2013 and 2012 are stated on page 70 f. of the financial statements of Cham Paper Group Holding AG.

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

Under the shareholding plan, the members of the Board of Direc-tors establish at the beginning of the financial year what share of their compensation they would like to receive in the form of shares for the current year (25%, 50%, 75% or 100%). This share may be changed during the course of the year, this applying to the re-mainder of the year. The allocation of shares usually takes place on 31 December of the respective year. The proportion of the fee designated by the Members of the Board of Directors multiplied by a factor of 1.2 is used as a basis for calculating the number of shares to be allocated. The share price applicable to the allocation is based on the weighted average price in effect during the pre-ceding month, generally November. Upon allocation, the shares remain blocked for one year. During this vesting period the share owners are precluded from exercising their voting rights for the shares being vested. All Board of Directors members are eligible for participation in the plan who have worked on a full-time basis during the respective financial year. The portion of compensation drawn in cash is subject to disbursement on a quarterly basis.

The members of the Executive Management Board have the op-tion of receiving the performance bonuses due them, as far as this is 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 following year. The amount of the performance incentive bonus multiplied by a factor of 1.2 is used as a basis for calculating the number of shares to be allocated. The share price applicable to the allocation is based on the weighted average price in effect during the preceding month, generally March. Upon allo-cation, the shares remain blocked for one year. During this vesting period the share owners are precluded from exercising their voting rights for the shares being vested. All members of the Executive Management Board are eligible for participation who are in the company’s employ on 31 March of the following year.

5.3 Allocation of shares during the year under reviewDuring the year under review, 909 shares of Cham Paper Group Holding AG were allocated to members of the Board of Directors or related parties. During the same period no shares were allo-cated to members of the Executive Management Board or related parties.

5.4 Employment contracts and severance payNo employment contracts with notice periods of more than twelve months, nor any agreements on severance pay or any other pay-ments in connection with departure, have been agreed with mem-bers of the Board of Directors and the Executive Management Board. No such compensation was paid during the year under review either.

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.

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

champaper&language=English


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

• providedthat,andforaslongas,acceptanceoftheapplicantasa shareholder with voting rights might hinder the company in providing evidence of Swiss control as required by Swiss fed-eral law, in particular the Federal Law on the Acquisition of Real Estate by Non-Residents, or

• wheretheapplicant,despitehavingbeenrequestedbythecom-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 2013 and 2012.

Up to now a shareholder could be represented at the General Meet-ing of Shareholders by an authorised legal representative, another shareholder entitled to vote, Cham Paper Group Holding AG as the corporate proxy, an independent proxy voting representative or a custodial proxy. As of 1 January 2014, restrictions apply to institu-tional proxies in accordance with the Ordinance Against Excessive Compensation in Publicly Listed Companies (VegüV). Shareholders may only still be represented by the independent proxy elected by the General Meeting of Shareholders. Voting representation by the corporate proxy and/or custodians is not permitted. The inde-pendent proxy for the first General Meeting of Shareholders fol-lowing entry into force of the VegüV, i.e. the General Meeting of Shareholders 2014, is to be chosen by the Board of Directors. The independent proxy is required to cast the votes entrusted to him by shareholders according 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 submit-ted in writing to the Board of Directors at least sixty days prior to the General Meeting of Shareholders.

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

7. Change of control and defense measures

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

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

8. Auditors

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

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

2013TCHF

2012 TCHF

Ordinary audits 164 164Additional audits 79 –Additional fees 434 23Total 677 187


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

Fees for additional audits cover extraordinary services related to audits in Italy.

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 2013, the auditors attended a total of three half-day meetings of the Audit Committee.

9. Information policy

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

For continuously updated information on the company, shares, analyst opinions, media articles, dates and FAQs, please refer to the Investor Relations section at www.cham-group.com. On our website you can also subscribe to the e-newsletter so that you, at the same time as the media, are kept abreast of results and new developments.

10. Contact addresses and calendar

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

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

General Meeting of Shareholders7 May 2014, Lorzensaal, Cham

Financial reporting2014 Half-year Results: 21 August 20142014 Annual Report: 19 March 2015

46 Consolidated financial statements

Cham Paper Group – Consolidated financial statements

Consolidated income statement

1 January – 31 DecemberNotes

2013TCHF

2012TCHF

Change%

Net revenue 3 231,327 279,737 –17.3%

Cost of goods and services sold –208,678 –253,703 –17.7%

Gross profit 22,649 26,034 –13.0%

Administrative and general expense –13,496 –14,507 –7.0%

Marketing, sales, research and development expense –10,261 –13,293 –22.8%

Other operating expense 6 –607 –514 18.1%

Other operating income 6 3,485 3,003 16.1%

Operating profit (EBIT) before restructuring 1,770 723 144.8%

Restructuring expenses 7 1,460 2,484 –41.2%

Operating profit (EBIT) after restructuring 3,230 3,207 0.7%

Financial result 8 –1,613 –2,149 –24.9%

Foreign currency effects 261 –648 n.a.

Net income before taxes 1,878 410 358.0%

Income taxes 9 –1,489 –1,644 –9.4%

Net gain / (loss) for the year for the Group 389 –1,234 n.a.

Earnings / (loss) per share, undilutedNotes

2013CHF

2012CHF

Gain / (loss) per share, undiluted 10 0.55 –1.76

Total 10 0.55 –1.76

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 avail-able on page 67 f. of the German version.


