SIG Combibloc Group Ltd. Annual Report 2019

FY2019 Annual Report · SIG Combibloc Group Ltd.

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ANNUAL REPORT 2019

SEIZING
OPPORTUNITIES

Our Company

WHO WE ARE

SIG is a leading systems and solutions provider
for aseptic carton packaging. Our unique
technology and outstanding innovation capacity
enable us to provide our customers with
end-to-end solutions for differentiated products,
smarter factories and connected packs, all to
address the ever-changing needs of consumers.

Founded in 1853, SIG is headquartered in
Neuhausen, Switzerland.

Contents

Our Company
03 Seizing opportunities
04 Letter from the Chairman and
the Chief Executive Officer
08 Market and industry review
10 Our business model
11 Our strategy
12 Our team
13 Technology and innovation

Business Review
17 Regional review:

17
EMEA
20 APAC
22 AMERICAS

24 Responsible business review
28 Key performance highlights
29 Chief Financial Officer’s statement
34 Risk management

Governance
36 Board of Directors
38 Group Executive Board
40 Corporate Governance Report

Compensation
55 Letter from the Chairwoman of

the Compensation Committee
Introduction

56
56 Compensation governance
59 Compensation principles
60 Compensation framework for

the Board of Directors

63 Compensation framework for
the Group Executive Board
70 Previous and discontinued

compensation plans

70 Loans granted to members of
the Board of Directors or the
Group Executive Board

71 Outlook for 2020
72 Report of the statutory auditor

Financials
73 Consolidated financial statements
131 Financial statements
of the Company

Business ReviewGovernanceCompensationFinancialsSIG 2019 Annual ReportSEIZING OPPORTUNITIES

Our purpose
We work in partnership with our customers to deliver
food and beverages to consumers across the world in
a safe, sustainable and affordable way.

Our purpose is a core element of our corporate compass
and underpins our dream of seeing every consumer
in the world with a SIG carton pack in their hand and
a smile on their face, every day.

Our promise to our customers is Excellence –
Engineered. Solutions – Delivered. Building on our
Swiss engineering heritage that goes back more than
150 years, we offer state-of-the art filling equipment
and superior technical service. We also deliver
solutions that go beyond just the filling technology and
packaging. We solve customers’ problems and offer new
possibilities through an intelligent, holistic overview of
their business needs. With our engineering know-how,
we can transform our customers’ filling plants into
intelligent, connected factories which are at the
forefront of digital technology.

Values and principles
The three core elements of our corporate compass are
encircled by the SIG company values and leadership
principles that represent our behavioural framework,
defining what we seek from employees and leaders.
They link our strategy to daily business and provide a
pathway to ensure the Company’s future success.

Business ReviewOur CompanyGovernanceCompensationFinancialsSIG 2019 Annual ReportLetter from the Chairman and the Chief Executive Officer

SEIZING OPPORTUNITIES

Rolf Stangl
Chief Executive Officer

Andreas Umbach
Chairman

2019 was SIG’s first full year as a publicly listed company
since returning to SIX Swiss Exchange in 2018. The listing
has naturally brought greater awareness of our Company
both in our home country Switzerland and abroad.
During the year we have engaged with a broad base of
investors internationally and have had many discussions
with representatives of the media and other external
stakeholders. This has given us the opportunity to
explain the unique technology behind our solution
business, consisting of filling lines, carton packs, closures
and services. We have also been able to demonstrate the
strong sustainability credentials which are intrinsic to our
business.

Our dream
As a listed company we continue to pursue our
expansion goals supported by the investments made in
recent years. Our dream of seeing “Every consumer in
the world with a SIG pack in their hand, and a smile on
their face, every single day” may sound ambitious but it
reflects the growing demand for packaged food globally.
In fact, this dream is firmly grounded in the reality of
providing safe, sustainable and affordable packaging
solutions for essential food products to our customers
around the world.

SIG’s focus on sustainability dates
back many years and it is an
integral part of our corporate
compass and group strategy.

Business ReviewOur CompanyGovernanceCompensationFinancialsSIG 2019 Annual ReportLetter from the Chairman and the Chief Executive Officer continued

Consuming safely and on the go
We help the food and beverage companies who are our
customers to meet the differing needs of consumers
globally. In many emerging markets where there is no
fully reliable cold chain, food preservation is a top
priority. Our cartons enable beverages and liquid food to
maintain their taste, appearance and nutritional qualities
for up to 12 months without the need for refrigeration or
preservatives. This minimises waste and avoids the CO2
emissions generated by a cold chain. Cartons are also
highly attractive in countries where e-commerce is
expanding, as they facilitate safe and cost-effective
transportation.

Our dream is firmly grounded in
the reality of providing safe,
sustainable and affordable
packaging solutions to our
customers around the world.

Our flexibility in terms of packaging size and format means
that emerging market consumers can have access to
nutritional products at an affordable price. Milk is a
primary source of protein for young and old alike and
consumption continues to rise in many countries. In some
more developed markets, producers including smaller
start-up brands are diversifying into areas such as plant-
based dairy alternatives, protein drinks and nutritional
supplements. Consumers’ changing lifestyles favour
on-the-go consumption and the difference between
food and drink is blurring. These all represent new
opportunities for us which can be maximised through
our unique filling capabilities and our innovative formats
and designs.

Sustainable solutions
Public concern over sustainability issues has intensified
over the last 12 months and the need for sustainable
packaging is now top of mind with all our customers, as
well as with many consumers. However, SIG’s focus on
sustainability dates back many years and it is an integral
part of our corporate compass and group strategy. Our
cartons have one of the lowest carbon footprints, being
made largely out of renewable materials and fully
recyclable, and we have pioneered structures that
further enhance their environmental profile. More
broadly, we focus on driving carbon footprints down and
on changing the narrative from carbon neutral to net
positive. In 2019, we became one of the first companies
in our industry to set a climate target approved by the
Science-Based Targets Initiative (SBTi) as being in line
with the goal of limiting global warming to 1.5°C above
pre-industrial levels.

Governance and shareholders
The Company held its first Annual General Meeting since
the recent listing on 11 April 2019 in Schaffhausen. The
meeting was well attended with 81.8% of the share
capital represented. All the proposals of the Board of
Directors were passed by a large majority.

The Board of Directors combines the knowledge and
experience of the previous Advisory Board with the
addition of new members who have a background in
publicly listed companies both in Switzerland and
abroad. Onex now has a single Board seat as David
Mansell did not stand for re-election at the Annual
General Meeting. In the course of 2019, in line with
common post-IPO practice, Onex reduced its holding
from 51% to 32% of the share capital.

2019 financial performance
2019 was another year of strong sales growth and cash
generation. Core revenue increased by 5.2% at constant
exchange rates, comfortably within our target range of
4% to 6%. Growth was driven in particular by markets
outside Europe, demonstrating the success of our
expansion initiatives. The adjusted EBITDA margin for the
Group at 27.2% was also within the target range for 2019.
We continued to invest in innovation and introduced
multiple new products in the course of the year. Recent
major launches such as combismile continued to ramp
up and our most advanced sustainable solutions,
including SIGNATURE PACK and EcoPlus, gained traction
as customers sought to address growing consumer
concerns over the environment. Adjusted net income
reached EUR 217 million, above the 2018 pro forma level.
Free cash flow was also ahead of 2018 at EUR 267 million
and we are proposing a dividend of CHF 0.38 per share,
compared with CHF 0.35 per share in 2018.

Increasing share of wallet and winning
new customers
Our business model is based on supplying our
customers with an integrated system serviced by our
engineers in the field worldwide. New customers are
often attracted to the SIG offering by the flexibility of our
system and our ability to fill a wide array of products,
ranging from plain white milk to soups and sauces
containing pieces or chunks. Our ambition is to deliver
unrivalled operating efficiency, service and innovation
to not only maintain but also grow our share of wallet.
Our success is evidenced by long-lasting customer
relationships and a net promoter score that is regularly
best-in-class. The loyalty of our customers is something
we prize very highly – it is never taken for granted and
we strive continuously to ensure that it is merited.

Business ReviewOur CompanyGovernanceCompensationFinancialsSIG 2019 Annual ReportLetter from the Chairman and the Chief Executive Officer continued

Growing the business globally while deepening
our local presence
We have a well established global filler base that forms
the bedrock of our future growth. Over the last 10 years,
aided by strong cash flows out of Europe, we have
significantly built up our business in the Americas and
Asia Pacific. These regions have increased in importance
in recent years and are expected to have the highest
growth rates going forward. We have focused on
establishing a local manufacturing presence in order to
be close to our customers and to benefit from cost and
sourcing efficiencies. With the rapid growth in our Asia
Pacific business, we announced in July that we have
decided to expand our production network in the region
with the construction of a second plant in China. This
follows on from our recently opened regional Tech
Centre in China and will enable us to continue to meet
demand across Oceania and Asia, where millions of
people are only now starting to consume packaged food
and beverages..SIG’s growth objectives are founded on
organic growth and acquisition opportunities in our

We have a well established global
filler base which forms the bedrock
of our future growth.

industry have historically been few. However, in 2019
we were able to acquire Visy Cartons in Australia,
establishing a presence in a market where SIG has until
now had no direct presence. We intend to expand the
Visy business in New Zealand as well as Australia and to
fully take advantage of the wave of investment by dairy
companies targeting exports of premium milk to the
Chinese market. The acquisition of Visy will further
leverage our expanding Asia Pacific footprint and will
enable us to expand the reach of SIG’s latest
technologies and solutions.

The capabilities and know-how of our
employees are key to our success
Our business demands a diversity of talents spanning
different areas including engineering, food science,
marketing and product development. We aim to make
SIG the best place in our industry to work and to offer
exciting development opportunities globally and across
disciplines. We would like to thank all our employees for
the excellent contributions they made in 2019, going the
extra mile to serve our customers, to further grow our
business while maintaining a high level of profitability
and return on capital, and to go way beyond good on
our journey to become net positive.

Andreas Umbach
Chairman

Rolf Stangl
Chief Executive Officer

SIG’s new Asia Pacific Tech Centre brings a new dimension in
supporting customers with the development and implementation
of new product concepts and market-ready packaging solutions.

Business ReviewOur CompanyGovernanceCompensationFinancialsSIG 2019 Annual ReportOpportunity stories

FURTHER EXPANSION
IN ASIA PACIFIC

New state-of-the art production
plant in China announced

Plant

120,000m2
8bn
€180m

Packs capacity

Investment

Highlights
• Asia Pacific continues to be the biggest growth

driver for aseptic carton packaging

• Construction of SIG’s second production plant

in Suzhou, China

The Asia Pacific market has shown a dynamic
performance over the last decade, with most countries
contributing to growth. The construction of a new plant
at the Suzhou Industrial Park, in close proximity to SIG’s
existing factory and recently opened Tech Centre, will
allow the realisation of operational and overhead
synergies.

The plant is expected to come onstream in early 2021.
It is expected to achieve world-class environmental and
safety performance and to be SIG’s most productive
plant, with the fastest, most efficient machines and the
highest levels of automation.

Together with our nearby Tech
Centre, our new production plant
will ensure that we continue to
excel at bringing new and exciting
product and packaging concepts
to the Asia Pacific market quickly
and efficiently.
Rolf Stangl
Chief Executive Officer

Business ReviewOur CompanyGovernanceCompensationFinancialsSIG 2019 Annual ReportMARKET AND INDUSTRY REVIEW

The aseptic carton market for liquid food and beverages
is fuelled by fundamental industry and consumer trends.

Aseptic carton packaging shows highest growth rates

Growing demand for packaged food
Safe and affordable packaging solutions are required to
serve the growing middle class in developing markets.

The number of people with access to packaged food is
growing faster than the overall global population. At the
same time, the average spend per person on packaged
food is rising. With more people able to consume a little
more every day, global spend on packaged food is
expected to rise at a cagr of 2.4% per annum1 over the
next ten years.

The choice of packaged food is to a large extent
determined by consumers’ disposable income. In
developing markets, households typically switch from
loose milk and beverages to processed or packaged
products when they reach an annual income above
$5,0002. Aseptic carton as an affordable and safe
solution caters to the needs of these rising consumers.
Subsequently, as people move into higher income
classes, they shift towards higher value or premium
food and beverage categories.

Driven by these demographic trends and by consumer
behaviour, aseptic carton volumes – currently around
92 billion litres – are expected to grow at a rate well
above the total food packaging market and above other
forms of ambient packaging.

1 Source: United Nations, Euromonitor, company information.
2 Source: Euromonitor, company information.

1,112bn kg

Total food
& beverages

+2.6%

CAGR

Ambient
packaging

+2.8%

CAGR

229bn kg

92bn kg

Aseptic carton

+3.6%

CAGR

The number of people with access to packaged
food is growing faster than the overall global
population. At the same time, the average spend
per person on packaged food is rising.

Business ReviewOur CompanyGovernanceCompensationFinancialsSIG 2019 Annual Report

Market and industry review continued

Efficient and safe supply chain
Manufacturers need efficient packaging technology and
safe supply chains with the transparency increasingly
expected by consumers who demand assurances on
product origin and quality. Low waste rates – as afforded
by SIG’s filling technology – are essential, especially for
companies filling premium products such as fruit-based
juices or plant-based milks containing valuable nuts
and grains.

Products packed aseptically – in other words using the
Ultra High Temperature (UHT) process – are heated at a
high temperature for two to four seconds and are then
immediately cooled before being poured into sterilised
packs. They have a longer shelf life – up to 12 months
– compared with other forms of packaging. Aseptic
carton packaging offers a high level of protection against
air and light, so that nutrients, vitamins and taste are
protected, maintaining the product’s natural goodness. It
is the most cost-efficient packaging solution in most pack
sizes for a wide range of liquid dairy and non-carbonated
soft drinks.

Demanding consumers
Innovative packaging and filling solutions are required to
meet demand for on-the-go consumption, differentiation
and convenience. Consumers’ desire for continuous
variety is resulting in a proliferation of SKUs. SIG’s sleeve-
fed filling system enables food and beverage companies
to respond to rapid changes in demand by providing a
high level of flexibility in terms of fast change-over times
between carton sizes and shapes.

Our technology is enabling both our customers and
ourselves to drive growth beyond the traditional liquid
dairy and non-carbonated soft drinks segments.
Following key food and beverage product trends, we
continue to penetrate fast-growing, premium-priced
categories such as plant-based dairy alternatives, dairy-

or juice-based drinkable snacks and breakfasts, warm or
hot on-the-go drinks, flavoured or functional waters,
protein or sports drinks and nutraceuticals.

In developing markets, affordability is a key requisite.
Carton provides a lightweight affordable option and SIG’s
filling flexibility enables customers to respond rapidly to
changes in market demand and purchasing power – for
example by shifting to smaller sizes at the right price.

Sustainability and going green
Sustainability issues are today at the forefront of public
attention and influence people’s perception of every
industry. As the impact of packaging on the environment
is increasingly monitored by regulators, NGOs, brand
owners and consumers, there is a compelling need for
sustainable solutions.

Aseptic cartons are among the most ecologically sound packaging
solutions for liquid food and beverages.

Aseptic cartons are among the most ecologically sound
packaging solutions for liquid food and beverages. They
are made primarily from renewable resources – meaning
pulp that is replenished through sustainable forest
management. The aseptic carton industry today
produces 40% more cartons from the same amount of
wood as used 20 years ago. This reflects improvements
in processing and advances in the carton structure,
including light-weighting.

7.3bn

people with access to
processed food

>10k

products packed by SIG

70%

lower carbon footprint than
other substrates

49%

of cartons recycled in Europe

By eliminating the need for refrigerated transport and
storage, aseptic cartons reduce CO2 emissions. Overall,
the total carbon footprint of our cartons is up to 70%
lower than other types of packaging.

Cartons are fully recyclable and already have a recycling
rate in Europe of 49%1. Recycling infrastructure and
collection are key, and SIG and the industry work
intensively to drive progress in these areas.

1 Source: The Alliance for Beverage Cartons and the Environment.

Business ReviewOur CompanyGovernanceCompensationFinancialsSIG 2019 Annual ReportOUR BUSINESS MODEL

Our strengths

What we do

The value we create

Engineering know-how
SIG has been designing packaging machinery since the early 20th century
and is ideally placed in a world where demand for packaged food is growing.
Our unique sleeve-based filling technology offers our customers unmatched
volume and format flexibility, enabling them to meet the rapidly changing
demands of consumers. Our superior system reliability ensures that our
customers are part of a safe and efficient supply chain.

Partnership with customers
Our filling and packaging technology is at the heart of our customers’
operations. We work in close collaboration to develop innovative product
and packaging solutions to meet consumer demands for differentiation,
convenience and sustainability. And we help to increase efficiency and
transparency through intelligent, automated and fully integrated plants. All
this results in customer relationships that span many years or even decades.

Broad geographic base
Over the last 10 years we have increased our exposure to the faster growing
regions of the world: the proportion of sales realised outside Europe has
increased from 28% in 2009 to 57% in 2019. With our globally integrated
footprint and supply chain, we are able to support customers locally and
to meet their needs quickly and efficiently.

Our culture
Our culture is based on the principle that we are all responsible and
accountable for results. Our colleagues are encouraged to dream big, set
stretched targets, take ownership and to challenge themselves. This enables
us to improve every day, to realise growth by winning against the competition
and to continue to invest in our business.

Filling technology and
packaging material
Sleeve-based packaging systems
providing 270+ packaging options
to our customers:

– Filling lines

– Carton packs

– Closures

Technical service
Flexible services to maximise
reliability and efficiency in food and
beverage production:

– >550 field service engineers

– Spare parts delivery worldwide

– Technical support

– Five regional training centres

Complete customised solutions
Added value through customised
complete solutions for:

– Innovative and differentiated

products

– Smarter factories

– More connected packaging

Our customers

increasing capacity in the field

1,233 fillers
>38bn

packs produced in 2019

Our people

employees in 35 countries

~5,500
130,846

hours of training

Communities

>2x

societal impact from community
programmes since 2016

Environment

100%

renewable energy for production

Investors

+52.9%

Total Shareholder Return in 2019

Business ReviewOur CompanyGovernanceCompensationFinancialsSIG 2019 Annual ReportOUR STRATEGY

We aspire to make SIG-packed products accessible to everyone, everywhere, enabling people to enjoy healthy, great-tasting food and beverages. To achieve our
ambition, our people work in partnership with our customers to bring food products to consumers around the world in a safe, sustainable and affordable way.

1 Growth

Grow above market

Progress in 2019

In June, we again achieved our objective of core
revenue growth at constant currency of 4-6%.
We achieved growth in all regions and expanded
our footprint in Asia Pacific with the acquisition of
Visy Cartons. We made further advances in the
sustainability of our packs and were the first
carton company to offer a paper straw.

KPIs

Core revenue

2017

2018

2019

€1.59bn
€1.64bn
€1.77bn

2 Customer

Win at the customer

We continued to win new customers while increasing
our share of wallet with existing customers. Key
drivers of our success were the format and volume
flexibility of our filling machines, attractive total cost
of ownership for longer runs, innovative product
designs and our high service levels. The launch of
the first pilot project for our partnership with GE
Digital paved the way for a transition to predictive
filler maintenance across our customer base.

>25 years

average length of relationship
with top 10 customers

3 People

Foster our winning team

In 2019, we implemented a long-term incentive plan,
which further fosters the alignment of managers
with shareholders and the perspective of pay for
performance. Across the Company we set stretched
– but achievable – targets and worked to ensure that
all team members understand their roles in meeting
those targets.

A diverse workforce with equal opportunities for
everyone is a priority for SIG. Our goals include
increasing the proportion of leadership positions
held by women to 30% by 2025.

Number of women
in leadership positions

2018

2019
2019

16.8%

297

17.3%

312

Total number of leadership positions held by women
Total number of leadership positions

Priorities for 2020

– Further execute our strategy to grow share in established

and new markets

– Further expand in new categories driven by changing

consumer habits, eg. plant-based dairy alternatives, water,
nutritional supplements

– Construct our new sleeves plant in China ready for production

commencing early in 2021

– Integration of Visy Cartons in Australia with the start of supply
chain optimisation and the expansion of the product range

– Help our customers respond to the growing consumer

concern for the environment by providing them with the most
sustainable packaging solutions on the market

– Continue to ensure that affordable solutions are available in

regions where consumer purchasing power is still low

– Support our customers in unlocking new growth

opportunities in rapidly developing segments such as dairy
alternatives and snacking

– Leverage our new Tech Centre in China to accelerate the pace

of innovation in the Asia Pacific region and to give more
customers first hand experience of the potential of our
filling machines

– Further align performance and reward; introduce a broader

employee share plan

– Further develop and drive talent management to ensure

a strong bench and seamless successions

– Build out diversity in leadership to reflect the diversity in our

markets, customers and consumers

Business ReviewOur CompanyGovernanceCompensationFinancialsSIG 2019 Annual ReportOUR TEAM

SIG – Best place to work
Our goal is to be the best employer in the industry and
beyond. We aim to create an environment where each
of our approximately 5,500 employees worldwide is
engaged in the business, fairly rewarded and recognised
for the work that they do, given equal opportunities
regardless of their background and able to develop their
full potential.

Talent development
Our Company offers a vast range of positions, which are
as individual as our people. We aim to match the skills of
each employee to the opportunities within the Company
and to continuously improve the way we address
employee needs. We undertake to give every employee
the chance to take part in internal or external training
programmes, and training requirements are identified as
part of the yearly review process. Our training concept
consists of culture and leadership plus expert knowledge
and regional basic know-how offerings. The Leadership
Campus teaches the SIG Leadership Model so that
transformational leadership becomes our common
leadership philosophy.

Employee reward and recognition
To increase employee motivation and our attractiveness
as an employer, we ensure that performance is
recognised and rewarded in a fair and transparent
manner. It is our policy to remunerate employees in
line with existing market practice. We benchmark our

remuneration approach against other companies to
ensure that our remuneration packages are competitive
in each of our markets. Pay is and will remain linked to
performance. In addition we will align shareholder
interests and broader employee compensation
through a broader employee share plan.

Employee engagement
By creating an engaging and energising working
environment, we aim to enable our employees to unfold
their full potential and to improve their workplace
experience. By listening to them and responding to their
views, we help to sustain high levels of job satisfaction.

To further foster engagement, we give our employees a
voice in our biennial Employee Engagement Survey and
in the implementation of concrete improvement
measures in their area of responsibility, scope of
influence and direct working and team environment. In
the last survey conducted in 2018, our net promoter
score significantly improved.

Over the past three years, we have responded to
employee feedback by focusing on the way we lead,
innovate and manage change. Our “C Time” and “T with
the C” meetings give employees an opportunity to hear
from our CEO and other C-suite executives directly, and
to ask about the issues that matter the most to them.
Quarterly team meetings, with video messages from the
CEO, are designed to improve engagement and
understanding of the company strategy.

Employment and labour rights
The SIG Code of Conduct addresses ethical and legal
principles in general, whilst the SIG Business Ethics Code
sets out more specific principles regarding employment
and labour rights. Employees are encouraged to report
any violation of the principles through the SIG Ethics &
Compliance Hotline or any available channel. As part of
our Sedex (Supplier Ethical Data Exchange) membership,
all our production sites undergo SMETA (Sedex Members
Ethical Trade Audit) four pillar audits on a regular basis.

Diversity and equal opportunities
Diversity and inclusion has increased in importance for
our business and our stakeholders. We are establishing
a diversity and inclusion strategy with an overarching
vision and governance, as well as a dashboard allowing
us to identify opportunities and set targets to measure
our progress in creating a diverse and inclusive culture.
Our aim is to prevent discrimination on any grounds and
to create an inclusive workplace where a range of
nationalities and cultures are represented, and where
there are equal professional opportunities regardless
of gender, age or disability. In our last Employee
Engagement Survey, the vast majority agreed that people
are treated fairly at SIG regardless of their gender,
nationality or ethnic background.

Business ReviewOur CompanyGovernanceCompensationFinancialsSIG 2019 Annual ReportTECHNOLOGY AND INNOVATION

Excellence – Engineered. Solutions – Delivered.
Our innovation capabilities enable us to address multiple
customer needs and to respond to fast-changing
consumer trends. We draw on the unmatched flexibility
of our system to create modular solutions which give
customers the optionality they need. We spend
approximately 3% of sales on R&D and, in addition to
the significant proprietary know-how in our solutions,
our innovations are patent-protected.

Our unique technology
The unique advantages of the SIG offer lie in our
proprietary filling technology and sleeve-based system.
We offer a range of packaging formats, volumes and
opening solutions, providing our customers with more
than 270 packaging options. Our customers fill more
than 10,000 food and beverage products into our packs.
The flexibility of our system limits change-over downtime
and results in better asset utilisation for many
customers. As well as a high level of reliability, our system
offers low waste rates for both the packaging and the
finished product.

Addressing multiple customer and consumer needs

OUR PROMISE
Excellence – Engineered.
Solutions – Delivered.

Product
solutions

Packaging
solutions

End-to-end design
solutions

Filling line
solutions

Service
solutions

Digital
marketing
solutions

Traceability
solutions

Supply chain
solutions

Business ReviewOur CompanyGovernanceCompensationFinancialsSIG 2019 Annual ReportTechnology and innovation continued

Product innovation
and differentiation
Product and packaging solutions
Our philosophy of packaging innovation starts with the
consumer. We conduct ethnographic research using
industry-specific methodologies to capture a multitude
of articulated and unarticulated consumer needs. We
work with leading experts to develop comprehensive
concepts and solutions which we then test with
consumers to see how they select, transport, use and
dispose of the package.

To bring new packaging solutions to the market, we work
in close collaboration with our customers. For example,
combiblocXSlim was developed to provide small
packages in a range of nine different sizes ranging from
80ml to 200ml. The packages are produced on a high-
speed filling machine running at 24,000 packs per hour
and capable of handling regular, high viscous and
particulate product recipes. There is also an aluminium-
free package option.

We collaborate closely with our customers to support
them with the development and implementation of new
product concepts. Brands are increasingly seeking to
premiumise their products to meet consumer lifestyle
aspirations. Consumer behaviour is shifting in favour of
convenience and on-the-go consumption, with a trend
towards snacking and a blurring of the boundary
between food and beverage. Our drinksplus technology
allows fruits, nuts and cereals to be incorporated into
yoghurt-based products or drinks and can easily be
added to a customer’s existing filling machines.

Recent launches
In 2019, we saw recent breakthrough innovations such
as combismile, Heat&Go and SIGNATURE PACK scale up
and gain market traction. combismile, launched in China
at the end of 2017, is driving our presence in key growth
categories. combismile is a new generation of on-the-go
packaging to help producers meet the growing consumer
demand for mobile, healthy and individual food and
beverage experiences. It is now being rolled out beyond
the Asia Pacific region, with launches in the USA and
South Africa in 2019.

We also introduced multiple new products in 2019.
The launch of combistyle is a proof point for SIG’s core
strength of flexibility. This new format can be filled on
existing filling machines which are already producing
standard combiblocMidi and combifitMidi shapes. This
means that customers can fill three different carton
formats on one line, optimising their asset utilisation.
From a consumer perspective, combistyle has a
distinctively shaped corner which stands out on the shelf
and provides a more comfortable and safer grip.

And it is not just the carton that is new. combistyle
features SIG’s new combiMaxx closure in a centralised
position, which is fully resealable and leak-proof with
easier opening and better pouring.

The unique particulates filling technology from SIG Combibloc lets
customers create new products that combine a drink with extra
pieces, such as crunchy grains or juicy pieces of fruit.

Business ReviewOur CompanyGovernanceCompensationFinancialsSIG 2019 Annual ReportTechnology and innovation continued

Innovating for the environment
SIG’s pioneering role in sustainable packaging was
demonstrated by the launch in 2010 of EcoPlus, the
world’s first aseptic carton without an aluminium barrier,
resulting in a 28% reduction in carbon footprint1.

Smart factories
Differentiation through service excellence
There are increasing business opportunities with
customers that go beyond packaging solutions.

This concept has also brought new advantages for
the consumer. In Asia, we have launched Heat&Go,
an aluminium-free format that allows beverages to
be heated in a microwave and enjoyed warm. Both
the quality and the shelf life of the product are fully
preserved and on the same high level as standard packs.

The introduction of EcoPlus was followed by SIGNATURE
PACK which, besides being aluminium-free, has a clear
link to 100% plant-based renewable materials.

In 2019, we went a step further by being the first in the
industry to offer beverage cartons made with recycled
polymers produced from post-consumer waste. Working
in partnership with our supplier SABIC, we have
developed a process for collecting and treating low
quality, mixed plastic waste, transforming it into high
quality, food grade material.

Combining convenience with commitment
In February 2019, SIG introduced the first straight paper
straw for aseptic carton packaging. This was soon
followed by the world’s first U-shaped paper straw
launched at Gulfood Manufacturing 2019 in Dubai.
Both straws use FSCTM-certified paper and are available
globally. The wrapper for the straw has also been
redesigned to remain attached to the package during
straw removal by the consumer, in order to avoid
littering. This innovation responds to the widespread
concern about the damage done by discarded plastic
straws, while maintaining the convenience required
by consumers.

Our experience in designing and implementing complete
packaging lines means that we provide everything from
single-system solutions and optimised upgrades to
complete turnkey solutions for intelligent, automated and
fully integrated plants – delivered through our best-in-
breed partner network.

Our Digital Platform Strategy builds on many years’
experience of connectivity for our filling lines, supporting
our customers in improving overall equipment
effectiveness (OEE). Building on this experience, SIG has
co-developed Plant 360 Asset Management with GE
Digital. This solution addresses increasing demands in
the food and beverage industry, particularly the need for
higher productivity, quality and uptime. Enhanced and
expanded digital data can be retrieved and evaluated at
any time by SIG’s reliability engineering team. New
analytical technology and asset management software
enable customers to move from preventive to predictive
maintenance of filling lines. For example, spare parts will
no longer be replaced at fixed maintenance intervals –
instead they will only be replaced when potential failure
is predicted. This means lower capital expenditure for
the customer as well as optimised quality.

Read how Plant 360 Asset Management has been
launched for the first time in the Middle East.

SIG has developed the Plant 360 Controller – a new digital monitoring
and control solution to optimise every angle of filling plant operations.

Connected packs
Digital marketing and traceability solutions
In today’s digital and on-demand world, consumers are
more informed and empowered than ever. They are
constantly sharing experiences online and looking for
new ways to have conversations with brands. Consumers
expect individual products to act as interactive media
sources.

In 2019, SIG launched PAC.ENGAGE to provide a variety
of communication options for brands to interact with
consumers directly on the package. With a simple scan
from a smartphone, the unique QR code can launch
dynamic engagement in the form of lucky raffles, loyalty
programmes, fun quizzes and more. Flexible, easy to
build modules can be customised for any brand and
provide valuable insights and actionable data about
purchasers.

1 Certified by an independent institute according to the relevant ISO standard.

Business ReviewOur CompanyGovernanceCompensationFinancialsSIG 2019 Annual ReportOur new Tech Centre in Suzhou is enabling us to serve
faster the rapid innovation cycles that are typical of Asia
Pacific and Oceania. Currently the centre is driving the
expansion of combismile into new and growing
categories such as dairy alternatives and vegetable
protein drinks. This is an illustration of the close
connection between consumer demands, product
development and packaging which is fundamental to
the way we serve our customers.

Technology and innovation continued

IoT and smart packaging innovations are opening up new
possibilities for both interaction and tracking. SIG is
helping customers to integrate complete transparency
into the value chain at all times. In Brazil, for example,
we have worked with the milk co-operative Languiru to
introduce one-click tracking, supported by automated
data collection across the supply chain. A QR code on the
pack enables consumers to track the contents from the
farm or collection point and has become a hallmark
of quality.

Two major Tech Centres
R&D and continuous innovation are at the heart of
everything we do. Our R&D is mainly conducted in two
major Tech Centres in Linnich, Germany and Suzhou,
China.

At these centres we design, engineer and test innovative
packaging structures and shapes and new product
formulations. Our customers can visit the centres
themselves to try out the new product formulations in an
industrial setting. In Linnich, the Tech Centre has food
accreditation, enabling us and our customers to carry
out consumer trials, with products marketed directly
in retail.

Watch video

PAC.ENGAGE provides a variety of communication options for brands
to interact with consumers directly on the package.

Business ReviewOur CompanyGovernanceCompensationFinancialsSIG 2019 Annual ReportRegional review: EMEA

FLEXIBLE AND INNOVATIVE OFFER

Successful go-to-market strategies

€755m

Core revenue 2018: €733m

+2.8%

change at constant currency

Introduction
SIG’s aseptic carton packaging business originated in
Germany and Europe remains the largest region globally
for aseptic carton packaging. Our largest sleeve
production plant is in Linnich, where we also assemble
filling machines and conduct R&D and consumer trials.

Our presence in the Middle East and Africa is led by our
50/50 joint venture SIG Combibloc Obeikan. Sales of the
joint venture are not consolidated but our share of net
income is recognised in the group income statement.

Market overview
Increasing share of wallet and winning new
customers in Europe
In a mature market for white milk and juice, many food
and beverage companies are focused on efficiency and
cost. However, there are opportunities for growth from
emerging categories such as plant-based dairy
alternatives and water. Consumers’ desire for novelty and
variety, with an increasing focus on healthy and natural
products, is giving rise to a proliferation of SKUs. This
means that the value chain has to become more agile
and flexible.

In this environment, SIG is pursuing two clear go-to-
market strategies. We are not only defending our
position but also growing with existing customers by
ensuring that we can meet their need for flexible and
cost-efficient solutions. We are winning new customers
and entering into and growing in new categories, while at
the same time expanding our European reach. Our
progress is supported by our filling capabilities and our
unique offer in terms of size and format flexibility.

Our strategies are underpinned by our core strengths of
operational excellence and advanced after-sales service.
We have upgraded our solution offering and portfolio as
well as our sales tools and processes. Moreover, the
strength of our packs’ environmental credentials is an
increasingly important differentiator in our discussions with
customers. Our sustainable product innovation enables us
to help customers respond to new regulatory requirements
and meet their own targets for sustainable packaging.

Maspex
Maspex is the market leader in non-carbonated soft drinks in
Poland and has been a SIG customer since 2001. The close
relationship developed over the years has enabled us to work
together on product development in order to meet consumer
needs.

When Maspex wanted to refresh consumer appeal for their
natural fruit juice range, they decided to introduce
combidome for the first time in Poland. This solution offered
differentiation and a new level of convenience. Together SIG
and Maspex developed new concepts aimed at attracting new
consumer groups and leveraging SIG’s volume flexibility.

With the installation of three SIG filling machines, Maspex has
successfully launched a new product range for its popular
Tymbark brand, including most recently 500ml on-the-go
vegetable juice drinks.

See how Maspex is promoting the new Tymbark range here:

Watch video

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsRegional review: EMEA continued

Almarai
With Almarai, one of Saudi Arabia’s largest
global food and beverage producers, the joint
venture piloted a first-in-industry integrated
digital solution for asset monitoring and
service delivery based on predictive analytics.
Developed in partnership with GE Digital,
the Plant 360 Asset Management solution’s
objectives are to increase asset availability,
production reliability and overall equipment
effectiveness.

SIG Combibloc Obeikan is playing a leading role
in industrial IoT with expanded connectivity to
monitor remotely over 80% of production by
MEA filling machines.

This digital connectivity enables the transition
of customers’ filling machines from traditional
preventative to condition-based maintenance,
targeting increased line availability and
improved asset utilisation.

Watch video

Growth through partnership in Middle East Africa
SIG Combibloc Obeikan’s geographic territory spans
70 countries in Middle East Africa (MEA), with revenue
currently generated in 17 countries, the most significant
of which are Saudi Arabia, South Africa, Egypt, Algeria
and Iraq. There is further potential for expansion in
selected markets.

The diversity of MEA means catering to the needs of
a wide variety of consumers and customers. The Gulf
states and South Africa are more sophisticated markets,
with relatively high incomes and demanding consumers
and customers. Sub-Saharan Africa generally is more
focused on affordability, with growth driven by rising
incomes and urbanisation.

Our performance in 2019
Rising interest in sustainability in Europe
In 2019, we were again able to grow our sales slightly in
a market expected to be flat to slightly declining in some
categories. Our outperformance reflects our format and
volume flexibility, competitive total cost of ownership and
the innovation and service we offer our customers.

We continued to win new customers including Wartmilk,
a district dairy co-operative in Poland and Juustoportti, a
family-owned Finnish dairy company. Furthermore, we
installed additional capacity with customers with whom
we only recently established a relationship. These include
Pfanner, an Austrian premium manufacturer of juices
exporting to many countries, and Covap, a large dairy
cooperative in Spain supplying a leading retailer. In order
to qualify as a strategic partner of Covap, we needed to
pass a 24-month system and performance test. We were
indeed able to demonstrate the strength of the SIG
system with the highest system quality level and to show
that we reduce filling costs for the customer through our
superior line efficiency.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsThe joint venture continued to partner with customers to
drive innovation, building on the value proposition pillars
of differentiation, innovation and smart factory solutions.
These solutions are supported by the recently
inaugurated flagship innovation and reliability centre
at the Dubai HQ.

The value proposition was brought to life through the
launch of the first combismile pack in MEA, marking a
milestone in SIG Combibloc Obeikan’s partnership with
Pioneer Foods in South Africa. The launch expands
Pioneer Foods’ portfolio into the premium segment
through its Ceres range of juices and caters for the
growing trend in South Africa towards on-the-go
consumption.

In partnership with FairCape, the first EcoPlus pack was
launched in the MEA region, emphasising SIG Combibloc
Obeikan’s commitment to protecting the environment
and fostering sustainability.

Further diversification into dairy was evidenced in Nigeria
with the launch of Hollandia evaporated milk in
partnership with Chi Limited. The success of this launch
was the result of a thorough understanding of market
pricing requirements, enabling the customer to hit the
right price point while enhancing their brand’s presence
on the shelf and catering to consumers seeking
convenience.

Regional review: EMEA continued

In 2019, a number of brands were attracted by the
sustainability of our packaging. When Candia, part of
the leading French dairy co-operative SODIAAL, chose
SIGNATURE PACK for its organic milk, the pack received
the French Packaging Award in the environmental
category. ALDI in Spain chose EcoPlus, our first
aluminium-free carton allowing a CO2 reduction of up
to 28%, for its Milani long life milk.

Sustainability is driving the adoption of combidome
for water, using SIGNATURE packaging material. The
combidome format offers the same advantages as a
bottle in terms of smooth pouring and ease of drinking
straight from the carton. The full barrier needed for
water is provided by an ultra-thin layer of ASI-certified
aluminium foil. This packaging has been successfully
launched for premium mineral water by DRINKS3,
in support of their goal of becoming the UK’s lowest
carbon footprint drinks brand by 2022. Unilever has
also launched the pack for a range of flavoured waters
under their start-up brand B-Better®.

