ANNUAL REPORT 2017 ABOUT US
Burckhardt Compression is the worldwide market leader for reciprocating compressor
systems and the only manufacturer and service provider that covers a full range of recipro-
cating compressor technologies and services. Its customized compressor systems are
used in the upstream oil & gas, gas transport and storage, refinery, chemical, petrochemical
and industrial gas sectors. Burckhardt Compression’s leading technology, broad portfolio
of compressor components and the full range of services help customers around the world
to find the optimized solution for their reciprocating compressor systems. Since 1844 its
highly skilled workforce has crafted superior solutions and set the benchmark in the gas
compression industry.
ABOUT US | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION2 CONTENTS | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
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Financial report
Comments on Financial Report,
Sales and Gross Profit,
Operating income
Financial income and
tax expenses, Net income,
Balance sheet, Cash flow
Consolidated income
statement
Consolidated balance sheet
Consolidated cash flow
statement
Consolidated statement
of changes in equity
Notes to the consolidated
financial statements
Financial statements of
Burckhardt Compression
Holding AG, Winterthur
112
Imprint
Sustainability report
Commitment and leadership,
Economic sustainability
Social sustainability
Environmental sustainability
Corporate governance
Group structure and
shareholders
Capital structure
Board of Directors
Executive Board
Compensation, shareholdings
and loans, Shareholders’
participation rights,
Changes of control and
defensive measures, Auditors
Information policy
Compensation report
Basis, Compensation policy,
Organization, duties and
powers, Compensation system
Compensation paid with
comparative figures for the
previous year
Overview of shareholdings and
allocated/distributed shares
Transactions with the Board
of Directors, the Executive
Board and related parties,
Motions for the Annual General
Meeting, Evaluation of the
compensation system
Auditor’s report of the
compensation report
CONTENTS
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About us
Contents
To our shareholders
Milestones 2017
Figures at a glance
Our company
History, Vision and Mission,
Burckhardt Compression brand
Guiding principles, Strategy
and Mid-Range Targets,
Product development and
innovation
Main applications
Customers, Compressor
systems
Service and components
business
Review of the fiscal year
Financial Performance
Capacity, Acquisitions,
Customers, Research and
development
Brand management
Review of the fiscal year
Systems Division
Financial Performance,
Markets
Integration, “Pulling Systems
Together” for positive change,
Outlook
Review of the fiscal year
Services Division
Financial Performance,
Markets, Further strengthening
of sales structures
Acquisitions and alliances,
New service centers, Outlook
4
TO OUR SHAREHOLDERS | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
TO OUR SHAREHOLDERS
DEAR SHAREHOLDERS
As expected, 2017 was a challenging year for our business. Nevertheless, we can report an
increase in both order intake and sales. Our margins met our expectations for the 2017 fiscal year,
but are significantly lower than our targets for the coming years.
Order intake: growth in both divisions Consolidated order intake amounted to CHF 525.2 mn,
which is 10.6% higher than a year previously. Excluding currency translation effects, there was a
rise of 10.3%. The Systems Division accounted for CHF 319.8 mn of total order intake, or 14.0%
more than in the previous year. This increase is explained primarily by the strong petrochemical
and refinery business. Meanwhile, orders received in the Services Division rose by 5.7% to
CHF 205.4 mn thanks mainly to good growth in the engineering business.
Another increase in sales Burckhardt Compression Group achieved further growth in fiscal
year 2017, booking CHF 594.6 mn in sales (plus 6.6%). The Services Division (plus 10.3%) as well
as the Systems Division (plus 4.7%) contributed. Excluding currency translation effects, sales
increased by 6.4%.
Operating income within guidance Gross profit of CHF 125.1 mn was 4.2% below the figure
reported for the previous year (CHF 130.5 mn). This resulted in a gross margin of 21.0% (previous
year: 23.4%). The decline in the Systems Division’s gross margin from 9.9% to 7.1% was mainly due
to one-time costs in the LNGM business and the sharp rise in material prices, especially in China.
Gross profit at the Services Division went up again to CHF 97.9 mn, which is CHF 3.9 mn higher
than in the previous year; the gross profit margin was 46.6%, lower than in 2016 (49.4%), primar-
ily because of changes in the product mix.
Operating income amounted to CHF 41.7 mn, or 7.0 percent of sales, down CHF 6.0 mn on the
prior-year figure. The Systems Division reported a substantially higher operating loss of
CHF –9.0 mn, compared with CHF –1.5 mn in 2016. The Services Division achieved operating
income of CHF 54.4 mn, compared with CHF 53.0 mn a year previously.
Consolidated net income amounted to CHF 29.0 mn, 10.6% less than in the previous fiscal
year. Net income per share amounted to CHF 8.51 (previous year CHF 9.12).
Equity base even stronger Total assets at the end of the reporting period amounted to
CHF 797.6 mn, which represents a reduction of 1.7%, or CHF 13.4 mn, on the year-back figure.
Current and non-current assets both decreased. The equity ratio increased from the previous
year’s 39.1% to 42.0%. The net financial position at the end of the fiscal year came to CHF –62.1 mn,
a slight improvement of CHF 5.2 mn compared to end-March 2017.
Market position maintained, further cost savings realized Despite the very competitive envi-
ronment, Burckhardt Compression successfully defended its market leadership position in the
reciprocating compressor systems market. The Services Division continued to expand its market
position and achieved largely organic sales growth of 10.3%. It also moved further into additional
markets including Argentina and the Nordic countries. Further progress was made on the cost-
saving and optimization projects started some time ago, such as Value Engineering and Best-Cost
Countries. Overall costs for compressors were reduced as a result.
TO OUR SHAREHOLDERS | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
5
Mid-Range Plan for 2018–2022 approved The Mid-Range Plan adopted in December 2017 sets
different priorities for the two divisions for the next five fiscal years. The Systems Division is
focusing mainly on improving profitability while maintaining global market leadership, whereas
the Services Division is aiming for significant growth. The first priority for growth is service busi-
ness involving compressors made by other manufacturers. This will be built up with the help of
operational initiatives, including the implementation of a global ERP platform, the further expan-
sion of our local and regional presence, and the expansion of service structures for the marine
business. Ongoing digitalization will be used for new services and applications in both divisions.
The Systems Division is aiming for sales of CHF 340 mn by 2022, with an EBIT margin of 0% to
5%, while the Services Division is targeting sales of CHF 360 mn and an EBIT margin of 20% to
25%. This strategy is based mainly on organic growth, which includes the complete takeover of
Shenyang Yuanda Compressor and Arkos Field Services.
Outlook for fiscal 2018 We believe that key sales markets will continue to recover in fiscal
year 2018, making customers more willing to invest. With sales expected to match the 2017 level,
we expect a slight increase in operating income and net profit.
Valentin Vogt
Dividend The Board of Directors will propose a dividend of CHF 6.00 per share (CHF 7.00 in the
previous year) at the annual general meeting. This corresponds to a payout ratio of 70.5% of net
income (previous year according to Swiss GAAP FER 76.8%), which is at the upper end of the tar-
geted range of 50% to 70%.
First annual accounts according to Swiss GAAP FER Standard The annual financial state-
ments contained in this report are the first to be based on the Swiss GAAP FER accounting stan-
dard. Prior-year figures (fiscal year 2016) have been recalculated on the basis of this standard to
provide proper comparability between this year and last.
Thank you The Board of Directors and Executive Board would like to thank our approximately
2’200 employees around the world for their exceptionally motivated and greatly valued work dur-
ing the year under review. We would like to thank our over 4’000 shareholders for the confidence
they have shown in us, even in times that have not been easy for the company. Special thanks
also to our customers and suppliers for the long-term relationship, in a spirit of mutual respect.
Yours sincerely,
Marcel Pawlicek
Valentin Vogt
Chairman of the Board of Directors
Marcel Pawlicek
CEO
Winterthur, May 29, 2018
6
MILESTONES 2017 | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
MILESTONES 2017
New sales office in Argentina
Burckhardt Compression opened a sales
office in Buenos Aires, Argentina, at
the start of 2018. In addition to Argentina,
the new South American office covers
Chile, Uruguay, Paraguay and Bolivia.
→ Page 4
Opening of the Global Support Center
in India
Burckhardt Compression opened its new
Global Support Center in Pune, India,
in August 2017. The center provides the
company with support in IT, engineering,
contracting and sales, helping to lower
costs and extended response times.
→ Page 28
New Mid-Range Plan launched
At the start of January 2018, Burckhardt
Compression presented investors its
new Mid-Range Plan for fiscal years
2018 to 2022. The main objectives are to
improve profitability while maintaining
global market leadership in the Systems
Division, and to secure significant
growth in the Services Division. The latter
is to be achieved through the ongoing
expansion of our local and regional
presence, as well as by creating service
structures for the marine business.
→ Page 11
MILESTONES 2017 | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
7
Service Center Nordics
The new Service Center opened in
Kungälv near Gothenburg, Sweden,
in collaboration with Kompressor-
teknik ML AB, repairs and services
reciprocating compressors made
by Burckhardt Compression and other
manufacturers. This brings the
company closer to customers in the
Nordic countries, allowing it to
be more responsive to their needs.
→ Page 36
Stronger presence in Canada
Burckhardt Compression took over
Canadian company CSM Compressor
Supplies & Machine Work Ltd., which is
based in Edmonton and Drumheller,
Alberta, in June 2017. This acquisition
expands our service infrastructure in
Western Canada. CSM can look back on
35 years of experience in the spare
parts and repair business. The acquisition
allows further development of our pres-
ence in the market for servicing compres-
sors in Canadian upstream business.
→ Page 36
First service contracts for ships
with remote diagnostics
During the year under review, Burckhardt
Compression signed multiyear service
agreements with several operators of
LNG tankers; these agreements include
remote diagnosis of Laby®-GI Compres-
sors with PROGNOST-NT systems.
PROGNOST remote diagnostics systems
provide seamless monitoring of the
mechanical condition of the equipment,
as well as of the gas compression in
all cylinders. If there are any irregulari-
ties in the operation of the compres-
sors, it will be displayed on the ship and
the PROGNOST Systems Customer
Support phone line can be called around
the clock.
→ Page 35
8
FIGURES AT A GLANCE | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
FIGURES AT A GLANCE 1
ORDER INTAKE
CHF mn
500
400
300
200
100
0
SALES
CHF mn
6 00
500
400
300
200
100
0
OPERATING INCOME (EBIT)
CHF mn
100
80
60
40
20
0
08 09 10 11 12 13 14 15 16 17
08 09 10 11 12 13 14 15 16 17
08 09 10 11 12 13 14 15 16 17
NET INCOME
CHF mn
SHAREHOLDERS’ EQUITY
NET FINANCIAL POSITION
CHF mn
CHF mn
80
70
60
50
40
30
20
10
0
350
300
250
200
150
100
50
0
160
140
120
100
80
60
40
20
0
–20
–40
–60
–80
08 09 10 11 12 13 14 15 16 17
08 09 10 11 12 13 14 15 16 17
08 09 10 11 12 13 14 15 16 17
SHARE PRICE
SINCE IPO
BCHN
SPI
FISCAL YEAR 2017
BCHN
CHF
500
450
400
350
300
250
200
150
100
50
0
CHF
500
450
400
350
300
250
200
150
100
50
0
2006 2007
2008 2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
04/01/2017
CHF 272.00
03/31/2018
CHF 304.80
1 The consolidated accounts have been prepared in accordance with Swiss GAAP FER since April 1, 2017.
The previous period (fiscal year 2016) has been restated accordingly to enable comparison with the year under preview.
FIGURES AT A GLANCE | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
9
Sales
Gross profit
in % of sales
Sales
Gross profit
in % of sales
Sales
Gross profit
in % of sales
in CHF mn
Order intake:
– Systems Division
– Services Division
Total
Sales and gross profit:
– Systems Division
– Services Division
Total
Operating income (EBIT)
in % of sales
Net income
in % of sales
Depreciation and amortization
Cash flow:
– from operating activities
– from investing activities
– from financing activities (incl. translation differences)
Total
Total balance sheet assets
Non-current assets
Current assets
Shareholders’ equity
in % of total balance sheet assets
Net financial position (in CHF mn)
Headcount as per end of fiscal year (full-time equivalents)
Total remuneration Board of Directors (in TCHF)
Total remuneration Executive Board (in TCHF)
Share price as per end of fiscal year (in CHF)
Market capitalization (in CHF mn)
Market capitalization/shareholders’ equity (ratio)
Net income per share (EPS) (in CHF)
Dividend per share (in CHF)
Number of issued shares
2015
2016 1
2017 1
Change
2016/2017
351.4
171.8
523.2
332.4
73.0
22.0%
154.8
78.7
50.8%
487.2
151.7
31.1%
73.0
15.0%
55.5
11.4%
280.6
194.3
474.9
367.2
36.5
9.9%
190.5
94.0
49.4%
557.7
130.5
23.4%
47.7
8.6%
32.5
5.8%
319.8
205.4
525.2
384.4
27.2
7.1%
210.2
97.9
46.6%
594.6
125.1
21.0%
41.7
7.0%
29.0
4.9%
14.0%
5.7%
10.6%
4.7%
–25.5%
10.3%
4.1%
6.6%
–4.2%
–12.7%
–10.6%
15.3
20.4
21.3
4.4%
40.7
–63.1
–30.8
–53.2
708.0
247.2
460.8
355.1
50.2%
93.2
1'432
513.0
4'499.0
329.75
1'121.2
3.2
16.34
10.00
45.9
–146.8
50.5
–50.4
811.0
257.6
553.4
317.1
39.1%
–67.2
2’107
492.0
2’461.0
271.25
922.3
2.9
9.12
7.00
44.4
–17.2
–27.0
0.2
797.6
251.8
545.8
335.2
42.0%
–62.1
2'214
569.0
2’378.0
304.80
1'036.3
3.1
8.51
6.00
3’400’000
3’400’000
3’400’000
–3.3%
–1.7%
–2.2%
–1.4%
5.7%
5.1%
15.7%
–3.4%
12.4%
12.4%
6.3%
–6.7%
–14.3%
1 The consolidated accounts have been prepared in accordance with Swiss GAAP FER since April 1, 2017.
The previous period (fiscal year 2016) has been restated accordingly to enable comparison with the year under preview.
10
OUR COMPANY | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
OUR COMPANY
HISTORY
Our company history began 174 years ago. On January 9, 1844,
founder Franz Burckhardt laid the foundation for success by
purchasing the first company premises in Basle. In its early
years, Burckhardt’s mechanics workshop manufactured
machines for the textile industry. Over the years, Burckhardt
expanded his field of activity to general mechanical engineer-
ing. In 1856, the company started producing steam engines.
In 1878, the first reciprocating compressor was developed and
the first sales recorded in 1883. As additional capital was
needed to finance the construction of the new factory on Dor-
nacherstrasse in Basle, the “Engineering Works Burckhardt Ltd.”
was established in Basle in 1890 by August Burckhardt, who had
taken over the company from his deceased father Franz.
Another milestone was achieved in 1913 with the delivery of
the first ammonia synthesis compressor with an end pressure
of 300 bar to BASF in Ludwigshafen, Germany – a customer
that had purchased one of Burckhardt’s first compressors back
in 1885. In 1935, Sulzer supplied the Hürlimann Brewery in
Zurich with the first Sulzer labyrinth Piston Compressor and in
1951, the company received an order from Imperial Chemical
Industries (ICI) for 11 Hyper Compressors for the production of
low density polyethylene (LDPE) with an end pressure of
1’500 bar. After several years’ cooperation between Burckhardt
and Sulzer, the Engineering Works Burckhardt was taken over
by Sulzer and became a subsidiary of the Sulzer Group on May 8,
1969. In 1982, as part of an intensified cooperation, the recipro-
cating compressor activities of the Sulzer Group were consoli-
dated under one legal entity, the Sulzer-Burckhardt Engineering
Works Ltd. The company celebrated its 150 th anniversary
in 1994. In the process of restructuring the entire Group in 1999,
Sulzer decided to consolidate the activities of Sulzer-Burck-
hardt Switzerland in Winterthur. Activities in Basle were relo-
cated to Winterthur and the building on Dornacherstrasse in
Basle was sold.
In 2000, Sulzer decided to concentrate its activities on four
divisions. As Sulzer-Burckhardt did not fit in with this new strat-
egy, the decision was made to divest Sulzer-Burckhardt.
Together with the financial investor Zurmont Finanz AG, five
members of management purchased Sulzer-Burckhardt Engi-
neering Works Ltd. on April 30, 2002. In the course of separat-
ing from Sulzer, Sulzer-Burckhardt became Burckhardt Com-
pression in May 2002. In 2006, Zurmont decided to divest its
shares in Burckhardt Compression by means of an IPO. Our
company has been listed on the SIX Swiss Exchange since
June 26, 2006, and at the end of the year under review it was
one of the 90 largest listed companies in Switzerland by mar-
ket capitalization.
In May 2016, the Group acquired a 60% majority interest in
Shenyang Yuanda Compressor, the leading manufacturer of
reciprocating compressor systems in China. In June 2016,
Burckhardt Compression introduced a divisional organizational
system with two divisions, Systems and Services, which enables
it to address customer needs even better than before. In Decem-
ber 2017, Burckhardt Compression signed off its Mid-Range Plan
for fiscal years 2018 to 2022. This sets the company’s strategic
direction for the next five years and defines its targets.
VISION AND MISSION
While developing its 2018–2022 Mid-Range Plan, Burckhardt
Compression formulated a new vision for the whole group as
well as a specific mission for each division.
Vision
We are our customers’ first choice for gas compression solu-
tions across the entire product life cycle.
Mission
Systems Division: We deliver the optimum gas compression
solution for each customer.
Services Division: We create customer convenience and trust
while ensuring the reliability and efficiency of our customers’
compressors across the entire product cycle.
BURCKHARDT COMPRESSION BRAND
Burckhardt Compression and its umbrella brand stand for qual-
ity and worldwide leadership in innovative reciprocating com-
pressor systems and technology. The brand image is supported
by technology that is distinguished by lowest life cycle costs,
Burckhardt Compression’s globally recognized specialists in
the various technical fields with outstanding problem-solving
competencies and an unyielding commitment to premium qual-
ity – be it in new compressor systems, compressor components
or service and maintenance. Our collaboration with external
and internal customers is dedicated, solutions-oriented and dis-
tinguished by genuine enthusiasm for our reciprocating com-
pressors. The umbrella brand and its corresponding graphic
mark in the form of the red-blue, stylized compressor valve
plate have been internationally registered for many years.
Burckhardt Compression’s brand and patent attorneys will vig-
orously and steadfastly defend the company against any imita-
tions, counterfeiting or patent infringements. There are clear
rules governing the use of Burckhardt Compression brands and
OUR COMPANY | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
11
their perception is developed and promoted through active
usage in our corporate and marketing communication activi-
ties.
grams will be continued. The division will also diversify its pres-
ence in the various market segments and introduce new appli-
cations.
The Services Division intends to grow its sales, including
sales by Arkos Field Services, to CHF 360 mn by 2022. It has
targeted a range of 20% to 25% for its EBIT margin. The divi-
sion’s growth priorities lie in service business for compressors
made by other manufacturers. To ensure continued success in
this area, Burckhardt Compression will launch further opera-
tional initiatives, implementing a global ERP platform, for
example, expanding its local and regional footprints, and fur-
ther improve service structures geared to the marine business.
In both divisions, digitalization will be used to support new
business models, applications and optimized production.
PRODUCT DEVELOPMENT AND
INNOVATION
Innovation management and systematic product development/
management serve to strengthen our competitive position and
enable us to optimally address new applications for reciprocat-
ing compressors by developing and delivering customer-ori-
ented solutions. Burckhardt Compression’s prime objectives are
to develop reciprocating compressors and components with the
lowest life cycle costs and maintain its technological leader-
ship in the reciprocating compressor business. Quality, technol-
ogy, materials and design specifications are all geared towards
high operational reliability, long service intervals and easy
maintenance – the overall aim being to achieve the lowest pos-
sible operating costs. Burckhardt Compression’s product devel-
opment activities have been guided by a stage-gate process for
many years. This process is first applied in the idea generation
and screening phase and continues during the initial evaluation
of product viability and market attractiveness followed by the
elaboration of product performance specifications, market
analysis and then the actual development and subsequent
launch of the product. After a product has been successfully
developed and placed into operation, a concluding review of the
development project is conducted. The major milestones in the
stage-gate process must be presented to and accepted by the
“Innovation Board”, which is headed by the members of the
Executive Board.
GUIDING PRINCIPLES
In response to the Group’s substantial growth in recent years
and the resultant internationalization of the company, Burck-
hardt Compression updated the “BC Code” in the previous fiscal
year and issued the revised policy document as “Values and
Behaviors”. This sets out the basic principles of our corporate
culture and takes into account the intensified and increasingly
virtual way that our various global companies and locations col-
laborate with each other. In this context it is vital that all our
employees share a common understanding of the values and
principles that guide our actions.
STRATEGY AND MID-RANGE TARGETS
Burckhardt Compression is the world’s leading manufacturer of
reciprocating compressors, with two divisions, Systems and
Services. A new Mid-Range Plan for the next five fiscal years
(2018 to 2022) was developed during the year under review. This
states that Burckhardt Compression will continue to expand its
market position through organic growth and selective acquisi-
tions, with the ultimate objective of strengthening its market
leadership. In the service business in particular, geographic
presence and proximity to customers are the keys to success,
which is why the Group acquired Canadian company CSM Com-
pressor Supplies & Machine Work Ltd. during the year under
review. In the compressor systems business, the Mid-Range
Plan includes a selective expansion of activities to new applica-
tions. For example, Shenyang Yuanda Compressor, the company
in which a 60% interest was acquired in 2015, enhances the
Group’s offering of compressors for coal-to-chemical and fertil-
izer applications in China.
Mid-Range Plan for 2018 to 2022
The new Mid-Range Plan was signed off by the Board of Direc-
tors at the beginning of December 2017 and presented to inves-
tors on January 9, 2018. It targets overall sales of around
CHF 700 mn for fiscal 2022, with a more or less even split
between the two divisions, and an EBIT margin of 10% to 15%.
The Systems Division, which will focus on improving profit-
ability while maintaining its global market leadership, is target-
ing sales for 2022 of CHF 340 mn, with an EBIT margin of 0% to
5%. Global sourcing will be intensified and cost-cutting pro-
12
OUR COMPANY | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
MAIN APPLICATIONS
Upstream oil & gas
Despite increasing energy efficiency, global demand for energy
is growing, spurring efforts to discover new deposits of oil and
gas as well as new ways of improving recovery from existing
wells. Moreover, producers must comply with increasingly strin-
gent regulations requiring the environmentally responsible dis-
posal of toxic and non-toxic gases that arise during extraction
and production.
Burckhardt Compression provides onshore and offshore solu-
tions for several applications. High-quality, low-speed recipro-
cating compressors (compliant with API standard 618) have been
developed for these applications, which include enhanced oil
recovery methods (EOR). EOR is a technique where pressurized
gas is injected into productive fields either directly through
existing well bores (gas lift) or through separate well bores (gas
injection), resulting in significantly higher recovery rates. Recov-
ery rates are typically around 30% using conventional produc-
tion methods and often be increased to more than 60% using
EOR methods. Natural gas is used to enhance recovery rates and
it is often mixed with other gases. EOR methods can also be com-
bined with environmentally responsible methods for disposing of
unwanted gases, which in the past were usually burnt off, pollut-
ing the surrounding environment and atmosphere. These gases
often contain aggressive, sulfuric components and Burckhardt
Compression is an expert at building compressors for compress-
ing such gases. In deepwater applications, CO2 injection is also
used for EOR methods with pressure levels of up to 600 bar. On-
site preprocessing applications in the oil and gas industries offer
additional opportunities for Burckhardt Compression. In these
applications, individual components of extracted gas are sepa-
rated at the wellhead to facilitate the subsequent gas transport
through the gathering lines to centralized points.
Gas transport and storage
Demand for environmentally friendly natural gas as a fossil fuel
will continue to increase over the long term. Replacing the
liquid fossil fuels of diesel, gasoline and oil with natural gas
would reduce global carbon dioxide emissions by about 25%.
That fact and more stringent emissions regulations, especially
in the marine shipping industry, are additional incentives to
switch to natural gas as a source of fuel. Moreover, coal-fired
and nuclear power plants are increasingly being replaced with
gas power plants amid widespread efforts to decarbonize grow-
ing economies and diversify energy supply in many regions of
the world. The development of new sources of natural gas, such
as shale gas deposits, is increasing the volume of international
trade in natural gas, and transport and storage volumes are
therefore rising as well. This is especially evident in the non-
pipeline mode of gas transportation via LNG carriers.
More than 40% of total natural gas transport volumes
traded and transported worldwide are liquefied, which reduces
gas transport volumes by a factor of 600. The process chain
consists of natural gas production, purification and liquefac-
tion, ship loading, transportation and subsequent off-loading,
storage, and regasification and, ultimately, injection into a gas
distribution grid. Burckhardt Compression offers unique solu-
tions for compressing and reliquefying boil-off gas (BOG) from
liquid gases, for gas injection systems for two- or four-stroke
marine diesel engines, and for recovering or storing natural gas
and other hydrocarbons at land or offshore installations.
Refinery
Refineries process crude oil into products such as gasoline, ker-
osene, diesel, liquefied petroleum gas (LPG) as well as solvents
and lubricants. Worldwide demand for these products will con-
tinue to grow over the long term and most of the growth in
demand will stem from non-OECD countries, especially China
and India. Additional factors encouraging investment in the
refining industry are more stringent environmental regulations,
the need for cost reductions, plant expansion trends and the
need to process both lower-quality grades of crude oil and, in
technologically more advanced processes, heavy petroleum by-
products. New refineries are being built in areas where new pro-
cessing facilities are required. For state-owned refineries, stra-
tegic issues regarding location and supply security are also of
considerable importance. Burckhardt Compression offers Pro-
cess Gas Compressors with the highest possible availability
and lowest life cycle costs for all relevant oil refining processes
that require gas (mostly hydrocarbon gas/hydrocarbon mix-
tures).
Petrochemical/chemical industry
The production of a vast range of petrochemical and chemical
products such as polyolefins (polymers), lacquers, synthetic
rubbers, adhesives and dyes, solvents, paints, fertilizers, deter-
gents or textiles entails, among other things, the processing of
oil, natural gas and even coal. Demand for petrochemical and
chemical products, especially for polyolefins, will steadily
increase worldwide over the long term. In this application area,
too, companies will continue their efforts to reduce costs by
replacing smaller scale plants with larger ones, establishing
strategic production sites, and extending value-added chains.
An additional source of growth is the growing production of nat-
ural gas from shale formations worldwide. In terms of poten-
tial, the USA is the leading market in this segment. Burckhardt
Compression offers several product lines with individual, reli-
able and benchmark-setting reciprocating compressor solu-
tions for a broad spectrum of applications.
OUR COMPANY | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
13
Industrial gases
Industrial gases such as argon, helium, carbon dioxide, carbon
monoxide, oxygen, nitrogen and hydrogen are produced in air
separation or hydrogen generation plants. The end market for
industrial gases is quite broad, encompassing industries as
diverse as metalworking and metallurgy, chemical companies,
energy technology, food manufacturing, green technology,
glass, pulp and paper manufacturing, electronics, construction,
rubber and plastics processing, and healthcare. Growth drivers
are regional growth and industry-specific growth. Companies
that supply the energy sector (refineries) with hydrogen are
expected to be a particularly strong growth driver. This is
another example of an application area where Burckhardt Com-
pression is profiting from the increased extraction of shale gas
deposits, especially in the USA. Burckhardt Compression’s
dependable compressors are used in a wide variety of applica-
tions to process industrial gases.
