Burckhardt Compression Annual Report 2019

FY2019 Annual Report · Burckhardt Compression

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ANNUAL REPORT 2019 ABOUT US | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

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, 175 years
and counting, its skilled workforce has crafted superior solutions and set the benchmark in
the gas compression industry.

2CONTENTS | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

76
76

79
80

105

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

114

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
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

2
3
4
6
8
10

12
12

14
15

22
22
24

46
46

49
51

54
54

55
56
62
65

67
67

About us
Contents
To our shareholders
175th anniversary
Milestones 2019
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 application areas
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
Sales/distribution,
Infrastructure, Completion
of “Pulling Systems Together”
program for improvement
Outlook

Review of the fiscal year
Services Division
Financial performance,
Markets
Continued expansion of
sales organization,
New service centers, Outlook

TO OUR SHAREHOLDERS | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

TO OUR SHAREHOLDERS

DEAR SHAREHOLDERS

Our full-year results for 2019 are largely in line with the guid-
ance we gave during the presentation of our half-year report.
Incoming orders did not match the record-high figure from the
previous fiscal year. Sales were in line with our expectations.
Operating and net income showed another improvement, but
are still not yet at the levels we have targeted in our Mid-Range
Plan.

Order intake lower versus previous year Consolidated order
intake amounted to CHF 607.3 mn, 7.8% below the figure for the
previous fiscal year, which was the highest ever recorded in the
history of Burckhardt Compression. Excluding the effects of
currency translation and acquisition activity, incoming orders
declined by 8.8% y-o-y. Both divisions experienced order defer-
rals during the final quarter of the fiscal year (January to March
2020) due to the global coronavirus outbreak. New orders at the
Systems Division amounted to CHF 361.2 mn, 15.6% less than in
the previous fiscal year. The Services Division increased its
order intake by 6.7% to CHF 246.1 mn, of which Arkos contrib-
uted CHF 17.6 mn following the full acquisition of this company
in late November 2019.

Higher sales Sales rose by 5.1% to CHF 629.6 mn; excluding the
effects of currency translation and acquisitions, year-on-year
sales growth was 3.9%. Sales at the Services Division rose by
7.8% to CHF 241.3 mn, while the Systems Division reported a
3.4% increase to CHF 388.3 mn. Services now account for
almost 40% of Group sales.

Renewed increase in operating and net income Gross profit
of CHF 149.8 mn topped the prior-year figure of CHF 135.7 mn
by 10.4% and the resulting gross profit margin was 23.8% (pre-
vious year: 22.6%). The gross margin at the Systems Division
improved to 11.0% (previous year: 8.1%), despite the recognition
of the remaining cost overruns in connection with the LNGM
business, which amounted to approximately CHF 10 mn in the
fiscal year under review. Gross profit at the Services Division
rose by 1.7% to CHF 107.0 mn, resulting in a gross profit margin
of 44.3%. This is well below the prior-year gross margin of
47.0%, primarily because the gross margin at Arkos Field Ser-
vices is much lower than the average margin of the Group’s
other services operations. Excluding acquisition activity, the
gross profit margin of the Services business stood at 47.8%.

Consolidated operating income increased by CHF 10.3 mn to
CHF 54.8 mn, which corresponds to 8.7% of sales (previous
year: 7.4%). Operating income at the Services Division declined
to CHF 54.7 mn from CHF 58.2 mn in the previous fiscal year.
The Systems Division returned to profitability, contributing a
positive CHF 6.4 mn in operating income compared to a loss of
CHF –8.7 mn in the previous year.

Consolidated net income rose by 23.8% y-o-y to CHF 39.9 mn
or 6.3% of sales (previous year: 5.4%). Due to the substantial
positive contribution of Shenyang Yuanda Compressor (whose

founder still holds a 40% stake in the company) to the Group’s
bottom line, earnings per share attributable to Burckhardt
Compression shareholders showed a proportionally smaller
increase of 17.3% to CHF 9.56.

Solid balance sheet Total assets at the end of March 2020
amounted to CHF 883.0 mn, an increase of CHF 34.3 mn or
4.0% compared to the prior-year figure. Arkos Field Services is
included in this figure as a fully consolidated subsidiary. The
equity ratio at year-end was 36.0% (previous year: 40.7%).

The entire goodwill from the various acquisitions Burck-
hardt Compression has made in recent years was taken directly
to equity in accordance with Swiss GAAP FER. This resulted in a
deterioration of the equity ratio in the short term, but eliminated
the risk of goodwill impairments in future reporting periods.

The net financial position at the end of the fiscal year
amounted to CHF –91.7 mn (previous year: CHF –49.4 mn),
which primarily reflects the increase in net working capital, the
acquisition of the remaining 60% interest in Arkos Field Ser-
vices and fixed investment at the new factory in Shenyang.

Continued implementation of projects within the scope of
the Mid-Range Plan for 2018–2022 Various projects initiated
under the current Mid-Range Plan were successfully completed
during the past fiscal year. A global procurement organization
was established and expanded, for example, resulting in another
CHF 7 mn in cost savings. “Best-cost areas” for the sourced
products were identified and products were standardized. We
launched a platform that we use together with our global sup-
pliers for tracking and communication purposes and also intro-
duced a four-stage gate process for our interaction with suppli-
ers as well as an e-auction system. These projects marked a big
step forward for our procurement operations in terms of digita-
lization and increased their efficiency. R&D collaborated with
colleagues in Sales on the further modularization of new com-
pressor systems, which led to a more efficient quote prepara-
tion process and simplified compressor development and man-
ufacturing processes.

The upturn in sales at the Systems Division held the divi-
sion’s leading market position and the Services Division contin-
ued to grow thanks to the full acquisition of Arkos Field Ser-
vices. Burckhardt Compression’s growing knowledge and skills
in the OBC business are leading to new growth opportunities in
the US.

New factory in Shenyang on track Construction of the new
factory in Shenyang, China, is well on track despite an interrupt
of six weeks because of the coronavirus outbreak and the new
factory will be able to commence operations in autumn 2020 as
planned.

Acquisition of the compressor business of JSW In March 2020,
we signed an agreement (closing April 2020) with The Japan
Steel Works Ltd., or JSW in short, to purchase its global com-
pressor business. This transaction with JSW clearly strength-

TO OUR SHAREHOLDERS | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

ens Burckhardt Compression’s market presence in Japan and
bolsters the company’s global leadership.

Change in the Board of Directors After serving as a director
for 18 years, nine of them as chairman, Valentin Vogt, the cur-
rent chair of the Board of Directors, will not be standing for re-
election at the Annual General Meeting on July 3, 2020. Ton
Büchner has been nominated for election as a new member of
the Board of Directors and as its new chairman. He served as
CEO and President of AkzoNobel from 2012 to 2017 and worked
for Sulzer for 18 years before that, ultimately serving as CEO
from 2007 to 2011.

Outlook We are guiding for more than CHF 650 mn in sales for
fiscal year 2020. The challenges encountered in the LNGM busi-
ness over recent years were successfully overcome in fiscal
year 2019, so no other according additional costs are expected
on this front in fiscal year 2020. On the other hand, we expect
consequences due to the current global uncertainties. From
today’s perspective, we expect stable profit margins for the
2020 financial year.

The longer-term effects of the global corona situation on
Burckhardt Compression’s business cannot be estimated at this
time. Order intake for our products and services in the first two
months of the new fiscal year was lower than in the comparable
prior-year period.

Dividend proposal The Board of Directors will propose an
unchanged dividend of CHF 6.00 per share at the Annual Gen-
eral Meeting. This corresponds to a payout ratio of 62.8% of net
income per share (previous year: 73.6%), which is in the targeted
range of 50% to 70%.

Thank you We thank our approximately 2’600 employees around
the world for their untiring efforts during the past fiscal year
and our shareholders for their continued trust in our company.
Special thanks are also given to our many, often long-standing,
customers and suppliers.

Yours sincerely,

Valentin Vogt
Chairman of the Board of Directors

Marcel Pawlicek
CEO

Winterthur, June 2, 2020

Valentin Vogt

Marcel Pawlicek

175TH ANNIVERSARY | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

175 YEARS BURCKHARDT COMPRESSION

Burckhardt Compression celebrated its 175-year anniversary during the past fiscal year.
This special anniversary was celebrated at the company’s various locations by all employees
and their families in a series of regionally organized events. On January 9, 2019, the exact
date of the company’s establishment 175 years earlier, an anniversary celebration was held
in Winterthur with about 100 invited guests.

SWITZERLAND,
JANUARY 9, 2019

The street in front of the company’s
headquarters is renamed Franz-Burck-
hardt-Strasse in honor of the company’s
founder. An official anniversary celebra-
tion was held in the evening at the
Casinotheater Winterthur, with more
than 100 guests.

APRIL 18, 2019

A celebration with employees at the Winterthur site, a private performance by
Circus Knie followed by a street food festival

BRAZIL, JUNE 28, 2019

An open house day for all employee
families and a barbecue

175TH ANNIVERSARY | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

SOUTH AFRICA,
APRIL 13, 2019

A circus show, magicians and balloon
artists, topped off with a celebration
dinner

INDIA, APRIL 18, 2019

Traditional lamps light up an evening of entertainment for young and old

CHINA, APRIL 20, 2019

A big celebration with a traditional dinner
for all employees

MILESTONES 2019 | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

MILESTONES 2019

Full takeover of Arkos Field Services
Burckhardt Compression acquires the
remaining 60% of Arkos Group LLC on
November 25, 2019. Arkos Field Services
thus becomes a wholly-owned sub-
sidiary of Burckhardt Compression and
is fully consolidated as of this date.
Through this transaction, Burckhardt
Compression, with Arkos Field Services,
is unique in its ability to provide its US
customers with compressors as well as
with compressor services for every seg-
ment of the market – upstream, mid-
stream and downstream. The US is the
country with the highest number of
reciprocating compressor installations
in the world.

First compressor for an underground
gas storage facility in Europe
Burckhardt Compression is supplying
Ganzair, a Hungarian company, with a
high-speed compressor that will inject
natural gas from a pipeline into an
underground storage facility. This
compressor will be compliant with
ISO 13631 and will be the first high-
speed compressor made by Burckhardt
Compression to be used for this purpose
in Europe. Burckhardt Compression
offers customers worldwide a line of
high-speed compressors with a wide
power range from 100 kW to 7.5 MW,
covering a wide variety of applications
in the upstream and midstream
segments.

Long-term agreement to service
nine LNG carriers
Burckhardt Compression has signed a
five-year service agreement with a
leading transporter of liquefied natural
gas (LNG) to service the Laby®-GI
compressors installed on nine of the
company’s LNG carriers. The long-term
service agreement covers all compres-
sors and compressor system parts
requiring maintenance, customer
support, remote diagnostics for
preventive maintenance, on-site field
services, and overall project manage-
ment. Maintenance will be performed
while the carriers are in operation in the
open sea for maximum efficiency. All
nine LNG carriers are ME-GI-powered
and equipped with Laby®-GI compres-
sors for handling BOG.

MILESTONES 2019 | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

New customers thanks to capex-
optimized API 618 compressor
Burckhardt Compression receives its
very first order for its recently launched
capex-optimized API 618-compliant
compressors in January 2020. The
compressors ordered by Hyundai
Engineering Company from this new
product line will be used in propane
dehydrogenation and propylene produc-
tion applications at a petrochemical
plant in Poland. Burckhardt Compressi-
on makes the most of its global
manufacturing footprint, cost-efficient
engineering capabilities and global
supply chain by launching this new
product line.

Service Center in Qatar opened
Burckhardt Compression strengthens
its services operations in the Middle
East by opening a new service center in
Doha, Qatar, in collaboration with
Oriental Trading Company (OTC). This
“Authorized Service Center” offers
maintenance, repair, and engineering
services for Burckhardt Compression
compressors as well as other brand
compressors. The new center brings
Burckhardt Compression even closer to
its customers in this region and
guarantees quick response times.

Cooperating with GRZ to develop
a new hydrogen technology
Burckhardt Compression has joined
forces with GRZ Technologies, a spin-off
of ETH Lausanne, Switzerland, to
develop a new hydrogen compression
technology for applications ranging
from hydrogen fuel stations to hydrogen
energy storage systems. The new
technology involves thermal active metal
hydrides. Burckhardt Compression has
developed a static hydrogen compressor
with no moving parts that uses thermal
active metal hydrides to compress
the hydrogen. Hydrogen is one of several
promising sources of carbon-neutral
energy for industrial and mobility
applications.

FIGURES AT A GLANCE | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

FIGURES AT A GLANCE

ORDER INTAKE

CHF mn

700

600

500

400

300

200

100

SALES

CHF mn

6 00

500

400

300

200

100

OPERATING INCOME (EBIT)

CHF mn

100

10 11 12 13 14 15 16 17 18 19

NET INCOME

CHF mn

SHAREHOLDERS’ EQUITY

NET FINANCIAL POSITION

CHF mn

350

300

250

200

150

100

160
140
120
100
80
60
40
20
0
–20
–40
–60
–80
–90
–100

10 11 12 13 14 15 16 17 18 19

SHARE PRICE
SINCE IPO

BCHN

SPI

FISCAL YEAR 2019

CHF

500

450

400

350

300

250

200

150

100

400

350

300

250

200

150

100

–50

–100

BCHN

SPI

500

450

400

350

300

250

200

150

100

2006 2007 2008 2009 2010 2011 2012

2013

2014

2015

2016

2017 2018 2019

2020

04/01/2019
CHF 279.50 (BCHN)
CHF 181.13 (SPI)

03/31/2020
CHF 192.40 (BCHN)
CHF 181.13 (SPI)

FIGURES AT A GLANCE | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

2018

2019

Change
2018/2019

Sales

Gross profit

in % of sales

Sales

Gross profit

in % of sales

Sales

Gross profit

in % of sales

Operating income (EBIT)

in % of sales

Operating income (EBIT)

in % of sales

Operating income (EBIT)

in % of sales

428.0

230.7

658.7

375.4

30.5

8.1%

223.9

105.2

47.0%

599.3

135.7

22.6%

–8.7

–2.3%

58.2

26.0%

–5.0

44.5

7.4%

32.2

5.4%

21.8

41.8

–7.8

–26.1

7.9

848.7

250.8

597.9

345.0

40.7%

–49.4

2’346

569

2’558

271.00

921.4

2.7

8.15

6.00

361.2

246.1

607.3

388.3

42.8

11.0%

241.3

107.0

44.3%

629.6

149.8

23.8%

6.4

1.7%

54.7

22.7%

–6.3

54.8

8.7%

39.9

6.3%

20.5

50.7

–49.7

6.3

7.3

883.0

234.1

648.9

317.5

36.0%

–91.7

2’621

573

2’893

192.40

654.2

2.1

9.56

6.001

3’400’000

–15.6%

6.7%

–7.8%

3.4%

40.3%

7.8%

1.7%

5.1%

10.4%

–6.0%

23.1%

23.8%

–5.9%

21.3%

4.0%

–6.7%

8.5%

–8.0%

11.7%

0.7%

13.5%

–29.0%

–22.8%

17.3%

0.0%

in CHF mn

Order intake:
– Systems Division

– Services Division

Total

Sales and gross profit:

– Systems Division

– Services Division

Total

Operating income (EBIT):

– Systems Division

– Services Division

– Others

Total

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

1 Motion to the Annual General Meeting

OUR COMPANY | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

OUR COMPANY

HISTORY

The history of our company begins 176 years ago. Company
founder Franz Burckhardt lays the cornerstone of Burckhardt
Compression’s success on January 9, 1844 with the purchase of
a commercial site for the company in Basel. During the found-
ing years, his mechanical workshop makes machines for the
textile industry. As the years go by, Franz Burckhardt expands
the scope of the company’s operations, becoming a general
builder of machinery. In 1856, the company starts producing
steam-powered machines. Its first reciprocating compressor is
designed in 1878 and enters the market in 1883. In 1890, August
Burckhardt, the son of the now-deceased company father Franz
Burckhardt, establishes “Maschinenfabrik Burckhardt” as a
joint stock company to raise capital for the construction of a
new factory on Dornacherstrasse in Basel.

Another milestone is achieved in 1913 with the sale of the
company’s first compressor for producing ammonia synthesis
gas. This compressor has a discharge pressure of 300 bar and
is delivered to BASF in Ludwigshafen, Germany – a customer
that purchased one of Burckhardt’s first compressors back in
1885. In 1935, the Swiss company Sulzer delivers its first Sulzer
Labyrinth Piston Compressor to the Hürlimann Brewery in
Zurich and in 1951 the company receives an order from Imperial
Chemical Industries (ICI) for 11 ultra-high-pressure compressors
with a discharge pressure of 1’500 bar that will be used to pro-
duce low-density polyethylene (LDPE). After years of collabora-
tion between Burckhardt and Sulzer, Maschinenfabrik Burck-
hardt is acquired by Sulzer on May 8, 1969 and becomes a
subsidiary of Sulzer Group. In 1982, in the wake of their greater
collaboration, the reciprocating compressor activities of the
Sulzer Group are transferred to a single legal entity called Mas-
chinenfabrik Sulzer-Burckhardt AG. In 1994, the merged entity
celebrates its 150th anniversary. In 1999, as part of a Group-wide
restructuring program, Sulzer decides to consolidate Sulzer-
Burckhardt’s Swiss activities at the site in Winterthur. The oper-
ations in Basel are moved to Winterthur and the building on
Dornacherstrasse in Basel is sold.

In 2000, Sulzer decides to focus its activities on four divi-
sions. Sulzer-Burckhardt is put up for sale because it does not
fit with the new strategy. Together with the financial investor
Zurmont Finanz AG, five members of the Executive Board of
Maschinenfabrik Sulzer-Burckhardt AG buy out the company on
April 30, 2002. In the wake of the management buyout, Sulzer-
Burckhardt’s name is changed to Burckhardt Compression in
May 2002. In 2006, Zurmont decides to sell its shares in Burck-
hardt Compression by means of an IPO. The company is listed
on the SIX Swiss Exchange on June 26, 2006 and it ranks among
the 100 largest listed companies in Switzerland by market cap-
italization at the end of 2019.

In May 2016, the Group acquires a 60% majority interest in
Shenyang Yuanda Compressor, the number one manufacturer of
reciprocating compressor systems in China. In June 2016,
Burckhardt Compression introduces a divisional organizational
structure with two divisions, Systems and Services, with the
aim of addressing customer needs even better than before. In
December 2017, Burckhardt Compression adopts a Mid-Range
Plan for fiscal years 2018 to 2022. It serves as a strategic road
map over the five-year period and lays out the company’s goals.
On January 9, 2019, Burckhardt Compression celebrates its
175th anniversary with guests from the worlds of business and
politics as well as science and technology. Special events are
organized at Burckhardt Compression’s sites around the world
during the 2019 fiscal year to thank employees for their dedica-
tion and commitment. All employees and their families join in
the anniversary celebrations.

After its initial purchase of a 40% interest in Arkos Field
Services, a provider of compressor services in the US, in 2015,
Burckhardt Compression acquires the remaining shares in
November 2019. This transaction makes Burckhardt Compres-
sion the only independent provider of compressor systems and
compressor services serving customers in every segment of the
US market – upstream, midstream and downstream.

In March 2020, Burckhardt Compression announces the pur-
chase of the compressor business of The Japan Steel Works
(JSW) to further strengthen its global market reach, especially
in Japan.

VISION AND MISSION

Vision
We are our customers’ first choice for gas compression solu-
tions across the entire product life cycle.

Mission
Systems Division: We provide optimal gas compression solu-
tions for every customer.
Services Division: We are totally committed to providing ser-
vices that make a difference. We get the job done.

BURCKHARDT COMPRESSION BRAND

Burckhardt Compression and its umbrella brand stand for qual-
ity and worldwide leadership in innovative reciprocating com-
pressor systems and technologies. Cutting-edge technology, a
vast portfolio of compressors and components and a full range
of services make Burckhardt Compression an ideal partner for
customers around the world who want highly reliable, custom-

OUR COMPANY | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

tailored solutions for their reciprocating compressor systems.
Our collaboration with external and internal customers is dedi-
cated, solutions-oriented and distinguished by genuine enthusi-
asm for our reciprocating compressors. The umbrella brand
and corresponding logo in the form of the red-blue, stylized
compressor valve plate have been internationally registered for
many years.