Return to growth in Middle East Africa
2019 saw a recovery in a number of markets in MEA after
a challenging macroeconomic and political environment
in 2018, notably in oil-dependent economies. The
improvement in the external macroeconomic
environment coupled with a strategy centred around
growth, diversification and efficiency resulted in
increased sales and profits.

The primary driver of growth was the existing customer
base, which is being augmented by geographic
expansion into new markets in Sub-Saharan Africa
and portfolio diversification.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsRegional review: APAC

FAVOURABLE DEMOGRAPHICS

Fast innovation cycles

€667m

Core revenue 2018: €598m

+6.0%

change at constant currency

Market overview
Millions of new consumers create multiple growth
opportunities
Most countries in the Asia Pacific region continue to
show positive macro trends, with economic growth
bringing higher living standards. Across many markets in
South East Asia and India, millions of people are only
now starting to consume packaged food and beverages.
This rise of these new consumers, driven by rising
disposable income, urbanisation and new consumption
habits, represents a huge opportunity for our industry.

At the same time, young and growing populations are
adopting modern lifestyles, with a focus on convenience
and more on-the-go consumption. Consumers are also
increasingly aware of health and wellness issues and are
looking for premium and higher quality products, with
sustainability credentials also of growing importance.

The liquid dairy market – which accounts for most of
SIG’s business in Asia Pacific – continued to expand in
2019. In China, ambient high-viscous drinking yogurt
remains the fastest-growing product category and is
benefiting from the ongoing trend towards
premiumisation.

Our performance in 2019
Premiumisation in liquid dairy drives growth
In 2019, revenue growth was driven in particular by
China, where combismile continued to expand, and
by Thailand and Indonesia.

technologies, such as drinksplus, to address premium
segments and offer new experiences to consumers. In
Thailand, DutchMill launched soy milk with chewable
cereals under the DNA brand, while in Vietnam NutiFood
launched NutiKul, a drinking yogurt with particulates.

We continue to grow with existing customers, with
market momentum amplified by the launch of new
products and formats enabling expansion into new
categories. Following the launch of combismile, we have
a firmly established position in the premium market in
China. And in 2019 we signed a new contract with a
strategic customer in Vietnam to place our first
combismile filler in South East Asia in 2020. Heat&Go,
the only carton that can be heated in a microwave,
continued to enjoy success in South Korea for products
that can be consumed either warm or cold, such as
coffee or soy milk.

We continued to expand in the liquid dairy market across
the region. New customer wins included YonSei in South
Korea, who shifted part of their liquid dairy filling from
a competitor to SIG. We also won new customers who
are focusing on premium and innovative products. In
Thailand, Tofusan chose SIG for the launch in cartons of
its premium organic soy milk – a product usually sold in
PET bottles – targeting busy, health-conscious
millennials. In South Korea, we placed a filler with
Seokang, whose innovation focus includes oat milk,
rice milk and protein shakes.

2019 was marked by a wealth of new product
introductions leveraging the SIG system and proprietary

Our confidence in the further growth potential of
both China and the rest of the Asia Pacific region is
demonstrated by our decision to build a second plant
in Suzhou.

Regional Tech Centre in China attracts customers
from across the region
In November 2019, we were proud to officially open our
new Asia Pacific Tech Centre in Suzhou which will cater
to the faster innovation cycles in Asia Pacific and
Oceania. Here we are testing innovative structures,
shapes and product formulations. We are also driving
the expansion of combismile into new and growing
categories such as vegetable protein drinks and ambient
flavoured milk.

Customers have been visiting the Tech Centre since the
end of 2018, in order to test for themselves our total
solutions offering comprising upstream, downstream
and formulations. The Tech Centre also has a world-class
facility for machine assembly and training services.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsRegional review: APAC continued

Customer success story
One of our key customers in South East Asia is the Dairy Farming
Promotion Organization of Thailand (DPO). DPO was founded in the
1960s following a visit to Denmark by King Rama IX, with the mission
of promoting dairy farming in Thailand. DPO Is now a state-owned
enterprise with a market share of close to 50% for mainstream milk.

SIG’s partnership with DPO started in 2004 and today we provide
close to 75% of their aseptic packaging – two of DPO’s four aseptic
plants run entirely on SIG filling machines. One of these is the flagship
Muaklek plant, where a programme of expansion and modernisation
was undertaken in 2016. SIG was awarded full management of the
turnkey project for aseptic filling in partnership with JBT/Stork. DPO
was convinced by the line efficiency offered by SIG – 24,000 packs per
hour – together with the volume flexibility and low waste rates.

We have a true partnership with
SIG. SIG’s reliability and high
efficiency enable DPO to receive
the increasing quantities of raw
milk, and produce and deliver
the very high quality of Thai
Denmark products.
Dr Narongrit,
DPO Director

Expanding in new geographies
India is one of the world’s fastest growing markets for
aseptic carton packaging, with rising disposable income
driving demand for convenient and differentiated
products. The growth potential remains vast, with over
90% of liquid dairy consumption still in unpackaged form.

Customers value SIG’s filling size flexibility in a rising cost
environment as it enables them to offer products at the
right retail price point. Our first two filling machines in
India, for non-carbonated soft drinks, began operation in
2018. In 2019, we were able to further build our presence
with the signature of a liquid dairy contract with Amul,
the largest dairy player with over 60% share of the white
milk market. We also entered into new projects with
Dabur, the largest juice and nectar player, and with the
Ladhani Group.

In 2018, we established a joint venture with Dai Nippon
Printing in Japan, one of the most highly developed
markets for food and beverages in the world, where
innovation is key to success. In 2019, the pioneering dairy
manufacturer Moriyama became the first Japanese
customer to run commercial production using SIG filling
technology and packs, offering premium ready-to-drink
products including cocoa and organic tea and coffee.

On 29 November 2019, we successfully completed the
acquisition of Visy Cartons in Australia, giving us direct
access to the Australian and New Zealand markets.

Watch video

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsRegional review: AMERICAS

DIVERSITY IN DAIRY

From affordable to premium products

€330m

Core revenue 2018: €297m

+9.7%

change at constant currency

Market overview
A vast array of consumers with different needs
The region covers a vast array of consumers with
different needs, demanding appropriate go-to-market
strategies in each area.

Carton represents over 70% of total ambient packaging
in our key South American markets. In Brazil, the world’s
second-largest aseptic carton market, there is a focus on
meeting the key consumer trends of affordability as well
as naturalness and authenticity. The flexibility of our
filling lines is a key tool when it comes to affordability,
as customers can rapidly switch between sizes and
products depending on consumer spending power.

Digitalisation is also playing an increasing role as
consumers seek a customised experience and assurance
on the origin of the product they are drinking. And, as
elsewhere in the world, consumers in South America are
increasingly mobile.

Customer success story
In Mexico, there are significant growth
opportunities in liquid dairy through serving the
needs of both price conscious and premium
consumers. The Mexican white milk market is
highly concentrated, with two players accounting
for over 75% of the market.

Our partnership with Alpura, the second-largest
dairy co-operative, began in 2015 with the
installation of our first filler for evaporated milk.
Further expansion of the partnership has been
underpinned by the SIG offer of flexibility,
innovation and sustainability. Successful launches
with Alpura have included combiblocMagnum
with superior print quality, resulting in more
impact at the point of sale and higher value
perception by the consumer. Most recently
combiblocMidi was launched with the Forti Plus
brand for recombined milk.

In 2019, Alpura became our second largest
customer in Mexico with a total of seven
SIG filling machines.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsRegional review: AMERICAS continued

Mexico continues to see strong growth in white milk
consumption driven by the growing share of recombined
milk, which is an affordable ready-to-drink dairy formula.
SIG is serving the key players in a concentrated market
and we are growing share through the affordable
solutions we are able to offer.

The USA and Canada are predominantly fresh milk
markets but a new opportunity has arisen with the
development of plant-based milks, popular with health-
conscious consumers who are willing and able to pay a
price premium. Products with health and wellness claims
are significantly outpacing average retail growth rates.
This development has coincided with the rise of small
brands offering authenticity and differentiation. These
brands often do not have the means to invest in their
own filling machines and therefore use co-manufacturing
models. SIG has strong relationships with a number of
North American co-manufacturers and with them we are
developing new formats and designs suitable for new
product categories. Our filling technology with its low
waste rates is a valuable asset when filling products with
valuable ingredients such as nuts and grains.

2019 in review
Offering affordability and authenticity
Sales growth in 2019 was robust across the region.

We were able to achieve growth in Brazil despite
continuing uncertainty in the macro-economic
environment. We continue to demonstrate our strength
in enabling customers to fill high-viscous products such
as sweetened condensed milk. These products are
benefiting from a return to cooking at home, including
the preparation of home-made desserts.

Catering to the need for affordable on-the-go
consumption, we launched 150ml formats for still fruit
drinks and flavoured milk with two of our key Brazilian
customers.

With the rising trend in South America towards
naturalness and authenticity, consumers are seeking
products and brands with values to which they can
connect. They want to know what they are buying and
where it comes from. Dairy producer Languiru has
launched Origem Milk, a new premium milk which uses
end-to-end traceability to track the milk from selected
farms to the shelf. By scanning a QR code printed on the
package, consumers can identify the farm at which the
milk was produced and the time of collection, and can
follow its path all the way through to packaging.

In the USA, we continue to penetrate new high value
categories with start-ups and innovative brands. By
leveraging differentiated packaging formats like
combidome, we are enabling our customers to
communicate the value and uniqueness of their
products. We introduced combismile as a new
generation of on-the-go packaging for ready-to-drink
beverages, with the ambition of capturing additional
growth within the on-the-go nutritional beverages
category. One example is the Canadian brand Rumble®,
which has chosen combismile for its line of enhanced
protein drinks, or Supershakes. combismile is also
bringing innovation to more traditional categories, such
as the launch by Maple Hill of its 100% grass fed organic
milk and chocolate milk in a single serve format.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsResponsible business review

GOING WAY BEYOND GOOD

SIG’s sustainable business growth is
underpinned by our commitment to go
Way Beyond Good – by doing business
responsibly, using responsibly sourced
materials and investing in sustainable
product innovation.

Targeted reduction

60%

Scope 1 and 2 emissions

Since 2018

100%

renewable electricity

We set out on our journey Way Beyond Good four years
ago. In 2017, we formed our Responsibility Advisory
Group, an independent body to challenge and support
us on this journey. Since then, we have achieved some
major milestones as we work towards our ambitious
2020 targets.

In 2019, we consolidated our commitment and continued
to push the boundaries with more firsts for the industry.
We saw our efforts start to pay dividends – for the
environment, society and our business – as more
customers opted for our most sustainable solutions.
We are developing a new plan to further promote a
sustainable food supply system that puts more into
society and the environment than it takes out.

Tackling climate change
We recognise the urgent need for ambitious global
action on climate and we are accelerating our timeline
to cut emissions in line with the 1.5°C global warming
target. Our commitment to a 60% reduction in Scope 1
and 2 emissions by 20301 has been approved by the
Science-Based Targets Initiative.

We already use 100% renewable electricity for
production and offset the rest of the energy needed to
make our packs. To reduce emissions even more, we are
looking to source more energy directly from renewable
sources and expand on-site renewables, including our
award-winning rooftop solar array in Thailand.

Our packs have a lower carbon footprint than alternative
types of packaging, largely because they are made mainly
out of paperboard from forests that absorb carbon as
they grow. The latest independent life cycle assessment
confirmed that beverage cartons compare favourably
with reusable glass bottles – and outperform PET bottles
including those with recycled content – across the UHT
milk and soft drink market segments. Our most
sustainable solutions have an even lower carbon
footprint – up to 58% lower than our standard packs.2

Moving to more plant-based polymers and eliminating
the need for aluminium foil in our packs will help us cut
carbon even further. The polymers in SIGNATURE PACK
100 are linked to 100% forest-based materials3 and we
already offer some aluminium-free packs. However, an
ultra-thin aluminium foil barrier is still needed to protect
some products and we are minimising the associated
environmental impact by sourcing foil certified to the
Aluminium Stewardship Initiative (ASI) standard – an
industry first.

Helping forests to thrive
Our main raw material, paperboard, is sourced from
sustainably managed forests. This enables us to
regenerate rather than deplete scarce natural resources,
as well as helping to mitigate climate-related risks to our
business.

From a 2016 baseline.

1
2 See our website for the results of independent life cycle assessments.
3 Polymers in SIGNATURE PACK are linked to wood-based residues from paper

manufacturing via a mass balance system.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsResponsible business review continued

Forest Stewardship Council (FSCTM) certification helps to
drive responsible forestry practices, ensuring trees are
continually replanted and natural habitats are protected.
We source all our paperboard from FSCTM-certified mills
and we aim to have the FSCTM label on 100% of our packs
by the end of 2020.

Driving sustainable product innovation
Going Way Beyond Good has fuelled innovation to meet
our customers’ evolving needs. This year, we launched
the first ASI-labelled packs, introduced the first paper
straw solutions for carton packs and entered a
partnership with one of our suppliers to enable us to
offer the world’s first beverage cartons made with
recycled polymers produced from post-consumer
plastic waste.

We have made sustainability a core driver for our
product innovation and our investment is paying off,
as more customers turn to our solutions in response
to growing consumer demand for more sustainable
packaging.

In 2019, we saw increased uptake of our most
sustainable products among big brands and major
retailers, with new product launches by ALDI and Candia
for dairy and by Riedel for fruit juices. Sales of our
low-carbon, aluminium-free combibloc EcoPlus have now
surpassed the one billion mark and we are seeing more
customers opt for our SIGNATURE PACK solution.

We also help customers make their own operations more
sustainable with our highly efficient filling machines –
which have the lowest waste rate in the industry – and
our technical service solutions. Our Fill Beyond Good
marketing campaign is driving increased uptake of
eco-efficient technical upgrades by highlighting the
potential resource, emissions and cost savings.

Contributing to a circular economy
We are contributing to a circular economy by designing
out waste, using mainly renewable materials and
supporting recycling. All our packs are fully recyclable
and we are committed to partnering with stakeholders
to support collection and recycling of used beverage
cartons.

In 2019, we launched new recycling partnerships with
customers in Indonesia and Mexico, established a new
Global Recycling Alliance for Beverage Cartons and the
Environment (GRACE) with industry partners and
became a founding member of the 4evergreen alliance
to boost the role of fibre-based packaging in a circular
economy. Our innovative so+ma partnership in Brazil is
bringing added social benefits by offering rewards for
recycling in low-income communities.

Delivering safe nutrition
Customers use our aseptic packs to deliver nutritious
food to consumers around the world in a safe,
sustainable and affordable way. We produced over
38 billion SIG packs this year and we will reach more
people around the world as our business continues
to grow.

We are also going further by working with partners
to bring quality nutrition to those most in need. Our
flagship Cartons for Good project is underway in
Bangladesh, using SIG packs and a unique downsized
filling machine to turn farmers’ surplus crops into school
meals for children in deprived communities.

Jorge exchanged points collected under the so+ma partnership for a
mobile technical assistance course.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsResponsible business review continued

Supporting communities
We want to create positive change for the communities
we touch – where we source, make and sell our products.
We are committed to upholding the principles of the
United Nations Global Compact and to supporting the
Sustainable Development Goals.

All our suppliers must meet strict environmental, ethical
and labour standards, and certifications such as FSCTM
and ASI reinforce requirements on responsible sourcing
for key raw materials. Our own manufacturing sites
complete regular SEDEX audits to assure customers that
SIG packs are made responsibly.

We strive to lead the industry on health and safety.
We aim to offer an inclusive working environment that
enables all our people to develop and thrive. In 2019, we
introduced the SIG Shine awards to recognise their
efforts. We also ran campaigns to encourage our people
to become involved in local projects and create positive
change for communities around the world.

Going further
We want our packaging to deliver nutritious food and
drink to more people every day, to revitalise and restore
our natural world, and to help shape a truly sustainable
food system.

To do this, we must go further than ever before. We must
go beyond simply using less resource, creating less waste
and causing less harm to replace what we use, give more
than we take and make a healthier planet.

We are developing ambitious new targets for 2025 and
2030 to help us go Way Beyond Good. In doing so, we
aim to create a more sustainable future for people, for
the planet and for our business.

Read more about Way Beyond Good on our website
and in our latest Corporate Responsibility Report at:
www.sig.biz/en/responsibility/way-beyond-good.

As part of our WAY BEYOND GOOD Engagement Programme, 80 SIG
employees from Thailand planted 1,500 mangrove trees on an area of
around 2,500 square metres in Rayong Province.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsOpportunity stories

SIG AND SO+MA
IN BRAZIL

Watch video

Innovative programme
to reward recycling
Highlights
• Turning waste into essentials for low-income

communities

• Partnership to support the collection and recycling

of beverage cartons

SIG’s innovative partnership with the social enterprise
so+ma in Brazil is promoting recycling by enabling
people in the city of Curitiba to exchange waste
packaging for reward points they can use to pay for food
and other essentials – or for training courses. Reward
points are earned based on the weight of waste
collected. In 2019, over 81,000 kg of material were
received.

The so+ma partnership aims to stimulate a change in
attitudes by demonstrating the value of recycling to
individuals and communities.

The idea of rewarding people is
very clever. It is an innovative green
exchange. We are launching a
solution that is adding value for
people, offering vocational courses
that will help families, young people
and the unemployed advance and
improve their quality of life.
Rafael Greca
Mayor of Curitiba

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsKEY PERFORMANCE HIGHLIGHTS

Core revenue

Core revenue growth1

€1.77bn

2018: €1.64bn

+5.2%

2018: +6.4%

2018

2019

2018

2019

Reported core
revenue growth

7.5%

2018: 3.4%

2018

2019

Adjusted EBITDA

Adjusted EBITDA margin ROCE

€485m

2018: €462m

27.2%

2018: 27.5%

2018

2019

2018

2019

22.8%

2018: 20.6%

2018

2019

Adjusted net income

Adjusted EPS2

Free cash flow

€217m

Reported €107m

1 At constant currency.
2 Diluted.

€0.68

EPS2 €0.33

€267m

Per share2 €0.83

Share information
for the year ended 31 December 2019

Market capitalisation
CHF 4.95bn
Number of issued shares
320,053,240
Share price as at 31 December
CHF 15.46
Total shareholder return in 2019
52.9%3

Share price high
CHF 15.58
Share price low
CHF 9.89
Average daily volume
654,297

e
c
i
r
p
e
r
a
h
s
G
S
o
t
d
e
x
e
d
n

P
S

28/12/2018

28/03/2019

28/06/2019

30/09/2019

30/12/2019

SIG Combibloc

Swiss Performance Index

3 Dividends reinvested.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancials

Chief Financial Officer’s statement

STRONG REVENUE GROWTH

Introduction
We remain on track to achieve our strategic objective of
above market growth, with core revenue increasing by
5.2% at constant currency in 2019. We are maintaining
best-in-class profitability while continuing to invest in
innovation and to expand into new markets and
categories. Our strong cash flow generation is enabling
us to invest in the business while paying an attractive
dividend and reducing net leverage. The high returns on
our investments are illustrated by a post-tax return on
capital employed of 22.8% in 2019.

Financial performance
Revenue evolution
Over the past ten years, we have diversified our
geographic exposure. The share of third-party core
revenue outside EMEA has increased from 28% in 2009
to 57% in 2019. Demographic trends, with urbanisation
and rising disposable incomes, continue to drive demand
for packaged food and beverages in Asia Pacific and
Americas. Our geographic diversification in these
segments has been underpinned by the expansion of
our local production facilities.

Increased geographic core revenue diversity

Revenue growth outside EMEA
Increased geographic (core) revenue diversity (€ millions)

28%

57%

72%

43%

2009

Outside EMEA

2019

EMEA

2009

2019

841

234 92

755

667

330

EMEA

APAC

Americas

Samuel Sigrist
Chief Financial Officer

Our strong cash flow
generation is enabling
us to invest in the
business while offering
an attractive dividend to
our shareholders.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsChief Financial Officer’s statement continued

Core revenue 2019
by segment

Sleeve & closure revenue 2019
by end market

€330m
2018: €297m

€755m
2018: €733m

8%
2018: 8%

70%
2018: 69%

€667m
2018: €598m

22%
2018: 23%

EMEA

APAC

Americas

NCSD

Food

Revenue by segment
In 2019, core revenue increased by 7.5% (5.2% on a
constant currency basis) to reach €1,766.9 million (total
revenue €1,783.9 million). Visy Cartons, consolidated
from 29 November, contributed 20 basis points to the
growth rate.

The difference between core revenue and total revenue
is diminishing, with the phasing out of folding box board
sales from our Whakatane Paper Mill largely complete.
Whakatane is now primarily an internal supplier of liquid
paper board.

All segments contributed to core revenue growth. EMEA
constant currency growth of 2.8% reflects continued
growth in the European business as filling machines
placed with new customers start to ramp up. Markets
in the Middle East and Africa improved with a pick-up
in economic activity in several markets.

We saw revenue growth in APAC of 6.0% on a constant
currency basis, driven primarily by China, Thailand and
Indonesia. In China, we were able to participate in and
contribute to expansion by one of our key customers. In
Thailand, we saw successful new product launches by
our customers and an expansion of their export market
opportunities.

Strong growth in Mexico, with recent filler installations
ramping up, and the deployment of new filling machines
in Brazil contributed to constant currency growth of 9.7%
in Americas.

SIG revenue split1

Fillers 6%

Sleeves 87%

Service 7%

1 Revenue split based on revenue generated through sale of system components and

sleeves & closures for 2019.

Seasonality
Our business experiences moderate seasonal
fluctuations, primarily due to seasonal consumption
patterns (for example the Chinese New Year) and
performance incentive programmes relating to sleeves
that generally end in the fourth quarter. This results in
relatively low sales in the first quarter, with inventory
returning to normal levels and the settlement of
performance incentives that have been accrued over the
course of the year. These factors contribute to an
increase in working capital levels and lower cash flows
from operating activities in the first quarter.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsChief Financial Officer’s statement continued

Adjusted EBITDA 2019
by segment

€84m
2018: €81m

€242m
2018: €245m

Net capex 2019
by segment

€38m
2018: €36m

Fillers 2019
in field (units)

Adjusted EBITDA margin1

€30m
2018: €36m

151
2018: 145

678
2018: 659

1,233

EMEA

APAC

Americas

SIG Group

2019

32.1%

33.5%

25.5%

27.2%

2018

33.5%

30.3%

27.2%

27.5%

€229m
2018: €191m

€49m
2018: €103m

404
2018: 376

EMEA

APAC

Americas

EMEA

APAC

Americas

EMEA

APAC

Americas

EBITDA
Revenue growth was the main driver of the increase
in adjusted EBITDA from €461.5 million in 2018 to
€485.4 million in 2019. The negative foreign currency
impacts experienced in 2018 were partially reversed,
with a positive contribution from currencies of €15.5
million in 2019.

Raw material costs had a €4 million positive impact on
adjusted EBITDA in 2019. We were able to negotiate
lower prices with selected suppliers and to benefit from
unhedged polymer volumes as commodity prices
weakened. This more than offset year-over-year price
increases in the hedged portion of our aluminium and
polymer contracts.

The continued execution of operational excellence
programmes in our production facilities led to significant
production efficiency gains. These were partially offset
by additional freight costs in Americas in the first half of
2019, resulting in a net benefit of €7 million.

SG&A increased by €21 million, primarily driven by the
costs of being a public company, higher employee
variable income provisions reflecting a stronger
operating performance, and headcount increases in

growth markets. R&D investments as a proportion of
revenue were steady at approximately 3%.

Cash flow generation at our joint ventures in the Middle
East accelerated during the year. In the fourth quarter we
completed a refinancing which allowed us to benefit
from this strong cash flow performance. As a result, the
dividend distribution in the fourth quarter of 2019 was
higher than expected. However, for the full year the
dividend was €3 million lower than in 2018. This
reduction is reflected in the adjusted EBITDA margin for
EMEA, which was also affected by unfavourable mix
effects in the first half of the year and by higher SG&A
costs.

The adjusted EBITDA margin in APAC increased
significantly to 33.5% in 2019, reflecting operating
leverage and a positive currency effect. The adjusted
EBITDA margin in Americas was lower at 25.5%, with a
negative impact from the depreciation of the Brazilian
Real. In addition, the USA was affected by high freight
costs in the first half of the year due to a strike in Europe
and by costs relating to the ramp up of combismile.

1 Adjusted EBITDA divided by revenue from transactions with external customers.

Capex
Net capex as a percentage of total revenue decreased
from 8.5% in 2018 to 6.2% in 2019. Investments in
property, plant and equipment was broadly unchanged
compared with 2018. Gross filler capex was lower after a
period of significant filler investment in APAC following
the launch of combismile. The reduction in net filler
capex reflects a proportionately higher level of upfront
cash than in previous years.

Group capex, reduced by upfront cash

Upfront cash €72m

Gross ﬁller €124m

PP&E €58m

We placed 75 filling machines in the field in 2019. Taking
account of withdrawals, the number of filling machines
globally reached 1,210, a net increase of 30. The
acquisition of Visy Cartons added 23 filling machines,
bringing the total to 1,233.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsChief Financial Officer’s statement continued

Foreign currencies
Whilst our reporting currency is the Euro, we generate a
significant portion of our revenue and costs in currencies
other than Euro. Increases or decreases in the value of
the Euro against other currencies in countries where we
operate can affect our results of operations and the
value of balance sheet items denominated in foreign
currencies. Our strategy is to reduce this exposure
through the natural hedging that arises from the
localisation of our operations. In addition, we
systematically hedge all key currencies against the
Euro using a 6- to 12-month rolling layered approach.

Return on capital employed
Return on capital employed (“ROCE”) is used by
management to measure the profitability of the Group
and the efficiency with which its capital is employed.
Management believes that ROCE is helpful to investors in
measuring value creation. ROCE is defined as ROCE
EBITA divided by capital employed.

Post-tax ROCE, computed at an unchanged reference tax
rate of 30%, increased by 220 basis points in 2019 to
22.8%. At the adjusted effective tax rate of 26% in 2019,
ROCE reached 24%. The increase was primarily
attributable to the increase in adjusted EBITDA.

Net income
Net income increased from a loss of €83.9 million in 2018
to a profit of €106.9 million in 2019. The net loss in 2018
was mainly due to significant costs relating to the IPO
and the refinancing of debt. As a result of the refinancing,
interest expense in 2019 was approximately €70 million
lower at €34 million. The positive operating performance
also contributed to the improvement in net income.

Adjusted net income increased from €148.9 million in
2018 to €217.4 million in 2019. This increase was driven
by the same financing and operating performance
factors as net income and by a decrease in the adjusted
effective tax rate from 33% in 2018 to 26% in 2019. The
decrease related primarily to interest payments under
the previous financing arrangements which were not tax
deductible in certain jurisdictions.

(In € million)

Profit/(loss) for the period
Non-cash foreign exchange impact of
non-functional currency loans and
realised foreign exchange impact due
to refinancing

Amortisation of transaction costs
Net change in fair value of derivatives
Net effect of early redemption of notes
Net effect of early repayment of term loans
PPA depreciation and amortisation
Adjustments to EBITDA:

Replacement of share of profit or loss

of joint ventures with cash dividends
received from joint ventures

Restructuring costs, net of reversals
Unrealised (gain)/loss on derivatives
Transaction- and acquisition-related

costs

Other

Tax effect on above items
Adjusted net income

2019

106.9

2018

(83.9)

(1.2)
2.8
1.5
–
–
136.5

5.3
1.8
(10.1)

4.3
4.4
(34.8)
217.4

(58.8)
11.0
7.4
82.5
56.3
140.1

14.8
4.3
23.1

19.7
4.5
(72.1)
148.9

(€ million)

Adjusted EBITDA
Dividends received from joint ventures
Depreciation of PP&E
ROCE EBITA

Current assets (excluding cash

and cash equivalents)
Current liabilities (excluding
interest-bearing liabilities)

PP&E
Capital employed

Pre-tax ROCE
Management estimate tax rate 30%
Estimated post-tax ROCE

2019

485.4
(20.7)
(177.2)
287.5

2018

461.5
(23.7)
(172.3)
265.5

462.2

407.3

(653.0)
1,073.1
882.3

32.6%
30.0%
22.8%

(574.3)
1,068.8
901.8

29.4%
30.0%
20.6%

Cash flows
Strong operating cash flow in 2019 was primarily driven
by the reduction in interest payments following the

Cash conversion

77%

refinancing at the time of the IPO in 2018.
Factors impacting cash flows from
operating activities in 2018, such as IPO
transaction costs and early bond
redemption fees (totalling €55.9 million),
did not recur in 2019. A stronger operating performance
in 2019 also contributed to the cash flow generation. In
addition, free cash flow performance in 2019 benefited
from the decrease in net capital expenditure explained in
the capex section above.

Net working capital as a percentage of total revenue
increased from 6.8% in 2018 to 8.4% in 2019. The strong
top line performance resulted in some working capital
outflow in 2019, whereas in 2018 there was a working
capital inflow. End 2019 working capital includes Visy
Cartons, for which sales were only consolidated for one
month. This increased the net working capital to revenue
ratio by 90 basis points.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsChief Financial Officer’s statement continued

Net debt
(In € million)

Gross total debt

Cash and cash equivalents

Net total debt

Total net leverage ratio

2019

2018

1,614.4

1,618.7

261.0

157.1

1,353.4

1,461.6

2.8x

3.2x

Leverage

2.8X
~2.2%

Cost of debt

The Group is financed by term
loans at a cost of approximately
2.2% as of 31 December 2019. A net
leverage improvement of 0.4 turns
year on year was driven by adjusted
EBITDA performance and by higher
cash balances at the end of the
year. The impact on net leverage of
implementing the new IFRS lease
accounting standard in 2019 was
not material (€15.9 million).

In October 2019, Moody’s upgraded their rating of SIG
Combibloc Group AG to Ba2 from Ba3. In December,
S&P raised their outlook to Positive with an unchanged
rating of BB+.

Moody’s

S&P

Company
rating

As of

Ba2

BB+

Stable

Oct 2019

Positive

Dec 2019

Other
Acquisitions
The Group acquired 100% of the shares of Visy Cartons
Pty Ltd. (“Visy Cartons” or “Visy”). Refer to note 27 of
the consolidated financial statements for an overview
of the transaction. The acquisition will strengthen SIG’s
presence in Oceania, allowing full access to the beverage
carton market in Australia and New Zealand. Synergies
are expected from supply chain efficiencies and Visy’s
use of the SIG’s latest technologies and solutions.

Dividend
To allow our shareholders to participate in the
cash generative nature of our business, we have set a
dividend payout target of 50 to 60% of adjusted net
income. The dividend proposed for 2019 means that
we will already move into this range.

+52.9%

TSR 1

CHF 0.38

Dividend

At the Annual General Meeting
to be held on 7 April 2020, the
Board of Directors will propose
a dividend payment for 2019
of CHF 0.38 per share, totalling
CHF 121.6 million (equivalent
to €112.1 million as per the
exchange rate on 31 December
2019), payable out of the
capital contribution reserve.

Outlook
For 2020, the Company expects core revenue growth
at constant currency towards the lower end of a 6 to
8% range, including the full year consolidation of Visy
Cartons. The adjusted EBITDA margin is expected to be
towards the lower end of a 27 to 28% range, taking into
account continued investments in geographic expansion
and innovation and a lower level of profitability at Visy
Cartons prior to the realisation of synergies.

As construction of the new plant in China proceeds, net
capital expenditure is forecast to be at the upper end of
the targeted 8 to 10% of revenue range. Free cash flow
may therefore be somewhat lower than in 2019.

The Company maintains its medium-term guidance of
core revenue growth of 4 to 6% at constant currency and
an adjusted EBITDA margin of around 29%. Net capital
expenditure should remain within 8 to 10% of revenue.
The Company plans to maintain a dividend payout ratio
of 50 to 60% of adjusted net income while reducing net
leverage towards 2x.

Samuel Sigrist
Chief Financial Officer

Alternative performance measures
For definitions of alternative performance measures and their related reconciliations that
are not included in this statement, please refer to the following link https://www.sig.biz/
investors/en/performance/key-figures

1 Dividends reinvested.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsRISK MANAGEMENT

In addition to common business-related risk factors, we
pay close attention to other significant risks we may be
exposed to such as sustainability, political, reputational,
regulatory and compliance risks. We have developed
instruments and know-how that helps the Group to
identify and assess such risks.

identify and evaluate risks. Mitigating actions have also
been discussed during these risk management
workshops with subsequent sign-off by the Board of
Directors. In addition, a separate risk workshop was held
with the Group Executive Board in 2019 to discuss and
validate the overall risk portfolio.

We have implemented a risk management process led by
the Group General Counsel and approved by the Board
of Directors, which sets out a structured process to
systematically manage risks. In this process, various risks
are identified, analysed and evaluated and risk-control
measurements are determined. The objectives of the risk
management process are to continuously ensure and
improve compliance with laws and regulations as well as
corporate governance guidelines and best practices. The
risk management process is also designed to protect the
Group from a loss of confidence and/or public
reputational damage resulting from, for example,
inadequate or failed internal processes or systems.
Furthermore, the risk management process facilitates
disclosures to key stakeholders of potential risks. At the
same time, the process creates an awareness of all key
executives of the magnitude of risks and provides them
with information for effective decision-making. As part of
this process, risk management workshops with regional
and functional leadership teams were held in 2019 to

The monitoring and control of risks are supported by our
internal control system for financial reporting, which
defines measures that reduce potential risks.
Management is responsible for implementing, tracking
and reporting of risk mitigation measures, including
periodic reporting to the Audit and Risk Committee and
the Board of Directors. Each identified material risk has a
risk owner at management level that is responsible for
the implementation of risk-management measures in his
or her area of responsibility. Furthermore, each material
risk has a mitigation action owner, mostly in global
functions with regional counterparts to ensure local
implementation.

Risks that could materially impact our business and
financial position and the development of internal
controls to mitigate such risks are regularly discussed
within the Audit and Risk Committee. In addition, the
members of the Audit and Risk Committee periodically
review the internal policies and procedures designed to

secure compliance with laws, regulations and internal
rules regarding insider information, confidentiality,
bribery and corruption, sanctions, and adherence to
ethical standards, and assess the effectiveness thereof.
The Audit and Risk Committee discusses with the CFO
and the Group General Counsel any legal matters that
may have a material impact on the Group’s business or
financial position and any material reports or inquiries
from regulatory or governmental agencies that could
materially impact the Group’s business or financial
position. The Board of Directors is at least annually
informed by the Audit and Risk Committee, with the
support of management, about any major changes in risk
assessment, risk management and any mitigation actions
taken. In 2019, the risk portfolio signed off by
management was discussed with the Audit and Risk
Committee as well as with the entire Board of Directors
in their December meetings.

We carry out an annual risk assessment in conformity
with the Swiss Code of Best Practice for Corporate
Governance. The Group’s risk management systems
cover both financial and operational risks.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsOpportunity stories

ACQUISITION OF VISY
CARTONS IN AUSTRALIA

Acquisition of a leading player in the
Australian beverage carton market

Revenue

~€50m1
€43m1

Acquisition price

Transaction completed
29 November 2019

(1) AUD/EUR exchange rate as at 29 November 2019

Highlights
• Visy becomes part of SIG’s business in the Asia

Pacific region

• Significant scope for expansion in New Zealand

The overall Australia and New Zealand market for aseptic
beverage cartons is expected to grow at around 3% cagr
over the next five years, driven mainly by investments in
dairies for the export of aseptic milk to China and other
Asian countries. In China in particular, demand for
imported premium milk is expected to grow by around
7% cagr. The acquisition of Visy Cartons will enable SIG to
further support its Asian customers who are investing in
or partnering with dairy producers and farms in Australia
and New Zealand.

The acquisition was funded through cash balances and
existing credit facilities. The profitability of Visy is expected
to increase with the realisation of significant synergies
arising from supply chain optimisation and access to SIG’s
latest technologies and solutions.

Visy has an excellent team with a
proven track record and together
we will work to ensure that
customers in Australia and New
Zealand enjoy outstanding service
and access to our leading
technologies.
Lawrence Fok
President and General Manager
of SIG Asia Pacific

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsBOARD OF DIRECTORS

Andreas Umbach
Chairman

Andreas Umbach is a Swiss and German citizen and
serves as the Chairman of the Board of Directors. Mr
Umbach further serves as the chairman of the board of
directors of Landis+Gyr Group AG (SIX: LAND) and until
10 April 2019 as the chairman of the board of directors
of Ascom Holding AG (SIX: ASCN), where he previously
served as a director from 2010 to 2017. Mr Umbach
has been a board member of WWZ AG since April 2013
and has been the chairman of the supervisory board of
Techem Energy Services GmbH since August 2018. Mr
Umbach previously served as a member of the board
of directors of LichtBlick SE from 2012 to 2016. From
2002 to 2017, Mr Umbach was the president and CEO/
COO of Landis+Gyr AG. Prior to serving as CEO, Mr
Umbach served as president of the Siemens metering
division within the power transmission and distribution
group and held other positions within Siemens. Mr
Umbach holds an MBA from the University of Texas at
Austin and an MS (Diplomingenieur) in mechanical
engineering from the Technical University of Berlin.

Matthias Währen

Colleen Goggins

Werner Bauer

Matthias Währen is a Swiss citizen and serves as a
member of the Board of Directors. Mr Währen further
serves as a member of the board of trustees of the
Givaudan Foundation, the HBM Fondation and a
member of the board of directors of Kemptthal
Immobilien Nord AG. Mr Währen previously served as a
member of the regulatory board of SIX Swiss Exchange
from 2006 to 2017, a member of the board of
scienceindustries from 2009 to 2017, a member of the
board of Swiss Holdings from 2015 to 2017 and a
member of the board of directors of various Givaudan
subsidiaries from 2005 to 2017. Most recently, he
served as CFO and a member of the executive
committee of Givaudan SA from 2005 until his
retirement in 2017. Prior to that, he served as the
global head of finance and informatics of the Roche
vitamin division and held a variety of other positions at
Roche, including vice president finance and informatics
at Roche USA, Nutley, New Jersey, head of finance and
information technology at Nippon Roche, Tokyo and
finance director of Roche Korea. Mr Währen started his
career in corporate audit of Roche in 1983. Mr Währen
holds a master’s in economics from the University of
Basel, Switzerland.