CUSTOMERS
The customers we serve include some of the largest companies
in the world active in the oil and gas industry, gas transporta-
tion, the petrochemical/chemical industry and in the industrial
gas sector, as well as a considerable number of general engi-
neering companies that design and construct plants and indus-
trial complexes for our end-customers.
COMPRESSOR SYSTEMS
Burckhardt Compression’s reciprocating compressors are the
key part of compressor systems which, in turn, are part of
large-scale processing plants.
Laby® – Labyrinth Piston Compressors
The Labyrinth Piston Compressor offers unrivalled reliability
and availability thanks to the unique labyrinth sealing system
on its piston and piston rod gland, which enables oil-free and
contact-free compression. The result is an extended MTBO
(mean time between overhaul), which has a positive impact on
reliability and operating cost. This prevents piston ring debris
from contaminating the gas as well as friction-induced hot
spots. The Laby® Compressor is designed to compress bone-
dry, dirty, abrasive and other gases. The gastight casing reduces
gas emissions and losses to the environment to virtually zero.
The Laby® Compressor easily manages the compression of LNG
boil-off gas at suction temperatures down to –160 °C (–250 °F).
Laby®-GI Compressors
The Laby®-GI Compressor has a fully balanced design that
eliminates unbalanced moments and forces, so it can be used
on offshore vessels and installations. Strict guidelines on maxi-
mum allowable vibration levels on deck structures must be
observed for such applications. The Laby®-GI Compressor is
mainly used for the compression of LNG boil-off gas. The unique
combination of labyrinth seal design and tried-and-tested ring
seal technology makes Laby®-GI Compressors the solution of
choice for both low-temperature and high-pressure applica-
tions. The proven technology guarantees maximum efficiency
and lowest life cycle costs. Depending on the operating condi-
tions, Laby®-GI Compressors can feature either lubricated or
non-lubricated compression.
Process Gas Compressors API 618
Process Gas Compressors built by Burckhardt Compression are
synonymous with unrivalled availability and long operating
times. Optimal sizing and the use of top quality compressor
components ensure low operating and maintenance costs. The
design, the advanced Swiss technology and superb quality
together with the robust construction translate into excellent
reliability and very low life cycle costs.
The process gas compressor is built according to individual
application specifications in accordance with the API 618 guide-
lines (5th edition). Burckhardt Compression offers non-lubri-
cated and lubricated Process Gas Compressors, horizontal and
vertical. They are especially suited for high-pressure compres-
sion of hydrogen, hydrocarbon and corrosive gases.
In order to satisfy the demanding processes in refineries,
Burckhardt Compression has extended its range and now offers
a complete portfolio of Process Gas Compressors for refineries.
In addition to our premium product line, which focuses on low-
ering operating costs through optimized design and high-qual-
ity components, we now also offer a robust, modular and
CAPEX-optimized product line. Thanks to Burckhardt Compres-
sion’s worldwide engineering and service organization, we can
take advantage of the Group’s own competence centers all over
the world, offering a complete solution that is focused fully on
the needs of the customer.
Hyper Compressors
The Hyper Compressor is a high-pressure reciprocating com-
pressor for low density polyethylene (LDPE) plants with a dis-
charge pressure of up to 3’500 bar. Burckhardt Compression
has established an outstanding track record with more than
56 years of experience in building Hyper Compressors. These
compressors are distinguished by a long operational life and
high safety standards, which can be traced to their unique con-
struction design and Burckhardt Compression’s global one-stop
maintenance and service capabilities.
14
OUR COMPANY | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
The most powerful compressor in the world, driven by a
33’000 kW electric motor and compression capacity of
400’000 metric tons of ethylene a year, was delivered by Burck-
hardt Compression in 2016. Burckhardt Compression is the
world market leader for Hyper Compressors.
Standard High Pressure Compressors
Standard High Pressure Compressors from Burckhardt Com-
pression are extremely robust and reliable reciprocating com-
pressors with a compact design and low weight. They are deliv-
ered skid-mounted with structural supports that dampen
vibrations, so there is no need for a special foundation. Due to
the low differential pressure per stage, greater cylinder utiliza-
tion and lower temperature can be achieved. The result is high
compression efficiency, low wear and less maintenance costs.
The air- and water-cooled compressors are used to compress
air, hydrogen, nitrogen, helium, argon, natural gas and other
non-corrosive gases and gas mixtures at land facilities and on
ships. The Standard High Pressure Compressors are smaller
than the other compressors in Burckhardt Compression’s port-
folio of reciprocating compressors, offering a maximum power
of 220 kW and discharge pressure of up to 400 bar and suction
volumes of up to 1’500 Nm3/h.
SERVICE AND COMPONENTS BUSINESS
The Services Division operates as a holistic provider of service
expertise for reciprocating compressors and the associated
system technology. As well as a comprehensive portfolio of ser-
vices, the division offers a high level of availability of original
spare parts and a wide range of engineering know-how, from
simple modification to large conversions and revamps, to turn-
key solutions. Experienced field service representatives ensure
close customer interaction and speedy responses. Depending
on the size of the project and site, Burckhardt Compression also
offers a 24/7 shift operation, so the systems can be put into
operation even faster. We also provide reliable, expert monitor-
ing and diagnostic solutions as well as advisory services, all
from a single source.
Comprehensive engineering, revamp and repair expertise
Reliability, availability and cost-effectiveness are crucial for
operators of reciprocating compressor systems, which is why
they appreciate expert partners with extensive knowledge of
such systems who can offer them sound advice. Burckhardt
Compression stands out from other manufacturers and service
providers because of its comprehensive in-house expertise.
Individual, complementary packages of services are offered for
all makes of reciprocating compressors and system auxiliaries,
even if made by another manufacturer. Our internal specialists
come from various technical fields and use proprietary,
advanced software tools to model, calculate and optimize
reciprocating compressor performance, regardless of make or
brand. They are capable of resolving even highly complex tech-
nical problems cost-effectively and efficiently. A highly moti-
vated team carries out revamp projects of any complexity to
the full satisfaction of customers and can prolong the operat-
ing life of older compressors by retrofitting them with the lat-
est technology.
Original spare parts for optimal compressor operation
Original spare parts backed by Burckhardt Compression’s man-
ufacturing guarantees stand for superior quality and ensure
low life cycle costs as well as the optimal operation of com-
pressor systems. These top-quality compressor components
are tailored to specific system requirements. Compressor com-
ponents such as valves, seals and packings are subject to wear
and tear, so these parts largely determine the duration of ser-
vice intervals and operational availability and, ultimately, the
overall life cycle costs of reciprocating compressors. Besides
operational availability, Burckhardt Compression stands by its
commitment to supply compressor parts and components over
a long-term period. This business is being methodically
expanded in close collaboration with numerous operators of
reciprocating compressors.
OUR COMPANY | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
15
Continuous monitoring enhances operating safety
Preventive services and rapid response times, based on online
diagnostic data and analyses, play a vital role in optimizing
compressor availability. Reliable condition monitoring and diag-
nostic systems for reciprocating compressors and equipment,
integrated within the top-level systems for monitoring an entire
production facility, are effective tools for enhancing the operat-
ing safety and prolonging the service intervals of a compressor
system. Permanent machine diagnosis detects potential and
actual irregularities at an early stage and thus helps to avoid
costly and unscheduled downtime. Other advantages include
the optimization of operating parameters and central control
and monitoring of compressors that are in operation at differ-
ent sites. The diagnostic systems made by our subsidiary
PROGNOST Systems GmbH are designed for use with recipro-
cating compressors as well as with other types of rotating
machinery. They are globally the technology leader and assure
day after day in the oil, gas and chemicals industry the value
for money and operational reliability.
Field Service – being close to the customer
Geographic proximity, being close to wherever the compressor
systems are installed, and cultivating relationships built on
trust are likewise vital in our concept of success. Having a local
presence simplifies interaction with the customer, shortens the
supply chain and reduces field service hours. Burckhardt Com-
pression is active in all relevant markets through its own sub-
sidiaries and its business partners. It currently operates 50 Ser-
vice Centers around the world and boasts a strong regional
reach. This service network will continue to expand going for-
ward.
16
NEW HORIZONS
GOING FORWARD WITH CLEAR GOALS
With the 2018–2022 Mid-Range Plan, the Systems Division
aims to improve its profitability while consolidating its
market leadership. The Services Division intends to secure
significant growth, especially in services for reciprocating
compressors made by other manufacturers. Both divisions
will use digitalization to support new business models,
applications and optimized production.
17
18
REVIEW OF THE FISCAL YEAR | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
REVIEW OF THE FISCAL YEAR
FINANCIAL PERFORMANCE
Order intake: growth in both divisions
Consolidated order intake amounted to CHF 525.2 mn, which is
10.6% higher than a year previously. Excluding currency transla-
tion effects, there was a rise of 10.3%. The Systems Division
accounted for CHF 319.8 mn of total order intake, or 14.0% more
than in the previous year. This increase is explained primarily by
the strong petrochemical and refinery business. Meanwhile,
orders received in the Services Division rose by 5.7% to
CHF 205.4 mn thanks mainly to good growth in the engineering
business.
Another increase in sales
Burckhardt Compression Group achieved further growth in fis-
cal year 2017, booking CHF 594.6 mn in sales (plus 6.6%). The
Services Division (plus 10.3%) as well as the Systems Division
(plus 4.7%) contributed. Excluding currency translation effects,
sales increased by 6.4%.
Operating income within guidance
Gross profit of CHF 125.1 mn was 4.2% below the figure reported
for the previous year (CHF 130.5 mn). This resulted in a gross
margin of 21.0% (previous year: 23.4%). The decline in the Sys-
tems Division’s gross margin from 9.9% to 7.1% was mainly due
to one-time costs in the LNGM business and the sharp rise in
material prices, especially in China. Gross profit at the Services
Division went up again to CHF 97.9 mn, which is CHF 3.9 mn
higher than in the previous year; the gross profit margin was
46.6% lower than in 2016 (49.4%), primarily because of the
change in the product mix.
Operating income amounted to CHF 41.7 mn, or 7.0 percent
of sales, down CHF 6.0 mn on the prior-year figure. The Systems
Division reported a substantially higher operating loss of
CHF –9.0 mn, compared with CHF –1.5 mn in 2016. The Services
Division achieved operating income of CHF 54.4 mn, compared
with CHF 53.0 mn a year previously.
Consolidated net income amounted to CHF 29.0 mn, 10.6%
less than in the previous fiscal year. Net income per share
amounted to CHF 8.51 (previous year CHF 9.12).
Equity base even stronger
Total assets at the end of the reporting period amounted to
CHF 797.6 mn, which represents a reduction of 1.7%, or
CHF 13.4 mn, on the year-back figure. Current and non-current
assets both decreased. The equity ratio increased from the pre-
vious year’s 39.1% to 42.0%. The net financial position at the end
of the fiscal year came to CHF –62.1 mn, a slight improvement
of CHF 5.2 mn compared to end-March 2017.
Market position maintained, further cost savings realized
Despite the very competitive environment, Burckhardt Com-
pression successfully defended its market leadership position
in the reciprocating compressor systems market. The Services
Division continued to expand its market position and achieved
largely organic sales growth of 10.3%. It also moved further into
additional markets, including Argentina and the Nordic coun-
tries. Further progress was made on the cost-saving and opti-
mization projects started some time ago, such as Value Engi-
neering and Best-Cost Countries. Overall costs for compressors
were reduced as a result.
Mid-Range Plan for 2018–2022 approved
The Mid-Range Plan adopted in December 2017 sets different
priorities for the two divisions for the next five fiscal years. The
Systems Division is focusing mainly on improving profitability
while maintaining global market leadership, whereas the Ser-
vices Division is aiming for significant growth. The first priority
for growth is service business involving compressors made by
other manufacturers. This will be built up with the help of oper-
ational initiatives, including the implementation of a global ERP
platform, the further expansion of our local and regional pres-
ence, and the expansion of service structures for the marine
business. Ongoing digitalization will be used for new services
and applications in both divisions. The Systems Division is
aiming for sales of CHF 340 mn by 2022, with an EBIT margin of
0% to 5%, while the Services Division is targeting sales of
CHF 360 mn and an EBIT margin of 20% to 25%. This strategy is
based mainly on organic growth, which includes the complete
takeover of Shenyang Yuanda Compressor and Arkos Field Services.
REVIEW OF THE FISCAL YEAR | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
19
First annual accounts according to Swiss GAAP FER
Standard
The annual financial statements contained in this report are
the first to be based on the Swiss GAAP FER accounting stand-
ard. Prior-year figures (fiscal year 2016) have been recalculated
on the basis of this standard to provide proper comparability
between this year and last.
Stable headcount
The size of the workforce remained more or less the same as in
the previous year at 2’214 employees (2016: 2’107). At the end of
March 2018, 674 employees (30.0%) were based in Switzerland,
1’079 (49.2%) in BRIC countries and 461 (20.8%) in other countries.
ORDER INTAKE
CHF mn
SALES
CHF mn
500
400
300
200
100
0
6 00
500
400
300
200
100
0
08 09 10 11 12 13 14 15 16 17
08 09 10 11 12 13 14 15 16 17
EBIT AND NET INCOME 1
CHF mn
100
80
60
40
20
0
08 09 10
11
12
13
14
15
16
17
EBIT
Net income
EQUITY RATIO 1
CHF mn
1’000
900
800
700
600
500
400
300
200
100
0
%
100
80
60
40
20
0
47
50
51
53
55
56
50
50
39
42
08
09
10
11
12
13
14
15
16
17
Balance sheet total
Shareholders’ equity
Equity ratio (%)
1 The consolidated accounts have been prepared in accordance with Swiss
GAAP FER since April 1, 2017. The previous period (fiscal year 2016) has been
restated accordingly to enable comparison with the year under preview.
20
REVIEW OF THE FISCAL YEAR | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
CAPACITY
CUSTOMERS
During the year under review, the Services Division opened a
Service Center in Sweden where repair and service work can be
carried out close to the customer, saving time and transport
costs. The cooperation with Kompressorteknik ML AB has
greatly strengthened Burckhardt Compression’s market pres-
ence in Sweden, Norway, Denmark, Finland and Iceland. Burck-
hardt Compression also reinforced its market activities in the
South American region with the opening of a sales office in
Argentina.
ACQUISITIONS
In June 2017, Burckhardt Compression acquired Canadian com-
pany CSM Compressor Supplies & Machine Work Ltd., which is
based in Edmonton and Drumheller, Alberta. This acquisition
expands Burckhardt Compression’s service infrastructure in
Western Canada. CSM can look back on 35 years of experience
in the spare parts and repair business, with a focus on the
upstream market. The acquisition allows Burckhardt Compres-
sion Canada to build up its presence in the upstream compres-
sor servicing business. At the same time, downstream custom-
ers will benefit from a comprehensive service portfolio that
combines servicing and engineering know-how.
Burckhardt Compression works hard to nurture a relationship
with its customers based on partnership. Both divisions regu-
larly conduct customer surveys in a bid to understand customer
needs even better, and surveys were carried out during the
development of the Mid-Range Plan. The findings and the
resulting projects and initiatives are part of the new plan.
RESEARCH AND DEVELOPMENT
Persisto® products added to materials portfolio
Two important compounds, marketed under the brand name
Persisto®, were added to our portfolio of materials for com-
pressor sealing systems during the year under review. These
PTFE-based materials have superior tribological qualities and
lead to much greater durability for oil-free compression of
hydrocarbons and hydrogen. Persisto® is the brand name we
use for our premium sealing materials. Many of these materials
were developed in-house by Burckhardt Compression, and we
are also responsible for production and quality assurance.
Optimization of our valve portfolio
We also optimized our valve portfolio during the year under
review. We developed more energy-efficient valves, and intro-
duced new materials with the aim of extending the lifetime of
compressor valves.
Portfolio of compressors for refineries and industrial
gases enlarged
As well as constantly optimizing our portfolio of process gas
compressors, we have added a smaller compressor to the
range, specially adapted to the needs of refinery customers.
This is a commercially very interesting product that meets all
current specifications and so increases our chances in the
fiercely competitive refinery market.
REVIEW OF THE FISCAL YEAR | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
21
BRAND MANAGEMENT
Burckhardt Compression is constantly striving to optimize and
strengthen the international positioning of its “Burckhardt
Compression” brand. Our corporate identity and long-term
brand strategy express the organization’s values and principles
and highlight Burckhardt Compression’s position as a unique,
long-term partner with a strong Swiss tradition.
Burckhardt Compression is constantly
striving to optimize and strengthen
the international positioning of its brand.
In the period under review, various print and online commu-
nications tools were introduced for both divisions and Burck-
hardt Compression’s exhibition concept was upgraded.
22
SYSTEMS DIVISION
“To maintain our market leadership successfully in future,
well-tuned production processes and continuous quality
control has to be top priority. That is why we have set ourselves
a deadline of 24 hours to sort out production problems.”
23
24
25
26
REVIEW OF THE FISCAL YEAR SYSTEMS DIVISION | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
REVIEW OF THE FISCAL YEAR
SYSTEMS DIVISION 1
ORDER INTAKE
CHF mn
400
300
200
100
0
SALES
CHF mn
4 00
300
200
100
0
GROSS PROFIT
CHF mn
100
80
60
40
20
0
08 09 10 10 12 13 14 15 16 17
08 09 10 11 12 13 14 15 16 17
08 09 10 11 12 13 14 15 16 17
OPERATING INCOME (EBIT)
CHF mn
50
40
30
20
10
0
–10
08 09 10 11 12 13 14 15 16 17
FIGURES
in CHF mn
Order intake
Sales and gross profit
Operating income (EBIT)
in % of sales
Sales
Gross profit
in % of sales
2015
2016 1
2017 1
Change
2016/2017
351.4
280.6
319.8
14.0%
332.4
73.0
22.0%
35.3
10.6%
367.2
36.5
9.9%
–1.5
–0.4%
384.4
27.2
7.1%
–9.0
–2.3%
4.7%
–25.5%
Headcount as per end of fiscal year (full-time equivalents)
1’446
1’425
–1.6%
1 The consolidated accounts have been prepared in accordance with Swiss GAAP FER since April 1, 2017.
The previous period (fiscal year 2016) has been restated accordingly to enable comparison with the year under preview.
REVIEW OF THE FISCAL YEAR SYSTEMS DIVISION | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
27
FINANCIAL PERFORMANCE
Markets still highly competitive
Incoming orders at the Systems Division amounted to
CHF 319.8 mn, which is 14.0% higher than in the previous year.
Thanks to an improved market environment, increased capacity
utilization and rising oil and gas prices, our customers invested
significantly more during the year under review. The sales fig-
ure of CHF 384.4 mn was 4.7% up on the previous year, thus set-
ting a new record. Gross profit, by contrast, stood at an unsat-
isfactory CHF 27.2 mn, which is 25.5% down on the year, leaving
a lower gross margin of 7.1% (previous year 9.9%). The main rea-
sons for the significant decline in gross profit were the global
increase in material prices, especially in the second half of the
year in China, as well as much lower sales in the LPGM marine
business and one-time costs incurred while building up the
LNGM business. These factors were only partially offset by our
improvement program. As a consequence, operating income
declined sharply from CHF –1.5 mn in the previous year to
CHF –9.0 mn during the year under review.
MARKETS
Burckhardt Compression offers compressor system solutions
in the following application areas:
– Upstream oil & gas
– Gas transport and storage
– Refinery
– Petrochemical/chemical industry
– Industrial gases
Burckhardt Compression achieved some
important successes and signed several major
contracts in the reinvigorated LDPE market.
Burckhardt Compression achieved some important successes
in a highly competitive market environment. These included
several major contracts signed in the reinvigorated LDPE (low
density polyethylene) market in China. Further significant
orders were won in Japan, the USA and India.
Upstream oil & gas
A substantial recovery in oil prices during the year under review
and productivity improvements in extraction technologies
stimu lated investments in production capacities. This is the
only application area in which Burckhardt Compression’s busi-
ness is influenced by movements in the oil price.
Gas transport and storage
Within the LNG (liquefied natural gas) application area, there
was a slight recovery in the LNG tanker business after several
years of stagnation. Efforts to diversify energy supply are lead-
ing various countries to buy more liquid gas, and to build the
requisite import terminals. The use of LNG for new applica-
tions, such as fueling vehicles, also offers medium-term growth
opportunities. Projected additional capacity for natural gas liq-
uefaction will boost demand for LNG tankers in the years to
come.
After a phase of overcapacities, the use of LPG (liquefied
petroleum gas) is undergoing a period of consolidation. With
energy generated from regional coal deposits increasingly
being replaced by liquefied gas from other regions, this market
is set to become more attractive in the future. Initial signs of
recovery in this market have been evident for some months
now.
Refinery
The positive business trend is a result of capacity building in
various regions, particularly in the Middle East, India, China and
Southeast Asia. This reflects a continuing trend that has seen
these countries trying to increase their local share of added
value and reduce dependency on imports of refined products.
This is also helping the compressor business.
Petrochemical and chemical industry
This application area performed positively again. In the petro-
chemical sector, Hyper Compressor projects, including booster-
primary compressors, were acquired for the first time in a long
time. Due to growing worldwide demand for products made of
plastic, the petrochemical industry is increasing its production
capacity significantly. In emerging markets in particular,
demand is being driven in part by a higher proportion of local
value creation. China, which accounts for more than 30% of the
global market for reciprocating compressors used in petro-
chemical applications, is performing especially well.
28
REVIEW OF THE FISCAL YEAR SYSTEMS DIVISION | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
Industrial gases
The industrial gases business also put in a good performance,
thanks not least to the extremely broad range of applications.
It can be assumed that various user industries will grow at least
in step with global GDP growth, if not faster, so we can expect
to see a corresponding increase demand for compressors.
INTEGRATION
The integration of Shenyang Yuanda Compressor, acquired
in 2016, was completed on schedule at the end of 2017, and the
first joint projects have already been carried out. Thanks to this
acquisition Burckhardt Compression reinforced its leading posi-
tion in China and gained new, cost-efficient suppliers.
“PULLING SYSTEMS TOGETHER”
FOR POSITIVE CHANGE
At the end of 2016, the Systems Division initiated an extensive
process- and cost-optimization program as a short-term
response to the reduced volume of incoming orders, while striv-
ing to improve its competitive edge significantly in the medium
term. The cost-optimization program, the primary aim of which
is to improve operational excellence, consists of 30 projects
affecting all units, including design, procurement, production
processes, project management, logistics and capacity man-
agement.
Substantial progress was made on various fronts during the
year under review. Capacities were adjusted to lower volumes,
for example, and the procurement organization was realigned,
resulting in significant cost savings. Another step was taken to
improve competitiveness when a Global Support Center was
opened in India to support the Group worldwide, especially in
the areas of engineering, IT and contracting.
OUTLOOK
Overall, we expect further market growth in 2018 and 2019.
Over the next few years, the markets in China and India in par-
ticular will continue to flourish, while markets in Southeast
Asia and the Middle East gain further in importance. The
increasing use of plastics in China and Southeast Asia should
help keep the petrochemical market strong. The refinery busi-
ness will continue to grow, and we are seeing positive signals
from the industrial gases application area as well. The marine
business is beginning to show the first signs of a recovery in
2018. Raw materials prices will continue to increase globally
over the next few months, but especially in China.
Overall, we expect further market growth
in 2018 and 2019.
The Systems Division is focusing on improving profitability
while maintaining its global market leadership. Our 2018–2022
Mid-Range Plan forecasts annual sales of CHF 340 mn by 2022,
with an EBIT margin of 0% to 5%. Global procurement is being
strengthened, and we are continuing measures to increase
competitiveness. The measures implemented so far have pro-
duced some first successes, which is encouraging. Initial imple-
mentation of the Value Engineering approach identified a 20%
reduction in manufacturing costs for a first compressor line.
Innovations and a more widely diversified presence in the differ-
ent market segments will continue to bolster Burckhardt Com-
pression’s market leadership. In the year under review, for
example, a new product line was developed for the highly com-
petitive process gas compressor market. This robust, modular
compressor line is optimized for CAPEX. As such it is a perfect
complement to Burckhardt Compression’s traditional premium
products with their low product life cycle costs. Further inno-
vations in compressing and reliquefying boil-off gas (BOG) from
liquid gases in the marine sector are equally promising.
REVIEW OF THE FISCAL YEAR SYSTEMS DIVISION | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
29
30
31
SERVICES DIVISION
“We want to grow substantially in the coming years. Our engineer-
ing expertise and professional project management skills play
a key role here. We already secured significant growth during the
year under review by converting and modernizing entire plants.”
32
33
34
REVIEW OF THE FISCAL YEAR SERVICES DIVISION | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
REVIEW OF THE FISCAL YEAR
SERVICES DIVISION 1
ORDER INTAKE
CHF mn
200
150
100
50
0
SALES
CHF mn
200
150
100
50
0
GROSS PROFIT
CHF mn
100
80
60
40
20
0
08 09 10 11 12 13 14 15 16 17
08 09 10 11 12 13 14 15 16 17
08 09 10 11 12 13 14 15 16 17
OPERATING INCOME (EBIT)
CHF mn
50
40
30
20
10
0
08 09 10 11 12 13 14 15 16 17
FIGURES
in CHF mn
Order intake
Sales and gross profit
Operating income (EBIT)
in % of sales
Sales
Gross profit
in % of sales
2015
2016 1
2017 1
Change
2016/2017
171.8
194.3
205.4
5.7%
154.8
78.7
50.8%
35.8
23.2%
190.5
94.0
49.4%
53.0
27.8%
210.2
97.9
46.6%
54.4
25.9%
10.3%
4.1%
2.5%
Headcount as per end of fiscal year (full-time equivalents)
649
778
19.9%
1 The consolidated accounts have been prepared in accordance with Swiss GAAP FER since April 1, 2017.
The previous period (fiscal year 2016) has been restated accordingly to enable comparison with the year under preview.
REVIEW OF THE FISCAL YEAR SERVICES DIVISION | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
35
FINANCIAL PERFORMANCE
Further increase in order intake and sales
Order intake rose 5.7% to CHF 205.4 mn, a new high, in large
part thanks to services for third-party products. Divisional
sales were likewise sharply higher, rising by 10.3% to
CHF 210.2 mn. The division now accounts for 35.4%, more than
one-third, of total Group sales. Strong organic growth and
acquisitions both helped fuel the rise. Gross profit was 4.1% up
on the prior year at CHF 97.9 mn. The gross margin fell to 46.6%
(2016: 49.4%), because of the changed product mix. Operating
income came to CHF 54.4 mn, which is CHF 1.3 mn up on the
previous year’s CHF 53.0 mn. The increase was kept from being
greater by the shift from spare parts business to service offer-
ings such as maintenance and spare parts for third-party
products.
Order intake rose 5.7% to CHF 205.4 mn,
a new high, in large part thanks to services
for third-party products.
MARKETS
Burckhardt Compression offers service solutions in the follow-
ing application areas:
– Spare Parts
– Engineering/Revamp/Repair
– Field Service
– Monitoring/Diagnostics
Burckhardt Compression signed several long-term service con-
tracts during the year under review for Laby®-GI fuel gas supply
compressors in the marine sector. It also brought important
innovations to market, including upgrades to the portfolio of
sealing materials for piston rings and packings.
Spare Parts
More spare parts for third-party products were ordered by cus-
tomers during the year under review. Customers are increas-
ingly purchasing spare parts in combination with services. The
market is responding positively to our strategy of expanding our
business with other companies’ products.
Engineering/Revamp/Repair
Expertise in the key areas of engineering and project manage-
ment was strengthened significantly in the year under review.
There was a clear rise in the number of large-scale projects
involving the conversion and modernization of complete sys-
tems. More local consulting services were offered as well. This
gives the division a distinct competitive advantage over smaller,
local service providers.
Field Service
Field Service reported gratifying growth thanks to preventive
and corrective maintenance work on our own and third-party
equipment. In addition, more and more long-term service agree-
ments are being signed. The growth in commissioning business
was mainly attributable to Laby®-GI Compressors on natural
gas tankers.