Consolidated balance sheet

Notes31.12.2013

TCHF31.12.2012

TCHF

Assets

Cash and cash equivalents 11 53,404 49,010

Trade accounts receivable 13 45,846 54,563

Other current receivables 14 2,596 5,337

Inventories 15 45,537 51,259

Accrued income and prepaid expenses 963 1,067

Total current assets 148,346 161,236

Tangible fixed assets 16 81,123 82,847

Intangible assets 17 2,473 3,054

Financial assets 396 620

Deferred tax assets 9 187 250

Total non-current assets 84,179 86,771

Total assets 232,525 248,007

LiabilitiesTrade accounts payable 41,470 38,147

Current financial liabilities 18 35,938 35,745

Other current liabilities 19 3,833 3,838

Current provisions 20 2,516 9,697

Accrued expenses and deferred income 11,738 12,425

Total current liabilities 95,495 99,852

Non-current financial liabilities 18 13,940 31,307

Other non-current liabilities 114 150

Deferred tax liabilities 2,642 2,260

Pension plan obligations 21 4,439 4,143

Non-current provisions 20 8,140 9,449

Total non-current liabilities 29,275 47,309

Total liabilities 124,770 147,161

Share capital 22 48,425 48,425

Capital reserves 37,523 41,462

Treasury shares 22 –747 –12,596

Retained earnings 22,554 23,555

Total shareholders’ equity 107,755 100,846




Consolidated cash flow statement

Notes2013

TCHF2012

TCHF

Gain / (loss) 389 –1,234

Depreciation 5 10,132 13,937

Impairments 8 234 –

(Gain) from disposal of property and equipment 6 –170 –

(Decrease) in provisions (including deferred taxes) –8,076 –6,338

Increase / (decrease) in pension plan obligations 21 235 –144

Other non-cash items 420 –2

Decrease in trade accounts receivable 9,233 6,882

Decrease / (increase) in inventories 6,211 –6,921

Increase in trade accounts payable 2,852 6,052

Decrease in other receivables, accrued income and prepaid expenses 2,874 3,146

(Decrease) in other liabilities, accrued expenses and deferred income –828 –852

Cash flow from operating activities 23,506 14,526

Purchase of tangible fixed assets 16 –6,690 –6,036

Proceeds from the disposal of tangible fixed assets 16 225 –

Purchase of intangible assets 17 –288 –431

Investments in financial assets –70 –

Divestments of financial assets 46 –

Cash flow from investment activities –6,777 –6,467

Repayment (–) of current financial liabilities –11,136 –14,049

Repayment (–) / increase in non-current financial liabilities –6,791 6,624

Repayment (–) of other non-current liabilities – –348

Disposition of treasury shares 7,700 –

Cash dividend –2,110 –

Cash flow from financing activities –12,337 –7,773

Translation effects on cash and cash equivalents 2 –27

Increase in cash and cash equivalents 4,392 286

Cash and cash equivalents as at 1 January 49,010 48,751

Cash and cash equivalents as at 31 December 53,404 49,010

Free Cash FlowNotes

2013TCHF

2012TCHF

Total Cash flow from operating activities 23,506 14,526

Total Cash flow from investment activities –6,777 –6,467

Free Cash Flow 16,729 8,059



Shareholders’ equity statement

Retained earnings reserves

Share capitalTCHF

Capital reserves

TCHF

Treasury sharesTCHF

Translation effects

TCHF

Fair value reserves

TCHF

Retained earnings

TCHFTotalTCHF

Balance as at 1 January 2013 48,425 41,462 –12,596 –8,444 –297 32,296 100,846

Cash flow hedges

Changes in fair value recognised in equity

– – – – 164 – 164

Realised losses transferred to income statement – – – – 133 – 133

Net profit for the year for the Group – – – – – 389 389

Dividend – – – – – –2,110 –2,110

Disposition of treasury shares – –4,031 11,731 – – – 7,700

Employee share ownership scheme – 92 118 – – – 210

Translation effects – – – 423 – – 423

Balance as at 31 December 2013 48,425 37,523 –747 –8,021 – 30,575 107,755

Retained earnings reserves

Share capitalTCHF

Capital reserves

TCHF

Treasury sharesTCHF

Translation effects

TCHF

Fair value reserves

TCHF

Retained earnings

TCHFTotalTCHF

Balance as at 1 January 2012 48,425 42,062 –13,610 –8,244 – 33,530 102,163

Cash flow hedges

Changes in fair value recognised in equity

– – – – 47 – 47

Realised gains transferred to income statement – – – – –344 – –344

Net loss for the year for the Group – – – – – –1,234 –1,234

Employee share ownership scheme – –600 1,014 – – – 414

Translation effects – – – –200 – – –200

Balance as at 31 December 2012 48,425 41,462 –12,596 –8,444 –297 32,296 100,846


50

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 2013.

The consolidated financial statements of the Cham Paper Group were approved by the Board of Directors on 19 March 2014 and are subject to approval by the general meeting of shareholders on 7 May 2014.