Colleen Goggins is an American citizen and serves as a
member of the Board of Directors. Since 2015, she has
served as an advisory board member for the Company.
Ms Goggins also currently serves as a member of the
board of directors of TD Bank Group, where she serves
on the risk committee, a member of the supervisory
board of Bayer AG and a member of the board of
directors of IQVIA, where she sits on the audit and
nominating and governance committees. She
previously served as a supervisory board member for
KraussMaffei from 2013 to 2016 and as a member of
the board of directors of Valeant Pharmaceuticals
International from 2014 to 2016, where she was a
member of the nominating committee and special ad
hoc committee. Prior to that, Ms Goggins worked at
Johnson & Johnson until 2011, where she held various
leadership positions, including worldwide chairman,
company group chairman, and president of the
Johnson & Johnson Consumer Products Company,
among others, and she served as a member of the
executive committee. Ms Goggins holds a bachelor of
science in food chemistry from the University of
Wisconsin and a master’s of management from the
Kellogg School of Management at Northwestern
University.

Werner Bauer is a Swiss and German citizen and
serves as a member of the Board of Directors. Since
2015, he has served as an advisory board member for
the Company. Mr Bauer also currently serves as vice
chairman of the boards of directors of Givaudan SA
and Bertelsmann SE & Co. KGaA, chairman of the
board of trustees at the Bertelsmann Foundation, and
as a member of the board of directors of Lonza Group
AG. Until November 2018 he also served as a member
of the board of directors of GEA-Group AG. Prior to
that, he served in a number of other board positions,
including chairman of the board of directors of Nestlé
Deutschland AG from 2005 to 2017 and chairman of
the board of directors of Galderma Pharma SA from
2011 to 2014, among others. Most recently, Mr Bauer
was the executive vice president and head of
innovation, technology, research & development for
Nestlé SA from 2007 to 2013, and prior to that, he
served as executive vice president and head of
technical, production, environment, research &
development for Nestlé SA and held other positions
within Nestlé. Mr Bauer started his career in 1980 as a
professor in chemical engineering at Technical
University in Hamburg, after which he was a professor
in food process technology and director of the
Fraunhofer Institute for food technology & packaging
at the Technical University of Munich. Mr Bauer holds a
diploma and PhD in chemical engineering from the
University of Erlangen-Nürnberg.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsBoard of Directors continued

Wah-Hui Chu

Mariel Hoch

Nigel Wright

Wah-Hui Chu is a Hong Kong Chinese citizen and
serves as a member of the Board of Directors. Since
2015, he has served as an advisory board member for
the Company. Mr Chu currently serves as the founder
and chairman of iBridge TT International Limited (Hong
Kong); he has served as a member of the board of
directors of Mettler Toledo International since 2007.
From 2013 to 2014 when he retired, Mr Chu served as
the CEO and a member of the board of directors of
Tingyi Asahi Beverages Holding, and from 2008 to
2011, he acted as executive director and CEO of Next
Media Limited. He also served as chairman of PepsiCo
Investment (China) Limited from 1998 through 2007,
and again from 2012 to 2013. Mr Chu spent many years
as an executive at PepsiCo, serving as non-executive
chairman of PepsiCo International’s Asia region in 2008
and president of PepsiCo International – China
beverages business unit between 1998 and 2008.
Before joining PepsiCo, Mr Chu held management
positions at Monsanto Company, Whirlpool
Corporation, H.J. Heinz Company and the Quaker Oats
Company. Mr Chu holds a bachelor degree of science
from the University of Minnesota and an MBA from
Roosevelt University.

Mariel Hoch is a Swiss and German citizen and serves
as a member of the Board of Directors. Ms Hoch has
been a partner at the Zurich law firm Bär & Karrer
since 2012. She currently serves as a member of the
board of directors of Comet Holding AG, where she
also sits on the nomination and compensation
committee and MEXAB AG. She is also a member of the
foundation board of The Schörling Foundation and
co-chair of the Zurich committee of Human Rights
Watch. Ms Hoch was admitted to the Zurich bar in
2005 and holds a PhD from the University of Zurich
and a law degree from the University of Zurich.

Nigel Wright is a Canadian citizen and has been a
member of the Board of Directors since 2014. Mr
Wright is a managing director at Onex, where he
manages European origination efforts in the business
services, healthcare and packaging sectors for Onex’s
large-cap fund, Onex Partners. He currently serves as
a director of Childcare BV (doing business as
KidsFoundation), Justitia, and of the Manning
Foundation for Democratic Education, and as trustee
of the Policy Exchange. Mr Wright joined Onex in 1997,
although from 2010 to 2013, he worked as chief of staff
for the Prime Minister of Canada. Prior to joining Onex,
Mr Wright was a partner at the law firm of Davies, Ward
& Beck, and before that he worked in policy
development in the office of the Prime Minister of
Canada. Nigel holds an LL.M. from Harvard Law School,
an LL.B. (with honours) from the University of Toronto
Law School and a bachelor’s degree in politics and
economics from Trinity College at the University
of Toronto.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsGROUP EXECUTIVE BOARD

Rolf Stangl
Chief Executive Officer

Samuel Sigrist
Chief Financial Officer

Markus Boehm
Chief Market Officer

Ian Wood
Chief Supply Chain Officer

Rolf Stangl is a Swiss and German citizen and has
served as CEO since 2008. Mr Stangl joined the
Company in 2004 and has held a number of positions
across the organisation including, amongst others,
head of corporate development and M&A, chief
executive officer of SIG Beverage (a division
subsequently divested) and CMO. Prior to joining the
Company, Mr Stangl served as an investment director
for small and mid-cap buyouts at a family office in
London and as a senior consultant with Roland Berger
Strategy Consultants in Germany. Mr Stangl holds a
bachelor’s degree in business administration from ESC
Reims & ESB Reutlingen.

Samuel Sigrist is a Swiss citizen and has served as CFO
and chairman of the Middle East Joint Venture since
2017. Mr Sigrist joined the Company in 2005 and has
worked in various finance and corporate development
roles, including director of group controlling &
reporting, head of finance/CFO of Europe and head of
group projects. From 2013 to 2017, Mr Sigrist was the
Company’s president & general manager, Europe and
prior to joining the Company, he worked as a
consultant. Mr Sigrist holds a bachelor’s degree in
business administration from the Zurich University of
applied sciences, an MBA from the University of
Toronto and a global executive MBA from the
University of St. Gallen. Mr Sigrist is also a Swiss
certified public accountant.

Markus Boehm is a German citizen and has served as
CMO since 2009. Since 2012, he has also been
responsible for the technology functions as well as the
machine assembly business (until 2018). Mr Boehm
joined the Company in 2004 as CFO of the Company in
China, and after a brief period as COO China he took
the role of CEO SIG Combibloc China in 2005. Prior to
joining the Company, Mr Boehm worked at Hilti in
Switzerland, Hong Kong and China and held various
finance positions at Procter & Gamble in Germany and
the United Kingdom. He graduated with a bachelor of
science in economics from the Wharton School and a
bachelor of arts in political science from the University
of Pennsylvania.

Ian Wood is a British citizen and has served as Chief
Supply Chain Officer since he joined the Company in
2018. Previously, Mr Wood spent 15 years at
Honeywell, initially in the supply chain function and
later as vice president & general manager of various
business units. Prior to joining Honeywell, Mr Wood
worked at A.T. Kearney and Ford Motor Company. Mr
Wood holds a master’s degree in manufacturing
engineering from Cambridge University, UK and an
MBA from Cranfield School of Management, UK.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsGroup Executive Board continued

Lawrence Fok
President & General Manager, Asia-Pacific

Ricardo Rodriguez
President & General Manager, Americas

Martin Herrenbrück
President & General Manager, Europe

Lawrence Fok is a Singapore citizen and has served as
President and General Manager of the Asia-Pacific
region since he joined the Company in 2012. Prior to
joining the Company, Mr Fok held senior management
positions at Norgren China, Alcan Global
Pharmaceutical Packaging, SCA Packaging China and
Avnet Asia. Mr Fok holds a bachelor’s degree in
mechanical engineering, a MSc in industrial & systems
engineering from the National University of Singapore,
and a Grad. Dip. in financial management from the
Singapore Institute of Management.

Ricardo Rodriguez is a Brazilian and Spanish citizen
and has served as President and General Manager of
the Americas region since 2015. Mr Rodriguez joined
the Company in 2003 and previously served as director
& general manager, South America and technical
service director, South America. Prior to joining the
Company, Mr Rodriguez worked at Tetra Pak in a
number of roles, including general manager of the Belo
Horizonte branch, key account manager and technical
service manager. He holds a bachelor of science
degree in aeronautical mechanical engineering from
the Technological Institute of Aeronautics in Brazil, an
MBA from the Getúlio Vargas Foundation and a
specialisation course in management at IMD-
Lausanne.

Martin Herrenbrück is a German citizen and has
served as President and General Manager of the
Europe region since 2017. Mr Herrenbrück joined the
Company in 2006 and previously held the positions of
head of cluster Europe, head of cluster Asia-Pacific
South, head of global marketing and other corporate
development roles. Prior to joining the Company, he
worked for several years at Roland Berger Strategy
Consultants in Germany. Mr Herrenbrück holds a
Master Of Science in management from HHL–Leipzig
Graduate School of Management and an MBA from KDI
School of Public Policy and Management in Seoul,
South Korea.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCORPORATE GOVERNANCE REPORT

This corporate governance report
contains the information that is
stipulated by the directive on
information relating to corporate
governance of the SIX Swiss
Exchange AG (“SIX Swiss Exchange”)
and follows its structure.

1 Group structure and shareholders

1.1 Group structure
SIG Combibloc Group AG (the “Company”) is the parent
company of the SIG Group1, which directly or indirectly
holds all other Group companies and interests in joint
ventures. The shares of the Company have been listed
on SIX Swiss Exchange since 28 September 2018 (symbol:
SIGN, valor symbol: 43 537 795, ISIN: CH0435377954).
The market capitalisation of the Company amounted to
CHF 4,948.0 million as of 31 December 2019.

Please see note 26 of the consolidated financial
statements for the year ended 31 December 2019 for a
comprehensive list of the Group’s subsidiaries and of its
joint ventures. Except for the Company, the Group does
not include any listed companies. The Group has
effective oversight and efficient management structures
at all levels. The operational Group structure as of 31
December 2019 is as follows:

The Company’s Board of Directors (the “Board of
Directors” or the “Board”), acting collectively, has the
ultimate responsibility for the conduct of business of the
Company and for delivering sustainable shareholder and
stakeholder value. The Board sets the Company’s
strategic aims, ensures that the necessary financial and
human resources are in place to meet the Company’s
objectives, and supervises and controls the management
of the Company. There are three permanent Board
committees; an audit and risk committee (“Audit and
Risk Committee”), a compensation committee
(“Compensation Committee”), and nomination and

governance committee (“Nomination and Governance
Committee”; collectively “Committees”).

In accordance with, and subject to, Swiss law, the
Company’s articles of association (“Articles of
Association”) and the Company’s organisational
regulations (“Organisational Regulations”), the Board
of Directors has delegated the executive management of
the Company’s business (Geschäftsleitung) to the Group
Executive Board (“Group Executive Board”) which is
headed by the chief executive officer (“CEO”) pursuant to
the Organisational Regulations.2 The Group Executive
Board comprises seven members, specifically the CEO,
the chief financial officer (“CFO”), the chief market officer
(“CMO”), the chief supply chain officer (“CSO”), the
president & general manager of Americas (“President &
General Manager Americas”), the president & general
manager of Europe (“President & General Manager
Europe”), and the president & general manager of
Asia-Pacific (“President & General Manager Asia-
Pacific”). For further information on the Group’s
segments please refer to note 7 of the consolidated
financial statements for the year ended 31 December
2019. The Group Executive Board is directly supervised
by the Board of Directors and its Committees.

1.2 Significant shareholders
According to the disclosure notifications reported to the
Company during 2019 and published by the Company via

1 References to “SIG Group”, “Group” or “we” are to the Company and its consolidated

subsidiaries.
For a comprehensive description on the delegation please refer to art. 19 of the Articles
of Association (https://www.sig.biz/investors/en/governance/articles-of-association) and
the Organizational Regulations (https://www.sig.biz/investors/en/governance/
organizational-regulations).

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCorporate Governance Report continued

the electronic publishing platform of SIX Swiss Exchange,
the following shareholders had holdings of 3% or more
of the voting rights of the Company as of 31 December
20193:

Significant shareholders

Onex shareholders 6

Haldor Foundation 7

% of

voting rights 4

Number
of shares 5

32.9% 105,253,240

6.00% 19,203,194

2 Capital structure

2.1 Ordinary share capital
The ordinary share capital of the Company as registered
with the commercial register of the Canton of
Schaffhausen amounts to CHF 3,200,532.40 as of 31
December 2019.

It consists of 320,053,240 fully paid-up registered shares
with a nominal value of CHF 0.01 per share.

Notifications made in 2019 in accordance with art. 120 et
seqq. of the Financial Market Infrastructure Act (“FMIA”)
can be viewed using the following link: https://www.
six-exchange-regulation.com/en/home/publications/
significant-shareholders.html/

2.2 Authorised and conditional share capital
The Company has authorised share capital and
conditional share capital of CHF 640,106.48 each as of 31
December 2019.

As regards the value of the percentage of voting rights
shown, it should be noted that any changes in the
percentage voting rights between the notifiable
threshold values are not subject to disclosure
requirements.

As of 31 December 2019, the Company held 6,158
treasury shares.

The Board of Directors is authorised to increase the
share capital at any time until 27 September 2020 by a
maximum of CHF 640,106.48 through the issue of up to
64,010,648 shares of CHF 0.01 nominal value each.

The conditional capital of CHF 640,106.48 (i.e. 64,010,648
shares of CHF 0.01 nominal value each) is divided into the
following amounts:

1.3 Cross-shareholdings
The Company has no cross-shareholdings exceeding 5%
in any company outside the Group.

• CHF 160,026.62 for employee benefit plans
• CHF 480,079.86 for equity linked financing

instruments

The number of shares shown here as well as the holding percentages are based on the
last disclosure of shareholdings communicated by the shareholder to the Company and
the Disclosure Office of SIX Swiss Exchange. The number of shares held by the relevant
shareholder may have changed since the date of such shareholder’s notification.
4 According to SIX: https://www.six-exchange-regulation.com/en/home/publications/

significant-shareholders.html/

5 According to SIX: https://www.six-exchange-regulation.com/en/home/publications/

significant-shareholders.html/

6 Direct Shareholders: Onex SIG Co-Invest LP, Onex Partners IV LP, Onex Partners

Holdings Limited, Wizard Management I GmbH & Co. KG, Onex Partners IV PV LP, Wizard
Management II GmbH & Co. KG, Onex US Principals LP, Onex Advisor Subco III LLC, Onex
Partners IV Select LP, Onex Partners IV GP LP. Mr Gerald W. Schwartz indirectly owns
shares representing a majority of the voting rights of the shares of Onex Corporation,
and as such may be deemed to beneficially own all of the common shares beneficially
owned by Onex Corporation. Mr Schwartz disclaims such beneficial ownership. Further
information is available under https://www.six-exchange-regulation.com/en/home/
publications/significant-shareholders.html/
7 Direct Shareholder: Winder Investment Pte Ltd.

Capital increases from authorised and conditional share
capital are subject to a single combined limit, i.e. the total
number of new shares that may be issued from the
authorised and conditional share capital together in
accordance with art. 4, 5 and 6 of the Articles of
Association may not exceed 64,010,648 shares (i.e. CHF
640,106.48, corresponding to 20% of the existing share
capital). Within the limit outlined above, the proportion of
new shares assigned to each of the categories is
stipulated by the Board of Directors. Any newly issued
shares are subject to the restrictions set out in art. 7 of
the Articles of Association.

Reference is made to the Articles of Association for the
precise wording of provisions relating to authorised and
conditional share capital, in particular art. 4, 5 and 6 of
the Articles of Association. Among other matters, these
contain details regarding the entitlements to withdraw or
restrict shareholders’ subscription rights. The relevant
provisions can be downloaded as a PDF document at
https://www.sig.biz/investors/en/governance/articles-of-
association.

2.3 Changes in capital
Until 4 September 2018, the legal form of the Company
was a Luxembourg limited liability company (société à
responsabilité limitée). The two changes in capital outlined
hereafter correspond to those made under this (former)
legal form within the last three years.

On 31 August 2016, additional equity contributions were
made. Additional new shares, 49,114 ordinary shares and
46,814 preference shares, were issued and fully paid.
This increased share capital by EUR 959 and additional
paid-in capital by EUR 616,097.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCorporate Governance Report continued

On 30 June 2017, additional contributions were made.
Additional new shares, 48,366 ordinary shares and
44,327 preference shares, were issued and fully paid.
This increased share capital by EUR 927 and additional
paid-in capital by EUR 639,073.

On 4 September 2018 (prior to the listing of the
Company), an extraordinary shareholders’ meeting of the
Company approved the conversion of the Company from
a Luxembourg limited liability company (société à
responsabilité limitée) into a Luxembourg corporation
(société anonyme). The same shareholders’ meeting
resolved to convert with effect from 25 September 2018
(i) the six classes of ordinary shares (each with a nominal
value of EUR 0.01) into one class of ordinary shares with
a nominal value of EUR 0.01 per share and (ii) the five
classes of preference shares (each with a nominal value
of EUR 0.01) into one class of preference shares with a
nominal value of EUR 0.01 per share.

On 27 September 2018, an extraordinary shareholders’
meeting of the Company resolved to convert the
100,091,015 preference shares into 100,091,015 ordinary
shares. Further, the meeting unanimously resolved to
change the currency of the share capital of the Company
from EUR to CHF. As a result, the Company’s share
capital immediately prior to the migration to Switzerland
was CHF 2,150,532.40 and consisted solely of ordinary
shares with a nominal value of CHF 0.01 per share.

For the purposes of the IPO, the Company further
increased its share capital by CHF 1,050,000.00 from CHF
2,150,532.40 to CHF 3,200,532.40 through the issue of
105,000,000 shares. The shareholders’ resolution
approving the share capital increase was passed at an
extraordinary shareholders’ meeting on 27 September
2018 excluding the subscription rights (Bezugsrechte) of
the existing shareholders of the Company.

2.4 Shares, participation certificates and profit-sharing
certificates
The shares are registered shares with a nominal value of
CHF 0.01 each and are fully paid-in. Each share carries
one vote at a shareholders’ meeting. The shares rank pari
passu in all respects with each other, including, in respect
of entitlements to dividends, to a share in the liquidation
proceeds in the case of a liquidation of the Company, and
to pre-emptive rights.

The Company issues its shares as uncertificated
securities (Wertrechte), within the meaning of art. 973c of
the Swiss Code of Obligations (“CO”) and in accordance
with art. 973c CO, the Company maintains a register of
uncertificated securities (Wertrechtebuch).

The shares that are entered into the main register of SIS
consequently constitute book-entry securities
(Bucheffekten) within the meaning of the Federal Act on
Intermediated Securities (“FISA”).

The Company has neither outstanding participation
certificates nor shares with preferential rights.

The Company has not issued any profit-sharing
certificates (Genussscheine).

2.5 Limitations on transferability and nominee
registrations
According to art. 7 of the Articles of Association, any
person holding shares will upon application be entered
in the share register without limitation as shareholders
with voting rights, provided it expressly declares to have
acquired the shares in its own name and for its own
account.

Any person that does not expressly state in its
application to the Company that the relevant shares were
acquired for its own account may be entered in the share
register as a shareholder with voting rights without
further inquiry up to a maximum of 5% of the issued
share capital outstanding at that time. Above this limit,
shares held by nominees are entered in the share
register with voting rights only if the nominee in question
makes known the names, addresses and shareholdings
of the persons for whose account it is holding 1% or
more of the outstanding share capital available at the
time and provided that the disclosure requirement
stipulated in the FMIA is complied with. In addition, the
Board of Directors has the right to conclude agreements
with nominees concerning their disclosure requirements.
Such agreements may further specify the disclosure of
beneficial owners and contain rules on the
representation of shareholders and the voting rights.
The percentage limit mentioned above also applies in
case of the acquisition of shares by way of exercising
pre-emptive, subscription, option or conversion rights
arising from shares or any other securities issued by the
Company or any third party.8

The setting and cancelling of the limitation on
transferability in the Articles of Association require
a resolution of the general meeting of the Company
(“General Meeting”) passed by at least 2/3 of the
represented share votes and an absolute majority of
the par value of represented shares.

2.6 Convertible bonds and warrants/options
As of 31 December 2019, the Company has no
outstanding bonds or debt instruments convertible
into or option rights in the Company’s securities.

For a comprehensive description on the limitations to transferability and nominee
registration refer to art. 7 of the Articles of Association (https://www.sig.biz/investors/
en/governance/articles-of-association).

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCorporate Governance Report continued

3 Board of Directors

3.1 Members of the Board of Directors
The Articles of Association provide that the Board of
Directors shall consist of a minimum of three members,
including the chairman of the Board (“Chairman of the
Board of Directors” or “Chairman”). Currently, the
Board consists of the following seven members:

Name

Nationality

Position

Since

Expires9

Andreas Umbach Swiss & German Chairman 2018
2018
Matthias Währen Swiss
2018
Colleen Goggins
2018
Werner Bauer
2018
Wah-Hui Chu

Member
American
Member
Swiss & German Member
Member
Hong Kong
Chinese
Swiss & German Member
Member
Canadian

Mariel Hoch
Nigel Wright

AGM 2020
AGM 2020
AGM 2020
AGM 2020
AGM 2020

2018
2014

AGM 2020
AGM 2020

All seven members of the Board were re-elected at the
annual general meeting of the Company (“Annual
General Meeting” or “AGM”) on 11 April 2019 (“AGM
2019”) for a one-year term of office. David Mansell who
was a member of the Board since 2018 did not stand for
re-election and thus stepped down from the Board upon
conclusion of the AGM 2019.

All current members of the Board of Directors are
non-executive directors. None of the members of the
Board of Directors has been a member of the
management of the Company or a subsidiary of the
Group in the three years preceding the year under
review. However, from 2015 until the listing of the
Company on 28 September 2018 (“IPO”) Colleen
Goggins, Werner Bauer, Wah-Hui Chu, and Nigel Wright
have served as advisory board members of the
Company. In addition, Nigel Wright is mandated by the
majority shareholder Onex.

9 All Board members are elected annually in accordance with Swiss corporate law and
the Articles of Association (https://www.sig.biz/investors/en/governance/articles-of-
association).

Andreas Umbach is a Swiss and German citizen and
serves as the Chairman of the Board of Directors since
the IPO. Mr Umbach further serves as the chairman of
the board of directors of Landis+Gyr Group AG (SIX:
LAND) (since 2017) and as a member of the board of
directors of Ascom Holding AG (SIX: ASCN) (since 2010),
where he also served as chairman of the board of
directors from 2017 to 2019. Mr Umbach will not stand
for re-election as member of the board of directors of
Ascom Holding AG at its upcoming general meeting in
April 2020. Mr Umbach also serves as the chairman of
the supervisory board of Techem Energy Services GmbH
(since 2018) and as a member of the board of directors
of WWZ AG (since 2013). In addition, he serves as the
president of the Zug Chamber of Industry and
Commerce (since 2016). Mr Umbach previously served as
a member of the board of directors of LichtBlick SE from
2012 to 2016. From 2002 to 2017, Mr Umbach was the
president and CEO/COO of Landis+Gyr AG. Prior to
serving as CEO, Mr Umbach served as president of the
Siemens metering division within the power transmission
and distribution group and held other positions within
Siemens. Mr Umbach holds a Master of Business
Administration (“MBA”) from the University of Texas at
Austin and a Master of Science (“MS”) degree in
mechanical engineering (Diplomingenieur) from the
Technical University of Berlin.

Matthias Währen is a Swiss citizen and serves as a
member of the Board of Directors since the IPO. Mr
Währen further serves as a member of the board of
trustees of the Givaudan Foundation (since 2014) and
the HBM Fondation (since 2018). Mr Währen previously
served as a member of the regulatory board of SIX Swiss
Exchange from 2006 to 2017, a member of the board of
scienceindustries from 2009 to 2017, a member of the
board of Swiss Holdings from 2015 to 2017 and a
member of the board of directors of various Givaudan
subsidiaries from 2005 to 2019. Most recently, he served

as CFO and a member of the executive committee of
Givaudan SA from 2005 until his retirement in 2017. Prior
to that, he served as the global head of finance and
informatics of the Roche vitamin division and held a
variety of other positions at Roche, including vice
president finance and informatics at Roche USA, Nutley,
New Jersey, head of finance and information technology
at Nippon Roche, Tokyo and finance director of Roche
Korea. Mr Währen started his career in corporate audit
of Roche in 1983. Mr Währen holds a master’s degree in
economics from the University of Basel, Switzerland.

Colleen Goggins is an American citizen and serves as a
member of the Board of Directors since the IPO. From
2015 until the IPO, she has served as an advisory board
member for the Company. Ms Goggins also currently
serves as a member of the board of directors of TD Bank
Group (since 2012), where she serves on the Risk
Committee as a member of the supervisory board of
Bayer AG (since 2017) and a member of the board of
directors of IQVIA (since 2017), where she sits on the
audit and nominating and governance committees.
Ms Goggins has been a member of the University of
Wisconsin Foundation and a member of the board of the
University’s center for brand and product management,
a member of the board of directors of New York
Citymeals on Wheels and a trustee of the International
Institute of Education. She previously served as a
supervisory board member for KraussMaffei from 2013
to 2016 and as a member of the board of directors of
Valeant Pharmaceuticals International from 2014 to 2016,
where she was a member of the nominating committee
and special ad hoc committee. Prior to that, Ms Goggins
worked at Johnson & Johnson until 2011, where she held
various leadership positions, including worldwide
chairman, company group chairman, and president of
the Johnson & Johnson Consumer Products Company,
among others, and she served as a member of the
executive committee. Ms Goggins holds a Bachelor of

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCorporate Governance Report continued

Science (“BS”) degree in food chemistry from the
University of Wisconsin-Madison and a master’s degree
in management from the Kellogg Graduate School of
Management at Northwestern University.

Werner Bauer is a Swiss and German citizen and serves as
a member of the Board of Directors since the IPO. From
2015 until the IPO, he has served as an advisory board
member for the Company. Mr Bauer also currently
serves as vice chairman of the board of directors of
Givaudan SA (since 2014) and Bertelsmann SE & Co.
KGaA (since 2012), chairman of the board of trustees at
the Bertelsmann Foundation (since 2011), and as a
member of the board of directors of Lonza Group AG
(since 2013). From 2011 until 2018 he also served as a
member of the boards of directors of GEA-Group AG.
Prior to that, he served in a number of other board
positions, including chairman of the board of directors of
Nestlé Deutschland AG (from 2005 to 2017) and
chairman of the board of directors of Galderma Pharma
SA from (2011 to 2014). Most recently, Mr Bauer was the
executive vice president and head of innovation,
technology, research & development for Nestlé SA from
2007 to 2013, and prior to that, he served as executive
vice president and head of technical, production,
environment, research & development for Nestlé SA and
held other positions within Nestlé. Furthermore, Mr
Bauer served as chairman of the board of directors of
Sofinol S.A. (from 2006 to 2012), and as a member of the
board of directors of L’Oréal (from 2005 to 2012) and of
Alcon Inc. (from 2002 to 2010). Mr Bauer started his
career in 1980 as a professor in chemical engineering at
Technical University in Hamburg, after which he was a
professor in food process technology and director of the
Fraunhofer Institute for food technology & packaging at
the Technical University of Munich. Mr Bauer holds a
diploma and PhD in chemical engineering from the
University of Erlangen-Nürnberg.

Wah-Hui Chu is a Hong Kong Chinese citizen and serves
as a member of the Board of Directors since the IPO.
From 2015 until the IPO, he has served as an advisory
board member for the Company. Mr Chu currently also
serves as the founder and chairman of iBridge TT
International Limited (Hong Kong) since 2018, as a
member of the board of directors of Mettler Toledo
International since 2007 and is the founder of M&W
Consultants Limited (Hong Kong) since 2007. From 2013
to 2014 when he retired, Mr Chu served as the CEO and
a member of the board of directors of Tingyi Asahi
Beverages Holding, and from 2008 to 2011, he acted as
executive director and CEO of Next Media Limited. He
also served as member of the board of directors of Li
Ning company limited from 2007 to 2012 and as
chairman of PepsiCo Investment (China) Limited from
1998 to 2007, and again from 2012 to 2013. Mr Chu spent
many years as an executive at PepsiCo, serving as
non-executive chairman of PepsiCo International’s Asia
region in 2008 and president of PepsiCo International
– China beverages business unit between 1998 and 2007.
Before joining PepsiCo, Mr Chu held management
positions at Monsanto Company, Whirlpool Corporation,
H.J. Heinz Company and the Quaker Oats Company. Mr
Chu holds a BS in agronomy from the University of
Minnesota and an MBA from Roosevelt University.

Mariel Hoch is a Swiss and German citizen and serves as
a member of the Board of Directors since the IPO. Ms
Hoch has been a partner at the Swiss law firm Bär &
Karrer since 2012. She currently also serves as a member
of the board of directors of Comet Holding AG (since
2016), where she also sits on the nomination and
compensation committee, of Komax Holding AG (since
2019), where she also sits on the audit committee, and of
MEXAB AG (since 2014). Ms Hoch served as member of

the board of directors of Adunic AG from 2015 to 2018.
She has also been a member of the foundation board of
The Schörling Foundation since 2013 and co-chair of the
Zurich committee of Human Rights Watch (since 2017).
Ms Hoch was admitted to the Zurich bar in 2005 and
holds a PhD from the University of Zurich and a law
degree from the University of Zurich.

Nigel Wright is a Canadian citizen and has been a member
of the Board of Directors since 2014. Mr Wright is a
managing director at Onex Corporation, where he
manages European origination efforts in the business
services, healthcare and packaging sectors for Onex’s
large-cap fund, Onex Partners. Furthermore, he is a
member of Onex Partners’ investment committee. He
currently serves as a director of Childcare BV (doing
business as KidsFoundation), Justitia, and of the Manning
Foundation for Democratic Education, and as a trustee
of the Policy Exchange. Mr Wright joined Onex in 1997,
although from 2010 to 2013, he worked as chief of staff
for the Prime Minister of Canada. Prior to joining Onex,
Mr Wright was a partner at the law firm of Davies, Ward
& Beck, and before that he worked in policy development
in the office of the Prime Minister of Canada. Nigel holds
an LL.M. from Harvard Law School, an LL.B. (with
honours) from the University of Toronto Law School and
a bachelor’s degree in politics and economics from
Trinity College at the University of Toronto.

There are no material business relationships of any
Board member with the Company or with any subsidiary
or joint venture.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCorporate Governance Report continued

3.2 Number of permissible activities
In the interest of good governance, the Company’s
Articles of Association limit the number of outside
mandates by the members of our Board as follows:

(i) up to four mandates in listed firms;

(ii) up to ten mandates in non-listed firms10; and

(iii) up to ten mandates in foundations, associations,
charitable organisations and other legal entities.

Such a mandate shall mean an activity in superior
governing or administrative bodies of legal entities that
are obliged to register themselves in the commercial
register or any comparable foreign register except for the
Company and any entity controlled by, or controlling, the
Company. The Board of Directors shall ensure that such
activities do not conflict with the exercise of duties to the
Group. Functions in various legal entities that are under
joint control, or in entities in which this legal entity has a
material interest, are counted as one function.

3.3 Election and term of office
The members of the Board of Directors are elected
individually each year by the Annual General Meeting of
the Company for a term of office of one year and can be
re-elected. The Chairman of the Board of Directors is
also elected each year by the Annual General Meeting for
a period of office of one year. There is no limit on the
term in office. The initial election year of each Board
member is shown in the table on page 43.

10 Pursuant to art. 727 para. 1 number 1 CO.
11 https://www.sig.biz/investors/en/governance/articles-of-association.

Internal organisation

3.4
3.4.1 Division of roles within the Board of Directors and
working methods
The Board of Directors represents the Company vis-à-vis
third parties and attends to all matters which have not
been delegated to or reserved for another corporate
body of the Company. The Chairman convenes meetings
of the Board of Directors as often as the Group’s
business requires, but at least four times a year. The
Chairman prepares the meetings, draws up the agenda,
and chairs them. Any member of the Board can ask for a
meeting to be convened and for the inclusion of an item
on the agenda. In order to pass resolutions, not less than
a majority of the Board members must be participating
in the meeting. Except as required by mandatory law, the
Board will adopt resolutions by a simple majority of the
votes cast. In case of a tie, the Chairman has no casting
vote. Board resolutions may also be passed in writing by
way of circular resolution, provided that no member of
the Board of Directors requests oral deliberation (in
writing, including by email) of the Chairman or the
secretary. Board resolutions by means of a written
resolution require the affirmative vote of a majority of all
the members of the Board.

4 Committees

The Board of Directors may delegate the preparation
and execution of its decisions to Committees or to its
individual members. The Board of Directors has
appointed three standing Committees: the Audit and
Risk Committee, the Compensation Committee and the
Nomination and Governance Committee. For each of
the Committees, the Board of Directors elects a
chairman from the members of the Board of Directors.
The period of office of all Committee members is one
year. Re-election is possible.

Subject to the provisions of the Articles of Association11,
the Audit and Risk Committee and the Compensation
Committee shall generally comprise three or more
members of the Board of Directors. The Nomination and
Governance Committee shall generally comprise two or
more members of the Board of Directors.

4.1 Compensation Committee
As required by Swiss law, the members of the
Compensation Committee are elected each year by the
Annual General Meeting. As of 31 December 2019, the
members of the Compensation Committee were Colleen
Goggins (chairperson), Mariel Hoch and Wah-Hui Chu.

Meetings of the Compensation Committee are held as
often as required but in any event at least three times
a year, or as requested by any of its members.

The members of the Compensation Committee shall be
non-executive and independent, and a majority of the
members of the Compensation Committee, including its
chairperson, should be experienced in the areas of
succession planning and performance evaluation, as well
as the compensation of members of boards of directors
and executive management boards.

The Compensation Committee shall assist the Board in
fulfilling its responsibilities relating to the compensation
of the members of the Board of Directors and the Group
Executive Board. The Compensation Committee’s
responsibilities include, inter alia:

• issuance and review of the compensation policy and
the performance criteria and periodical review of the
implementation and submission of suggestions and
recommendations to the Board, including as regards
compliance with applicable laws;

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCorporate Governance Report continued

• preparation of the Board of Directors’ proposals to

the Annual General Meeting regarding the
compensation of the Board of Directors and the
Group Executive Board;

• review of the principles and design of compensation
plans, long-term incentive and equity plans, pension
arrangements and further benefits for the Group
Executive Board, including review of the contractual
terms of the members of the Group Executive Board
and submission of adjustments to the Board of
Directors for approval;

• for each performance period, preparation of the

decisions for the Board of Directors regarding the
compensation of the members of the Board of
Directors and the Group Executive Board, including
the breakdown of compensation elements (within the
amount approved by the Annual General Meeting);
• submission of suggestions to the Board of Directors
regarding the recipients of performance-related and/
or long-term incentive compensation and submission
of suggestions to the Board of Directors regarding
the definition of the annual or other targets for
performance-related and/or long-term incentive
compensation; and

• review of the Compensation Report and submission

to the Board of Directors for approval.

The Board of Directors may entrust the Compensation
Committee with additional duties in related matters. The
Compensation Committee is required to report its
activities to the Board of Directors on a regular basis and
to make recommendations and propose appropriate
measures to the Board of Directors.

4.2 Audit and Risk Committee
The members and the chairman of the Audit and Risk
Committee are appointed by the Board of Directors. As
of 31 December 2019, the members of the Audit and Risk
Committee were Matthias Währen (chairperson), Mariel
Hoch and Werner Bauer.

Meetings of the Audit and Risk Committee are held as
often as required but, in any event, at least four times a
year, or as requested by any of its members.

The members of the Audit and Risk Committee shall be
non-executive and independent, and a majority of the
members of the Audit and Risk Committee, including its
chairperson, must be experienced in financial and
accounting matters.

The Audit and Risk Committee (i) assists the Board in
fulfilling its supervisory responsibilities with respect to (a)
the integrity of the Company’s financial statements and
financial reporting process, (b) the Company’s
compliance with legal, regulatory, and compliance
requirements, (c) the system of internal controls, and (d)
the audit process; (ii) monitors the performance of the
Company’s internal auditors and the performance,
qualification, and independence of the Company’s
independent auditors; and (iii) considers the proper
assessment and professional management of risks by
supervising the Company’s risk management system and
processes.

The responsibilities of the Audit and Risk Committee in
particular include, inter alia, to review and discuss with
the CFO and, both together with the CFO and separately,
with the auditors the Company’s annual and semi-annual
and quarterly (if quarterly financial statements are
prepared) financial statements and reports intended for
publication, as well as any other financial statements
(including the notes thereto) intended for publication.

The Audit and Risk Committee also recommends the
annual financial statements for approval by the Board of
Directors for submission to the Annual General Meeting,
and approves semi-annual and quarterly (if quarterly
financial statements are prepared) financial statements
(including the notes thereto) for publication. In addition,
the Audit and Risk Committee discusses with the CFO
and the auditors significant financial reporting issues and
judgements made in connection with the preparation of
the Company’s financial statements, including any
significant changes in the Company’s accounting
principles, the selection and disclosure of critical
accounting estimates, and the effect of alternative
assumptions, estimates or accounting principles on the
Company’s financial statements.

In connection with the risk management of the Company,
the Audit and Risk Committee discusses with the CFO
and, if appropriate, the Company’s General Counsel any
legal matters (including the status of pending or
threatened litigation) that may have a material impact on
the Company’s business or financial statements and any
material reports or inquiries from regulatory or
governmental agencies that could materially impact the
Company’s business or contingent liabilities and risks. Its
members periodically review the Company’s policies and
procedures designed to secure compliance with laws,
regulations and internal rules regarding insider
information, confidentiality, bribery and corruption,
sanctions, and adherence to ethical standards, and
assess the effectiveness thereof. The Audit and Risk
Committee obtains and reviews reports submitted at
least annually by the General Counsel and any other
persons the Committee has designated as being
responsible for assuring the Company’s compliance with
laws and regulations. In this context, it informs the Board
at least annually about the most significant risks for the
Company and the Group and how such risks are
managed or mitigated.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCorporate Governance Report continued

The Board of Directors may entrust the Audit and Risk
Committee with additional duties in financial matters. In
discharging its responsibilities, the Audit and Risk
Committee has unrestricted and direct access to all
relevant information in relation to the Company and the
Group. The Audit and Risk Committee ensures that it is
informed by the independent auditors on a regular basis.
The Audit and Risk Committee is required to report its
activities to the Board of Directors on a regular basis and
to make recommendations and propose appropriate
measures to the Board of Directors.