When making acquisitions, Burckhardt Compression decides
during the integration process whether a brand is retained or
integrated into an existing house brand.

Other brands that belong to Burckhardt Compression Group
are:
– Shenyang Yuanda Compression, one of the largest manufac-
turers of reciprocating compressors in China, whose products
are mostly sold in its domestic market

– Arkos Field Services, our exclusive services provider in the US
– CSM, together with Burckhardt Compression Canada, our ser-

vices provider in Canada

– Prognost, the world’s leader in compressor monitoring and

diagnostic systems

– SAMR, a French manufacturer of sliding bearings
– BCS Compression, products made by Shenyang Yuanda Com-
pressor for export markets that leverage Burckhardt Com-
pression’s global processes, supply chains and service organi-
zation, and cost-effective engineering capabilities

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
their perception is developed and promoted through active
usage in our corporate and marketing communication activi-
ties.

GUIDING PRINCIPLES

In response to the Group’s substantial growth in recent years
and ongoing internationalization, Burckhardt Compression
issued uniform “Values and Behaviors” that serve as the very
foundation of our corporate culture. This document is also per-
tinent to the growing collaborative interaction and increasingly
virtual collaboration between the Group’s subsidiaries and sites
across the world. In this context, it is vital that all company
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. It operates in two divisions, Sys-
tems and Services. Burckhardt Compression’s Mid-Range Plan
for the fiscal years 2018 to 2022 targets the continued expan-
sion of its market position through organic growth and selec-
tive acquisitions, with the ultimate objective of strengthening
its market leadership. In the year under review, Burckhardt
Compression acquired the remaining 60% of Arkos Field Ser-
vices, a provider of compressor services in the US, and
announced the purchase of the compressor business of The
Japan Steel Works, or JSW for short.

Mid-Range Plan for fiscal years 2018 to 2022
Consolidated sales of around CHF 700 mn are targeted for fis-
cal year 2022 in the current Mid-Range Plan with sales split
fairly evenly between the two divisions and an EBIT margin of
10% to 15% at Group level.

The Systems Division is aiming to improve its profitability
while maintaining its global market leadership. Its sales target
for 2022 is CHF 340 mn with an EBIT margin of 0% to 5%. A
greater emphasis on global procurement and further cost opti-
mization will help it to achieve these targets. The division will
also broaden its presence in its targeted market segments and
new applications will be launched.

The 2022 sales target for the Services Division, including
Arkos Field Service, is CHF 360 mn. The target range for its
EBIT margin is 20% to 25%. Servicing the compressors of other
manufacturers is an important growth priority for this division.
Burckhardt Compression will launch further operational initia-
tives, ranging from global processing and the continued expan-
sion of its local and regional presence to the buildup of its mar-
itime services network, to achieve its targets in the Services
Division.

Furthermore, digitalization will help to create new business
models and applications in both divisions and optimize produc-
tion processes.

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 objective is to
develop reciprocating compressors and components that opti-
mally address customer needs and ensure its technology lead-

OUR COMPANY | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

ership in the market for reciprocating compressors. Quality,
technology, materials and design specifications are geared
towards high operational reliability, optimal service intervals
and easy maintenance – the overall aim being to achieve the
lowest possible operating costs. Burckhardt Compression’s
product development 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 attractive-
ness, followed by the elaboration of product performance speci-
fications, 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. All stage-gate
milestones are subject to approval by the “Innovation Board”,
which is headed by members of the Executive Board.

MAIN APPLICATION AREAS

Upstream oil & gas
Despite increasing energy efficiency, global demand for energy
continues to grow in the long run spurring on 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 stringent regulations requiring the environ-
mentally responsible handling of toxic and non-toxic gases that
arise during extraction and production.

Burckhardt Compression offers onshore and offshore solu-
tions for a wide range of applications. High-quality, low-speed
reciprocating 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. Recovery rates are typically around 30% using conven-
tional production methods and can 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 combined with environmentally responsi-
ble methods for disposing of unwanted gases, which in the past
were usually flared, polluting the surrounding environment and
atmosphere. Burckhardt Compression is an expert at building
compressors for compressing these gases, which often contain
aggressive, sulfuric components. In deepwater applications,
CO2 injection is also used for EOR methods with pressure levels
of up to 600 bar. Preprocessing applications at the point of pro-
duction in the oil and gas industries offer additional opportuni-
ties for Burckhardt Compression and its new high-speed com-

pressors are particularly suited for these applications. In these
applications individual components of extracted gas are sepa-
rated at the wellhead to facilitate the subsequent gas trans-
port through the gathering lines to centralized points.

Gas transport and storage
Demand for natural gas 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 regula-
tions, especially in the maritime industry, are additional incen-
tives to switch to natural gas as a source of fuel. Liquid natural
gas is increasingly being used as propulsion fuel for LNG carri-
ers, merchant ships, and cruise ships. The importance of natu-
ral gas will further grow with the amid widespread efforts to
decarbonize growing economies and diversify energy supply.
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, which offers
greater flexibility and avoids the geostrategic risks associated
with gas pipeline infrastructure.

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 LNG process
chain begins with the extraction, purification, and liquefaction
of the natural gas, followed by ship loading, transportation, and
subsequent off-loading, then storage and re-gasification, and,
ultimately, injection into a gas distribution grid. Burckhardt
Compression offers unique solutions for compressing and reli-
quefying 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
onshore or offshore installations.

Refinery
Refineries process crude oil into products such as gasoline, ker-
osene, diesel, heating oil, liquefied petroleum gas (LPG), as well
as solvents and lubricants. Worldwide demand for these prod-
ucts will continue to grow over the medium term and most of
the growth in demand will come from non-OECD countries,
especially in Asia. Additional factors encouraging investment in
the refining industry are more stringent environmental regula-
tions, cost-cutting pressure, 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 addi-
tional processing capacity is needed. For state-owned refiner-
ies, strategic issues regarding location and supply security are

OUR COMPANY | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

also of considerable importance. Burckhardt Compression
offers Process Gas Compressors with the highest possible
availability and lowest life cycle costs for all relevant oil refin-
ing processes that require gas (mostly hydrocarbon gas/hydro-
carbon mixtures).

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, fertilizer, deter-
gents and 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 US 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.

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. The produc-
tion of hydrogen for the energy (refineries) and transportation
sectors is a particularly fast-growing section of this market.
Demand for ultra-pure compressed hydrogen gas for fuel cells
is surging and this represents a prime opportunity for Burck-
hardt Compression to leverage its tremendous experience and
its wide range of oil-free compressors.

CUSTOMERS

Our customer base includes some of the largest, most famous,
and most innovative companies in the world. We serve
– energy companies,
– natural gas transportation and storage companies (onshore

and offshore),

– petrochemical/chemical companies,
– industrial gas companies and
– general engineering companies that design and construct pro-

duction lines or entire plants 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 unrivaled reliability
and availability thanks to its unique labyrinth sealing system on
the piston and piston rod gland, which enables oil-free and con-
tact-free compression.

The result is a longer service life, which has a positive
impact on overall reliability and operating costs. This prevents
piston ring debris from contaminating the gas- and friction-
induced hot spots. The Laby® Compressor is suitable for bone-
dry, dirty, abrasive and other gases. The gastight casing reduces
gas emissions and losses to the environment to virtually zero.
Laby® Compressors can be relied on to compress LNG boil-off
gas at suction temperatures of as low as minus 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 for off-
shore applications regarding maximum allowable vibration lev-
els on deck structures must be observed. The Laby®-GI Com-
pressor 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
applications. The proven technology is a guarantee for maxi-
mum efficiency and lowest life cycle costs. Depending on the
operating conditions, Laby®-GI Compressors can be engineered
for lubricated or non-lubricated compression applications.

OUR COMPANY | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

Process Gas Compressors per API 618
Process Gas Compressors built by Burckhardt Compression are
synonymous with unrivaled availability and long operating
lives. 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.

Our Process Gas Compressors are built to customer-spe-
cific application requirements in accordance with the API 618
guidelines (5th Edition). Burckhardt Compression offers non-
lubricated and lubricated Process Gas Compressors, horizontal
and vertical. They are especially suited to the high-pressure
compression 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. Burckhardt Compression has global
engineering and service organizations and the Group’s own cen-
ters of excellences leverage those resources to offer compre-
hensive solutions that are entirely focused on the needs of the
customer.

We have many years of experience with hydrogen gas com-
pression systems for the refining industry and are now also
offering hydrogen compression solutions for the mobility mar-
ketplace. These Process Gas Compressors with lubricated or
non-lubricated designs can be operated at the typical fuel pres-
sures of up to 500 bar.

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 nearly 60
years of experience in building Hyper Compressors. These com-
pressors are distinguished by a long operational life and high
safety standards, which can be traced back to their unique con-
struction design and Burckhardt Compression’s global one-stop
maintenance and service capabilities.

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 built by Burckhardt
Compression in 2016. Burckhardt Compression is the world
market leader for Hyper Compressors.

Standard High Pressure Compressors
Burckhardt Compression’s Standard High Pressure Compres-
sors are extremely robust and reliable reciprocating compres-
sors with a compact design and low weight. They are delivered
skid-mounted with structural supports that dampen vibrations,
so there is no need for a special foundation. Due to the low-
pressure conditions per compressor speed range, greater pis-
ton displacement can be achieved at lower compression tem-
peratures. The result is high compression efficiency, low wear
and less maintenance expense. The air- and water-cooled com-
pressors are used to compress air, hydrogen, nitrogen, helium,
argon, natural gas and other non-corrosive gases and gas mix-
tures at land facilities and on ships. The standard high-pressure
compressors are smaller than the other compressors in Burck-
hardt Compression’s portfolio of reciprocating compressors,
with a maximum power of 220 kW, maximum discharge pres-
sure of 400 bar and suction volumes of up to 1’500 Nm3/h.

High-Speed Compressors
High-speed compressors are basically process gas processors
with shorter stroke diameters and very high rotational speeds
(1000–1800 RPM). These compressor systems are used for stan-
dardized natural gas production and transport applications, and
they are often powered by gas engines instead of electric
motors. Due to the short-term nature of planning decisions in
this industry, there is a strong desire to keep initial investment
costs at a minimum. With this in mind, Shenyang Yuanda Com-
pressor launched a compressor especially for natural gas pro-
duction and transport companies several years ago that it is
now marketing to selected other industries through Burckhardt
Compression’s distribution channels. Initial project wins in
Europe attest to this product’s great potential.

SERVICE AND COMPONENTS BUSINESS

The Services Division is a full-range provider of services for
reciprocating compressors and related engineering expertise.
Its comprehensive range of services is backed by OEM parts
with high supply readiness and vast engineering know-how,
from simple modifications to extensive retrofit and revamp
projects, as well as turnkey solutions. Experienced field service
technicians ensure close interaction with the customer and
rapid response. Depending on the size of the project and site,
Burckhardt Compression also offers a 24/7 shift operation, so
production systems can be put back into operation even faster.
We also provide reliable, expert monitoring and diagnostic solu-
tions as well as advisory services, all from a single source.

OUR COMPANY | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

parameters and central control and monitoring of compressors
that are in operation at different sites. The diagnostic systems
made by our subsidiary PROGNOST Systems GmbH are designed
for use with all types of reciprocating compressors as well as
with many other types of rotating machinery. They are backed
by unrivaled technology and reliability and deliver value day
after day in the oil, gas and chemicals industries.

Field service – close to the customer
Geographic proximity, a local presence and long-lasting cus-
tomer relationships grounded in trust are another key to our
success. Having a local presence simplifies interaction with the
customer, shortens the supply chain and reduces field service
hours. Burckhardt Compression is active in all relevant markets
through its own subsidiaries and its business partners. It cur-
rently operates 50 service centers around the world, giving it a
strong regional reach and extensive field service capabilities. It
will continue to expand this service network going forward.

Customer training
The objective of our ever-growing range of customer training
and learning programs is to foster a frequent technical exchange
with our customers on compressors and its operation. Theoret-
ical and practical training programs for various types of com-
pressors and for our own and third-party components are
offered at the modern training center we have set up in Winter-
thur, and we also provide on-site training at customer sites with
the systems they have. Qualified technical specialists instruct
customers on a wide range of maintenance and operational
issues over the life cycle of any compressor system.

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. A
wide range of complementary services are offered for all
brands of reciprocating compressors and their auxiliary system,
and even for all types of other compressors. Our internal spe-
cialists 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 full
warranty as an OEM stand for superior quality and ensure low
life cycle costs as well as the optimal operation of compressor
systems. These top-quality compressor components are tai-
lored to specific system requirements. Compressor compo-
nents 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. Burckhardt Compression is methodically
expanding this business in close collaboration with numerous
operators of reciprocating compressors.

Diagnosis and monitoring for superior operational reli-
ability
Preventive services and rapid intervention guided by online
diagnostic data and analyses are vital for optimal compressor
availability. Reliable condition monitoring and diagnostic sys-
tems for reciprocating compressors and equipment, integrated
within the top-level systems for monitoring an entire produc-
tion facility, are effective tools for enhancing operational reli-
ability and optimizing service intervals. Continuous machine
diagnosis detects potential and actual anomalies at an early
stage and thus helps to avoid costly and unscheduled down-
time. Other advantages include the optimization of operating

MID-RANGE PLAN
2018–2022

MORE PROJECTS SUCCESSFULLY COMPLETED WITHIN THE SCOPE
OF THE MID-RANGE PLAN

The Services Division acquired the remaining
60% of Arkos Field Services, a US company
headquartered in Houston, Texas, during the
year under review. This transaction gave it
full ownership of the company and will help it
to expand its business servicing compressors
made by other manufacturers – one of the goals
of the current Mid-Range Plan.

The Systems Division also achieved an impor-
tant Mid-Range Plan milestone returning to
profitability.

REVIEW OF THE FISCAL YEAR | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

REVIEW OF THE FISCAL YEAR

FINANCIAL PERFORMANCE

Order intake lower versus previous year
Consolidated order intake amounted to CHF 607.3 mn, 7.8%
below the figure for the previous fiscal year, which was the
highest ever recorded in the history of Burckhardt Compres-
sion. Excluding the effects of currency translation and acquisi-
tion activity, incoming orders declined by 8.8% y-o-y. Both divi-
sions experienced order deferrals during the final quarter of the
fiscal year (January to March 2020) due to the global coronavi-
rus outbreak. New orders at the Systems Division amounted to
CHF 361.2 mn, 15.6% less than in the previous fiscal year. The
Services Division increased its order intake by 6.7% to
CHF 246.1 mn, of which Arkos contributed CHF 17.6 mn follow-
ing the full acquisition of this company in late November 2019.

Higher sales
Sales rose by 5.1% to CHF 629.6 mn; excluding the effects of
currency translation and acquisitions, year-on-year sales
growth was 3.9%. Sales at the Services Division rose by 7.8% to
CHF 241.3 mn, while the Systems Division reported a 3.4%
increase to CHF 388.3 mn. Services now account for almost
40% of Group sales.

Renewed increase in operating and net income
Gross profit of CHF 149.8 mn topped the prior-year figure of
CHF 135.7 mn by 10.4% and the resulting gross profit margin
was 23.8% (previous year: 22.6%). The gross margin at the Sys-
tems Division improved to 11.0% (previous year: 8.1%), despite
the recognition of the remaining cost overruns in connection
with the LNGM business, which amounted to approximately
CHF 10 mn in the fiscal year under review. Gross profit at the
Services Division rose by 1.7% to CHF 107.0 mn, resulting in a
gross profit margin of 44.3%. This is well below the prior-year
gross margin of 47.0%, primarily because the gross margin at
Arkos Field Services is much lower than the average margin of
the Group’s other services operations. Excluding acquisition
activity, the gross profit margin of the Services business stood
at 47.8%.

Consolidated net income rose by 23.8% y-o-y to CHF 39.9 mn
or 6.3% of sales (previous year: 5.4%). Due to the substantial
positive contribution of Shenyang Yuanda Compressor (whose
founder still holds a 40% stake in the company) to the Group’s

bottom line, earnings per share attributable to Burckhardt
Compression shareholders showed a proportionally smaller
increase of 17.3% to CHF 9.56.

Solid balance sheet
Total assets at the end of March 2020 amounted to
CHF 883.0 mn, an increase of CHF 34.3 mn or 4.0% compared
to the prior-year figure. Arkos Field Services is included in this
figure as a fully consolidated subsidiary. The equity ratio at
year-end was 36.0% (previous year: 40.7%).

The entire goodwill from the various acquisitions Burckhardt
Compression has made in recent years was taken directly to
equity in accordance with Swiss GAAP FER. This resulted in a
deterioration of the equity ratio in the short term, but eliminated
the risk of goodwill impairments in future reporting periods.

Continued implementation of projects within the scope of
the Mid-Range Plan for 2018–2022
Various projects initiated under the current Mid-Range Plan
were successfully completed during the past fiscal year. A
global procurement organization was established and expanded,
for example, resulting in another CHF 7 mn in cost savings.
“Best-cost areas” for the sourced products were identified and
products were standardized. We launched a platform that we
use together with our global suppliers for tracking and commu-
nication purposes and also introduced a four-stage gate pro-
cess for our interaction with suppliers as well as an e-auction
system. These projects marked a big step forward for our pro-
curement operations in terms of digitalization and increased
their efficiency. R&D collaborated with colleagues in Sales on
the further modularization of new compressor systems, which
led to a more efficient quote preparation process and simplified
compressor development and manufacturing processes.

New factory in Shenyang on track
Construction of the new factory in Shenyang, China, is well on
track despite an interrupt of six weeks because of the corona-
virus outbreak and the new factory will be able to commence
operations in autumn 2020 as planned.

REVIEW OF THE FISCAL YEAR | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

Acquisition of the compressor business of JSW
In March 2020, we signed an agreement (closing April 2020)
with The Japan Steel Works Ltd., or JSW in short, to purchase
its global compressor business. This transaction with JSW
clearly strengthens Burckhardt Compression’s market pres-
ence in Japan and bolsters the company’s global leadership.

Workforce growth
The number of employees at the end of the fiscal year stood
at 2’621, an increase of 275 from the previous year’s figure of
2’346 (full-time equivalents). This number includes 213 employees
of Arkos Field Services.

At the end of March 2020, 782 employees (30%) were based
in Switzerland, 1’161 (44%) in BRIC countries and 678 (26%) in
other countries.

ORDER INTAKE

CHF mn

SALES

CHF mn

700

600

500

400

300

200

100

6 00

500

400

300

200

100

10 11 12 13 14 15 16 17 18 19

EBIT AND NET INCOME

CHF mn

100

EBIT
Net income

EQUITY RATIO

CHF mn

1’000

900

800

700

600

500

400

300

200

100

Balance sheet total
Shareholders’ equity
Equity ratio (%)

REVIEW OF THE FISCAL YEAR | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

CAPACITY

RESEARCH AND DEVELOPMENT

The Services Division opened a new service center in Guwahati,
India, during the year under review. New service centers were
also opened in Malaysia in cooperation with Petroteam/IPS Aus-
tralia and in Doha, Qatar, in cooperation with OTC.

ACQUISITIONS

Burckhardt Compression acquired the remaining 60% of Arkos
Field Services in the US in November 2019. Arkos Field Services
is our exclusive services provider in the US. In March 2020
Burckhardt Compression announced the acquisition of the
global compressor business of The Japan Steel Works, or JSW
for short. Burckhardt Compression’s market presence has
grown through these transactions.

CUSTOMERS

Working with customers in a spirit of partnership is important
to Burckhardt Compression. Both divisions regularly conduct
customer surveys in a bid to understand customer needs even
better, and such surveys were carried out while preparing the
latest Mid-Range Plan. The survey findings and resulting action
plans and initiatives were incorporated into the new plan.

Compressor systems for marine applications
We conducted a thorough design review of our successful
Laby®-GI compressor for use aboard large LNG carriers. This
resulted in efficiency gains and greater customer benefit, for
example by eliminating the need for cylinder lubricants. Com-
pressor manufacturing costs were introduced through the
introduction of a structured value-engineering process.

Meanwhile, our engineers optimized the sealing systems
used in Laby®-GI compressors that are already in operation
aboard LNG carriers, so these customers can have their com-
pressors retrofitted with non-lubricated sealing systems too.
The performance advantages are significant, because a com-
plex system of cylinder lubrication is no longer needed, which
improves the cost efficiency of the retrofitted systems.