1.2 Amendment to the accounting principlesPursuant to Swiss GAAP FER 11, deferred tax assets from off-settable losses carried over may be posted as assets if it is likely that the benefit or offsetting against future gains can be realised. The Group has refrained up to now from carrying them as assets as the potential to offset is difficult to estimate, and offsetting is only entered in the accounts at the time the actual benefit is rea-lised. This practice is to continue unchanged. Therefore, it will be clarified in precise terms in the accounting principles. As Swiss GAAP FER permits, losses carried over will not be carried as as-sets, and the benefit will be recorded upon realisation. The precise clarification of the accounts in this point has not led to any changes to the annual accounts for the year to 31 December 2012.

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

Subsidiaries are companies that are directly or indirectly controlled by Cham Paper Group Holding AG. “Control” refers to the pos-sibility of exercising control over financial and operational business activities so as to be able to accordingly derive a benefit from it. This is usually the case when Cham Paper Group Holding AG di-rectly or indirectly owns more than 50% of the voting rights of a company. The minority shareholder interests in the net assets and

the operating result are reported separately. Companies acquired or sold during the financial year are included in the consolidated financial statements from or until the date of transfer of control. The purchase method is used for the consolidation of capital. When a company is acquired, net assets are valued at their cur-rent market value. Any surplus result from the difference between the purchase costs and the revalued net assets of the company acquired is designated as “goodwill”. Goodwill is offset against shareholders’ equity at the time of acquisition without any impact on income. The effects of theoretical capitalisation are shown in the Notes to the consolidated financial statements.

Internal Group transactions and relationships and intercompany gains are eliminated.

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

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

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

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

51 Notes to the consolidated financial statements

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 2013 2012 2013 2012

1 EUR 1.23 1.21 1.23 1.21

1 USD 0.89 0.91 0.93 0.94

1 GBP 1.47 1.48 1.45 1.49

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

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

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

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

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

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

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

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

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


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

Tangible fixed assets Years Tangible fixed assets 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.

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

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

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

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

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

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


The assets and liabilities for deferred income taxes are recorded for the effects under income tax law of all temporary differences aris-ing between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes to the Group. Deferred income taxes are determined using tax rates that apply, or have been announced, on the balance sheet date in the countries where the Group operates. 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.

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

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

1.20 Pension plan obligationsThe employee benefit obligations of the subsidiaries for retire-ment, death and disability are in accordance with statutory require-ments and provisions in the respective countries. The majority of the Group’s employees 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.

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

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

2. Changes in the scope of consolidation

The Cham Paper Group Immobilien AG and Cham Paper Group Management AG companies were merged with Cham Paper Group Switzerland AG in 2013.

The company below was formed in 2013. The percentages shown in brackets show the share voting rights in the company.

– Cham Paper Group Asia Pte Ltd. (100%)

The companies below were liquidated in 2012. The percentages shown in brackets show the share voting rights in the company.

– Cham Paper Group (Deutschland GmbH) Düsseldorf, Germany (100%)

– Cham Paper Group (France) S.à.r.l., Paris, France (100%)– Cham Paper Group (UK) Ltd., Forest Row, UK (100%)


3. Segment reporting

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

2013TCHF

2012TCHF

Europe 177,967 214,085

America 10,715 14,524

Asia 35,504 44,240

Rest of world 7,141 6,888

Net revenue with third parties 1) 231,327 279,737

1) Allocated according to sales destination.

4. Personnel expense

2013TCHF

2012TCHF

Wages and salaries –32,809 –40,899

Employee benefits (incl. pension plan expense) –8,910 –10,034

Other personnel expense –395 –1,026

Total personnel expense excluding travel expenses –42,114 –51,959

Personnel expense is included in the consolidated income statement in the costs of the respective items. As of 31 December 2013, the Group had a headcount of 445.1 FTEs (2012: 544.5 FTEs).

5. Depreciation and amortisation

2013TCHF

2012TCHF

Depreciation of tangible fixed assets –9,258 –13,128

Amortisation of intangible assets –874 –809

Total depreciation and amortisation –10,132 –13,937

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


6. Other operating income/expenses

2013TCHF

2012TCHF

Disbursed insurance benefits – 491

Net gains from disposal of tangible fixed assets 173 –

Reversal of provisions 700 700

Rental income 700 420

Other income 1,912 1,394

Total other operating income 3,485 3,005

Capital and real estate taxes –604 –514

Net losses on disposal of tangible fixed assets –3 –

Total other operating expense –607 –514

7. Restructuring expenses

2013TCHF

2012TCHF

Reversal of restructuring provisions 1,460 2,484

Total restructuring expenses 1,460 2,484

Restructuring provisions for redundancy welfare plans and the early termination of contracts amounting to TCHF 1,460 were liquidated in 2013 (2012: liquidation of TCHF 2,484). The restructuring provisions were formed in 2011 in connection with the reorientation of the Cham Paper Group. A restructuring provision of the order of TCHF 24,983 was formed in the course of discontinuing base paper produc-tion and the switch to pure surface coating, as well as from the conversion of the operating buildings at the Cham site. This included costs for redundancy welfare plans, clearing and disposal work, and expenses incurred in connection with the premature termination of contracts.


8. Financial income and expense

2013TCHF

2012TCHF

Interest income from cash and cash equivalents 110 118

Other financial income 80 67

Total financial income 190 185

Interest expense of bank loans and mortgage notes –1,048 –1,858

Gains on interest rate derivatives, net – 271

Impairment of financial assets –234 –

Other financial expense –521 –747

Total financial expense –1,803 –2,334

Financial result –1,613 –2,149

9. Income taxes

2013TCHF

2012TCHF

Current income taxes –1,118 –801

Deferred income taxes –371 –843

Total income taxes –1,489 –1,644

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 15.21% in 2013 (2012: 15.56%) for the companies in Switzerland and 31.40% (2012: 31.40%) for the companies in Italy.