Monitoring/Diagnostics
Monitoring/Diagnostics also recorded sustained growth, espe-
cially in the USA. PROGNOST Systems further expanded and
optimized its range of products for monitoring additional rotat-
ing equipment. Ongoing digitalization during the year under
review saw the launch of a new mobile application offering a
simpler way for customers to access monitoring data.
FURTHER STRENGTHENING
OF SALES STRUCTURES
As part of the ongoing development of its sales strategy, Burck-
hardt Compression further professionalized the offer and exe-
cution of service engineering solutions with the introduction of
central management during the year under review. This has
greatly accelerated process times for requests, offers and
implementation. At the same time, regional sales structures
have been strengthened. As local Field Service Representa-
tives, our highly qualified engineers are responsible both for
customer care and for evaluating local market opportunities.
The greater skill-set required by these employees is reflected
in the training they are now receiving.
A partnership model was developed and implemented to
expand our local service presence. This allows us to offer ser-
vice capabilities close to our customers, especially in small but
fast-growing markets, while limiting the amount of investment
required.
36
REVIEW OF THE FISCAL YEAR SERVICES DIVISION | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
ACQUISITIONS AND ALLIANCES
OUTLOOK
Burckhardt Compression took over Canadian company
CSM Compressor Supplies & Machine Work Ltd., based in
Edmonton and Drumheller, Alberta, in June 2017, thus strength-
ening its service business for reciprocating compressors in Can-
ada. Downstream customers in the region will now benefit from
a comprehensive local service portfolio that combines servic-
ing and engineering expertise. Importantly, the acquisition also
allows the division to build up its presence in local upstream
service business.
In the year under review, Burckhardt Compression also
entered into a strategic cooperation with Swedish company
Kompressorteknik ML AB. This will strengthen Burckhardt
Compression’s presence in Sweden, Norway, Denmark, Finland
and Iceland. This partner company has many years of experi-
ence and expertise in servicing oil-free compressors, and offers
customers tailor-made service packages. The partnership pro-
vides customers with the added value of a wider product range
and locally available repair skills.
Thanks to the partnership with Arkos Field Services, in
which Burckhardt Compression has a 40% stake, the US com-
pany’s existing upstream network of 15 branches across the
USA can also be used as a platform for service provision in the
downstream sector.
NEW SERVICE CENTERS
To further strengthen its geographical presence, Burckhardt
Compression opened a sales office in Argentina. In collabora-
tion with Kompressorteknik ML AB, which entered into a stra-
tegic partnership with us in July 2017, we have begun to develop
a local Service Center. To meet growing local requirements, the
subsidiaries in Spain and Korea were relocated to new locations
during the year under review. A targeted increase in headcount
was carried out in Korea to strengthen the provision of services
to the marine sector. Investments were also made in developing
the Field Service team in India.
Interesting growth prospects will be opening up for the service
business in the coming years for various reasons:
– More and more customers are outsourcing service-related
operations.
– The inventory of installed equipment continues to grow.
– Customers are seeking efficiency gains to sharpen their com-
petitive profile, and this requires retrofitting and conversions.
– Preventive maintenance in conjunction with continuous mon-
itoring of systems is growing in importance.
We believe, therefore, that the demand for comprehensive ser-
vices from a single source will grow more strongly than direct
business with spare parts.
Innovation plans are focusing on the development and pro-
duction of specific plastics for sealing systems on reciprocating
compressors, as well as on the further development of solu-
tions for simple, cost-effective condition monitoring and diag-
nosis of operational compressor systems.
According to our 2018–2022 Mid-Range Plan, the Services
Division will increase sales by between 6% and 8% a year to
reach CHF 360 mn by 2022. Our target range for the EBIT mar-
gin is 20% to 25%. Our growth priorities are service business for
compressors made by other manufacturers, and personal ser-
vices. To ensure success here, Burckhardt Compression is tak-
ing further operational initiatives, such as strengthening cus-
tomer care and further developing local and regional service
competence. Further measures include the expansion of engi-
neering and project management structures in the division, as
well as the implementation of a global ERP platform for all ser-
vice locations. The growing number of natural gas tankers
using Laby®-GI fuel gas supply compressors calls for the cre-
ation of a service structure tailored to the specific require-
ments of marine business. In addition, digitalization should be
used for new services and applications. The main aims here are
to further increase the availability and use of operational and
customer data, to make communication more transparent, and
to optimize business processes. At the same time, cost control
is being implemented more rigorously.
The successes achieved in the year under review confirm
that we are on the right course. Customers warmly welcomed
the expansion of our service presence, our engineering and proj-
ect management skills, for example. The effectiveness of the
above-mentioned initiatives is regularly evaluated using cus-
tomer satisfaction surveys involving over 400 key customers
worldwide.
REVIEW OF THE FISCAL YEAR SERVICES DIVISION | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
37
38
BURCKHARDT COMPRESSION GROUP
“Good customer relations are at the heart of everything, which is
why Burckhardt Compression is committed to open communi-
cation and high transparency. We see our customers as partners,
and we want to find the best solution with them. We regularly
conduct customer surveys to ensure this is happening.”
39
40
41
42
SUSTAINABILITY REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
SUSTAINABILITY REPORT
COMMITMENT AND LEADERSHIP
Burckhardt Compression has made a long-term commitment to
the economy, society and the environment. Our aim is to create
all the right conditions to preserve and continue the company’s
174-year tradition of success. This can only be achieved if a bal-
ance is found between the different and sometimes opposing
interests of individual stakeholders.
We are committed to transparency. Only by knowing exactly
where things stand can appropriate goals be set and the right
measures be initiated to achieve them. Regular management
reviews and appropriate controlling instruments ensure that
we achieve the goals we set. Burckhardt Compression’s sustain-
ability credentials are regularly assessed by an external spe-
cialist (GAM). During the latest assessment in 2015 we again
achieved our goal of exceeding the average rating for a selected
group of comparable Swiss companies.
Burckhardt Compression adapted its quality management
systems during the year under review in accordance with the
requirements of ISO9001:2015 and received the corresponding
new certification.
ECONOMIC SUSTAINABILITY
Objective
Our company’s primary objective is to achieve our financial
goals, since failure to meet these goals could have a profound
impact on the future of our company. The continued existence
of Burckhardt Compression over the long term is ensured only
if we manage to achieve financial results that at least average
those of our direct competitors.
As part of the effort to maintain economic sustainability,
Burckhardt Compression regularly produces a Mid-Range Plan,
usually covering a period of five fiscal years. This is periodically
reviewed and adjusted in line with the economic, political and
technological environment.
Investors
We maintain an open and transparent dialog with our investors
and interested parties. The aim of our Investor Relations is to
adequately portray our company and markets to enable a fair
valuation of Burckhardt Compression stock. In an effort to fur-
ther that dialog, we held our second Investor Day at the com-
pany’s headquarters in Winterthur in January 2018, where we
presented investors with our new Mid-Range Plan for 2018 to
2022.
Our Investor Relations are evaluated by independent firms and
receive consistently very good ratings considering the size of
our company. The leading Swiss business newspaper “Finanz
und Wirtschaft” gives us an A– rating (A being the highest rat-
ing) for Investor Relations and transparency.
In the yearly ranking of annual reports conducted by
HarbourClub and the business magazine “Bilanz,” our 2016
annual report improved its ranking in the Value Reporting
(Print) category from 31st out of more than 220 companies in the
previous year to 24th. We came 61st in the Design (Print) cate-
gory, and 105th in the Online category.
The annual Obermatt survey measures the performance of
listed companies relative to peers. It rated Burckhardt Com-
pression 5th in the “growth performance ranking” of mid-cap
companies for 2017 (previous year: 14th).
In the 2017 survey of company boards carried out by zRating
in collaboration with the “Finanz und Wirtschaft,” Burckhardt
Compression achieved an excellent 14th place among the
165 Swiss listed companies covered by the survey. This survey
comprised 26 criteria based on the principles of good corporate
governance, statutory requirements and self-regulatory instru-
ments.
Customers
Burckhardt Compression seeks long-term customer relations.
The average useful life of our compressors is 30–50 years.
Following the project phase, we provide our customers with the
necessary services and components they need throughout the
entire life cycle of the compressor systems. Our longest stand-
ing customer relationship dates back to 1885, when we supplied
BASF in Ludwigshafen with one of the first compressors ever
built by our company.
The various business activities of Burckhardt Compression
also call for a variety of tools for measuring customer satisfac-
tion. Here a distinction is made between direct and indirect key
performance indicators (KPI), which are measured and evalu-
ated. Customer satisfaction is evaluated during claims and
warranties meetings, which are an integral part of the manage-
ment process and are held with the Management Team.
Appropriate measures are then introduced and implemented
based on the results of the evaluation. In the year under review,
customer surveys were carried out with a focus on the Systems
Division.
SUSTAINABILITY REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
43
Process improvement
The quest for continuous improvement by Burckhardt Compres-
sion’s executives and employees forms the foundation on which
the company is based.
Every year, the personal objectives of our executives and
employees include implementing continuous improvement proj-
ects. These projects are implemented using methods developed
by Burckhardt Compression and evaluated by its executives. We
also work with suppliers, universities, institutions and advisors
worldwide to develop and improve products or processes in
areas where we do not have the necessary expertise. Collabora-
tion with external experts and specialists fosters new ideas and
maximizes creative potential, also within the company.
Capital expenditure
In the past five years Burckhardt Compression has invested
CHF 115.2 mn (excluding acquisitions). In the year under review,
most of it was invested in Winterthur and at Shenyang Yuanda
Compressor.
Value-based management
We measure the value generated for our shareholders in two
ways:
– Market capitalization as a percentage of equity
– Change in earnings per share
Market cap divided by shareholders’ equity at the end of the
reporting year resulted in a quotient of 3.1 (previous year accord-
ing to Swiss GAAP FER 2.9). This clearly shows that we continue
to generate substantial value with the capital of our sharehold-
ers (shareholders’ equity). Net income per share for the period
under review amounted to CHF 8.51 (previous year CHF 9.12). We
aim to increase this figure further.
Competition
We are committed to fair competition, in which there is no room
for price fixing, cartels or other activities that distort competi-
tion. We value our corporate and business know-how, especially
our technical and commercial know-how, and are constantly
safeguarding it against loss or unauthorized access.
Suppliers
A well-functioning supply chain ensures our continual product
development and manufacturing activities. Burckhardt Com-
pression buys its products from various global and regional
suppliers. We cooperate closely with them as early as the devel-
opment stage and aspire to establish long-lasting partnerships.
We adhere to the principles set out in our Code of Conduct and
ensure that they are strictly complied with in all dealings with
our suppliers. The Code of Conduct is available to the public and
can be viewed at www.burckhardtcompression.com/about-us/
vision-mission-values. We systematically test our suppliers’
suitability and annually assess their performance by means of
visits and audits, and by measuring key performance indicators.
Burckhardt Compression was named as world
market leader for reciprocating compressor
systems during the year under review.
Strategic procurement is a regular component of the man-
agement schedule at Burckhardt Compression Group. Respon-
sible managers report at regular intervals on the most impor-
tant changes in the global procurement market, such as price
trends for raw materials and finished products. Decisions are
made together with the divisional management teams to ensure
a smooth supply chain. Every year, we reward the best suppliers
in the various categories to encourage them to achieve even
more.
Innovation
Burckhardt Compression was named as world market leader for
reciprocating compressor systems during the year under review.
The Global Market Leaders Index was developed by the Busi-
ness School of the University of St. Gallen in collaboration with
the Akademie Deutscher Weltmarktführer. The index lists com-
panies that offer leading technology and outstanding products
and services.
44
SUSTAINABILITY REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
During the year under review, Burckhardt Compression
acquired and fully integrated CSM Compressor Supplies &
Machine Work Ltd., based in Edmonton and Drumheller, Canada.
All acquisition targets must meet three specific criteria:
1) The acquired activities must be a good strategic fit for our
company; 2) the price must be in accord with our expectations;
3) the corporate culture of the target company must be com-
patible with our own.
Risk management
As the world’s leading manufacturer of reciprocating compres-
sors, Burckhardt Compression is exposed to a number of risks.
We have developed a comprehensive risk management plan for
our company and integrated it into our existing planning and
management process.
The Executive Board’s assessment of risks is discussed with the
Audit Committee twice a year. We distinguish between two cat-
egories of risk:
1.
Internal: Risks that Burckhardt Compression can directly
influence
2. External: Risks over which Burckhardt Compression has
little or no influence.
The objectives of our risk management activities are:
– to systematically detect special risks;
– to establish processes for monitoring, reducing and, in a best
case, preventing risks;
– achieving a balance between risks and rewards for our busi-
ness.
ACTUAL WARRANTY COSTS
AS A PERCENTAGE OF SALES
%
10
11
12
13
14
15
16
17
0.7
1.0
0.8
0.7
0.8
0.6
0.8
1.0
NET INCOME PER SHARE 1
CHF
07
08
09
10
11
12
13
14
15
16
17
20.00
21.46
16.68
13.56
15.22
16.42
15.87
16.93
16.34
9.12
8.51
1 The consolidated accounts have been prepared in accordance with Swiss
GAAP FER since April 1, 2017. The previous period (fiscal year 2016) has been
restated accordingly to enable comparison with the year under preview.
SUSTAINABILITY REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
45
SOCIAL SUSTAINABILITY
Corporate culture
A well-established corporate culture is crucial to a company’s
competitiveness. Our comprehensive value program, called
“Values and Behaviors”, ensures that employees in our Group’s
different locations and companies share the same corporate
values and principles. This shared understanding makes collab-
oration between teams and across borders much easier.
All employees are trained in our corporate values and our
code of conduct. Members of the Executive Board have also
stressed the importance of these common values and behav-
iors in video podcasts. Employees are also given updates on our
efforts to corporate values in the “BC Live Report” e-newsletter,
which is published three times a year. These measures help us
to ensure that our employees are familiar with our corporate
culture and live up to our core values. Our executives are impor-
tant role models in this regard.
Sustainable HR policy
Only satisfied employees are willing to go that extra mile to
meet the needs of our customers. That’s why we are committed
to a sustainable HR policy. We actively promote a balance of
employees in regard to gender and age. Loyalty and the ability
to identify with the company are confirmed by the fact that the
average employee has been with the company for nine years.
Toward the end of the year under review, Burckhardt Com-
pression carried out a worldwide employee survey. The results
are expected at the start of the coming fiscal year. Once it has
these, Burckhardt Compression will launch initiatives and proj-
ects designed to further improve employee satisfaction.
We have a responsibility to ensure the expertise of our
employees and promote the exchange of knowledge. Our new
employee orientation process ensures that new hires are famil-
iarized with their area of work and our corporate culture. Per-
sonal development is part of our annual appraisal and it is
financed by Burckhardt Compression. We have developed an
internal, modularly structured expert, product-related and
leadership training program to ensure the continual develop-
ment of our technology know-how and leadership competen-
cies. Training courses for specific skill-sets are organized for
the entire Burckhardt Compression Group twice a year.
Burckhardt Compression conducts an annual appraisal and
performance review of each employee suited to the particular
level of hierarchy, comprising personal development goals and
suggestions for continuous improvement. Part of this system
involves reviews as to the status of individual objectives and
corresponding measures.
13.6% of our employees worldwide are women (13.0% in the
previous fiscal year). Having nearly reached our interim target
of 15%, we aim to raise this percentage steadily over the com-
ing years to 20%. Both men and women sit on the Board of
Directors and the Executive Board of our company. This meets
one of the recommendations of the Code of Best Practice for
Corporate Governance published by economiesuisse; but, more
than that, we are convinced that mixed-gender teams perform
better.
Our employees are regularly informed about the course of
business and other corporate developments by their managers.
Burckhardt Compression employees in Switzerland are informed
twice a year in person by the CEO and Division heads. The still
high employee turnover rate of 9.8% (previous year 10.2%) is
caused by the woldwide good economic cycle. We are aiming for
a further significant reduction in employee turnover.
Promoting new talent and career development
We actively promote and support new talent at all levels and
we are committed to the Swiss system of apprentice training.
There are currently 60 apprentices in Switzerland and 17 in
India receiving vocational training in eight different trades. We
are a founding member of the initiative launched under the aus-
pices of the Swiss Federal Office for Professional Education and
Technology and the Swiss-Indian Chamber of Commerce to
establish an apprenticeship system of learning in India pat-
terned after the Swiss model and we are a corporate sponsor
of the AZW Training Center in Winterthur for vocational educa-
tional career pathways. Apprentices with a good performance
record are generally retained by Burckhardt Compression upon
completion of their apprenticeship. Burckhardt Compression’s
annual spending on apprenticeship training programs (cash out)
amounts to about CHF 1.4 mn. Based on the internal talent
review process, potential new managers and specialists are
identified at an early stage and carefully developed. Vacant job
positions at all levels are also advertised internally. External as
well as internal candidates must go through a proprietary
screening process. The systematic evaluation and development
of the company’s future managers, which we have practiced
internally with success for many years, enabled us to again fill
various management vacancies during the past year with inter-
nal candidates. If there are no suitable candidates available in-
house to succeed a departing executive or to fill a new manage-
ment-level position, we are in a good position to recruit
well-qualified external candidates, not least due to our com-
pany profile and image.
46
SUSTAINABILITY REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
Occupational health & safety
Safety at work is very important to Burckhardt Compression.
We believe it is important that all employees are informed of
the risks involved in their work and aware of the accident pre-
vention measures. Regular training is provided on the topic of
safety at work. Work safety audits and safety inspections are
carried out annually by external professionals and the findings
are implemented accordingly.
The health and general well-being of our employees are
important to us. During the year under review an initiative was
launched at the workshop in Winterthur to prevent slips and
trips. Burckhardt Compression knows that physical and mental
health is closely linked to performance. An extensive range of
physical activities, preventive measures and measures on spe-
cific topics help to improve employee satisfaction, health and
motivation, and to reduce absences.
We have systematically reduced the average number of
working days lost because of illness over the last 13 years. Dur-
ing the year under review, this figure went up again for the first
time to 7.5 days (previous year 6.3 days). The requisite mea-
sures were initiated to achieve our target of under 6 days. This
and other measures are part of the EOHS system (Environment/
Occupational Health & Safety System) that is being introduced
at all Group sites in compliance with ISO 14001 and OHSAS
18001 standards.
Social environment
We are well established in our social environment. We actively
cooperate with citizens and the authorities at all locations. Our
company supports employees who are committed to doing good
for the community. Therefore, we support the engagement of
our executives and employees in political and charitable aspira-
tions with the aim of alleviating problems facing society. For
example, our Board Chairman has been president of the Swiss
Employers’ Association for the past seven years, and of “Check
your Chance”, a Swiss association that fights youth unemploy-
ment, since 2014. Our CEO is the honorary chair of the Swiss-
CIS/Georgia Chamber of Commerce. To strengthen local social
networks, we run programs at the locations of our biggest com-
panies in Switzerland and India that support local social and
cultural projects. In doing so, we specifically encourage our
employees to become personally involved in such projects.
GEOGRAPHIC BREAKDOWN OF THE WORKFORCE, 2017
100% = 2’214
Employees (full-time equivalents)
Other
21%
BRIC
Countries
49%
Switzerland
30%
GLOBAL WORKFORCE BY GENDER
Employees (full-time equivalents)
10
11
12
13
14
15
16
17
105
111
139
160
168
175
277
302
Men
Women
812
872
939
1’072
1’217
1’257
1’830
1’912
EMPLOYEE TURNOVER RATIO
%
10
11
12
13
14
15
16
17
8.0
7.5
5.2
5.0
4.4
5.4
10.2
9.8
SUSTAINABILITY REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
47
ENVIRONMENTAL SUSTAINABILITY
“We are a company that cares about the environment and that
strongly supports responsible and prudent consumption of
energy and our planet’s finite natural resources. By exercising
foresight and prudence, we help to minimize the use of energy,
water and chemicals of all kinds while addressing the issue of
harmful emissions.” (Code of Conduct)
Procurement
We draw on the experience of our suppliers to help us continu-
ously improve our products. Much of the value creation is per-
formed by them. Therefore, we place the same high demands
on them as we do on ourselves. They are integrated into our
environmental and quality policy. Checks are made on site or
when goods arrive to ensure adherence to specifications and
verified by reviewing the required audit reports.
Innovation
Environmental protection starts with product design and devel-
opment. Here, the focus is on sustainable and efficient develop-
ment, taking into account the entire life cycle of a product; the
average lifetime of our compressors is 30 to 50 years. Whenever
it makes sense, our customers are included early on in the devel-
opment stage of new products, in order to find joint innovative
solutions and verify ideas.
Products
Highly functional products enable our compressor systems to
run optimally. The following newly developed products and
solutions promise to offer customers greater benefits while
improving our environmental footprint:
– Laby®-GI Compressors: The dual-fuel propulsion system
developed for LNG carriers can be powered by environmen-
tally friendly natural gas instead of diesel. The Laby®-GI fuel
gas compressors by Burckhardt Compression compress the
boil-off gas from the LNG tanks, which is then injected directly
into a diesel engine. The dual-fuel propulsion system for LNG
carriers significantly reduces CO2 and SOX emissions when
powered by natural gas.
– Process Gas Compressors API 618: These compressors are
used specifically in industrial processes for the desulfuriza-
tion of fuels.
– PROGNOST®-SILver: Systems for monitoring and diagnosing
the condition of reciprocating compressors are key tools for
increasing operational safety, lengthening service intervals
and preventing fault events.
Manufacturing and logistics
In our efforts to transfer knowledge and production know-how
between our various production and engineering centers, we
are also transferring safe, efficient and environmentally friendly
production and engineering processes. We have optimized our
internal logistics processes and transportation operations
through the “PULL@BCAG” program. We are also reducing the
number of transport runs by consolidating deliveries and
deploying more container delivery solutions. PULL@BCAG is
not simply a project but rather a reflection of our basic philoso-
phy about the work we do. Local procurement of machine
accessories brings us even closer to our customers and allows
us to reduce transport runs.
The small parts finishing shop’s heat recovery
solutions for the heating and ventilation
systems achieve a high efficiency rate of 77%.
Buildings and fixtures
A new surface finishing shop for small parts was commissioned
in fiscal 2016. It is equipped with cutting-edge technology and
enables small parts weighing up to four tons to be coated more
efficiently than before. The small parts finishing shop’s heat
recovery solutions for the heating and ventilation systems
achieve a high efficiency rate of 77%. This enables us to further
reduce our emissions of harmful VOC gases (Volatile Organic
Compounds). Water-soluble paints can also be used in the
future. Furthermore, the continuous flow manufacturing sys-
tem for the new assembly hall was finalized.
At the factory in Shenyang owned by Shenyang Yuanda
Compressor, the company in which a majority interest was
acquired in 2016, a waste air filtration system was installed to
treat gases released during casting operations; various other
investments were made in the casting preparation and casting
process.
48
SUSTAINABILITY REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
Our factory in Pune, India, received a GreenCo Gold Award
during the year under review. GreenCo is a rating system estab-
lished by the Confederation of Indian Industry (CII), which takes
a holistic approach to measuring the results of companies’ envi-
ronmental initiatives. One of the reasons why we won this
award is that the Pune factory has reduced its energy consump-
tion by 32% in just two years. This was made possible by the
consistent use of LED light bulbs, motion sensors and solar
panels, and by careful monitoring of energy consumption. In
addition, fresh water consumption at Pune fell by 30% thanks
to rainwater harvesting, while waste per productive hour of
work decreased by 23%.
Burckhardt Compression reviewed and adjusted the chemi-
cals concept at its Winterthur site during the year under review.
Combustible chemicals were replaced by less combustible
ones, and all container labelling was amended. Oil storage was
modernized by means of collecting containers and special
transport tanks, which helped improve both the safety of the
chemicals and the efficiency of our processes.
These and other measures are part of the EOHS system
(Environment/Occupational Health & Safety System) that is
being introduced at all Group sites in compliance with ISO 14001
and OHSAS 18001 standards. Official certification is planned for
2018.
Our factory in Pune, India, received
a GreenCo Gold Award during the year
under review.
Environmental management, recycling and waste
disposal
Hazardous goods and chemicals are transported, stored and
disposed of in accordance with applicable laws and regulations.
We try to recycle as much of our waste as possible. Internal col-
lection points help our employees sort and dispose of waste
correctly. This allows most of our waste to be recycled. The
rest is sent to a nearby waste incineration plant that produces
district heat for water and space heating systems. Specialized
companies are engaged to ensure that certain materials
(e.g. metals) are recycled in the proper, most environmentally
friendly way.
The waste management concept introduced in collabora-
tion with an external consultant was continued and expanded
and will lead to even greater separation of waste in the future.
SUSTAINABILITY REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
49
ELECTRICITY CONSUMPTION
MWh
10
11
12
13
14
15
16
17
3’717
3’707
4’136
3’672
5’305
5’385
6’773
6’933
WATER CONSUMPTION
m3
10
11
12
13
14
15
16
17
WASTE
t
10
11
12
13
14
15
16
17
41’639
35’040
28’251
14’851
17’792
18’865
29’157
24’310
256
246
197
235
280
326
284
321
Figures without Shenyang Yuanda Compressor
50
CORPORATE GOVERNANCE | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
CORPORATE GOVERNANCE
Burckhardt Compression is committed to responsible corpo-
rate governance. The company adheres to the Directive on
Information Relating to Corporate Governance (DCG) issued by
SIX Swiss Exchange, where applicable to Burckhardt Compres-
sion, and the “Swiss Code of Best Practice for Corporate Gover-
nance” issued by economiesuisse.
This report is structured in accordance with the DCG’s out-
line and numbering. Unless otherwise noted, the information
presented reflects the situation on March 31, 2018.
1. GROUP STRUCTURE AND
SHAREHOLDERS
1.1. Group structure
1.1.1. Management structure
Burckhardt Compression is managed by a divisional operating
structure with two divisions, the Systems Division (compressor
manufacturing business) and the Services Division (compressor
services and components). The management structure of the
Burckhardt Compression Group is given in the organizational
chart below:
CEO
M. Pawlicek
CHRO
S. Pitt
President
Systems Division
F. Billard
CFO
R. Brändli
President
Services Division
M. Wendel
1.1.2. Listed Group companies
Burckhardt Compression Holding AG, a corporation organized
under the laws of Switzerland with legal domicile in Winterthur,
is the only listed Group company. Burckhardt Compression reg-
istered shares (BCHN) are listed on the SIX Swiss Exchange in
Zurich (ISIN: CH0025536027; security number 002553602). Its
market capitalization as per March 31, 2018 amounted to
CHF 1’036’320’000.
1.1.3. Unlisted Group companies
Information on the unlisted companies included in the scope of
consolidation of Burckhardt Compression Holding AG is given in
the financial report on page 103, Note 102, “Investments in sub-
sidiaries.”
With the exception of Burckhardt Compression Holding AG,
none of the companies included in the scope of consolidation
hold any BCHN shares.
1.2. Significant shareholders
According to information available to the company from the
disclosure notifications of the SIX Swiss Exchange AG, the
shareholders listed in the following table reported sharehold-
ings of at least 3% of the voting rights as per March 31, 2018. In
accordance with the company’s Bylaws, the voting rights of
NN Group N.V. and J O Hambro Capital Management limited are
limited in each case to 5.0% of the total number of BCHN reg-
istered shares recorded in the commercial register:
Name
Country
%
of shares
MBO Aktionärsgruppe
NN Group N.V.
J O Hambro Capital Management Limited
CH
NL
UK
Atlantic Value General Partner Limited (Mondrian) UK
Ameriprise Financial Inc.