New materials for the Persisto® portfolio
We enlarged and optimized our portfolio of Persisto® compres-
sor sealing systems materials during the year under review.
These mostly PTFE-based materials have superior tribological
qualities and significantly extend the service lives of oil-lubri-
cated and oil-free compressors. Many of these materials were
engineered by Burckhardt Compression and are manufactured
in-house in accordance with our quality management system.

This reengineered solution does not
require cylinder lubrication, which
lowers maintenance costs and increases
value for money.

New sealing rings for pistons and packings
Innovative ring geometries enable process gas compressors to
be operated without oil lubricants in fueling applications for
hydrogen-powered trains, trucks or buses, with pressures of up
to 500 bar. The technological advantages of reciprocating com-
pressors for this market are unrivaled efficiency and long run-
ning times. Thanks to this new sealing technologies, Burck-
hardt Compression can offer compressors for this promising
application area.

REVIEW OF THE FISCAL YEAR | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

BRAND MANAGEMENT

We are constantly striving to optimize and strengthen the inter-
national profile of the “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.

In the period under review, various print and online commu-
nications tools were introduced for both divisions and Burck-
hardt Compression’s trade show visuals were improved.

SYSTEMS DIVISION

The Systems Division kept its market position in the face of strong
competition. Shenyang Yuanda Compressor sold process gas
compressors to customers outside China for the first time and
Burckhardt Compression received orders for compressors that
will be used at a hydrogen fuel plant and at an underground gas
storage facility in Europe.

REVIEW OF THE FISCAL YEAR SYSTEMS DIVISION | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

REVIEW OF THE FISCAL YEAR
SYSTEMS DIVISION

ORDER INTAKE

CHF mn

500

400

300

200

100

SALES

CHF mn

4 00

300

200

100

GROSS PROFIT

CHF mn

100

10 11 12 13 14 15 16 17 18 19

OPERATING INCOME (EBIT)1

CHF mn

–10

10 11 12 13 14 15 16 17 18 19

FIGURES

in CHF mn

Order intake
Sales and gross profit

Operating income (EBIT)

in % of sales

Sales

Gross profit

in % of sales

2017

2018

2019

Change
2018/2019

319.8

428.0

361.2

–15.6%

384.4

27.2

7.1%

–9.0

–2.3%

375.4

30.5

8.1%

–8.7

–2.3%

388.3

42.8

11.0%

+6.4

+1.7%

3.4%

40.3%

Headcount as per end of fiscal year (full-time equivalents)

1’425

1’506

1’517

0.7%

1 Before fiscal year 2015, no EBIT was reported at divisional level.

REVIEW OF THE FISCAL YEAR SYSTEMS DIVISION | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

FINANCIAL PERFORMANCE

Back in the black
Orders received by the Systems Division in fiscal year 2019
amounted to CHF 361.2 mn, a decline of 15.6% compared to the
record-high figure from the previous fiscal year. Order intake
was still trending higher in the first half, but customer order
activity tapered off afterwards, particularly during the final
quarter of the year, which is partly a reflection of the coronavi-
rus outbreak. Meanwhile, divisional sales advanced 3.4% y-o-y
to CHF 388.3 mn thanks to the high order intake from the pre-
vious fiscal year and strong growth in China. Gross profit for the
year of CHF 42.8 mn topped the prior-year figure by 40.3%,
despite the recognition of the remaining cost overruns in the
LNGM business, which amounted to approximately CHF 10 mn.
The gross profit margin improved to 11.0% (previous year: 8.1%).
Operating income improved by CHF 15.1 mn versus the previous
fiscal year to a positive CHF 6.4, bringing the Systems Division
back to profitability.

MARKETS

Burckhardt Compression offers compressor system solutions
for the following application areas:
– Upstream oil & gas
– Gas transport and storage
– Refinery
– Petrochemical/chemical industry
– Industrial gases

Burckhardt Compression won several
contracts for large LDPE production
lines in South Korea and China during
the year under review.

Burckhardt Compression kept its market position during the
year under review despite strong competitive pressure, as evi-
denced by the various orders it received for large LDPE lines in
South Korea and China and for other projects. A major petro-
chemical project was successfully completed in Canada.

The very first large order for process gas compressors built
by Shenyang Yuanda Compressor for a customer beyond its
domestic market was received during the fiscal year under
review. Besides this, Burckhardt Compression received an order

for a Hydrogen production facility in the US that produces
Hydrogen for fuel. The first high-speed compressor for an
underground gas storage facility in Europe was delivered to a
Hungarian customer. It will inject natural gas from a pipeline
into the underground storage facility. Initial sales of the new
and optimized line of API 618 compressors were also booked.

Oil and gas production
The drop in capital spending in the upstream oil & gas industry
in the US had a negative effect on this application area during
the year under review. This is the only application area targeted
by Burckhardt Compression that is exposed directly to changes
in crude oil prices.

Gas transport and storage
2019 was another positive year for the LNG market (liquefied
natural gas) targeted by Burckhardt Compression. Numerous
new LNG terminals are under construction, especially in Asia.
The growing importance of large LNG carriers reflects increas-
ing global demand for cleaner and lower-cost sources of energy.
Container liner and cruise ship operators must meet increas-
ingly stringent environmental regulations. Most recently, the
global limits on sulfur dioxide and nitrogen oxide emissions
from ships were significantly tightened on January 1, 2020.
Burckhardt Compression has claimed a large share of the mar-
ket for LNG-powered vessels in recent years. Besides solutions
for ME-GI diesel propulsion systems, we can now also offer
solutions for the X-DF engines moving in parallel into the mar-
ket. Regardless which system is used, ship operators can con-
veniently switch from marine diesel to the naturally forming
boil-off gas and vice versa during engine operation. We provided
Laby® compressors for a ship powered by an X-DF engine during
the year under review.

Refinery
Business momentum in this segment remained positive during
the period under review, fueled by the double-digit growth of
the global market. Pressure on refinery margins sustained the
trend towards integrated production concepts throughout the
value chain. Countries with substantial refinery capacity are
aiming to increase the domestic share of the added value to
reduce their dependency on imported refinery products. Our
compressor business is benefiting from these efforts. Large
production plants are currently under construction in China and
Southeast Asia. India completed its transition to the stricter
BS6 emission standard last year, which has boosted demand for
hydrogen gas and compressors at the country’s refineries.

REVIEW OF THE FISCAL YEAR SYSTEMS DIVISION | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

INFRASTRUCTURE

Construction of Shenyang Yuanda’s new plant continued as
planned during the past fiscal year despite an interrupt of six
weeks because of the coronavirus outbreak, so commissioning
and startup will take place as scheduled in autumn 2020. This
new plant is an investment in the future development of the
systems business. The two existing factories will be moved to
the new, larger site, where workflows and processes will reflect
the latest standards and best practices, further improving over-
all operating efficiency. We continued to expand our Global Sup-
port Center in India.

COMPLETION OF “PULLING
SYSTEMS TOGETHER” PROGRAM
FOR IMPROVEMENT

This large-scale initiative launched in 2016 to optimize the Sys-
tem Division’s processes and costs was completed at the end
of the 2018 fiscal year. Some 30 different projects were
launched as part of the “Pulling Systems Together” program
and they covered practically every area of the division, from
design, procurement, production workflows and project man-
agement to logistics and capacity management. This program
helped the division to effectively respond to temporary fluctua-
tions in order volumes and to improve its operational excel-
lence so as to bring about a significant and lasting improve-
ment in its competitiveness over the medium term.

Petrochemical and chemical industry
The petrochemical and chemical industry has long witnessed
increasing global demand for plastic products. Production
capacity has grown as a result and efforts are being made
across the industry to increase the local share of added value.
This is particularly evident in China, where the share of imported
products by value is still relatively high despite the substantial
investments in local production capacity that have been made
in recent years. Although the orders for LDPE production lines
received during the year under review were fewer and smaller
in scope than in the previous year, we still expect order inflow
from this industry to increase in the coming years.

Industrial gases
Historically, the various industries in this application area have
grown at roughly the same pace as world GDP. Hydrogen gas is
attracting increasing attention as a source of fuel for trains and
commercial vehicles and, looking further into the future, for
cars as well. Hydrogen could become a more economical and
greener source of energy for vehicles than electricity. Some
states in the US are actively supporting this alternative trend
and have begun investing in hydrogen production assets. Pro-
ducers of industrial gases are challenging the conventional
energy companies by developing technologies for hydrogen-
powered vehicles. M&A activity has picked up in an effort to
achieve scale in the current market environment.

SALES/DISTRIBUTION

In fiscal year 2018, the sales organization for new compressor
systems was decentralized. Responsibility for customer rela-
tionship management and project negotiations (front sales) was
transferred to the respective regions and regional offices for
preparing and processing technical proposals and quotes (appli-
cation engineering) were set up. This organizational change
delivered the expected results in the year under review and
enabled further improvements in our sales and project execu-
tion capabilities.

Collaboration with external sales agents in countries where
Burckhardt Compression does not employ its own sales staff
was intensified in the fiscal year under review. New agents were
signed in Abu Dhabi and Malaysia.

REVIEW OF THE FISCAL YEAR SYSTEMS DIVISION | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

OUTLOOK

As already pointed out, the precise impact of the global corona-
virus outbreak on our operaions in fiscal year 2020 cannot be
determined at the present time. The Systems Division began
the year with a full order book. Supply chains are still intact,
despite some complications as a result of the virus. Customers
continue to take delivery of the products and services they’ve
ordered from us and invoices are being paid.

Achieving a further improvement
in profitability while at the same
time keeping its global market
leadership remains the number one goal
for the Systems Division.

Further improving profitability while defending its global
market leadership remains the top priority for the Systems Divi-
sion. Under the current Mid-Range Plan for 2018 to 2022, sales
of CHF 340 mn and an EBIT margin of 0% to 5% are targeted for
fiscal year 2022. This sales target was already reached in fiscal
year 2018 and then clearly exceeded during the year under
review. The Systems Division also managed to return to profit-
ability in 2019 after three consecutive years in the red with an
EBIT margin of 1.7%, thanks to a host of measures affecting
nearly every aspect of its business. This turnaround was
achieved despite the recognition of the remaining substantial
cost overruns in the LNGM business. The division will continue
to make every effort to further improve its profitability.

SERVICES DIVISION

After acquiring all outstanding shares in Arkos Field Services,
the Services Division became a one-stop shop in the US for
downstream, midstream and upstream compressor services.
The division also signed long-term service agreements for
marine compressors. Its Hyper Compressor services business
showed pleasing growth in China, Japan and South Korea.

REVIEW OF THE FISCAL YEAR SERVICES DIVISION | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

REVIEW OF THE FISCAL YEAR
SERVICES DIVISION

ORDER INTAKE

CHF mn

250

200

150

100

SALES

CHF mn

250

200

150

100

GROSS PROFIT

CHF mn

120

100

10 11 12 13 14 15 16 17 18 19

OPERATING INCOME (EBIT)1

CHF mn

10 11 12 13 14 15 16 17 18 19

FIGURES

in CHF mn

Order intake
Sales and gross profit

Operating income (EBIT)

in % of sales

Sales

Gross profit

in % of sales

2017

2018

2019

Change
2018/2019

205.4

230.7

246.1

210.2

97.9

46.6%

54.4

25.9%

223.9

105.2

47.0%

58.2

26.0%

241.3

107.0

44.3%

54.7

22.7%

6.7%

7.8%

1.7%

–6.0%

Headcount as per end of fiscal year (full-time equivalents)

778

830

1’093

31.7%

1 Before fiscal year 2015, no EBIT was reported at divisional level.

REVIEW OF THE FISCAL YEAR SERVICES DIVISION | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

FINANCIAL PERFORMANCE

Continued growth
The Services Division continued its multi-year growth trajec-
tory in 2019. Order intake rose by 6.7% (excluding acquisition
effects –0.9%) to CHF 246.1 mn. Divisional sales grew 7.8%
(excluding acquisition effects 0.1%) to CHF 241.3 mn, and now
account for 38% of consolidated sales (previous year: 37%).
Gross profit edged 1.7% higher to CHF 107.0 mn, resulting in a
margin of 44.3%. This is well below the prior-year margin of
47.0%, mainly due to the clearly sub-par gross profit margin of
Arkos Field Services. Excluding acquisition activity, the divi-
sional gross profit margin was 47.7%. Operating income declined
by 6% from CHF 58.2 mn to CHF 54.7 mn in the fiscal year
under review, which is mainly attributable to the additional
costs related to the further expansion of the divisional sales
network as well as the dilutive effect of the EBIT from Arkos
Field Services.

Burckhardt Compression won several
long-term services agreements in the marine
business, including a five-year agreement to
service the compressors on nine LNG carriers.

MARKETS

In late November, Burckhardt Compression acquired the remain-
ing 60% of Arkos Field Services, a provider of compressor ser-
vices in the US. Arkos Field Services is now a wholly-owned sub-
sidiary of Burckhardt Compression and serves our customers in
the US as the country’s only one-stop compressor manufac-
turer and services provider for every segment of the market –
upstream, midstream and downstream. The US has the world’s
largest installed base of reciprocating compressors.

In March 2020, we signed an agreement with The Japan
Steel Works Ltd., or JSW in short, to purchase its global com-
pressor business. JSW is a conglomerate with operations in the
steel, energy, and machinery manufacturing industries and the
acquired compressor business accounts for 1% to 2% of its
annual sales of CHF 1.9 bn. This transaction with JSW clearly
strengthens Burckhardt Compression’s market presence in
Japan and bolsters the company’s global leadership.

New long-term service agreements for marine assets were
signed, mostly with customers in the Middle East, but this will
not be reflected in reported sales until fiscal year 2020 and
beyond. These long-term projects enhance the reliability and
accuracy of our planning processes. As an example, a five-year

agreement was signed with a leading player in the LNG trans-
port industry to service the Laby®-GI compressors aboard nine
of its LNG carriers with the aim of forging a close and long-term
partnership.

The Hyper Compressor services business in China, Japan
and Korea also showed pleasing trends. Improvements in our
key account management processes over the past year will
likely lead to more service agreements going forward. On the
innovation front, cloud applications were used for the first time
for compressor monitoring purposes. Sealing and rider rings
made of the engineering plastic material Persisto® for use in a
wide variety of applications were also well received by custom-
ers.

Spare Parts
New orders for parts showed a slight decline in the year under
review after the strong growth witnessed in the 2018 fiscal
year. Customers are increasingly ordering spare parts for com-
pressors made by Burckhardt Compression and other manufac-
turers in connection with the services we provide them. Cus-
tomers continue to appreciate our multi-year efforts to build up
the range of products and services we offer for other brand
compressors.

Engineering/Revamp/Repair
The decline in the Spare Parts business was more than offset
by the rapid growth of the Engineering/Revamp/Repair busi-
ness. Long-term service agreements in this particular area help
to fuel the continued expansion of the services business in gen-
eral. We won major revamp contracts in Singapore, Germany
and elsewhere. Repair processes and guidelines were standard-
ized across the Group to ensure uniformity and enhance cus-
tomer satisfaction.

Field Services
Our Field Services operations maintained the pleasing momen-
tum from the previous year. With the full acquisition of Arkos
Field Services, Burckhardt Compression has significantly
increased its presence in the US market and advanced the
global expansion of its services organization. Thanks to this
transaction, we were also able to manage several major proj-
ects (offshore and onshore) with our own field service techni-
cians.

Monitoring/Diagnostics
New system sales declined as customers were hesitant to
invest in monitoring solutions during the year under review.
Monitoring and diagnostics services showed renewed growth,
however. Demand for leasing solutions also increased, reflect-
ing an ongoing trend. We launched our first cloud-based moni-

REVIEW OF THE FISCAL YEAR SERVICES DIVISION | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

toring solutions based on the Prognost system during the past
year and they were very well received by the market.

OUTLOOK

CONTINUED EXPANSION OF SALES
ORGANIZATION

The centralized quote management system introduced in 2017
and the new service engineering solutions continue to deliver
the expected benefits. In the year under review we took further
action to improve the efficiency of our sales processes by
expanding our regional sales structures. Staff received special
training in connection with the global sales development pro-
gram initiated for both divisions. We increased our sales sup-
port operations in India for Prognost.

Our highly qualified field service representatives around the
world are responsible for managing customer relationships and
developing additional market opportunities. Under our new
partnership model we are profiling ourselves as a local services
provider, especially for customers in smaller but fast-growing
markets with limited investment.

NEW SERVICE CENTERS

A new service center was opened in Slovakia in May 2019, from
which Burckhardt Compression can offer compressor operators
in Slovakia, the Czech Republic, Hungary, Poland and Austria a
full range of services and repairs for all reciprocating compres-
sor brands as well as hyper compressor services. A new service
center was also opened in Guwahati, India, and new service cen-
ters were opened in Malaysia in partnership with Petroteam/IPS
Australia and in Doha, Qatar, in partnership with OTC. The proj-
ect to expand our component manufacturing capacity in Shang-
hai initiated in fiscal year 2018 continued throughout fiscal year
2019.

As already pointed out, we cannot yet determine the precise
impact the global coronavirus outbreak will have on our opera-
tions in fiscal year 2020. We have not observed any major slow-
down in demand for the products and services offered by the
Services Division. Its supply chains are likewise still intact,
despite some complications as a result of the coronavirus out-
break. Customers continue to take delivery of the products and
services they have ordered from us and invoices are being paid.

The outlook for growth in our services business remains attrac-
tive:
– More and more customers are outsourcing service-related

operations.

– The installed base of compressor units continues to grow.
– Compressor operators are seeking efficiency gains to sharpen
their competitive profile, which requires retrofit and overhaul
services.

– Predictive maintenance in conjunction with the continuous
condition monitoring of compressor systems is growing in
importance.

Therefore we believe that demand for a full range compressor
services from a single source will grow more strongly than the
spare parts business alone. Customers are increasingly expect-
ing engineering solutions, competent on-site advisory services
and tailor-made maintenance concepts, especially for installa-
tions at an advanced stage of their life cycle.

Customers are increasingly expecting
engineering solutions, competent
field advisory services and tailor-made
maintenance concepts, especially for
older installations.

In our Mid-Range Plan for 2018 to 2022, we expect the
Services Division to achieve annual organic sales growth of 6%
to 8%. Including the consolidation of Arkos Field Services, the
divisional sales target for 2022 is CHF 360 mn. The target
range for its EBIT margin is 20% to 25%. Growth priorities are
services for compressors made by other manufacturers and
people-driven services. To ensure success in this business,
Burckhardt Compression has launched operational initiatives to
strengthen customer relationship management, for example,
and expand its local and regional service capabilities. Our ser-

REVIEW OF THE FISCAL YEAR SERVICES DIVISION | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

vices capabilities will be expanded in the coming fiscal year, pri-
marily in Latin America, Southeast Asia and Japan. Other mea-
sures include the expansion of its engineering and project
management resources in the Services Division and the intro-
duction of uniform processes and guidelines for all service cen-
ter locations.

A large number of LNGM vessels were commissioned in
recent years and the maintenance and spare parts needed are
becoming business potential for Burckhardt Compression. This
represents a new business opportunity for Burckhardt Com-
pression. Long-term service agreements covering the entire life
cycle of the compressor installations are particularly interest-
ing here. From a geographic perspective, the Asia-Pacific region
offers the most opportunities for growth, given the many new
systems that have been installed in the region during recent
years. In North America, we will benefit from our increased
service capabilities following the integration of Arkos Field Ser-
vices. Looking further into the future, we believe that preven-
tive maintenance services in connection with compressor mon-
itoring solutions will be an attractive growth driver. Service
support for CNG fueling stations (CNG: compressed natural gas)
and hydrogen gas solutions have also emerged as new pockets
of growth for our company. We will make systematic use of dig-
italization to launch new services and applications. The main
aims here are to improve our ability to access and mine com-
pany and customer data and improve our communication and
optimize our business processes. Our online customer platform
will be upgraded during the current fiscal year and a mobile
solution will be introduced for our field service technicians.

Last year’s achievements indicate that the Services Division
is on the right track. The market response to the expansion of
our service presence and our engineering and project manage-
ment resources was very positive. Our engineering capabilities
were clearly expanded. We also broadened the range of training
courses for our own employees and our customers’ service and
maintenance technicians.