As of 31 December 2013, the deferred tax assets amounted to TCHF 187 (2012: TCHF 250), which contained no capitalised tax loss carryovers (2012: 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 2013, the Group had tax-deductible loss carryovers of TCHF 90,845 (2012: TCHF 150,894). The tax-deductible loss carryovers expire as follows:

Tax loss carryovers2013

TCHF

Tax effect2013

TCHF

Tax loss carryovers2012

TCHF

Tax effect2012

TCHF

Within 1 year – – 58,901 9,165

Between 1 and 5 years 79,992 12,167 5,330 829

After 5 years 10,853 2,415 86,663 14,342

Total tax-deductible loss carryovers 90,845 14,582 150,894 24,336

In FY 2013 tax-deductible loss carryovers expired in the amount of TCHF 58,696 (2012: TCHF 0).


10. Earnings / loss (–) per share

The undiluted (basic) earnings per share are calculated by dividing the net income as of the reporting period ended on 31 December 2013 and 2012 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.

2013 2012

Weighted average number of registered shares outstanding 705,901 700,782

Results share of shareholders of Cham Paper Group Holding AG) (in TCHF) 389 –1,234

Earnings / loss (–) per share, undiluted (in CHF) 0.55 –1.76

There were no diluting effects in 2013 and 2012.

11. Cash and cash equivalents

2013TCHF

2012TCHF

Cash on hand, cash in bank accounts and in postal accounts 38,404 49,010

Short-term bank deposits 15,000 –

Total cash and cash equivalents 53,404 49,010

12. Derivative financial instruments

Derivative financial instrumentsThe Group uses derivative financial instruments as part of its Group-wide risk management. The derivative financial instruments are reported at their current values. The following table shows the market value (gross) of the derivative financial instruments as at 31 De-cember 2013 and 2012 by type of contract and asset category:

2013Contract or nominal

value not recognisedTCHF

Positive market value recognised

TCHF

Negative market value recognised

TCHF

Held for trading purposes

Foreign currency derivatives – forward exchange contracts 4,413 – 4

Held for hedging purposes

Raw materials derivatives – pulp swaps – – –

Total derivative financial instruments 4,413 – 4

2012Contract or nominal

value not recognisedTCHF

Positive market value recognised

TCHF

Negative market value recognised

TCHF

Held for trading purposes

Foreign currency derivatives – forward exchange contracts 17,495 – 6

Held for hedging purposes

Raw materials derivatives – pulp swaps 31,924 – 297

Total derivative financial instruments 49,419 – 303

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


Raw materials derivatives hedge the cash flow risks of future planned pulp purchases by means of swap transactions. The amount and the timeline of the hedged future planned pulp purchases are based on contractually agreed delivery quantities and dates for speciality papers over a planned timeframe of a maximum of twelve months. As of 31 December 2013, the Group had hedged no future planned pulp purchases (2012: 18,000 tonnes).

The net loss from hedging transactions recognised in the consolidated income statement under “cost of goods and services sold” amounted to TCHF 133 in FY 2013 (2012: net loss TCHF 344).

13. Trade accounts receivable

2013TCHF

2012TCHF

Trade accounts receivable from product deliveries, gross 49,613 58,234

Allowances for bad debts –3,767 –3,671

Total trade accounts receivable, net 45,846 54,563

Insured receivables 35,595 46,136

14. Other current receivables

2013TCHF

2012TCHF

VAT receivables 1,384 2,838

Social security receivables 301 219

Other receivables 911 2,280

Other current receivables 2,596 5,337

15. Inventories

2013TCHF

2012TCHF

Raw materials 15,829 15,561

Work in progress and finished goods 24,447 31,017

Consumables and supplies 1,936 1,848

Spare parts 3,325 2,833

Total inventories 45,537 51,259

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 2013 amounted to TCHF 2,127 (2012: TCHF 2,855).