Credit Suisse Funds AG
Oppenheimer Funds
UBS Fund Management (Switzerland) AG
US
CH
US
CH
12.4
6.9
6.9
5.0
3.5
3.0
3.0
3.0
More detailed information on the disclosure notifications is
available on the website of the SIX Swiss Exchange’s Disclosure
Office (https://www.six-exchange-regulation.com/en/home/
publications/significant-shareholders.html).
1.3. Cross-shareholdings
Burckhardt Compression Holding AG has no cross-sharehold-
ings with any other company or group of companies.
CORPORATE GOVERNANCE | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
51
2.6. Limitations on transferability and nominee
registrations
No person or entity will be registered in the Share Register with
voting rights for more than 5% of the issued share capital. This
entry restriction is also applicable to persons whose shares are
held, in whole or part, by Nominees. This restriction is also valid
if shares are acquired through the exercise of subscription,
option or conversion rights, with the exception of shares
acquired through inheritance, division of an estate or marital
property law.
Legal entities and partnerships associated with each other
by uniformly managed capital or votes or in any other way, as
well as private and legal entities or partnerships which form an
association to evade registration restrictions are regarded as
one person.
Individual persons who have not expressly declared in their
registration application that they hold the shares for their own
account (Nominees) will be entered in the Share Register with
voting rights if the Nominee concerned provides proof that he
is subject to supervision by an accredited bank and financial
market regulator and if he has concluded an agreement with
the Board of Directors concerning his status. Nominees holding
up to 2% of the issued shares will be entered in the Share Reg-
ister with voting rights without having to sign an agreement
with the Board of Directors. Nominees holding more than 2% of
the issued shares will be entered in the Share Register with 2%
voting rights and, for the remaining shares, without voting
rights. Above this 2% cap, the Board of Directors may have
Nominees entered in the Share Register with voting rights if
they disclose the names, the addresses, the nationalities and
the shareholdings of the persons for whom they hold more than
2% of the issued share capital.
2.7. Convertible bonds and options
The company does not have any outstanding convertible bonds
and has not issued any option rights.
2. CAPITAL STRUCTURE
2.1. Capital
The issued share capital of Burckhardt Compression Hold-
ing AG amounts to CHF 8’500’000, comprising 3’400’000 fully
paid registered shares with a nominal value of CHF 2.50 each.
2.2. Details on authorized and conditional capital
The Board of Directors is empowered to increase the company’s
share capital by a maximum of CHF 1’275’000 at any time until
June 30, 2019 by issuing a maximum of 510’000 fully paid reg-
istered shares with a nominal value of CHF 2.50 each (autho-
rized share capital). The date and amount of the issuance, the
time of dividend entitlement and, if applicable, the type of con-
tribution shall be determined by the Board of Directors. Partial
increases in capital are permitted. The transferability of the
shares shall be subject to the registration restrictions set forth
in the Bylaws, if any. The Board of Directors is authorized to
exclude shareholders’ subscription rights, in part or whole, in
favor of third parties if the new shares are used to i) acquire
companies through an exchange of shares or ii) to finance the
purchase of companies in whole or part. The Board of Directors
is also authorized to exclude subscription rights of sharehold-
ers if the newly created shares are issued by means of a public
offering. Shares for which subscriptions rights have been
granted but not exercised will be allotted by the Board of Direc-
tors at its own discretion. Apart from the above, Burckhardt
Compression Holding AG has no other authorized and/or condi-
tional share capital.
2.3. Changes in capital
There has been no movement in share capital since the IPO in
June 2006.
2.4. Shares and participation certificates
Voting rights may only be exercised after the shareholder has
been registered in the Share Register. All shares are entitled to
full dividend rights. Voting rights per shareholder are restricted
to 5% of the total number of the registered shares recorded in
the commercial register. This does not apply to shareholders
who were in possession of more than 5% of the shares of
Burckhardt Compression Holding AG before the Initial Public
Offering (IPO). The voting rights of treasury shares – held by
Burckhardt Compression Holding AG – will be suspended. The
company has not issued any participation certificates.
2.5. Dividend-right certificates
The company has not issued any dividend-right certificates.
52
CORPORATE GOVERNANCE | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
From left: Urs Leinhäuser, Dr. Monika Krüsi, Valentin Vogt, Hans Hess, Dr. Stephan Bross
3. BOARD OF DIRECTORS
3.1. Members and
3.2. Other activities and interests
The Bylaws stipulate that the Board of Directors consists of a
minimum of three and a maximum of seven members. At pres-
ent, the composition of the Board of Directors is as follows:
Name
Nationality
Function
First elected
Term expires
Valentin Vogt
Hans Hess
Dr. Monika Krüsi
Urs Leinhäuser
Dr. Stephan Bross
CH
CH
CH/IT
CH
DE
Chairman, non-executive, Chairman SC
Deputy Chairman, non-executive, Chairman NCC
Member, non-executive, member SC, member AC
Member, non-executive, Chairman AC
Member, non-executive, member NCC
2002
2006
2012
2007
2014
2018
2018
2018
2018
2018
AC = Audit Committee
NCC = Nomination and Compensation Committee
SC = Strategy Committee
Valentin Vogt was CEO of Burckhardt Compression Group from
the year 2000 until March 31, 2011. No other Board member has
served as a member of the Executive Board of a Burckhardt
Compression Group company. None of the directors have mate-
rial business relationships with a Burckhardt Compression
Group company.
Biographical details and information on other activities and
commitments of the individual members of the Board of Direc-
tors are given below:
CORPORATE GOVERNANCE | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
53
VALENTIN VOGT (1960)
HANS HESS (1955)
Education
Lic. oec. HSG St. Gallen, Switzerland
Professional background
Since 2011 self-employed, Switzerland
2000–2011 CEO, Burckhardt
Compression Group, Switzerland
1992–2000 General Manager, Sulzer
Metco AG, Switzerland
1989–1992 CFO, Sulzer Metco AG,
Switzerland
1986–1989 CFO, Alloy Metals, USA
1985–1986 Controller, Sulzer AG,
Switzerland
Duties and responsibilities as a
director of Burckhardt Compression
Holding AG
– Chairman of the Board of Directors
– Chairman of the Strategy Committee
Education
Master’s degree in Materials Science &
Engineering, ETH Zurich, Switzerland,
MBA University of Southern California,
USA
Professional background
Since 2006 self-employed,
Hanesco AG, Switzerland
1996–2005 Delegate of the Board of
Directors and CEO, Leica
Geosystems AG, Switzerland
1993–1996 President, Leica Optronics
Group, Switzerland
1989–1993 Vice President, Leica
Microscopy Group, Switzerland
1983–1988 Head of Polyurethane
Division, Huber & Suhner AG, Switzerland
1981–1983 Development Engineer,
Sulzer AG, Switzerland
Other activities and commitments
– Board member, Bucher Holding AG,
Switzerland
– Board member, Kistler Holding AG,
Duties and responsibilities as a
director of Burckhardt Compression
Holding AG
– Deputy Chairman of the Board of
Switzerland
Directors
– Board member, Ernst Göhner Stiftung
– Chairman of the Nomination and
Beteiligungen AG, Switzerland
Compensation Committee
– Chairman of the Swiss Employers’
Association, Switzerland
– Member of Economic Advisory Board,
Other activities and commitments
– Chairman of the Board, COMET
Swiss National Bank, Switzerland
Holding AG, Switzerland
– Chairman of the Board, Reichle &
DeMassari AG, Switzerland
– Board member, dorma+kaba
Holding AG, Switzerland
– Chairman, Swissmem, Switzerland
– Vice President, economiesuisse,
Switzerland
– Trustee, Swisscontact, Switzerland
– Trustee, Technorama, Switzerland
54
CORPORATE GOVERNANCE | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
DR. MONIKA KRÜSI (1962)
URS LEINHÄUSER (1959)
DR. STEPHAN BROSS (1962)
Education
Degree in Engineering, University of
Braunschweig, Germany
Professional background
Since 2017 Member of the Executive
Board (CTO), KSB SE & Co. KGaA,
Germany
2014–2017 Senior Vice President,
Pumps, KSB AG, Germany
2007–2013 Senior Vice President,
Service, KSB AG, Germany
2002–2007 Head Product Management
and Development Engineered Pumps,
KSB AG, Germany
1997–2001 Head Development and
Services Fluid Flow Technical Systems,
KSB AG, Germany
1996–1997 Head of Fluid Mechanics
Research, KSB AG, Germany
1993–1996 R&D Engineer, KSB AG,
Germany
Duties and responsibilities as a
director of Burckhardt Compression
Holding AG
– Member of the Board of Directors
– Member of the Nomination and
Compensation Committee
Education
Ph.D. in Business Informatics, MBA,
University of Zurich, Switzerland
Professional background
Since 2003 Partner, MKP
Consulting AG, Switzerland
2001–2003 Partner, Venture Incubator
Partners AG, Switzerland
1991–2001 Associated Partner,
McKinsey & Co., Inc., Switzerland
1986–1990 Credit Suisse, Switzerland
Duties and responsibilities as a
director of Burckhardt Compression
Holding AG
– Member of the Board of Directors
– Member of the Strategy Committee
– Member of the Audit Committee
Other activities and commitments
– Board member, ACP, Switzerland
– Board member, Emch AG, Switzerland
– Board member, CP Pumpen AG,
Switzerland
– Board member, 360°, Switzerland
– Board member, Otto Suhner AG,
Switzerland
– Board member, Signal AG, Switzerland
– Board member, Technopark Luzern,
Switzerland
Education
Degree in Business Administration,
University of Applied Sciences, Zurich,
Switzerland
IMD Lausanne (SSE)
Professional background
Since 2016 Partner/Consultant
ADULCO GmbH, Switzerland
2014–2016 self-employed, Switzerland
2011–2014 CFO and Deputy CEO,
Member of Executive Board, Autoneum
Holding AG, Switzerland
2003–2011 CFO and Head Corporate
Center, Member of Group Executive
Committee, Rieter Holding AG,
Switzerland
1999–2003 CFO, Member of Group
Executive Committee, Mövenpick
Holding, Switzerland
1997–1999 Head of Finance and
Controlling, Piping Systems Division,
Georg Fischer AG, Switzerland
1995–1997 Head of Corporate
Controlling, Georg Fischer AG,
Switzerland
1988–1994 Group Controller,
Cerberus AG, Switzerland
1992 Managing Director, Cerberus,
Denmark
1986–1988 Tax Consultant, Deputy
Head, Tax Consultancy Department,
Refidar Moore Stephens, Switzerland
1983–1986 Tax Inspector, Cantonal Tax
Department SH, Switzerland
Duties and responsibilities as a
director of Burckhardt Compression
Holding AG
– Member of the Board of Directors
– Chairman of the Audit Committee
Other activities and commitments
– Chairman of the Board, Avesco AG,
Switzerland
– Board member, Ammann Group
Holding AG, Switzerland
– Board member, Liechtensteinische
Landesbank AG, Liechtenstein
– Board member, VAT Group AG,
Switzerland
CORPORATE GOVERNANCE | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
55
Nomination and Compensation Committee This committee
advises and assists the Board of Directors on appointing,
assessing and dismissing members of the Executive Board, and
draws up proposals for the appointment or dismissal of mem-
bers of the Board of Directors. Furthermore, the Nomination
and Compensation Committee advises and assists the Board of
Directors on questions relating to the compensation of the
Board members and the Executive Board. The Nomination and
Compensation Committee held three half-day meetings in fis-
cal 2017. The CEO and the CHRO also attended these meetings.
Members are Hans Hess (Chairman) and Dr. Stephan Bross.
Strategy Committee The Strategy Committee supports the
CEO in developing corporate strategy and advises the Board of
Directors in strategic matters such as acquisitions and divest-
ments. It evaluates the implementation of company strategy on
a regular basis and submits proposals to the Board of Directors
if adjustments or other measures are deemed necessary. The
Strategy Committee held three meeting in fiscal year 2017.
These meetings lasted a half or a whole day. At two of these
meetings the entire Board of Directors and the members of the
Executive Board were attending. The committee members are
Valentin Vogt (Chairman) and Dr. Monika Krüsi.
3.6. Definition of areas of responsibility
The Board of Directors has delegated the executive manage-
ment of the company and the Group to the CEO of Burckhardt
Compression Group, with the exception of the following mat-
ters:
– Definition of the Group’s business policies and strategy
– Definition of the top-level organizational structure of the
Group
– Approval of the periodic forecasts, the annual report and of
reporting and accounting policies
– Ensuring adequate internal control systems based on the rec-
ommendations of the Audit Committee
– Determination of the appropriate capital structure
– Appointment and dismissal of members to and from the Exec-
utive Board, as well as compensation of the Executive Board
– Decisions on new subsidiaries, major capital expenditure proj-
ects, acquisitions, financing transactions, insurance concepts
and the provision of guarantees if such decisions exceed the
powers conferred on the CEO.
The powers of the Executive Board and of the Group company
executives are listed in detail in the delegation of authority.
3.3. Rules in the Bylaws concerning the number of per-
mitted activities
Members of the Board of Directors may not hold more than
ten (10) additional board memberships, whereof not more than
four (4) in listed companies.
3.4. Election and terms of office
Each member of the Board of Directors, the Board Chairman,
and each member of the Nomination and Compensation Com-
mittee are elected annually by the Annual General Meeting. The
members of the Board of Directors shall be automatically
retired from the Board of Directors in the year in which they
reach the age of 70.
3.5. Internal organization
The Board of Directors has the final responsibility for the busi-
ness strategy and the management of the Burckhardt Com-
pression Group. It has final authority and defines the guidelines
regarding strategy, organization, financial planning and
accounting for the Burckhardt Compression Group. The Board
of Directors has delegated executive management responsibil-
ity to the CEO of Burckhardt Compression Group. The Board of
Directors appoints a secretary for the Board and for the com-
pany. The Secretary does not need to be a member of the Board.
This role is currently assigned to the company’s legal Counsel.
The Board of Directors meets as often as business requires,
but at least four times per year. In fiscal year 2017, the Board of
Directors held seven meetings, with each meeting lasting from
half a day to one day. Furthermore, the Board of Directors held
three telephone conferences during fiscal year 2017, each one
lasting one to two hours. The Board of Directors has a quorum
when the majority of the members are present. Decisions are
passed by a simple majority. In the event of a tie, the Chairman
has the casting vote.
The CEO, the two Presidents of the Systems and Services
Divisions, the CFO, the CHRO and the Legal Counsel, in his role
as secretary, are regularly invited to attend Board meetings to
report on developments in their respective business areas. The
Board of Directors has set up the following committees:
Audit Committee The Audit Committee advises and supports
the Board in all matters related to external and internal audits,
risk management, accounting policies and practices and com-
pliance with accounting standards issued. In fiscal year 2017,
the Audit Committee held two half-day meetings. The CEO, the
CFO, the head of the internal audit department and representa-
tives of the external auditors also participated in these meet-
ings. Members are Urs Leinhäuser (Chairman) and Dr. Monika
Krüsi. As part of the switch from the IFRS to the Swiss GAAP FER
accounting standard, the Audit Committee also met for an
extraordinary session that was attended by the CFO and Group
Controller in addition to the members of the Audit Committee.
56
CORPORATE GOVERNANCE | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
3.7. Information and control instruments vis-a-vis the
Executive Board
Financial reporting and planning Order intake, the income
statement, balance sheet, liquidity planning and cash flow,
headcount, personnel costs and capital expenditure are consol-
idated and annotated on a monthly basis. A rolling forecast of
Group results for the current and coming fiscal years is also
prepared and annotated four times a year (April, July, October
and January). Targets for the coming fiscal year are determined
based on the January forecast. The financial report and the
forecasts are distributed to the members of the Executive
Board and all members of the Board of Directors. At every
meeting of the Board of Directors, the members of the Execu-
tive Board report on the course of business and on all issues of
relevance to the Group.
Internal Group Audit and internal control system (ICS) The
Internal Group Audit unit reports to the Chairman of the Board
of Directors’ Audit Committee. Management responsibility for
the unit has been delegated to the head of the Accounting unit
of Burckhardt Compression AG, who is also responsible for
coordinating and conducting the audits. The CFO is responsible
for coordination between the Audit Committee and the head of
the Internal Group Audit. The Internal Group Audit team con-
sists of qualified staff from the Finance and Controlling depart-
ments of Burckhardt Compression AG and several selected
financial specialists from the Group’s subsidiaries. These
employees perform the internal audit duties assigned to them
in addition to their core duties and responsibilities within the
Finance and Controlling units and in this additional capacity
they report directly to the Head of Internal Group Audit, who in
turn reports in this function directly to the Chairman of the
Board of Directors’ Audit Committee. This efficient organiza-
tion is tailored to the needs and size of Burckhardt Compression
Group and fosters an active exchange of information and best
practices with the objective of creating sustained value added
for Burckhardt Compression Group by means of continual pro-
cess improvement. The internal auditors undergo regular train-
ing for the performance of their tasks. The training received is
coordinated by the head of the Internal Group Audit. The sched-
ule for internal audits is determined by the Audit Committee of
the Board of Directors on an annual basis and may be changed
or expanded by the Audit Committee as and when required. Six
internal audits were carried out in fiscal year 2017. The internal
auditors’ reports were distributed to the management of the
audited company, the members of the Audit Committee of the
Board of Directors, the Executive Board members and to the
external company auditors. The statutory auditor assesses the
effectiveness of the internal control system (ICS) in a written
report submitted to the Audit Committee and the Board of
Directors once a year.
Risk management Burckhardt Compression implements a risk
management system. In a two-step risk management process,
key risks are identified at an early stage and allocated to the
categories of strategic, financial and operational risk defined by
the Board of Directors. The risks are then evaluated and pro-
cessed accordingly, and rigorously monitored, prevented,
reduced or transferred using the appropriate risk mitigation
measures. The first stage of risk management consists of a
continuous risk management process, in which the divisions
and larger companies at Burckhardt Compression Group sys-
tematically identify and assess the risks in a regular rhythm,
define the necessary risk mitigation measures together with
the responsible persons, and set and monitor deadlines for
implementation. Risk assessment takes account of internal and
external factors.
The second stage of the risk management process consists
of a periodic Risk Management Review, which takes places
twice a year at the meetings of the Board of Directors’ Audit
Committee. To this end, the CEO prepares an overview of the
main risks faced by Burckhardt Compression Group, and an
assessment of the likelihood of these risks occurring and the
effects this would have. This overview is presented to the Audit
Committee together with the risk mitigation measures, the
people responsible for implementing them, and an implementa-
tion timetable. The Audit Committee then reports to the Board
of Directors about the findings of the Risk Management Review.
4. EXECUTIVE BOARD
4.1. Members of the Executive Board and
4.2. Other activities and interests
Name
Nationality
Function
Marcel Pawlicek
Rolf Brändli
Sandra Pitt
Fabrice Billard
Martin Wendel
CH
CH
DE
FR
DE
CEO
CFO
CHRO
President Systems Division
President Services Division
Biographical details and information on other activities and
commitments of the members of the Executive Board are given
below:
CORPORATE GOVERNANCE | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
57
MARCEL PAWLICEK (1963)
ROLF BRÄNDLI (1968)
SANDRA PITT (1971)
Education
Degree in Mechanical Engineering,
HTl Winterthur, Switzerland, MBA
Marketing and International Business,
Fordham University, New York, USA
Professional background
Since 2011 CEO, Burckhardt
Compression Group, Switzerland
2008–2011 Head of Design & Manufac-
turing, Burckhardt Compression AG,
Switzerland
2001–2008 Head of CSS, Burckhardt
Compression AG, Switzerland
1999–2001 Head Sales and Contracting
HPI, Sulzer-Burckhardt AG, Switzerland
1989–1999 Project Manager and Mar-
keting & Sales Manager for Burckhardt
Compressors, Sulzer Inc., USA
1986–1989 Design Engineer, Sulzer-
Burckhardt AG, Switzerland
Other activities and commitments
– President of the Swiss-CIS/Georgia
Chamber of Commerce
– Vice President of AZW Winterthur,
Switzerland
Education
Degree in Business Administration,
HWV Zurich, Switzerland
Professional background
Since 2008 CFO, Burckhardt
Compression Group, Switzerland
2001–2008 Head of Finance &
Administration, Sulzer Brasil S.A., São
Paulo, Brazil; Regional Controller, Sulzer
Pumps South America & South Africa
1997–2001 Regional Controller Asia/
Pacific, Sulzer International Ltd.;
General Manager, Sulzer Hong Kong Ltd.,
Hong Kong, SAR China
1994–1997 Management Consultant,
OBT Treuhand AG Zurich, Switzerland
Education
Degree in Business Administration/
Business Informatics, Germany, MBA
International Finance/International HR,
American University Washington, USA
Professional background
Since 2015 CHRO, Burckhardt
Compression Group, Switzerland
2013–2015 Head Corporate HR,
AFG Management AG, Switzerland
2012–2013 Head Personal Central
Europe, Holcim (Schweiz) AG,
Switzerland
2010–2012 Head Personal, Holcim
(Schweiz) AG, Switzerland
2007–2009 Head Personal BASF Group
Switzerland, BASF Schweiz AG,
Switzerland
2006–2007 HR Director Europe,
BASF AG, Division Europe, Germany
2003–2006 Internal Consultant
Performance Management, BASF AG,
Division Personal Global, Germany
2002–2003 HR Coordinator Europe,
BASF AG, Division Personal Global,
Germany
58
CORPORATE GOVERNANCE | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
FABRICE BILLARD (1970)
MARTIN WENDEL (1966)
Education
Master of Science in aeronautics and
aerospace engineering, Ecole Centrale
Paris, France
Education
Degree in mechanical engineering
and production systems, University of
Karlsruhe, Germany
Professional background
Since 2016 President Systems Division,
Burckhardt Compression Group, Swit-
zerland
2015–2016 Chief Strategy Officer,
Sulzer, Switzerland
2012–2015 Head Business Unit Mass
Transfer Technology, Sulzer Chemtech,
Switzerland/Singapore
2010–2012 Head Europe, Middle-East,
India, Russia & Africa Business Unit
Mass Transfer Technology, Sulzer
Chemtech, Switzerland
2008–2010 Vice President Business
Development, Sulzer Chemtech,
Switzerland
2005–2008 Head Global Customer
Services, Sulzer Pumps, Switzerland
2004–2005 Strategic Development
Manager, Sulzer Corporate, Switzerland
1999–2004 Principal, The Boston
Consulting Group, Switzerland/France
Professional background
Since 2016 President
Services Division, Burckhardt
Compression Group, Switzerland
2014–2016 Vice President Service,
Rolls-Royce Power Systems AG,
Germany
2011–2014 Vice President Service
Operations and Logistics, Rolls-Royce
Power Systems AG, Germany
2008–2010 Vice President Global After
Sales, Rolls-Royce Power Systems AG,
Germany
2002–2008 Director Global Spare Parts
Center, Rolls-Royce Power Systems AG,
Germany
2000–2001 Head Project Euro III,
EvoBus, Germany
1999–2000 Head Order Center/Logis-
tics Powered Industrial Trucks, Linde,
Germany
1997–1999 Head Electric Forklift Truck
Production, Paint Shop, Receiving, Linde,
Germany
CORPORATE GOVERNANCE | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
59
4.3. Rules in the Bylaws concerning the number of per-
mitted activities
Members of the Board of Directors may not hold more than
five additional board memberships, whereof not more than two
in listed companies.
4.4. Management contracts
There are no management contracts with third parties.
5. COMPENSATION, SHAREHOLDINGS
AND LOANS
The principles and elements of compensation paid to members
of the Board of Directors and the Executive Board as well as the
authority and the mechanisms used to determine such compen-
sation are explained in the Compensation Report on pages 61 to
69.
The shareholdings of the members of the Board of Directors
and the Executive Board in Burckhardt Compression Holding AG
are listed in the Compensation Report on pages 61 to 69 and in
the financial statement of Burckhardt Compression Holding AG,
note 103 “Share capital and shareholders” on page 103.
Burckhardt Compression Group did not grant any loans,
credit or collateral to any of the members of the Board of Direc-
tors or the Executive Board in fiscal year 2017 and there are no
arrangements of this nature outstanding.
6. SHAREHOLDERS’ PARTICIPATION
RIGHTS
6.1. Voting rights restrictions and representation of
voting rights
No person or entity will be registered in the Share Register with
voting rights for more than 5% of the issued share capital. This
entry restriction is also applicable to persons whose shares are
held, in whole or part, by Nominees. This restriction is also valid
if shares are acquired through the exercise of subscription,
option or conversion rights. This restriction on voting rights
does not apply to shareholders who were in possession of more
than 5% of the shares of Burckhardt Compression Holding AG
before the IPO. There is no provision for measures to remove
restrictions.
6.4. Inclusion of items on the agenda
Shareholders who together represent at least 10% of the share
capital or shares with a nominal value of at least CHF 1.0 mn
can ask for an item to be included on the agenda of the General
Meeting. The Board of Directors must receive written proposals
for items to be included on the agenda, specifying the issue to
be discussed and the shareholders’ proposals, at least 40 days
before the date of the General Meeting.
6.5. Entries in the Share Register
The record date for registered shareholders to be entered in the
Share Register prior to an Annual General Meeting will be
stated in the invitation to the Annual General Meeting.
7. CHANGES OF CONTROL AND
DEFENSIVE MEASURES
7.1. Obligation to make an offer
Once a shareholder acquires 33⅓% of share capital and voting
rights, he/she will be under an obligation to submit a public
tender offer. The Bylaws contain neither an opting-out nor an
opting-up clause.
7.2. Clauses on change of control
There are no provisions for special severance payments for
members of the Board of Directors or members of the Executive
Board in the event of a change of control over Burckhardt Com-
pression Holding AG.
8. AUDITORS
8.1. Duration of mandate and term of office of the auditor
in charge
PricewaterhouseCoopers AG (PwC) has been the statutory
auditor of Burckhardt Compression Holding AG since 2002 and
is also in charge of the audit of the consolidated financial state-
ments. The statutory auditor is elected by the General Meeting
of Shareholders for one year at a time. The auditor in charge
will be changed after a maximum period of seven years. Beat
Inauen has served as auditor in charge since the 2013 reporting
period.
A shareholder may be represented at the Annual General
Meeting by the independent proxy holder or by another person
with legal capacity. All shares held by a shareholder can only
be represented by one person.
8.2. Auditor’s fees
Total fees for auditing services provided by PwC worldwide
during fiscal year 2017 amounted to TCHF 374 (previous year
TCHF 380).
6.2. Statutory quorums
A majority of at least two-thirds of the voting rights repre-
sented is required for changes to the company’s Bylaws.
6.3. Convocation of the General Meeting of Shareholders
None of the applicable rules deviate from the law.
60
CORPORATE GOVERNANCE | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
8.3. Additional fees
The additional fees for services provided by PwC worldwide
during fiscal year 2017 amounted to TCHF 1 (previous year:
TCHF 6). This includes consultation fees in connection with the
implementation of new accounting policies and other issues.
8.4. Information tools of the external auditors
The Audit Committee assists the Board of Directors in monitor-
ing the company’s accounting and financial reporting. It
assesses the internal control procedures, the management of
business risks, the audit plan and scope, the conduct of the
audits and their results. The Audit Committee also reviews the
auditor’s fees. The statutory auditor is present during the
examination of the consolidated annual and semi-annual finan-
cial statements. Once a year, the members of the Audit Com-
mittee receive from the statutory auditor a summary of the
audit findings and suggested improvements. The Audit Commit-
tee held two regular half-day meetings during the 2017 report-
ing period, in which the auditor in charge and another represen-
tative of the auditor took part.
9. INFORMATION POLICY
Burckhardt Compression Holding AG reports order intake,
sales, operating results, balance sheet, cash flow and changes
in shareholders’ equity on a semi-annual basis, together with
comments on the trend of business and the outlook for the
future. Burckhardt Compression Holding AG provides share
price sensitive information in accordance with the ad hoc dis-
closure requirements set out in the listing Rules of the SIX Swiss
Exchange. Burckhardt Compression Holding AG will send poten-
tially share price-sensitive information to all interested parties
via an e-mail distribution list. Financial reports are available on
our website (www.burckhardtcompression.com) and will be
delivered to interested parties on request.