The detailed customer satisfaction survey conducted for
the first time two years ago was repeated during the fiscal year
under review. The results of this survey confirmed that our
strategic initiatives are producing the intended results. The tar-
get groups of this survey were our customers’ service and main-
tenance technicians and other employees with a technical
background as well as procurement specialists. The survey
showed that our customers are very satisfied with the compe-
tence of our field service specialists and the quality of the
spare parts we make. These findings were evaluated with inputs
from all of our country organizations and specialist units;
appropriate corrective measures were taken where necessary.

BURCKHARDT COMPRESSION GROUP

The delivery of two Hyper Compressors during the past year deserves
special mention. They were first transported by water from Basel
to Shanghai and from there to their final destination by a heavy haul
trucking specialist. Burckhardt Compression also won several
contracts to supply compressors for large LDPE production lines
in South Korea and China during the reporting year.

SUSTAINABILITY REPORT | ANNUAL REPORT 2019 | 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
the framework for continuing the company’s 176-year history of
success on all levels. This can only be achieved if a balance is
found between the different and sometimes opposing interests
of the individual stakeholders.

We are committed to transparency. A firm understanding of
the current status is needed to set the right goals and take the
measures that will help 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 evaluated by an external specialist (GAM)
on a regular basis. During the latest assessment in 2018 we
again achieved our goal of exceeding the average rating for a
selected group of comparable Swiss companies.

Burckhardt Compression continued to adapt its occupa-
tional health and safety management system and its environ-
mental management system over the course of the past year to
maintain compliance with the requirements of OHSAS 18001
and ISO 14001, respectively.

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 modified to reflect the prevailing economic, polit-
ical 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
accurately portray our company to enable a fair valuation of
Burckhardt Compression’s stock. We organize an Investor Day
to that end. The latest Investor Day was held at the
company’s headquarters in Winterthur in January 2018, where
we presented the targets and objectives of our Mid-Range
Plan for 2018 to 2022. The next Investor Day is scheduled in
autumn 2020 and will again take place at the company’s head-
quarters in Winterthur.

Our investor relations activities are evaluated by indepen-
dent firms and they receive consistently very good ratings con-
sidering the size of our company. The leading Swiss business
newspaper “Finanz und Wirtschaft” gives us an A– rating
(A being the highest rating) for investor relations as well as
transparency and a B– rating for growth.

In the yearly ranking of annual reports conducted by
HarbourClub and the business magazine “Bilanz”, our 2018
annual report scored a very high 34th (out of a total of 238 com-
panies) in the “Value Reporting Print” category. A significant
improvement was achieved in the “Value Reporting Online” cat-
egory, where Burckhardt Compression jumped 69 places to
number 34.

In the 2019 survey of company boards carried out by zRating
in collaboration with the newspaper “Finanz und Wirtschaft,”
Burckhardt Compression scored 24 points and ranked
39th among the 174 Swiss listed companies covered by the sur-
vey. This ranking is based on criteria pertaining to board orga-
nization, independence, transparency, compensation and sus-
tainability.

Customers
Burckhardt Compression seeks to establish lasting customer
relationships, given that the average useful life of our compres-
sors is 30 to 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-standing 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 war-
ranties meetings, which are an integral part of the manage-
ment process and are held with the designated management
team. Appropriate measures are then introduced and imple-
mented based on the results of the evaluation. In the year under
review, customer satisfaction surveys were focused on the Ser-
vices Division.

Competition
We are committed to fair competition and have zero tolerance
for price fixing, cartels or any other activities that distort com-
petition. This is also clearly stated in our Code of Conduct. We
value our corporate and business know-how, especially our
technical and commercial expertise, and are constantly safe-
guarding it against loss or unauthorized access.

SUSTAINABILITY REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

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 downloaded at www.burckhardtcompression.com/
about-us/vision-mission-values. We systematically test their
suitability and annually assess their performance by means of
visits and audits, and by measuring key performance indicators.
Strategic procurement is an integral part of Burckhardt
Compression’s strategic management cycle. The relevant pro-
curement managers report at regular intervals on the most
important 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. In the year under review, we organized a
Supplier Day in Switzerland and in India to deepen our contact
with our suppliers and inform them about various changes and
projects.

We were honored with the SAP Gold Award in the “Fast
Delivery” category in connection with the roll-out of SAP’s Suc-
cess Factors HR software in the previous fiscal year. SAP’s
award is given in recognition of superb project planning and the
fast and cost-effective implementation of SAP software solu-
tions, focusing closely on SAP standards.

Innovation
Burckhardt Compression was named world market leader for
reciprocating compressor systems in fiscal year 2017. The
Global Market Leaders Index was developed by the Business
School of the University of St. Gallen in collaboration with the
Akademie Deutscher Weltmarktführer. The index lists compa-
nies that offer leading technology and outstanding products
and services.

Process improvement
The quest for continuous improvement by Burckhardt Compres-
sion’s executives and employees forms the foundation of our
company.

Every year, the personal objectives of our executives and
employees include implementing continuous improvement proj-
ects. These projects are implemented using a method devel-
oped by Burckhardt Compression and evaluated by its execu-
tives. We also work with suppliers, universities, institutions,

and advisors worldwide to develop and improve products or pro-
cesses in areas where we do not have the necessary expertise.
Collaboration with external experts and specialists fosters new
ideas and maximizes creative potential, also within the com-
pany.

Capital expenditure
Burckhardt Compression has invested CHF 136.8 mn over the
past five years (excluding acquisitions). Most of its capital
expenditure during the period under review was spent in Win-
terthur 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 capitalization divided by shareholder equity at the end
of the reporting year resulted in a quotient of 2.1 (previous
year 2.7). This clearly shows that we continue to generate sub-
stantial value with the capital of our shareholders (sharehold-
ers’ equity) even in times with a coronavirus outbreak. Net
income per share attributable to the shareholders of Burck-
hardt Compression for the period under review amounted to
CHF 9.56 (previous year: CHF 8.15). We aim to increase this fig-
ure going forward.

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 planning and manage-
ment process.

The Executive Board’s assessment of risks is discussed with the
Audit Committee and the Board of Directors twice a year.
We distinguish between two categories of risk:
1.

Internal: Risks that Burckhardt Compression can directly
influence.

2. External: Risks over which Burckhardt Compression has lit-

tle or no influence.

SUSTAINABILITY REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

The objectives of our risk management activities are:
– to systematically detect special risks;
– to establish processes for monitoring, reducing and, ideally,

ACTUAL WARRANTY COSTS
AS A PERCENTAGE OF SALES

preventing risks;

– achieving a balance between risks and rewards for our busi-

ness.

Warranty costs
The significant increase in warranty costs over the past three
fiscal years is mainly due to additional costs incurred in the
LNGM business.

10
11
12
13
14
15
16
17
18
19

0.7

1.0

0.8

0.7

0.8

0.6

0.8

1.0

1.4

1.9

NET INCOME PER SHARE

CHF

07
08
09
10
11
12
13
14
15
16
17
18
19

20.00

21.46

16.68

13.56

15.22

16.42
15.87

16.93
16.34

9.12
8.51
8.15

9.56

SUSTAINABILITY REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

SOCIAL SUSTAINABILITY

Corporate culture
A well-founded and sound corporate culture is the foundation
of a company’s competitiveness. Our “Values and Behaviors”
policy document ensures that all employees at the Group’s var-
ious sites and subsidiaries share the same corporate values and
principles. This shared understanding makes collaboration
between teams and across borders much easier.

All employees are trained on the company’s values and
behaviours and code of conduct. Members of the Executive
Board have also stressed the importance of these common val-
ues and behaviors in video podcasts. These measures help to
ensure that our employees are familiar with our corporate cul-
ture 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 sustainable HR policies. We actively promote a good balance
of employees in terms of gender and age. High levels of
employee loyalty and identification with the company are con-
firmed by the fact that the typical employee has been with the
company for 8.5 years.

Toward the end of the year under review, Burckhardt Com-
pression conducted another survey of its employees around the
world. The exceptionally high participation rate of 89% in the
previous employee survey rose to an even higher 91% in the lat-
est survey. Virtually every group-wide topic surveyed showed a
very pleasing improvement, which indicates that the work-
shops, initiatives and projects initiated based on the results of
the previous survey have produced the desired outcomes.
Employee feedback regarding collaboration, supervisors, and
employee focus and information policies showed the greatest
improvement. The overall pleasing results reinforce Burckhardt
Compression’s plans and intentions to pursue further such ini-
tiatives worldwide. This employee survey is conducted every
two years to measure changes in employee satisfaction. The
next employee survey is planned for fiscal year 2021.

We have a responsibility to ensure the expertise of our
employees and promote the exchange of knowledge. Our
employee orientation programs ensure 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 perfor-
mance reviews and it is financed by Burckhardt Compression. We
have developed an internal program with various technical, prod-
uct-specific and management training modules to ensure the
continual development of our technical and leadership compe-

tencies. Training courses for specific skill-sets are organized for
the entire Burckhardt Compression Group several times a year.
Burckhardt Compression conducts an annual appraisal and
performance review with every employee (MyPerformance@
BC), comprising personal development goals and suggestions
for continuous improvement. Periodic reviews of the progress
made toward performance goals, formal meetings with employ-
ees and goal-setting are also part of our evaluation system.

Women make up 14.5% of our global work force (13.8% in the
previous year) and we aim to steadily raise this percentage to
20% over the coming years. Both men and women sit on the
Board of Directors and the Executive Board of our company.
This meets one of the recommendations from the Code of Best
Practice for Corporate Governance published by economiesu-
isse, but, more than that, we are convinced that mixed-gender
teams perform better.

Burckhardt Compression conducted
another global survey of its employees
around the world. The remarkably
high response rate of 91% reflects a
high level of employee dedication.

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 by the CEO and the heads of their divisions. The
employee turnover rate of 9.5% in the period under review (pre-
vious year: 9.8%) includes all persons leaving as well as all
expired temporary labor agreements and is attributed to the
good state of the global economy. The rate of voluntary depar-
tures within overall employee turnover for the year under
review stood at 5.8%, below the defined upper threshold of 6%.

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 58 apprentices in Switzerland and 31 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 career
pathways. Apprentices with a good performance record are

SUSTAINABILITY REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

generally retained by Burckhardt Compression upon comple-
tion of their apprenticeship. Burckhardt Compression’s annual
spending on apprenticeship training programs (cash out)
amounts to about CHF 1.4 mn. An internal talent review process
is in place to identity potential new managers and specialists
at an early stage and guide them through selective talent devel-
opment programs. Vacant job positions at all levels are also
advertised internally. External as well as internal candidates
must go through a proprietary screening process. The system-
atic evaluation and development of the company’s future man-
agers, which we have practiced internally with success for
many years, enabled us to again fill various management vacan-
cies during the past year with internal candidates. If there are
no suitable candidates available in-house to succeed a depart-
ing executive or to fill a new management-level position, we are
in a good position to recruit well-qualified external candidates,
not least due to our company profile and image.

Another Internal Management Development Program, or
IMDP for short, was organized during the past fiscal year. Prom-
ising mid- and upper-management talents from around the
world receive training through this program. The IMDP consists
of several modules that go beyond the functional roles of each
participant and is intended to give them a better understanding
of the company as a whole. Participants also work on multina-
tional project teams with a strategic focus on the Mid-Range
Plan as part the program.

Occupational health and safety
Workplace safety is very important to Burckhardt Compression.
We go to great lengths to ensure that every employee is aware
of potential workplace risks and accident prevention measures.
Regular training is provided on work safety topics. Work safety
audits are carried out annually by external professionals. Inter-
nal safety inspections are performed to identify and mitigate
hazards. The subsequent recommendations will be duly imple-
mented.

The health and general well-being of our employees are also
important to us. Burckhardt Compression acknowledges that
physical and mental health correlates with employee produc-
tivity and performance. For this reason, Burckhardt Compres-
sion launched in this fiscal year the program Dr BeWell. It con-
tains an extensive range of physical activities, preventative
measures and theme-specific campaigns help improve
employee satisfaction, health and motivation, and to reduce
absences. In fiscal year 2018 the occupational health and safety
management system of every Burckhardt Compression site
received OHSAS 18001 certification and we intend to upgrade
our certification to ISO 45001 in the 2020 fiscal year. Numerous
measures ranging from detailed risk assessments and safety
inspections accompanied by management to workplace safety

GEOGRAPHIC BREAKDOWN OF THE WORKFORCE, 2019
100% = 2’621

Employees (full-time equivalents)

Other
26%

BRIC
countries
44%

Switzerland
30%

GLOBAL WORKFORCE BY GENDER

Employees (full-time equivalents)

812

872

939

1’072

1’217

1’257

105

111

139

160

168

175

277

302

324

379

Men
Women

EMPLOYEE TURNOVER RATIO1

10
11
12
13
14
15
16
17
18
19

8.0

7.5

5.2
5.0

4.4

5.4

10.2

9.8
9.8
9.5

1 2016 onwards: contains all leaves

1’830

1’912

2’022

2’242

SUSTAINABILITY REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

training and mandatory protective footwear requirements for
certain employees have led to a further improvement in the
relevant key performance indicators.

With 6.8 days (previous year: 6.1 days) the average number
of working days lost per employee remained on a low level. We
aim to bring this down to less than 6.0 days. Further action has
been taken to achieve this goal.

Environmental management
Every Burckhardt Compression site received ISO 14001 certifi-
cation in the fiscal year 2018. In addition to compliance with the
applicable standards, activities here were primarily focused on
environmentally relevant aspects, with the aim of reducing
energy consumption. A comprehensive chemicals management
concept was also drawn up, hazardous chemicals were replaced
with less hazardous ones , and our storage practices were opti-
mized.

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 held the unpaid position of
Chairman of the Swiss Employers’ Association since 2011 and of
“Check your Chance”, a Swiss association that seeks to reduce
youth unemployment, since 2014. Our CEO also serves as the
honorary chair of the Swiss, Eastern Europe (non-EU), Central
Asia and South Caucasus Joint Chamber of Commerce. To
strengthen our local social networks, we run programs at the
locations of our biggest companies 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.

Employees in India have helped to build small man-made
lakes in Kondhapuri and Vadner that will retain rainwater which
can then be used by the surrounding communities for agricul-
tural purposes.

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)

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. This
is indispensable since our compressor systems have an average
service life of 30 to 50 years. Whenever it makes sense, our cus-
tomers are included early on in the development 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:

– Compressor systems for marine applications: The dual-fuel
propulsion system developed for LNG carriers can be powered
by environmentally friendly natural gas instead of marine die-
sel oil. 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, SOX and NOX emissions up to 30% when powered by natu-
ral gas.

– Process gas compressors per API 618: These compressors are
used specifically in industrial processes for the desulfuriza-
tion of fuels.

– Process gas compressors for hydrogen fueling applications:
Innovative ring geometries enable process gas compressors
to be operated without oil lubricants in fueling applications
for hydrogen-powered trains, trucks or buses, with pressures
of up to 500 bar. The technological advantages of reciprocat-
ing compressors for this market are unrivaled efficiency and
long service lives.

– PROGNOST®-SILver: Systems for monitoring and diagnosing
the condition of reciprocating compressors are key tools for
increasing operational reliability, extending service intervals
and preventing failures.

SUSTAINABILITY REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

Procurement
We draw on the experience of our suppliers to help us continu-
ously improve our products. Much of our value creation is
dependent on 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
are verified by reviewing the required audit reports.

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 opti-
mized our internal logistics processes and transportation oper-
ations through the “PULL@BCAG” program. We are also reduc-
ing 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 phi-
losophy about the work we do. Local procurement of machine
accessories brings us even closer to our customers and allows
us to reduce transport runs.

Buildings and fixtures
At the Winterthur site, a multi-year project to save energy in our
offices and workshops is underway.

Our plant in Pune reduced its energy
consumption by 21% versus the
2015/16 base year and its freshwater
consumption by 33%.

Shenyang Yuanda Compressor’s new plant in Shenyang will
draw more of its energy needs from district heating systems.
The insulation concept for the exterior walls also deserves spe-
cial mention. The insulated sandwich wall panels used will
reduce the amount of energy required for heating purposes.
Furthermore, when the new plant is operational, employee
workwear and protective clothing will be washed at a central
laundromat instead of the current system where every depart-
ment has its own washing machine. The new concept will save
both water and energy.

A new sand mixer has been installed for Shenyang Yuanda
Compressor’s foundry. The sand that is used for the casting
molds can now be reprocessed and reused. The main building
has also been renovated to improve energy efficiency.

Our plant in Pune received the GreenCo STAR Performer
Award during the year under review. GreenCo is an environmen-
tal rating system introduced by the Confederation of Indian
Industry (CII) that takes a holistic approach to measuring the
effectiveness of a company’s environmental policies. Our plant
in Pune received this award for achieving a 21% reduction in its
energy consumption versus the 2015/16 base year and a
33% reduction in its freshwater consumption thanks to a rain-
water harvesting system. Washing rather than disposing of oily
cotton cleaning rags used in manufacturing processes saved
772 kg of cotton.

Environmental management, recycling and waste
disposal
Hazardous goods and chemicals are transported, stored and
disposed of in accordance with applicable laws and regulations.
Internal collection points help our employees sort and dispose
of waste correctly and allow us to recycle most of our waste.
The rest is sent to a nearby waste incineration plant that pro-
duces district heat for Burckhardt Compression’s 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 in collabora-
tion with external consultants was continued and expanded and
will lead to even greater separation of waste in the future. Con-
ventional lighting in Winterthur continued to be replaced with
with LEDs during the past year. Burckhardt Compression opti-
mized the chemicals concept at its Winterthur site during the
year under review. Combustible chemicals were replaced with
less flammable chemicals, and all storage containers were
relabeled. Oil storage tanks were retrofitted with spill contain-
ment systems and special transport tanks, which improves our
chemical safety practices and process efficiency. The substitu-
tion of hazardous chemicals further reduced our consumption
of VOC gases (Volatile Organic Compounds), which are harmful
for the environment. These and other measures are part of the
EOHS system that has been introduced at all Group sites in
compliance with ISO 14001 and OHSAS 18001 standards. Offi-
cial certification was obtained in 2018.

SUSTAINABILITY REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

ELECTRICITY CONSUMPTION

MWh

10
11
12
13
14
15
16
17
18
19

3’717
3’707

4’136

3’672

5’305
5’385

6’773

6’933
7’029

7’231

WATER CONSUMPTION

10
11
12
13
14
15
16
17
18
19

WASTE

10
11
12
13
14
15
16
17
18
19

41’639

35’040

28’251

14’851

17’792
18’865

29’157

24’310

29’019
30’311

256
246

197

235

280

326

284

321

343
352

Figures without Shenyang Yuanda Compressor

CORPORATE GOVERNANCE | ANNUAL REPORT 2019 | 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, 2020.

1. GROUP STRUCTURE AND
SHAREHOLDERS

1.1. Group structure

1.1.1. Organizational group structure
Burckhardt Compression is managed through a divisional orga-
nizational structure consisting of two divisions, the Systems
Division (compressor manufacturing business) and the Services
Division (compressor services and components). The manage-
ment 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

R. Dübi

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, 2020 amounted to
CHF 654’160’000.

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 106, Note 102, “Subsidiaries”.

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, 2020. In
accordance with the company’s Bylaws, the voting rights of
NN Group N.V. and Atlantic Value General Partner 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 shareholder pool (Valentin Vogt,
Harry Otz, Leonhard Keller, Martin Heller,
Ursula Heller, Marcel Pawlicek)
NN Group N.V.

CH
NL

Atlantic Value General Partner Limited (Mondrian) UK

Ameriprise Financial Inc.

Credit Suisse Funds AG

Vontobel Fonds Services AG

BlackRock, Inc.

UBS Fund Management (Switzerland) AG

12.4
10.3

5.0

3.5

3.2

3.1

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 2019 | BURCKHARDT COMPRESSION

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 mar-
ket 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 Register
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% vot-
ing 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 sharehold-
ings 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
July 6, 2021 by issuing a maximum of 510’000 fully paid regis-
tered shares with a nominal value of CHF 2.50 each (authorized
share capital). The date and amount of the issuance, the time
of dividend entitlement and, if applicable, the type of contribu-
tion will 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 Burck-
hardt 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.