4.3 Nomination and Governance Committee
The members and the chairman of the Nomination and
Governance Committee are appointed by the Board of
Directors. As of 31 December 2019, the members of the
Nomination and Governance Committee were Nigel
Wright (chairperson), Wah-Hui Chu and Werner Bauer.

Meetings of the Nomination and Governance Committee
are held as often as required but, in any event, at least
two times a year, or as requested by any of its members.

The majority of the members of the Nomination and
Governance Committee shall be non-executive and a
majority of the members of the Nomination and
Governance Committee, including its chairperson, must
be experienced in nomination of members of boards of
directors and the group executive boards and corporate
governance matters.

The Nomination and Governance Committee assists the
Board of Directors in fulfilling its responsibilities and
discharging the Board’s responsibility to (i) establish and
maintain a process relating to nomination of the
members of the Board and the Group Executive Board
and (ii) establish sound practices in corporate
governance across the Group. Its responsibilities include,
inter alia, to assist the Board in identifying individuals who
are qualified to become members of the Board or who
are qualified to become the CEO when vacancies arise
and, in consultation with the CEO, members of the Group
Executive Board. Furthermore, the Nomination and
Governance Committee reviews the performance of
each current member of the Board of Directors, the CEO
and each of the other members of the Group Executive
Board. It also provides recommendations to the Board of
Directors as to how the Board’s performance can be
improved.

The Nomination and Governance Committee also
develops and makes recommendations to the Board of
Directors regarding corporate governance matters and
practices, including effectiveness of the Board of
Directors, its committees and individual directors. It also
oversees the Company’s strategy and governance on
corporate responsibility for environmental, social and
governance matters, in particular regarding key issues
that may affect the Company’s business and
reputation12.

12 The organisation, detailed responsibilities and reporting duties of the Nomination and

Governance Committee are stipulated in the Articles of Association (https://www.sig.biz/
investors/en/governance/articles-of-association).

The Board of Directors may entrust the Nomination and
Governance Committee with additional duties in related
matters. The Nomination and Governance Committee is
required to report its activities to the Board of Directors
on a regular basis and to make recommendations and
propose appropriate measures to the Board of Directors.

5 Frequency of meetings of the Board of
Directors and its Committees

The Chairman convenes meetings of the Board of
Directors as often as the Group’s business requires, but
at least four times a year, and whenever a member of the
Board or the CEO requests a meeting of the Board
indicating the reasons for such meeting in writing.

The Board of Directors convenes for full-day ordinary
meetings as well as an annual joint strategy meeting with
the Group Executive Board. The task at these meetings is
to analyse the positioning of the Group in the light of
current macroeconomic and company-specific
circumstances and to review, and if necessary to
redefine, the strategic orientation.

In the period under review, the Board has held eight
meetings, thereof five meetings in person (two full-day
meetings, one half-day meeting followed by the AGM
2019, one two-days strategy meeting and one two-days
meeting in one of the Company’s growth regions) and
three conference calls (with an average duration of two
hours each). The meetings had an overall attendance of
95% (apologies for absence had been received for two
meetings from the Board member who did not stand for
re-election at the AGM 2019 and for an extraordinary
conference call from one of the other Board members).
In addition, the Board passed two decisions by way of
circular resolution.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCorporate Governance Report continued

For the period under review, the Compensation
Committee held six meetings, thereof four meetings in
person and two conference calls, each with 100%
attendance and an average duration of approximately
two hours. The Audit and Risk Committee held five
in-person meetings, each with 100% attendance and an
average duration of approximately 3.5 hours. The
Nomination and Governance Committee held five
meetings, thereof three meetings in person and two
conference calls, each with 100% attendance and an
average duration of approximately 1.5 hours.

The Board meetings were, with the exception of certain
directors-only sessions, usually attended by the CEO,
CFO and other members of the Group Executive Board
and other representatives of senior management.
Some of the meetings of the Board of Directors and
its Committees were partially attended by external
advisers, in particular an external advisor to the
Compensation Committee regularly attended meetings
of such committee. Meetings of the Audit and Risk
Committee were attended by the CFO, Head of Internal
Audit and Chief Compliance Officer, and usually by the
CEO. Representatives of the auditor also attended
individual meetings or individual agenda items of
meetings of the Audit and Risk Committee. Meetings of
the Compensation Committee were regularly attended
by the CEO and the Head of Human Resources. The
Nomination and Governance Committee meeting was
attended by the CEO and by a member of management
acting as Secretary.

13 The detailed description of these responsibilities and duties of the Board of Directors,

its Committees and the Group Executive Board are stipulated in the Articles of
Association (https://www.sig.biz/investors/en/governance/articles-of-association) and
the Organizational Regulations (https://www.sig.biz/investors/en/governance/
organizational-regulations).

6 Areas of responsibility

• the notification of a judge in case of over-

The Board, acting collectively, has the ultimate
responsibility for the conduct of business of the
Company and for delivering sustainable shareholder and
stakeholder value. The Board sets the Company’s
strategic aims, ensures that the necessary financial and
human resources are in place to meet the Company’s
objectives and supervises and controls the management
of the Company. It may take decisions on all matters that
are not expressly reserved to the shareholders’ meeting
or to another corporate body by law, by the Articles, or
the Organisational Regulations. The Board’s non-
transferable and irrevocable duties, as set out in the CO
and art. 19 para. 3 of the Articles of Association,
include:13

• the ultimate direction of the Company and the power

for issuing the necessary directives;

• determining the organisation of the Company;
• the overall structure of the accounting system,

financial control and financial planning;

• the appointment and dismissal of those persons
responsible for the conduct of business and for
representing the Company, the regulation of
signatory authorities and the determination of their
other authorities;

• the ultimate supervision of the persons entrusted

with the management of the Company, in particular
with respect to their compliance with the law, the
Articles of Association, regulations and directives;
• the preparation of the annual report, Compensation
Report and the shareholders’ meeting, including the
implementation of the resolutions adopted by the
shareholders’ meeting;

indebtedness;

• the passing of resolutions regarding the subsequent
payment of capital with respect to non-fully paid-in
shares and the respective amendments of Articles of
Association;

• the passing of resolutions concerning an increase of
the share capital and regarding the preparation of
capital increase reports as well as the respective
amendments to the Articles of Association; and
• the non-transferable and inalienable duties and

powers of the Board of Directors by law, such as the
Swiss Federal Merger Act on Merger, Demerger,
Transformation and Transfer of Assets of 1 July 2004,
as amended or the Articles of Association.

In addition, Swiss law and the Organisational Regulations
reserve to the Board the powers, inter alia,

• to set financial objectives and approve, via the

budget and financial planning process, the necessary
means to achieve these objectives, including
approving a capital allocation framework;

• to decide on the Group entering into substantial new
business areas or exiting from a substantial existing
business area, in each case, insofar as not covered by
the current approved strategic framework;
• to appoint and remove the CEO and the other

members of the Group Executive Board;

• to set the risk profile and the risk capacities of the

Group; and

• to approve all matters and business decisions where
such decisions exceed the authority delegated by the
Board to the board committees, the CEO or the
Group Executive Board.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCorporate Governance Report continued

The Board of Directors has delegated the operational
management of the Company and the Group to the
Group Executive Board headed by the CEO, subject to
the duties and powers reserved to the Board by Swiss
law, the Articles of Association, and the Organisational
Regulations. The Group Executive Board is responsible
for implementing and achieving the Company’s corporate
objectives and for the management and control of all
Group companies14. The Group Executive Board is
directly supervised by the Board of Directors and its
Committees.

Pursuant to the Organisational Regulations, the CEO is
appointed upon recommendation by the Nomination
and Governance Committee and may be removed by the
Board of Directors. The other members of the Group
Executive Board are appointed by the Board of Directors
upon recommendation by the Nomination and
Governance Committee in consultation with the CEO and
may be removed by the Board of Directors.

Information and control instruments vis-à-vis

7
Group Executive Board

The Board of Directors supervises the Group Executive
Board and uses reporting and controlling processes to
monitor its operating methods. At each of its meetings,
the Board of Directors is informed by the CEO, or by
another member of Group Executive Board, of the
current business and significant events. At these
meetings, members of the Board of Directors may ask
other members of the Board of Directors or the CEO to
provide information about the Group that they require in
order to carry out their duties. The Chairman has regular

14 The Group Executive Board exercises those duties which the Board of Directors has
delegated to the management in accordance with the Company’s Organisational
Regulations (https://www.sig.biz/investors/en/governance/organizational-regulations)
and Swiss law.

interaction with the CEO between Board meetings. The
course of business and all major issues of corporate
relevance are discussed at least once a month. Executive
Management provides monthly reports to the Board
regarding the financial and operational performance of
the business. All members of the Board of Directors are
notified immediately of any exceptional occurrences.

The Head of Internal Audit, General Counsel, and
auditing bodies assist the Board of Directors in carrying
out its controlling and supervisory duties. In addition, the
Committees monitor the performance of the Group
Executive Board. The scope of this remit is agreed with
the Board of Directors.

The Committees regularly receive information in the
form of Group reports relevant to their needs. These
reports are typically discussed in depth at regular
meetings of the Committees involved. The Group
Executive Board defines and evaluates the Group’s most
significant risks on the basis of a coordinated and
consistent approach to risk management and control.
Based on a list of the most important risks, the Group
Executive Board establishes a list of measures to prevent
and mitigate potential loss and damage. The list is
presented to the Audit and Risk Committee. After review
and discussion, the Audit and Risk Committee informs
the Board of Directors that directs the Group Executive
Board to ensure that the measures are put into practice.

In addition, the Board of Directors is supported by
Internal Audit. The Audit and Risk Committee reviews
and discusses with the Head of Internal Audit material
matters arising in internal audit reports provided to the
Audit and Risk Committee. Internal Audit has an
unrestricted right to demand information and examine
the records of all Group companies and departments.

In addition, after consultation with the Audit and Risk
Committee, the Group Executive Board may ask Internal
Audit to carry out special investigations above and
beyond its usual remit. The Head of Internal Audit
submits a report to the Audit and Risk Committee at
least annually. The Audit and Risk Committee is
responsible for reviewing and discussing such reports,
the internal audit plan for the Company and budgeted
resources for Internal Audit.

The SIG Group has risk management systems in place at
all its Group companies. Potential risks are reviewed
periodically and significant risks to which the Company is
exposed are identified and assessed for probability of
occurrence and effect. Action to manage and contain
these risks is approved by the Board of Directors.

8 Group Executive Board

8.1 Members of Group Executive Board
The Group Executive Board is headed by the CEO
and comprises seven members, specifically the CEO,
the CFO, the CMO, the CSO, the President & General
Manager Asia-Pacific, the President & General Manager
Americas and the President & General Manager Europe.
The members of the Group Executive Board are
as follows:

Name

Rolf Stangl

Samuel Sigrist

Markus Boehm

Ian Wood

Nationality

Position

Swiss and German

Swiss

German

British

CEO

CFO

CMO

CSO

Lawrence Fok

Singaporean

President & General
Manager Asia Pacific

Ricardo Rodriguez

Brazilian and Spanish President & General

Martin Herrenbrück

German

Manager Americas

President & General
Manager Europe

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCorporate Governance Report continued

Rolf Stangl is a Swiss and German citizen and has served
as CEO since 2008. Mr Stangl joined the Company in
2004 and has held a number of positions across the
organisation, including, amongst others, head of
corporate development and M&A, chief executive officer
of SIG Beverage (a division subsequently divested) and
CMO. Prior to joining the Company, Mr Stangl served as
an investment director for small and mid-cap buyouts at
a family office in London and as a senior consultant with
Roland Berger Strategy Consultants in Germany. Mr
Stangl holds a bachelor’s degree in business
administration from ESC Reims & ESB Reutlingen.

Samuel Sigrist is a Swiss citizen and has served as CFO
and chairman of the Middle East Joint Venture since 2017.
Mr Sigrist joined the Company in 2005 and has worked in
various finance and corporate development roles,
including director of group controlling & reporting, head
of finance/CFO of Europe and head of group projects.
From 2013 to 2017, Mr Sigrist was the Company’s
president & general manager, Europe and prior to joining
the Company, he worked as a consultant. Mr Sigrist holds
a bachelor’s degree in business administration from the
Zurich University of applied sciences, an MBA from the
University of Toronto and a global executive MBA from
the University of St. Gallen. Mr Sigrist is also a Swiss
certified public accountant.

the Company, Mr Boehm worked at Hilti in Switzerland,
Hong Kong and China and held various finance positions
at Procter & Gamble in Germany and the UK. He
graduated with a BS in economics from the Wharton
School and a bachelor of arts in political science from the
University of Pennsylvania.

Ian Wood is a British citizen and has served as Chief
Supply Chain Officer since he joined the Company in
2018. Previously, Mr Wood spent 15 years at Honeywell
initially in the supply chain function and later as vice
president & general manager of various business units
within the Home & Building technologies segment. Prior
to joining Honeywell, Mr Wood worked at A.T. Kearney
and Ford Motor Company. Mr Wood holds a master’s
degree in manufacturing engineering from Cambridge
University, UK and an MBA from Cranfield School of
Management, UK.

Lawrence Fok is a Singapore citizen and has served as
President and General Manager of the Asia-Pacific region
since he joined the Company in 2012. Prior to joining the
Company, Mr Fok held senior management positions at
Norgren China, Alcan Global Pharmaceutical Packaging,
SCA Packaging China and Avnet Asia. Mr Fok holds a
bachelor’s degree in Mechanical Engineering, a MS in
industrial & systems engineering from the National
University of Singapore, and a Grad. Dip. in Financial
Management from the Singapore Institute of
Management.

Ricardo Rodriguez is a Brazilian and Spanish citizen and
has served as President and General Manager of the
Americas region since 2015. Mr Rodriguez joined the
Company in 2003 and previously served as director &
general manager, South America and technical service
director, South America. Prior to joining the Company, Mr
Rodriguez worked at Tetra Pak in a number of roles,
including general manager of the Belo Horizonte branch,
key account manager and technical service manager. He
holds a BS degree in aeronautical mechanical
engineering from the Technological Institute of
Aeronautics in Brazil, an MBA from the Getúlio Vargas
Foundation and a specialisation course in management
at IMD-Lausanne.

Martin Herrenbrück is a German citizen and has served as
President and General Manager of the Europe region
since 2017. Mr Herrenbrück joined the Company in 2006
and previously held the positions of Head of Cluster
Europe, Head of Cluster Asia-Pacific South, Head of
Global Marketing and other corporate development
roles. Prior to joining the Company, he worked for several
years at Roland Berger Strategy Consultants in Germany.
Mr Herrenbrück holds a MS in Management from HHL–
Leipzig Graduate School of Management and an MBA
from KDI School of Public Policy and Management in
Seoul, South Korea.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCorporate Governance Report continued

8.2 Number of permissible activities
In the interest of good governance, the Company’s
Articles of Association limit the number of outside
mandates by the members of the Group Executive Board
as follows:

(i) up to one mandate in listed firms15;

(ii) up to five mandates in non-listed firms; and

(iii) up to five mandates in foundations, associations,

charitable organisations and other legal entities.

Such a mandate shall mean an activity in superior
governing or administrative bodies of legal entities that
are obliged to register themselves in the commercial
registry or any comparable foreign register except for the
Company and any entity controlled by, or controlling, the
Company. The Board of Directors shall ensure that such
activities do not conflict with the exercise of duties to the
Group. Functions in various legal entities that are under
joint control, or in entities in which this legal entity has a
material interest, are counted as one function.

8.3 Management agreements
The Company has not entered into any management
contracts with persons outside the Group for the
delegation of executive management tasks.

9 Compensation, shareholdings and loans

All details of compensation, shareholdings and loans are
listed in the Compensation Report on pages 56 et seqq.

10 Shareholders’ rights of participation

10.1 Restrictions of voting rights and representation
Each share that is entered in the share register entitles
the shareholder to one vote. The voting rights may be
exercised only after a shareholder has been registered in
the Company’s share register as a shareholder with
voting rights up to a specific qualifying day (record date)
which is designated by the Board of Directors. On
application, persons acquiring shares are entered in the
share register as shareholders with voting rights without
limitations, provided they expressly declare having
acquired the shares in their own name and for their own
account and that they comply with the disclosure
requirement stipulated by the FMIA. Entry in the share
register of registered shares with voting rights is subject
to the approval of the Company.

The entry may be refused based on the grounds set
forth in art. 7, para. 3, para. 4, para. 5 and para. 6 of the
Articles of Association. The respective rules have been
described in Section 2.5 “Limitations on Transferability
and Nominee Registrations” of this Corporate
Governance Report. If the Company does not refuse
to register the applicant acquirer as a shareholder with
voting rights within 20 calendar days upon receipt of the
application, the acquirer is deemed to be a shareholder
with voting rights. Acquirers that are not eligible for
registration are entered in the share register as
shareholders without voting rights. The corresponding
shares are considered as not represented in the General
Meeting.

The rights of shareholders to participate in General
Meetings comply with legal requirements and the
Articles of Association (https://www.sig.biz/investors/en/
governance/articles-of-association). Every shareholder
may personally participate in the General Meeting and
cast his/her vote(s), or be represented by a proxy
appointed in writing, which proxy need not be a
shareholder, or be represented by the independent
proxy. Shareholders may issue their power of attorney
and instructions to the independent proxy by post or
electronically. The independent proxy is obliged to
exercise the voting rights that are delegated to him/her
by shareholders according to their instructions. Should
he/she have received no instructions, he/she shall
abstain from voting.

On an annual basis, the Annual General Meeting elects
the independent proxy with the right of substitution. His/
her term of office terminates at the conclusion of the
next Annual General Meeting. Re-election is possible.
Should the Company have no independent proxy, the
Board of Directors shall appoint an independent proxy
for the next Annual General Meeting.

10.2 Quorum requirements
Unless a qualified majority is stipulated by law or the
Articles of Association, the General Meeting makes its
decisions on the basis of the relative majority of valid
votes cast, regardless of the number of shareholders
present or shares represented. Abstentions and blank
votes do not count as votes. The resolutions require the
approval of a simple majority of votes represented.

15 Pursuant to art. 727 para. 1 number 1 CO.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCorporate Governance Report continued

10.3 Convening the Annual General Meeting
The Annual General Meeting is convened by the Board of
Directors or, if necessary, by the Company’s independent
auditors. Extraordinary General Meetings may be held
when deemed necessary by the Board of Directors or
the Company’s auditors. Liquidators may also call a
General Meeting. Furthermore, Extraordinary General
Meetings must be convened if resolved at a General
Meeting or upon written request by one or more
shareholder(s) representing in aggregate at least 10% of
the Company’s share capital registered with the
commercial register.

General Meetings are convened by publication in the
Swiss Official Gazette of Commerce at least 20 days prior
to the date of the meeting. Such publication and letters
of invitation must indicate the date, time and venue of
the meeting, the items on the agenda, and the wording
of any motions proposed by the Board of Directors or by
shareholders who have requested the convention of a
General Meeting or the inclusion of an item on the
meeting’s agenda.

10.4 Inclusion of agenda items
The Board of Directors is responsible for specifying the
agenda. Registered shareholders with voting rights
individually or jointly representing at least 5% of the
Company’s share capital or shares with a nominal value

16 Onex Partners IV LP, George Town, Cayman Islands; Onex Partners IV PV LP, Wilmington,

Delaware, United States of America; Onex Partners IV Select LP, George Town, Cayman
Islands; Onex Partners IV GP LP, George Town, Cayman Islands; Onex US Principals LP,
Wilmington, Delaware, United States of America; Onex Partners Holdings Limited SARL,
Munsbach, Grand Duchy of Luxembourg; Onex Advisor Subco LLC, Delaware, United
States of America; Onex SIG Co-Invest LP, George Town, Cayman Islands; Wizard
Management I GmbH & Co. KG, Munich, Germany and Wizard Management II GmbH &
Co. KG, Munich, Germany, together the current direct shareholders, as well as all other
companies directly or indirectly held now or in the future by Onex Corporation, Toronto,
Ontario, Canada.

17 For further information on compensation with respect to a change of control please

refer to page 68.

of at least CHF 1 million may request that an item be
placed on the agenda of a General Meeting of the
Company, provided they submit details thereof to the
Company in writing at least 45 calendar days in advance
of the shareholders’ meeting concerned.

10.5 Registration in the share register
Only shareholders who are registered in the share
register as shareholders with voting rights at a specific
qualifying day (record date) designated by the Board of
Directors are entitled to attend a General Meeting and to
exercise their voting rights. In the absence of a
designation of the record date by the Board of Directors,
the record date shall be ten days prior to the General
Meeting.

11 Change of control and defence measures

11.1 Duty to make an offer
Art. 9 of the Company’s Articles of Association provides
for a “selective opting-out”, according to which the Onex
Persons16 are, acting individually or in joint agreement
with other Onex Persons, exempted from the obligation
to submit a public takeover offer pursuant to art. 135
para. 1 FMIA in respect of the following circumstances:

transactions in shares or other reportable securities
under FMIA (i) between any Onex Person and (ii)
between any Onex Person on the one hand and
any member of the Board of Directors or the
management of the Company or of the SIG Group
on the other hand;

any other arrangements between the persons
mentioned in (a) above potentially triggering the
obligation to submit a public takeover offer; and

any change of the holder of multiple voting shares
(MVS) of Onex Corporation held by its president and
CEO, Gerald W. Schwartz, but not any change of
control in the subordinated voting shares (SVS) of
Onex Corporation that are publicly traded on the
Toronto Stock Exchange.

11.2 Change of control clauses
There are no change-of-control provisions in favour of
any member of the Board of Directors and/or the Group
Executive Board and/or other management personnel.
However, in the event of a change of control, restricted
share units, performance share units as well as shares
subject to transfer restrictions or vesting periods
granted to members of the Board of Directors and the
Group Executive Board may be subject to accelerated
vesting or early lifting of restrictions under the applicable
plans.17

12 Auditors

12.1 Duration of the mandate and term of office of the
Auditor in charge
The auditors are elected annually at the Annual General
Meeting for one year. The grounds for selection of
external auditors are customary criteria such as
independence, quality, reputation and cost of services.
PricewaterhouseCoopers AG, St. Jakobstrasse 25, 4002
Basel, Switzerland (“PwC”) have been the statutory
auditors of the Company since the migration of the
Company from Luxembourg to Switzerland which
occurred on 27 September 2018 and were re-elected at
the AGM 2019. Prior to the Company’s migration, the
independent registered auditors (réviseur d’entreprises
agréé) of SIG Combibloc Group AG (formerly SIG
Combibloc Group Holdings S.à r.l.) were
PricewaterhouseCoopers, Société coopérative, Luxembourg,
who have been the independent registered auditors of
the Company since the period ended 31 December 2015.
The main Group companies are also audited by PwC.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCorporate Governance Report continued

Thomas Brüderlin (audit expert) as auditor in charge is
responsible for auditing the financial statements of the
Company as well as for the consolidated financial
statements of the Group. The lead auditor has to rotate
every seven years in accordance with Swiss law. Thomas
Brüderlin’s last year as auditor in charge will be YE 2019.

12.2 Fees
The fees charged by PwC as the auditors of the Company
and of the Group companies audited by them, as well as
their fees for audit-related and additional services, are as
follows:

CHF 1,000

Audit

Audit related services

Tax and other services

Total

2019

1,638

254

264

2,156

12.3 Informational instruments pertaining to
the Auditors
The Board exercises its responsibilities for supervision
and control of the external auditors through the Audit
and Risk Committee. The Audit and Risk Committee
assesses the professional qualifications, independence,
quality and expertise of the auditors as well as the fees
paid to them each year and prepares an annual
appraisal. It recommends to the Board proposals for the
general shareholders’ meeting regarding the election or
dismissal of the Company’s independent auditors. The
assessment of the performance of the external auditor is
based on key criteria, such as efficiency on the audit
process, validity of the priorities addressed in the audit,
objectivity, scope of the audit focus, quality and results of
the audit reports, resources used and the overall
communication and coordination with the Audit and Risk

Committee and Group Executive Board as well as the
audit fees. The Audit and Risk Committee further
coordinates cooperation between the external auditors
and the internal auditors.

Prior to the audit, the auditors agree the proposed audit
plan and scope, approach, staffing and fees of the audit
with the Audit and Risk Committee. Special assignments
from the Board of Directors are also included in the
scope of the audit.

PwC presents to the Audit and Risk Committee, on an
annual basis, a comprehensive report on the results of
the audit of the consolidated financial statements, the
findings on significant accounting and reporting matters,
and findings on the internal control system, including any
significant changes in the Company’s accounting
principles, the selection and disclosure of critical
accounting estimates, and the effect of alternative
assumptions, estimates or accounting principles on the
Company’s financial statements as well as the status of
findings and recommendations from previous audits.
The results and findings of this report are discussed in
detail with the CFO and the Audit and Risk Committee
where representatives of the auditor explain their
activities and respond to questions. The Audit and Risk
Committee also monitors whether and how the Group
Executive Board implements measures based on the
auditor’s findings.

Each year, the Audit and Risk Committee evaluates the
effectiveness of the external audit, performance, fees
and independence of the auditors and the audit strategy.
The Board of Directors discusses and reviews the scope
of the audits and the resulting reports. On this basis, it
decides on any changes or improvements to be made.
Representatives of the auditor attend individual

meetings or individual agenda items of meetings of the
Audit and Risk Committee. Furthermore. There is regular
contact between the auditors, the Group Executive
Board, and the Audit and Risk Committee outside of
meetings. During the period under review there were
four meetings between the Audit and Risk Committee
and the auditors at which PwC presented their proposal
for the scope of the audit of the Group’s financial
statements for the year ended 31 December 2019.

Additional services or consulting assignments are
delegated to the auditors only if they are permitted by
law and the auditor’s code of independence. The
auditors are required to confirm that their performance
of these additional services will not affect the
independence of their auditing mandate. The Audit and
Risk Committee pre-approves all permitted non-audit
services performed by the auditors, and reviews the
compatibility of non-audit services performed by them
with their independence requirements. This procedure is
aimed at ensuring PwC’s independence in their capacity
as auditors to the Group. PwC monitors its
independence throughout the year and confirms its
independence to the Audit and Risk Committee annually.

13 Information policy

The Group is committed to communicating in a timely
and transparent way to shareholders, potential investors,
financial analysts and customers. Toward this end, the
Board of Directors takes an active interest in fostering
good relations and engagement with shareholders and
other stakeholders. In addition, the Company complies
with its obligations under the rules of SIX Swiss Exchange,
including the requirements on the dissemination of
material and price-sensitive information.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCorporate Governance Report continued

The Group publishes an annual report that provides
audited consolidated financial statements, audited
financial statements and information about the Company
including the business results, strategy, products and
services, corporate governance and executive
compensation. The Annual Report is published within
four months after the 31 December balance sheet date.
The annual results are also authorised in the form of a
press release. In addition, the Company releases results
for the first half of each year within three months after
the 30 June balance sheet date. The published half year
and annual consolidated financial statements comply
with the requirements of Swiss company law, the listing
rules of SIX Swiss Exchange and International Financial
Reporting Standards (“IFRS”). Furthermore, the Group
publishes trading statements for the first and third
quarters in the form of a press release. The quarterly
press releases contain unaudited financial information
prepared in accordance with IFRS.

The Company’s Annual Report, Half-Year Report, and
quarterly releases are distributed pursuant to the rules
and regulations of SIX Swiss Exchange and are
announced via press releases and investor conferences
in person or via telephone. An archive containing annual
reports, half-year reports, quarterly releases, and related
presentations can be found at https://investor.sig.biz.

The Group reports in accordance with the disclosure
requirements of art. 124 FMIA and the ad hoc publication
requirements of art. 53 of the listing rules of SIX Swiss
Exchange. At https://investor.sig.biz/en-gb/contact/,
interested parties can register for the free Company
email distribution list in order to receive direct, up-to-
date information at the time of any potentially price-
sensitive event (ad hoc announcements). Ad hoc
announcements may be viewed at https://www.sig.biz/
investors/en/news-events/media-releases at the same
time as notification to SIX Swiss Exchange and for two
years thereafter.

Notices to shareholders are made by publication in the
Swiss Official Gazette of Commerce (Schweizerisches
Handelsamtsblatt). To the extent the Company
communicates to its shareholders by mail, such
communications shall be sent by ordinary mail to the
recipient and address recorded in the share register or in
such other form as the Board of Directors deems fit.

The Company’s website:
https://www.sig.biz

Ad hoc messages (pull system):
https://www.sig.biz/investors/en/news-events/
media-releases

In addition, the Company publishes a Corporate
Responsibility Report on an annual basis, produced in
accordance with the Global Reporting Initiative (GRI) G4
Guidelines Core option. An archive containing corporate
responsibility reports can be found in the “Responsibility”
section at https://www.sig.biz/investors/en/performance/
corporate-responsibility-report.

Subscription for ad hoc messages (push system):
https://www.sig.biz/investors/en/contact

Financial reports:
https://www.sig.biz/investors/en/performance/
historical-financial-statements

Corporate Responsibility Reports:
https://www.sig.biz/investors/en/performance/
corporate-responsibility-report

Corporate calendar:
https://www.sig.biz/investors/en/news-events/overview

Contact address:
The SIG Group Investor Relations Department can be
contacted through the website or by telephone, email
or letter.

SIG Combibloc Group AG
Laufengasse 18
8212 Neuhausen am Rheinfall
Switzerland

+41 (52) 674 6508
jennifer.gough@sig.biz

Financial calendar
The important dates for 2020 include:

2019 full year results

25 February 2020

Publication of the Annual General Meeting 2020
invitation

Annual General Meeting 2020

Release of first quarter 2020 key financial data

Publication of half-year report 2020

13 March 2020

7 April 2020

5 May 2020

28 July 2020

Release of third quarter 2020 key financial data

27 October 2020

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCompensation Report

COMPENSATION REPORT

Colleen Goggins
Chairwoman of the
Compensation Committee

Our remuneration system
rewards performance in a
balanced and sustainable
manner and aligns well
with shareholders’
interests.

Letter from the Chairwoman of the
Compensation Committee

Dear Shareholders,
On behalf of the Board of Directors and the
Compensation Committee, I am pleased to introduce
SIG Combibloc Group’s (“SIG”) Compensation Report
for the year ended 31 December 2019. This report on
compensation completes our business, financial,
and corporate governance reports and explains SIG’s
compensation system and its governance, as well as
how the performance of SIG impacts the variable
compensation of the Group Executive Board.

The Compensation Committee can now look back on
one full term of service after the IPO in September 2018.
2019 was characterised by implementing our
performance-based Long-Term Incentive plan (“LTIP”)
under which the first grant occurred. This fosters the
alignment of the participating Group Executive Board
members and the key managers with our shareholders
and is a key element to reflect the principle of “pay for
performance” in our compensation framework. Further
details of our LTIP are provided in Section 5. The
Compensation Committee also educated itself on recent
developments in compensation, legal, and governance-
related matters pertaining to Swiss-listed companies.

The purpose of SIG’s compensation framework is to
attract, engage, and retain executives and employees,
to drive performance and to encourage behaviours that
are in line with SIG’s values as well as with the long-term
interests of shareholders. The Compensation

Committee regularly assesses, reviews and develops
the compensation framework at SIG to ensure that it is
fulfilling its purpose, reflecting the performance and
culture of the Company, and aligning the interests of
different stakeholders.

At the upcoming Annual General Meeting, we will ask
the shareholders to approve prospectively in binding
votes the maximum aggregate amount of compensation
for the Board of Directors until the next Annual General
Meeting in 2021 and the maximum aggregate amount of
compensation for the Group Executive Board for the
year 2021. Further, this Compensation Report will be
submitted for a non-binding, consultative vote of the
shareholders.

We will continue an open and regular dialogue with
our shareholders as we continue to further develop
the compensation system. We are confident that
this report includes all relevant information and that
our remuneration system rewards performance in a
balanced and sustainable manner and aligns well with
shareholders’ interests.

On behalf of SIG, the Compensation Committee and
the entire Board of Directors, I would like to thank you,
our shareholders, for your contributions and continued
trust in SIG.

Colleen Goggins
Chairwoman of the Compensation Committee

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCompensation Report continued

1. Introduction
This Compensation Report has been prepared in compliance with Swiss laws and
regulations, including the Ordinance against Excessive Compensation of Listed Stock
Companies. The report is in line with the Directive on Information relating to Corporate
Governance of SIX and also takes into account the recommendations set out in the
Swiss Code of Best Practice for Corporate Governance of economiesuisse.

• Principles for the compensation of the members of the Board and the

Group Executive Board (Art. 24 to 26)
Members of the Board of Directors receive fixed compensation, while members of
the Group Executive Board receive fixed and variable compensation. The variable
compensation may include short-term and long-term variable compensation
components. These are governed by quantitative and qualitative performance
criteria that take into account the performance of SIG.

The Compensation Report contains the following information:

• Compensation approvals by the General Meeting (Art. 27)

• A description of the compensation governance and compensation framework at

SIG

• The compensation of the members of the Board of Directors (“Board”) for 2019
• The compensation of the Group Executive Board for 2019

2. Compensation governance

Articles of
Association

Approve

Defined in

Annual
General
Meeting
(“AGM”)

Compensation
governance
decisions by...

Board of
Directors &
Compensation
Committee

Defined in

Compensation
Committee
Charter

Figure 1: Compensation governance at SIG

The compensation governance structure at SIG involves three primary bodies, as
depicted in Figure 1: (1) the Board, (2) the Compensation Committee (“CC”), acting in an
advisory capacity for the Board and (3) SIG’s shareholders at the Annual General
Meeting (“AGM”). The Compensation Committee Charter and the Articles of Association
outline and define the roles and responsibilities of these bodies. The Articles of
Association contain the following relevant provisions on compensation:

The AGM has the authority to approve the maximum aggregate amount of
compensation for the Board of Directors for the ensuing term of office and the
maximum aggregate amount of compensation for the Group Executive Board for the
following year.

• Supplementary amounts available for members joining the Group Executive
Board or being promoted within the Group Executive Board to CEO after the
relevant approval of compensation by the AGM (Art. 27, para. 4)
SIG is authorised to pay compensation to such members of the Group Executive
Board without further approval even in excess of the maximum aggregate amount
approved by the AGM for the relevant year, provided that the sum of such excess
amount is not greater than 40% of the approved maximum aggregate amount of
compensation for the Group Executive Board for such year.

• Retirement benefits (Art. 30)

SIG may establish or join one or more independent pension funds for occupational
pension benefits. Instead or in addition, SIG may directly offer retirement benefits
(such as pensions, purchase of health care insurances, etc.) outside of the scope of
occupational pension benefit regulations to members of the Group Executive Board
and may pay them out after retirement.

The Articles of Association can be found on our homepage for investors
www.sig.biz/investors/en/governance/articles-of-association or download
the document directly here: cms.sig.biz/media/5241/aoa-sig-combibloc-
group-ag.pdf.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancials

Compensation Report continued

The roles of the Compensation Committee and the AGM are described in more detail
in the following paragraph. The general split of responsibilities and authorities between
the Board, the Compensation Committee and the AGM is illustrated in Figure 2.

Role of the shareholders (AGM) – shareholder engagement
In line with SIG’s Articles of Association, particularly Art. 11 and Art. 27, the Board will
submit three separate compensation-related resolutions for shareholder approval at
the 2020 AGM, as illustrated in Figure 3:

Compensation principles (Articles of Association)

CEO

Compensation
Committee

Board of
Directors

Approval
(subject
to AGM
approval)

AGM

Approval
(in case of
changes,
binding vote)

Compensation strategy and guidelines

Proposal

Approval

Key terms of compensation plans and
programmes for members of the Board of
Directors and Group Executive Board

Total compensation for members of the
Board of Directors

Total compensation and benefits for members
of the Group Executive Board

Employment and termination agreements
for the CEO

Employment and termination agreements
for members of the Group Executive Board

Proposal

Approval

Approval
(subject
to AGM
approval)

Proposal

Approval

Proposal

Review

Approval

Compensation Report

Proposal

Approval

Individual total compensation of the CEO

Proposal

Approval

Individual total compensation of other
members of the Group Executive Board

Proposal

Review

Approval

Figure 2: Authority table regarding compensation

Board vote
(Binding)

Group
Executive
Board vote
(Binding)

AGM 2020

AGM 2021

t
a
e
t
o
V

0
2
0
2
M
G
A

Maximum aggregate
amount for the term
AGM 2020 – AGM 2021

t
a
e
t
o
V

0
2
0
2
M
G
A

Maximum aggregate
amount for FY 2021

Approval
(binding vote)

Report vote
(Consultative)

t
a
e
t
o
V

0
2
0
2
M
G
A

Compensation
Report FY 2019

Approval
(binding vote)

Approval
(consultative
vote)

2019

2020

2021

2022

Figure 3: Overview of votes at the 2020 AGM

Compensation Committee – activities during 2019
The Compensation Committee consists of three independent, non-executive Board
members who are elected annually and individually by the Annual General Meeting for
a one-year term until the following Annual General Meeting. The main role of the
Compensation Committee is to assist the Board in fulfilling its responsibilities relating
to the compensation of the members of the Board and the Group Executive Board of
SIG. It supports the Board in discharging its duties, sets guidelines regarding the
compensation of the members of the Board, the Chief Executive Officer (“CEO”), and
the other members of the Group Executive Board, proposes the maximum aggregate
amount of compensation to be awarded, and prepares the related motions for the
Annual General Meeting.

The Compensation Committee Chairperson ensures that the Board members are kept
informed in a timely and appropriate manner of all material matters within the
Compensation Committee’s area of responsibility.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancials

Compensation Report continued

The Compensation Committee Chairperson convenes the meetings of the Compensation Committee as often as any business affairs of SIG require, but at least three times a
year. In 2019, the Committee held six meetings. The topics covered are described in Figure 4. Details on the Compensation Committee members are provided in the Corporate
Governance Report included elsewhere in the 2019 Annual Report. All members of the Committee had full meeting attendance during the reporting year.