Key dates for 2018 and 2019
July 6, 2018
Annual General Meeting of Shareholders
October 30, 2018
Results for the first half of 2018 (as per September 30, 2018)
May 28, 2019
2018 Annual Report (as per March 31, 2019)
July 6, 2019
Annual General Meeting of Shareholders
Details of these dates, possible changes, the company profile,
current share prices, presentations and contact addresses can
be found at www.burckhardtcompression.com, where inter-
ested parties can also subscribe to the e-mail distribution list.
COMPENSATION REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
61
COMPENSATION REPORT
1. BASIS
This Compensation Report describes the policies and system in
place for the compensation of the Board of Directors and the
Executive Board of Burckhardt Compression, and contains
information on their annual compensation. The report was pre-
pared in accordance with the provisions of the Swiss Federal
Ordinance Against Excessive Compensation in listed Compa-
nies (OAEC), the Directive on Information relating to Corporate
Governance (DCG) issued by the SIX Swiss Exchange, and the
Bylaws of Burckhardt Compression Holding AG.
2. COMPENSATION POLICY
Burckhardt Compression has established a transparent and
long-term-oriented compensation system. The objectives pur-
sued with this system are to ensure that the compensation of
the Board of Directors and the company executives is market
competitive and to achieve a good balance between the inter-
ests of the shareholders, the directors and executive manage-
ment. Market-competitive pay is a basic prerequisite for attract-
ing well-qualified directors and executives and ensuring that
they remain with the company for the long run.
3. ORGANIZATION, DUTIES AND POWERS
The Nomination and Compensation Committee (NCC) is com-
prised of at least two members of the Board of Directors. The
members of the NCC are elected individually and annually by
the Annual General Meeting and their term of office shall expire
at the end of the next Annual General Meeting. The Annual Gen-
eral Meeting of July 1, 2017 elected Hans Hess and Dr. Stephan
Bross to the Nomination and Compensation Committee. The
Board of Directors appointed Hans Hess Chairman of the Nomi-
nation and Compensation Committee.
The NCC meets at least twice a year. The CEO and the CHRO
attend these meetings in an advisory capacity, except during
deliberation of meeting topics that pertain to themselves. The
Nomination and Compensation Committee held three meetings
during the year under review.
The duties and powers of the NCC are set forth in the
Bylaws and in the Organizational Regulations of the Company.
The NCC supports the Board of Directors in the performance of
its duties pertaining to the compensation and personnel poli-
cies of the company and the entire Group as prescribed by law
or the company’s Bylaws. The most important duties and pow-
ers of the NCC with regard to compensation are noted in the
table below.
The Annual General Meeting of Burckhardt Compression Hold-
ing AG casts the following votes in relation to the compensa-
tion of the Board of Directors and Executive Board:
– a prospective vote on the maximum aggregate amount of
fixed compensation for the Board of Directors and the Execu-
tive Board for the fiscal year following the Annual General
Meeting
– a retrospective vote on the maximum aggregate amount of
variable compensation for the Executive Board for the fiscal
year preceding the Annual General Meeting.
Furthermore, the Annual General Meeting casts a consultative
vote on the Compensation Report.
4. COMPENSATION SYSTEM
Burckhardt Compression Group’s compensation system con-
sists of a mix of fixed and variable components. In accordance
with the Bylaws of Burckhardt Compression Holding AG, vari-
able compensation can be paid in whole or part in the form of
shares, conditional rights to receive shares, or in comparable
instruments of the company.
Topic
Proposal/recommendation by
Approval authority
Compensation principles and guidelines
Compensation Report
Compensation of Board of Directors
Compensation of CEO
Aggregate compensation of Executive Board
Compensation per member of Executive Board (excl. CEO)
Loans and additional pension benefits for Executive Board (excl. CEO)
NCC
NCC
NCC
NCC
NCC
CEO
CEO
Board of Directors
Board of Directors
Board of Directors
Board of Directors
Board of Directors
NCC
NCC
62
COMPENSATION REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
4.1. Compensation system for the Board of Directors
New compensation rules for the Board of Directors came into
force in the 2017 fiscal year. These were approved through a
change in the Bylaws at the Annual General Meeting of July 1,
2017. Compensation for the Board of Directors consists of a
fixed component, 80% of which is paid in cash, 20% in shares; a
fixed cash supplement for directors who serve on a formal
Board committee; and a fixed lump-sum for expenses. The num-
ber of shares awarded is based on the average share price (daily
closing price on the SIX exchange) for the period between the
announcement of the full-year results and the Annual General
Meeting.
The fixed cash component amounts to CHF 81’000 for mem-
bers of the Board of Directors and CHF 134’000 for the Chair-
man. The fixed supplement for directors serving on a formal
Board committee is CHF 10’000 a year. The lump sum for
expenses is CHF 4’000 for members of the Board of Directors
and CHF 6’000 per year for the Chairman of the Board of Direc-
tors.
4.2. Compensation system for the Executive Board
Compensation of the Executive Board consists of three compo-
nents:
– a fixed base salary
– a variable performance- and profit-related annual bonus paid
in cash
– a variable performance- and profit-related long-term incen-
tive bonus awarded in the form of free shares.
Base salary The members of the Executive Board are assigned
to so-called Global Grades as defined by a global functional
grading system (Willis Towers Watson Global Grading System).
Market data for each Global Grade and the results of annual
executive performance appraisals are taken into consideration
when determining the base salary of the members of the Execu-
tive Board.
Annual Bonus The members of the Executive Board receive a
variable performance- and profit-related bonus in addition to
their base salaries. The annual bonus is calculated based on a
predefined percentage of net income generated by the Burck-
hardt Compression Group and is contingent on the attainment
of minimum financial targets. The percentage rate applied for
the CEO is 0.28%. For the other members of the Executive
Board, the predefined fixed percentage rate varies from
0.08% to 0.16% of net income, depending on their Global Grade.
The annual bonus is limited to 50% of annual base salary.
Long-term incentive pay Members of the Executive Board
additionally receive long-term incentive pay awarded in the
form of free shares. The long-term bonus program is valid for a
six-year period (fiscal years 2017–2022). Long-term incentive
pay is based on the attainment of the Mid-Range Plan targets
for organic growth (sales) and net income of Burckhardt
Compression Group for the fiscal years 2018 to 2022 and for the
2017 fiscal year.
The basis upon which the long-term incentive pay is calcu-
lated consists of a fixed, predefined amount per Global Grade.
If the sales and net income targets set in the Mid-Range Plan
are attained by the end of fiscal year 2022, this fixed amount
will be multiplied by a factor of 1.0 (0.5 each for sales and net
income) and awarded in the form of shares (free shares). The
targeted amount of the long-term bonus for the entire six-year
period is CHF 900’000 for the CEO, and between CHF 405’000
and CHF 600’000 for the members of the Executive Board,
depending on their Global Grade. The sales target in the Mid-
Range Plan (aggregate) for the six years is CHF 3’819 mn, the
net income target is CHF 300 mn. If the targets are only par-
tially achieved, the factors will be reduced by a corresponding
amount. Minimum financial targets have been defined for both
cumulative sales and for cumulative net income. The minimum
cumulative sales target is set at CHF 3’346 mn, minimum
cumulative net income at CHF 195 mn. If cumulative sales or
net income fall short of these minimum thresholds, the corre-
sponding factor will be reduced to zero. If the Mid-Range Plan
targets for sales or net income are exceeded, the corresponding
factors will be increased up to a maximum amount of 0.6 each
(1.2 in total).
An interim evaluation of the attained targets will be con-
ducted after three years. Members of the Executive Board
whose employment with the company has not been terminated
as of July 31, 2020 will on that date be awarded a fixed number
of free shares for the fiscal years 2017, 2018 and 2019. These
free shares will be distributed at the end of July 2020. The sec-
ond allotment of free shares for the fiscal years 2020, 2021 and
2022 will be distributed at the end of July 2023, provided that
the employment contract for the respective Executive Board
members has not been terminated. Persons subsequently
appointed to the Executive Board will be entitled to long-time
incentive pay on a pro rata basis. The number of shares awarded
will be based on the average share price for the periods from
the announcement of the full-year results to the annual general
meetings for the fiscal years 2019 and 2022, respectively.
All shares received will not be subject to any restrictions
upon the date of transfer.
Employment contract terms Employment contracts with
Executive Board members are entered into for an indefinite
period with a notice period of six months.
COMPENSATION REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
63
5. COMPENSATION PAID WITH
COMPARATIVE FIGURES FOR THE
PREVIOUS YEAR
5.1. Compensation paid to the Board of Directors
The following aggregate compensation was paid to the mem-
bers of the Board of Directors for the fiscal years 2017 and 2016:
in CHF 1’000
Name
Function
Members of the Board of Directors
Valentin Vogt
Chairman
Hans Hess
Deputy Chairman
Dr. Stephan Bross
Dr. Monika Krüsi
Urs Leinhäuser
Total
Member
Member
Member
Approved by the 2017 AGM
for fiscal year 2017
in CHF 1’000
Name
Function
Members of the Board of Directors
Valentin Vogt
Chairman
Hans Hess
Deputy Chairman
Dr. Stephan Bross
Dr. Monika Krüsi
Urs Leinhäuser
Total
Member
Member
Member
Approved by the 2015 AGM
for fiscal year 2016
Fees
Social insurance
contributions and
other benefits
Total fixed
compen sation
(gross)
Share-based
payments
Social insurance
contributions and
other benefits
Total variable
compen sation
(gross)
144
91
91
101
91
518
17
10
4
10
10
51
161
101
95
111
101
569
5802
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Fees
Social insurance
contributions and
other benefits
Total fixed
compen sation
(gross)
Share-based
payments1
Social insurance
contributions and
other benefits
Total variable
compen sation
(gross)
120
65
65
75
65
390
9
4
0
5
5
23
129
69
65
80
70
413
4253
20
14
14
13
13
74
1
1
0
1
1
5
22
15
14
14
14
79
2017
Total
161
101
95
111
101
569
5802
2016
Total
151
83
78
95
85
492
1 Variable compensation paid to members of the Board of Directors (free shares)
2 This amount includes a contingency reserve of CHF 9’000
3 This amount includes a contingency reserve of CHF 10’000
Total fixed compensation in the fiscal year under review is
higher than in the previous year because from fiscal 2017
onwards no variable payments are being made to the Board of
Directors, with the corresponding sums directed instead to the
fixed payments. The Annual General Meeting of July 1, 2017
approved aggregate fixed compensation in the amount of
CHF 580’000 (gross, incl. social insurance contributions) for the
Board of Directors (five persons) for fiscal year 2017. The amount
of compensation actually paid was CHF 11’000 less than the
approved amount.
64
COMPENSATION REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
5.2. Compensation paid to the Executive Board
The following compensation was paid to the members of the
Executive Board for the fiscal years 2017 and 2016:
in CHF 1’000
Name
Function
Executive Board
Marcel Pawlicek
CEO
Other members of the Executive Board
Total
Approved by the 2016 AGM
for fiscal year 2017
in CHF 1’000
Name
Function
Executive Board
Marcel Pawlicek
CEO
Other members of the Executive Board2
Total
Approved by the 2015 AGM
for fiscal year 2016
Fixed base
salary, cash
Social
insurance
contributions
and other
benefits
Total fixed
compen-
sation (gross)
Variable
annual
bonus, cash
Share-based
long-term
incentive pay
Total variable
compen-
sation (gross)
Social
insurance
contributions
and other
benefits
2017
Total
425
1’066
1’491
116
260
376
541
1’326
1’867
2’1301
64
118
182
75
172
247
29
53
82
168
343
511
709
1’669
2’378
Fixed base
salary, cash
Social
insurance
contributions
and other
benefits
Total fixed
compen-
sation (gross)
Variable
annual
bonus, cash
Share-based
long-term
incentive pay
Total variable
compen-
sation (gross)
Social
insurance
contributions
and other
benefits
2016
Total
425
1’117
1’542
123
249
372
548
1’367
1’915
3’470
84
145
229
35
192
227
31
59
90
150
396
546
698
1’763
2’461
1 This amount includes a contingency reserve of CHF 200’000
2 As per March 31, 2017: 4 members
The CEO’s fixed base salary for the period under review is com-
parable to the level from the previous year. The total amount
of fixed base salary for the other members of the Executive
Board is CHF 51’000 less than in the prior-year period. The 2016
amount included the pro rata salaries of former Executive
Board members for the months of April and May. The Annual
General Meeting of July 1, 2016 approved a total sum of
CHF 2’130’000 (gross, including social insurance contributions)
for the fixed compensation of the entire Executive Board for the
fiscal year 2017. The amount of fixed compensation actually
paid (gross, including social insurance contributions) was
CHF 263’000 below the approved amount.
Owing to the expected business performance, no minimum
financial performance limit was defined for the transitional
year of 2017 for the annual bonus at net profit margin level.
The annual bonus for the Executive Board in fiscal 2017 was
CHF 47’000 lower than a year earlier. This is because net profit,
which serves as the basis for the annual bonus, was lower. Per-
sonnel expenses for the Executive Board’s long-term bonus
were CHF 20’000 more than in the previous year. The provision
made for the long-term bonus has been adjusted for two rea-
sons: firstly, on the basis of an assessment of business perfor-
mance over several years; secondly, the Swiss GAAP FER
accounting standard requires expenses over the vesting period
to be spread across the duration of the program, which can lead
to adjustments within individual business years.
COMPENSATION REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
65
6. OVERVIEW OF SHAREHOLDINGS AND
ALLOCATED/DISTRIBUTED SHARES
6.1. Detailed overview of allocated and distributed shares
In the fiscal years 2016 and 2017, the following shares were allo-
cated and distributed:
Name
Function
Shares
allocated in
FY 2016
Shares
allocated in
FY 2017
Shares
distributed in
FY 2016
Shares
distributed in
FY 2017
Members of the Board of Directors
Valentin Vogt
Chairman
Hans Hess
Deputy Chairman
Dr. Stephan Bross
Member
Dr. Monika Krüsi
Urs Leinhäuser
Member
Member
Total
Executive Board
Marcel Pawlicek
CEO
Other members of the Executive Board
Total
Total
0
0
0
0
0
0
0
0
0
0
187
125
125
125
125
687
673
859
1’532
2’219
0
0
0
0
0
0
0
0
0
0
187
125
125
125
125
687
1’295
1’170
2’465
3’152
66
COMPENSATION REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
6.2. Detailed overview of shareholdings
As per March 31, 2018, the members of the Executive Board and
the Board of Directors (and related persons) owned the follow-
ing numbers of shares of Burckhardt Compression Holding AG:
Name
Function
Members of the Board of Directors
Valentin Vogt
Chairman
Deputy Chairman
Member
Member
Member
CEO
President Systems Division
CFO
CHRO
President Services Division
Hans Hess
Dr. Stephan Bross
Dr. Monika Krüsi
Urs Leinhäuser
Total
Executive Board
Marcel Pawlicek
Fabrice Billard
Rolf Brändli
Sandra Pitt
Martin Wendel
Total
Total Board of Directors and
Executive Board
As a % of all outstanding shares
03/31/2018
Total shares
03/31/2017
Total shares
203’213
5’618
170
940
1’035
203’026
5’493
45
815
910
210’976
210’289
42’111
400
1’702
278
231
44’722
42’111
220
1’054
0
100
43’485
255’698
253’774
7.5%
7.5%
COMPENSATION REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
67
9. EVALUATION OF THE COMPENSATION
SYSTEM
Burckhardt Compression’s compensation system is regularly
evaluated by the Nomination and Compensation Committee
and the Board of Directors, and adjusted if required. With the
introduction of the divisional organization, it was decided to
adjust the annual bonus program, starting from fiscal year 2018.
The change in the way the annual bonus for the Executive Board
is calculated was made to ensure that account is taken not only
of Group profitability, but also of the profitability of the two
divisions. As before, the percentage specified for the Global
Grade of Executive Board functions is multiplied by the Group’s
net profit. A new feature from the 2018 fiscal year onwards is
that this value will be adjusted using a Group factor (return on
net operating assets – RONOA) for the CEO, CFO and CHRO, and
using a division factor (divisional operating income) for the presi-
dents of the two divisions. This produces the annual bonus for
a specific fiscal year. If the defined target value is not met, or
if a minimum financial performance threshold of 4% return on
sales at the net profit level is not achieved, no annual bonus is
paid. The modifications to the compensation system for the
Executive Board from fiscal year 2018 are being implemented
within the existing rules and require no adjustment to the
Bylaws.
One part of the fair and integrated compensation system is
the annual benchmarking, which is based on the Global Grading
and which uses compensation market data from Willis Towers
Watson. This is carried out annually, most recently in the
2017 fiscal year.
7. TRANSACTIONS WITH THE BOARD
OF DIRECTORS, THE EXECUTIVE BOARD
AND RELATED PARTIES
No other payments or fees for additional services were paid to
the members of the Board of Directors or the Executive Board
or to related parties during the fiscal year 2017. No bonuses for
accession were paid in the year under review. At the reporting
date no loans, credit lines or pension benefits over and above
those provided by mandatory occupational pension plans have
been extended to members of the company’s boards.
8. MOTIONS FOR THE ANNUAL GENERAL
MEETING
8.1. Approval of the maximum aggregate amount of
variable compensation for the Executive Board
Fiscal year 2017
The Board of Directors proposes that a maximum aggregate
amount of CHF 511’000 (gross, including social insurance con-
tributions and other benefits) be approved as variable compen-
sation for the Executive Board for fiscal year 2017.
8.2. Consultative vote on the Compensation Report
Fiscal year 2017
The Board of Directors proposes that shareholders approve the
Compensation Report for fiscal year 2017 in a consultative vote.
8.3. Approval of the maximum aggregate amount of fixed
compensation for members of the Board of Directors
Fiscal year 2019
The Board of Directors proposes that a maximum aggregate
amount of CHF 580’000 (gross, including social insurance
contributions and other benefits) be approved as fixed com-
pensation for the Board of Directors for fiscal year 2019. The
proposed amount includes a contingency reserve of CHF 11’000.
8.4. Approval of the maximum aggregate amount of fixed
compensation for members of the Executive Board
Fiscal year 2019
The Board of Directors proposes that a maximum aggregate
amount of CHF 2’120’000 (gross, including social insurance
contributions and other benefits) be approved as fixed compen-
sation for the Executive Board for fiscal year 2019. The proposed
sum includes a contingency reserve of CHF 250’000.
68
COMPENSATION REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
Report of the statutory auditor
to the General Meeting of Burckhardt Compression Holding AG
Winterthur
We have audited the remuneration report of Burckhardt Compression Holding AG for the year ended March 31, 2018.
The audit was limited to the information according to articles 14–16 of the Ordinance against Excessive
Compensation in Stock Exchange Listed Companies (Ordinance) contained in the tables on pages 63 and 64 of the
remuneration report.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report in
accordance with Swiss law and the Ordinance against Excessive Compensation in Stock Exchange Listed Companies
(Ordinance). The Board of Directors is also responsible for designing the remuneration system and defining
individual remuneration packages.
Auditor’s responsibility
Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit in
accordance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the remuneration report complies with
Swiss law and articles 14–16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration report
with regard to compensation, loans and credits in accordance with articles 14–16 of the Ordinance. The procedures
selected depend on the auditor’s judgment, including the assessment of the risks of material misstatements in the
remuneration report, whether due to fraud or error. This audit also includes evaluating the reasonableness of the
methods applied to value components of remuneration, as well as assessing the overall presentation of the
remuneration report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the remuneration report of Burckhardt Compression Holding AG for the year ended March 31, 2018
complies with Swiss law and articles 14–16 of the Ordinance.
PricewaterhouseCoopers AG
Beat Inauen
Audit expert
Auditor in charge
Winterthur, May 24, 2018
Oliver Illa
Audit expert
PricewaterhouseCoopers AG, Zürcherstrasse 46, Postfach, CH-8401 Winterthur, Switzerland
Telefon: +41 58 792 71 00, Telefax: +41 58 792 71 10, www.pwc.ch
PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.
COMPENSATION REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
69
70
FINANCIAL REPORT
Burckhardt Compression Holding AG’s fiscal year 2017 com-
prises the period from April 1, 2017 to March 31, 2018.
COMMENTS ON FINANCIAL REPORT
Summary
in CHF 1’000
Order intake
Sales1
Gross profit1
Operating income (EBIT)1
in % of sales
Net income1
Total assets1
Total equity1
Earnings per share (in CHF)1
FTEs as per end of fiscal year
1 in accordance with Swiss GAAP FER
2017
2016
Change
2016/2017
525’229
594’574
125’060
41’682
7.0%
29’023
797’583
335’200
8.51
2’214
474’885
557’725
130’537
47’729
8.6%
32’453
810’965
317’103
9.12
2’107
10.6%
6.6%
–4.2%
–12.7%
–10.6%
–1.7%
5.7%
–6.7%
5.1%
SALES AND GROSS PROFIT
OPERATING INCOME
Mainly as a result of the lower gross profit, the operating
income declined by CHF 6.0 mn to CHF 41.7 mn, yielding an EBIT
margin of 7.0%. Selling and marketing together with general
and administrative expenses rose by 4.1% or CHF 3.2 mn, includ-
ing a first full year of Shenyang Yuanda Compressor (fiscal
year 2016: eleven months only) as well as six months of CSM
Compressor Inc. (Canada), acquired in June 2017, within the
consolidation scope. Also the new organizational structure of
the Group with two Divisions was in place for a first full year
versus six months only in fiscal year 2016. Research and devel-
opment expenses ended the year CHF 0.8 mn below the prior
year period at CHF 8.0 mn. Other operating income (net), was
amounting to CHF 5.1 mn. Main contributor to this line in fiscal
year 2017 was the real estate company (Burckhardt Compres-
sion Immobilien AG) with an operating result of CHF 3.6 mn,
while the remaining amount was largely the result of currency
translation gains.
Total sales rose by 6.6% to CHF 594.6 mn in fiscal year 2017.
The Services Division (plus 10.3%) as well as the Systems Divi-
sion (plus 4.7%) contributed to this increase. The growth in Sys-
tems business included a few projects originally scheduled for
invoicing in the prior fiscal year. As Burckhardt Compression
does not apply the percentage of completion (POC) method,
revenue recognition for these projects was fully done in fiscal
year 2017. The growth in the Services Division came from all
business lines, including monitoring and diagnostics and other
brand compressor (OBC) business. Excluding currency transla-
tion effects, total sales increased by 6.4%. From a geographic
perspective, North America has reported the largest growth,
while Europe was significantly lower than in the prior fiscal
year. China, other Asian countries and Australia remained
strong with further growth. Middle East and Africa stagnated
whereas South America experienced a steep growth, but all
three regions at relatively low absolute amounts.
Total gross profit was 4.2% below the figure reported for
the previous year. This resulted in a gross margin of 21.0% (pre-
vious year: 23.4%). The decline in the Systems Division’s gross
margin from 9.9% to 7.1% was mainly due to one-time costs in
the LNGM business and the sharp rise in material prices, espe-
cially in China. Gross profit margins at the Services Division
stood at 46.6%, 2.8 percentage points below the prior fiscal
year, primarily because of changes in the product mix.
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
71
FINANCIAL INCOME AND TAX EXPENSES
CASH FLOW
Net change in cash and cash equivalents was amounting to
CHF 0.2 mn (last year: CHF –50.4 mn). The cash flow from oper-
ating activities was amounting to CHF 44.4 mn, slightly below
prior year (CHF 46.0 mn). Cash outflow for investing activities,
including the acquisition of CSM Compressor Inc., Canada, was
amounting to CHF –17.2 mn. This was significantly less than in
the prior year (CHF –146.8 mn), which at that time included the
cash out for the acquisition of a 60% stake in Shenyang Yuanda
Compressor. The cash paid for dividends was CHF 23.9 mn and
financial liabilities were reduced by CHF 4.6 mn during the
period under review.
The share of results of associates is all related to the 40%
interest in Arkos Field Services and was amounting to
CHF –1.9 mn (prior year: CHF –2.6 mn). Despite the slight
improvement compared to last year and a positive momentum
towards the end of the fiscal year, the result remained negative
for one more year, mainly due to the still compressed
US oil & gas market, especially during the first half of fiscal
year 2017, as well as the temporary interruption of business at
most customer’s sites in the aftermath of hurricane “Harvey”.
The Group’s tax rate stood at 23.5% which is 1.6 percentage
points below the previous year (25.1%). The negative impact
from the US tax reform on deferred tax assets was more than
compensated by a more favorable mix of the weighted average
tax rates for each group companies where the fiscal year 2017
earnings were generated.
NET INCOME
The resulting net income declined by 10.6% or CHF 3.4 mn to
CHF 29.0 mn (prior year: CHF 32.5 mn), resulting in a net income
margin of 4.9%, which was 0.9 percentage points below last
year. The net income per share was amounting to CHF 8.51 (fis-
cal year 2016: CHF 9.12).
BALANCE SHEET
Total assets as per the end of fiscal year 2017 amounted to
CHF 797.6 mn, which represents a reduction of 1.7%, or
CHF 13.4 mn year-over-year. Current and non-current assets
both decreased. The large volume of projects shipped and
invoiced in the last quarter of fiscal year 2017 was resulting in
lower inventory levels as per the balance sheet closing date. On
the other hand, trade accounts receivables remained with
CHF 227.7 mn at a high level. 28.1% of the accounts receivables
were overdue more than 90 days as per closing date (last
year: 30.4%). Most of the related project are located in China.
The balance between advance payments from customers com-
pared to work in progress and advance payments to suppliers
closed the year at CHF –42.5 mn (prior year: CHF –42.1 mn). The
still negative balance is mainly the result of a number of proj-
ects in China with either unfavorable payment terms or delayed
project schedules. The equity ratio increased from the previous
year’s 39.1% to 42.0%. Cash and cash equivalents were reported
at CHF 75.1 mn, virtually unchanged since last year
(CHF 74.9 mn). The net financial position at the end of the fiscal
year slightly improved by CHF 5.2 mn compared to last year to
CHF –62.1 mn.
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION 72
CONSOLIDATED INCOME STATEMENT
Notes
2017
2016
in CHF 1’000
Sales
Cost of goods sold
Gross Profit
Selling and marketing expenses
General and administrative expenses
Research and development expenses
Other operating income
Other operating expenses
Operating income
Share of results of associates
Financial income and expenses
Earnings before taxes
Income tax expenses
Net income
Share of net income attributable to
shareholders of Burckhardt Compression Holding AG
Share of net income attributable to non-controlling interests
Basic earnings per share in CHF
Diluted earnings per share in CHF
The consolidated financial statements have been prepared in
accordance with Swiss GAAP FER since the beginning of fiscal
year 2017. Prior period figures have been restated accordingly
(see note 2.2).
The enclosed notes are an integral part of the consolidated
financial statements.