CORPORATE GOVERNANCE | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

3. BOARD OF DIRECTORS

From left: David Dean, Dr. Stephan Bross, Valentin Vogt, Dr. Monika Krüsi, Urs Leinhäuser

CORPORATE GOVERNANCE | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

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. The com-
position of the Board of Directors is as follows:

Name

Nationality

Function

First elected

Term expires

Valentin Vogt
Urs Leinhäuser

Dr. Monika Krüsi

Dr. Stephan Bross

David Dean1
Hans Hess2

1 From July 7, 2019
2 Until July 6, 2019

CH
CH

CH/IT

Chairman, non-executive; Chairman SC
Member, non-executive; Chairman AC

Member, non-executive; member SC,
member AC2, Chair NCC1

Member, non-executive; member NCC

Member, non-executive; member AC

Deputy Chairman, non-executive; Chairman NCC

2002
2007

2012

2014

2019

2006

2020
2020

2020

2019

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.

The competencies of the Board members are depicted in the
following matrix:

Valentin Vogt Urs Leinhäuser Monika Krüsi Stephan Bross David Dean

Hans Hess

Executive competence (>200 FTEs)
Strategic competence

Competence in non-European cultures

Supply chain competence

Competence in BC markets

Technological competencies

Financial competencies

M&A competence

Board-level competencies

CEO coaching competencies

•

The company’s Legal Counsel, who serves as Secretary to the Board of Directors, has a degree in law (Dr. iur.).

CORPORATE GOVERNANCE | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

Biographical details and information on
other activities and commitments of
the individual members of the Board of
Directors are given below:

VALENTIN VOGT (1960)

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

Other activities and commitments
– Chairman of the Board, Kistler Holding

AG, Switzerland

– Board member, Bucher Holding AG,

Switzerland

– Board member, Ernst Göhner Stiftung

Beteiligungen AG, Switzerland

– Chairman of the Swiss Employers’

Association, Switzerland

URS LEINHÄUSER (1959)

DR. MONIKA KRÜSI (1962)

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
– Chair of the Nomination and Compen-

sation Committee

– Member of the Strategy Committee

Other activities and commitments
– Chair of the Board of Directors,

Repower AG, Switzerland

– Board member, 360°, Switzerland
– Board member, Otto Suhner AG, Swit-

zerland

– Board member, Signal AG, Switzerland
– Board member, BGRB Holding 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
1992 Managing Director, Cerberus,
Denmark
1988–1994 Group Controller,
Cerberus AG, Switzerland
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 of Directors,

Avesco AG, Switzerland

– Board member, Ammann Group

Holding AG, Switzerland

– Board member, Liechtensteinische

Landesbank AG, Liechtenstein
– Board member, VAT Group AG,

Switzerland

– Board member, PENSADOR

Partner AG, Zurich

CORPORATE GOVERNANCE | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

DR. STEPHAN BROSS (1962)

DAVID DEAN (1959)

Education
Engineering degree, University of
Braunschweig, Germany

Professional background
Since 2018 Executive Board member
(CTO), KSB SE & Co. KGaA, Germany
2017 Executive Board member,
Technology, KSB AG, 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

Education
Swiss certified expert for accounting
and controlling
Swiss certified accountant
Completed executive education
programs at Harvard Business School,
Boston, USA, and at the IMD, Lausanne,
Switzerland

Professional background
Since 2019 Self-employed, Switzerland
2004–2019 CEO, Bossard Group,
Switzerland
1998–2004 CFO, Bossard Group,
Switzerland
1993–1998 Deputy CFO and Corporate
Controller, Bossard Group, Switzerland

Duties and responsibilities as a
director of Burckhardt Compression
Holding AG
– Member of the Board of Directors
– Member of the Audit Committee

Other activities and commitments
– Board member, Bossard Group,

Switzerland

HANS HESS (1955)
All data until July 6, 2019

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

Duties and responsibilities as a
director of Burckhardt Compression
Holding AG
– Deputy Chairman of the Board of

– Board member, Komax Group,

Directors

Switzerland

– Chairman of the Nomination and Com-

Compensation Committee

– Board member, Brugg Group,

pensation Committee

Switzerland

– Board member, Haag-Streit Group,
Switzerland (a division of Metall
Zug Group)

Other activities and commitments
– Chairman of the Board, COMET Hold-

ing AG, Switzerland

– Board member, Agta Record AG,

– Chairman of the Board, Reichle & De-

Switzerland

Massari AG, Switzerland

– Vice President of the Board, dormak-

aba Holding AG, Switzerland

– Chairman, Swissmem, Switzerland
– Vice President, economiesuisse, Swit-

zerland

– Trustee, Swisscontact, Switzerland
– Trustee, Technorama, Switzerland

CORPORATE GOVERNANCE | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

3.3. Rules in the Bylaws concerning the number of
permitted 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 term 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 2019, the Board
of Directors and Board committees convened the following
meetings:

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. The CEO, the CFO,
the head of the internal audit unit and representatives of the
external auditors also participated in the Audit Committee’s
ordinary meetings. The members are Urs Leinhäuser (Chairman)
and David Dean.

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
directors and the Executive Board members. The CEO and the
CHRO also attend the ordinary meetings of the NCC. The mem-
bers are Dr. Monika Krüsi (Chair) and Dr. Stephan Bross.

Meetings

05/23/2019, NCC meeting
05/23/2019, AC meeting

05/23/2019, BOD meeting

08/27/2019, e.o. NCC meeting

08/27/2019, BOD meeting

10/31/2019, AC meeting

10/31/2019, NCC meeting

10/31/2019, BOD meeting

10/04/2019, Board telephone conference

10/17/2019, Board telephone conference

12/13/2019, BOD meeting

01/13/2020, Board telephone conference

01/15/2020, Board strategy day

03/03/2020, BOD meeting

03/30/2020, Board telephone conference

BOD = Board of Directors
AC = Audit Committee
NCC = Nomination and Compensation Committee

Governing
body
NCC

BOD

NCC

BOD

NCC

BOD

Hans
Hess
•

•

Duration

Valentin
Vogt

Urs
Leinhäuser

Monika
Krüsi

Stephan
Bross

David
Dean

2 hours

3 hours

6 hours

2 hours

5 hours

2 hours

3 hours

5 hours

1 hour

4.5 hours

0.5 hours

10 hours

4.5 hours

1.5 hours

•

CORPORATE GOVERNANCE | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

Strategy Committee The Strategy Committee supports the
CEO in developing corporate strategy and advises the Board of
Directors on 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
members are Valentin Vogt (Chairman) and Dr. Monika Krüsi. In
addition, the Strategy Committee organizes and prepares the
annual strategy day in collaboration with the CEO.

3.6. Definition of areas of responsibility
The Board of Directors has delegated the executive management
of the company and the Group to the CEO of Burckhardt Com-
pression Group, with the exception of the following matters:
– 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, the insurance con-
cept 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 organization regulation
(www.burckhardtcompression.com/corporate-governance).

3.7. Information and control instruments relating to 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 audit reports to the Chairman of the Audit Committee
of the Board of Directors. Management responsibility for the
unit has been delegated to the Chief Accounting Officer of
Burckhardt Compression AG, who is also responsible for plan-
ning and conducting the audits. The CFO is responsible for coor-
dination between the Audit Committee and the head of the

Internal Group Audit. The Internal Group Audit team consists of
qualified staff from the Finance and Controlling departments
of Burckhardt Compression AG and several selected financial
specialists from the Group’s subsidiaries. Qualified subject mat-
ter experts from other fields (e.g. IT, Legal or Human Resources)
may be consulted, depending on the auditing assignment. These
employees perform the internal audit duties assigned to them
in addition to their regular duties and in this additional capacity
they report directly to the Head of Internal Group Audit, who in
turn reports in this function directly to Chairman of the Board
of Directors’ Audit Committee. This efficient organization is tai-
lored to the needs and size of the Burckhardt Compression
Group and fosters an active exchange of information and best
practices with the objective of creating sustained added value
for the Burckhardt Compression Group by means of continual
process improvement. The internal auditors undergo regular
training for the performance of their tasks. The training received
is coordinated by the head of the internal Group audit. The
schedule for internal audits is determined by the Audit Commit-
tee of the Board of Directors on an annual basis and may be
changed or expanded by the Audit Committee as and when
required. Eight internal audits were carried out in fiscal year
2019. 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 sys-
tem (ICS) in a written report submitted to the Audit Committee
and the Board of Directors once a year.

Risk management Burckhardt Compression has an integrated
risk management policy. In a two-stage process, key risks are
identified using an anticipatory approach and grouped under
one of three risk categories – strategic, financial or operational
– that have been defined by the Board of Directors. The risks
are then evaluated, managed and stringently monitored,
avoided, mitigated or transferred to third parties through ade-
quate risk management measures. The first stage of the risk
management process entails continuous risk management con-
ducted by the two divisions and the major subsidiaries of Burck-
hardt Compression Group within the scope of a periodic leader-
ship cycle. In this process, potential risks are systematically
identified and assessed and the appropriate risk control mea-
sures as well as the corresponding duties, responsibilities and
implementation timelines are established and monitored. Inter-
nal and external factors are included in the evaluation of poten-
tial risks.

The second stage of the risk management process consists
of a periodic risk management review that takes place twice a
year at the meetings of the Board of Directors’ Audit Commit-
tee. 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 they
would have. This overview is presented to the Audit Committee
together with the risk mitigation measures, the people respon-

CORPORATE GOVERNANCE | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

sible for implementing them, and an implementation 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 commitments

Name

Nationality

Function

Marcel Pawlicek
Rolf Brändli

CH
CH

Sandra Pitt

DE/CH

Fabrice Billard

Rainer Dübi

CEO
CFO

CHRO

President Systems Division

President Services Division

From left: Rainer Dübi, Fabrice Billard, Marcel Pawlicek, Sandra Pitt, Rolf Brändli

Biographical details and information on
other activities and commitments of the
members of the Executive Board:

CORPORATE GOVERNANCE | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

MARCEL PAWLICEK (1963)

ROLF BRÄNDLI (1968)

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 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 &
Manufacturing, 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
Marketing & 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

CORPORATE GOVERNANCE | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

SANDRA PITT (1971)

FABRICE BILLARD (1970)

RAINER DÜBI (1969)

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 of HR Central Europe,
Holcim (Schweiz) AG,
Switzerland
2010–2012 Head of HR, Holcim
(Schweiz) AG, Switzerland
2007–2009 Head of HR, BASF
Group Switzerland, BASF Schweiz AG,
Switzerland
2006–2007 HR Specialist Region
Europe, BASF AG, Germany
2003–2006 Internal Consultant
Performance Management, BASF AG,
Germany
2002–2003 HR Coordinator Europe,
BASF AG, Germany

Education
Master of Science in Aeronautics and
Aerospace Engineering, Ecole Centrale
Paris, France

Education
Degree in Mechanical Engineering,
HTL Winterthur, MASBA School of
Management, Switzerland

Professional background
Since 2016 President Systems Division,
Burckhardt Compression Group, Swit-
zerland
2015–2016 Chief Strategy Officer, Sul-
zer, 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 Chem-
tech, Switzerland
2008–2010 Vice President Business
Development, Sulzer Chemtech, Swit-
zerland
2005–2008 Head Global Customer Ser-
vices, Sulzer Pumps, Switzerland
2004–2005 Strategic Development
Manager, Sulzer Corporate, Switzerland
1999–2004 Principal, The Boston Con-
sulting Group, Switzerland/France

Professional background
Since 2019 President
Services Division, Burckhardt
Compression Group, Switzerland
2012–2019 Head of Design &
Manufacturing, Burckhardt
Compression AG, Switzerland
2010–2012 Senior Sales Manager,
Burckhardt Compression AG,
Switzerland
2007–2010 Manager Sizing, Burckhardt
Compression AG, Switzerland
2003–2007 Sizing Project Engineer,
Burckhardt Compression AG,
Switzerland
2001–2003 Commissioning Lead
Engineer, Alstom, Switzerland
1999–2001 Commissioning Engineer,
ABB, Switzerland

CORPORATE GOVERNANCE | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

4.3. Rules in the Bylaws concerning the number of
permitted activities
Members of the Executive Board may not hold more than five
(5) additional board memberships, whereof not more than two
(2) additional may be 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 67
to 75.

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 67 to 75 and in
the financial statements, note 103, “Share capital and share-
holders” on page 106.

Burckhardt Compression Group did not grant any loans,
credit, or collateral to any of the members of the Board of
Directors or the Executive Board in fiscal year 2019 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 as a shareholder in the
Share Register for more than 5% of the issued share capital.
This entry restriction is also applicable to persons whose
shares are held, in whole or in part, by nominees. This restric-
tion 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 pos-
session of more than 5% of the shares of Burckhardt Compres-
sion Holding AG before the IPO. There is no provision for mea-
sures to remove restrictions.

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.

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.

6.4. Inclusion of items on the agenda
Shareholders who together represent at least 10% of the share
capital 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 the
latest 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 ten-
der offer. The Bylaws contain neither an opting-out nor an opt-
ing-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 audi-
tor 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. Burckhardt Compression
plans to tender its external audit contracts at least every
10 years and examine all bids received. The most recent invita-
tion to tender was issued during the fiscal year 2012. PwC was
awarded the contract in March 2013 as decided by the Board of
Directors and PwC was reelected as statutory auditor by the
General Meeting of Shareholders in 2013. 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.

CORPORATE GOVERNANCE | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

8.2. Auditor’s fees
Total fees for auditing services provided by PwC worldwide dur-
ing fiscal year 2019 amounted to TCHF 343 (previous year:
TCHF 327).

8.3. Additional fees
The additional fees for services provided by PwC worldwide
during fiscal year 2019 are in the amount of TCHF 0 (previous
year: TCHF 80). Additional services rendered by PwC pertain to
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 ordinary meetings lasting 2, respectively 3 hours
each during the 2019 reporting period, in which the auditor in
charge and another representative 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 price-sen-
sitive information in accordance with the ad hoc disclosure
requirements set out in the Listing Rules of the SIX Swiss
Exchange. Burckhardt Compression Holding AG will send poten-
tially price-sensitive information to all interested parties via an
email distribution list. Financial reports are available on our
website (www.burckhardtcompression.com) and will be deliv-
ered to interested parties on request.

Key dates for 2020 and 2021
July 3, 2020
Annual General Meeting
November 4, 2020
Results for the first half of 2020 (closing September 30, 2020)
November 4, 2020
Investor Day
June 1, 2021
2020 Annual Report (closing March 31, 2021)
July 3, 2021
Annual General Meeting

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 email distribution list.

COMPENSATION REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

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, together with
information on their annual compensation. This 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 6, 2019 elected Dr. Monika Krüsi and
Dr. Stephan Bross to the Nomination and Compensation Com-
mittee. The Board of Directors appointed Dr. Monika Krüsi Chair
of the Nomination and Compensation Committee.

The NCC meets at least twice a year. The CEO and CHRO
attend these meetings in an advisory capacity, except during
deliberation on 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 com-
pany’s Bylaws and Organizational Regulations (www.burck
hardtcompression.com/corporate-governance). The NCC sup-
ports the Board of Directors in the performance of its duties
pertaining to the compensation and personnel policies of the
company and the entire Group as prescribed by law or the com-
pany’s Bylaws. The most important duties and powers of the
NCC with regard to compensation are given 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 Executive Board

Loans to members of the Executive Board

NCC
NCC

NCC

CEO

BOD
BOD

BOD

NCC

COMPENSATION REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

4.1. Compensation system for the Board of Directors
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 number of
shares awarded is based on the average share price (daily clos-
ing 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 cash supplement for directors serving on a for-
mal 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 based on Willis Towers Wat-
son’s Global 50 Remuneration Planning Report and the results
of annual executive performance appraisals are taken into con-
sideration when determining the base salary of the members of
the Executive Board.

Annual Bonus The members of the Executive Board receive a
variable performance- and profit-related bonus in addition to
their base salaries. A new annual bonus plan for the Executive
Board went into effect in fiscal year 2018. The annual bonus is
calculated as the mathematical product of three values: the
consolidated net income of Burckhardt Compression Group, a
percentage rate based on the Global Grade and a goal attain-
ment factor. The percentage rate applied for the CEO is 0.28%.
The percentage rate for other members of the Executive
Board – depending on their Global Grade – ranges from 0.12% to
0.16%. The goal attainment factor for the CEO, the CFO and the
CHRO is based on the achievement of a goal for the Return On
Net Operating Assets (RONOA) of Burckhardt Compression
Group. For the heads of the two divisions the factor is based on
the achievement of a goal for divisional operating profit. The
goal attainment factor ranges from 0 to 1.5. If the defined goal
is achieved, the goal achievement factor is 1.0. The annual
bonus is capped at 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 Com-
pression 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 the 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 450’000
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 amounts to
CHF 3’819 mn; the net income target is CHF 300 mn. If the tar-
gets are only partially 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 corresponding 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 number of
free shares for the fiscal years 2017, 2018, and 2019, depending
on the attainment of the goals. These free shares will be dis-
tributed at the end of July 2020. The second distribution of free
shares for the fiscal years 2020, 2021, and 2022 will be distrib-
uted at the end of July 2023, provided the employment con-
tract 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 aver-
age 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 2019 | BURCKHARDT COMPRESSION

Fees

144

101

518

Fees

144

101

518

Social insurance
contributions and
other benefits

2019

Total

162

101

112

573
5803

2018

Total

161

101

111

101

569
5804

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 2019 and 2018:

in CHF 1’000

Name

Function

Members of the Board of Directors
Valentin Vogt

Chairman

Urs Leinhäuser

Dr. Monika Krüsi

Dr. Stephan Bross

David Dean1

Hans Hess2

Total

Member

Deputy Chairman

Approved by the 2018 AGM
for fiscal year 2019

in CHF 1’000

Name

Function

Members of the Board of Directors
Valentin Vogt

Chairman

Urs Leinhäuser

Dr. Monika Krüsi

Dr. Stephan Bross

Hans Hess

Total

Member

Deputy Chairman

Approved by the 2017 AGM
for fiscal year 2018

1 From July 7, 2019
2 Until July 6, 2019
3 This amount includes a contingency reserve of CHF 11’000.
4 This amount includes a contingency reserve of CHF 9’000.

The total fixed compensation in the fiscal year under review is
almost unchanged from the previous fiscal year. The Annual
General Meeting of July 6, 2018 approved aggregate fixed com-
pensation in the amount of CHF 580’000 (gross, incl. social
insurance contributions) for the Board of Directors (5 persons)
for fiscal year 2019. The amount of compensation actually paid
was CHF 7’000 less than the approved amount.

COMPENSATION REPORT | ANNUAL REPORT 2019 | 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 2019 and 2018:

in CHF 1’000

Name

Function

Executive Board
Marcel Pawlicek

CEO

Other members of the Executive Board

Total

Approved by the 2018 AGM
for fiscal year 2019

in CHF 1’000

Name

Function

Executive Board
Marcel Pawlicek

CEO

Other members of the Executive Board

Total

Approved by the 2017 AGM
for fiscal year 2018

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

2019

Total

431

1’210

1’641

111

271

382

542

1’481

2’023
2’1202

107

285

392

231

329

104

149

250

620

870

792

2’1011

2’893

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

2018

Total

425

1’117

1’542

116

268

384

541

1’385

1’926
2’1204

161

245

105

177

282

105

229

403

632

770

1’7883

2’558

1 This amount includes Rainer Dübi’s compensation for the 2019 fiscal year and pro rata compensation for Martin Wendel until August 31, 2019.
2 This amount includes a contingency reserve of CHF 250’000.
3 This amount includes Martin Wendel’s compensation for the 2018 fiscal year as well as pro rata compensation for Rainer Dübi from February 15, 2019.
4 This amount includes a contingency reserve of CHF 250’000.

The CEO’s fixed compensation for the period under review is
comparable to the level from the previous fiscal year. The total
amount of fixed compensation for the other members of the
Executive Board is CHF 96’000 more than in the prior-year
period. This is because fixed compensation was paid to 6 per-
sons during the first 5 months of the reporting period. The
Annual General Meeting of July 6, 2018 approved a total sum of
CHF 2’120’000 (gross, including social insurance contributions)
for the fixed compensation of the entire Executive Board for the
fiscal year 2019. The amount of fixed compensation actually
paid (gross, including social insurance contributions) was
CHF 97’000 less than the approved amount.