Agenda Item

January

February

May

July

September

December

Principles and design of
compensation plans

Compensation Group
Executive Board

Market intelligence (recent developments in
compensation, legal, governance landscapes)

Long-term incentive framework for 2020 and
onwards to enlarge participants group

Short-term Incentive Plan
– Target achievement 2018
– Target setting 2019
– General target framework review including KPI

measures 2020

Long-term Incentive Plan
– Target setting for grant 2019 and approval of plan

participants

Review target compensation for the CEO and the
Group Executive Board for 2020
Proposal to the Board of Directors

Compensation Board
of Directors

Review compensation for the Board of Directors and
Proposal to the Board of Directors

General framework

Shareholding Guidelines Assessment

General review of policies and partial update

Communication

AGM invitation including determination of the
maximum amounts of compensation for the Board of
Directors (for the term AGM 2019 to AGM 2020) and the
Group Executive Board (year 2020)

Analysis of the compensation voting results of the
AGM and the proxy advisers feedback

Compensation Report

Figure 4: Topics covered by the Compensation Committee in 2019

A performance review of members of the Board and of the Group Executive Board was conducted by the Nomination and Governance Committee with the members of the
Compensation Committee in attendance, so that close coordination was ensured.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCompensation Report continued

The Compensation Committee may ask members of the Group Executive Board, one
or more senior managers in the human resources function and third parties to attend
meetings in an advisory capacity and may provide them with all appropriate
information. The Chairperson of the Board and the CEO did not attend the meeting
when their own compensation was discussed. The Chairperson of the Compensation
Committee reported to the Board after each meeting on the substance of the meeting.
All documents and the minutes of the Compensation Committee meetings are
available to all members of the Board and all members of the Board may attend any
committee meetings as guests. The Compensation Committee regularly holds private
sessions (i.e. without the presence of members of the Group Executive Board, senior
managers or third parties). The Compensation Committee may decide to consult
external advisers for specific compensation matters. In 2019, the Compensation
Committee mandated different external consultants for specific advisory services. One
of these external advisers is part of one of the big four accounting firms (however not
our external auditor). Separate practice groups of this firm were retained to advise the
Group on certain compensation unrelated matters in 2019.

3. Compensation principles
The compensation framework of SIG reflects the commitment to attract, engage and
retain top talents globally. SIG’s overall compensation framework is long-term in nature
and designed to reward outperformance and effectively address underperformance,
with performance defined relative to targets and, in some case, relative to peers. SIG
endeavours to make its compensation principles simple and transparent for the
benefit of shareholders, Board and management. The compensation principles are
illustrated in Figure 5.

d
n
a
s
e
v
i
t
c
e
b
O

s
e
p
i
c
n
i
r
P

• Be competitive to attract and retain top talent and at the same time be

reasonable in terms of amount and composition

• Be balanced in terms of weight between base salary, STIP and LTIP

• Be long-term as well as simple and transparent

• Be developed to reward outperformance and effectively tackle

underperformance

• Be fully compliant with relevant laws and regulations

Figure 5: SIG compensation framework, objectives and principles

To assess SIG’s compensation system not only from an internal equity perspective but
also from an external competitiveness perspective, regular market benchmark

analyses are conducted by the Compensation Committee regarding the level as well as
the structure of the compensation of the Board and the Group Executive Board.

For the Board, Swiss-listed industrial companies are considered the most relevant
reference market for compensation comparison, reflecting the specific governance
regime and regulatory aspects of the Swiss market1. For the Group Executive Board,
a broader industry-related European comparator group is considered appropriate to
assess compensation practices, structure and pay levels given SIG’s international
footprint and reflecting the recruiting2. In both cases, size criteria apply.

A benchmark analysis for the Group Executive Board was conducted in 2019 using the
same comparison groups as in the previous benchmark to ensure consistency. The
Committee will continue to review the compensation packages with regards to level and
structure for the Board as well as the Group Executive Board on a regular basis. Similarly,
the composition of the respective comparison group will also be reviewed regularly.

Figure 6 provides an overview of the compensation elements for the Board and the
Group Executive Board:

Board of Directors

Group Executive Board

Annual base salary

Annual base fee

Annual committee fee

s
t
n
e
m
e

Pension benefits/other benefits

s Short-term incentive plan
t
n
e
m
e

Long-term incentive plan

n
o
i
t
a
s
n
e
p
m
o
c

d
e
x
i
F

e
b
a
i
r
a
V

Figure 6: Overview of compensation elements

Additional details for all the compensation elements are included later in the report.

1 The comparison group used for the most recent compensation benchmarking analysis of the Board consisted of the following Swiss

listed industrial companies: ARYTZA, Barry Callebaut, BKW, Bucher, Clariant, DKSH, dormakaba, Dufry, Flughafen Zuerich, Geberit,
Georg Fischer, OC Oerlikon, SFS Group, Straumann, Sulzer, Sunrise, Vifor Pharma.

2 The comparison group used for the compensation benchmarking analysis of the Group Executive Board conducted in 2019
consisted of the following comparators: Aalberts, AMS, ARYTZA, Barry Callebaut, BKW, Bucher, Clariant, DKSH, DMG MORI,
dormakaba, Duerr, Dufry, Flughafen Zuerich, GEA; Georg Fischer, IMI, Kingspan, OC Oerlikon, PRC, SFS Group, Spirax-Sarco,
Straumann, Sulzer, Vifor Pharma, Weir.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancials

Compensation Report continued

4. Compensation framework for the Board of Directors
Compensation approach for the Board of Directors
To underline the role of the Board to perform independent oversight and supervision
of SIG, the entire compensation of the Board is fixed and does not contain any variable
pay component.

The equity component is intended to further strengthen the long-term focus of the
Board in performing its duties. Both the cash and share elements are paid out in
arrears on a quarterly basis in four equal instalments. A three-year blocking/vesting
period is applied to the shares and RSUs, expiring at the third anniversary of each
respective grant. This approach is illustrated in Figure 8.

The compensation for the members of the Board of Directors is composed of two
components: a fixed annual base fee and fixed annual committee fee(s) for assuming
the role of the Chairperson of a Board Committee or as a member of Board
committees. Only ordinary members of the Board are entitled to the additional
committee fees. The compensation of the Chairperson of the Board consists of the
annual base fee only. Required employee social security contributions under the
relevant country’s applicable law are included in the compensation. No additional
compensation components such as pension entitlements, lump-sum expenses or
attendance fees are awarded to the members.

The amount of the annual base fee and annual committee fees for the Chairperson
and the members of the respective committees are illustrated in Figure 7.

Annual base
fee (in CHF,
gross)

Annual committee fees (in CHF, gross)

Audit and Risk

Compensation

Nomination and
Governance

Chair

Member

Chair

Member

Chair

Member

Chairperson

550,000

Not entitled

Ordinary
member

175,000

50,000

25,000

40,000

15,000

40,000

15,000

Figure 7: Overview of the Board of Director’s fees

The individual sum of the annual base fee and, where applicable, the annual committee
fee per member is to be paid 60% in cash and 40% in either SIG blocked shares or
Restricted Share Units (“RSUs”), entitling the respective Board member to receive SIG
shares upon vesting of the RSUs. Dividend equivalents are paid to those members of
the Board opting for RSUs, as a substitute for dividends, if any, paid on shares. In order
to simplify the payout process, the Compensation Committee discussed adjustments
to the Board of Director’s compensation approach. Details are outlined in Section 8 of
this Compensation Report.

Share element
(40%)

3-year blocking/vesting period

Share element

Cash element
(60%)

Cash element

Pay mix

Term

Term +1

Term +2

Term +3

Figure 8: Compensation approach of the Board of Directors

Shareholding Guidelines for the Board of Directors
In order to further strengthen the long-term focus of the members of the Board and to
increase the alignment of their interests with those of SIG’s shareholders, Shareholding
Guidelines are in place. Over a three-year period from the first equity grant date, the
members of the Board (including the Chairperson) are expected to build up an
investment in SIG worth the equivalent of 100% of their annual base fees. All blocked
or unblocked shares and vested or unvested entitlements to shares (such as RSUs)
received as a compensation, and shares acquired privately, either outright or
beneficially, by the Board member or his or her immediate family members count
toward meeting this threshold.

In the event that the Shareholding Guidelines are not met by a member of the Board at
the end of the build-up period, non-fulfilment consequences, including sale restrictions
on equity instruments received as compensation, would apply until the Shareholding
Guidelines are met.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCompensation Report continued

Compensation awarded to the Board of Directors (Audited)
Table 1 summarises the compensation for 2019 of the seven non-executive members of the Board. Nigel Wright and David Mansell (until he retired at the AGM 2019) are
associated with Onex Corporation, the major shareholder of SIG, and waived any form of compensation for their services on the Board in 2019.

Table 1: Total compensation of the Board of Directors in 2019 (1 January to 31 December) including information of the prior year

Members of the Board of Directors
on 31 December 2019

Andreas Umbach

Matthias Währen

Colleen Goggins

Werner Bauer

Wah-Hui Chu

Mariel Hoch

Nigel Wright

David Mansell 7

Total

Board
membership

Chair

ARC 1

CC 2

NGC 3

Chair

Settled in
cash,
CHF 4

330,000

135,000

129,000

123,000

129,000

–

Settled in
shares,
CHF 5

220,012

90,005

86,002

82,013

86,002

–

Social security
payments,
CHF 6

Total
compensation
earned in 2019,
CHF

Total
compensation
earned in 2018,
CHF 8

36,847

12,501

14,118

11,897

13,411

15,054

–

586,859

237,506

229,120

226,899

218,424

230,056

–

147,262

59,584

56,924

54,264

57,729

–

975,000

650,036

103,826

1,728,865

432,687

1 Audit and Risk Committee.
2 Compensation Committee.
3 Nomination and Governance Committee.
4 Represents gross amounts paid, prior to any deductions such as employee social security and income withholding tax for services rendered from 1 January until 31 December 2019.
5 Represents gross amounts settled either in blocked shares or in RSUs, prior to any deductions such as employee social security and income withholding tax for services rendered from 1 January until 31 December 2019. The number of blocked shares/RSUs is determined by dividing
each Board member’s individual compensation amount for one award cycle by the average closing price of the SIG share of the last ten trading days immediately preceding each award date. For the December payment the average closing price of the SIG share of the first ten trading
days of the month December applied.

6 Employer social security contributions.
7 Mandate until AGM 2019.
8 Payments are pro rata amounts for the shorter time period between IPO and December 2018.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCompensation Report continued

Assessment of compensation paid to the Board of Directors
The compensation levels for the members of the Board of Directors remained unchanged in 2019 relative to the post-IPO period in the prior year. Given the fact that the
compensation in 2018 was paid only for the period from the IPO on 28 September 2018 until year-end 2018 (three months) while the compensation for 2019 reflects a full year of
service, the compensation figures in Table 1 rose accordingly.

For a reconciliation of the approved and granted amounts, see Figure 9.

25.09.2018
2018 pre-
IPO EGM

01.01.2019
Start of
year

11.04.2019
2019 AGM

31.12.2019
End of
year

07.04.2020
2020 AGM

09/2018 10/2018 11/2018 12/2018 01/2019 02/2019 03/2019 04/2019 05/2019 06/2019 07/2019 08/2019 09/2019 10/2019 11/2019 12/2019 01/2020 02/2020 03/2020 04/2020

Compensation for the period from
2018 pre-IPO EGM to 31 December
2018 = CHF 0.4 million

Compensation for the period
from 1 January 2019 to 2019
AGM = CHF 0.6 million

Compensation for the period AGM 2019 to December 2019 = CHF 1.1 million

Compensation for the term 2018 pre-IPO EGM to AGM 2019 = CHF 1.0 million
(effective 7 months)

Compensation for 2019 = CHF 1.7 million

Amount approved by shareholders at the 2018 pre-IPO EGM (for 9 months) =
CHF 1.9 million

Amount approved by shareholders at the 2019 AGM (for the term AGM 2019 to AGM 2020) = CHF 2.3 million

Figure 9: Reconciliation of compensation of the Board of Directors

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancials
Compensation Report continued

Shareholdings of the Board of Directors (Audited)
Table 2 shows the shareholdings of the Board as of 31 December 2019. Since the
Shareholding Guidelines foresee a build-up period for members of the Board of three
years after the first equity grant starting from 2019, adherence will be assessed for the
first time in 2022.

Table 2: Shareholdings of the Board of Directors as of 31 December 2019 including
information of the prior year

Number
of directly
or beneficially
held shares 1

67,529

20,960

–

22,842

8,888

7,287

–

n/a

RSUs 7

–

7,287

–

6,949

–

n/a

Number
of indirectly
held shares

Total
shareholdings
including RSUs
31 Dec. 2019

Total
shareholdings
31 Dec. 2018

–

23,820 2

–

67,529

20,960

31,107

46,662

39,657

7,287

106,422 3

106,422

n/a

48,888

13,333

23,820 2

39,375 5

32,708 5

–

170,634 3

62,379 3

391,137 6

127,506

14,236

177,882

319,624

Andreas Umbach

Matthias Währen

Colleen Goggins

Werner Bauer

Wah-Hui Chu

Mariel Hoch

Nigel Wright

David Mansell 4

Total

1 Ordinary registered shares of SIG Combibloc Group AG, including blocked shares.
2 Shares are held indirectly through partnership interests in Wizard Management II GmbH & Co. KG, which holds ordinary registered

shares of SIG Combibloc Group AG (for further details see section 6) (figures rounded).
Indirectly attributable through minority investment in affiliates of Onex Corporation, the major shareholder (figures rounded).
The mandate of David Mansell ended at the AGM 2019 so that the Shareholding Guidelines no longer apply for him.
Thereof 23,820 shares held indirectly through partnership interests in Wizard Management II GmbH & Co. KG, which holds ordinary
registered shares of SIG Combibloc Group AG (for further details see section 6) (figures rounded).
Thereof 86,664 shares directly or beneficially held; 304,473 shares held indirectly.
The RSUs will be converted into SIG shares after a three-year vesting period.

3
4
5

6
7

5. Compensation framework for the Group Executive Board
Compensation approach for the Group Executive Board
Compensation of the members of the Group Executive Board is provided through the
following main components: Annual base salary and pension benefits/other benefits,
which together form the fixed compensation component, a short-term incentive plan
(“STIP”) and a long-term incentive plan (“LTIP”), which together form the variable
compensation component. The first grant under the LTIP occurred in 2019. This
compensation framework, fully implemented in 2019, is presented in Figure 10.
Compensation principles are generally reviewed every two to three years and were last
reviewed by the Compensation Committee in 2019.

Long-term
incentive plan
(LTIP) at target

3-year performance/vesting period

LTIP grant

Vesting of long-
term incentive
plan (LTIP)

0-200% of
number of
granted PSUs

Payment of
short-term
incentive plan
(STIP)

0-200% of target
value

Short-term
incentive plan
(STIP) at target

Pension
benefits/other
benefits

Base salary

Pay mix

Reporting year

Reporting year +1

Reporting year +2

Reporting year +3

Figure 10: Illustrative overview of compensation framework of the
Group Executive Board in 2019

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCompensation Report continued

Fixed compensation components:
Annual base salary
The base salary is the main fixed compensation component paid to the members of
the Group Executive Board at SIG. It is paid in cash in twelve equal monthly instalments
unless local law requires otherwise. The level of base salary is determined by the
specific role performed and the responsibilities accepted thereunder. It rewards the
experience, expertise and know-how necessary to fulfil the demands of a specific
position. In addition, the market value of the role in the location where the Company
competes for talent is considered.

Pension benefits/other benefits
As the Group Executive Board is international in its nature, the members participate in
the benefit plans available in the country of their employment contract. Pension
benefits are provided through SIG’s regular pension plan. Members of the Group
Executive Board who are under a foreign employment contract receive benefits in line
with local current market practice. Besides the pension coverage, benefits mainly
include insurance and health care plans. In addition to this, the Group Executive Board
members are also provided with certain executive perquisites and benefits in kind
according to competitive market practice in the country of their employment (e.g.
company cars). The fair value of these benefits is part of compensation and disclosed
in Table 3.

Members of the Group Executive Board with a Swiss employment contract also receive
a lump-sum cash payment as reimbursement for business and representational
expenses, in accordance with the expense policy document approved by the cantonal
tax authority of Schaffhausen.

Variable compensation components:
The variable compensation consists of a short-term incentive and a long-term incentive
component.

Short-term incentive plan (“STIP”)
Under the STIP, the members of the Group Executive Board are rewarded for the
achievement of pre-defined annual financial targets for key performance indicators
(“KPIs”) derived from SIG’s business strategy. In 2019, the STIP framework remained
unchanged. The targets are determined by the Board, based on the recommendation
of the Compensation Committee each year in advance, following a robust process. To
calibrate the achievement curve for the following year, a target achievement level is
identified based on the budget of the respective year. Minimum and maximum
performance achievement levels are defined considering, among other metrics, the
previous year’s performance level as well as the notion that higher payouts should
require proportionally higher levels of performance achievement, which leads to
non-linear achievement curves. To determine the payout, the performance against
each KPI will be assessed individually in a range from 0% to 200% and then combined
according to the assigned weightings (see Figure 11). The overall payout is capped at
200% of the target amount and can fall to zero should the minimum performance
achievement level not be attained.

Eligible participants who have particular regional responsibilities have KPIs reflecting
their regional as well as group performance. The same weighting is assigned to group
and regional KPIs for members who have such responsibilities. Other Group Executive
Board members’ performance, including the performance of the CEO and CFO, is
assessed based on group level only.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCompensation Report continued

In 2019, the target individual short-term incentive equals 100% of the base salary for the CEO and between 66% and 82% of the base salary for other members of the Group
Executive Board. The framework is also illustrated in Figure 11.

Target individual short-term incentive

(100% of base salary for CEO, 66%-82%
of base salary of other members of the
Group Executive Board)

Performance regarding financial targets

Actual individual short-term incentive

(0% to 200% of individual target short-
term incentive)

KPIs

Group

Group adjusted EBITDA

Group net leverage ratio

Group core revenue

Regional

Regional adjusted EBITDA

Regional adjusted operating net working capital

Regional core revenue

Weight
2019

60%

20%

60%

20%

GEB member without regional responsibility

GEB member with regional responsibility

100%

50%

Figure 11: Overview of the Group Executive Board STIP compensation framework in 2019

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCompensation Report continued

Long-term incentive plan (“LTIP”)
Since 2019, members of the Group Executive Board participate in SIG’s long-term success via the LTIP. This LTIP completes the compensation landscape at SIG by offering
executives the opportunity to participate in the long-term success of SIG, thereby reinforcing their focus on longer-term performance and aligning their interests with those of
shareholders. The following provides an outline of the plan specifics.

The mechanics behind the LTIP are illustrated in Figure 12. At the beginning of each three-year performance period, a certain number of Performance Share Units (“PSUs”) is
granted to each participant, which represents a contingent entitlement to receive SIG shares in the future. The number of granted PSUs depends on (i) the individual LTIP grant
level in CHF, determined by the Board each year but never exceeding 200% of the base salary of any member of the Group Executive Board, including the CEO, and (ii) the fair
value of one PSU at the grant date. In 2019, the LTIP grant in CHF amounted to 183% of the base salary for the CEO and between 108% and 161% of the base salary for other
members of the Group Executive Board.

LTIP grant in CHF

Fair value of one Performance
Share Unit (PSU) at grant date

50%

25%

Performance conditions

3 year relative TSR1 with a cap at 100%
for a negative absolute TSR

3 year cumulative diluted adjusted EPS

3 year cumulative FCF

200%

Value of the vested
LTIP in CHF

Share price at
vesting date

Granted number of PSUs

0 to 200% of the granted number of PSUs

Vested number of PSUs

1 SPI® Industry Industrials (Return) Index.

Figure 12: Overview of the principles of the LTIP

Performance period = 3 years

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCompensation Report continued

After the three-year performance period, a certain number of the granted PSUs vest,
depending on the performance of SIG over the period. The number of PSUs vesting in
SIG shares may vary between 0% and 200% of granted PSUs and is based on the
achievement of the following three weighted KPIs.

Relative total shareholder return (TSR)

Earnings per share (EPS)

Free cash flow (FCF)

50%

25%

Total shareholder return measured
relative to the SPI® ICB Industry
Industrials (Return) Index

SIG’s cumulative diluted
adjusted earnings per share

SIG’s cumulative
free cash flow

To determine the multiple of the granted PSUs ultimately vesting in shares, the
performance against each KPI will be assessed individually in a range from 0 to 200%
and then combined according to the assigned weightings. This means that a low
performance in one KPI can be balanced by a higher performance in another KPI.
Overall, the combined vesting multiple will never exceed 200%. If the performance of
each of the three KPIs lies below the respective minimum performance requirement,
the resulting combined vesting multiple would be 0% and consequently no PSUs would
vest. Additionally, if the absolute TSR falls below zero over the period, the vesting factor
of the relative TSR metric would be capped at 1.0.

In setting the targets, the Compensation Committee has been supported by an
external, independent adviser. Investors’ return expectations on market value, stock
risk profile, investment projections and current profitability levels were taken as a
starting point and translated into EPS and FCF targets, using multifactor valuation
models and statistical analyses in order to establish an appropriate link between LTIP
payouts and the value created for investors. The results of the outside-in approach
were assessed against historical company performance, as well as equity analysts’
expectations and strategic plan as suggested by management, to reinforce the
Compensation Committee’s and Board’s confidence in the overall quality and
robustness of the EPS and FCF targets. The Compensation Committee discussed
different options for target setting and the corresponding vesting curves for each KPI
and submitted a recommendation to the Board, which approved the respective vesting
curves for the 2019 grant.

Key Performance
Indicators (KPIs)

Threshold
(0% vesting)

Target
(100% vesting)

Cap
(200% vesting)

3 years relative TSR
against SPI® ICB
Industrials (Return)
Index

-16%
of median of index

+0%
Median of index

+10%
of median of index

3 years cumulative
diluted adjusted EPS

64.6%
of target

3 years cumulative FCF

62.5%
of target

100%
target as set by the
Board of Directors

135.4%
of target

137.5%
of target

Figure 13: Overview of the vesting curve of the LTIP 2019

Other circumstances under which no PSUs vest include various forfeiture clauses
relating to termination of employment during the performance period of the LTIP grant.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCompensation Report continued

Compensation mix
Figure 14 illustrates the compensation mix for the CEO and the Group Executive Board
at target level. This compensation mix reflects SIG’s high-performance orientation and
it represents the Company’s strong emphasis on aligning the interests of the Group
Executive Board and the shareholders to create long-term shareholder value and
profitable growth, by making a large part of compensation dependent on the
achievement of long-term goals.

Employment conditions for the Group Executive Board
All members of the Group Executive Board have employment contracts of unlimited
duration and a notice period of 12 months, ensuring compliance with the Swiss
Ordinance Against Excessive Compensation in Listed Stock Companies and other
applicable laws and regulations. The employment contracts provide, for a period of up
to one-year post-termination, compensation for adherence to the non-compete clause.
Such contracts do not include any severance payments, any change of control
provisions other than accelerated vesting and/or unblocking of unvested share awards.

CEO
(%)

GEB EXCL. CEO
(% average)

29%
ﬁxed
components

39%
ﬁxed
components

71%
variable
components

61%
variable
components

Base salary

Pension beneﬁts/other beneﬁts

Short-term incentive

Long-term incentive

Figure 14: Overview of the compensation mix for the CEO and the Group Executive
Board (excl. CEO) at target level

For the Group Executive Board members (excluding the CEO), the fixed components
(including annual base salary and pension benefits/other benefits) vary between 33%
and 42% (39% on average) of the total target compensation and the variable
components vary between 58% and 67% (61% on average) of the package.

In case of a change of control, the LTIP will automatically terminate as of the date of the
change of control (which will be defined by the Board if unclear). There are generally no
special arrangements in place from which the Group Executive Board members (as well
as the Board members) could benefit in divergence from other plan participants.

Shareholding Guidelines for the Group Executive Board
In order to reinforce the long-term focus of the members of the Group Executive Board
and to sustain and increase the alignment of their interests with those of SIG’s
shareholders, Shareholding Guidelines have been issued. Over a five-year period from
the first equity grant date in 2019, the members of the Group Executive Board are
expected to build up an investment in SIG worth the equivalent of 100% of their annual
base salary, or 200% for the CEO.

All blocked or unblocked shares as well as vested or unvested entitlements to shares
(including RSUs but excluding PSUs) and shares acquired privately, either outright or
beneficially, by the Group Executive Board member or his or her immediate family
members count towards meeting these Shareholding Guidelines. In the event that the
Shareholding Guidelines are not met by a Group Executive Board member at the end
of the build-up period, non-fulfilment consequences, including sale restrictions on
equity instruments received as compensation, would apply until the Shareholding
Guidelines are met.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCompensation Report continued

Compensation awarded to the Group Executive Board (Audited)
Table 3 summarises the total compensation for the seven current members of the
Group Executive Board in 2019. The total compensation for the Group Executive Board
amounted to CHF 13.2 million.

Table 3: Total compensation of the Group Executive Board in 2019, including information
of the prior year

CHF 1

Annual base salary

Pension benefits

Group
Executive
Board
(including
the CEO)
2019

Group
Executive
Board
(including
the CEO)
2018

3,214,722

3,105,302

536,405

486,213

CEO,
Rolf Stangl
2019

875,000

129,518

Short-term variable compensation 2

3,410,295

1,865,822

1,224,720

Long-term variable compensation 3

Other benefits 4

Social security contributions 5

Total regular compensation for
the Group Executive Board

One-time awards including employer
social security 6

4,700,000

331,256

966,097

–

1,600,000

259,728

443,409

28,916

303,876

13,158,775

6,160,473

4,162,030

1,710,436

–

2,886,455

–

1,817,398

CEO
(%)

1 Exchange rates 2019: EUR/CHF 1.11282; THB/CHF 3.20216; CNY/CHF 14.39436; BRL/CHF 25.23583.
Exchange rates 2018: EUR/CHF 1.15485; THB/CHF 3.02613; CNY/CHF 14.79878; BRL/CHF 26.89541.

2 Represents effective short-term variable compensation for 2019 for the seven current Group Executive Board members, which will be

paid in 2020, after the publication of SIG’s audited consolidated financial statements.

3 Amount granted under the LTIP; the number of vested PSUs is subject to the achievement of the performance targets. The number of

granted PSUs is equal to the participant’s granted amount under the LTIP divided by the fair value of one PSU at the grant date (CHF 9.49,
see note 31 of the consolidated financial statements for additional details).

4 Comprises payments related to additional insurances, car benefits and other allowances and benefits.
5 Employer social security contributions include estimates for the short-term incentive plan attributable to 2019 which will be paid in 2020

as well as for the long-term incentive plan at target level on accrual basis.
IPO-related one-time award to selected members of the Group Executive Board in 2018.

Approved versus total regular compensation for the Group Executive Board
The total compensation for the Group Executive Board for 2019 of CHF 13.2 million
(including social security contributions) is below the maximum aggregate compensation
amount of CHF 18.0 million, which was approved at the Extraordinary General Meeting
on 27 September 2018 (pre-IPO) for 2019.

Assessment of actual compensation paid/granted to the Group
Executive Board
In comparison to the previous year, the total compensation of the Group Executive
Board, excluding the IPO-related one-time award in 2018, rose by 114%. This increase
is caused primarily by the post-IPO implementation of the LTIP, performance-related
aspects regarding the STIP as well as some exchange rate movements. There were no
increases in base salaries nor in target STIP levels versus post-IPO. There are two main
factors that impacted the increase in compensation to the Group Executive Board
in 2019:

CEO,
Rolf Stangl
2018

856,250

120,280

612,048

–

7,227

114,631

• SIG’s operating performance in 2019 increased, the Group Executive Board 2019
STI achievement ranging from 85% to 142% in 2019 compared to a range of 61%
to 89% in 2018

• Introduction of the LTIP in 2019

Figure 15 illustrates the 2019 actual compensation mix for the CEO and the Group
Executive Board, which underlines the strong focus on the short- and long-term
variable compensation elements.

GEB EXCL. CEO
(% average)

26%
ﬁxed
components

36%
ﬁxed
components

74%
variable
components

64%
variable
components

Base salary
in CHF

Pension beneﬁts/other beneﬁts
in CHF

Short-term incentive
in CHF

Long-term incentive
in CHF

Figure 15: Overview of the actual compensation mix in 2019 for the CEO and the Group
Executive Board (excl. CEO) (reflects the amount granted under the LTIP)

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancials

Compensation Report continued

Shareholdings of the Group Executive Board (Audited)
Table 4 shows the shareholdings of the Group Executive Board at 31 December 2019.
Since the Shareholding Guidelines foresee a five-year build-up period for members of
the Group Executive Board commencing with the first equity grant in 2019, compliance
will be assessed for the first time in 2024.

Performance Share Unit Plan
In 2019, the PSU plan was introduced and the members of the Group Executive Board
and certain other members of management were granted PSUs for the first time. Table
5 gives an overview of the first grant.

Table 4: Shareholdings of the Group Executive Board as of 31 December 2019 including
information of the prior year

Rolf Stangl

Samuel Sigrist

Markus Boehm

Ian Wood

Lawrence Fok

Martin Herrenbrück

Ricardo Rodriguez

Total

Total
shareholdings
31 Dec. 2019

Number of indirectly 1,

directly or beneficially
held shares 2

665,544 3

290,063 3

268,648 3

84,225 4

359,955 3

134,633 4

263,702 3

Total shareholdings 2
31 Dec. 2018

1,065,471 3

464,362 3

549,703 3

99,107 4

509,612 3

166,610 4

422,160 3

2,066,770

3,277,025

Indirect ownership of shares can change in case of an exit, depending on the reason for resignation.

1
2 Ordinary registered shares of SIG Combibloc Group AG.
3 Shares are held indirectly through partnership interests in Wizard Management I GmbH & Co. KG, which holds ordinary registered

shares of SIG Combibloc Group AG (for further details see section 6) (figures are rounded).

4 Shares are held indirectly through partnership interests in Wizard Management II GmbH & Co. KG, which holds ordinary registered

shares of SIG Combibloc Group AG (details see section 6) (figures are rounded).

Table 5: Performance Share Unit overview

Grant date

Vesting date

Fair value of one PSU at grant date

Granted numbers of PSUs

Thereof granted to members of the Group Executive Board

2019

01.04.2019

31.03.2022

CHF 9.49

537,414

495,263

6. Previous and discontinued compensation plans
Management Equity Plan (MEP)
In 2015, a Management Equity Plan (“MEP”) was established for selected managers of
SIG. The purpose of the MEP was to enable eligible managers to participate in the value
creation of the Company and to align their interests with those of other shareholders. It
was intended to generate returns to the eligible managers upon liquidity events. The
shares in the Company are held by the managers via two limited liability partnerships.
Table 2 and Table 4 show the shareholdings of the Board and the Group Executive
Board at 31 December 2019. No further share purchases or awards under the MEP
have been made in 2019 and there will be none in the future.

7. Loans granted to members of the Board of Directors or the Group
Executive Board
SIG’s Articles of Association do not allow for loans to be granted by the Group or its
consolidated subsidiaries to members of the Board or the Group Executive Board. As a
consequence, no loans were granted to or are outstanding from either Board or Group
Executive Board members.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancialsCompensation Report continued

8. Outlook for 2020
To create a stronger shareholder alignment and performance orientation within the
leadership team below the Group Executive Board, the Compensation Committee
recommended, and the Board of Directors approved, a new Equity Investment Plan,
which will be implemented in 2020. With this new plan, SIG is committed to fostering
strong shareholder alignment below the Group Executive Board level.

In 2019, the Compensation Committee reviewed the payment terms and conditions of
the compensation for the Board of Directors. In order to ensure a leaner payment
process, the Board of Directors has decided to forego the choice between blocked
shares and RSUs. As of 1 January 2020, the equity element will be provided solely in the
form of blocked shares. The overall compensation regarding level and structure will
remain unchanged.

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancials
Report of the statutory auditor to the General Meeting
of SIG Combibloc Group AG Neuhausen am Rheinfall

We have audited the remuneration report of SIG Combibloc Group AG for the year ended
31 December 2019. The audit was limited to the information according to articles 14-16 of the
ordinance against Excessive Com-pensation in Stock Exchange Listed Companies (Ordinance)
contained in the tables labelled ‘audited’ on page 61, page 63 and pages 69-70 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 mis-statements 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 SIG Combibloc Group AG for the year ended
31 December 2019 complies with Swiss law and articles 14–16 of the Ordinance.

PricewaterhouseCoopers AG

Thomas Brüderlin
Audit expert
Auditor in charge

Basel, 20 February 2020

Manuela Baldisweiler
Audit expert

SIG 2019 Annual ReportBusiness ReviewOur CompanyGovernanceCompensationFinancials
Consolidated financial statements
for the year ended 31 December 2019

SIG Combibloc Group AG

Consolidated statement of profit or loss and
other comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes

Basis of preparation

Our operating performance

Our operating assets and liabilities

Our financing and financial risk management

Our Group structure and related parties

Our people

Other

Report of the statutory auditor on the audit of the
consolidated financial statements

See note 3 for further details on the consolidated financial statements.

101

111

117

122

127

FinancialsSIG 2019 Annual ReportOur CompanyGovernanceCompensationBusiness ReviewConsolidated statement of profit or loss
and other comprehensive income

Consolidated statement of financial position

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

(In € million)

Revenue
Cost of sales
Gross profit
Other income
Selling, marketing and distribution expenses
General and administrative expenses
Other expenses
Share of profit of joint ventures
Profit from operating activities
Finance income
Finance expenses
Net finance expense
Profit/(loss) before income tax
Income tax expense
Profit/(loss) for the period

Other comprehensive income
Items that may be reclassified to profit or loss
Currency translations of foreign operations:
– recognised in translation reserve
– transfer from translation reserve
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit plans
Total other comprehensive income, net of income tax

Total comprehensive income

Basic earnings/(loss) per share (in €)
Diluted earnings/(loss) per share (in €)

Note

6, 7

8
28

32
9

1,783.9
(1,370.1)
413.8
20.4
(75.1)
(172.6)
(9.3)
15.4
192.6
12.0
(56.6)
(44.6)
148.0
(41.1)
106.9

1,676.1
(1,300.3)
375.8
8.5
(64.1)
(155.8)
(49.9)
8.9
123.4
67.3
(273.7)
(206.4)
(83.0)
(0.9)
(83.9)

60.0
–

24.0
84.0

(60.7)
0.1

(2.1)
(62.7)

190.9

(146.6)

10
10

0.33
0.33

(0.35)
(0.35)

Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Other current assets
Total current assets
Non-current receivables
Investments in joint ventures
Deferred tax assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Employee benefits
Other non-current assets
Total non-current assets
Total assets

Trade and other payables
Loans and borrowings
Current tax liabilities
Employee benefits
Provisions
Other current liabilities
Total current liabilities
Non-current payables
Loans and borrowings
Deferred tax liabilities
Employee benefits
Provisions
Other non-current liabilities
Total non-current liabilities
Total liabilities
Share capital
Additional paid-in capital
Translation reserve
Treasury shares
Retained earnings
Total equity
Total liabilities and equity

Note

17
16
15
32
20

16
28
32
5.2, 12
5.2, 13
14, 27
30
20

18
5.2, 22
32
30
19
20

24
24

As of
31 Dec.
2019

261.0
271.6
167.2
1.2
22.2
723.2
5.6
193.4
21.8
1,073.1
49.0
2,460.3
168.4
29.3
4,000.9
4,724.1

492.3
50.8
43.5
45.2
12.1
59.9
703.8
10.4
1,541.9
172.5
126.3
15.5
165.0
2,031.6
2,735.4
2.8
2,059.8
(82.1)
(0.1)
8.3
1,988.7
4,724.1

As of
31 Dec.
2018

157.1
242.7
144.4
1.0
19.2
564.4
4.4
198.7
12.1
1,068.8
–
2,486.6
129.3
18.3
3,918.2
4,482.6

440.6
34.9
25.6
34.6
20.1
53.4
609.2
7.6
1,556.5
187.8
108.7
16.1
101.2
1,977.9
2,587.1
2.8
2,158.8
(142.1)
–
(124.0)
1,895.5
4,482.6

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewConsolidated statement of changes in equity

(In € million)

Equity as of 1 January 2019
Profit for the period
Other comprehensive income
Items that may be reclassified to profit or loss
Currency translations of foreign operations:
– recognised in translation reserve
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit plans
Total other comprehensive income, net of income tax
Total comprehensive income for the period
Share–based payments
Purchase of treasury shares
Settlement of share–based payment plans and arrangements
Dividends
Total transactions with owners
Equity as of 31 December 2019

Equity as of 1 January 2018
Loss for the period
Other comprehensive income
Items that may be reclassified to profit or loss
Currency translations of foreign operations:
– recognised in translation reserve
– transfer from translation reserve
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit plans
Total other comprehensive income, net of income tax
Total comprehensive income for the period
Conversion of share categories
Issue of shares in the IPO
Costs for issue of shares in the IPO
Total transactions with owners
Equity as of 31 December 2018

Share
capital

Additional
paid–in
capital

Note

Translation–
reserve

Treasury
shares

Retained
earnings

Total
equity

2.8

2,158.8

(142.1)

–

(124.0)
106.9

1,895.5
106.9

60.0

60.0
60.0

–
–

(99.0)
(99.0)
2,059.8

–
(82.1)

1,154.1

(81.5)

–
–

–
2.8

2.2

(60.7)
0.1

(60.6)
(60.6)

–
(142.1)

–
–
(0.3)
0.9

0.6
2.8

–
–
0.3
1,043.0
(38.6)
1,004.7
2,158.8

60.0

24.0
84.0
190.9
1.8
(0.5)
–
(99.0)
(97.7)
1,988.7

24.0
24.0
130.9
1.8

(0.4)

1.4
8.3

(38.0)
(83.9)

1,036.8
(83.9)

(60.7)
0.1

(2.1)
(62.7)
(146.6)
–
1,043.9
(38.6)
1,005.3
1,895.5

(2.1)
(2.1)
(86.0)

–
(124.0)

–
–

(0.5)
0.4

(0.1)
(0.1)

–

–
–

31
24
24
24

24
24
24

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness Review
Consolidated statement of cash flows

(In € million)

Cash flows from operating activities
Profit/(loss) for the period
Adjustments for:
Depreciation and amortisation
Impairment losses
Change in fair value of derivatives
Share-based payment expense
Gain on sale of property, plant and equipment and

non-current assets

Share of profit of joint ventures
IPO-related costs
Net finance expense
Interest paid
Payment of transaction and other costs relating to financing
Payment of fee for early redemption of notes
Income tax expense
Income taxes paid, net of refunds received

Change in trade and other receivables
Change in inventories
Change in trade and other payables
Change in provisions and employee benefits
Change in other assets and liabilities
Net cash from operating activities

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

Note

(In € million)

106.9

(83.9)

287.1
2.8
(10.1)
1.8

(0.3)
(15.4)
–
44.6
(43.0)
–
–
41.1
(56.6)
358.9
(11.3)
(9.3)
31.7
0.9
67.2
438.1

271.7
0.6
23.1
–

(0.9)
(8.9)
7.4
206.4
(133.0)
(29.7)
(26.2)
0.9
(59.0)
168.5
37.8
(22.9)
34.6
1.1
41.1
260.2

12, 13, 14
12

9
28
9
23

22
22, 23
32

Cash flows from investing activities
Acquisition of business, net of cash acquired
Acquisition of property, plant and equipment and

intangible assets

Proceeds from sale of property, plant and equipment and other

assets

Dividends received from joint ventures
Investment in joint venture
Interest received
Net cash used in investing activities

Cash flows from financing activities
Proceeds from loans and borrowings
Proceeds from issue of shares in the IPO
Payments relating to the IPO
Repayment of loans and borrowings
Payment of lease liabilities
Purchase of treasury shares
Payment of dividends
Other
Net cash used in financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents as of the beginning of the period
Effect of exchange rate fluctuations on cash and cash equivalents
Cash and cash equivalents as of the end of the period

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

Note

(40.5)

–

12, 14

(182.2)

(213.9)

9
28
28

22
24
24
22
22
24
24

4.2
20.7
–
0.5
(197.3)

–
–
(3.4)
(31.3)
(9.8)
(0.5)
(99.0)
4.6
(139.4)

101.4

157.1
2.5
261.0

15.9
23.7
(0.6)
1.2
(173.7)

1,600.0
1,043.9
(42.6)
(2,637.0)
(1.8)
–
–
2.9
(34.6)

51.9

103.9
1.3
157.1

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewBASIS OF PREPARATION

This section includes information on the parent company and the Group. It also includes
details about the preparation of the consolidated financial statements and explains the
structure of the consolidated financial statements.