16. Tangible fixed assets

2013Unde-

veloped properties

TCHF

Land and buildings

TCHF

Machinery, equipment

and vehicles TCHF

Production equipment

TCHF

Construc-tion in

progressTCHF

Total TCHF

Acquisition costs as at 1 January – 92,379 206,087 188,949 1,222 488,637

Transfers between categories – 107 664 97 –868 –

Additions – 645 5,177 262 606 6,690

Disposals – – –9,155 –174 – –9,329

Exchange differences – 396 1,983 703 1 3,083

Acquisition costs as at 31 December – 93,527 204,756 189,837 961 489,081

Cumulative depreciation as at 1 January – –59,830 –178,761 –167,199 – –405,790

Depreciation – –678 –6,765 –1,815 – –9,258

Disposals – – 9,100 174 – 9,274

Exchange differences – –205 –1,595 –384 – –2,184

Cumulative depreciation as at 31 December – –60,713 –178,021 –169,224 – –407,958

Carrying amount as at 31 December – 32,814 26,735 20,613 961 81,123

Carrying amount as at 1 January – 32,549 27,326 21,750 1,222 82,847

2012Unde-

veloped properties

TCHF

Land and buildings

TCHF

Machinery, equipment

and vehicles TCHF

Production equipment

TCHF

Construc-tion in

progressTCHF

Total TCHF

Acquisition costs as at 1 January – 92,301 204,754 189,105 2,539 488,699

Transfers between categories – – 2,757 55 –2,812 –

Additions – 320 3,975 219 1,522 6,036

Disposals – – –4,236 – – –4,236

Exchange differences – –242 –1,163 –430 –27 –1,862

Acquisition costs as at 31 December – 92,379 206,087 188,949 1,222 488,637

Cumulative depreciation as at 1 January – –58,732 –176,504 –162,933 – –398,169

Depreciation – –1,219 –7,421 –4,488 – –13,128

Disposals – – 4,236 – – 4,236

Exchange differences – 121 928 222 – 1,271

Cumulative depreciation as at 31 December – –59,830 –178,761 –167,199 – –405,790

Carrying amount as at 31 December – 32,549 27,326 21,750 1,222 82,847

Carrying amount as at 1 January – 33,569 28,250 26,172 2,539 90,530

The assets were examined on the balance sheet reporting date for any signs of impairment as provided for in Swiss GAAP FER 20. No impairments were applied for 2013 (2012: none).

The carrying values of the pledged tangible fixed assets for financial liabilities amount to TCHF 69,174 (2012: TCHF 42,954).

The fire insurance value of tangible fixed assets amounts to TCHF 768,420 (2012: TCHF 715,458). Tangible fixed assets are insured at their reinstatement value.


17. Intangible assets

2013 SoftwareTCHF

TotalTCHF

Acquisition costs as at 1 January 12,754 12,754

Additions 288 288

Disposals –700 –700

Exchange differences 21 21

Acquisition costs as at 31 December 12,363 12,363

Cumulative amortisation as at 1 January –9,700 –9,700

Depreciation –874 –874

Disposals 700 700

Exchange differences –16 –16

Cumulative amortisation as at 31 December –9,890 –9,890

Carrying amount as at 31 December 2,473 2,473

Carrying amount as at 1 January 3,054 3,054

2012 SoftwareTCHF

TotalTCHF

Acquisition costs as at 1 January 14,595 14,595

Additions 431 431

Disposals –2,259 –2,259

Exchange differences –13 –13

Acquisition costs as at 31 December 12,754 12,754

Cumulative amortisation as at 1 January –11,160 –11,160

Depreciation –809 –809

Disposals 2,259 2,259

Exchange differences 10 10

Cumulative amortisation as at 31 December –9,700 –9,700

Carrying amount as at 31 December 3,054 3,054

Carrying amount as at 1 January 3,435 3,435

The assets were examined on the balance sheet reporting date for any signs of impairment as provided for in Swiss GAAP FER 20. No impairments were applied for 2013 (2012: none).


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

2013TCHF

2012TCHF

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

Cumulative theoretical depreciation –2,322 –2,010

Theoretical impairment – –

Theoretical closing balance, goodwill, 31 December – 312

Theoretical effect on pre-tax result –312 –464

18. Financial liabilities

2013TCHF

2012TCHF

Short-term bank loans 25,063 28,745

Short-term portion of long-term bank loans 10,875 7,000

Total current financial liabilities 35,938 35,745

Mortgage notes 13,940 31,307

Total non-current financial liabilities 13,940 31,307

Total amount of secured financial liabilities 29,575 42,954

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

Finance lease liabilitiesThere were no finance lease liabilities as of 31 December 2013 or 31 December 2012.

19. Other current liabilities

2013TCHF

2012TCHF

VAT liabilities 25 207

Social security liabilities 29 419

Tax liabilities 639 267

Other current liabilities 3,140 2,945

Total other current liabilities 3,833 3,838


20. Provisions

2013Restructuring

TCHFOtherTCHF

TotalTCHF

As at 1 January 18,446 700 19,146

Additions – – –

Reversals –1,463 –700 –2,163

Utilisation –6,348 – –6,348

Exchange differences 21 – 21

As at 31 December 10,656 – 10,656

Shown on the consolidated balance sheet as:

Current provisions 2,516 – 2,516

Non-current provisions 8,140 – 8,140

2012Restructuring

TCHFOtherTCHF

TotalTCHF

As at 1 January 24,953 1,400 26,353

Additions – – –

Reversals –2,483 –700 –3,183

Utilisation –3,998 – –3,998

Exchange differences –26 – –26

As at 31 December 18,446 700 19,146

Shown on the consolidated balance sheet as:

Current provisions 8,997 700 9,697

Non-current provisions 9,449 – 9,449

Various restructuring expenses were incurred in 2011 in restructuring the Cham Paper Group. This extends in particular to costs for redundancy welfare plans, clearing and disposal work, and expenses incurred in connection with the premature termination of contracts.

The other provisions contain accruals for construction measures.