The annual bonus for the Executive Board in fiscal year 2019
was CHF 147’000 more than in the previous year. This is because
of the increase in reported net profit, which serves as the basis
for the annual bonus, because the targets set in conjunction
with the Group and divisional factors described above were
exceeded and because 6 persons were drawing a base salary
during the first 5 months of the reporting period. Personnel
expenses for the Executive Board’s long-term incentive pay
rose by CHF 47’000 from the previous year. The provision made
for the long-term incentive pay has been adjusted for two rea-
sons: firstly, on the basis of an assessment of business perfor-
mance over a multi-year period; secondly, in accordance with
Swiss GAAP FER, the related expenses must be allocated over
the program’s vesting period, which can lead to adjustments
within individual fiscal years.

The total variable compensation for the individual members
of the Executive Board for the period under review ranged from
28% to 33% of total compensation.

COMPENSATION REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

6. OVERVIEW OF SHAREHOLDINGS AND
DISTRIBUTED SHARES

6.1. Detailed overview of distributed shares
In the fiscal years 2018 and 2019 the following shares were
distributed:

Name

Function

Members of the Board of Directors
Valentin Vogt

Chairman

Urs Leinhäuser

Dr. Monika Krüsi

Member

Dr. Stephan Bross

Member

David Dean1

Hans Hess2

Total

Member

Deputy Chairman

Executive Board
Marcel Pawlicek

CEO

Other members of the Executive Board
Total3

Total

1 From July 7, 2019
2 Until July 6, 2019
3 Shares are not allocated or are not distributed under the long-term incentive pay program every year.

Shares
distributed in
FY 2018

Shares
distributed in
FY 2019

255

104

308

COMPENSATION REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

6.2. Detailed overview of shareholdings
As per March 31, 2020, 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

Urs Leinhäuser

Dr. Monika Krüsi

Dr. Stephan Bross

David Dean1

Hans Hess2

Total

Executive Board
Marcel Pawlicek

Rolf Brändli

Sandra Pitt

Fabrice Billard

Rainer Dübi3

Total

Member

Deputy Chairman

CEO

CFO

CHRO

President Systems Division

President Services Division

Total Board of Directors and
Executive Board
As a % of all outstanding shares

1 From July 7, 2019
2 Until July 6, 2019
3 Executive Board member as of February 15, 2019

03/31/2020
Total shares

03/31/2019
Total shares

203’392

1’643

1’048

278

355

206’716

42’111

1’702

278

600

45’291

203’288

1’080

985

215

5’663

211’231

42’111

1’702

278

400

600

45’091

252’007

256’322

7.4%

7.5%

COMPENSATION REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

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 2019. No signing
bonuses were paid during the fiscal year 2019. At the reporting
date no loans, credit lines, or pension benefits over and above
those provided by mandatory occupational pension plans had
been granted 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 for fiscal
year 2019
The Board of Directors proposes that an aggregate amount of
CHF 870’000 (gross, including social insurance contributions
and other benefits) be approved as variable compensation for
the Executive Board for fiscal year 2019.

8.2. Consultative vote on the Compensation Report for
fiscal year 2019
The Board of Directors proposes that shareholders approve the
Compensation Report for fiscal year 2019 in a consultative vote.

8.3. Approval of the maximum aggregate amount of fixed
compensation for the members of the Board of Directors
for fiscal year 2020
The Board of Directors proposes that a maximum aggregate
amount of CHF 640’000 (gross, including social insurance con-
tributions and other benefits) be approved as fixed compensa-
tion for the Board of Directors for fiscal year 2020. The pro-
posed amount includes a contingency reserve of CHF 15’000.

8.4. Approval of the maximum aggregate amount of fixed
compensation for the members of the Board of Directors for
fiscal year 2021
The Board of Directors proposes that a maximum aggregate
amount of CHF 650’000 (gross, including social insurance con-
tributions and other benefits) be approved as fixed compensa-
tion for the Board of Directors for fiscal year 2021. The proposed
amount includes a contingency reserve of CHF 11’000.

8.5. Approval of the maximum aggregate amount of fixed
compensation for members of the Executive Board for fiscal
year 2021
The Board of Directors proposes that a maximum aggregate
amount of CHF 2’200’000 (gross, including social insurance
contributions and other benefits) be approved as fixed compen-
sation for the Executive Board for fiscal year 2021. The pro-
posed sum includes a contingency reserve of CHF 200’000.

9. EVALUATION OF THE COMPENSATION
SYSTEM

Burckhardt Compression’s compensation system is regularly
reviewed by the Nomination and Compensation Committee and
the Board of Directors and may be modified if necessary.
The Nomination and Compensation Committee benchmarked
independently market levels of board compensation and bene-
fits during the year under review. Thirteen listed Swiss machin-
ery manufacturers1 were selected for the benchmarking pur-
poses. The compensation received by the Chairman of the
Board of Directors of Burckhardt Compression was well below
the benchmark level. In order to adjust the compensation
received by the Chairman of the Board, a proposal adjusting the
total amount of fixed compensation for the Board of Directors
will therefore be submitted to the pending Annual General
Meeting.

A compensation benchmark based on external salary sur-
veys compiled by Willis Towers Watson and presented in its
Global 50 Remuneration Planning Report is one element of the
integrated compensation system for the Executive Board.

In the year under review, Willis Towers Watson was retained
by the Nomination and Compensation Committee to review the
global grades of the Executive Board functions and to conduct
a compensation benchmark review. This benchmark review was
based on a selection of 13 listed Swiss machinery manufactur-
ers1. Willis Towers Watson was given no other mandates in the
year under review.

The Board of Directors decided in fiscal year 2019 to adjust
the annual bonus system for the Executive Board beginning in
fiscal year 2020.

Annual bonus amounts will be calculated from fiscal year
2020 on by multiplying the net profit of the Burckhardt Com-
pression Group by the fixed percentage of the global grade of
each Executive Board member. Group and divisional factors will
no longer be used in the calculations of compensation.

1 The 13 companies are: Starrag, Meyer Burger, Gurit, Komax, Burkhalter, Interroll, Belimo, Zehnder, Feintool, Phoenix Mecano, Bossard, Huber & Suhner and
Schweiter.

COMPENSATION REPORT | ANNUAL REPORT 2019 | 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 31 March 2020. 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 69 to 70 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 31 March 2020 complies
with Swiss law and articles 14–16 of the Ordinance.

PricewaterhouseCoopers AG

Beat Inauen

Audit expert
Auditor in charge

Winterthur, 27 May 2020

Oliver Illa

Audit expert

PricewaterhouseCoopers AG, Bahnhofplatz 17, Postfach, CH-8400 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 2019 | BURCKHARDT COMPRESSION

FINANCIAL REPORT

Burckhardt Compression Holding AG’s fiscal year 2019 com-
prises the period from April 1, 2019 to March 31, 2020.

COMMENTS ON FINANCIAL REPORT

Summary

in CHF 1’000

Order intake
Sales

Gross profit

Operating income (EBIT)

in % of sales

Net income

Total assets

Total equity

Earnings per share attributable to shareholders of
Burckhardt Compression Holding AG (in CHF)

FTEs as per end of fiscal year

2019

2018

Change
2018/2019

607’303
629’585

149’785

54’795

8.7%

39’871

883’002

317’506

9.56

2’621

658’675
599’280

135’677

44’507

7.4%

32’201

848’732

345’034

8.15

2’346

–7.8%
5.1%

10.4%

23.1%

23.8%

4.0%

–8.0%

17.3%

11.7%

SALES AND GROSS PROFIT

OPERATING INCOME

Sales in the 2019 fiscal year increased by 5.1% to CHF 629.6 mn.
Excluding the effects of currency translation and acquisitions,
year-on-year sales growth was 3.9%. Sales at the Service Divi-
sion rose by 7.8% to CHF 241.3 mn (excl. acquisitions +0.1%),
while the Systems Division reported a 3.4% increase to
CHF 388.3 mn on the back of a high order backlog entering the
year and strong growth in China. Sales grew mainly across the
regions China, other Asia & Australia and North America.

Gross profit of CHF 149.8 mn topped the prior-year figure of
CHF 135.7 mn by 10.4% and the resulting gross profit margin
was 23.8% (previous year: 22.6%). The gross margin at the
Systems Division improved to 11.0% (previous year: 8.1%), despite
the recognition of the remaining cost overruns in connection
with the LNGM business, which amounted to approximately
CHF 10 mn in the fiscal year under review. Gross profit at the
Services Division rose by 1.7% to CHF 107.0 mn, resulting in a
gross profit margin of 44.3% (prior year: 47.0%). The lower gross
margin is mainly resulting from the lower margin contribution
from Arkos Field Services.

Operating income increased by CHF 10.3 mn to CHF 54.8 mn,
yielding an EBIT-margin of 8.7% of sales (previous year: 7.4%).
Selling and marketing expenses together with general adminis-
trative expenses were amounting to 14.8% of sales (prior year:
14.4%), including several one-off expenses such as consulting
and legal fees in the context with the acquisition of the remain-
ing 60% of Arkos and the acquisition of the compressor business
of JSW. Other operating income was amounting to CHF 8.7 mn,
mainly with contributions from the real estate company in
Winterthur (Burckhardt Compression Immobilien AG) and from
government grants to Shenyang Yuanda Compressor in China.
Research and development expenses were amounting to
CHF 10.5 mn (last year: CHF 8.7 mn).

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

FINANCIAL INCOME AND TAX EXPENSES

CASH FLOW

The share of results in associates is fully related to Arkos Field
Services, of which Burckhardt Compression held a 40% minor-
ity interest only until the end of November 2019. Despite the
reduced period of eight months, the negative contribution dou-
bled compared to last year to CHF –2.5 mn due to a large extent
to significant expenses and lawyer’s fees in the context with
the legal dispute around the execution of the call option. Finan-
cial expenses rose to CHF 4.7 mn (prior year: CHF 2.2 mn),
mainly as a result of the slightly higher average interest rate on
financial liabilities (1.8% vs. 1.6% in the prior year) and foreign
exchange losses on intercompany loans. Income tax expenses
lowered to CHF 7.7 mn compared to CHF 8.9 mn the year before.
The resulting tax rate declined to 16.2% (previous year: 21.6%),
as an effect of the one-off reduction of income tax expenses in
Switzerland due to an according tax reform and some other
positive tax effects such as the higher share of taxable income
in locations with tax exemptions.

Cash and cash equivalents totaled CHF 90.3 mn by the end of
fiscal year 2019, CHF 7.3 mn above the prior year. Cash flow
from operating activities
increased by CHF 8.9 mn to
CHF 50.7 mn. The net cash outflow from investing activities
was with CHF 49.7 mn, CHF 41.9 mn above the prior-year period
(CHF –7.8 mn), including CHF 15.8 mn for the acquisition of the
60% stake in Arkos Field Services and the cash out for the
assets under construction in the context with the relocation
project of Shenyang Yuanda Compressor in China. Dividends
paid were amounting to CHF 22.3 mn, CHF 1.9 mn more than
last year. The net financial position (net debt) lowered to
CHF –91.7 mn (prior year: CHF –49.4 mn), mainly due to the
higher net working capital, the relocation project at SYCC, for
which the main part of the Government subsidies will be paid
upon completion only, and the acquisition of the remaining 60%
of Arkos.

NET INCOME

Net income in fiscal year 2019 rose by 23.8% y-o-y to CHF 39.9 mn
or 6.3% of sales (previous year: 5.4%). Due to the substantial
positive contribution of Shenyang Yuanda Compressor (whose
founder still holds a 40% stake in the company) to the Group’s
net income, earnings per share attributable to shareholders of
Burckhardt Compression noted a proportionally lower increase
of 17.3% to CHF 9.56 (previous year: CHF 8.15).

BALANCE SHEET

The balance sheet total grew by 4.0% to CHF 883.0 mn. Prop-
erty plant and equipment were totaling CHF 202.6 mn, mainly
due to the higher amount of assets under construction related
to the physical relocation project at Shenyang Yuanda Compres-
sor in China and the full consolidation of Arkos Field Services.
Inventories increased by CHF 42.4 mn to CHF 264.5 mn. Trade
accounts receivables ended the fiscal year at CHF 256.1 mn,
slightly below the prior year. 37.2% of the accounts receivables
were overdue more than 60 days as per year-end (prior year:
38.0%). The majority of overdue positions are related to projects
in China. The balance between advance payments from custom-
ers compared to work in progress and advance payments to sup-
pliers ended the year at CHF –47.0 mn (previous year:
CHF –39.2 mn). The negative balance is also related primarily to
projects in China with unfavorable payment terms. The equity
ratio lowered to 36.0% (prior year: 40.7%), mainly as an effect
of the acquisition of the remaining 60% of Arkos. As a result of
the very high workload at year-end, total net working capital
was amounting to CHF 230.6 mn (prior year: CHF 201.7 mn).

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION78

CONSOLIDATED INCOME STATEMENT

Notes

2019

2018

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)

629’585
–479’800

149’785
–50’455

–42’753

–10’513

41’955

–33’224

54’795
–2’494

–4’741

47’560
–7’689

39’871

32’390
7’481

9.56

599’280
–463’603

135’677
–48’952

–37’589

–8’711

28’651

–24’569

44’507
–1’208

–2’238

41’061
–8’860

32’201

27’644
4’557

8.15

11
11

The enclosed notes are an integral part of the consolidated
financial statements.

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

CONSOLIDATED BALANCE SHEET

Notes

03/31/2020

03/31/2019

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 enclosed notes are an integral part of the consolidated
financial statements.

12’943

202’632

–

14’513

4’034

234’122

264’479

256’121

33’377

4’584

90’319

648’880

11’369

191’188

11’539

9’061

27’689

250’846

222’045

261’113

28’482

3’236

83’010

597’886

883’002

848’732

8’500

435

–5’216

269’763

273’482
44’024

317’506

88’713

13’620

14’311

7’616

8’500

446

–1’582

295’100

302’464
42’570

345’034

64’742

15’348

14’074

7’401

124’260

101’565

93’259

91’337

145’297

13’895

77’122

20’326

441’236

67’666

86’731

129’233

36’510

60’881

21’112

402’133

565’496

503’698

883’002

848’732

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

CONSOLIDATED CASH FLOW STATEMENT

Notes

2019

2018

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 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

Increase in Financial Assets

Acquisition of group companies net of cash acquired

Disposal of group companies

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

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 enclosed notes are an integral part of the consolidated
financial statements.

39’871

7’689

4’741

2’494

17’416

3’133

–36’129

5’331

–6’544

1’180

23’494

–70

1’947

2’455

227

–2’865

–13’627

50’743

–29’484

2’555

–4’851

–2’100

–15’783

–

–49’663

43’010

–5’710

–3’735

–22’289

11’276

–5’047

7’309

83’010

90’319

7’309

32’201

8’860

2’238

1’208

17’667

4’170

–13’736

–37’991

317

22’730

10’298

1’160

4’767

2’093

568

–1’883

–12’872

41’795

–22’384

18’490

–2’546

–1’485

–

144

–7’781

367

–5’096

–

–20’361

–25’090

–991

7’933

75’077

83’010

7’933

FINANCIAL REPORT | ANNUAL REPORT 2019 | 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 share-
holders of
Burckhardt
Compression
Holding AG

390’917
27’644

–20’361

–95

296’067
27’644

–1’778

–971

–20’361
–

1’863

Non-
controlling
interests

Total
equity

39’133
4’557

–1’120

335’200
32’201

–2’898

–971

–

–20’361

–

1’863

302’464
32’390

–13’682

789

42’570
7’481

–4’101

345’034
39’871

–17’783

789

–20’363

–1’926

–22’289

–3’735
–

–90

2’948

–9’324

–3’735

–

2’948

–9’324

8’500

421 –1’652

–434

2’145 –103’830

–1’778

–971

8’500

446 –1’582

–1’405

367 –103’830 399’968

302’464

42’570

345’034

8’500

446 –1’582

–1’405

367 –103’830 399’968
32’390

–13’682

789

–3’735

–11

101

8’500

435 –5’216

–616

–13’315 –121’835 405’529

273’482

44’024

317’506

–18’005

Balance at 04/01/2018
Result for the period

Currency translation
differences
Changes of cash flow hedges

Dividends paid

Share-based payments
(distributed)
Share-based payments
(allocated)

Balance at 03/31/2019

Balance at 04/01/2019
Result for the period

Currency translation
differences
Changes of cash flow hedges

Dividends paid

Changes in treasury shares

Share-based payments
(distributed)
Share-based payments
(allocated)
Revaluation of 40%
Investment Arkos1
Goodwill on acquisition

Balance at 03/31/2020

1 See note 4 “Business Combinations and Other Changes in the Scope of Consolidation”

The enclosed notes are an integral part of the consolidated
financial statements.

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS

1. GENERAL INFORMATION

Burckhardt Compression is a manufacturer and service provi-
der 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,
chemical, petrochemical and industrial gas sectors. Burckhardt
Compression’s leading technology, broad portfolio of compres-
sor components and the full range of services help customers
around the world to find their optimized solution for their reci-
procating compressor systems. Burckhardt Compression Hol-
ding AG is a company limited by shares incorporated and domic-
iled in Switzerland. The address of its registered office is:
Franz-Burckhardt-Strasse 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 2019 com-
prises the period from April 1, 2019 to March 31, 2020. These
consolidated financial statements were authorized for issue by
the Board of Directors on May 27, 2020 and will be submitted to
shareholders for approval at the annual general meeting sched-
uled for July 3, 2020.

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. Use of Judgments and Estimates
These consolidated financial statements include estimates and
assumptions that affect the reported figures and related disclo-
sures. Actual results may differ from these estimates. Esti-
mates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognized prospectively.

2.3. 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-control-

ling 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. When a company is
acquired in a step up acquisition, the existing interest is reval-
ued at the time when the company is first consolidated. The
revaluation of shares previously owned is offset against
retained earnings. Companies which have been divested are
included in the consolidated financial statements until the date
on which control ceased. Capital consolidation is based on the
acquisition method (purchase method). At the time of the acqui-
sition, all previously recognized 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 theoretical capitalization and any
impairment are shown using an amortization period of five
years. In the event of a possible subsequent sale, the goodwill
offset against shareholders’ equity at the time of the acquisi-
tion is recognized in the income statement against the pro-
ceeds 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.

2.4. Foreign Currency Translation
The consolidated financial statements of Burckhardt Compres-
sion are prepared in Swiss francs (CHF).

Foreign Currency Translation at Company Level
Foreign currency 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.

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. Translation differ-
ences 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.

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION
83

Major Foreign Currency Exchange Rates

Average rates

2019
1.10

0.99

14.16

Period-end rates
03/31/2020 03/31/2019
1.12

1.06

0.96

13.44

1.00

14.77

2018

1.15

0.99

14.77

1 EUR

1 USD

100 CNY

2.5. 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.

2.6. 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.

2.7. 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

2.8. Other Financial Assets
Other financial assets include loans and long-term rental
deposits. They are stated at cost less appropriate impairment
losses.

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.

2.10. 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.

2.11. 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.

2.12. Financial Liabilities
Financial liabilities mainly consist of bank debt and are recog-
nized at nominal value.

2.13. 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.

2.14. 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 a reduction of capital reserves.

2.15. Government Grants
Grants from governments or similar organizations are recog-
nized at their nominal value when there is reasonable assu-
rance that the grant will be received, and Burckhardt Compres-
sion will comply with all attached conditions.

Government grants related to income are deferred and rec-
ognized as income over the period necessary to match them with
the related costs which they are intended to compensate. Gov-
ernment grants related to assets are deducted directly from the
carrying amount of the asset which they are intended to com-
pensate.

2.9. Inventories
Inventories are stated at the lower of cost or net realizable
value. The cost of work in progress and finished goods com-

2.16. Derivative Financial Instruments
Burckhardt Compression uses derivative financial instruments to
mitigate currency risks. The risk management policy is described

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION84

in note 3. The derivative financial instruments are recognized at
fair value. Where such derivative financial instruments 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.

2.17. 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.