2 Preparation of the consolidated financial statements

The consolidated financial statements for the year ended 31 December 2019 have been
prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board (“IASB”). They were approved by the Board of
Directors of the Company on 20 February 2020. They also comply with the Listing Rules of SIX
Swiss Exchange and with Swiss company law.

1 Reporting entity and overview of the Group

SIG Combibloc Group AG (“SIG” or the “Company”) is domiciled in Switzerland and is listed on
SIX Swiss Exchange.

The consolidated financial statements are presented in Euros (“€ or EUR”) as Euro is deemed to
be the currency most representative of the Group’s activities. The functional currency of the
Company is Swiss Franc.

The consolidated ﬁnancial statements are prepared on a historical cost basis except for
certain financial instruments such as derivatives that are measured at fair value, certain
components of inventory that are measured at net realisable value and defined benefit
obligations that are measured under the projected unit credit method.

“Company” refers to SIG Combibloc Group AG in relation to the period after the IPO and to
SIG Combibloc Group Holdings S.à r.l. in relation to the period before the IPO.

The Company, via its subsidiaries, obtained control of SIG Combibloc Group AG (a subsidiary
renamed to SIG Combibloc Services AG in connection with the IPO) and SIG Holding USA, LLC
and their respective subsidiaries (together the “SIG Group”) on 13 March 2015.

The consolidated financial statements for the year ended 31 December 2019 comprise the
Company and its subsidiaries (together referred to as the “Group”). The subsidiaries and joint
ventures reflected in the consolidated financial statements of the Company are listed in
note 26.

The Group is a global system supplier of aseptic carton packaging solutions for both beverage
and liquid food products, ranging from juices and milk to soups and sauces. Its solutions
offering consists of aseptic carton packaging filling machines, aseptic carton packaging sleeves
and closures as well as after-market services.

FinancialsSIG 2019 Annual ReportOur CompanyGovernanceCompensationBusiness Review3 Structure of the consolidated financial statements

4 Key events and transactions

The consolidated financial statements are structured into different sections that should
facilitate an overview and understanding of the Group’s operations, financial position and
performance. The notes are included in these sections based on their relevance and include
information that is material and relevant to the consolidated financial statements.

There were no key events or transactions occurring in the year ended 31 December 2019 that
had a significant impact on the financial position and performance of the Group. The Group’s
acquisition of Visy Cartons Pty Ltd (“Visy Cartons”) is described in note 27.

Our
operating
performance

Our operating
assets and
liabilities

Our
financing and
financial risk
management

Our Group
structure
and related
parties

6 Revenue

7 Segment

information

8 Other income
and expenses

9 Alternative

performance
measures

10 Earnings
per share

11 Cash flow

information

12 Property,
plant and
equipment

13 Right-of-use

assets

14 Intangible
assets

21 Capital

26 Group entities

management

22 Loans and
borrowings

23 Finance

income and
expenses

27 Business

combination

28 Joint ventures

29 Related parties

15 Inventories

24 Equity

25 Financial risk
management

16 Trade

and other
receivables

17 Cash and cash
equivalents

18 Trade and

other payables

19 Provisions

20 Other assets
and liabilities

Basis of
preparation

1 Reporting
entity and
overview of
the Group

2 Preparation

of the
consolidated
financial
statements

3 Structure
of the
consolidated
financial
statements

4 Key events and
transactions

5 General

accounting
policies and
topics

Our
people

Other

30 Employee
benefits

32 Income tax

33 Financial

31 Share-based
payment
plans and
arrangements

instruments
and fair value
information

34 Contingent
liabilities

35 Subsequent

events

Significant accounting policies and information about management judgements, estimates and
assumptions are provided in the respective notes throughout the consolidated financial
statements. Accounting policies that relate to the financial statements as a whole or are
relevant for several notes are included in this “Basis of preparation” section.

Regarding the comparative information presented for the year ended 31 December 2018, it
should be noted that the Group was significantly affected by the IPO in September 2018 and
the refinancing transactions that took place in connection with the IPO. The refinancing
transactions have resulted in lower interest expense and interest payments.

5 General accounting policies and topics

5.1 Application of accounting policies

The accounting policies applied by the Group in the consolidated financial statements for the
year ended 31 December 2019 are, except as noted below and in note 5.2, consistent with
those applied in the consolidated financial statements for the year ended 31 December 2018.

The Group has in 2019 introduced share-based payment plans for certain members of
management. These plans are accounted for under IFRS 2 Share-based Payment. The members
of the Board of Directors have since January 2019 been partly compensated in the form of SIG
shares. See note 31 for further information. The Group is settling its obligations under the
share-based payment plans and arrangements via purchases of own shares. These shares are
accounted for as treasury shares under IAS 32 Financial Instruments: Presentation. See note 24
for further information.

5.2 Impact of new or amended standards and interpretations

A number of new or amended standards and interpretations were effective for annual periods
beginning on 1 January 2019. The applicable standards and interpretations had no, or no
material, impact on the consolidated financial statements. However, IFRS 16 Leases is the most
relevant new standard for the Group.

FinancialsSIG 2019 Annual ReportOur CompanyGovernanceCompensationBusiness ReviewIFRS 16 Leases

IFRS 16 Leases replaces the current guidance under IFRS on leases (including IAS 17 Leases) and
contains new requirements in relation to the accounting for leases by lessees.

The Group adopted IFRS 16 on 1 January 2019, applying the standard’s modified retrospective
approach. Comparative information has therefore not been restated. The Group adopted
IFRS 16 only to contracts that were previously identified as leases.

Assets leased by the Group are under IFRS 16 recognised on the statement of financial
position as a right-of-use asset with a corresponding liability, representing the present value of
the future lease payments. However, leases of low-value assets and short-term leases continue
to be accounted for off-balance sheet as allowed by the standard’s practical expedients.
Leases with a remaining contract period of 12 months or less on 1 January 2019 have also
been accounted for off-balance sheet. Under IAS 17, assets leased by the Group were
classified as finance leases if the terms of the lease contract transferred substantially all the
risks and rewards of ownership to the Group. All other leases were classified as operating
leases and accounted for off-balance sheet.

The Group is not materially impacted by IFRS 16. The Group recognised lease liabilities as of
1 January 2019 of €15.9 million relating to lease contracts that previously were accounted for as
operating leases. The same amount has been recognised as right-of-use assets. No
adjustment of the right-of-use assets was required for any onerous lease contracts. The Group
also chose to exclude initial direct costs from the measurement of the right-of-use assets upon
the adoption of IFRS 16. As a consequence, there was no impact from the adoption of IFRS 16
on the Group’s opening retained earnings as of 1 January 2019.

For leases that had been classified as finance leases under IAS 17 (including leases under sale
and leaseback transactions resulting in finance leases), the carrying amounts of lease liabilities
and right-of-use assets as of 1 January 2019 equalled the carrying amounts of finance lease
liabilities and related assets immediately before this date. Assets with a carrying amount of
€27.6 million were reclassified from property, plant and equipment to right-of-use assets. The
Group’s finance lease liabilities amounted to €26.5 million as of 31 December 2018.

The table below provides an overview of the impact on the Group’s financial position of the
transition to IFRS 16.

(In € million)

Operating lease commitments disclosed as of 31 December 2018
IFRS 16 recognition exemptions:
Leases of low-value assets
Short-term leases (including leases with a remaining contract period of

12 months or less as of 1 January 2019)

Impact of discounting
Lease liabilities as of 1 January 2019 for contracts previously accounted

for as operating leases, discounted using the incremental borrowing rate
as of 1 January 2019

Finance lease liabilities as of 31 December 2018
Total lease liabilities as of 1 January 2019

Right-of-use assets as of 1 January 2019 relating to contracts

previously accounted for as operating leases

Assets as of 31 December 2018 relating to contracts previously accounted for

as finance leases

Total right-of-use assets as of 1 January 2019

1 January
2019

20.2

(1.1)

(2.2)
(1.0)

15.9
26.5
42.4

15.9

27.6
43.5

When measuring the lease liabilities as of 1 January 2019 for contracts that were previously
accounted for as operating leases, the weighted-average discount rate applied was 2.51%.

The right-of-use assets are presented separately on the face of the statement of financial
position, while the lease liabilities are included in loans and borrowings. Further details about
the accounting for these items are included in notes 13 and 22.

With the exception of certain variable lease payments and lease payments for leases of
low-value assets and short-term leases, the larger part of the Group’s total lease expense for
lease contracts that previously were accounted for as operating leases will under IFRS 16 be
presented as depreciation of right-of-use assets and interest expense on the lease liabilities
rather than as part of operating expenses as they had been under IAS 17. The Group
recognised €6.1 million of depreciation charges and €0.3 million of interest expense in the year
ended 31 December 2019 relating to lease contracts that were previously accounted for
off-balance sheet. The expense relating to lease contracts that are accounted for off-balance
sheet in the year ended 31 December 2019 totals €3.7 million.

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewLease payments under operating lease contracts had been included in cash flows from
operating activities under IAS 17. Variable lease payments that are not included in the
measurement of the lease liability, lease payments for leases of low-value assets and short-
term leases as well as payments for the interest portion of the lease liability are also included
in cash flows from operating activities under IFRS 16. Payments for the principal portion of the
lease liability are presented as part of cash flows from financing activities. Payments of
€6.1 million for the year ended 31 December 2019 presented as part of cash flows from
financing activities relate to lease contracts for which such payments were previously included
in cash flows from operating activities.

Management believes that the following accounting policies involve the most significant
judgements, estimates and assumptions:

Impairment testing and recognition of impairment losses – see notes 12 and 14.

• Liabilities for various customer incentive programmes – see notes 6 and 18.
•
• Business combinations and fair value assessments – see note 27.
• Measurement of obligations under defined benefit plans – see note 30.
• Determination of income tax liabilities – see note 32.
• Realisation of deferred tax assets – see note 32.

The Group is as a lessee also impacted by new disclosure requirements under IFRS 16.

The accounting for lease contracts by lessors remains substantially unchanged under IFRS 16.
There is no change in the accounting for the Group’s filling lines deployed with customers
under contracts accounted for as operating leases.

5.3 Adoption of standards and interpretations in 2020 and beyond
A number of new or amended standards and interpretations are effective for annual periods
beginning on 1 January 2020 or later and have not been applied in preparing these
consolidated financial statements. The Group does not plan to adopt these standards and
interpretations before their effective dates. Many of them are not applicable to the Group or
are expected to have no, or no material, impact on the consolidated financial statements.

5.4 Critical accounting judgements, estimates and assumptions
In preparing these consolidated financial statements, management has made judgements,
estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expenses and disclosure of contingent assets
and liabilities. The estimates and associated assumptions are based on historical experience
and various other assumptions that are believed to be reasonable under the circumstances.
Actual results may differ from estimates and assumptions made. The estimates and
assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period
or in the period of the revision and future periods if the revision affects both the current and
future periods.

5.5 Accounting policies and other topics relating to the consolidated

financial statements as a whole

5.5.1 Foreign currency

Items included in the financial statements of individual Group entities are recognised in their
respective functional currency, which is the currency of the primary economic environment in
which each Group entity operates.

Foreign currency transactions

Foreign currency transactions are translated into the respective functional currency of the
Group entity at the exchange rates at the dates of the transactions. Monetary assets and
liabilities in foreign currencies at the reporting date are translated into the functional currency
at the exchange rate at that date. Non-monetary assets and liabilities in foreign currencies that
are measured based on historical cost are translated at the exchange rates at the dates of the
transactions. Foreign currency exchange gains or losses are generally recognised in profit or
loss.

Foreign operations

Assets and liabilities of foreign operations, including goodwill and fair value adjustments arising
on acquisitions, are translated into Euro at the exchange rates at the reporting date. The
income and expenses of foreign operations are translated into Euro at average rates for the
reported periods, which approximate the exchange rates at the dates of the transactions. This
also applies to the statement of cash flows and all movements in assets and liabilities as well
as any items of other comprehensive income. The foreign currency exchange gains and losses
arising on the translation of the net assets of foreign operations are recognised in other
comprehensive income, in the translation reserve.

When a foreign operation is disposed of or liquidated, the cumulative amount in the translation
reserve related to that foreign operation is reclassified to profit or loss as part of the gain or
loss on disposal (or liquidation). The Group does not apply hedge accounting to the foreign
currency exchange differences arising between the functional currency of the foreign
operation and the Euro.

FinancialsSIG 2019 Annual ReportOur CompanyGovernanceCompensationBusiness ReviewSignificant exchange rates

The Group as lessee

The following significant exchange rates against the Euro applied during the periods
presented:

Average rate for the year

Spot rate as of

31 Dec.
2019

31 Dec.
2018

31 Dec.
2019

31 Dec.
2018

1.61017
4.40968
7.73094
1.11282
21.56039
1.69855
34.75217
1.11967

1.57935
4.29386
7.80368
1.15485
22.70877
1.70513
38.16260
1.18082

1.59949
4.51570
7.82050
1.08540
21.22019
1.66531
33.41502
1.12340

1.62200
4.44400
7.87510
1.12690
22.49212
1.70559
37.05202
1.14500

Australian Dollar (AUD)
Brazilian Real (BRL)
Chinese Renminbi (CNY)
Swiss Franc (CHF)
Mexican Peso (MXN)
New Zealand Dollar (NZD)
Thai Baht (THB)
U.S. Dollar ($ or USD)

5.5.2 Lease accounting
The Group as lessor

The Group deploys filling lines at its customers’ sites under both lease and sale contracts.
These contracts generally contain certain terms showing that the Group retains control of the
filling line and does not transfer the significant risks and rewards of ownership to the
customer. As a consequence of these contractual terms, the majority of the Group’s filling line
contracts qualify to be accounted for as operating leases in accordance with IFRS 16 Leases.
See further notes 6, 12 and 20. Sale contracts that do not contain such terms are accounted
for in accordance with IFRS 15 Revenue from Contracts with Customers.

The Group’s lease contracts do not include unconditional rights for customers to extend the
lease or to purchase the filling line at the end of the stated lease period. Due to the Group’s
long-term relationships with its customers and changing customer needs, contracts could be
modified or terminated at any time. Customers may for example want to change to a different
filling machine model. Filling lines taken back from customers are generally overhauled and
redeployed with other existing or new customers.

The Group leases a few buildings as well as facility and production equipment that in the past
qualified to be accounted for as finance leases (including sale and leaseback transactions
resulting in finance leases). It also leases assets including offices, some production-related
buildings and equipment, warehouses and cars that in the past qualified to be accounted for
as operating leases. Since the adoption of IFRS 16 Leases, the majority of the leases are
accounted for on-balance sheet (see further note 5.2).

Under IAS 17 (until 31 December 2018)

Leases under which the Group is the lessee were classified as finance leases whenever the
terms of the lease contract transferred substantially all the risks and rewards of ownership to
the Group. All other leases were classified as operating leases. The Group’s sale and leaseback
transactions qualified to be accounted for as finance leases.

Under IFRS 16 (from 1 January 2019)

The majority of the Group’s leased assets are recognised as right-of-use assets with
corresponding lease liabilities. See notes 13 and 22 for further details about the accounting for
right-of-use assets and lease liabilities.

Leases of low-value assets and short-term leases (leases with a lease term of 12 months or
less) are accounted for off-balance sheet. The lease payments are recognised as an expense
on a straight-line basis over the lease term. Variable lease payments that are not included in
the measurement of lease liabilities are also accounted for off-balance sheet and are
recognised as expense when incurred. The Group’s off-balance sheet leases have an
insignificant impact on the Group’s result.

The accounting for sale and leaseback transactions depends on whether the initial transfer of
the Group’s underlying asset to the buyer-lessor is a sale. If the transfer of the asset is not a
sale (i.e. control of the asset is retained), the Group accounts for the transaction as a financing
transaction. The asset is kept on the statement of financial position (as part of property, plant
and equipment) and a financial liability is recognised equal to the proceeds received from the
buyer-lessor. The financial liability is decreased by the payments made less the portion
considered interest expense. If the transfer of the asset is a sale (i.e. control of the asset is
transferred), the Group derecognises the underlying asset and applies lease accounting to the
lease back. The right-of-use asset is measured at the retained portion of the previous carrying
amount of the asset. Such a transfer may result in a gain or loss.

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness Review5.5.3 Impairment of non-financial assets

The carrying amounts of the Group’s property, plant and equipment, right-of-use assets,
intangible assets with finite useful lives and investments in joint ventures are reviewed
regularly and at least annually to identify whether there is an indication of impairment. If an
impairment indicator exists, the asset’s recoverable amount is estimated. Goodwill and
intangible assets with indefinite useful lives are tested for impairment on an annual basis and
whenever there is an indication that they may be impaired.

For impairment testing, assets are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the cash inflows of
other assets or cash generating units.

The recoverable amount of an asset or cash generating unit is the greater of its value in use
and its fair value less costs of disposal. In assessing the value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset or cash
generating unit.

An impairment loss is recognised if the carrying amount of an asset or cash generating unit
exceeds its recoverable amount. An impairment loss is allocated to first reduce the carrying
amount of any goodwill allocated to the cash generating unit, and then to reduce the carrying
amounts of the other assets in the cash generating unit on a pro rata basis. Impairment losses
are recognised in profit or loss.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss
is reversed only to the extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.

Further details on impairment testing are provided in the respective notes on property, plant
and equipment, right-of-use assets and intangible assets (see notes 12, 13 and 14).

5.5.4 Contingent assets

Contingent assets are possible assets arising from a past event to be confirmed by future
events not wholly within the control of the Group. Contingent assets are not recognised in the
statement of financial position but are separately disclosed.

OUR OPERATING PERFORMANCE

This section covers our operating performance on a Group as well as on a segment level. It
includes alternative performance measures that management believes are relevant in
evaluating the Group’s performance and liquidity.

6 Revenue

Revenue derives from the sale of goods (i.e. sleeves, closures, board and filling lines) and the
provision of after-market services and is presented net of returns, trade discounts, volume
rebates and other customer incentives. The Group also presents income from the deployment
of filling lines under contracts that qualify to be accounted for as operating leases and revenue
under royalty agreements as part of revenue.

Approximately 87% of the Group’s revenue from its offering of aseptic carton packaging
solutions relates to the sale of sleeves and closures. The remaining 13% consists of revenue
relating to filling lines and to servicing of the Group’s deployed filling lines.

Composition of revenue

The Group has recognised the following amounts of revenue.

(In € million)

Revenue from sale and service contracts (including royalty agreements)
Revenue from filling line contracts accounted for as operating leases
Total revenue
of which
Core revenue

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

1,691.8
92.1
1,783.9

1,597.9
78.2
1,676.1

1,766.9

1,644.3

Core revenue represents revenue generated from the Group’s core activities and excludes
revenue from sales of folding box board, which amounted to €17.0 million for the year ended
31 December 2019 and €31.8 million for the year ended 31 December 2018. Core revenue is
not a defined performance measure in IFRS (see further note 9).

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewThe Group’s total revenue is further disaggregated by major product/service lines in the
following table. Filling line revenue is composed of revenue from the deployment of filling lines
under contracts that qualify to be accounted for as operating leases and from the sale of filling
lines (see note 5.5.2). Service revenue relates to after-market services in relation to the Group’s
filling lines. Revenue under royalty agreements and from the sale of folding box board and
liquid paper board is included in other revenue.

Accounting policy, significant judgements and estimates

Revenue from sale of sleeves and other related products, deployment of filling lines under
contracts accounted for as sales contracts and provision of service is measured at the fair
value of the consideration received or receivable net of returns, trade discounts, volume
rebates and other customer sales incentives.

(In € million)

Revenue from sale of sleeves and closures
Filling line revenue
Service revenue
Other revenue
Total revenue

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

1,472.7
111.9
113.4
85.9
1,783.9

1,378.2
99.2
99.3
99.4
1,676.1

The Group’s three segments (EMEA, APAC and Americas) are providing the same aseptic
carton packaging solutions, comprising filling machines, sleeves and closures as well as
after-market services. The split of revenue between revenue from sale of sleeves and closures,
filling line revenue and service revenue is broadly the same at Group level, between the
Group’s three segments and over recent years. Other revenue is mainly divided between
EMEA and APAC. See note 7 for further information about the Group’s segments.

Notes 18 and 20 include information about the Group’s liabilities relating to various incentive
programmes, advance payments from customers and deferred revenue, which had or will
have an impact on the amount of revenue recognised.

Revenue is recognised when the Group transfers control over a product or service to a
customer. Transfer of control varies depending on the individual contract terms. Revenue
from sale of sleeves and other related products and deployment of filling lines under
contracts accounted for as sales contracts is recognised at a point in time while revenue
from service contracts is recognised over time.

Lease payments for filling lines that are deployed under operating lease contracts are
recognised on a straight-line basis over the lease period. The payment (i.e. the sales price)
for the use of filling lines that are deployed under sales contracts that qualify to be
accounted for as operating leases is recognised as a deferred revenue liability in the
statement of financial position, and recognised as revenue on a straight-line basis over the
shorter of the period over which the customer relation is expected to last and the ten years
useful life of a filling line. The control and significant risks and rewards of ownership are
retained by the Group in respect of such sales contracts (see further note 5.5.2).

When sales incentives are offered to customers, only the amount of revenue that is highly
probable of not being reversed is recognised. The amount of sales incentives expected to
be earned or taken by customers in conjunction with incentive programmes is therefore
estimated and deducted from revenue. Estimates in respect of the incentives are based on
historical and current market trends, which are affected by the business seasonality and
competitiveness of promotional programmes being offered. Estimates are reviewed
quarterly for possible revisions.

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewThe Group Functions include activities that are supportive to the Group’s business, such as
the global filling machine assembly, global technology (including R&D), information technology,
marketing, finance, legal, human resources and other support functions. The Group Functions
are involved in transactions with third parties only in relation to the Group’s joint ventures, of
which the majority relate to the sale of filling machines. Global filling machine assembly also
sells filling machines and spare parts, and provides assembly-related services, to all three of
the segments.

Inter-company transactions between the segments, and between the segments and the
Group Functions, are eliminated in consolidation. They mainly relate to the sale of filling
machines, sleeves and closures. Pricing is determined on a cost-plus basis.

Information about the Group’s segments is reported to the chief operating decision maker
(”CODM”) on a regular basis for the purposes of resource allocation and assessment of
performance of the segments. The performance of the segments is assessed by the CODM
primarily on the basis of adjusted EBITDA (as defined in the section below).

7 Segment information

The Group has three operating segments, which are also the reportable segments: Europe,
Middle East and Africa (“EMEA”), Asia Pacific (“APAC”) and Americas. All segments provide
aseptic carton packaging solutions.

Overview of segments and Group Functions

The following section provides an overview of the Group’s three segments (EMEA, APAC and
Americas) as well as the activities not forming part of any of the segments (Group Functions).

EMEA includes sleeves manufacturing as well as production of closures for the Group’s
customers in Europe. EMEA also supplies Americas and APAC with sleeves and, to a lesser
extent, closures. EMEA further includes the result from the sale of supply from the Group’s
European manufacturing entities to the Group’s joint ventures in the Middle East. The Group’s
central procurement activities are part of EMEA with the European sleeves manufacturing and
closures production entities being the main internal customers. The Group’s joint ventures in
the Middle East contribute to the performance of EMEA through dividend payments and
royalty payments related to the use of SIG technical solutions and sleeves sales in the Middle
East.

APAC includes sleeves manufacturing for the Group’s customers in China, South East Asia and
Oceania. The China-based filling machine assembly facility is also included in APAC, as is the
production of liquid paper board and folding box board in New Zealand. The liquid paper
board produced in New Zealand is mainly used by the sleeves manufacturing facilities in Asia
and the joint ventures in the Middle East.

Americas covers the Group’s customers in North and South America. North America is
primarily supplied by sleeves from the European and Asian sleeves manufacturing facilities.
South America has its own sleeves manufacturing facility.

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewSegment financial information

The following tables present financial information about the Group’s segments. Group
Functions include activities that are supportive to the Group’s business. The same measurement
basis is used when presenting the segment information as is used in the Group’s consolidated
financial statements.

(In € million)

Revenue from transactions with external customers
Revenue from inter-segment transactions
Segment revenue
Core revenue from transactions with external customers 1
Adjusted EBITDA 2
Capital expenditure: 3
PP&E (excl. filling machines) 3 4
Net filling machines 3 4
Net capital expenditure 3

(In € million)

Year ended 31 December 2019

EMEA

APAC

Americas

Total
segments

Group
Functions

Reconciling
items

755.1
237.7
992.8
755.1
242.2
(62.1)
(16.0)
(14.2)
(30.2)

683.8
12.7
696.5
666.8
228.9
(86.1)
(34.1)
(14.7)
(48.8)

329.5
–
329.5
329.5
84.1
(40.9)
(3.4)
(34.9)
(38.3)

1,768.4
250.4
2,018.8
1,751.4
555.2
(189.1)
(53.5)
(63.8)
(117.3)

15.5
40.6
56.1
15.5
(69.8)
6.9
(4.8)
11.7
6.9

–
(291.0)
(291.0)
–
–
–
–
–
–

Year ended 31 December 2018

EMEA

APAC

Americas

Total
segments

Group
Functions

Reconciling
items

733.3
202.6
935.9
733.3
245.4
(70.0)
(24.6)
(11.1)
(35.7)

630.2
9.6
639.8
598.4
191.1
(137.5)
(47.5)
(55.1)
(102.6)

297.3
2.8
300.1
297.3
81.0
(37.2)
(2.2)
(33.5)
(35.7)

1,660.8
215.0
1,875.8
1,629.0
517.5
(244.7)
(74.3)
(99.7)
(174.0)

15.3
39.1
54.4
15.3
(56.0)
30.8
17.3
13.5
30.8

–
(254.1)
(254.1)
–
–
–
–
–
–

Total

1,783.9
–
1,783.9
1,766.9
485.4
(182.2)
(58.3)
(52.1)
(110.4)

Total

1,676.1
–
1,676.1
1,644.3
461.5
(213.9)
(57.0)
(86.2)
(143.2)

1 Core revenue from transactions with external customers represents revenue from external customers, excluding revenue from sales of folding

box board to third parties. Core revenue is not a defined performance measure in IFRS (see further note 9).
The performance of the segments is presented with reference to adjusted EBITDA. Adjusted EBITDA is defined by the Group as EBITDA,
adjusted to exclude certain non-cash transactions and items of a significant or unusual nature and to include the cash impact of dividends
received from joint ventures. EBITDA and adjusted EBITDA are not defined performance measures in IFRS. Refer to note 9 for the detailed
definitions of these performance measures and the reconciliation between the Group’s profit or loss, EBITDA and adjusted EBITDA.
See note 5.2 for the impact on adjusted EBITDA of the adoption of IFRS 16 Leases on 1 January 2019.
The Group’s capital expenditure mainly relates to investments in its own production, plant and equipment (PP&E capital expenditure, excluding
filling machines) and to the manufacture and deployment of filling machines with customers (filling machine capital expenditure).
Net capital expenditure is defined by the Group as capital expenditure less upfront cash. Upfront cash is defined as consideration received as
an upfront payment for filling machines from customers. Capital expenditure relating to filling machines is presented net of this upfront
payment in the table above. Net capital expenditure is not a defined performance measure in IFRS. Refer to note 11 for the reconciliation
between capital expenditure and net capital expenditure.

4 Group Functions may report positive net filling machine capital expenditure if the capital expenditure of the global filling machine assembly

during a period is smaller than the payments it received under intra-group sales of filling machines. This could also happen occasionally in the
case of PP&E capital expenditure, excluding filling machines.

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness Review

Segment revenue per major product/service lines

Information about the Group’s revenue is included in note 6, where total revenue is
disaggregated by major product/service lines. In respect of the segments, the split of revenue
between revenue from sale of sleeves and closures, filling line revenue and service revenue is
broadly the same as at Group level and over recent years. Other revenue is primarily divided
between EMEA and APAC.

Geographic information

The Group operates seven manufacturing facilities that produce carton sleeves (two in
Germany and one each in Austria, China, Thailand, Brazil and Australia). The facility in Australia
was part of the business combination that took place in November 2019 (see note 27). The
Group also operates two assembly facilities for filling machines in Germany and China, a
production facility for closures in Switzerland and a paper mill for the production of liquid
paper board and folding box board in New Zealand. It further operates three R&D centres (one
each in Germany, Switzerland and China) as well as four training centres (one each in Germany,
Brazil, Thailand and China). Furthermore, the joint ventures in the Middle East operate a
sleeves manufacturing facility and a training centre in their region.

The table below includes information about the Group’s non-current assets on a country basis.
Non-current assets exclude financial instruments, deferred tax assets and net defined benefit
assets.

(In € million)

Germany
Switzerland 1
China
Thailand
Austria
Other countries
Total non-current assets

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

1,110.7
501.9
547.9
548.7
342.6
749.8
3,801.6

1,138.4
515.7
550.9
515.1
348.1
705.8
3,774.0

The Company’s country of domicile is Switzerland.

The non-current assets are reported based on the geographic location of the business
operations. The non-current assets are predominantly located in the countries in which the
Group’s manufacturing, assembly and production facilities are situated. The Group’s
intellectual property is primarily held by a company based in Switzerland.

The table below includes information about the Group’s revenue from external customers on
a country basis.

(In € million)

China
Germany
Brazil
Switzerland
Other countries
Total revenue from external customers

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

292.4
198.0
151.3
12.3
1,129.9
1,783.9

278.1
192.0
150.8
11.5
1,043.7
1,676.1

Revenue is reported based on the geographic location of customers. The customer base of the
Group includes international companies, large national and regional companies as well as
small local companies.

Information about major customers

The Group does not have revenue from transactions with a single external customer
amounting to 10% or more of the Group’s revenue in any of the periods presented.

8 Other income and expenses

Other income and expenses relate to activities and transactions that are outside the Group’s
principal revenue generating activities. Foreign currency exchange gains and losses as well as
fair value changes on commodity and foreign currency exchange derivatives entered into as
part of the operating business are also presented as other income and expenses. Activities
and transactions of a significant or unusual nature are generally adjusted for in the
performance measures adjusted EBITDA and adjusted net income used by management (see
note 9).

Composition of other income

(In € million)

Net change in fair value of derivatives
Income from miscellaneous services
Rental income
Other
Total other income

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

10.1
4.0
0.7
5.6
20.4

–
4.1
0.7
3.7
8.5

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewComposition of other expenses

Adjusted EBITDA

(In € million)

Net foreign currency exchange loss
Net change in fair value of derivatives
Transaction- and acquisition-related costs
Other
Total other expenses

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

(4.1)
–
(4.1)
(1.1)
(9.3)

(3.4)
(23.1)
(19.7)
(3.7)
(49.9)

Transaction- and acquisition-related costs include IPO-related costs that relate to the listing of
existing shares on SIX Swiss Exchange in September 2018, acquisition-related costs and costs
for pursuing other initiatives. These costs are excluded in the calculation of adjusted EBITDA
and adjusted net income. See note 9 for further details about these costs.

9 Alternative performance measures

Management uses a number of measures to assess the performance of the Group that are not
defined in IFRS, including core revenue, adjusted EBITDA, adjusted net income, adjusted
earnings per share, net capital expenditure and free cash flow.

Adjusted EBITDA is used by management for business planning and to measure operational
performance. Management believes that adjusted EBITDA provides investors with further
transparency in the Group’s operational performance and facilitates comparison of the
performance of the Group on a period-to-period basis and versus peers.

EBITDA is defined by the Group as profit or loss before net finance expense, income tax
expense, depreciation of property, plant and equipment and right-of-use assets, and
amortisation of intangible assets. Adjusted EBITDA is defined by the Group as EBITDA,
adjusted to exclude certain non-cash transactions and items of a significant or unusual nature
including, but not limited to, transaction- and acquisition-related costs, restructuring costs,
unrealised gains or losses on derivatives, gains or losses on the sale of non-strategic assets,
asset impairments and write-downs and share of profit or loss of joint ventures, and to include
the cash impact of dividends received from joint ventures.

See note 5.2 for the impact on adjusted EBITDA of the adoption of IFRS 16 Leases on
1 January 2019.

The following table reconciles profit or loss to EBITDA and adjusted EBITDA.

These alternative non-IFRS performance measures are presented as management believes
that they are important supplemental measures of the Group’s performance. Management
believes that they are useful and widely used in the markets in which the Group operates as a
means of evaluating performance. In certain cases, these alternative performance measures
are also used to determine compliance with covenants in the Group’s credit agreement and
compensation of certain members of management. However, these alternative performance
measures should not be considered as substitutes for the information contained elsewhere in
these consolidated financial statements.

(In € million)

Profit/(loss) for the period
Net finance expense
Income tax expense
Depreciation and amortisation
EBITDA
Adjustments to EBITDA:
Replacement of share of profit or loss of joint ventures with cash dividends

This note includes information about adjusted EBITDA and adjusted net income. Core revenue
is presented in notes 6 and 7, adjusted earnings per share in note 10 and net capital
expenditure and free cash flow in note 11.

received from joint ventures

Restructuring costs, net of reversals
Unrealised (gain)/loss on derivatives
Transaction- and acquisition-related costs
Other
Adjusted EBITDA

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

106.9
44.6
41.1
287.1
479.7

5.3
1.8
(10.1)
4.3
4.4
485.4

(83.9)
206.4
0.9
271.7
395.1

14.8
4.3
23.1
19.7
4.5
461.5

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewThe following table reconciles profit or loss for the period to adjusted net income.

(In € million)

Profit/(loss) for the period
Non-cash foreign exchange impact of non-functional currency loans and

realised foreign exchange impact due to refinancing

received from joint ventures

Restructuring costs, net of reversals
Unrealised (gain)/loss on derivatives
Transaction- and acquisition-related costs
Other
Tax effect on above items
Adjusted net income

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

106.9

(83.9)

(1.2)
2.8
1.5
–
–
136.5

5.3
1.8
(10.1)
4.3
4.4
(34.8)
217.4

(58.8)
11.0
7.4
82.5
56.3
140.1

14.8
4.3
23.1
19.7
4.5
(72.1)
148.9

Transaction- and acquisition-related costs include IPO-related costs that relate to the listing of
existing shares on SIX Swiss Exchange in September 2018, acquisition-related costs and costs
for pursuing other initiatives. Costs incurred for the IPO that are directly attributable to the
issue of new shares (€38.6 million) are recognised as a deduction from equity (see further
note 24). IPO-related costs relating to both the issue of new shares and the listing of existing
shares have been proportionally allocated between new shares and existing shares based on
the total number of shares (new and existing). Payments of IPO-related costs for listing new
and existing shares are presented as part of cash flows from financing activities. Payments of
other transaction- and acquisition-related costs are presented as part of cash flows from
operating activities.

The “Other” category for the year ended 31 December 2019 primarily includes operational
process-related costs and impairment losses on property, plant and equipment. For the year
ended 31 December 2018, “Other” primarily includes management fees and operational
process-related costs. It also includes a gain of €0.7 million relating to the sale of a piece of land
regarded as an investment property. The sale resulted in a cash inflow of €13.9 million.

Adjusted net income

Adjusted net income is used by management to measure performance. Management believes
that adjusted net income is a meaningful measure because by removing certain non-recurring
charges and non-cash expenses, the Group’s operating result directly associated with the
period’s performance is presented. The use of adjusted net income may also be helpful to
investors because it provides consistency and comparability with past performance and
facilitates period-to-period comparisons of results of operations.

Adjusted net income is defined by the Group as profit or loss adjusted to exclude certain items
of significant or unusual nature including, but not limited to, the non-cash foreign exchange
impact of non-functional currency loans, amortisation of transaction costs, the net change in
fair value of financing-related derivatives, purchase price allocation (“PPA”) depreciation and
amortisation, adjustments made to reconcile EBITDA to adjusted EBITDA and the estimated
tax impact of the foregoing adjustments. The PPA depreciation and amortisation arose due to
the acquisition accounting that was performed when the SIG Group was acquired by Onex in
2015.

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness Review10 Earnings per share

Basic and diluted earnings per share

Basic earnings (or loss) per share are calculated by dividing the consolidated profit or loss for
the period by the weighted average number of shares in issue during the period, excluding the
weighted average number of treasury shares. Diluted earnings per share for the year ended
31 December 2019 reflects the effect of potentially dilutive shares under the Group’s share-
based payment plans and arrangements introduced in the same period.

The Group changed its share structure in connection with the IPO (as further described in
note 24). Prior to the IPO, different classes of ordinary and preference shares were converted
into one class of ordinary shares. The conversion was made on a one-share-for-one-share
basis and the number of shares remained unchanged. The earnings per share information is
therefore calculated as if the Group had always had only one class of shares, also in the
comparative period.

Issued shares as of 1 January 2018
Capital increase in connection with the IPO
Issued shares as of 31 December 2018

Issued shares as of 1 January 2019
Issued shares as of 31 December 2019

Total number
of ordinary shares

215,053,240
105,000,000
320,053,240

320,053,240
320,053,240

The below table shows the weighted average numbers of shares outstanding before and after
adjustments for the effect of potentially dilutive shares. For the year ended 31 December 2018,
the Group did not have any potentially dilutive shares.

Issued shares as of 1 January 2018
Effect of capital increase in connection with the IPO
Weighted average number of shares as of 31 December 2018 – basic

and diluted

Issued shares as of 1 January 2019
Effect of treasury shares held
Weighted average number of shares as of 31 December 2019 – basic

Effect of share-based payment plans and arrangements
Weighted average number of shares as of 31 December 2019 – diluted

Weighted average
number of ordinary shares

215,053,240
26,178,082

241,231,322

320,053,240
(10,732)
320,042,508

15,552
320,058,060

The following table shows the profit or loss attributable to shareholders and the weighted
average number of outstanding shares used in the calculation of basic and diluted
earnings per share.