7
8
8
14
9
10
11
11
594’574
–469’514
125’060
–45’341
–35’127
–8’004
25’158
–20’064
41’682
–1’888
–1’867
37’927
–8’904
29’023
28’837
186
8.51
8.51
557’725
–427’188
130’537
–44’774
–32’512
–8’795
27’221
–23’948
47’729
–2’551
–1’842
43’336
–10’883
32’453
30’905
1’548
9.12
9.12
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
CONSOLIDATED BALANCE SHEET
73
Notes
03/31/2018
03/31/2017
12
13
14
10
15
16
17
18
19
19
20
10
21
22
20
23
24
21
in CHF 1’000
Non-current assets
Intangible assets
Property, plant and equipment
Investment in associates
Deferred tax assets
Other financial assets
Total non-current assets
Current assets
Inventories
Trade receivables
Other current receivables
Prepaid expenses and accrued income
Cash and cash equivalents
Total current assets
Total assets
Equity
Share capital
Capital reserves
Treasury shares
Retained earnings and other reserves
Equity attributable to shareholders of Burckhardt Compression Holding AG
Non-controlling interests
Total equity
Liabilities
Non-current liabilities
Non-current financial liabilities
Deferred tax liabilities
Non-current provisions
Other non-current liabilities
Total non-current liabilities
Current liabilities
Current financial liabilities
Trade payables
Customers’ advance payments
Other current liabilities
Accrued liabilities and deferred income
Current provisions
Total current liabilities
Total liabilities
Total equity and liabilities
The consolidated financial statements have been prepared in
accordance with Swiss GAAP FER since the beginning of fiscal
year 2017. Prior period figures have been restated accordingly
(see note 2.2).
The enclosed notes are an integral part of the consolidated
financial statements.
13’200
193’170
12’249
7’871
25’313
251’803
210’703
227’699
29’546
2’755
75’077
545’780
11’767
200’379
14’704
6’622
24’083
257’555
250’232
209’782
15’326
3’178
74’892
553’410
797’583
810’965
8’500
421
–1’652
288’798
296’067
39’133
335’200
65’599
14’599
14’249
5’900
8’500
–
–6’582
278’129
280’047
37’056
317’103
71’825
16’365
13’000
6’707
100’347
107’897
71’538
65’294
120’642
21’373
63’340
19’849
362’036
70’310
59’980
164’669
21’741
49’340
19’925
385’965
462’383
493’862
797’583
810’965
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
74
CONSOLIDATED CASH FLOW STATEMENT
Notes
2017
2016
10
9
14
13
12
10
4
in CHF 1’000
Cash flow from operating activities
Net income
Income tax expenses
Financial income and expenses
Share of results of associates
Depreciation
Amortization
Change in inventories
Change in trade receivables
Change in other current assets
Change in trade payables
Change in customers’ advance payments
Change in provisions
Change in other current liabilities
Adjustment for non-cash items
Interest received
Interest paid
Income taxes paid
Total cash flow from operating activities
Cash flow from investing activities
Purchase of property, plant and equipment
Sale of property, plant and equipment
Purchase of intangible assets
Sale of intangible assets
Acquisition of group companies net of cash acquired
Total cash flow from investing activities
Cash flow from financing activities
Increase in financial liabilities
Decrease in financial liabilities
Purchase of treasury shares
Dividends paid
Transactions with non-controlling interests
Total cash flow from financing activities
Currency translation differences on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Net change in cash and cash equivalents
The consolidated financial statements have been prepared in
accordance with Swiss GAAP FER since the beginning of fiscal
year 2017. Prior period figures have been restated accordingly
(see note 2.2).
The enclosed notes are an integral part of the consolidated
financial statements.
29’023
8’904
1’867
1’888
17’411
3’897
42’029
–10’412
–10’627
3’452
–46’169
2’037
19’119
1’082
578
–1’743
–17’977
44’359
–8’730
810
–5’101
–
–4’197
–17’218
2’322
–6’961
–
–23’859
299
–28’199
32’453
10’883
1’842
2’551
16’471
3’945
12’829
–7’610
11’155
–18’137
14’222
–778
–10’940
–6’609
302
–2’068
–14’545
45’966
–14’489
774
–1’513
65
–131’677
–146’840
99’424
–9’648
–4’917
–33’950
–
50’909
1’243
–419
185
–50’384
74’892
75’077
185
125’276
74’892
–50’384
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
in CHF 1’000
Share
capital
Capital
reserves
Treasury
shares
Hedge
reserve
Translation
reserve
Goodwill
offset
Other
retained
earnings
Equity
attributable to
shareholders of
Burckhardt
Compression
Holding AG
Non-con-
trolling
interests
75
Total
equity
Balance at 03/31/2016 (IFRS)
Swiss GAAP FER Adjustments
Balance at 04/01/2016
(Swiss GAAP FER)
Result for the period
Additions from acquisitions
of subsidiaries
Currency translation differences
Changes of cash flow hedges
Dividends paid
Changes in treasury shares
Share-based payments
(allocated)
Goodwill on acquisition
Balance at 03/31/2017
(Swiss GAAP FER)
Balance at 03/31/2017 (IFRS)
Swiss GAAP FER Adjustments
Balance at 04/01/2017
(Swiss GAAP FER)
Result for the period
Currency translation differences
Changes of cash flow hedges
Dividends paid
Transactions with non-controlling
interests
Share-based payments
(distributed)
Share-based payments (allocated)
Goodwill on acquisition
Balance at 03/31/2018
(Swiss GAAP FER)
8’500
8’500
–
–
–1’639
–4’671
–18’920
18’920
– 371’822
19’161
–20’460
–1’639
–4’671
–
–20’460 390’983
355’092
17’621
372’713
–
–
355’092
17’621
372’713
–993
–1’117
–4’943
30’905
30’905
1’548
–
37’037
–993
–1’529
–33’950
239
–82’807
–1’117
–33’950
–4’943
239
–82’807
8’500
–
–6’582
–5’788
–993 –103’267 388’177
280’047
37’056
32’453
37’037
–2’522
–1’117
–33’950
–4’943
239
–82’807
317’103
8’500
–
8’500
–
–
–
–6’582
–
–5’788
–
–23’057
22’064 –103’267
– 338’779
49’398
311’852
–31’805
45’337
–8’281
357’189
–40’086
–6’582
–5’788
–993 –103’267 388’177
280’047
37’056
317’103
3’138
5’354
421
4’930
28’837
28’837
3’138
5’354
–23’624
–23’624
–5’351
2’878
–563
–
–
2’878
–563
186
1’827
–235
299
29’023
4’965
5’354
–23’859
299
–
2’878
–563
8’500
421
–1’652
–434
2’145 –103’830 390’917
296’067
39’133
335’200
The consolidated financial statements have been prepared in
accordance with Swiss GAAP FER since the beginning of fiscal
year 2017. Prior period figures have been restated accordingly
(see note 2.2).
The enclosed notes are an integral part of the consolidated
financial statements.
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
76
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Burckhardt Compression is a manufacturer and service provid-
er for a full range of reciprocating compressor technologies and
services. Its customized compressor systems are used in the
upstream oil & gas, gas transport and storage, refinery, chemi-
cal, petrochemical and industrial gas sectors. Burckhardt Com-
pression’s leading technology, broad portfolio of compressor
components and the full range of services help customers
around the world to find their optimized solution for their recip-
rocating compressor systems. Burckhardt Compression Hold-
ing AG is a company limited by shares incorporated and domi-
ciled in Switzerland. The address of its registered office is: Im
Link 5, 8404 Winterthur, Switzerland. Burckhardt Compression
registered shares (BCHN) are listed on the SIX Swiss Stock
Exchange in Zurich (ISIN: CH0025536027).
Burckhardt Compression Holding AG’s fiscal year 2017 com-
prises the period from April 1, 2017 to March 31, 2018. These
consolidated financial statements were authorized for issue by
the Board of Directors on May 24, 2018 and will be submitted to
shareholders for approval at the annual general meeting sched-
uled for July 6, 2018.
2. ACCOUNTING POLICIES
2.1. Basis of Preparation
The consolidated financial statements of Burckhardt Compres-
sion Holding AG have been prepared in accordance with the
entire Swiss GAAP FER accounting and reporting standards. In
addition, the provisions of the Listing Rules of the SIX Swiss
Exchange and Swiss accounting law were complied with. The
consolidated financial statements have been prepared under
the historical cost convention unless otherwise stated in the
following consolidation and accounting policies.
2.2. Change in Accounting Principles
The 2017 consolidated financial statements were prepared
using the Swiss GAAP FER accounting and reporting standards
for the first time. Swiss GAAP FER is a generally accepted,
understandable and comprehensive accounting standard pro-
viding a true and fair view of the financial position, the cash
flows and the results of its operations. The accounting and
valua tion principles applied for the Annual Report 2017 differ
from the Annual Report 2016, prepared in accordance with
IFRS, as detailed below.
Goodwill and intangible assets from acquisitions Goodwill
from acquisitions is directly offset, as at the acquisition date,
with retained earnings in equity in accordance with the allowed
treatment under Swiss GAAP FER 30 “Consolidated Financial
Statements”. Under IFRS, goodwill was capitalized and tested
for impairment annually. Furthermore, under IFRS, all identifi-
able intangible assets (such as customer relationships, tech-
nologies and brands) were separately capitalized and amortized
over their estimated economic useful lives. Under Swiss
GAAP FER, Burckhardt Compression has decided not to sepa-
rate and identify any unrecognized intangible assets as per
acquisition date. They are therefore allocated to goodwill.
Goodwill included in associated companies Under IFRS,
goodwill included in the purchase price of associated compa-
nies was part of the carrying amount of the associated compa-
nies. Burckhardt Compression has decided to offset such good-
will directly in equity as at the acquisition date under Swiss
GAAP FER.
Pension benefit obligations and provisions Pursuant to Swiss
GAAP FER 16 “Pension Benefit Obligations”, an economic obli-
gation or benefit from Swiss pension schemes is determined
based on the financial statements of such pension schemes
prepared in accordance with Swiss GAAP FER 26 “Accounting
of Pension Plans”. The economic impact from pension schemes
of foreign subsidiaries is determined in accordance with
accepted valuation methods. Under IFRS, pension benefit obli-
gations were calculated in accordance with the projected unit
credit method and recognized in accordance with IAS 19.
Provisions previously calculated under IAS 19 which are not
retirement benefits in the narrower sense have been restated
in accordance with Swiss GAAP FER 16, paragraph 6.
Development costs Under IFRS, development costs needed to
be capitalized if the criteria of the standards were met. Burck-
hardt Compression has chosen to expense all internal develop-
ment costs as incurred under Swiss GAAP FER.
Financial liability from Shenyang Yuanda put option As part
of the agreement regarding the acquisition of 60% of the shares
of Shenyang Yuanda Compressor Co. Ltd. (SYCC) in May 2016,
Burckhardt Compression issued a put option on the remaining
40% of the shares of SYCC. In accordance with IFRS, the present
value of the exercise price of the put option was accounted for
as financial liability on Burckhardt Compression’s balance sheet.
Changes in the present value were accounted for as financial
expense. Under Swiss GAAP FER, no such financial liability is
recognized on Burckhardt Compression’s balance sheet as this
commitment does not meet the recognition criteria for a liability.
Deferred income taxes The above-mentioned valuation and
balance sheet adjustments have effects on the deferred taxes
in the balance sheet and in the income statement.
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
Translation differences As part of the changeover to Swiss
GAAP FER, accumulated translation differences were offset
against other retained earnings as of April 1, 2016.
The presentation and structure of income statement, balance
sheet, cash flow statement and statement of changes in equity
have been adjusted to meet the requirements of Swiss GAAP
FER. Prior period figures have been restated to conform to the
presentation for the reporting period to ensure comparability.
The effects of the above-mentioned adjustments on equity and
on net income are shown in the tables below.
Equity adjustments
in CHF 1’000
04/01/2016 03/31/2017
Equity according to IFRS
355’092
357’189
Swiss GAAP FER adjustments
Offset goodwill from acquisitions
Offset intangible assets from acquisitions
Offset goodwill from associates
Adjustment pension benefit
obligations and provisions
Offset capitalized development costs
Offset present value of exercise
price of put option
Adjustment deferred tax assets
and liabilities
Total adjustments
Equity according to Swiss GAAP FER
–19’802
–552
–272
49’257
–1’124
–85’191
–25’391
–283
16’855
–2’109
–
54’669
–9’886
17’621
372’713
1’364
–40’086
317’103
Net income adjustments
in CHF 1’000
Net income according to IFRS
Swiss GAAP FER adjustments
Adjustment amortization intangible assets
from acquisitions
Adjustment pension benefit obligations and provisions
Adjustment capitalized development costs
Adjustment present value of exercise
price of put option
Adjustment deferred tax income and expenses
Total adjustments
Net income according to Swiss GAAP FER
2016
38’488
3’032
–15’212
–1’015
3’976
3’184
–6’035
32’453
77
2.3. Use of Judgments and Estimates
These consolidated financial statements include estimates and
assumptions that affect the reported figures and related dis-
closures. Actual results may differ from these estimates. Esti-
mates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognized prospectively.
2.4. Principles of Consolidation
The consolidated financial statements include all entities where
Burckhardt Compression Holding AG has the power to control
the financial and operating policy, usually as a result of directly
or indirectly owning more than 50% of the voting rights. All of
the assets and liabilities as well as the income and expenses of
these companies are fully included. Non-controlling interests
are presented separately in the balance sheet and the income
statement. Intercompany transactions, balances and unrealized
gains or losses on transactions between group companies are
eliminated. Group companies are disclosed in note 33.
Acquired companies are fully consolidated from the date on
which control was effectively transferred. Companies which
have been divested are included in the consolidated financial
statements until the date on which control ceased. Capital con-
solidation is based on the acquisition method (purchase
method). At the time of the acquisition, all previously recog-
nized assets and liabilities of the company are initially valued
at fair value. Acquisition-related costs are expensed as incurred.
The net assets acquired are compared with the purchase price,
and any resulting goodwill is directly offset against equity. In
the notes to the financial statements, the effects of a theoret-
ical capitalization and any impairment are shown using an
amortization period of five years. In the event of a possible sub-
sequent sale, the goodwill offset against shareholders’ equity
at the time of the acquisition is recognized in the income state-
ment against the proceeds of the sale.
Associates are those entities in which Burckhardt Compres-
sion has significant influence, but no control, over the financial
and operating policies. Significant influence is generally pre-
sumed to exist when Burckhardt Compression holds, directly or
indirectly, between 20% and 50% of the voting rights. Associ-
ates are accounted for using the equity method. The propor-
tionate share of net income is shown in the consolidated income
statement. Associates are disclosed in note 33.
2.5. Foreign Currency Translation
The consolidated financial statements of Burckhardt Compres-
sion are prepared in Swiss francs (CHF).
Foreign Currency Translation at Company Level Foreign cur-
rency transactions are recorded at the exchange rate of the
transaction date. Monetary assets and liabilities which are
denominated in foreign currencies are translated at period-end
exchange rates. Resulting translation differences are recorded
in the income statement.
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION 78
Foreign Currency Translation for Consolidation Purposes
Assets and liabilities of foreign subsidiaries are translated into
CHF using period-end exchange rates. Average exchange rates
are used for the translation of the income statements. Transla-
tion differences arising from the consolidation of financial
statements are recorded as a separate component of equity.
Likewise, exchange differences arising on inter-company loans
with equity character are directly recorded in equity.
Major Foreign Currency Exchange Rates
Average rates
2017
1.13 1.08
2016
0.97 0.99
Period-end rates
03/31/2018 03/31/2017
1.07
1.18
0.96
1.00
1 EUR
1 USD
100 CNY
14.66
14.69
15.21
14.50
2.6. Impairment of Assets
All non-current assets are tested for impairment when indica-
tors exist that the carrying amount of the asset might exceed
its recoverable amount. Where the carrying amount of an asset
is higher than the recoverable amount, the asset is impaired to
its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less cost to sell and its value in use.
Impairment tests are performed based on discounted cash
flows at the level of the corresponding cash-generating units,
representing the lowest level at which such assets are evalu-
ated for recoverability.
2.7. Intangible Assets and Goodwill
Acquired software licenses are capitalized on the basis of the
costs incurred to acquire and bring to use the specific software.
The estimated useful life for software generally amounts to
three to five years. Internal costs associated with developing or
maintaining software are recognized as an expense as incurred.
Other intangible assets are recorded at acquisition or pro-
duction costs less accumulated amortization. The amortization
expense is calculated on a straight-line basis over the esti-
mated useful life of the asset.
Goodwill resulting from acquisitions is offset against equity
at the date of acquisition. The consequences of a theoretical
capitalization and amortization of goodwill (using an amortiza-
tion period of five years) are disclosed in note 12.
2.8. Property, Plant and Equipment
Items of property, plant and equipment are stated at cost less
accumulated depreciation. They are depreciated on a straight-
line basis over their estimated useful lives. Land is stated at
cost and is not depreciated, except land use rights in China,
which are depreciated over their useful lives. The estimated
useful lives are as follows:
– Buildings: 20 to 50 years
– Machinery: 5 to 15 years
– Technical equipment: 5 to 10 years
– Other non-current assets: maximum 5 years
2.9. Other Financial Assets
Other financial assets include loans and long-term rental
deposits. They are stated at cost less appropriate impairment
losses.
2.10. Inventories
Inventories are stated at the lower of cost or net realizable
value. The cost of work in progress and finished goods com-
prises material costs, direct and indirect production costs and
other order-related production costs. Inventories are stated at
weighted average costs or standard costs based on their type
and use. Valuation allowances are recognized for slow-moving
and excess inventory items.
2.11. Trade and Other Current Receivables
Trade receivables and other current receivables are stated at
nominal value less valuation allowances for doubtful amounts.
Impairments are assessed case by case. An impairment loss is
recognized when there is objective evidence that Burckhardt
Compression will not be able to collect the full amount due,
such as substantial financial problems of the customer or a
declaration of bankruptcy.
2.12. Cash and Cash Equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks and other short-term highly liquid invest-
ments with original maturities of three months or less.
2.13. Financial Liabilities
Financial liabilities mainly consist of bank debt and are recog-
nized at nominal value.
2.14. Provisions
Provisions are recognized for warranty obligations, unprofitable
contracts, personnel expenses and various commercial risks
where Burckhardt Compression has an obligation towards third
parties arising from past events, the amount of the liability can
be reliably measured and it is probable that the settlement will
result in an outflow of resources. The amount of the provisions
is based on the expected expenditures required to cover all obli-
gations and liabilities.
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
79
2.15. Treasury Shares
Treasury shares are stated at acquisition cost and deducted
from equity. No subsequent valuation is made. If the treasury
shares are disposed of, the resulting gain or loss is recognized
as an addition to or reduction of capital reserves.
2.16. Government Grants
Grants from governments or similar organizations are recog-
nized at their fair value when there is reasonable assurance
that the grant will be received and Burckhardt Compression
will comply with all attached conditions.
Government grants related to income and government
grants related to assets are deferred and recognized as income
over the period necessary to match them with the related costs
which they are intended to compensate.
2.17. Derivative Financial Instruments
Burckhardt Compression uses derivative financial instruments
to mitigate currency risks. The risk management policy is
described in note 3. The derivative financial instruments are
recognized at fair value. Where such derivative financial instru-
ments are linked to specific projected transactions and cash
flows, the hedging is deemed to be effective and documented
accordingly, changes in the fair value of the cash flow hedges
are recognized in equity as long as the hedged item has not
been recognized on the balance sheet. Otherwise, the gain or
loss relating to fair value changes of the derivative financial
instruments is recognized immediately in the income statement
as part of other operating income or other operating expenses.
2.18. Revenue Recognition
Burckhardt Compression recognizes revenue arising from the
sale of goods and the rendering of services upon completion of
the contract, net of sales or value-added taxes, credits, dis-
counts and rebates. Revenue and the related cost of goods sold
are recognized in the accounts when the risks and rewards have
passed to the customers subject to the conditions of sale. The
following conditions must be met in this regard:
– Deliveries have been made and/or the service as per contract
has been performed.
– A contractually-agreed sales price exists or can be reliably
estimated.
– Collection of the payment is reasonably assured.
– The costs (including those yet to be incurred) can be reliably
measured.
2.19. Research and Development
Research and development costs are expensed as incurred.
2.20. Income Taxes
Income tax expenses include all income tax on the taxable prof-
its of the group. Deferred income tax is recorded in full using
the liability method. Deferred income tax assets and liabilities
arise on temporary differences between the carrying amounts
of assets and liabilities under Swiss GAAP FER and their related
tax values. The tax rates and laws enacted or substantively
enacted at the balance sheet date are used to determine
deferred income tax. Deferred income tax assets result from
tax loss carry-forwards, tax credits as well as temporary valu-
ation differences of assets and liabilities. They are recognized
to the extent that realization through future taxable profits is
probable.
2.21. Off-Balance-Sheet Transactions
Contingent liabilities and other non-recognizable commitments
are valued and disclosed on each balance sheet date.
2.22. Share-Based Payments
Share-based payments with compensation through equity
instruments are valued at fair value at the grant date. The cor-
responding personnel expenses are distributed over the vesting
periods.
2.23. Employee Benefits
There are various pension plans within Burckhardt Compression
based on local conditions in their respective countries. An eco-
nomic obligation is recognized as a liability if the requirements
for the recognition of a provision are met under Swiss GAAP FER.
An economic benefit is capitalized provided that Burckhardt
Compression is entitled to such benefit in the future, for exam-
ple, to offset future pension expenses.
For Swiss pension plans, economic benefits and/or eco-
nomic obligations are determined on the basis of the annual
financial statements of the pension funds prepared in accor-
dance with Swiss GAAP FER 26. Freely available employer con-
tribution reserves are recognized as financial asset. For foreign
plans, the economic impact is determined according to country-
specific methods.
3. FINANCIAL RISK MANAGEMENT
Basic Principles The goal of the group-wide risk management
policy is to minimize the negative impact of changes in the
financing structure and financial markets, particularly with
regard to currency fluctuations. Derivative financial instru-
ments such as foreign exchange contracts may be used to
address the respective risks. Burckhardt Compression pursues
a conservative, risk-averse financial policy. Financial risk man-
agement is based on the principles and regulations established
by the Board of Directors. These govern Burckhardt Compres-
sion’s financial policy and outline the conduct and powers of the
group’s treasury department, which is responsible for the
group-wide management of financial risks. The financial prin-
ciples and regulations govern areas such as financing policy,
the management of foreign currency risk, the use of derivative
financial instruments and the investment policy applicable to
financial resources not required for operational purposes.
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION 80
Liquidity Risks Each Burckhardt Compression group company
is responsible for managing its liquidity so that day-to-day busi-
ness can be handled smoothly, while the group treasury is
responsible for maintaining the group’s overall liquidity. Some
of the group subsidiaries may secure loans from local creditors
within the limits approved by the group management. The group
treasury provides the local group companies with the necessary
funds or invests their excess liquidity. The group treasury main-
tains sufficient liquidity reserves and open credit and guarantee
lines to fulfill the financial obligations at all times.
The actual and future cash flows and cash reserves are
compiled monthly in a rolling liquidity forecast. The Executive
Board and the Board of Directors are informed about the liquid-
ity situation and outlook with the regular financial reporting.
Currency Risks Burckhardt Compression hedges all major
USD-denominated sales transactions of its non-US entities to
the extent that such transactions are not fully or partially natu-
rally hedged. EUR-denominated sales and purchase transac-
tions of the Swiss company are fairly evenly balanced when
viewed over a period of 1–2 years and are therefore, to a certain
extent, naturally hedged at the net profit level over said period.
These foreign-exchange flows are regularly monitored by the
group treasury; if there is evidence of a sustained shift in these
flows, major sales and purchase transactions will be hedged on
a case-by-case basis. For this, the group treasury normally uses
forward exchange contracts. The other companies belonging to
Burckhardt Compression group may, after consultation with
group treasury, hedge the foreign-exchange risks of their sales
and purchase transactions through local qualified institutions
or group treasury, the objective being the optimization of the net
profit of each group company as reported in its functional local
currency. The group management regularly monitors the
changes in the most important currencies and may adjust the
hedging policy accordingly in the future. As a globally active cor-
poration, Burckhardt Compression is also exposed to currency
risks resulting from the translation into Swiss francs of items in
the balance sheets of the foreign group companies. Burckhardt
Compression Holding AG does not hedge these translation risks.
Credit Risks Credit risk in respect of trade receivables is lim-
ited due to the diverse nature and quality of the customer base.
Such risk is minimized by means of regular credit checks,
advance payments, letters of credit and other tools. There is no
concentration of customer-related risks within Burckhardt
Compression Group as the most important customers in the
project business, which account for a large share of Burckhardt
Compression’s overall business, vary from one year to the next.
Credit risks of banks and financial institutions are moni-
tored and managed centrally. Generally, only independently
rated parties with a strong credit rating are accepted, and the
total volume of transactions is split among several banks to
reduce the individual risk with one bank.
Interest Rate Risks Interest rate risks arise from fluctuations
in interest rates which could have a negative impact on the
financial position of Burckhardt Compression. Assets and liabil-
ities at variable rates expose Burckhardt Compression to cash
flow interest rate risk.
Capital Risks The capital managed by Burckhardt Compres-
sion is its consolidated equity. With regard to its capital man-
agement policies, Burckhardt Compression seeks to secure the
continuation of its business activities, to achieve an acceptable
return for the shareholders and to finance the growth of the
business to a certain extent from own cash flow. In order to
achieve these objectives Burckhardt Compression can adjust
the dividend payments, repay share capital, issue new shares or
divest parts of the assets.
4. BUSINESS COMBINATIONS AND
OTHER CHANGES IN THE SCOPE OF
CONSOLIDATION
CSM Compressor Supplies & Machine Work Ltd. (Canada)
On June 23, 2017, Burckhardt Compression acquired CSM Com-
pressor Supplies & Machine Work (CSM), a Canadian business
based in Edmonton and Drumheller, in an asset deal. CSM has
35 years of experience in component supply and repair, focused
on the upstream market. This acquisition enables Burckhardt
Compression Canada to establish a presence in the upstream
compressor service market and, in parallel, offer comprehen-
sive service to downstream customers.
The following table shows the fair value of assets and liabilities
acquired at the acquisition date and the goodwill arising from
this transaction.
in CHF 1’000
Intangible assets
Property, plant and equipment
Inventories
Trade receivables
Prepaid expenses and accrued income
Trade payables
Accrued liabilities and deferred income
Net assets acquired at fair value
Goodwill
Total
Less cash and cash equivalents acquired
Net cash outflow on acquisition
48
545
1’664
1’495
19
–124
–13
3’634
563
4’197
–
4’197
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
81
IKS Industrie- und Kompressorenservice GmbH (Germany)
On October 4, 2016, Burckhardt Compression acquired 100%
of the shares of IKS Industrie- und Kompressorenservice
GmbH (IKS). IKS offers its clients a full range of compressor
maintenance services. The acquisition of IKS made Burckhardt
Compression a leading provider of reciprocating compressor
services in German-speaking markets. In addition to its highly
qualified service specialists, IKS has a well-established service
network in Germany.
Shenyang Yuanda Compressor Co. Ltd. (China)
On May 13, 2016, Burckhardt Compression Holding AG com-
pleted the acquisition of 60% of the shares of Shenyang Yuanda
Compressor Co. Ltd., the leading manufacturer of reciprocating
compressors in China. With this acquisition, Burckhardt Com-
pression gained local market reach in additional market seg-
ments, expanded its product portfolio to cover the diverse mar-
ket requirements and got direct access to a well-established
local supply chain.
The following table shows the fair value of assets and liabilities
acquired at the acquisition date and the goodwill arising from
this transaction (restated under Swiss GAAP FER).
The following table shows the fair value of assets and liabilities
acquired at the acquisition date and the goodwill arising from
this transaction (restated under Swiss GAAP FER).
in CHF 1’000
in CHF 1’000
Intangible assets
Property, plant and equipment
Inventories
Trade receivables and other receivables
Non-current liabilities
Current liabilities
Net assets acquired at fair value
Goodwill
Total
Less cash and cash equivalents acquired
Less purchase price not yet paid
Net cash outflow on acquisition
22
170
182
615
–268
–690
31
3’457
3’488
–
Intangible assets
Property, plant and equipment
Investments in associates
Inventories
Trade receivables and other receivables
Cash and cash equivalents
Non-current liabilities
Current liabilities
Net assets acquired at fair value
Non-controlling interests
–1’396
Goodwill
2’092
Total
Less cash and cash equivalents acquired
Net cash outflow on acquisition
306
39’601
239
64’511
100’419
5’320
–5’940
–111’864
92’592
–37’037
79’350
134’905
–5’320
129’585
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
Others Certain expenses related to the corporate center are
not attributable to a particular segment. They are reported in
the column “Others”. Furthermore, “Others” includes the income
and expenses of Burckhardt Compression’s real estate company
in Switzerland (Burckhardt Compression Immobilien AG).