2.18. Research and Development
Research and development costs are expensed as incurred.

2.19. 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 valuation differ-
ences of assets and liabilities. They are recognized to the extent
that realization through future taxable profits is probable.

2.20. Off-Balance-Sheet Transactions
Contingent liabilities and other non-recognizable commitments
are valued and disclosed on each balance sheet date.

2.21. 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.

2.22. 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 ex-
ample, 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 mini-
mize the negative impact of changes in the financing structure
and financial markets, particularly with regard to currency
fluctuations. Derivative financial instruments such as foreign
exchange contracts may be used to address the respective
risks. Burckhardt Compression pursues a conservative, risk-
averse financial policy. Financial risk management is based on
the principles and regulations established by the Board of
Directors. These govern Burckhardt Compression’s financial
policy and outline the conduct and powers of the group’s trea-
sury department, which is responsible for the group-wide man-
agement of financial risks. The financial principles and regula-
tions govern areas such as financing policy, the management of
foreign currency risk, the use of derivative financial instru-
ments and the investment policy applicable to financial
resources not required for operational purposes.

Liquidity Risks
Each Burckhardt Compression group company is responsible
for managing its liquidity so that day-to-day business can be
handled smoothly, while the group treasury is responsible for
maintaining the group’s overall liquidity. Some of the group sub-
sidiaries may secure loans from local creditors within the limits
approved by the group management. The group treasury provi-
des the local group companies with the necessary funds or in-
vests their excess liquidity. The group treasury maintains suf-
ficient 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 naturally hedged. EUR-

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION
85

denominated sales and purchase transactions of the Swiss com-
pany 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 pur-
chase transactions will be hedged on a case-by-case basis. For
this, the group treasury normally uses forward exchange con-
tracts. The other companies belonging to Burckhardt Compres-
sion group may, after consultation with group treasury, hedge
the foreign-exchange risks of their sales and purchase transac-
tions 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 impor-
tant currencies and may adjust the hedging policy accordingly in
the future. As a globally active corporation, Burckhardt Com-
pression 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 does not
hedge these translation risks.

Credit Risks
Credit risk in respect of trade receivables is limited due to the
diverse nature and quality of the customer base. Such risk is
minimized by means of regular credit checks, advance pay-
ments, letters of credit and other tools. There is no concentra-
tion 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. In past years
Burckhardt Compression experienced no major impairments of
receivables.

Credit risks of banks and financial institutions are monitored
and managed centrally. Generally, only independently rated par-
ties with a strong credit rating are accepted, and the total vol-
ume 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 liabilities at variable rates
expose Burckhardt Compression to cash flow interest rate risk.

Capital Risks
The capital managed by Burckhardt Compression is its consol-
idated equity. With regard to its capital management 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 cer-
tain extent from own cash flow. In order to achieve these objec-
tives Burckhardt Compression can adjust the dividend pay-
ments, repay share capital, issue new shares or divest parts of
the assets.

4. BUSINESS COMBINATIONS AND
OTHER CHANGES IN THE SCOPE OF
CONSOLIDATION

Arkos Group LLC (USA)
On November 25, 2019, Burckhardt Compression acquired the
remaining 60% shares of Arkos Group LLC, a well-established
U.S. compression and equipment service provider in the field of
gas compression. Together with the already existing interest of
40%, Burckhardt Compression now holds 100% of the US Com-
pany. With the acquisition of the remaining ownership of Arkos,
Burckhardt Compression together with Arkos Field Services will
be the only independent one-stop provider for equipment and
service in the upstream, midstream and downstream business.

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

Property, plant and equipment

Inventories

Deferred Tax Asset

Trade receivables & Prepaid expenses

Cash and cash equivalents

Current liabilities

Non-current liabilities
Net assets acquired at fair value
(excluding pre-existing relationships)
Trade receivables & Prepaid expenses with BC

Current liabilities with BC

Non-current liabilities with BC

Net assets acquired at fair value
(including pre-existing relationships)
Shares previously owned (40%)

Goodwill

Revaluation of shares previously owned

Total
Less cash and cash equivalents acquired

Net cash outflow on acquisition

15’263

16’842

2’861

16’571

1’766

–11’901

–14’009
27’393

244

–2’664

–25’733

–760

–9’020

18’005

9’324

17’549
–1’766

15’783

The purchase price allocation for the acquisition of Arkos Group
LLC is preliminary for up to 12 months after the acquisition
date.

Burckhardt Compression Tehran SSK (Iran)
On November 2, 2018, Burckhardt Compression sold its subsid-
iary Burckhardt Compression Tehran SSK (BCIR), an Iranian sub-
sidiary based in Tehran, in a share deal. BCIR was fully consoli-
dated in the Burckhardt Compression Group until October 31,
2018. In fiscal year 2018 the effect on net income from the
divestment amounted to CHF –0.6 mn.

A complete list of all Group companies is shown in note 33.

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

Others
Certain expenses related to the corporate center are not attrib-
utable 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) as well
as expenses for strategic projects.

5. SEGMENT REPORTING

Systems Division
Burckhardt Compression’s Systems Division covers a complete
range of reciprocating compressor technologies. Its customized
compressor systems are used in the upstream oil & gas, gas
transport and storage, refinery, chemical, petrochemical and
industrial gas sectors. Depending on the customers’ needs,
Burckhardt Compression offers solutions to minimize life cycle
costs of the reciprocating compressor systems or solutions to
minimize the capital expenditure.

Services Division
Burckhardt Compression’s Services Division is a one-stop pro-
vider of a full range of services for reciprocating compressors
and stands for top-quality, high-performance components for
all makes of reciprocating compressors, as replacement parts,
or to repair or upgrade existing installations. Original spare
parts backed by Burckhardt Compression’s manufacturing guar-
antees stand for superior quality and ensure together with var-
ious complementary service modules both low life cycle costs
as well as the optimal operation of compressor systems.

Systems Division

Services Division

Others

2019

2018

2019

2018

2019

2018

388’256
375’400
–345’482 –344’906

241’329
223’880
–134’318 –118’697

42’774
11.0%

6’443
1.7%

30’494
8.1%

–8’669
–2.3%

107’011
44.3%

54’692
22.7%

105’183
47.0%

58’185
26.0%

–
–

–

–
–

–6’340

–

–5’009
–

Total

2019

629’585
–479’800

149’785
23.8%

54’795
8.7%

2018

599’280
–463’603

135’677
22.6%

44’507
7.4%

2019

2018

Capital expenditure for property,
plant and equipment
in CHF 1’000

135’434
4’121

66’609

5’691

20’215

155’346
19’052

Europe
Africa

43’843

North America

5’175

South America

34’484

Middle East

240’251

208’969

China

2019

2018

5’228
6

1’997

282

21’117

843

9’279
4

161

106

11’875

955

Other Asia & Australia

157’264

132’411

Other Asia & Australia

Total

629’585

599’280

Total

29’484

22’384

in CHF 1’000

Sales
Cost of goods sold

Gross profit
Gross profit as % of sales

Operating income
Operating income as % of sales

Geographic information

Sales by customer location
in CHF 1’000

Europe
Africa

North America

South America

Middle East

China

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

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

2019

2018

–151’390 –131’986
–24’253
–28’908

–16’188

–13’533

in CHF 1’000

Interest expenses

Interest income
Other financial income (+) and expenses (–)

–196’486 –169’772

Total financial income and expenses

2019

2018

–3’760

–2’186

614
–1’595

863
–915

–4’741

–2’238

7. RESEARCH AND DEVELOPMENT
EXPENSES

Research and development activities in the fiscal year 2019
focused on the improvement of our marine solutions for new
installations as well as for our service activities. Furthermore, we
centered our activities on enhancing our compressor solutions for
the hydrogen economy as well as our readiness to benefit from
digital opportunities.

Other financial income and expenses include the exchange rate
gains and losses on intercompany loans.

1O. INCOME TAXES

Income Tax Expenses

in CHF 1’000

2019

2018

8. OTHER OPERATING INCOME
AND EXPENSES

Current income tax expenses
Deferred income tax income (+) and expenses (–)

–13’468
5’779

–9’418
558

Total income tax expenses

–7’689

–8’860

in CHF 1’000

Currency exchange gains
Other operating income

Total other operating income

Currency exchange losses
Other operating expenses

Total other operating expenses

2019

2018

26’016
15’939

14’271
14’380

41’955

28’651

–24’863
–8’361

–15’487
–9’082

–33’224 –24’569

Total other operating income and expenses

8’731

4’082

Other operating income includes the operating income of
CHF 6.8 mn (prior year: CHF 6.6 mn) of the real estate company
(Burckhardt Compression Immobilien AG).

Other operating expenses include expenses amounting to
CHF 3.3 mn (prior year: CHF 3.2 mn) of the real estate company
(Burckhardt Compression Immobilien AG).

Reconciliation of Income Tax Expenses

in CHF 1’000

Earnings before taxes
Expected income tax expenses
Effect of non-recognition of tax loss
carry forwards
Effect of income tax of prior periods

Effect of changes in tax rates

Effect of non-deductible expenses / income not
subject to tax

Total income tax expenses
as % of earnings before taxes

2019

2018

47’560
–8’333
–2’654

41’061
–8’489
–161

1’058

2’155

–99

–147

–7’689
16.2%

–8’860
21.6%

The effective tax rate of Burckhardt Compression Group of
16.2% (prior year: 21.6%) corresponds to the weighted average
tax rate based on the profit before income taxes and the tax
rate of each group company. The lower tax rate is mainly an
effect of the higher share of taxable income of countries with
lower tax rates and the tax reform in Switzerland.

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

Current Income Taxes

11. EARNINGS PER SHARE

Net current income tax liabilities
in CHF 1’000

2019

2018

in CHF 1’000

2019

2018

Net income attributable to
the shareholders of Burckhardt
Compression Holding AG
Average number of outstanding shares

Earnings per share (CHF)

32’390
3’386’838

27’644
3’393’911

9.56

8.15

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 04/01/2019 / 04/01/2018
Changes in the consolidation scope

Recognized in the income statement

Income taxes paid

Translation differences

Balance as per 03/31/2020 / 03/31/2019
thereof current tax assets

thereof current tax liabilities

2’091
166

13’468

–13’627

–154

1’944
829

2’773

5’594
–

9’418

–12’872

–49

2’091
678

2’769

Deferred Income Taxes

Net deferred income tax liabilities
in CHF 1’000

2019

2018

Balance as per 04/01/2019 / 04/01/2018
Changes in the consolidation scope

Recognized in the income statement

Recognized in equity

Translation differences

Balance as per 03/31/2020 / 03/31/2019
thereof deferred tax assets

thereof deferred tax liabilities

6’287
–2’861

–5’779

419

1’041

–893
14’513

13’620

6’728
–

–558

–265

382

6’287
9’061

15’348

Tax 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

03/31/2020

03/31/2019

595
36’049

36’644
7’690

635
17’782

18’417
4’087

–2’718

–257

4’972

3’830

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

12. INTANGIBLE ASSETS

Acquisition Costs

in CHF 1’000

Balance as per 04/01/2019 / 04/01/2018
Changes in the consolidation scope

Additions

Disposals

Reclassifications

Currency translation differences

Software

29’630
–

1’540

–2’473

3’698

–403

Balance as per 03/31/2020 / 03/31/2019

31’992

Other
intangible
assets

Intangible
assets under
construction

2019
Total

Software

Other
intangible
assets

Intangible
assets under
construction

754
–

–36

–15

–77

632

2’495
–

3’305

–

–3’683

–11

2’106

32’879
–

4’851

–2’509

–

–491

30’091
–

1’552

–2’321

546

–238

34’730

29’630

770
–2

–

–32

754

2’072
–

976

–

–546

–7

2’495

Accumulated Amortization

in CHF 1’000

Software

Other
intangible
assets

Intangible
assets under
construction

2019
Total

Software

Other
intangible
assets

Intangible
assets under
construction

Balance as per 04/01/2019 / 04/01/2018
Changes in the consolidation scope

Additions

Disposals

Reclassifications

Currency translation differences

–20’993
–

–3’050

2’470

–15

291

–517
–

–83

Balance as per 03/31/2020 / 03/31/2019

–21’297

–490

–
–

–

–21’510
–

–3’133

2’506

–

350

–19’308
–

–4’058

2’221

–

152

–21’787

–20’993

–425
–

–112

–

–517

–
–

–

2018
Total

32’933
–2

2’546

–2’321

–

–277

32’879

2018
Total

–19’733
–

–4’170

2’221

–

172

–21’510

Net Book Value

in CHF 1’000

Software

Other
intangible
assets

Intangible
assets under
construction

2019
Total

Software

Other
intangible
assets

Intangible
assets under
construction

2018
Total

As per 04/01/2019 / 04/01/2018
As per 03/31/2020 / 03/31/2019

8’637
10’695

237
142

2’495
2’106

11’369
12’943

10’783
8’637

345
237

2’072
2’495

13’200
11’369

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

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. Goodwill from new acquisitions is fixed to Swiss
francs using the closing rate at acquisition date. Therefore,
there are no exchange rate differences in the movement sched-
ules. The impact of the theoretical capitalization and amortiza-
tion of goodwill is disclosed below.

in CHF 1’000

Acquisition costs
Balance as per 04/01/2019 / 04/01/2018

Additions from acquisitions

Balance as per 03/31/2020 / 03/31/2019

in CHF 1’000

Accumulated amortization
Balance as per 04/01/2019 / 04/01/2018

Amortization expense

Balance as per 03/31/2020 / 03/31/2019

in CHF 1’000

Net book value
Theoretical net book value as per 04/01/2019 / 04/01/2018

Theoretical net book value as per 03/31/2020 / 03/31/2019

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

2019

2018

103’830

18’005

121’835

2019

–68’290

–18’216

–86’506

2019

35’540

35’329

103’830

–

103’830

2018

–51’128

–17’162

–68’290

2018

52’702

35’540

03/31/2020

03/31/2019

317’506

35’329

352’835

2019

39’871

–18’216

21’655

345’034

35’540

380’574

2018

32’201

–17’162

15’039

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

13. PROPERTY, PLANT & EQUIPMENT

Acquisition Costs

in CHF 1’000

Balance as per 04/01/2019 / 04/01/2018
Changes in the consolidation scope

Additions

Disposals

Reclassifications

Land
and
buildings

Machinery
and
equipment

Other
business
assets

Assets
under
con struction

2019
Total

Land
and
buildings

Machinery
and
equipment

Other
business
assets

Assets
under
con struction

2018
Total

165’526 128’508 28’568
3’234

11’285

–

8’145
745

330’748 164’158 122’172
–253

15’263

–

3’919

3’367

15’982

23’268

8’055

–4’439

–1’079

–3’584

–44

–9’146 –5’932

1’185

1’493

262

–216

338

5’399

–668

2’918

–3’156

–1’484

27’317
–87

2’157

–573

150

–396

4’895
–

6’773

–

–3’406

318’542
–340

22’384

–7’173

–

–117

–2’665

Currency translation differences

–4’851

–3’834

–1’648

–11’817 –1’093

–1’060

Balance as per 03/31/2020 / 03/31/2019 168’706 129’007 30’199

20’188

348’100 165’526 128’508 28’568

8’145

330’748

Accumulated Depreciation

in CHF 1’000

Balance as per 04/01/2019 / 04/01/2018
Changes in the consolidation scope

Land
and
buildings

Machinery
and
equipment

Other
business
assets

Assets
under
con struction

2019
Total

Land
and
buildings

Machinery
and
equipment

Other
business
assets

Assets
under
con struction

2018
Total

–34’340 –84’374 –20’846
–

–

Additions

Disposals

Reclassifications

–4’751

–9’717

–2’948

2’387

1’014

3’190

216

–

Currency translation differences

1’262

2’350

1’089

Balance as per 03/31/2020 / 03/31/2019 –35’226 –90’727 –19’515

–
–

–

–139’560 –30’992 –75’622 –18’758
12
–

–

–17’416 –4’938

–9’849

–2’880

6’591

1’249

216

4’701

–2

343

491

–63

634

438

277

–145’468 –34’340 –84’374 –20’846

–
–

–

–125’372
47

–17’667

2’178

–

1’254

–139’560

Net Book Value

in CHF 1’000

Land
and
buildings

Machinery
and
equipment

Other
business
assets

Assets
under
con struction

2019
Total

Land
and
buildings

Machinery
and
equipment

Other
business
assets

Assets
under
con struction

2018
Total

As per 04/01/2019 / 04/01/2018
As per 03/31/2020 / 03/31/2019

131’186
7’722
44’134
133’480 38’280 10’684

8’145
20’188

191’188 133’166 46’550
44’134
202’632 131’186

8’559
7’722

4’895
8’145

193’170
191’188

Relocation Shenyang Yuanda Compressor Co. Ltd (SYCC)
Back in 2018, SYCC started the relocation of its manufacturing
and assembly facility, to the newly established China Germany
Equipment Manufacturing Industrial Park, which is also located
in the city of Shenyang. The relocation is planned to be com-
pleted end of 2020. In the course of this transaction SYCC has
been purchasing and building new PPE and at the same time
giving back existing PPE to the Chinese government. The whole
transaction is subsidized by the Chinese Government. In fiscal
year 2019, SYCC invested more than CHF 17 mn for this project.
Overall SYCC in the period 2018 to 2020 will invest more than
CHF 30 mn for this project. Once the relocation project is com-
pleted land use rights, buildings and machinery that were built
or acquired in the course of the relocation project will be offset
with the subsidies received by the government (Netting of
assets and liabilities).

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

14. INVESTMENTS IN ASSOCIATES

in CHF 1’000

Balance as per 04/01/2019 / 04/01/2018
Changes in the consolidation scope

Share of net results

Currency translation differences

Balance as per 03/31/2020 / 03/31/2019

15. OTHER FINANCIAL ASSETS

Other financial assets mainly include time deposits. In the prior
year other financial assets included a promissory note from
Arkos Group companies amounting to CHF 18.3 mn and loans to
Arkos Group companies amounting to CHF 6.0 mn.

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,
2020 of CHF –47.0 mn (prior year: CHF –39.2 mn).

2019

11’539
–9’020

–2’494

–25

–

2018

12’249
–

–1’208

498

11’539

03/31/2020

03/31/2019

33’608
164’648

55’017

27’607

–16’401

264’479

24’033
139’565

42’249

28’894

–12’696

222’045

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

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 04/01/2019 / 04/01/2018

Changes in the consolidation scope

Additions

Release

Utilization

Currency translation adjustments

Balance as per 03/31/2020 / 03/31/2019

03/31/2020

03/31/2019

265’032
–8’911

256’121

2019

–8’343

–

–3’195

1’614

252

761

–8’911

269’456
–8’343

261’113

2018

–9’977

–

–2’655

2’658

1’391

240

–8’343

The allowance for bad debts at the end of the 2019 and 2018 fis-
cal years was entirely related to accounts receivables which
were more than 90 days overdue as per closing date.

in CHF 1’000

Maturity 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 03/31/2020 / 03/31/2019

03/31/2020

03/31/2019

129’255

17’170

14’410

9’348

85’938

256’121

50.5%

6.7%

5.6%

3.6%

33.6%

100.0%

124’311

19’853

17’766

16’984

82’199

261’113

47.6%

7.6%

6.8%

6.5%

31.5%

100.0%

Trade receivables overdue more than 90 days are mainly related
to projects in China.

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

18. OTHER CURRENT RECEIVABLES

20. FINANCIAL LIABILITIES

03/31/2020

03/31/2019

03/31/2020

03/31/2019

in CHF 1’000

Notes receivable
VAT receivables

Derivative financial instruments

Current tax assets

Other current receivables

Total other current receivables

15’497
7’483

620

829

8’948

33’377

4’811
8’550

2’198

678

12’245

28’482

19. SHARE CAPITAL AND TREASURY
SHARES

in CHF 1’000

Non-current financial liabilities
Current financial liabilities

Total financial liabilities

88’713
93’259

64’742
67’666

181’972

132’408

The average effective interest rate amounted to 1.8% in fiscal
year 2019 (prior year: 1.6%).

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 2019 (same
as prior year).

03/31/2020

03/31/2019

Currencies of Financial Liabilities

Number of shares issued

3’400’000

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 July 6, 2021 by issuing a maxi-
mum of 510’000 fully paid registered shares with a nominal va-
lue of CHF 2.50 each (authorized capital).