(In € million unless indicated)

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

Profit/(loss) for the period
Weighted average number of shares for the period – basic (in numbers)
Basic earnings/(loss) per share (in €)

106.9
320,042,508
0.33

Profit/(loss) for the period
Weighted average number of shares for the period – diluted (in numbers)
Diluted earnings/(loss) per share (in €)

106.9
320,058,060
0.33

(83.9)
241,231,322
(0.35)

Adjusted earnings per share

Adjusted earnings per share is defined by the Group as adjusted net income divided by the
weighted average number of shares. Management believes that (basic) adjusted
earnings per share is a useful measure as adjusted net income is used to measure
performance. Adjusted net income and adjusted earnings per share are not defined
performance measures in IFRS (see further note 9).

The table below shows the adjusted net income and the weighted average number of
outstanding shares used in the calculation of basic and diluted adjusted earnings per share.

(In € million unless indicated)

Adjusted net income
Weighted average number of shares for the period – basic (in numbers)
Adjusted earnings per share – basic (in €)

Adjusted net income
Weighted average number of shares for the period – diluted (in numbers)
Adjusted earnings per share – diluted (in €)

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

217.4
320,042,508
0.68

217.4
320,058,060
0.68

148.9
241,231,322
0.62

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness Review11 Cash flow information

Free cash flow

This note includes information about the Group’s cash flows from a capital expenditure
perspective and from a performance perspective in general. It also includes information about
non-cash transactions. Where more relevant for the understanding of a transaction, cash
inflows and outflows are described in the notes of the respective assets or liabilities to which
the cash flows relate. The same applies to non-cash transactions.

Free cash flow is used by management to evaluate the performance of the Group. Free cash
flow is defined by the Group as net cash from operating activities plus dividends received from
the joint ventures less capital expenditure and payments of lease liabilities (finance lease
liabilities before adoption of IFRS 16 Leases – see note 5.2). Free cash flow is not a defined
performance measure in IFRS (see further note 9).

Net capital expenditure

The Group’s capital expenditure primarily relates to investments in own production, plant and
equipment (PP&E capital expenditure, excluding filling machines) and to the manufacture and
deployment of filling machines with customers under contracts accounted for as operating
leases (filling machine capital expenditure).

Net capital expenditure is defined by the Group as capital expenditure less upfront cash.
Upfront cash is defined as consideration received as an upfront payment for filling machines
from customers. Net capital expenditure is not a defined performance measure in IFRS (see
further note 9).

Management uses net capital expenditure as it better demonstrates how cash generative the
business is. As the Group typically receives a portion of the total consideration for a filling
machine as an upfront payment from the customer (see also note 20), the cash outflow
relating to filling machines is generally lower than implied by the gross capital expenditure
figure. Payments received for filling lines (including upfront payments) are included in cash
flows from operating activities.

The following table reconciles capital expenditure to net capital expenditure.

(In € million)

PP&E (excluding filling machines)
Gross filling machines
Capital expenditure (gross)
Upfront cash (for filling machines)
Net capital expenditure

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

58.3
123.9
182.2
(71.8)
110.4

57.0
156.9
213.9
(70.7)
143.2

The following table reconciles net cash from operating activities to free cash flow.

(In € million)

Net cash from operating activities
Dividends received from joint ventures
Acquisition of PP&E and intangible assets
Payment of lease liabilities
Free cash flow

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

438.1
20.7
(182.2)
(9.8)
266.8

260.2
23.7
(213.9)
(1.8)
68.2

The increase in net cash from operating activities in the year ended 31 December 2019
compared to the prior period is mainly a result of lower interest payments since the
refinancing transactions that took place in connection with the IPO in 2018. The Group also
had payments in the comparative period presented as part of cash flows from operating
activities relating to the refinancing transactions and the IPO.

Non-cash transactions

The Group has entered into lease contracts in the year ended 31 December 2019 and
31 December 2018 that are accounted for on-balance sheet (see notes 13 and 22). The initial
recognition of a lease on the statement of the financial position is a non-cash transaction. The
Group also introduced share-based payments plans and arrangements in the year ended
31 December 2019. The granting of instruments under these plans and arrangements are non-
cash transactions (see note 31).

Other non-cash transactions for the year ended 31 December 2018 include the derecognition
of capitalised transaction costs and original issue discount resulting from the early redemption
of notes and repayment of term loans, the derecognition of derivative instruments that were
related to the debt (see notes 22 and 23) and the conversion of shares (see note 24).

Cash outflows under lease contracts

The total cash outflow for the Group’s lease contracts for the year ended 31 December 2019
was €15.7 million (€15.9 million for the year ended 31 December 2018).

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewOUR OPERATING ASSETS AND LIABILITIES

This section includes certain information about the Group’s operating assets and liabilities.
The main operating assets relate to the Group’s production equipment and its deployed filling
lines accounted for as operating leases. The Group also has right-of-use assets resulting from
lease contracts entered into as a lessee. The Group’s trade receivables balance is reduced by
selling trade receivables under securitisation and factoring programmes. A substantial part of
the Group’s assets relates to goodwill and other intangible assets. Impairment testing of
goodwill and trademarks with indefinite useful lives is described in this section. The main
operating liabilities relate to trade payables and accruals for various incentive programmes.

12 Property, plant and equipment

Property, plant and equipment (“PP&E”) is mainly composed of filling lines that are deployed at
customers’ sites under contracts accounted for as operating leases (see also note 5.5.2) and
the Group’s plant and production equipment. PP&E also includes work in progress, which
relates to construction of filling machines and to filling lines under installation at customers’
sites as well as to construction of various types of production equipment used by the Group in
its manufacturing and assembly facilities.

Impact of new IFRS standards
Upon the adoption of IFRS 16 Leases on 1 January 2019, assets with a carrying amount of
€27.6 million that are leased by the Group under contracts that previously were accounted for
as finance leases were reclassified from PP&E to the new asset category right-of-use assets.
See further note 5.2. There was no impact on the accounting for filling lines deployed at
customers’ sites by the Group (as a lessor).

Composition of PP&E

(In € million)

Cost
Accumulated depreciation and

impairment losses

Carrying amount as of 31 Dec. 2018

Cost
Accumulated depreciation
and impairment losses

Carrying amount as of 31 Dec. 2019

Carrying amount as of 1 Jan. 2018
Additions
Disposals
Depreciation
Impairment losses
Transfers
Effect of movements in exchange rates
Carrying amount as of 31 Dec. 2018

Carrying amount as of 1 Jan. 2019
Additions
Additions through business combination
Reclassification to right-of-use assets
Disposals
Depreciation
Impairment losses
Transfers
Effect of movements in exchange rates
Carrying amount as of 31 Dec. 2019

Land Buildings

Plant and
equipment

Work in
progress

Filling
lines 1

Total

39.3

184.5

559.4

170.0

680.1

1,633.3

–
39.3

(36.3)
148.2

(309.2)
250.2

–
170.0

(219.0)
461.1

(564.5)
1,068.8

40.1

181.6

620.7

156.0

854.2

1,852.6

–
40.1

39.7
–
–
–
–
–
(0.4)
39.3

39.3
–
–
–
–
–
–
–
0.8
40.1

(47.0)
134.6

142.0
14.9
(0.1)
(9.9)
–
3.2
(1.9)
148.2

148.2
0.5
–
(14.3)
–
(9.2)
–
7.6
1.8
134.6

(399.6)
221.1

274.0
3.3
(0.6)
(83.8)
–
61.6
(4.3)
250.2

250.2
3.5
6.4
(13.3)
(4.3)
(75.5)
–
49.3
4.8
221.1

–
156.0

209.2
205.6
(1.8)
–
–
(242.9)
(0.1)
170.0

170.0
167.7
2.8
–
–
–
–
(186.6)
2.1
156.0

(332.9)
521.3

(779.5)
1,073.1

350.5
7.8
(0.5)
(78.6)
(0.6)
178.1
4.4
461.1

461.1
6.5
4.7
–
(5.4)
(92.5)
(2.8)
129.7
20.0
521.3

1,015.4
231.6
(3.0)
(172.3)
(0.6)
–
(2.3)
1,068.8

1,068.8
178.2
13.9
(27.6)
(9.7)
(177.2)
(2.8)
–
29.5
1,073.1

The filling lines qualify to be accounted for as operating lease contracts. The Group does not lease out any other assets.

Notes 7 and 11 include further information about the Group’s capital expenditure with regard
to its production equipment and filling lines.

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewDepreciation of PP&E

Depreciation of PP&E is recognised in the following components in the statement of profit or
loss and other comprehensive income.

(In € million)

Cost of sales
Selling, marketing and distribution expenses
General and administrative expenses
Total depreciation

Capital expenditure commitments

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

170.9
1.2
5.1
177.2

167.0
1.2
4.1
172.3

As of 31 December 2019, the Group had entered into contracts to incur capital expenditure of
€99.7 million (€42.1 million as of 31 December 2018) for the acquisition of PP&E. The
commitments relate to filling machine assembly, certain downstream equipment and
equipment for the Group’s sleeves manufacturing facilities. The increase between the two
periods is mainly due to upcoming investments in relation to the second sleeves
manufacturing facility in China. The facility is expected to be ready in early 2021 and will then
be leased by the Group (see also note 13). Out of the total amount of committed capital
expenditure, €9.3 million of commitments as of 31 December 2019 concern contracts with a
related party (Erwepa – see note 29).

Accounting policy, significant judgements and estimates

Items of PP&E are measured at cost less accumulated depreciation and accumulated
impairment losses. Gains and losses on disposals of items of PP&E are recognised in profit
or loss as part of other income or expenses.

The cost of an acquired or self-constructed item of PP&E includes any costs directly
attributable to bringing the asset to the location and condition necessary for it to be
capable of operating in the manner intended by management. Borrowing costs that are
directly attributable to the acquisition, construction or production of a qualifying asset form
part of the cost of that asset. The cost of the Group’s filling lines also includes the estimated
cost of dismantling to the extent such an amount is recognised as a provision. Subsequent
expenditure is capitalised only if it is probable that the future economic benefits associated
with the expenditure will flow to the Group and the cost can be measured reliably. The costs
of the day-to-day servicing of PP&E are recognised in profit or loss as incurred.

Items of PP&E are depreciated on a straight-line basis over their estimated useful lives, with
depreciation generally recognised in profit or loss. Land is not depreciated. The estimated
useful lives for the current and comparative periods are as follows:

Buildings
Plant and equipment:
Production-related equipment and machinery
Furniture and fixtures
Filling lines (leased assets, SIG as the lessor)

15 to 40 years

4 to 12 years
3 to 8 years
10 years

The Group as a lessor – filling lines

The Group mainly deploys filling lines under contracts that qualify to be accounted for as
operating leases (see note 5.5.2 for additional details). As further described in this
accounting policy section, the filling lines are measured at cost and depreciated over their
estimated useful life of ten years and tested for impairment when there is an impairment
indicator.

Impairment of PP&E

Items of PP&E are reviewed regularly and at least annually to identify whether there is an
indication of impairment. If an impairment indicator exists, the asset’s recoverable amount
is estimated. See note 5.5.3 for further details about impairment testing of non-financial
assets.

A change in the Group’s intended use of certain assets, such as a decision to rationalise
manufacturing locations, may trigger a future impairment. Value in use calculations require
management to estimate the future cash flows expected to arise from an individual asset or
cash generating unit and to determine a suitable discount rate to calculate present value.

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness Review13 Right-of-use assets

Depreciation of right-of-use assets

The Group generally purchases its production-related buildings and equipment (see note 12).
However, it also enters into lease contracts. Right-of-use assets relate to lease contracts that
the Group has entered into as a lessee. The contracts mainly cover leases of assets such as
office buildings, production-related buildings and equipment, warehouses and cars.

Impact of new IFRS standards
Upon the adoption of IFRS 16 Leases on 1 January 2019, an amount of €15.9 million relating to
lease contracts that previously were accounted for as operating leases was recognised as
right-of-use assets and will be depreciated over the remaining term of the respective lease
contracts. At the same time, assets with a carrying amount of €27.6 million relating to lease
contracts that were previously accounted for as finance leases were reclassified from PP&E to
right-of-use assets. They continue to be depreciated over the same period. See further
note 5.2.

Composition of right-of-use assets

(In € million)

Carrying amount as of 1 January 2019
Initial effect of adopting IFRS 16
Reclassification from PP&E upon adoption of

IFRS 16
Additions
Additions through business combination
Depreciation
Other adjustments
Effect of movements in exchange rates
Carrying amount as of 31 December 2019

Buildings

Plant and
equipment

–
12.0

14.3
2.0
0.9
(5.3)
(0.2)
0.4
24.1

–
1.1

13.3
10.1
0.5
(3.1)
(0.5)
0.2
21.6

Cars

–
2.8

–
2.3
0.1
(1.6)
(0.3)
–
3.3

Total

–
15.9

27.6
14.4
1.5
(10.0)
(1.0)
0.6
49.0

The Group’s most significant lease is the 20 year lease contract entered into in 2018 relating to
the SIG Tech Centre in China (approximately 60% of the carrying amount of leased buildings as
of 31 December 2019). The lease term of other assets is most commonly in the range of three
to five years.

Depreciation of right-of-use assets is recognised in the following components in the statement
of profit or loss and other comprehensive income.

(In € million)

Cost of sales
Selling, marketing and distribution expenses
General and administrative expenses
Total depreciation

Lease commitments

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

5.8
1.8
2.4
10.0

–
–
–
–

In the year ended 31 December 2019, the Group signed a 20 year lease contract relating to a
second sleeves manufacturing facility in China. The Group expects the lease of the facility to
commence in early 2021. The Group has also signed a few lease contracts concerning mainly
production equipment, with the leases expected to commence within the next year. The
present value of the estimated future lease payments under these contracts approximates
€74 million as of 31 December 2019.

Accounting policy

At the commencement date of lease, the Group recognises a lease liability and a related
right-of-use asset. The accounting for lease liabilities is described in note 22.

The right-of-use asset represents the Group’s right to use the leased asset. A right-of-use
asset is initially measured at cost, which in many cases will equal the amount recognised as
a lease liability. However, adjustments are required for any lease payments made at or
before the commencement date of the lease and any initial direct costs incurred. The cost
also includes the estimated cost to dismantle and remove the leased asset, to restore it to
the condition required under the lease contract or to restore the site on which it is located,
to the extent such an amount is recognised as a provision.

Subsequent to initial recognition, a right-of-use asset is measured at cost less accumulated
depreciation and impairment losses. A right-of-use asset is subsequently also adjusted for
certain remeasurements of the related lease liability.

Right-of-use assets are depreciated on a straight-line basis from the commencement date
of the lease over the shorter of the lease term and their useful lives unless it is reasonably
certain that the Group will obtain ownership by the end of the lease term.

As for PP&E, right-of-use assets are reviewed regularly and at least annually to identify
whether there is an indication of impairment. If an impairment indicator exists, the asset’s
recoverable amount is estimated. See note 5.5.3 for further details about impairment
testing of non-financial assets.

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness Review14 Intangible assets

Research and development

The largest portion of the Group’s intangible assets is goodwill, arising as a result of the
acquisition of the SIG Group by Onex in 2015. The other intangible assets mainly consist of
trademarks, customer relationships and technology-related assets. The trademarks have
indefinite useful lives.

Research and development costs (excluding depreciation and amortisation expense) are
recognised as a component of general and administrative expenses, totalling €51.7 million for
the year ended 31 December 2019 and €52.6 million for the year ended 31 December 2018.

Amortisation of intangible assets

The acquisition of Visy Cartons on 29 November 2019 resulted in an increase of goodwill and
customer relationships. See further note 27.

Amortisation of intangible assets is recognised in the following components in the statement
of profit or loss and other comprehensive income.

Composition of intangible assets

(In € million)

Goodwill

Trademarks

Customer
relationships

Technology
and other
assets

Total

Cost
Accumulated amortisation and

impairment losses

Carrying amount as of 31 Dec. 2018

Cost
Accumulated amortisation and

impairment losses

Carrying amount as of 31 Dec. 2019

Carrying amount as of 1 Jan. 2018
Additions
Amortisation
Effect of movements in exchange rates
Carrying amount as of 31 Dec. 2018

Carrying amount as of 1 Jan. 2019
Additions
Additions through business

combination

Amortisation
Effect of movements in exchange rates
Carrying amount as of 31 Dec. 2019

1,583.7

298.2

626.6

359.9

2,868.4

–
1,583.7

1,621.9

–
1,621.9

1,577.5
–
–
6.2
1,583.7

1,583.7
–

14.5
–
23.7
1,621.9

–
298.2

309.6

–
309.6

287.1
–
–
11.1
298.2

298.2
–

–
–
11.4
309.6

(238.0)
388.6

(143.8)
216.1

(381.8)
2,486.6

646.2

365.2

2,942.9

(305.4)
340.8

453.3
–
(62.7)
(2.0)
388.6

388.6
–

9.7
(63.6)
6.1
340.8

(177.2)
188.0

243.1
2.1
(36.7)
7.6
216.1

216.1
1.6

–
(36.3)
6.6
188.0

(482.6)
2,460.3

2,561.0
2.1
(99.4)
22.9
2,486.6

2,486.6
1.6

24.2
(99.9)
47.8
2,460.3

(In € million)

Cost of sales
Selling, marketing and distribution expenses
General and administrative expenses
Total amortisation

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

63.9
–
36.0
99.9

64.3
0.1
35.0
99.4

Annual impairment tests of goodwill and trademarks with indefinite useful lives

Goodwill with a carrying amount of €1,621.9 million as of 31 December 2019 (€1,583.7 million
as of 31 December 2018) and trademarks with indefinite useful lives with a carrying amount of
€309.6 million as of 31 December 2019 (€298.2 million as of 31 December 2018) are not
subject to amortisation but tested for impairment on an annual basis and whenever there is
an impairment indicator. The annual impairment tests are performed in the fourth quarter
each year.

The Group does not monitor goodwill at a lower level than Group level for internal
management purposes but goodwill must for impairment testing purposes be allocated to a
cash generating unit (“CGU”), or group of CGUs, that is not larger than an operating segment
before aggregation. The Group has allocated the goodwill for impairment testing purposes to
its three operating segments (EMEA, APAC and Americas).

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewGoodwill

Trademarks with indefinite useful lives

For the impairment test of goodwill, the recoverable amount has been estimated with
reference to value in use. In assessing the value in use, the estimated future cash flows over
the next five years (for the 2018 impairment test over the next four years) have been
discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money as well as the risks specific to each segment. The
weighted average cost of capital (“WACC”) is used to determine the discount rate. Cash flows
for the first five years (2018: four years) are based on financial plans approved by management.
Cash flows after the five year (2018: four year) internal planning period are extrapolated using
terminal growth rates based on the estimated global and regional market growth for
companies in the aseptic carton packaging industry. The terminal growth rates used by the
Group for impairment testing purposes are conservative and do not exceed the estimated
long-term growth rates in the aseptic carton packaging industry.

Goodwill is allocated to the Group’s three operating (and reportable) segments as per the table
below. The goodwill that resulted from the acquisition of Visy Cartons in November 2019 has
been allocated to APAC (preliminary assessed, see further note 27) and has been considered
as of 31 December 2019. The table also includes information about the key assumptions used
in the impairment test.

The value of the Group’s trademarks with indefinite useful lives is associated with the Group as
a whole. Trademarks are tested for impairment at Group level as all SIG entities benefit from
the trademarks. The entities are charged a royalty fee for the use of the SIG trademarks. For
the impairment test, the recoverable amount has been estimated with reference to value in
use. The assessed royalty fees over the next five years (for the 2018 impairment test over the
next four years) have been discounted to their present value using a pre-tax discount rate at
Group level of 8.8% (9.8% in the 2018 annual impairment test) and a terminal growth rate at
Group level of 2.0% (2.0% in the 2018 annual impairment test). The WACC is used to determine
the discount rate. The royalty fees for the first five years (2018: four years) are based on
financial plans approved by management. Cash flows after the five year (2018: four year)
internal planning period are extrapolated using a terminal growth rate based on the estimated
global market growth for companies in the aseptic carton packaging industry. The terminal
growth rate used by the Group for impairment testing purposes is conservative and does not
exceed the estimated long-term growth rates in the aseptic carton packaging industry.

No impairment of trademarks with indefinite useful lives was identified in any of the periods.
Management considers it unlikely that any realistic change in the assumptions used would
result in an impairment loss.

(In € million or %)

EMEA
APAC
Americas
Total goodwill

Year ended 31 December 2019

Year ended 31 December 2018

Carrying
amount

Growth
rate

757.2
657.3
207.4
1,621.9

1.25%
2.5%
2.25%

Pre-tax
discount
rate

7.1%
9.0%
12.1%

Carrying
amount

757.2
620.8
205.7
1,583.7

Growth
rate

1.25%
2.5%
2.25%

Pre-tax
discount
rate

7.5%
9.4%
14.5%

No impairment of goodwill was identified in any of the periods. Management considers it
unlikely that any realistic change in the assumptions used would result in an impairment loss.
The estimated recoverable amounts of the goodwill allocated to the segments significantly
exceed the respective carrying amounts in both periods.

Accounting policy

Goodwill arising upon business combinations is measured at cost less accumulated
impairment losses. With respect to investments in joint ventures accounted for using the
equity method, the carrying amount of goodwill is included in the carrying amount of the
investment.

The Group’s trademarks are assessed to have indefinite useful lives considering the long
history of the SIG brand and its expected future continuous use. They are measured at cost
less accumulated impairment losses. Other intangible assets, including customer
relationships and technology assets, have finite useful lives and are measured at cost less
accumulated amortisation and accumulated impairment losses. Gains and losses on
disposals of intangible assets are recognised in profit or loss as part of other income or
expenses.

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewAccounting policy continued
Development expenditure is capitalised only if the expenditure can be measured reliably,
the product or process is technologically and commercially feasible, future economic
benefits are probable and the Group intends to and has sufficient resources to complete
the development and to use or sell the asset. If the capitalisation criteria are not met,
development expenditure is recognised in profit or loss as incurred. Due to uncertainties
inherent in the development of new products and processes, notably regarding the
difficulty of reliably estimating expected future economic benefits, development costs
typically do not meet the capitalisation criteria but are recognised as general and
administrative expenses as incurred. Expenditure on research activities is recognised in
profit or loss as incurred.

Intangible assets with finite useful lives are amortised on a straight-line basis over their
estimated useful lives, with amortisation generally recognised in profit or loss. The
estimated useful lives of amortisable intangible assets for the current and comparative
periods are as follows:

Customer relationships
Technology assets (including patented and
non-patented technology and know-how)
Other intangible assets (including software)

10 years

6 to 10 years
3 to 6 years

Impairment of goodwill and other intangible assets

Intangible assets with finite useful lives are reviewed regularly and at least annually to
identify whether there is an indication of impairment. If an impairment indicator exists, the
asset’s recoverable amount is estimated. Goodwill and intangible assets with indefinite
useful lives are tested for impairment on an annual basis and whenever there is an
indication that they may be impaired. Note 5.5.3 includes further details about the
assessment of the recoverable amounts of non-financial assets and recognition of any
impairment losses.

Significant judgements and estimates

Significant judgement is involved in the annual impairment testing of goodwill and
trademarks with indefinite useful lives. The judgements and assumptions used in estimating
the recoverable amount are included above under “Annual impairment tests of goodwill and
trademarks with indefinite useful lives”, where the outcome of the annual impairment tests
is also described.

15 Inventories

Composition of inventories and other financial information

(In € million)

Raw materials and consumables
Work in progress
Finished goods
Total inventories

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

56.8
17.2
93.2
167.2

59.6
17.6
67.2
144.4

As of 31 December 2019, inventories included a provision of €17.2 million due to write-downs
to net realisable value (€13.4 million as of 31 December 2018).

Raw materials and consumables recognised as an expense in cost of sales in the statement of
profit or loss and other comprehensive income amounted to €715.9 million in the year ended
31 December 2019 (€676.0 million in the year ended 31 December 2018).

Accounting policy

Inventories are measured at the lower of cost and net realisable value. The cost of
inventories is based on the weighted average cost formula and includes costs incurred in
acquiring the inventories and bringing them to their present location and condition. In the
case of manufactured inventories and work in progress, cost includes an appropriate share
of production overheads based on normal operating capacity. Net realisable value is the
estimated selling price less the estimated costs of completion and estimated costs
necessary to make the sale.

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness Review16 Trade and other receivables

Trade and other receivables mainly comprise trade receivables. The Group has a securitisation
programme under which it sells a portion of its sleeves-related trade receivables without
recourse. It also maintains a small number of minor factoring programmes.

Composition of trade and other receivables

The table below provides an overview of the Group’s current and non-current trade and other
receivables. Trade receivables that will be sold under the securitisation and factoring
programmes are presented as trade receivables at fair value. Trade receivables that will not be
sold are presented as trade receivables at amortised cost.

(In € million)

Trade receivables at amortised cost
Trade receivables at fair value
Related party trade receivables
Note receivables
VAT receivables
Other receivables
Total current trade and other receivables

Non-current receivables

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

109.6
52.9
22.7
20.2
16.8
49.4
271.6

5.6

80.2
54.8
16.3
34.1
14.1
43.2
242.7

4.4

Total current and non-current receivables

277.2

247.1

Trade receivables at amortised cost – loss allowance and ageing

(In € million)

Current
Past due up to 29 days
Past due 30 days to 89 days
Past due 90 days or more
Trade receivables at amortised cost, net of loss allowance
Loss allowance
Trade receivables at amortised cost, gross

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

86.1
15.4
6.2
1.9
109.6
(3.4)
113.0

50.8
19.5
7.3
2.6
80.2
(3.8)
84.0

The loss allowance represents the Group’s estimate of individually impaired trade receivables
as well as expected credit losses on trade receivables that are not individually impaired. It
primarily relates to trade receivables past due more than 90 days. The expected credit losses
are calculated using a provision matrix based on historical credit loss experience and
assessments of current and future conditions. The expected loss rate for trade receivables
past due more than 90 days that are not individually impaired is between 25% and 100%. For
trade receivables past due 30 to 89 days that are not individually impaired, the expected loss
rate is around 5%.

Management believes that the recognised loss allowance sufficiently covers the risk of default
based on historical payment behaviour and assessments of future expectations of credit
losses, including regular analysis of customer credit risk.

The table below shows the movements in the loss allowance for trade receivables at amortised
cost.

(In € million)

Loss allowance as of 1 January
Change in loss allowance recognised in profit or loss during the year
Foreign exchange differences
Loss allowance as of 31 December

2019

2018

3.8
(0.4)
–
3.4

3.5
0.6
(0.3)
3.8

Securitisation programme

The Group has an asset-backed securitisation programme under which it sells without
recourse a portion of its sleeves-related trade receivables to a special purpose entity. This
entity is not controlled, and therefore not consolidated, by the Group. The trade receivables
sold qualify for derecognition by the Group. The Group transfers the contractual rights to the
cash flows of the trade receivables at their nominal value less a retained reserve in exchange
for cash. The net amount is presented as part of other current receivables and represents the
Group’s right to receive this amount once the trade receivables sold have been settled by the
customers.

Trade receivables sold under the securitisation programme amounted to €112.5 million as of
31 December 2019 (€102.3 million as of 31 December 2018), of which €95.8 million
(€84.0 million as of 31 December 2018) has been derecognised and €16.7 million (€18.3 million
as of 31 December 2018), representing the retained reserve, is presented as part of other
current receivables. The retained reserve represents the Group’s maximum exposure to any
losses in respect of trade receivables previously sold under the programme. The interest
expense paid under the asset-backed securitisation programme amounted to €2.4 million in
the year ended 31 December 2019 (€2.0 million as of 31 December 2018) and is presented as
part of other finance expenses.

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewFactoring programmes

17 Cash and cash equivalents

The Group has a small number of minor factoring programmes under which trade receivables
sold by the Group qualify for derecognition. The factored amounts totalled €24.7 million as of
31 December 2019 (€21.3 million as of 31 December 2018). The interest expense paid under
the factoring programme amounted to €0.6 million in the year ended 31 December 2019
(€0.4 million as of 31 December 2018) and is presented as part of other finance expenses.

Accounting policy
Trade receivables at amortised cost

Trade and other receivables that will not be sold under the Group’s securitisation and
factoring programmes are initially recognised at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition, these receivables are measured at
amortised cost using the effective interest method less a loss allowance. The loss allowance
represents the Group’s estimate of individually impaired trade receivables as well as
expected credit losses on trade receivables that are not individually impaired. The expected
credit losses are calculated using a provision matrix based on historical credit loss
experience and assessments of current and future conditions. Any subsequent recoveries
of amounts previously written off relating to individually impaired trade receivables are
credited to the same line item in profit or loss where the original write-off was recognised.
The Group holds these trade receivables to collect the contractual cash flows and these
cash flows are solely payments of principal and interest on the principal outstanding.

(In € million)

Cash and cash equivalents (unrestricted)
Restricted cash
Total cash and cash equivalents

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

254.9
6.1
261.0

154.5
2.6
157.1

Cash and cash equivalents mainly consist of cash at banks but may also include short-term
deposits at banks with maturities of three months or less from the date of acquisition
(€35.6 million as of 31 December 2019 and nil as of 31 December 2018). The restricted cash
relates to cash collected for the benefit of the Group’s securitisation partner.

18 Trade and other payables

Trade and other payables are mainly comprised of trade payables, accruals for various
customer incentives and other accrued expenses.

Composition of trade and other payables

Trade receivables at fair value through profit or loss

(In € million)

Trade receivables that will be sold under the Group’s securitisation and factoring
programmes are initially recognised at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition, they are also recognised at fair value. These trade
receivables are sold and derecognised shortly after their initial recognition in the statement
of financial position. Any change in fair value is recognised through profit or loss. The
objective with these trade receivables is to realise the cash flows primarily through
selling them.

Trade payables
Related party payables
Liability for various customer incentive programmes
VAT payables
Accrued interest third parties
Other current payables and accrued expenses
Current trade and other payables

Derecognition of trade receivables

A financial asset is derecognised when the contractual rights to the cash flows from the
asset have expired, when the contractual rights to receive the cash flows have been
transferred and the Group has transferred substantially all of the risks and rewards of
ownership, or when the Group transfers a financial asset but retains the contractual rights
to receive the cash flows but at the same time assumes a contractual obligation to pay the
cash flows to another recipient (and remits the cash flows to the other recipient once having
collected an amount from the original asset without material delay, also being prohibited to
sell or pledge the original asset). Any interest in such a derecognised financial asset that is
retained by the Group is recognised as a separate asset or liability.

Related party payables
Other non-current payables
Non-current payables

Total current and non-current trade and other payables

502.7

448.2

As of
31 Dec.
2019

As of
31 Dec.
2018

179.6
2.9
210.7
9.5
6.2
83.4
492.3

2.7
7.7
10.4

165.8
2.2
144.8
5.9
3.3
118.6
440.6

3.1
4.5
7.6

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewLiabilities with an impact on the Group’s revenue

19 Provisions

In respect of liabilities relating to contracts with customers accounted for under the revenue
standard, the Group has refund and contract liabilities.

The Group’s provisions mainly relate to dismantling costs, warranties and restructuring
programmes.

The Group’s incentive programmes relate to trade discounts, volume rebates and other
customer incentives linked to sleeve volumes (see also note 6). These programmes generally
run over a calendar year, resulting in a gradual build-up over the year of an accrual liability
against revenue from sale of sleeves. As of 31 December 2019 and 31 December 2018, the
liabilities for customer incentive programmes mainly represent incentives earned by
customers under programmes running over a calendar year that have not yet been settled by
the Group. The remaining part represents accruals built up for incentive programmes running
over periods other than a calendar year (i.e. refund liabilities). The Group has recognised an
insignificant amount as revenue in the current period that was included in the balance of
liabilities for customer incentive programmes at the beginning of the period but was never
paid out as the conditions for the incentive payments were not met (also applicable to the
comparative period).

The Group’s contract liabilities relate to advance payments received from customers in relation
to the sale of sleeves and the sale of filling lines under contracts accounted for under the
revenue standard. These advance payments are recognised as revenue within a short time
frame from their initial recognition in the statement of financial position. As of 31 December
2019, the Group had contract liabilities in the amount of €11.6 million (€18.2 million as of
31 December 2018). These advance payments are presented in the table above as part of
other current payables and accrued expenses. The amount of advance payments recognised
as of 31 December 2018 has been recognised as revenue in 2019.

Accounting policy and significant estimates

Trade and other payables are initially recognised at fair value less any directly attributable
transaction costs. Subsequent to initial recognition, these liabilities are carried at amortised
cost using the effective interest method. The liability for accruals for various customer
incentives is estimated based on historical and current market trends as further described
in note 6. The accruals are presented against revenue.

Composition of provisions

(In € million)

Dismantling

warranty Restructuring

Other

Total

Product

Carrying amount as of 1 January 2018
Provisions made
Provisions used
Provisions reversed
Effect of movements in exchange rates
Carrying amount as of 31 December 2018

Current
Non-current
Carrying amount as of 31 December 2018

Carrying amount as of 1 January 2019
Provisions made
Provisions used
Provisions reversed
Effect of movements in exchange rates
Carrying amount as of 31 December 2019

Current
Non-current
Carrying amount as of 31 December 2019

Restructuring provision

7.6
3.7
(0.4)
(0.1)
0.4
11.2

–
11.2
11.2

11.2
2.3
(0.2)
(1.8)
0.7
12.2

0.1
12.1
12.2

7.2
5.7
(3.1)
(1.3)
(0.1)
8.4

8.4
–
8.4

8.4
5.8
(4.9)
(1.8)
0.1
7.6

7.6
–
7.6

24.7
7.2
(15.7)
(2.9)
–
13.3

10.7
2.6
13.3

13.3
2.2
(10.6)
(0.4)
–
4.5

3.6
0.9
4.5

3.3
1.4
(1.2)
(0.2)
–
3.3

1.0
2.3
3.3

3.3
0.8
(0.3)
(0.5)
–
3.3

0.8
2.5
3.3

42.8
18.0
(20.4)
(4.5)
0.3
36.2

20.1
16.1
36.2

36.2
11.1
(16.0)
(4.5)
0.8
27.6

12.1
15.5
27.6

The restructuring provision relates primarily to restructuring programmes focused on
reducing costs, streamlining the organisation and adjusting headcount to be more closely
aligned with the Group’s needs and changing market demands going forward.

Other provisions

Other provisions mainly relate to legal claims.

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewAccounting policy

20 Other assets and liabilities

A provision is recognised if, as a result of a past event, the Group has a present legal or
constructive obligation that can be reliably estimated and if it is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions are discounted if the
time value of money is material. The unwinding of the discount is recognised as part of
finance expenses. A provision is classified as current or non-current depending on whether
the expected timing of the payment of the amounts provided for is more than 12 months
after the reporting date.

Other assets mainly comprise accrued income, prepaid expenses and deferred expenditure.
Other liabilities mainly comprise deferred revenue relating to advance payments received in
relation to filling lines deployed under contracts that are accounted for as operating leases.
The Group’s derivative assets and liabilities are also presented as part of other assets or other
liabilities. The derivatives primarily relate to commodity and foreign currency exchange
derivatives as well as to interest rate swaps. See notes 25 and 33 for additional details about
the Group’s derivatives.

A provision for dismantling is recognised when the Group has an obligation to pay for
dismantling costs arising upon the return of a filling line. This obligation typically arises upon
deployment of the filling line.

A provision for warranties is recognised for products under warranty as of the reporting
date based upon known failures and defects as well as sales volumes and past experience
of the level of problems reported and products returned.

A provision for restructuring is recognised when the Group has approved a detailed and
formal restructuring plan, and the restructuring has either commenced or has been publicly
announced. The provision only includes direct costs that are necessarily entailed by the
restructuring and not associated with ongoing activities. No provision is made for future
operating costs.

A provision for onerous contracts is recognised when the expected benefits to be derived
by an entity from a contract are lower than the unavoidable cost of meeting its obligations
under the contract.

A provision for legal claims reflects management’s best estimate of the outcome based on
the facts known as of the reporting date.

Composition of other assets

(In € million)

Derivative assets
Other current assets
Other current assets

Other non-current assets
Other non-current assets

Total other current and non-current assets

Composition of other liabilities

(In € million)

Derivative liabilities
Deferred revenue
Other current liabilities

Derivative liabilities
Deferred revenue
Other non-current liabilities

Total other current and non-current liabilities

As of
31 Dec.
2019

As of
31 Dec.
2018

2.1
20.1
22.2

29.3
29.3

51.5

As of
31 Dec.
2019

11.1
48.8
59.9

2.6
162.4
165.0

224.9

0.2
19.0
19.2

18.3
18.3

37.5

As of
31 Dec.
2018

18.8
34.6
53.4

1.2
100.0
101.2

154.6

Deferred revenue relates to deployment of filling lines under lease and sales contracts that
qualify to be accounted for as operating leases (see notes 5.5.2, 6 and 12 for further details).
Advance payments received under such contracts vary between contracts and customers but
are recognised as a deferred revenue liability in the statement of financial position and
released to profit or loss to achieve recognition of revenue on a straight-line basis over in
general ten years for sales contracts and over in general six years for lease contracts.

100

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewOUR FINANCING AND FINANCIAL RISK MANAGEMENT

Composition of loans and borrowings

The table below shows the carrying amount of the Group’s loans and borrowings.

This section includes information about the Group’s financing in the form of loans and
borrowings and equity. The expenses for the financing are also presented in this section.
Lastly, the Group’s financial risk management policy and exposure to liquidity, market and
credit risks are described.

21 Capital management

The Directors of the Company are responsible for monitoring and managing the Group’s
capital structure, which is comprised of equity (share capital and additional paid-in capital) as
well as loans and borrowings.

The Directors’ policy is to maintain an acceptable capital base to promote the confidence of
the Group’s shareholders and lenders under the senior secured credit facilities and to sustain
the future development of the business. The Directors monitor the Group’s financial position
to ensure that it complies at all times with its financial and other covenants as set out in its
credit agreement for the senior secured credit facilities.

In order to maintain or adjust the capital structure, the Directors may elect to take a number of
measures, including for example to dispose of assets of the business, alter its short- to
medium-term plans with respect to capital projects and working capital levels, or to rebalance
the level of equity and debt in place.

22 Loans and borrowings

The Group’s loans and borrowings mainly comprise its Euro denominated term loans.
Liabilities under lease contracts where SIG is the lessee are also included in loans and
borrowings.