82
5. SEGMENT REPORTING
Systems Division Burckhardt Compression’s Systems Division
covers a complete range of reciprocating compressor technolo-
gies. Its customized compressor systems are used in the
upstream oil & gas, gas transport and storage, refinery, chemi-
cal, petrochemical and industrial gas sectors. Depending on the
customers’ needs, Burckhardt Compression offers solutions to
minimize life cycle costs of the reciprocating compressor sys-
tems or solutions to minimize the capital expenditure.
Services Division Burckhardt Compression’s Services Division
is a one-stop provider of a full range of services for reciprocat-
ing compressors and stands for top-quality, high-performance
components for all makes of reciprocating compressors, as
replacement parts, or to repair or upgrade existing installa-
tions. Original spare parts backed by Burckhardt Compression’s
manufacturing guarantees stand for superior quality and
ensure together with various complementary service modules
both low life cycle costs as well as the optimal operation of
compressor systems.
in CHF 1’000
Sales
Cost of goods sold
Gross profit
Gross profit as % of sales
Operating income
Operating income as % of sales
Systems Division
Services Division
Others
Total
2017
2016
2017
2016
2017
2016
2017
2016
367’190
384’392
–357’201 –330’702
210’182
–112’313
190’535
–96’486
27’191
7.1%
–8’974
–2.3%
36’488
9.9%
–1’472
–0.4%
97’869
46.6%
54’352
25.9%
94’049
49.4%
53’011
27.8%
–
–
–
–
–
–
–
–
–3’696
–
–3’810
–
594’574
–469’514
125’060
21.0%
41’682
7.0%
557’725
–427’188
130’537
23.4%
47’729
8.6%
Geographic information
Sales by customer location
in CHF 1’000
Europe
Africa
North America
South America
Middle East
China
Other Asia & Australia
Total
2017
2016
Capital expenditure for property,
plant and equipment
in CHF 1’000
2017
2016
123’670
3’116
99’481
14’017
26’964
155’970
171’356
594’574
201’196
2’751
Europe
Africa
44’333
North America
7’596
South America
31’117
Middle East
132’757
China
137’975
Other Asia & Australia
557’725
Total
2’251
47
352
30
473
4’222
1’355
8’730
7’947
–
1’148
166
879
3’599
750
14’489
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
83
6. PERSONNEL EXPENSES
9. FINANCIAL INCOME AND EXPENSES
in CHF 1’000
Wages and salaries
Social security and pension expenses
Other personnel expenses
Total personnel expenses
2017
2016
2017
2016
–118’515
–19’708
–11’531
–116’684
–20’125
–11’451
in CHF 1’000
Interest expenses
–2’491
–2’363
Interest income
Other financial income (+) and expenses (–)
819
–195
614
–93
–149’754
–148’260
Total financial income and expenses
–1’867
–1’842
7. RESEARCH AND DEVELOPMENT
EXPENSES
1O. INCOME TAXES
Income Tax Expenses
Research and development activities in the fiscal year 2017
centered on enhancing certain types of compressors and com-
pressor components for the optimization of Burckhardt Com-
pression’s product portfolio as well as research in the field of
compressor-related tribology and manufacturing technologies.
in CHF 1’000
2017
2016
Current income tax expenses
Deferred income tax income (+) and expenses (–)
Total income tax expenses
–12’470 –14’337
3’454
3’566
–8’904 –10’883
8. OTHER OPERATING INCOME
AND EXPENSES
Reconciliation of Income Tax Expenses
in CHF 1’000
Currency exchange gains
Other operating income
Total other operating income
Currency exchange losses
Other operating expenses
Total other operating expenses
2017
2016
in CHF 1’000
16’575
8’583
19’186
8’035
25’158
27’221
–14’861
–5’203
–19’496
–4’452
–20’064
–23’948
Earnings before taxes
Expected income tax expenses
Effect of non-recognition of tax loss
carry forwards
Effect of recognition and offset of tax loss
carry forwards not recognized in prior years
Effect of income tax of prior periods
Effect of changes in tax rates
Effect of non-deductible expenses
Total income tax expenses
as % of earnings before taxes
2017
2016
37’927
–8’955
–362
43’336
–9’131
–859
591
–
468
–530
–116
–626
–
–267
–8’904 –10’883
25.1%
23.5%
Total other operating income and expenses
5’094
3’273
Other operating income includes the operating income of
CHF 6.6 mn (prior year: CHF 6.5 mn) of the real estate company
(Burckhardt Compression Immobilien AG).
Other operating expenses include expenses amounting to
CHF 3.0 mn (prior year: CHF 3.3 mn) of the real estate company.
The expected tax rate of Burckhardt Compression Group of
23.6% (prior year: 21.1%) corresponds to the weighted average
tax rate based on the profit before income taxes and the tax
rate of each group company. The effect of changes in tax rates
is mainly due to the tax reform in the United States.
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
84
Current Income Taxes
11. EARNINGS PER SHARE
Net current income tax liabilities
in CHF 1’000
2017
2016
in CHF 1’000
2017
2016
Net income attributable to
the shareholders of Burckhardt
Compression Holding AG
Average number of outstanding shares
Earnings per share (CHF)
28’837
3’387’252
30’905
3’388’264
8.51
9.12
The average number of outstanding shares is calculated based
on the issued shares minus the weighted average number of
treasury shares. There are no conversion rights or option rights
outstanding; therefore, there is no potential dilution of earnings
per share.
Balance as per 04/01/2017 / 04/01/2016
Changes in the consolidation scope
Recognized in the income statement
Income taxes paid
Translation differences
Balance as per 03/31/2018 / 03/31/2017
thereof current tax assets
thereof current tax liabilities
Deferred Income Taxes
Net deferred income tax liabilities
in CHF 1’000
Balance as per 04/01/2017 / 04/01/2016
Changes in the consolidation scope
Recognized in the income statement
Recognized in equity
Translation differences
Balance as per 03/31/2018 / 03/31/2017
thereof deferred tax assets
10’935
–
12’964
–1’635
12’470
14’337
–17’977 –14’545
166
5’594
371
5’965
–186
10’935
–
10’935
2017
2016
9’743
–
14’803
–1’145
–3’566
–3’454
659
–108
6’728
7’871
–316
–145
9’743
6’622
thereof deferred tax liabilities
14’599
16’365
Loss Carry Forwards
in CHF 1’000
Expiring in the next 3 years
Expiring in 4 years or later
Total tax loss carry forwards
Potential deferred tax assets from
tax loss carry forwards
Effect of non-recognized tax loss
carry forwards
Effective deferred tax assets from tax
loss carry forwards
03/31/2018
03/31/2017
452
11’454
11’906
2’705
–
10’249
10’249
3’099
–447
–667
2’258
2’432
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
12. INTANGIBLE ASSETS
Acquisition Costs
in CHF 1’000
Software
Other
intangible
assets
Intangible
assets under
construction
2017
Total
Software
Other
intangible
assets
Intangible
assets under
construction
Balance as per 04/01/2017 / 04/01/2016
Changes in the consolidation scope
Additions
Disposals
Reclassifications
Currency translation differences
27’157
48
1’054
–
1’579
253
Balance as per 03/31/2018 / 03/31/2017
30’091
345
–
405
–
–
20
770
–
–
3’642
–
–1’579
9
2’072
27’502
48
5’101
–
–
282
24’648
553
1’472
–242
596
130
32’933
27’157
166
145
41
–9
–
2
345
–
–
–
–
–
–
–
Accumulated Amortization
in CHF 1’000
Software
Other
intangible
assets
Intangible
assets under
construction
2017
Total
Software
Other
intangible
assets
Intangible
assets under
construction
Balance as per 04/01/2017 / 04/01/2016
Changes in the consolidation scope
Additions
Disposals
Reclassifications
Currency translation differences
–15’450
–
–3’763
–
–
–95
–285
–
–134
–
–
–6
Balance as per 03/31/2018 / 03/31/2017
–19’308
–425
–
–
–
–
–
–
–
–15’735
–
–3’897
–11’464
–307
–3’858
–
–
–101
180
–
–1
–141
–63
–87
6
–
–
–19’733
–15’450
–285
–
–
–
–
–
–
–
85
2016
Total
24’814
698
1’513
–251
596
132
27’502
2016
Total
–11’605
–370
–3’945
186
–
–1
–15’735
Net Book Value
in CHF 1’000
Software
Other
intangible
assets
Intangible
assets under
construction
2017
Total
Software
Other
intangible
assets
Intangible
assets under
construction
2016
Total
As per 04/01/2017 / 04/01/2016
As per 03/31/2018 / 03/31/2017
11’707
10’783
60
345
–
2’072
11’767
13’200
13’184
11’707
25
60
–
–
13’209
11’767
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
86
Goodwill
Goodwill from acquisitions is fully offset against equity at the
date of acquisition. The theoretical amortization of goodwill is
based on the straight-line method and an amortization period
of five years. The carrying amounts of goodwill existing at con-
version from IFRS to Swiss GAAP FER as per April 1, 2016 have
been included in the theoretical movement schedule below
using the currency rates as of April 1, 2016. Goodwill from new
acquisitions is fixed to Swiss francs using the closing rate at
acquisition date. Therefore, there are no exchange rate differ-
ences in the movement schedules. The impact of the theoreti-
cal capitalization and amortization of goodwill is disclosed
below.
2017
2016
in CHF 1’000
Acquisition costs
Balance as per 04/01/2017 / 04/01/2016
Additions from acquisitions
Balance as per 03/31/2018 / 03/31/2017
in CHF 1’000
Accumulated amortization
Balance as per 04/01/2017 / 04/01/2016
Amortization expense
Balance as per 03/31/2018 / 03/31/2017
in CHF 1’000
Net book value
Theoretical net book value as per 04/01/2017 / 04/01/2016
Theoretical net book value as per 03/31/2018 / 03/31/2017
in CHF 1’000
Theoretical impact on equity
Equity as per balance sheet
Theoretical capitalization of goodwill
Theoretical equity including net book value of goodwill
in CHF 1’000
Theoretical impact on net income
Net income as per income statement
Amortization of goodwill
Theoretical net income after goodwill amortization
103’267
563
103’830
2017
–33’995
–17’133
–51’128
2017
69’272
52’702
20’460
82’807
103’267
2016
–18’613
–15’382
–33’995
2016
1’847
69’272
03/31/2018
03/31/2017
335’200
52’702
387’902
2017
29’023
–17’133
11’890
317’103
69’272
386’375
2016
32’453
–15’382
17’071
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
87
13. PROPERTY, PLANT & EQUIPMENT
Acquisition Costs
in CHF 1’000
Land
and
buildings
Machinery
and
equipment
Other
business
assets
Assets
under
con struction
2017
Total
Land
and
buildings
Machinery
and
equipment
Other
business
assets
Assets
under
con struction
2016
Total
Balance as per 04/01/2017 / 04/01/2016
Changes in the consolidation scope
162’185 113’486
545
–
Additions
Disposals
Reclassifications
Currency translation differences
122
4’034
–113
–2’326
323
1’641
5’324
1’109
26’014
–
1’760
–962
211
294
7’758
–
2’814
309’443 117’839
545 34’176
90’612
18’808
8’730
1’333
–5
–3’406
–370
–5’858
–
9’995
186
3’230
–788
18’773
3’643
2’852
–441
12’539
2’028
6’169
–596
1’049
–12’582
138
200
239’763
58’655
14’489
–2’254
–596
–614
4’135
–847
942
–164
Balance as per 03/31/2018 / 03/31/2017 164’158 122’172
27’317
4’895
318’542 162’185 113’486 26’014
7’758
309’443
Accumulated Depreciation
in CHF 1’000
Balance as per 04/01/2017 / 04/01/2016
Changes in the consolidation scope
Land
and
buildings
Machinery
and
equipment
Other
business
assets
Assets under
con struction
2017
Total
Land
and
buildings
Machinery
and
equipment
Other
business
assets
Assets
under
con struction
2016
Total
–25’672 –66’915 –16’477
–
–
–
Additions
Disposals
Reclassifications
–4’945
–9’649
–2’817
113
1’682
–
–
801
–
Currency translation differences
–488
–740
–265
Balance as per 03/31/2018 / 03/31/2017 –30’992 –75’622 –18’758
–
–
–
–
–
–
–
–109’064 –14’607 –48’635 –11’988
–2’088
– –6’800
–9’996
–17’411 –4’624
–9’039
–2’808
2’596
–
–1’493
291
–
68
696
–
59
493
–
–86
–
–
–
–
–
–
–75’230
–18’884
–16’471
1’480
–
41
–125’372 –25’672 –66’915 –16’477
– –109’064
Net Book Value
in CHF 1’000
Land
and
buildings
Machinery
and
equipment
Other
business
assets
Assets
under
con struction
2017
Total
Land
and
buildings
Machinery
and
equipment
Other
business
assets
Assets
under
con struction
2016
Total
As per 04/01/2017 / 04/01/2016
As per 03/31/2018 / 03/31/2017
136’513
46’571
133’166 46’550
9’537
8’559
7’758
4’895
200’379 103’232
41’977
193’170 136’513 46’571
6’785
9’537
12’539
7’758
164’533
200’379
14. INVESTMENTS IN ASSOCIATES
15. OTHER FINANCIAL ASSETS
in CHF 1’000
Balance as per 04/01/2017 / 04/01/2016
Changes in the consolidation scope
Share of net results
Currency translation differences
Balance as per 03/31/2018 / 03/31/2017
2017
2016
14’704
–
–1’888
–567
12’249
16’364
231
–2’551
660
14’704
Other financial assets include a promissory note from Arkos
Group companies amounting to CHF 17.4 mn (prior year:
CHF 18.0 mn) and loans to Arkos Group companies amounting
to CHF 4.3 mn (prior year: CHF 4.5 mn).
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
88
16. INVENTORIES
in CHF 1’000
Raw materials, supplies and consumables
Work in progress
Finished products and trade merchandise
Advance payments to suppliers
Valuation allowance
Total inventories
The capital invested in work in progress and advance payments
to suppliers is to a large extent financed by advance payments
from customers, leaving a negative balance as of March 31,
2018 of CHF –42.4 mn (prior year: CHF –42.1 mn).
17. TRADE RECEIVABLES
in CHF 1’000
Trade receivables, gross
Allowance for bad debts
Trade receivables, net
in CHF 1’000
Allowance for bad debts
Balance as per 04/01/2017 / 04/01/2016
Changes in the consolidation scope
Additions
Release
Utilization
Currency translation adjustments
Balance as per 03/31/2018 / 03/31/2017
03/31/2018
03/31/2017
22’580
133’789
37’586
29’293
–12’545
210’703
19’103
171’404
35’232
35’323
–10’830
250’232
03/31/2018
03/31/2017
237’676
–9’977
227’699
219’411
–9’629
209’782
03/31/2018
03/31/2017
–9’629
–
–1’672
1’206
486
–368
–9’977
–441
–10’097
–162
642
31
398
–9’629
The allowance for bad debts at the end of the 2017 and 2016 fis-
cal years was entirely related to accounts receivables which
were more than 90 days overdue as per closing date.
in CHF 1’000
Age profile of trade receivables
Not due
Overdue 1–30 days
Overdue 31–60 days
Overdue 61–90 days
Overdue more than 90 days
Balance as per 03/31/2018 / 03/31/2017
03/31/2018
03/31/2017
128’037
18’567
11’865
5’133
64’097
227’699
56.2%
8.2%
5.2%
2.3%
28.1%
100.0%
105’564
21’882
10’818
7’606
63’912
209’782
50.3%
10.4%
5.2%
3.6%
30.5%
100.0%
Trade receivables overdue more than 90 days are to a large ex-
tent related to projects in China.
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
89
18. OTHER CURRENT RECEIVABLES
20. FINANCIAL LIABILITIES
in CHF 1’000
Notes receivable
VAT receivables
Derivative financial instruments
Current tax assets
Other current receivables
Total other current receivables
03/31/2018
03/31/2017
03/31/2018
03/31/2017
in CHF 1’000
14’178
6’732
969
371
7’296
29’546
3’610
5’185
Non-current financial liabilities
Current financial liabilities
215
Total financial liabilities
65’599 71’825
70’310
71’538
137’137
142’135
–
6’316
15’326
The average effective interest rate amounted to 1.6% in fiscal
year 2017 (prior year: 1.9%). Some credit agreements are subject
to financial covenants such as a minimum equity ratio or net
financial indebtedness to EBITDA. All covenants were adhered
to in fiscal year 2017 (same as prior year).
19. SHARE CAPITAL AND TREASURY
SHARES
03/31/2018
03/31/2017
Currencies of Financial Liabilities
Number of shares issued
3’400’000 3’400’000
in CHF 1’000
03/31/2018
03/31/2017
The nominal value per share amounts to CHF 2.50. All shares
are registered shares and are paid in full. The breakdown of
equity into its individual components is shown in the statement
of changes in equity. The Board of Directors is empowered
to increase the company’s share capital by a maximum of
CHF 1’275’000 at any time until June 30, 2019 by issuing a maxi-
mum of 510’000 fully paid registered shares with a nominal
value of CHF 2.50 each (authorized capital).
At the upcoming annual general meeting of shareholders on
July 6, 2018, the Board of Directors of Burckhardt Compression
Holding AG will propose a dividend for the 2017 fiscal year of
CHF 6.00 (prior year: CHF 7.00).
As of March 31, 2018, non-distributable reserves amounted to
CHF 1.7 mn (prior year: CHF 1.7 mn).
03/31/2018
03/31/2017
Number of treasury shares
6’267 24’966
All treasury shares are held for the share-based long-term in-
centive program within the Burckhardt Compression Group.
Financial liabilities in CHF
Financial liabilities in USD
Financial liabilities in other currencies
Total financial liabilities
63’550
60’915
12’672
107’450
17’761
16’924
137’137
142’135
In 2017, Burckhardt Compression’s real estate company (Burck-
hardt Compression Immobilien AG), which uses the Swiss franc
as functional currency, replaced a mortgage loan in CHF with a
mortgage loan in USD. The currency risk is hedged using a cur-
rency swap.
Maturities of Non-Current Financial Liabilities
in CHF 1’000
Due within 2 years
Due within 3 years
Due within 4 years
Due within 5 years
Due beyond 5 years
Total non-current financial liabilities
03/31/2018
03/31/2017
11’306
747
8’454
3’467
41’625
65’599
5’789
15’474
2’222
1’756
46’584
71’825
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
90
21. PROVISIONS
in CHF 1’000
Balance as per 04/01/2017 / 04/01/2016
Changes in the consolidation scope
Additions
Release
Utilization
Currency translation differences
Employee-
related
Warranties,
penalties,
unprofitable
contracts
Other
2017
Total
Employee-
related
Warranties,
penalties,
unprofitable
contracts
Other
2016
Total
7’020
–
1’460
–290
–907
151
24’269
–
5’510
–3’571
–1’270
–164
1’636
13
859
–405
–157
–56
32’925
13
7’829
–4’266
–2’334
–69
6’526
–
928
–161
–339
66
23’565
1’564
7’480
–6’889
–1’768
317
1’435
–
492
–416
86
39
31’526
1’564
8’900
–7’466
–2’021
422
Balance as per 03/31/2018 / 03/31/2017
7’434
24’774
1’890
34’098
7’020
24’269
1’636
32’925
Thereof non-current
Thereof current
5’385
2’049
8’782
15’992
82
1’808
14’249
19’849
5’274
1’746
7’726
16’543
–
1’636
13’000
19’925
Employee-related provisions include employee benefit obliga-
tions (see also note 31), provisions for long-term service awards
and ordinary termination benefits.
22. OTHER NON-CURRENT LIABILITIES
Other non-current liabilities mainly consist of various govern-
ment grants in China.
23. OTHER CURRENT LIABILITIES
in CHF 1’000
Notes payable
VAT payables
Derivative financial instruments
Current tax liabilities
Other current liabilities
Total other current liabilities
03/31/2018
03/31/2017
3’588
–
2’799
2’330
1’298
4’913
5’965
7’723
10’935
3’563
21’373
21’741
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
91
Other Contingent Liabilities
Burckhardt Compression owns 40% of Arkos Group LLC. Burck-
hardt Compression has agreed on the conditions of the poten-
tial transfer of the remaining 60% stake of Arkos Group LLC
with the current owner. On the one hand, Burckhardt Compres-
sion has received call options on the remaining 60% stake of
Arkos Group LLC. On the other hand, Burckhardt Compression
has issued put options on the remaining 60% stake of Arkos
Group LLC.
Burckhardt Compression owns 60% of Shenyang Yuanda
Compressor Co. Ltd. Burckhardt Compression has agreed on
the conditions of the potential transfer of the remaining 40%
stake of Shenyang Yuanda Compressor Co. Ltd. with the cur-
rent owner. On the one hand, Burckhardt Compression has
received call options on the remaining 40% stake of Shenyang
Yuanda Compressor Co. Ltd. On the other hand, Burckhardt
Compression has issued put options on the remaining 40%
stake of Shenyang Yuanda Compressor Co. Ltd.
None of the options are currently exercisable. As the options
do not meet the recognition criteria for an asset or a liability,
they are not recognized on Burckhardt Compression’s balance
sheet.
27. COMMITMENTS
Operating Leases
in CHF 1’000
03/31/2018
03/31/2017
Operating leases due in less than 1 year
Operating leases due in 1 to 5 years
Operating leases due in more than 5 years
Total operating lease commitments
2’412
6’862
2’836
12’110
1’449
3’351
1’231
6’031
Purchase Commitments
Purchase commitments for capital expenditure as per March 31,
2018 amounted to CHF 1.5 mn (prior year: CHF 1.2 mn).
24. ACCRUED LIABILITIES AND
DEFERRED INCOME
in CHF 1’000
Contract-related liabilities
Vacation and overtime
Salary and bonus payments
Miscellaneous
Total accrued liabilities and
deferred income
03/31/2018
03/31/2017
49’137
3’227
7’050
3’926
36’208
2’593
7’214
3’325
63’340
49’340
25. DERIVATIVE FINANCIAL
INSTRUMENTS
in CHF 1’000
Contract value
Positive fair values
Negative fair values
03/31/2018
03/31/2017
102’943
969
1’298
143’393
215
4’913
Burckhardt Compression uses derivative financial instruments
to mitigate currency risks. The risk management policy is de-
scribed in note 3. On the balance sheet, derivative financial in-
struments are shown as “Other Current Receivables” and “Other
Current Liabilities”.
26. CONTINGENT LIABILITIES
Guarantees
Burckhardt Compression guarantees essentially for securing
customer advance payments and for eventual warranty claims
from customers. Guarantees are issued by third-party banks or
by Burckhardt Compression Holding AG. In addition, standing
guarantees have been issued by Burckhardt Compression Hol-
ding AG to secure credit lines and guarantee limits granted by
foreign banks.
in CHF 1’000
Guarantees issued by banks for
Burckhardt Compression
Guarantees issued by
Burckhardt Compression Holding AG
Total guarantees
03/31/2018
03/31/2017
122’125
111’436
109’389
231’514
114’818
226’254
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
92
28. PLEDGED ASSETS
30. RELATED PARTY TRANSACTIONS
As per March 31, 2018, Burckhardt Compression had pledged
assets with a carrying amount of CHF 111.5 mn (prior year:
CHF 114.5 mn) to secure mortgage loans and guarantees. The
pledged assets consisted mainly of land and buildings, and to a
lesser degree of inventories and receivables.
29. SHARE-BASED PAYMENTS
Until 2016 (with shares being granted in 2017), there was a long-
term incentive plan for the members of the Board of Directors,
the members of the Executive Board and certain other em-
ployees. Since 2017, there is a long-term incentive plan for the
members of the Executive Board and certain other employees.
Long-term incentive pay is awarded in the form of free shares.
None of the shares are subject to any restrictions upon the date
of transfer. Further details regarding the long-term incentive
plan are disclosed in the Compensation Report section of this
Annual Report.
In 2017, 18’699 shares at a fair value of CHF 286 were
granted to participants of the long-term incentive plan. In 2016,
no shares were granted to participants of the long-term incen-
tive plan.
Personnel expenses in 2017 for share-based payments
amounted to CHF 2.9 mn (prior year: CHF 0.2 mn).
Members of the Board of Directors and of the
Executive Board
Except for the remuneration as disclosed in the Compensation
Report section of this Annual Report, no further relations or
transactions existed in 2017 and 2016 with the members of the
Board of Directors and of the Executive Board.
Associated Companies
The following transactions were carried out with associated
companies (mainly Arkos Group companies).
in CHF 1’000
2017
2016
Sales of goods and services
Purchase of goods and services
4’579
912
5’114
352
The following balances with associates companies (mainly Arkos
Group companies) were outstanding as of the balance sheet
date.
in CHF 1’000
Receivables
Payables
03/31/2018
03/31/2017
23’382
270
23’463
1’668
Receivables include a promissory note from Arkos Group com-
panies with a carrying amount of CHF 17.4 mn (prior year:
CHF 18.0 mn) and loans to Arkos Group companies with a carry-
ing amount of CHF 4.3 mn (prior year: CHF 4.5 mn).
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
93
32. EVENTS AFTER THE BALANCE
SHEET DATE
There were no events between the balance sheet date and the
date these consolidated financial statements were approved by
the Board of Directors which would require additional disclo-
sures or changes in the consolidated financial statements.
31. EMPLOYEE BENEFIT OBLIGATIONS
Burckhardt Compression has various pension plans to which
most of its employees contribute. With the exception of com-
panies in Switzerland and Germany, these pension plans are de-
fined contribution pension arrangements. Under these, as a
rule, payments are made into pension funds administered by
third parties. Burckhardt Compression has no payment obliga-
tions beyond making these defined contributions.
The plans in Switzerland consist of two independent pen-
sion funds: “Sulzer Vorsorgeeinrichtung” (SVE), a base plan for
all employees, and “Johann Jakob Sulzer Stiftung” (JJS), a plan
for employees with salaries exceeding a certain limit. The
majority of the active participants in the two pension funds are
employed at companies not belonging to Burckhardt Compres-
sion. The board of trustees for the base plan comprises ten
employer representatives and ten employee representatives of
the contributing companies and is responsible for asset alloca-
tion and risk management. The pension plans contain a cash
balance benefit formula. Under Swiss law, the pension funds
guarantee the vested benefit amount as confirmed annually to
members. Interest may be added to member balances at the
discretion of the board of trustees. At retirement date, mem-
bers have the right to take their retirement benefit as a lump
sum, an annuity or part as a lump sum with the balance con-
verted to an annuity. The pension funds may adapt the contri-
bution and benefits at any time. In case of underfunding, this
may involve special payments from the employer. The surplus
or underfunding cannot be determined per company. The cover-
age of the collective plans as a whole as of December 31, 2017
amounted to 113.6% (SVE; prior year: 108.8%) and 112.3% (JJS;
prior year: 107.4%). The technical interest rate used by both col-
lective plans amounted to 2.0% (prior year: 2.0%).
Employer Contribution Reserves
Burckhardt Compression does not have any employer contribu-
tion reserves.