21. Pension plan obligations

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

Economic benefit / economic obligation and pension plan expense

Over-funding/

under-funding

Economic share of organisation

Change as compared

to previous year or

recognised in income during FY

Amounts accrued

during period

Pension plan expense share of

personnel expense

31.12.13TCHF

31.12.13TCHF

31.12.12TCHF

2013TCHF

2013 TCHF

2013 TCHF

2012TCHF

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

Pension funds without any overfunding/underfunding – – – – – – –

Pension funds with overfunding 5,331 – – – 1,012 1,012 1,571

Pension funds with underfunding – – – – – – –

Pension plans without assets of their own – –4,439 –4,143 –235 – 165 179

Total 5,331 –4,439 –4,143 –235 1,012 1,177 1,750

The calculations are based on the last available annual accounts of the pension scheme in accordance with Swiss GAAP FER 26. The pension scheme will conduct a partial liquidation as a result of the restructuring of the company in 2014.

No employer contribution reserves existed in 2013 or 2012.

As of 31 December 2013 there were obligations toward pension plans in the amount of TCHF 127 (2012: TCHF 0).

22. Share capital and treasury shares

2013Number of

registered shares Par value per share

CHF Carrying value

TCHF

Total registered shares issued 745,000 65.00 48,425

Total treasury shares 5,746 65.00 –747

Total shares outstanding 739,254 65.00 –

2012Number of

registered shares Par value per share

CHF Carrying value

TCHF

Total registered shares issued 745,000 65.00 48,425

Total treasury shares 41,655 65.00 –12,596

Total shares outstanding 703,345 65.00 –

At the 101st general meeting of shareholders on 1 May 2013, the shareholders of Cham Paper Group Holding AG approved the distribu-tion of a cash dividend of CHF 3.00 per share payable from the capital contribution reserves. The cash dividend totalling TCHF 2,110 was distributed to the shareholders (2012: no dividend distribution).

The non-distributable, statutory or legal reserves amounted to TCHF 17,452 as of 31 December 2013 (2012: TCHF 16,753).

64 Notes to the consolidated financial statements Notes to the consolidated financial statements

Treasury sharesNumber of treasury shares as at 31 December 2013 and 2012:

2013 2012

Holdings as at 1 January 41,655 44,302

Employee share ownership scheme –909 –2,647

Purchases – –

Sales –35,000 –

Holdings as at 31 December 5,746 41,655

35,000 treasury shares were sold in November and December 2013 at an average sale price of CHF 220 (shares were neither sold nor purchased in 2012).

23. Non-recognised commitments and contingencies

Operating lease commitmentsThe subsidiaries hold numerous contracts for operating leases, mainly for equipment and vehicles as well as for the lease of an external warehouse. Total expenses in FY 2013 for operating leases amounted to TCHF 1,357 (2012: TCHF 835). Future minimum payments under non-cancellable operating leases are due as follows:

2013TCHF

2012TCHF

Within 1 year 686 868

Between 1 and 5 years 816 1,131

Total 1,502 1,999

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:

2013TCHF

2012TCHF

Capital commitments for tangible fixed assets 248 1,084

Capital commitments for intangible assets – 20

Total 248 1,104

Guarantee obligationsAs of 31 December 2013, guarantees given as part of ordinary business operations amounted to TCHF 291 (2012: TCHF 300).

24. Related party transactions

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

Share ownershipFor information on the employee share ownership scheme of the Board of Directors and the Executive Management Board, please refer to the Notes of the financial statements of the Cham Paper Group Holding AG on page 72.

65 Notes to the consolidated financial statements Notes to the consolidated financial statements

Employee share ownership schemeFor information on the employee share ownership scheme of the Board of Directors and the Executive Management Board, please refer to the Notes of the financial statements of the Cham Paper Group Holding AG on page 69.

Compensation of the Board of Directors and the Executive Management BoardFor information on the compensation of the Board of Directors and the Executive Management Board, please refer to the Notes of the financial statements of the Cham Paper Group Holding AG on page 70 f.

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

In the risk assessment of 2013 the following significant risks among others were identified:

Exchange rate risk: Since 2009 the exchange rate of the Swiss franc against the euro has developed to the detriment of the Cham Paper Group. The Swiss mill in particular is confronted with dete-riorating margins and the imminent loss of market share because sales prices cannot be downwardly adjusted any further in many cases. In order to minimise the impact of brief exchange rate fluc-tuations, the Group has developed and implemented a hedging concept. In addition, “natural” hedging has been established dur-ing the past couple of years and purchases made in the currency in which sales are made, where possible. In view of the increasing strength of the Swiss franc as compared to the euro, the Group Executive Board was forced in the second half of 2011 to initi-ate restructuring within the Group and gradually shift base paper production to the Italian mills. The relocation of selected products with high margins was concluded at the end of 2013.

Market / economy: The earnings situation of the Cham Paper Group is subject to cyclical fluctuations in the world economy that may lead to sales revenues drops, unrecoverable debts and over-capacity in markets. Factors like these make it impossible for the company to pass on increases in energy and raw materials costs to customers entirely 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 contin-gency plan to address possible scenarios. Furthermore, capacities in the Group were adapted in line with sales possibilities during the year under review.

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

The Board of Directors of Cham Paper Group Holding AG has ap-proved the risk assessment and monitors the implementation of the actions defined in the catalogue of measures by the Executive Management Board. In the event of the emergence of unexpect-ed individual risks, the Board of Directors is also immediately in-formed of the risks identified and the actions taken and processes implemented by the Executive Management Board to mitigate or eliminate them.

26. 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 19 March 2014 there were no significant events that would negatively impact the statements made in the 2013 financial state-ments or that would have to be disclosed here.