At the upcoming annual general meeting of shareholders on
July 3, 2020, the Board of Directors of Burckhardt Compression
Holding AG will propose a dividend for the 2019 fiscal year of
CHF 6.00 (prior year: CHF 6.00).

in CHF 1’000

03/31/2020

03/31/2019

Financial liabilities in CHF

Financial liabilities in USD
Financial liabilities in other currencies

129’350

33’554
19’068

60’650

62’716
9’042

Total financial liabilities

181’972

132’408

Burckhardt Compression’s real estate company (Burckhardt
Compression Immobilien AG), which uses the Swiss franc as
functional currency, switched a mortgage loan from USD into
CHF.

Maturities of Non-Current Financial Liabilities

As of March 31, 2020, non-distributable reserves amounted to
CHF 1.7 mn (prior year: CHF 1.7 mn).

in CHF 1’000

03/31/2020

03/31/2019

Number of treasury shares

21’616

5’999

All treasury shares are held for the share-based long-term
incentive program within the Burckhardt Compression Group.

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

03/31/2020

03/31/2019

15’693

16’267

2’395

2’106
52’252

88’713

13’252

7’958

206

86
43’240

64’742

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

21. PROVISIONS

in CHF 1’000

Balance as per 04/01/2019 / 04/01/2018
Changes in the consolidation scope

Additions

Release

Utilization

Currency translation differences

Balance as per 03/31/2020 / 03/31/2019

Employee-
related

Warranties,
penalties,
unprofitable
contracts

7’369
772

3’666

–3’000

–308

–427

8’072

24’061
302

6’155

–1’314

–3’502

–910

24’792

Other

2019
Total

Employee-
related

Warranties,
penalties,
unprofitable
contracts

Other

2018
Total

3’756
–

693

–2’379

–81

–216

35’186
1’074

10’514

–6’693

–3’891

–1’553

7’434
–

1’064

–270

–727

–132

24’774
–

5’055

–3’349

–2’503

1’890
–

2’872

–975

–7

–24

34’098
–

8’991

–4’594

–3’237

–72

1’773

34’637

7’369

24’061

3’756

35’186

Thereof non-current

Thereof current

4’984

3’088

9’164

15’628

163

1’610

14’311

20’326

5’225

2’144

8’696

15’365

153

3’603

14’074

21’112

Employee-related provisions include employee benefit obliga-
tions (see 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 in the context of the relocation project
(see note 13).

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

2’471

1’148

421

2’773
7’082

13’895

11’321

2’410

2’330

2’769
17’680

36’510

Other current liabilities mainly consist of various social securi-
ties payables as well as various taxes payables such as VAT or
withholding taxes. In the previous year other current liabilities
mainly consisted of various government grants in China in the
context of the relocation process (see note 13).

24. ACCRUED LIABILITIES AND
DEFERRED INCOME

in CHF 1’000

Contract-related liabilities
Vacation and overtime

Salary and bonus payments

03/31/2020

03/31/2019

Miscellaneous

Total accrued liabilities and
deferred income

03/31/2020

03/31/2019

57’033
3’478

10’272

6’339

77’122

44’504
3’585

8’045

4’747

60’881

25. DERIVATIVE FINANCIAL
INSTRUMENTS

Burckhardt Compression uses derivative financial instruments
to mitigate currency risks. The risk management policy is
described in note 3. On the balance sheet, derivative financial
instruments are shown as “Other Current Receivables” and
“Other Current Liabilities”.

in CHF 1’000

Contract value
Positive fair values

Negative fair values

03/31/2020

03/31/2019

85’803
620

421

178’319
2’198

2’330

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

26. CONTINGENT LIABILITIES

27. COMMITMENTS

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 Hold-
ing 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

03/31/2020

03/31/2019

178’904
331’635

169’666
106’928

510’539

276’594

Other Contingent Liabilities
Burckhardt Compression owns 60% of Shenyang Yuanda Com-
pressor 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 current ow-
ner. On the one hand, Burckhardt Compression has received call
options on the remaining 40% stake of Shenyang Yuanda Com-
pressor Co. Ltd. On the other hand, Burckhardt Compression
has issued put options on the remaining 40% stake of Shenyang
Yuanda Compressor Co. Ltd.

The options regarding Shenyang Yuanda Compressor
Co. Ltd. are currently not 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.

Operating Leases

in CHF 1’000

03/31/2020

03/31/2019

Operating leases due in less than 1 year
Operating leases due in 1 to 5 years

Operating leases due in more than 5 years

2’930
11’467

5’831

2’739
7’956

1’710

Total operating lease commitments

20’228

12’405

Purchase commitments
Purchase commitments for capital expenditure as per March 31,
2020 amounted to CHF 11.1 mn (prior year: CHF 10.5 mn). The
purchase commitments are mainly connected to the relocation
activities in Shenyang (see note 13).

28. PLEDGED ASSETS

As per March 31, 2020, Burckhardt Compression had pledged
assets with a carrying amount of CHF 135.5 mn (prior year:
CHF 119.5 mn) to secure mortgage loans and guarantees. The
pledged assets consisted mainly of land and buildings, and to a
lesser degree of inventories and trade receivables.

29. SHARE-BASED PAYMENTS

Since 2017, there is a long-term incentive plan for the members
of the Executive Board and certain other employees in place.
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 2019, 383 shares at a fair value of CHF 235 were granted
to participants of the long-term incentive plan. In 2018, partici-
pants of the long-term incentive plan were granted 268 shares
at a fair value of CHF 358.

Personnel expenses in 2019 for share-based payments

amounted to CHF 2.9 mn (prior year: CHF 1.9 mn).

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

30. RELATED PARTY TRANSACTIONS

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 2019 and 2018 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 until November 25,
2019).

in CHF 1’000

2019

2018

Sales of goods and services
Purchase of goods and services

3’285
317

3’290
591

The following balances with associated companies (mainly
Arkos Group companies until November 25, 2019) were out-
standing as of the balance sheet date.

03/31/2020

03/31/2019

Burckhardt Compressions pension plans in Switzerland con-
sist of two independent pension funds: “Sulzer Vorsorgeeinrich-
tung” (SVE), a base plan for all employees, and “Johann Jakob
Sulzer Stiftung” (JJS), a plan for employees with salaries exceed-
ing a certain limit. The majority of the active participants in the
two pension funds are employed at companies not belonging to
Burckhardt Compression. The board of trustees for the base plan
comprises ten employer representatives and ten employee rep-
resentatives of the contributing companies and is responsible for
asset allocation and risk management. The pension plans con-
tain a cash balance benefit formula. Under Swiss law, the pen-
sion funds guarantee the vested benefit amount as confirmed
annually to members. Interest may be added to member bal-
ances at the discretion of the board of trustees. At retirement
date, members have the right to take their retirement benefit as
a lump sum, an annuity or part as a lump sum with the balance
converted to an annuity. The pension funds may adapt the con-
tribution 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 coverage
of the collective plans as a whole as of December 31, 2019
amounted to 117.1% (SVE; prior year: 109.6%) and 116.2% (JJS; prior
year: 105.6%). The technical interest rate used by both collective
plans amounted to 2.0% (prior year: 2.0%).

in CHF 1’000

Receivables
Payables

–
–

25’348
65

Employer Contribution Reserves
Burckhardt Compression does not have any employer contribu-
tion reserves.

In the prior year receivables included a promissory note from
Arkos Group companies with a carrying amount of CHF 18.3 mn
and loans to Arkos Group companies with a carrying amount of
CHF 6.0 mn.

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
defined 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.

32. EVENTS AFTER THE BALANCE
SHEET DATE

On April 17, 2020, Burckhardt Compression acquired the global
compressor business from the Japan Steel Works Ltd. (JSW), a
Japanese business based in Tokyo.

With the acquisition of the global compressor business
from JSW Burckhardt Compression is strengthening its market
presence in Japan.

The purchase price for the acquisition was CHF 23.5 mn and
settled in cash. At the time of approval of the consolidated
financial statements, the process to determine the fair values
of identifiable assets and liabilities of JSW was not yet com-
pleted.

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

03/31/2020
–

03/31/2019
–

–1’927

–2’121

Change to prior
year period recog-
nized in the current
result of the period
2019
–

Currency
translation
differences

Contributions of
the fiscal year

Pension benefit expenses

2019
–

111

2019
–7’987

–

–7’987

2019
–7’987

–7’904

2018
–7’230

–7’227

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

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

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

Winterthur,
Switzerland

Burckhardt Compression (Deutschland) GmbH

Neuss, Germany

Burckhardt Compression (Italia) S.r.l.

Milan, Italy

Burckhardt Compression (France) S.A.S.

Cergy Saint
Christophe, France

Burckhardt Compression (España) S.A.

Madrid, Spain

Burckhardt Compression (UK) Ltd.

Bicester, United
Kingdom

Burckhardt Compression (US) Inc.

Houston, USA

Burckhardt Compression (Canada) Inc.

Mississauga,
Canada

Burckhardt Compression (Japan) Ltd.

Tokyo, Japan

Burckhardt Compression (Shanghai) Co. Ltd.

Shanghai, China

Burckhardt Compression (India) Private Ltd.

Pune, India

Burckhardt Compression (Brasil) Ltda.

São Paolo, Brazil

Burckhardt Compression (Middle East) FZE

Burckhardt Compression Korea Ltd.

Dubai, United
Arab Emirates

Seoul,
South Korea

Burckhardt Kompresör San. ve Tic. Ltd.

Istanbul, Turkey

Burckhardt Compression Singapore Pte Ltd.

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

Busan,
South Korea

Dammam,
Saudi Arabia

Wilmington, USA

CSM Compressor Inc.

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

CAD
10’000

g
n

i
t
c
a
r
t
n
o
C

•

100%

•

100%

•

100%

•

s
e
l
a
S

e
c

i
v
r
e
S

•

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

s
e
l
a
S

e
c

i
v
r
e
S

•

g
n

i
t
c
a
r
t
n
o
C

•

&
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

g
n
e

&
g
n

i
r
u
t
c
a
f
u
n
a
M

•

Company

Registered
office

Registered
capital

Interest
in capital

Shenyang Yuanda Compressor Co. Ltd. 1

Shenyang, China

Liaoning Yuanyu Industrial Machinery Co. Ltd.

Kaiyuan, China

Shenyang Yuanda Compressor
Automatic Control System Co. Ltd. 2

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

Shenyang, China

Compressor Tech Holding AG 1

Zug, Switzerland

PROGNOST Systems GmbH

Rheine, Germany

PROGNOST Systems Inc.

Houston, USA

PROGNOST Machinery Diagnostics
Equipment and Services LLC

Société d’Application du Métal Rouge SAS

Abu Dhabi, United
Arab Emirates

Pont Sainte Marie
Cedex, France

Arkos Group LLC

Houston, USA

Arkos Field Services, LP

Houston, USA

Arkos Realty & Investments, LP

Houston, USA

CNY
100’000’000

CNY
39’000’000

CNY
5’000’000

CNY
1’000’000

CNY
100’000’000

CNY
65’000’000

CHF
200’000

EUR
200’000

USD
240’000

AED
300’000

EUR
501’000

USD
26’250’000

60%

36%

60%

24%

100%

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 2019 | BURCKHARDT COMPRESSION

100

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 31 March 2020, the Consolidated
Balance Sheet as at 31 March 2020, 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 78 to 99) give a true and fair view of the consolidated
financial position of the Group as at 31 December 2019 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 2'450'000

Materiality

We concluded full scope audit work at five reporting units in four countries.
Our audit scope addressed over 68% 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

Audit scope

Acquisition of Arkos Group

Key audit
matters

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

PricewaterhouseCoopers AG, Bahnhofplatz 17, Postfach, CH-8400 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 2019 | BURCKHARDT COMPRESSION

101

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 2'450'000

How we determined it

5% of average earnings before tax 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 considera-
tions. 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 245'000 identified during
our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons.

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. 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, communication with the component auditors,
communicating the risks identified at Group level and determining the materiality thresholds for the audits performed by
component auditors.

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.

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
31 March 2020, work in progress from systems division
projects in the amount of CHF 164.6 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

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

Burckhardt Compression Holding AG | Report of the statutory auditor to the General Meeting

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

102

incorrect estimate could have a significant impact on the
result for the period.

planning phase, and focussed our testing on the
following:

Please refer to page 83 (Accounting policies – Inventories)
and page 92 (Inventories) in the notes to the Group
financial statements.

– 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 onsite 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 2019 consolidated
financial statements.

Burckhardt Compression Holding AG | Report of the statutory auditor to the General Meeting

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

Acquisition Arkos Group

Key audit matter

How our audit addressed the key audit matter

103

On 25 November 2019, Burckhardt Compression Group
acquired the remaining 60% of the shares of Arkos Group,
headquartered in Waller, USA.

The assessment of the acquisition of the Arkos Group was
deemed a key audit matter because of the critical
estimates made by Management concerning the purchase
price allocation in the opening balance sheet.

Please refer to page 85 (Busines combinations and other
Changes in the Scope of Consolidation)

We assessed whether the amounts reported on the

opening balance sheet as at 25 November 2019 had been
identified in line with the share purchase agreement and
recognised in line with the provisions of Swiss GAAP FER 30
“Consolidated financial statements”. We performed
procedures including the following:

• We identified significant components within the Arkos
Group and performed procedures in order to assess
the existence, completeness and valuation of the net
assets. Furthermore, we assessed the adjustments
between the book values determined under the
accounting framework previously applied by Arkos
Group and those in accordance with Swiss GAAP
FER.

• We assessed the appropriateness of the method used

to reflect the acquisition.

• We assessed the qualification and independence of
the expert engaged by Burckhardt Compression
Group to determine the value of the properties owned
by the Arkos Group.

•

In addition, we assessed whether the transaction was
accounted for and disclosed in the financial statements
in accordance with the provision of Swiss GAAP FER
30 “Consolidated financial statements”.

Our audit procedures are appropriate to corroborate
Management’s allocation of the purchase price to the
identifiable assets and liabilities measured at fair value and
Management’s disclosure of the purchase of the Arkos
Group in the 2019 consolidated financial statements.

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.

Burckhardt Compression Holding AG | Report of the statutory auditor to the General Meeting

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

104

A further description of our responsibilities for the audit of the consolidated financial statements is located at the website
of EXPERTsuisse: http://expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our
auditor’s report.

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, 27 May 2020

Oliver Illa

Audit expert

Burckhardt Compression Holding AG | Report of the statutory auditor to the General Meeting

FINANCIAL REPORT | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

FINANCIAL STATEMENTS OF BURCKHARDT
COMPRESSION HOLDING AG, WINTERTHUR

105

BALANCE SHEET

in CHF 1’000

Current assets
Cash and cash equivalents

Other current receivables due from third parties

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

Short-term loans from gruop companies

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

Income from services provided to group companies

Total income

Expenses
Operating expenses

Direct Taxes

Total expenses

Net income

Notes

03/31/2020

03/31/2019

102

103

104

664

671

363

375

32’500

171’781

204’281

26’000

171’781

197’781

204’952

198’156

167

155

300

628

8’500

1’700

168’883

30’457

–5’216

204’324

120

165

–

291

8’500

1’700

166’691

22’556

–1’582

197’865

204’952

198’156

2019

2018

31’293

294

192

31’779

–1’262

–60

–1’322

23’280

249

192

23’721

–1’103

–62

–1’165

30’457

22’556

FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG, WINTERTHUR | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

106

NOTES TO THE FINANCIAL STATEMENTS OF
BURCKHARDT COMPRESSION HOLDING AG

101 Accounting policies
The financial statements as per March 31, 2020 are in compli-
ance 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

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 profit and loss statement.

Burckhardt Compression Holding AG uses derivative finan-
cial instruments exclusively as hedges of the exposure to vari-
ability in cash flows that is attributable to a particular risk
associated with a recognized asset or liability or a highly prob-
able future transaction (cash flow hedges). At inception of the
hedge, Burckhardt Compression Holding AG documents the
hedging relationship and the effectiveness between the hedg-
ing instrument and the hedged item.

The derivative financial instruments are off-balance sheet

items.

All the values in the annual financial statements are
reported in thousand Swiss Francs unless otherwise indicated.
Burckhardt Compression Holding AG’s fiscal year 2019 com-

prises the period from April 1, 2019 to March 31, 2020.

102 Subsidiaries
The equity interests held directly and indirectly by Burckhardt
Compression Holding AG are shown in note 33 “Group Compa-
nies and Associates”.

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 July 6, 2021
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, 2020, 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, 2020 (accord-
ing to the statutory bylaws the voting rights of NN Group N.V.,
and Atlantic Value General Partner Ltd. (Mondrian) are limited
to 5% of the total number of the registered BCHN shares
recorded in the commercial register):

FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG, WINTERTHUR | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION107

03/31/2020

03/31/2019

% of
shares

12.40
10.31

5.03

3.49

3.24

3.05

3.04

3.01

< 3.00

% of
shares

12.40
6.93

5.03

3.49

3.03

< 3.00

3.01

6.13

Country

CH
NL

2019

2018

5’999

16’000

–383
21’616

6’267

–268
5’999

Shareholders

Name

MBO shareholder pool (Valentin Vogt, Harry Otz, Leonhard Keller,
Martin Heller, Ursula Heller, Marcel Pawlicek)
NN Group N.V.

Atlantic Value General Partner Limited (Mondrian)

Ameriprise Financial Inc.

Credit Suisse Funds AG

Vontobel Fonds Services AG

BlackRock, Inc.

UBS Fund Management (Switzerland) AG

J O Hambro Capital Management Limited

The number of shares held by the members of the Executive
Board and the non-executive members of the Board of Directors
(and related persons) as per March 31, 2020 are shown under
point 6.2 within the compensation report.

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 263.63.

FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG, WINTERTHUR | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION

108

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

03/31/2020

03/31/2019

03/31/2020

03/31/2019

03/31/2020

03/31/2019

Forward foreign exchange contracts (negative current fair value on cash flow hedge)

Guarantees

in CHF 1’000

Guarantees

03/31/2020

03/31/2019

236’662

106’927

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.

FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG, WINTERTHUR | ANNUAL REPORT 2019 | 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 67
to 75.

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 Holding
AG’s assets and liabilities.

Proposal by 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

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 3, 2020.

Gross dividend
Less 35% withholding tax

Net dividend

109

2019

2018

189’247
–20’364

30’457

199’340

187’053
–20’362

22’556

189’247

–20’400

178’940

168’847

2019

2018

2017

6.00
–2.10

3.90

6.00
–2.10

3.90

6.00
–2.10

3.90

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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 31 March 2020, income statement and notes for the year then ended, including a summary of significant accounting
policies.

In our opinion, the financial statements (pages 105 to 109) as at 31 March 2020 comply with Swiss law and the
company’s articles of incorporation.

Basis for opinion

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 1'500'000

Materiality

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:

Audit scope

Impairment testing of investments in subsidiaries

Key audit
matters

PricewaterhouseCoopers AG, Bahnhofplatz 17, Postfach, CH-8400 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.

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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 1'500'000

How we determined it

0.73% of total assets

Rationale for the materiality
benchmark applied

We chose total assets as the benchmark because, in our view, it is a relevant
benchmark 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 150'000 identified during
our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons.

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.

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 category 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 predefined
impairment testing process.

Please refer to page 106 (Subsidiaries) in the notes to the
financial statements.

In our audit of investments in subsidiaries, we performed 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 (revenue and margin
growth).

We consider the valuation process and the assumptions
used to be an appropriate and adequate basis for the
impairment testing of the goodwill as at 31 March 2020.

Burckhardt Compression Holding AG | Report of the statutory auditor to the General Meeting

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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.

A further description of our responsibilities for the audit of the financial statements is located at the website of
EXPERTsuisse: http://expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our auditor’s
report.

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, 27 May 2020

Oliver Illa

Audit expert

Burckhardt Compression Holding AG | Report of the statutory auditor to the General Meeting

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FINANCIAL STATEMENTS OF BURCKHARDT COMPRESSION HOLDING AG, WINTERTHUR | ANNUAL REPORT 2019 | BURCKHARDT COMPRESSION114

IMPRINT | ANNUAL REPORT 2019 | 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 avail-
able on the internet under report.burckhardtcompression.com 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
proImageHub GmbH, Lukas Pitsch
Arkos Field Services

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.com