Economic Benefits/Economic Obligations and Pension
Benefit Expenses
Economic portion of the organization
in CHF 1’000
Pension plans with surplus
Unfunded pension plans
Total
03/31/2018
–
03/31/2017
–
–2’238
–2’238
–2’080
–2’080
Change to prior
year period recog-
nized in the current
result of the period
2017
–
54
54
Currency
translation
differences
Contributions of
the fiscal year
Pension benefit expenses
2017
–
–212
–212
2017
–6’716
–
–6’716
2017
–6’716
54
–6’662
2016
–7’146
–94
–7’240
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION 94
33. GROUP COMPANIES AND ASSOCIATES
Company
Registered
office
Registered
capital
Interest
in capital
&
h
c
r
a
e
s
e
R
t
n
e
m
p
o
l
e
v
e
d
g
n
i
r
e
e
n
i
g
n
e
&
g
n
i
r
u
t
c
a
f
u
n
a
M
Burckhardt Compression AG 1
Burckhardt Compression Immobilien AG 1
Burckhardt Compression (Deutschland) GmbH
Burckhardt Compression (Italia) S.r.l.
Burckhardt Compression (France) S.A.S.
Burckhardt Compression (España) S.A.
Burckhardt Compression (UK) Ltd.
Burckhardt Compression (US) Inc.
Burckhardt Compression (Canada) Inc.
Burckhardt Compression (Japan) Ltd.
Burckhardt Compression (Shanghai) Co. Ltd.
Burckhardt Compression (India) Private Ltd.
Burckhardt Compression (Brasil) Ltda.
Burckhardt Compression (Middle East) FZE
Burckhardt Compression Korea Ltd.
Burckhardt Kompresör San. ve Tic. Ltd.
Burckhardt Compression Singapore Pte Ltd.
Winterthur,
Switzerland
Winterthur,
Switzerland
Neuss,
Germany
Milan,
Italy
Cergy Saint
Christophe, France
Madrid,
Spain
Bicester,
United Kingdom
Houston,
USA
Brampton,
Canada
Tokyo,
Japan
Shanghai,
China
Pune,
India
São Paolo,
Brazil
Dubai, United
Arab Emirates
Seoul,
South Korea
Istanbul,
Turkey
Singapore,
Singapore
Burckhardt Compression South Africa (Pty) Ltd. Sunnyrock,
South Africa
Burckhardt Compression Korea Busan Ltd.
Burckhardt Compression (Saudi Arabia) LLC
Burckhardt Compression
North America Service LLC
Burckhardt Compression Tehran SSK
CSM Compressor Inc.
Busan,
South Korea
Dammam,
Saudi Arabia
Wilmington,
USA
Tehran,
Iran
Edmonton,
Canada
CHF
2’000’000
CHF
5’000’000
EUR
30’000
EUR
400’000
EUR
300’000
EUR
550’000
GBP
250’000
USD
18’250’000
CAD
200’000
JPY
50’000’000
CNY
14’198’000
INR
331’140’000
BRL
5’818’000
AED
2’000’000
KRW
250’000’000
TRY
800’000
SGD
700’000
ZAR
3’000’000
KRW
7’000’000’000
SAR
1’000’000
USD
1’800’000
IRR
100’000’000
CAD
10’000
g
n
i
t
c
a
r
t
n
o
C
•
•
•
•
•
•
100%
•
•
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
•
•
•
•
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
•
•
s
e
l
a
S
e
c
i
v
r
e
S
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
Company
Registered
office
Registered
capital
Interest
in capital
Shenyang Yuanda Compressor Co. Ltd. 1
Liaoning Yuanyu Industrial Machinery Co. Ltd.
Shenyang Yuanda Compressor Automatic
Control System Co. Ltd.
Shenyang Yuanda Compressor Energy
Service Co. Ltd.
Shenyang Yuanda Compressor Import and
Export Co. Ltd.
Shenyang Yuanda Shengda Turbine
Compressor Co. Ltd. 2
Shunyuan Resources Recycling Equipment
Industry (Liaoing) Co. Ltd. 2
Compressor Tech Holding AG 1
PROGNOST Systems GmbH
PROGNOST Systems Inc.
Shenyang,
China
Kaiyuan,
China
Shenyang,
China
Shenyang,
China
Shenyang,
China
Shenyang,
China
Shenyang,
China
Zug,
Switzerland
Rheine,
Germany
Houston,
USA
Société d’Application du Métal Rouge SAS
Pont Sainte Marie
Cedex, France
Arkos Group LLC 2
Arkos Field Services LP 2
Arkos Realty & Investments LP 2
Precision Arkos Machine, LP 2
Houston,
USA
Houston,
USA
Houston,
USA
Houston,
USA
CNY
94’500’000
CNY
39’000’000
CNY
5’000’000
CNY
1’000’000
CNY
1’000’000
CNY
100’000’000
CNY
65’000’000
CHF
200’000
EUR
200’000
USD
240’000
EUR
501’000
USD
26’250’000
–
–
–
60%
60%
36%
60%
60%
24%
24%
100%
100%
100%
100%
40%
40%
40%
28%
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95
s
e
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•
•
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•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
1 Company is directly held by Burckhardt Compression Holding AG.
All other companies are indirectly held by Burckhardt Compression Holding AG.
2 Company is accounted for using the equity method.
All other companies are fully consolidated.
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
96
Report of the statutory auditor
to the General Meeting of Burckhardt Compression Holding AG
Winterthur
Report on the audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of Burckhardt Compression Holding AG and its subsidiaries
(the Group), which comprise the consolidated income statement for the year ended March 31, 2018, the consolidated
balance sheet as at March 31, 2018, consolidated cash flow statement and consolidated statement of changes in equity
for the year then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies.
In our opinion, the consolidated financial statements (pages 72 to 95) give a true and fair view of the consolidated
financial position of the Group as at March 31, 2018 and its consolidated financial performance and its consolidated
cash flows for the year then ended in accordance with Swiss GAAP FER and comply with Swiss law.
Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those
provisions and standards are further described in the “Auditor’s responsibilities for the audit of the consolidated
financial statements” section of our report.
We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss
audit profession and we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit approach
Overview
Overall Group materiality: CHF 3'000'000
We concluded full scope audit work at four reporting units in three
countries. Our audit scope addressed over 69% of the Group's sales.
As key audit matters the following areas of focus have been identified:
• Accounting for work in progress of the systems division
• Conversion from IFRS to Swiss GAAP FER
PricewaterhouseCoopers AG, Zürcherstrasse 46, Postfach, CH-8401 Winterthur, Switzerland
Telefon: +41 58 792 71 00, Telefax: +41 58 792 71 10, www.pwc.ch
PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
97
Audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the
consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes
and controls, and the industry in which the Group operates.
The audit strategy for the audit of the consolidated financial statements was determined taking into account the work
performed by the Group auditor and the component auditors in the PwC network. The Group auditor performed the
audit of the consolidation, the disclosures and the presentation of the consolidated financial statements as well as the
conversion from IFRS to Swiss GAAP FER. Where audits were performed by component auditors, we ensured that, as
Group auditor, we were adequately involved in the audit in order to assess whether sufficient appropriate audit
evidence was obtained from the work of the component auditors to provide a basis for our opinion. Our involvement
comprised analysing the reporting, taking part in telephone calls with the component auditors, communicating the
risks identified at Group level and determining the materiality thresholds for the audits performed by component
auditors.
Materiality
The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable
assurance that the consolidated financial statements are free from material misstatement. Misstatements may arise
due to fraud or error. They are considered material if, individually or in aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the
overall Group materiality for the consolidated financial statements as a whole as set out in the table below. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the
consolidated financial statements as a whole.
Overall Group materiality
CHF 3'000'000
How we determined it
5% of average earnings before taxes over the past five years
Rationale for the materiality
benchmark applied
We chose earnings before taxes as the benchmark because, in our view, it is
the benchmark against which the performance of the Group is most
commonly measured and it is a generally accepted benchmark for
materiality considerations. The five year average takes into account the
volatility of the business environment.
We agreed with the Audit Committee that we would report to them misstatements above CHF 200'000 identified
during our audit as well as any misstatements below that amount which, in our view, warranted reporting for
qualitative reasons.
Report on key audit matters based on the circular 1/2015 of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
98
Accounting for work in progress of the systems division
Key audit matter
How our audit addressed the key audit matter
Burckhardt Compression Group has projects in the
systems division, which are accounted for as work in
progress in accordance with Swiss GAAP FER. As at
March 31, 2018, work in progress from systems division
projects in the amount of CHF 133.8 million was
recognised in the balance sheet.
Management estimates the costs to be incurred until
their completion, possible penalties as well as net
realisable value. This involves significant scope for
judgement and an incorrect estimate could have a
significant impact on the result for the period.
Please refer to page 78 (Accounting policies –
Inventories) and page 88 (Inventories) in the notes to
the Group financial statements.
Our audit procedures regarding the accounting for
work in progress of systems division projects included
in particular the following:
• We assessed the design and the existence of the
key controls regarding the systems division
projects and tested the effectiveness of selected
controls.
• We selected a sample of systems division
projects, based on the contract volumes, the
contribution margin and changes in the margin
compared to the planning phase, and focussed
our testing on the following:
– We assessed the contract related
calculations to determine whether the
contractual terms had been recorded
appropriately.
– We discussed with the project controllers
and project managers the progress of the
projects based on the latest project reports,
the costs still to be incurred until their
completion and changes in the estimated
margin.
– We obtained written information from the
legal representatives of the Group. We
inspected this written information with
regard to indications of potential quality
deficiencies or penalties and assessed
whether these matters were presented
appropriately in the consolidated financial
statements.
• During the audit, we conducted on-site
inspections of various compressors still under
construction.
•
For the systems division projects completed
during the year under review, we compared
various final parameters with the estimates
made in the planning phase in order to assess,
with hindsight, the accuracy of the estimates
made by Management.
The results of our audit support the accounting of work
in progress of the systems division in the 2017
consolidated financial statements.
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
99
Conversion from IFRS to Swiss GAAP FER
Key audit matter
How our audit addressed the key audit matter
With effect as of April 1, 2017, Burckhardt Compression
Group changed the accounting framework it uses from
International Financial Reporting Standards (IFRS) to
Swiss GAAP FER. This change has significant impact on
the 2017 consolidated financial statements and the prior
year figures. Additionally, the Board of Directors and
the Management
and implemented for the first time the disclosure
requirements in accordance with Swiss GAAP FER.
have exercised various policy choices
(Accounting Policies –
Please refer to page 76 and 77
Changes in Accounting Principles) in the notes to the
Group financial statements.
In our audit of the conversion from IFRS to Swiss GAAP
FER, we performed in particular the following audit
procedures:
• We requested the Management’s assessment of
the impact of the change on the opening balance as
at April 1, 2016 and on the 2016 income statement,
and we then assessed whether
– all the effects of the change in accounting
standards had been identified and recorded by
Management;
– the goodwill from acquisitions, customer
relationships, technologies and brands had been
correctly offset against equity;
– the requirements of Swiss GAAP FER 16
‘Pension benefit obligations’ had been correctly
implemented;
– the capitalised internally generated development
costs had been correctly offset against equity;
– the financial liability as part of the agreement
regarding the acquisition of Shenyang Yuanda
Compressor Co. Ltd. (SYCC) had been correctly
offset against equity;
– deferred taxes had been correctly restated to
take into account the effects of the change.
• We checked whether the figures prepared according
to Swiss GAAP FER in the opening balance as at
April 1, 2016 and the 2016 income statement were
restated correctly. Additionally, we checked that
the reconciliation of the shareholders’ equity as at
April 1, 2016 and March 31, 2017 and the net income
for 2016 were disclosed correctly in the 2017
consolidated financial statements.
• We assessed the completeness and the
appropriateness of the disclosures according to
Swiss GAAP FER in the 2017 consolidated financial
statements.
The results of our audit are consistent with a correct
implementation of the Swiss GAAP FER requirements
in the 2017 consolidated financial statements.
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
100
Responsibilities of the Board of Directors for the consolidated financial statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and
fair view in accordance with Swiss GAAP FER and the provisions of Swiss law, and for such internal control as the
Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations,
or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Swiss law and Swiss Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.
As part of an audit in accordance with Swiss law and Swiss Auditing Standards, we exercise professional judgment
and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made.
• Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible for
the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors or its relevant committee, we determine those matters
that were of most significance in the audit of the consolidated financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION 101
Report on other legal and regulatory requirements
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal
control system exists which has been designed for the preparation of consolidated financial statements according to
the instructions of the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
PricewaterhouseCoopers AG
Beat Inauen
Audit expert
Auditor in charge
Winterthur, May 24, 2018
Oliver Illa
Audit expert
FINANCIAL REPORT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION 102
FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG, WINTERTHUR | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
FINANCIAL STATEMENTS OF BURCKHARDT
COMPRESSION HOLDING AG, WINTERTHUR
BALANCE SHEET
in CHF 1’000
Current assets
Cash and cash equivalents
Other current receivables due from third parties
Other current receivables due from group companies
Total current assets
Non-current assets
Financial assets
– Long-term loans to group companies
– Investments in subsidiaries
Total non-current assets
Total assets
Current liabilities
Trade payables due to third parties
Other current liabilities due to third parties
Accrued liabilities and deferred income
Current provisions
Total current liabilities
Equity
Share capital
Legal reserves from retained earnings
Free reserves from retained earnings
– Profit brought forward
– Net income
Treasury shares
Total equity
Total equity and liabilities
INCOME STATEMENT
in CHF 1’000
Income
Dividend income from group companies
Interest income from group companies
Gain on sale of own shares
Income from services provided to group companies
Total income
Expenses
Operating expenses
Direct Taxes
Total expenses
Net income
Notes
03/31/2018
03/31/2017
102
103
104
1’114
23
31
1’168
798
409
0
1’207
22’966
171’781
194’747
39’466
171’781
211’247
195’915
212’454
25
3
103
183
314
8’500
1’700
184’990
2’063
–1’652
195’601
2
0
219
0
221
8’500
1’700
160’995
47’620
–6’582
212’233
195’915
212’454
2017
2016
3’000
241
421
192
3’854
–1’762
–29
–1’791
2’063
47’800
508
0
192
48’500
–1’328
448
–880
47’620
FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG, WINTERTHUR | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
103
NOTES TO THE FINANCIAL STATEMENTS OF
BURCKHARDT COMPRESSION HOLDING AG
101 Accounting policies
General The financial statements as per March 31, 2018 are in
compliance with the requirements of Swiss corporate law.
The financial statements have been prepared in accordance
with the provisions of commercial accounting as set out in the
Swiss Code of Obligations (Art. 957 to 963b CO).
The following disclosures are not being made separately in
the statutory financial statements pursuant to Art. 961d (1) CO
as Burckhardt Compression Holding AG is presenting its con-
solidated financial statements according to Swiss GAAP FER:
– Additional disclosures in the notes (auditor’s fee; disclosure
on non-current interest-bearing liabilities)
– Cash flow statement
– Management report
All the values in the annual financial statements are reported
in thousand Swiss Francs unless otherwise indicated.
Burckhardt Compression Holding AG’s fiscal year 2017 com-
prises the period from April 1, 2017 to March 31, 2018.
Investments in subsidiaries Investments in subsidiaries are
reported in the balance sheet at the cost of acquisition less
appropriate valuation adjustments for impairments that are
anticipated to be permanent.
Treasury shares The treasury shares are stated at acquisition
cost and deducted from equity. No subsequent valuation is
made. If the treasury shares are disposed of, the resulting gain
or loss is recognized in the income statement.
Derivative financial instruments Burckhardt Compression
Holding AG uses derivative financial instruments exclusively as
hedges of the exposure to variability in cash flows that is attrib-
utable to a particular risk associated with a recognized asset
or liability or a highly probable future transaction (cash flow
hedges). At inception of the hedge, Burckhardt Compression
Holding AG documents the hedging relationship and the effec-
tiveness between the hedging instrument and the hedged item.
The derivative financial instruments are off-balance sheet
items.
102 Investments in subsidiaries
The equity interests held directly and indirectly by Burckhardt
Compression Holding AG are shown in note 33 “Group Compa-
nies”.
103 Share capital and shareholders
The share capital amounts to CHF 8’500’000 and is composed
of 3’400’000 shares, each with a nominal value of CHF 2.50. All
shares are registered shares and are paid in full. The Board of
Directors is empowered to increase the company’s share capital
by a maximum of CHF 1’275’000 at any time until June 30, 2019
by issuing a maximum of 510’000 fully paid registered shares
with a nominal value of CHF 2.50 each (authorized capital).
No person will be registered in the Share Register as share-
holder with voting rights with respect to more than five percent
of the issued share capital. This entry restriction is also appli-
cable to persons whose shares are totally or partially held by
nominees. This restriction is also valid if shares are purchased
when practicing subscription, warrant and conversion rights,
with the exception of shares acquired by succession, distribu-
tion of inheritance or matrimonial regime. Legal entities and
partnerships associated with each other by uniformly managed
capital or votes or in any other way, as well as private and legal
entities or partnerships, which form an association to evade the
entry restriction, are regarded as one person.
Individual persons, who have not expressly declared in the
application of entry that they hold the shares for their own
account (Nominees), will be entered in the Share Register with
voting rights, if the Nominee concerned establishes his subor-
dination to an accredited banking supervision and securities
authority, and if he/she has concluded an agreement with the
Board of Directors of the company concerning his/her position.
Nominees holding two or less than two percent of the issued
shares will be entered in the Share Register with voting rights
without an agreement with the Board of Directors. Nominees
holding more than two percent of the issued shares will be
entered in the Share Register with two percent voting rights
and, for the remaining shares, without voting right. Above this
limit of two percent, the Board of Directors may enter in the
Share Register Nominees with voting rights if they disclose the
names, addresses, nationality, and shareholdings of the per-
sons for whom they hold more than two percent of the issued
shares.
As of March 31, 2018, there is no such declaration between
a nominee-shareholder and the board of directors.
Shareholder groups which had existed before June 23, 2006
are excluded from the voting rights restrictions.
According to information available to the company from the
disclosure notifications of the SIX Swiss Exchange Ltd., the fol-
lowing shareholders reported shareholdings of at least 3% of
the share capital and voting rights as of March 31, 2018 (accord-
ing to the statutory bylaws the voting rights of NN Group N.V.
and JO Hambro Capital Management Limited are limited to 5%
of the total number of the registered BCHN shares recorded in
the commercial register):
104
FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG, WINTERTHUR | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
Shareholders
Name
MBO Aktionärsgruppe
NN Group N.V.
J O Hambro Capital Management Limited
Atlantic Value General Partner Limited (Mondrian)
Ameriprise Financial Inc.
Credit Suisse Funds AG
UBS Fund Management (Switzerland) AG
Oppenheimer Funds
TIAA-CREF Investment Management
As per March 31, 2018 the members of the Executive Board and
the non-executive members of the Board of Directors (and
related persons), owned the following numbers of shares of
Burckhardt Compression Holding AG:
Name
Position
Members of the Board of Directors
Valentin Vogt
Chairman
Deputy Chairman
Member
Member
Member
CEO
CFO
CHRO
COO Systems Division
COO Services Division
Hans Hess
Dr. Stephan Bross
Dr. Monika Krüsi
Urs Leinhäuser
Total
Executive Board
Marcel Pawlicek
Rolf Brändli
Sandra Pitt
Fabrice Billard2
Martin Wendel1
Total
Total
In % of total shares
1 Member of the Executive Board as from September 1, 2016
2 Member of the Executive Board as from October 1, 2016
03/31/2018
03/31/2017
% of
shares
12.40
6.93
6.89
4.99
3.49
3.03
3.01
3.01
<3.00
% of
shares
12.40
6.90
5.10
4.99
3.10
<3.00
3.01
3.00
4.95
Country
CH
NL
GB
GB
US
CH
CH
US
US
03/31/2018
03/31/2017
Total shares
Total shares
203’213
5’618
170
940
1’035
203’026
5’493
45
815
910
210’976
210’089
42’111
1’702
278
400
231
44’722
255’698
7.5%
42’111
1’054
0
220
100
43’485
253’774
7.5%
FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG, WINTERTHUR | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
105
104 Treasury shares
Number at the beginning of the period
Purchases
Sales
Number at the end of the period
The average selling price did amount to CHF 263.64. In the prior
fiscal year, the treasury shares were purchased at an average
price of CHF 246.70 per share.
105 Further disclosures pursuant to Article 959c par. 2 of
the Swiss Code of Obligations:
Full-time employees
Burckhardt Compression Holding AG does not employ any
employees.
Liabilities to pension funds
in CHF 1’000
Total liabilities to pension funds
Net release of undisclosed reserves
in CHF 1’000
Net release of undisclosed reserves
Derivative financial instruments
in CHF 1’000
2017
2016
24’966
0
–18’699
6’267
5’016
20’000
–50
24’966
03/31/2018
03/31/2017
0
0
03/31/2018
03/31/2017
0
0
03/31/2018
03/31/2017
Forward foreign exchange contracts (negative current fair value on cash flow hedge)
0
0
Guarantees
in CHF 1’000
Guarantees
03/31/2018
03/31/2017
109’389
114’818
Burckhardt Compression Holding AG issues advance payment
guarantees and performance bonds in the name of Burckhardt
Compression AG and in favor of a small number of selected cus-
tomers. In addition, standing guarantees have been given to
secure credit lines and guarantee limits granted by foreign
banks.
The credit lines and guarantee facilities extended to Burck-
hardt Compression AG by financial institutions do not require
any assets or shares of Burckhardt Compression Holding AG to
be pledged as collateral.
106
FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG, WINTERTHUR | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
Remuneration of the Board of Directors and
the Executive Board
Type and amount of remuneration of the members of the Board
of Directors and the Executive Board as well as the principles
and basic elements of the company’s compensation policy are
depicted and explained in the compensation report on pages 61
to 69.
Events after the balance sheet date
There were no additional events after the balance sheet date
which affect the annual results or would require an adjustment
to the carrying amounts of Burckhardt Compression Hold-
ing AG’s assets and liabilities.
Proposal of the Board of Directors for the appropriation
of retained earnings
in CHF 1’000
Retained earnings at the beginning of the period
Distributed dividend
Net income of the year
Retained earnings at the disposal of the Annual General Meeting
The Board of Directors proposes the following appropriation
– Gross dividend
Retained earnings carried forward
The Board of Directors will propose payment of a gross dividend
of CHF 6.00 per registered share at the Annual General Meeting
of Shareholders on July 6, 2018.
Gross dividend
Less 35% withholding tax
Net dividend
Annual General Meeting of Shareholders
The Annual General Meeting of Shareholders will take place at
4.00 pm on Friday, July 6, 2018 at the Park Arena, Barbara-Reinhart-
Strasse 24, 8404 Winterthur, Switzerland.
2017
2016
208’615
–23’625
2’063
187’053
194’945
–33’950
47’620
208’615
–20’400
–23’800
166’653
184’815
2017
2016
2015
6.00
–2.10
3.90
7.00
–2.45
4.55
10.00
–3.50
6.50
FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG, WINTERTHUR | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
107
108
FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG, WINTERTHUR | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
Report of the statutory auditor
to the General Meeting of Burckhardt Compression Holding AG
Winterthur
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Burckhardt Compression Holding AG, which comprise the balance sheet
as at March 31, 2018, the income statement and notes for the year then ended, including a summary of significant
accounting policies.
In our opinion, the financial statements (pages 102 to 106) as at March 31, 2018 comply with Swiss
company’s articles of incorporation.
law and the
Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those
provisions and standards are further described in the “Auditor’s responsibilities for the audit of the financial
statements” section of our report.
We are independent of the entity in accordance with the provisions of Swiss law and the requirements of the Swiss
audit profession and we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit approach
Overview
Overall materiality: CHF 1'960'000
We tailored the scope of our audit in order to perform sufficient work to
enable us to provide an opinion on the financial statements as a whole,
taking into account the structure of the entity, the accounting processes and
controls, and the industry in which the entity operates.
As key audit matter the following area of focus has been identified:
Impairment testing of investments in subsidiaries
PricewaterhouseCoopers AG, Zürcherstrasse 46, Postfach, CH-8401 Winterthur, Switzerland
Telefon: +41 58 792 71 00, Telefax: +41 58 792 71 10, www.pwc.ch
PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.
FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG, WINTERTHUR | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
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Audit scope
We designed our audit by determining materiality and assessing the risks of material misstatement in the financial
statements. In particular, we considered where subjective judgements were made; for example, in respect of
significant accounting estimates that involved making assumptions and considering future events that are inherently
uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including
among other matters consideration of whether there was evidence of bias that represented a risk of material
misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable
assurance that the financial statements are free from material misstatement. Misstatements may arise due to fraud or
error. They are considered material if, individually or in aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the
overall materiality for the financial statements as a whole as set out in the table below. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our
audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the financial
statements as a whole.
Overall materiality
CHF 1'960'000
How we determined it
1.0% of total assets
Rationale for the materiality
benchmark applied
We chose total assets as the benchmark because, in our view, it is a relevant
bechmark for holding company, and it is a generally accepted benchmark for
holding companies.
We agreed with the Audit Committee that we would report to them misstatements above CHF 200'000 identified
during our audit as well as any misstatements below that amount which, in our view, warranted reporting for
qualitative reasons.
Report on key audit matters based on the circular 1/2015 of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
Impairment testing of investments in subsidiaries
Key audit matter
How our audit addressed the key audit matter
Investments in subsidiaries is a significant asset cate-
gory on the balance sheet (CHF 171.8 million).
Impairment testing of investments whose book value is
greater than the book value of the underlying net assets
requires Management to consider capitalised earnings.
Doing so involves significant scope for judgement,
particularly to determine the assumptions to use
concerning future business results.
In identifying the potential need for impairment of
investments in subsidiaries, Management uses a pre-
defined impairment testing process.
Please refer to page 103 (Investments in subsidiaries)
in the notes to the financial statements.
In our audit of investments in subsidiaries, we per-
formed the following main audit procedures:
• We compared the book value of the investments in
the year under review with their pro-rata share of the
respective company's equity or the company's
valuation, based on capitalised earnings.
• We checked for plausibility the key assumptions
applied by Management.
We consider the valuation process and the assump-
tions used to be an appropriate and adequate basis for
the goodwill as at March 31,
the impairment testing of
2018.
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FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG, WINTERTHUR | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
Responsibilities of the Board of Directors for the financial statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisions
of Swiss law and the company’s articles of incorporation, and for such internal control as the Board of Directors
determines is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Board of Directors either intends to liquidate the entity or to cease operations, or has
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Swiss law and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Swiss law and Swiss Auditing Standards, we exercise professional judgment
and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made.
• Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the entity’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the entity
to cease to continue as a going concern.
We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors or its relevant committee, we determine those matters
that were of most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated
in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
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111
Report on other legal and regulatory requirements
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal
control system exists which has been designed for the preparation of financial statements according to the
instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company’s
articles of incorporation. We recommend that the financial statements submitted to you be approved.
PricewaterhouseCoopers AG
Beat Inauen
Audit expert
Auditor in charge
Winterthur, May 24, 2018
Oliver Illa
Audit expert
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IMPRINT | ANNUAL REPORT 2017 | BURCKHARDT COMPRESSION
IMPRINT
The statements in this review relating to matters that are not
historical facts are forward-looking statements that are not
guarantees of future performance and involve risks and uncer-
tainties, including but not limited to: future global economic
conditions, foreign exchange rates, regulatory rules, market
conditions, the actions of competitors and other factors beyond
the control of the company.
The Annual Report is published in German and English and is
available on the internet under www.burckhardtcompression.com/
financial-reports as an online version. The German version is
binding. The financial report is available in English only.
Publisher:
Burckhardt Compression Holding AG, Winterthur
Concept/Layout:
Source Associates AG, Zurich
Photography:
Scanderbeg Sauer Photography, Zurich
PR consultant:
PEPR, Oetwil am See
Burckhardt Compression Holding AGCH-8404 Winterthur, SwitzerlandTel. +41 52 262 55 00Fax +41 52 262 00 51info@burckhardtcompression.comwww.burckhardtcompression.com20.34.14.40