27. Subsidiaries

Company as at 31 DecemberRegistered office Activity Currency

Sharecaptial

TCHF

Directholding

in %

Indirect holding

in %

Industrieverwaltungsgesellschaft Cham AG CH Cham s CHF 50 100% –

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

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

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%

The Cham Paper Group Immobilien AG and Cham Paper Group Management AG companies were merged with Cham Paper Group Swit-zerland AG in 2013. Furthermore, Cham Paper Group Asia Pte Ltd. was formed.

In 2012 Cham Paper Group (Deutschland) GmbH, Cham Paper Group (France) S.à.r.l. and Cham Paper Group (UK) Ltd. were liquidated.

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

All companies are fully consolidated.

67

Financial statements of Cham Paper Group Holding AG

Financial statements of Cham Paper Group Holding AG

Income statement

1 January – 31 DecemberNotes

2013TCHF

2012TCHF

Interest income from cash and cash equivalents 80 83

Interest income from subsidiaries 1,590 1,669

Gains from treasury shares 5 2,117 262

Total income 3,787 2,014

Administrative expense –1,923 –1,178

Interest expense due subsidiaries –14 –22

Other financial expense –22 –8

Tax expense 49 –

Total expense –1,910 –1,208

Net income for the year 1,877 806

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 76 f. of the German version.

68 Financial statements of Cham Paper Group Holding AG

Balance sheet

As at 31 December, prior to appropriation of available earningsNotes

31.12.2013TCHF

31.12.2012TCHF

Assets

Cash and cash equivalents 44,139 34,838

Treasury shares 5 747 6,540

Short-term receivables 42 32

Short-term receivables subsidiaries 1,687 1,763

Prepaid expenses 34 24

Total current assets 46,649 43,197

Participations 4 13,745 13,745

Loans to subsidiaries 62,000 65,000

Total non-current assets 75,745 78,745

Total assets 122,394 121,942

Liabilities

Amounts due third parties – 4

Liabilities to subsidiaries 750 552

Loans from subsidiaries – –

Accrued expenses 1,305 814


Shareholders’ equity

Share capital 48,425 48,425

Legal capital contribution reserves 21,873 23,983

Other legal reserves 22,815 22,815

Reserves for treasury shares 747 12,596

Free reserves 20,732 8,883

Retained earnings brought forward 3,870 3,064

Net income for the year 1,877 806

Total shareholders’ equity 6 120,339 120,572

Total liabilities and shareholders’ equity 122,394 121,942

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 76 f. of the German version.

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

Notes to the Financial Statements of Cham Paper Group Holding AG

1. IntroductionThe annual accounts of Cham Paper Group Holding AG, Fabrikstrasse, 6330 Cham, Switzerland, were prepared applying the transitional provisions for the new accounting law in accordance with the provisions of the Swiss Code of Obligations, prevailing on 31 December 2012, in respect of bookkeeping and accounting.

2. Valuation and accounting methodsSecurities 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 denomi-nated 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.

3. Participation incomeIn 2013 no participation income was realised (2012: none).

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

As of 31 December 2013 no impairment of the participations had been applied (2012: none). The mean value method was applied in the valuation of the participatory interests.

5. Treasury shares35,000 treasury shares were sold in November and December 2013 at an average sale price of CHF 220 (shares were neither sold nor purchased in 2012). Treasury shares are reported at the lower of acquisition cost or market value.

Due to the employee share ownership scheme, members of the Board of Directors were allotted 909 treasury shares in 2013 (2012: 2,311) at the average share price in effect in November 2013 of CHF 231.00 (2012: CHF 157.00). The members of the Executive Manage-ment Board and the Executive Committee respectively were allotted no treasury shares (2012: 336 treasury shares at the average share price in effect in November 2012 of CHF 157.00).

In 2013, treasury shares were reported at acquisition value (2012: lower market value).

The number of treasury shares as at 31 December 2013 was 5,746 (2012: 41,655). The number of treasury shares held by Cham Paper Group Holding AG was determined in accordance with the requirements of Article 659b of the Swiss Code of Obligations. Treasury shares are not entitled to dividends and votes.


6. Changes in shareholders’ equity

Share capitalTCHF

Capital contribution

reservesTCHF

General legal reserves

TCHF

Reserves for treasury

shares TCHF

Free reserves

TCHF

Retained earnings brought forward

TCHFTotal TCHF

Balance as at 1 January 2013 48,425 23,983 22,815 12,596 8,883 3,870 120,572

Adjustment of reserves for treasury shares – – – –11,849 11,849 – –

Reversal of legal capital contribution reserves – –2,110 – – – 2,110 –

Cash dividend – – – –2,110 –2,110

Net income for the year – – – – – 1,877 1,877

Balance as at 31 December 2013 48,425 21,873 22,815 747 20,732 5,747 120,339

Balance as at 1 January 2012 48,425 23,983 22,815 13,610 127,869 –116,936 119,766

Allocation to free reserves – – – – –120,000 120,000 –

Adjustment of reserves for treasury shares – – – –1,014 1,014 – –

Net income for the year – – – – – 806 806

Balance as at 31 December 2012 48,425 23,983 22,815 12,596 8,883 3,870 120,572

As of 31 December 2013 and 31 December 2012, the share capital of Cham Paper Group Holding AG consisted of 745,000 registered shares with a par value of CHF 65.00 each.

7. 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 2013: BURU shareholder group (BURU Holding AG, Philipp Buhofer, Heinz Buhofer, all Hagendorn) with 40.96% (2012: 40.89%) and LB (Swiss) Investment AG, Zurich, with 6.71% (2012: 5.61%).

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

8. Compensation of the Board of Directors and the Executive Management Board

Compensation of Board of Directors members Compensation of current and former members of the Board of Directors in FY 2013 and 2012:

Compensation of Board of Directors members in 2013 FunctionBase salary 1)

TCHF

Attendance fees 1)

TCHF

Consultancy fees 2) TCHF

Compen-sation of

Executive Management

Board TCHF

TotalTCHF

Philipp Buhofer Chairman 135 33 50 – 218

Felix Thöni (from 2013 AGM) Vice Chairman 42 33 20 – 95

Niklaus Peter Nüesch Member 32 19 30 – 81

Hans Schaller (until 2013 AGM) Member 10 11 – – 21

Peter Schmid Member 33 31 163 – 227

Urs Ziegler Member 38 30 5 202 275

Total paid to Board of Directors members 290 157 268 202 917

71Notes to the Financial Statements of Cham Paper Group Holding AG

Compensation of Board of Directors members in 2012 FunctionBase salary 1)

TCHF

Attendance fees 1)

TCHF

Consultancy fees 2) TCHF

Compen-sation of

Executive Committee

TCHFTotalTCHF

Philipp Buhofer Chairman 200 32 49 – 281

René Furler (until 2012 AGM) Vice Chairman 14 7 – – 21

Urs Ziegler (from 2012 AGM) Vice Chairman 42 31 24 17 114

Niklaus Peter Nüesch (from 2012 AGM) Member 21 10 – – 31

Hans Schaller Member 33 29 3 – 65

Peter Schmid Member 34 26 15 – 75

Felix Thöni Member 34 26 19 – 79

Total paid to Board of Directors members 378 161 110 17 666

1) The Board of Directors has the option of receiving part of its compensation (0%–100%) in the form of shares, a premium of 20% being granted for the subscription of shares. The shares are blocked for one year.

2) The consultancy fees relate to compensation for projects, fixed-term engagements and general legal advice.

Compensation of Executive Management Board and Executive Committee respectivelyTotal compensation of the Executive Management Board and the Executive Committee respectively in FY 2013 and 2012:

Total 2013 1)

TCHF

Total 2012 1)

TCHF

Base salary 1,094 1,174

Bonuses including one-off special bonuses 40 212

Payments to pension plans 228 151

Total compensation 1,362 1,537

1) The remuneration paid to executive members of the Board of Directors is contained in the compensation of the Board members.

The content and method of determining compensation and shareholding schemes are described on page 42 f.

The highest compensation paid to an Executive Management Board member or a member of the Executive Committee in FY 2013 was TCHF 849 to Marcello di Giacomo, Managing Director CPG Italia S.p.A. (2012: Peter Studer, CEO of Cham Paper Group, TCHF 417).

In the course of FY 2013, compensation totalling TCHF 1,362 (2012: TCHF 824) was paid to resigning members of the Executive Committee. No severance benefits were disbursed or agreed in 2013 or 2012.

No loans were granted to members of the Board of Directors or the Executive Management Board (Executive Committee) in FY 2013 or 2012.


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

As of 31 December 2013, the Board of Directors members and their related parties owned a total of 322,260 registered shares of Cham Paper Group Holding AG (31 December 2012: 321,887 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 2013

Number of registered shares31 December 2012

Number of registered shares

Philipp Buhofer 1) Chairman 305,156 304,676

Felix Thöni (from 2013 AGM) Vice Chairman 877 739

Niklaus Peter Nüesch Member – –

Hans Schaller Member n.a. 470

Peter Schmid Member 2,391 2,323

Urs Ziegler Member 13,836 13,679

1) Of which 294,859 (2012: 294,859) registered shares held via BURU Holding AG and 2,894 (2012: 2,914) registered shares held by relatives.

As of 31 December 2013, the Executive Management Board and Executive Committee members respectively and their related parties owned no registered shares of Cham Paper Group Holding AG (31 December 2012: 406 registered shares). Share ownership is set out below:

Name Function31 December 2013

Number of registered shares31 December 2012

Number of registered shares

Peter Müller Managing Director CPG Schweiz AG n.a. 376

Marcello di Giacomo Managing Director CPG Italia S.p.A n.a. –

Gerold Zuegg Mill Manager Condino n.a. 30

10. Information about risk assessment

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

73Notes to the Financial Statements of Cham Paper Group Holding AG

Proposed appropriation of available earnings

2013CHF

2012CHF

Retained earnings brought forward from previous year 3,869,602 3,063,119

Net income for the year 1,877,526 806,483

Reversal of legal capital contribution reserves 2,217,762 2,110,035

Total available earnings 7,964,889 5,979,637

Appropriation of available earnings

Dividend –2,217,762 –2,110,035

Balance to be carried forward to new account 5,747,127 3,869,602

Total distributed as dividend 2,217,762 2,110,035

Minus portion consisting of the capital contribution reserves –2,217,762 –2,110,035

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.

74

Sustainability Report – GRI Statement

Sustainability Report – GRI Statement

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

Consulting Sustainability Report– Sustainserv, Zurich and Boston

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

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

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

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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