In the third quarter of 2018, the Group repaid its existing Euro and US Dollar denominated
term loans and redeemed its notes by using part of the proceeds received from the IPO and
proceeds from the new senior secured credit facilities that were entered into in connection
with the IPO. The difference between the carrying amount of the term loans and the notes as
of the repayment/redemption date and the amount paid is presented as part of the net
finance expense. The derivative instruments associated with the term loans and the notes
were also derecognised.

Impact of new IFRS standards
As a result of the adoption of IFRS 16 Leases on 1 January 2019, the Group’s lease liabilities
increased by €15.9 million. See further note 5.2.

(In € million)

Senior secured credit facilities
Lease liabilities
Current loans and borrowings

Senior secured credit facilities
Lease liabilities
Non-current loans and borrowings

Total loans and borrowings

As of
31 Dec.
2019

39.0
11.8
50.8

1,500.2
41.7
1,541.9

As of
31 Dec.
2018

31.2
3.7
34.9

1,533.7
22.8
1,556.5

1,592.7

1,591.4

The following table presents the components of the carrying amount of the loans and
borrowings.

(In € million)

Principal amount (including repayments)
Deferred original issue discount
Deferred transaction costs
Senior secured credit facilities

Lease liabilities

Total loans and borrowings

As of
31 Dec.
2019

1,560.9
(11.2)
(10.5)
1,539.2

As of
31 Dec.
2018

1,592.2
(14.2)
(13.1)
1,564.9

53.5

26.5

1,592.7

1,591.4

101

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewSenior secured credit facilities

Lease liabilities

The Group entered into new senior secured credit facilities in October 2018 consisting of two
Euro denominated term loans (A and B) and a revolving credit facility.

A maturity analysis of the Group’s lease liabilities is included below.

Less than 1 year
Between 1 and 5 years
More than 5 years

Contractual undiscounted
cash flows

2019

13.8
32.1
26.3
72.2

2018

5.1
18.0
22.0
45.1

Interest

Lease liabilities

2019

2.0
5.8
10.9
18.7

2018

1.5
5.2
11.9
18.6

2019

11.8
26.3
15.4
53.5

2018

3.6
12.8
10.1
26.5

In the prior period, the lease liabilities only related to lease contracts accounted for as finance
leases under IAS 17 Leases. Since the adoption of IFRS 16 Leases, the majority of the Group’s
lease contracts that were previously accounted for as operating leases are also accounted for
on-balance sheet. See further notes 5.2 and 13.

In the year ended 31 December 2018, the Group entered into a finance lease for its new SIG
Tech Centre in China resulting in an initial lease liability of €14.8 million. The remaining balance
was related to sale (at carrying amount) and leaseback transactions for production equipment
and one of its facilities. Since 1 January 2019, the balance also includes leases of offices,
production-related buildings and equipment, warehouses and cars.

Note 13 includes information about lease contracts to which the Group has committed but
where the lease has not yet commenced, including the lease of a second sleeves
manufacturing facility that is expected to commence in early 2021.

The table below provides a summary of the main terms of the two term loans and the revolving
credit facility.

Principal amount

Maturity date

Interest rate

Term loan A
Term loan B
Revolving credit facility

€1,250 million
€350 million
€300 million

October 2023
October 2025
October 2023

Euribor +2.00% with a floor of 0.00%
Euribor +2.50% with a floor of 0.00%
Euribor +1.75% with a floor of 0.00%

Interest on both term loans is paid on a quarterly basis. Term loan A will be repaid in quarterly
instalments of 0.625% of the initial principal amount in the first two years and in quarterly
instalments of 1.25% of the principal amount over the remaining term, with the remaining
balance due at maturity. No repayments of the term loan B principal amount are due prior to
maturity. The Group has the right to repay both the term loans in full or in part at the end of
each interest period without premium or penalty.

Directly attributable transaction costs in the form of arrangement and advisory fees for the
two term loans amounted to €14.9 million and are being, together with an original issue
discount for the two term loans of €14.8 million, amortised over the respective terms of the
loans, using the effective interest method.

The amount available under the multi-currency revolving credit facility is €297.4 million as of
31 December 2019 (€292.5 million as of 31 December 2018) due to €2.6 million in letters of
credit being outstanding under an ancillary facility (€7.5 million as of 31 December 2018). The
Group pays a fee for the undrawn revolver amount per year for the right to use the revolving
credit facility (30% of the margin percentage on an annualised basis applied to the undrawn
balance of the revolving credit facility).

The obligations under the senior secured credit facilities are guaranteed and secured by
Group subsidiaries in Luxembourg, Switzerland, the United States, Germany, Brazil, Austria
and the United Kingdom. The credit agreement contains customary affirmative and negative
covenants. It also contains customary events of default. The Group was in compliance with all
covenants and there were no events of default as of 31 December 2019 and
31 December 2018.

102

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewChanges in liabilities arising from financing activities

The following tables present changes in liabilities arising from financing activities, including changes arising from both cash flows and non-cash changes. The main changes for the year ended
31 December 2018 relate to the repayment of the term loans and early redemption of the notes as well as the entering into of new term loans.

Cash flows
from/(used in):

Financing
activities

Operating
activities

Fair value
changes and
other non-cash
movements

Effect of
movements in
exchange rates

(In € million)

Principal amount
Transaction costs
Original issue discount
Loans and borrowings, excl. lease liabilities

Lease liabilities

Total loans and borrowings
Capitalised cost for revolving credit facility
Interest: Accrued/paid

Derivative (assets)/liabilities from financing activities
Total (assets)/liabilities from financing activities and cash/non-cash changes

1 Jan.
2019

1,592.2
(13.1)
(14.2)
1,564.9

26.5

1,591.4
(1.1)
3.3
1,593.6

1.2
1,594.8

(31.3)
–
–
(31.3)

(5.8)

(37.1)
–
–
(37.1)

–
(37.1)

Cash flows
from/(used in):

Net effect of early
redemption/repayment

(In € million)

Principal amount 1
Transaction costs
Original issue discount
Embedded derivatives
Loans and borrowings, excl. finance lease liabilities

Finance lease liabilities

Total loans and borrowings
Capitalised cost for revolving credit facility
Interest: Accrued/paid
Early redemption fee (notes)

Derivative (assets)/liabilities from financing activities
Deferred option premium
Total (assets)/liabilities from financing activities and

1 Jan.
2018

2,614.4
(75.8)
(6.3)
12.0
2,544.3

12.3

2,556.6
(3.6)
20.1
–
2,573.1

(56.5)
2.6

Financing
activities

Operating
activities

(1,037.0)
–
–
–
(1,037.0)

(0.4)

(1,037.4)
(1.1)
–
–
(1,038.5)

–
–

–
(14.9)
(14.8)
–
(29.7)

–

(29.7)
–
(133.5)
(26.2)
(189.4)

0.5
–

cash/non-cash changes

2,519.2

(1,038.5)

(188.9)

Notes

–
19.7
–
(20.5)
(0.8)

–

(0.8)
–
–
26.2
25.4

57.1
–

82.5

–
–
–
–

–

–
–
(41.7)
(41.7)

(1.3)
(43.0)

Loans

–
46.1
5.3
10.2
61.6

–

61.6
2.7
–
–
64.3

(6.8)
(1.2)

56.3

–
2.6
3.0
5.6

32.4

38.0
0.3
44.6
82.9

2.7
85.6

–
–
–
–

0.4

0.4
–
–
0.4

–
0.4

Fair value
changes and
other non-cash
movements

Effect of
movements in
exchange rates

–
12.6
1.7
(1.0)
13.3

14.8

28.1
0.9
116.7
–
145.7

6.9
(1.4)

151.2

14.8
(0.8)
(0.1)
(0.7)
13.2

(0.2)

13.0
–
–
–
13.0

–
–

13.0

31 Dec.
2019

1,560.9
(10.5)
(11.2)
1,539.2

53.5

1,592.7
(0.8)
6.2
1,598.1

2.6
1,600.7

31 Dec.
2018

1,592.2
(13.1)
(14.2)
–
1,564.9

26.5

1,591.4
(1.1)
3.3
–
1,593.6

1.2
–

1,594.8

The cash flow amount relating to the principal amount of loans and borrowings shows the net effect of entering into new term loans (€1,600.0 million of cash inflow) and repayment of debt (€2,637.0 million of cash outflow, split between €675.0 million for the redemption of the notes
and €1,962.0 million relating to the final repayment of the pre-IPO term loans and quarterly repayments of pre- and post-IPO term loans). For further information, see the introductory section of this note and note 23.

103

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewAccounting policy
Loans and borrowings (the term loans) are initially recognised at fair value less any directly
attributable transaction costs. Subsequent to initial recognition, these liabilities are
measured at amortised cost using the effective interest method. Loans and other
borrowings are classified as current or non-current liabilities depending on whether the
Group has an unconditional right to defer settlement for at least 12 months after the
reporting period.

The accounting for a change to the cash flows of a financial liability measured at amortised
cost (such as the Group’s term loans) depends on the nature of change. When a floating
rate debt instrument is modified to change its interest rate, the modification is regarded as
a repricing to the new market interest rate, which is accounted for prospectively by
adjusting the effective interest over the remaining life of the debt instrument. A floating rate
instrument is one whose original contractual terms contain a provision such that the cash
flows will (or might) be reset to reflect movements in market rates of interest. If a change in
cash flows arises due to renegotiation or other modifications, and the renegotiation or
modification does not result in the derecognition of the financial liability, the gross carrying
amount is recalculated and any gain or loss recognised in profit or loss as part of the net
finance expense. If a renegotiation or other modification represents a settlement of the
original debt, it is accounted for as being extinguished.

A financial liability (or a part of it) is derecognised when it is extinguished, i.e. when the
contractual obligations are discharged, cancelled, expired or replaced by a new liability with
substantially modified terms. The difference between the carrying amount of the financial
liability (or part of a financial liability) extinguished and the consideration paid is recognised
in profit or loss as part of the net finance expense. Any costs or fees incurred are
recognised as part of the gain or loss on extinguishment.

Lease liabilities
The Group’s lease liabilities are initially measured at the present value of the lease payments
outstanding as of the commencement date of a lease, discounted at the interest rate
implicit in the lease or, if that rate cannot be determined (which is generally the case), at the
incremental borrowing rate. Lease payments included in the measurement of the lease
liabilities include fixed lease payments and variable lease payments that depend on an
index. Other variable lease payments are recognised in profit or loss. The Group does not
separate non-lease components from lease components in its lease contracts. Extension,
termination and purchase options that, at the commencement date of the lease, are
reasonably certain to be exercised are considered when assessing the lease term and/or
measuring the lease liability.

Subsequent to initial recognition, the lease liabilities are measured by increasing the
carrying amount to reflect interest on the lease liability (applying the effective interest
method); reducing the carrying amount to reflect lease payments made; and remeasuring
the carrying amount to reflect any contract modifications or reassessments relating to for
example changed future lease payments linked to changes in an index and changes in the
assessment of whether an extension, termination or purchase option will be exercised.

When a lease liability is remeasured, the corresponding adjustment is generally made to the
carrying amount of the related right-of-use asset (see note 13).

23 Finance income and expenses

The Group’s net finance expense is mainly related to finance expenses for the Group’s loans
and borrowings, fair value changes on associated derivative instruments and foreign exchange
gains and losses relating to the loans and borrowings.

Composition of net finance expenses

(In € million)

Interest income
Net foreign currency exchange gain
Net interest income on interest rate swaps
Finance income

Interest expense on:
– Notes
– Senior secured credit facilities
– Lease liabilities
Amortisation of original issue discount
Amortisation of transaction costs
Net change in fair value of derivatives
Net interest expense on interest rate swaps
Net effect of early redemption of notes
Net effect of early repayment of term loans
Other
Finance expenses
Net finance expense

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

2.8
9.2
–
12.0

–
(33.9)
(2.2)
(3.0)
(2.8)
(1.5)
(1.3)
–
–
(11.9)
(56.6)
(44.6)

2.3
64.4
0.6
67.3

(39.5)
(67.0)
(0.9)
(1.8)
(11.0)
(7.4)
–
(82.5)
(56.3)
(7.3)
(273.7)
(206.4)

The Group used part of the proceeds from the IPO in September 2018 and the proceeds from its
new term loans taken up in connection with the IPO to redeem its notes and repay the term
loans held prior to the IPO. The net effect of the early redemption of the notes was €82.5 million,
which includes a redemption fee of €26.2 million. The net effect of the early repayment of the
existing term loans was €56.3 million. The refinancing resulted in lower interest expense.

The increase of lease liabilities in the current period due to the adoption of IFRS 16 Leases on
1 January 2019 has resulted in higher interest expense on lease liabilities compared to the
comparative period. See further note 5.2.

In the year ended 31 December 2018, the net foreign currency exchange gain primarily
consisted of positive translation effects on loans and borrowings resulting from the
strengthening of the Swiss Franc against the Euro.

Net change in fair value of derivatives consists of fair value changes on financing-related derivatives.

Other finance expenses primarily consist of revolver commitment fees, securitisation and
factoring expenses and interest expense on current tax liabilities.

104

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness Review24 Equity

Conversion of shares in 2018

This note includes information about the Group’s share capital and additional paid-in capital.
The other components of equity consist of the translation reserve and retained earnings. The
Company’s shares are listed on SIX Swiss Exchange.

Issued share capital

The table below provides an overview of the shares in issue as of 31 December 2019 and
31 December 2018, all fully paid.

(Initial)

ordinary
shares

Ordinary
shares
(class A1-A5)

Non-redeemable
preference
shares
(class P1-P5)

Total
shares

14,877,361
200,175,879

100,084,864
(100,084,864)

100,091,015
(100,091,015)

215,053,240
–

105,000,000
320,053,240

–
–

–

–
–

–

105,000,000
320,053,240

320,053,240

Number of shares

Balance as of 1 January 2018
Conversion of share categories
Capital increase in connection with

the IPO

Balance as of 31 December 2018

Balance as of 31 December 2019

320,053,240

Prior to the IPO in 2018

As of 1 January 2018 and prior to the IPO, the share capital consisted of 215,053,240 shares
totalling €1,156.3 million, of which €2.2 million was share capital and €1,154.1 million was
additional paid-in capital.

The shares were divided into different categories (ordinary shares and preference shares), with
each share entitled to one vote at shareholders’ meetings. The nominal value of each share
was €0.01. Rights to dividends and rights in case of dissolution of the Company varied
depending upon the category of shares and the respective class within each category.
Whether dividends were paid or the shares were redeemed was solely at the discretion of the
Company. The non-redeemable preference shares were classified as equity as they bore
discretionary dividends, did not contain any obligations to deliver cash or other financial assets
and did not require settlement in a variable number of the Group’s equity instruments.

Prior to the IPO, the different classes of ordinary shares (class A1-A5, each with a nominal value
of €0.01) were converted into one class of ordinary shares with a nominal value of
€0.01 per share, and the different classes of preference shares (class P1-P5, each with a
nominal value of €0.01) were converted into one class of preference shares with a nominal
value of €0.01 per share. The resulting 100,091,015 single class preference shares were then
converted into 100,091,015 ordinary shares with a nominal value of €0.01 per share. Finally, the
nominal value of the only remaining class of ordinary shares was changed from €0.01 per share
to CHF 0.01 per share. This change resulted in an insignificant reduction of the share capital
and an increase of the additional paid-in capital of the same amount.

Issue of shares in IPO in 2018

The Company issued 105,000,000 new shares in the IPO, each with a nominal value of
CHF 0.01. The gross proceeds from the IPO amounted to €1,043.9 million (CHF 11.25 per share),
resulting in an increase in the share capital of €0.9 million and an increase in the additional
paid-in capital of €1,043.0 million. Costs incurred of €38.6 million that are directly attributable
to the issue of the new shares have been recognised as a deduction from equity (additional
paid-in capital). The net proceeds from the IPO amount to €1,005.3 million. An amount of
€3.4 million of costs incurred and recognised in the year ended 31 December 2018 that were
directly attributable to the issue of the new shares was paid in 2019.

After the IPO

As of 31 December 2018, the share capital consisted of 320,053,240 shares, issued and fully
paid, representing €2.8 million of share capital and €2,197.4 million of additional paid-in capital
(before deduction of costs of €38.6 million relating to the issue of new shares in connection
with the IPO in September 2018). Net of the deducted IPO costs, the additional paid-in capital
in the comparative period amounted to €2,158.8 million.

As of 31 December 2019, the Group also had 320,053,240 shares, issued and fully paid. The
nominal value of each share is CHF 0.01. Each share is entitled to one vote at shareholders’
meetings. The shareholders are entitled to dividends as declared from time to time.

105

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewAuthorised share capital and conditional share capital

The Company has authorised share capital and conditional share capital of CHF 640,106.48
each as of 31 December 2019 and 31 December 2018.

The Board of Directors’ authority to increase the share capital out of authorised share capital
is limited until 27 September 2020. Capital increases from authorised and conditional share
capital are mutually exclusive, i.e. they are subject to a single combined limit, and may not
exceed 64,010,648 shares (equalling CHF 640,106.48 or 20% of the existing share capital).

The authorised share capital can be used for various purposes. This creates a flexibility to seek
additional capital, if required. The conditional share capital is divided into CHF 160,026.62 for
employee benefit plans and CHF 480,079.86 for equity linked financing instruments.

Treasury shares

The Company purchases its own shares on the market to settle its obligations under its
share-based payment plans and arrangements, which were introduced in the year ended
31 December 2019 (see note 31). The Company held 6,158 shares for this purpose as of
31 December 2019 (nil as of 31 December 2018), representing an amount of €0.1 million.
All treasury shares are carried at acquisition cost.

(Number of treasury shares or in € million)

Number

Amount

Balance as of 1 January 2019
Purchases
Transfer under share-based payment plans and arrangements
Balance as of 31 December 2019

–
47,000
(40,842)
6,158

–
(0.5)
0.4
(0.1)

Dividends

A dividend of CHF 0.35 per share, totalling CHF 112.0 million (€99.0 million) was paid to
shareholders out of the capital contribution reserve (additional paid-in capital) in April 2019.
No dividends were paid in the year ended 31 December 2018.

For the year ended 31 December 2019, the Board of Directors will propose a dividend payment
of CHF 0.38 per share, totalling CHF 121.6 million (which, as per the exchange rate as of
31 December 2019, would equal €112.1 million) to the Annual General Meeting to be held on
7 April 2020. The dividend payment to be proposed is not recognised as a liability.

Accounting policy

Incremental costs directly attributable to the issue of shares and purchase of treasury
shares are recognised as a deduction from equity. Any resulting tax effects of any
transaction costs that are recognised in equity are also reflected in equity.

Treasury shares

The cost of repurchased shares is presented as a deduction from equity, in the separate
category treasury shares. When treasury shares subsequently are transferred to settle the
Group’s obligations under its share-based payment plans and arrangements (or sold, if
applicable), the related amount recognised as a share-based payment expense (or any
amount received under a sale) is recognised as an increase in equity. Any resulting surplus
or deficit is presented as an adjustment to additional paid-in capital. The Group applies
the average cost method to calculate the surplus or deficit on the transfer or sale of
treasury shares.

25 Financial risk management

In the course of its business, the Group is exposed to a number of financial risks: liquidity risk,
market risk (including currency risk, commodity risk and interest rate risk) and credit risk. This
note presents the Group’s objectives, policies and processes for managing its exposure to
these financial risks. Note 33 includes an overview of the derivative financial instruments that
the Group has entered into to mitigate its market risk exposure.

Exposure to liquidity, market and credit risks arises in the normal course of the Group’s
business. Management and the Board of Directors have the overall responsibility for the
establishment and oversight of the Group’s financial risk management framework.
Management has established a treasury policy that identifies risks faced by the Group and sets
out policies and procedures to mitigate those risks. Financial risk management is primarily
carried out by the Treasury function of the Group. Management has delegated authority levels
and authorised the use of various financial instruments to a restricted number of personnel
within the Treasury function.

106

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewLiquidity risk

Liquidity risk is the risk that the Group will not meet contractual obligations as they fall due.
The Group evaluates its liquidity requirements on an ongoing basis using various cash and
financial planning analyses and ensures that it has sufficient cash to meet expected operating
expenses, repayments of and interest payments on its debt and future lease payments.

The Group generates sufficient cash flows from its operating activities to meet obligations
arising from its financial liabilities. It has a revolving credit facility in place to cover potential
shortfalls and access to local working capital facilities in various jurisdictions, which are
available if needed to support the cash management of local operations. The Group had
unrestricted cash and cash equivalents in the amount of €254.9 million (€154.5 million as of
31 December 2018) and access to an additional €297.4 million under its revolving credit facility
as of 31 December 2019 (€292.5 million as of 31 December 2018).

The following table includes information about the remaining contractual maturities for the
Group’s non-derivative financial liabilities as of 31 December 2019. The table includes both
interest and principal cash flows. Balances due within one year equal their carrying amounts
as the impact of discounting is not significant.

(In € million)

As of 31 December 2019
Trade and other payables
Loans and borrowings:
– Senior secured credit facilities
– Lease liabilities
Total non-derivative
financial liabilities

Contractual cash flows

Carrying
amount

Total

Up to
1 year

1-2 years

2-5 years

More than
5 years

(493.2)

(482.8)

(2.3)

(4.9)

(3.2)

(1,539.2)
(53.5)

(1,703.5)
(72.2)

(73.9)
(13.8)

(96.3)
(13.0)

(1,176.6)
(19.1)

(356.7)
(26.3)

(2,085.9)

(2,268.9)

(570.5)

(111.6)

(1,200.6)

(386.2)

See note 5.2 for the impact on the Group’s lease liabilities of the adoption of IFRS 16 Leases on
1 January 2019.

The Group’s senior secured credit facilities contain covenants and certain clauses that may
require earlier repayments than indicated in the table above. The Group monitors the
covenants as well as the aforementioned clauses on a regular basis to ensure that it is in
compliance with the credit agreement at all times.

The interest payments on the senior secured credit facilities are variable, thus the interest rate
amounts included in the table above will change if the market interest rate changes. The Group
uses interest-rate swaps that fix the variable rate on a portion of its term loans (see section
“Interest rate risk” in this note).

The Group enters into derivative contracts as part of operating and financing the business.
The commodity derivative contracts are net cash settled. Other derivative contracts are net or
gross cash settled. The derivative asset or liability recognised as of 31 December 2019 and
31 December 2018 represents the liquidity exposure to the Group as of that date (see
note 33). The cash flows resulting from a settlement of the derivative contracts may change as
commodity prices, interest rates and exchange rates change. However, the overall impact on
the Group’s liquidity from the derivative contracts is not deemed to be significant.

The following table includes information about the remaining contractual maturities for the
Group’s non-derivative financial liabilities as of 31 December 2018.

Carrying
amount

Total

Up to
1 year

1-2 years

2-5 years

More than
5 years

Contractual cash flows

(442.3)

(434.7)

(0.9)

(4.5)

(2.2)

(1,564.9)
(26.5)

(1,770.8)
(45.1)

(66.8)
(5.1)

(74.1)
(5.3)

(1,264.3)
(12.7)

(365.6)
(22.0)

(2,033.7)

(2,258.2)

(506.6)

(80.3)

(1,281.5)

(389.8)

(In € million)

As of 31 December 2018
Trade and other payables
Loans and borrowings:
– Senior secured credit facilities
– Finance lease liabilities
Total non-derivative
financial liabilities

Market risks

Market risk is the risk that changes in market prices, such as foreign currency exchange rates,
commodity prices and interest rates, will affect the cash flows or the fair value of the Group’s
holdings of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters.

The Group buys and sells derivatives in the ordinary course of business to manage market
risks. The Group does not enter into derivative contracts for speculative purposes. Hedge
accounting under IFRS 9 is not applied.

Currency risk

As a result of the Group’s international operations, foreign currency exchange risk exposures
exist on sales, purchases, borrowings and dividend payments that are denominated in
currencies that are not the functional currency of the entity involved in the transaction. The
Group is also exposed to translation currency risk arising from the translation of the assets,
liabilities and results of its foreign entities into Euro, the Group’s presentation currency, from
their respective functional currencies. The functional currencies of the subsidiaries are mainly
Euro, US Dollar, Swiss Franc, Chinese Renminbi, Thai Baht, Brazilian Real, Mexican Peso,
Australian Dollar and New Zealand Dollar.

107

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewIn accordance with the Group’s Treasury policy, the Group seeks to minimise transaction currency
risk via natural offsets to the extent possible. Therefore, when commercially feasible, the Group
incurs costs in the same currencies in which cash flows are generated. In addition, the Group uses
foreign currency exchange derivatives to hedge additional transaction currency risks.

The Group does not hedge its exposure to translation gains or losses related to the financial results
of its non-Euro functional currency entities.

As previously noted, the Group manages operational transaction currency risk via natural offsets
and by entering into foreign currency exchange derivative contracts. The following table provides an
overview of the outstanding foreign currency exchange derivative contracts entered into as part of
the operating business as of 31 December 2019.

Type

Non-deliverable forwards
Non-deliverable forwards
Non-deliverable forwards
Currency forwards
Currency forwards
Currency forwards
Currency forwards
Currency forwards
Currency forwards
Currency forwards
Currency forwards
Currency swap
Currency forwards
Currency swap

Contract
type

Currency

Buy
Buy
Sell
Buy
Sell
Buy
Buy
Sell
Buy
Sell
Buy
Sell
Buy
Sell

€
$
$
€
$
€
$
€
$
$
€
€
$
$

Contracted
volume

23,880,000
745,000
745,000
21,445,000
23,757,000
20,645,000
6,555,000
13,110,000
5,000,000
24,055,000
37,045,000
1,150,000
31,745,000
400,000

Counter-
currency

Contracted
conversion range

Contracted
date of maturity

BRL
BRL
BRL
THB
THB
CNY
CNY
NZD
NZD
NZD
$
$
MXN
MXN

4.4065 – 4.8779
3.8485 – 4.0652
3.9605 – 3.9900
33.8158 – 36.8500
29.8909 – 31.5849
7.8033 – 8.1287
6.7446 – 7.2216
1.6927 – 1.7221
0.6652
0.6327 – 0.6960
1.1051 – 1.1777
1.1178
19.4047 – 21.1259
19.7828

Jan. 2020 – Dec. 2020
Jan. 2020 – Apr. 2020
Jan. 2020 – Apr. 2020
Jan. 2020 – Dec. 2020
Jan. 2020 – Dec. 2020
Jan. 2020 – Dec. 2020
Jan. 2020 – Dec. 2020
Jan. 2020 – Dec. 2020
Jun. 2020
Jan. 2020 – Dec. 2020
Jan. 2020 – Dec. 2020
Apr. 2020
Jan. 2020 – Dec. 2020
Apr. 2020

The following table provides an overview of the outstanding foreign currency exchange derivative contracts as of 31 December 2018.

Type

Non-deliverable forwards
Non-deliverable forwards
Currency forwards
Currency forwards
Currency forwards
Currency forwards
Currency forwards
Currency swap
Currency forwards
Currency forwards

Contract
type

Currency

Buy
Buy
Buy
Sell
Buy
Buy
Sell
Sell
Buy
Buy

$
€
€
$
€
$
$
€
€
€

Contracted
volume

6,188,700
26,945,000
28,163,000
14,187,000
15,844,000
7,953,000
12,154,000
20,000,000
27,074,000
9,174,000

Counter-
currency

Contracted
conversion range

Contracted
date of maturity

BRL
BRL
THB
THB
CNY
CNY
NZD
$
$
MXN

3.4266 – 4.0455
4.4996 – 4.7842
37.332 – 37.992
32.104 – 32.521
7.9286 – 8.1504
6.9161 – 6.9344
0.6801 – 0.6833
1.14170
1.1521 – 1.1863
22.946 – 24.990

Jan. 2019 – Jan. 2020
Jan. 2019 – Jan. 2020
Jan. 2019 – Dec. 2019
Jan. 2019 – Dec. 2019
Jan. 2019 – Dec. 2019
Jan. 2019 – Dec. 2019
Feb. 2019 – Nov. 2019
Jan. 2019
Jan. 2019 – Dec. 2019
Jan. 2019 – Dec. 2019

108

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewThe Group’s primary transaction currency exposure as of 31 December 2019 relates to an
intra-group Euro denominated loan held by a Swiss functional currency entity. A 5% weakening
of the Euro against the Swiss Franc as of 31 December 2019 would have resulted in an
additional unrealised foreign currency exchange loss of €8.2 million as of 31 December 2019.

The Group’s primary transaction currency exposure as of 31 December 2018 related to Euro
net balances held by US Dollar functional currency entities and to US Dollar net balances held
by Euro functional currency entities. A 5% strengthening of the Euro against the US Dollar as of
31 December 2018 would have resulted in an additional unrealised foreign currency exchange
loss of €4.4 million as of 31 December 2018.

Commodity price risk

Commodity price risk is the risk that changes in the price of commodities purchased by the
Group and used as inputs in the production process may impact the Group, as such price
changes cannot always be passed on to the customers.

The Group’s exposure to commodity price risk arises principally from the purchase of
polymers and aluminium. The Group’s objective is to ensure that the commodity price risk
exposure is kept at an acceptable level. The Group generally purchases commodities at spot
market prices and uses derivatives to hedge the exposure in relation to the cost of polymers
(and their components) and aluminium. Due to this strategy, the Group is able to fix the raw
material prices for the coming year for approximately 80% of the polymers and aluminium
purchases, which substantially reduces the exposure to raw material price fluctuations over
that period.

The realised gain or loss arising from derivative commodity contracts is recognised in cost of
sales, while the unrealised gain or loss associated with derivative commodity contracts is
recognised in other income or expenses.

The Group recognised an unrealised gain of €10.6 million in the year ended 31 December 2019
and an unrealised loss of €22.0 million in the year ended 31 December 2018 relating to its
derivative commodity contracts as a component of other income or expenses. The Group
recognised a realised loss of €21.5 million in the year ended 31 December 2019 and a realised
loss of €1.4 million in the year ended 31 December 2018 relating to its derivative commodity
contracts as a component of cost of sales.

The following table provides an overview of the outstanding commodity derivative contracts as
of 31 December 2019.

Type

Unit of measure

Contracted
volume

Contracted
price range

Contracted
date of maturity

Aluminium swaps
Aluminium premium

swaps
Resin swaps
Resin swaps
Ethylene swaps
Propylene swaps

metric tonne

23,040

$1,750.00 – $1,979.00

Jan. 2020 – Dec. 2020

metric tonne
metric tonne
metric tonne
metric tonne
metric tonne

8,280
36,060
29,400
22,920
8,100

$159 – $171
€1,344 – €1,410
$980.00 – $1,175.00
€975 – €993.50
€1,339 – €1,420

Jan. 2020 – Dec. 2020
Jan. 2020 – Dec. 2020
Jan. 2020 – Dec. 2020
Jan. 2020 – Dec. 2020
Jan. 2020 – Dec. 2020

There would have been an impact of €14.4 million on profit or loss from a remeasurement of
commodity derivative contracts as of 31 December 2019 (an impact of €14.9 million on profit
or loss as of 31 December 2018), assuming a 10% parallel upward or downward movement in
the price curve used to value the contracts assuming all other variables remain constant.

The following table provides an overview of the outstanding commodity derivative contracts as
of 31 December 2018.

Type

Unit of measure

Contracted
volume

Contracted
price range

Contracted
date of maturity

Aluminium swaps
Aluminium premium

swaps
Resin swaps
Resin swaps
Ethylene swaps
Propylene swaps
Electricity swaps

metric tonne

20,760

$2,020.00 – $2,200.00

Jan. 2019 – Dec. 2019

metric tonne
metric tonne
metric tonne
metric tonne
metric tonne
megawatt hour

8,400
47,748
28,680
9,240
8,040

$166 – $185
€1,450 – €1,490
$1,245.00 – $1,320.00
€1,085 – €1,108
€1,430 – €1,495
43,824 NZD 73.00 – NZD 101.50

Jan. 2019 – Dec. 2019
Jan. 2019 – Dec. 2019
Jan. 2019 – Dec. 2019
Jan. 2019 – Dec. 2019
Jan. 2019 – Dec. 2019
Jan. 2019 – Dec. 2019

109

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewInterest rate risk

Credit risk

The Group’s interest rate risk arises primarily from its Euro denominated term loans at variable
interest. The interest rate profile of the Group’s significant interest-bearing financial
instruments as of 31 December 2019 and 31 December 2018 is presented in the following
table.

(In € million)

Fixed rate instruments
Financial assets
Financial liabilities

Effect of interest rate swaps

Variable rate instruments
Financial assets
Financial liabilities

Effect of interest rate swaps

As of
31 Dec.
2019

As of
31 Dec.
2018

5.1
(53.5)
(48.4)
(800.0)
(848.4)

–
(26.5)
(26.5)
(800.0)
(826.5)

261.0
(1,560.9)
(1,299.9)
800.0
(499.9)

157.1
(1,592.2)
(1,435.1)
800.0
(635.1)

The Group has entered into interest rate swaps to hedge a portion of the cash flow exposure
arising on its term loans at variable interest rates. The swaps are presented as part of other
non-current liabilities in the statement of financial position. The fair value changes are
recognised in profit or loss.

A 100 basis point increase in the variable component (three month Euribor) of the interest rate
on the term loans would increase the annual interest expense by €4.6 million as of
31 December 2019 (€5.5 million as of 31 December 2018).

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations. This risk arises principally from the Group’s
receivables from its customers. The carrying amount of financial assets represents the
maximum credit exposure. Historically, there has been a low level of losses resulting from
default by customers.

The credit risk relating to trade receivables is influenced mainly by the individual characteristics
of each customer. Given the diverse global operations and customers across the Group, credit
control procedures are jointly managed by the Group’s Treasury function and each of the
operating businesses within the Group. These joint responsibilities include, but are not limited
to, reviewing the individual characteristics of new customers for creditworthiness before
accepting the customer and agreeing upon purchase limits and terms of trade as well as
regularly reviewing the creditworthiness of existing customers and previously agreed purchase
limits and terms of trade.

The Group limits its exposure to credit risk by executing a credit limit policy, requiring advance
payments in certain instances, taking out insurance for specific debtors as well as utilising
securitisation and non-recourse factoring programmes. These programmes are further
described in note 16.

In addition, concentration of credit risk is limited due to the customers comprising a diversified
mix of international companies, large national and regional companies as well as small local
companies, of which most have been customers of the Group for many years.

In line with its Treasury policy, the Group generally enters into transactions only with banks
and financial institutions having a credit rating of at least investment grade (long term: A rating
and short term: A1 or P1 rating, as per Standard & Poor’s or Moody’s). However, the Group
may also enter into transactions with banks and financial institutions with a currently lower
investment grade (long term: BBB rating and short term: A2 or P2 rating).

110

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewOUR GROUP STRUCTURE AND RELATED PARTIES

This section provides details about the Group’s subsidiaries and joint ventures, including the
acquisition of Visy Cartons on 29 November 2019. It also covers other related parties.

26 Group entities

The Group only has wholly owned subsidiaries. It also has three joint ventures, with an
ownership interest of 50% (see further note 28).

Overview of Group entities

The following table provides an overview of all of the Group’s subsidiaries and joint ventures.
The ownership and voting interests are the same for all Group entities. The ownership
interests are the same as of 31 December 2019 and 31 December 2018, unless specifically
stated . The reporting date of all Group entities is 31 December, with the exception for SIG
Combibloc Australia Pty Ltd. (see footnote 3 of the table).

The table does not list subsidiaries of the Group’s joint ventures. In the context of the SIX
Exchange Regulation Directive on Information relating to Corporate Governance, subsidiaries
of the Group’s joint ventures are only listed if considered material. A subsidiary of a joint
venture is considered material if its revenue correspond to more than 5% of the total revenue
of such joint venture in the relevant year.

Companies
Parent company
Switzerland
SIG Combibloc Group AG, Neuhausen am Rheinfall 1
Subsidiaries
Argentina
Combibloc S.R.L., Buenos Aires
Australia
SIG Australia Holding Pty Ltd., Melbourne 2
SIG Combibloc Australia Pty Ltd., Broadmeadows 3
Whakatane Mill Australia Pty Ltd., Melbourne 4
Austria
SIG Austria Holding GmbH, Saalfelden
SIG Combibloc GmbH, Saalfelden
SIG Combibloc GmbH & Co. KG, Saalfelden
Bangladesh
SIG Combibloc Bangladesh Ltd., Dhaka
Brazil
SIG Beverages Brasil Ltda., São Paulo
SIG Combibloc do Brasil Ltda., São Paulo

As of 31 December 2019

Share capital 11

Interest

3,200,532 CHF

100%

151,876,270 ARS

100%

32,100,000 AUD
40,000,001 AUD
10 AUD

1,000,000 EUR
35,000 EUR
4,500,000 EUR

100%
100%
100%

50,000,000 BDT

100%

109,327,434 BRL
722,386,462 BRL

100%
100%

Companies

Chile
SIG Combibloc Chile Ltda., Santiago
China
SIG Combibloc (Suzhou) Co. Ltd., Suzhou
Czech Republic
SIG Combibloc s.r.o., Hradec Kralove
France
SIG Combibloc S.à.r.l., Asnières Cedex
Germany
SIG Combibloc GmbH, Linnich
SIG Combibloc Holding GmbH, Linnich 5
SIG Combibloc Systems GmbH, Linnich
SIG Combibloc Zerspanungstechnik GmbH, Aachen
SIG Euro Holding GmbH, Linnich 5
SIG Information Technology GmbH, Linnich
SIG International Services GmbH, Linnich
Hungary
SIG Combibloc Kft., Budapest 6
India
SIG Combibloc India Private Ltd., Gurgaon, Haryana
Indonesia
P.T.SIG Combibloc Indonesia, Jakarta Selatan
Italy
SIG Combibloc S.r.l., Parma
Korea
SIG Combibloc Korea Ltd., Seoul
Luxembourg
SIG Combibloc Holdings GP S.à r.l., Munsbach 7
SIG Combibloc Holdings S.à r.l., Munsbach 8
SIG Combibloc PurchaseCo S.à r.l., Munsbach
Malaysia
SIG Combibloc Malaysia SDN. BHD, Kuala Lumpur
Mexico
SIG Combibloc México, S.A. de C.V., Mexico City
Netherlands
SIG Combibloc B.V., Hengelo
New Zealand
Whakatane Mill Ltd., Whakatane
Poland
SIG Combibloc Sp. z o.o., Warsaw
Romania
SIG Combibloc Services S.R.L., Cluj
Russia
OOOSIG Combibloc, Moscow

As of 31 December 2019

Share capital 11

Interest

5,016,722,134 CLP

100%

75,000,000 USD

100%

19,340,000 CZK

100%

31,000 EUR

100%

34,494,382 EUR

–

1,000,000 EUR
256,000 EUR
10,000,000 EUR
500,000 EUR
1,000,000 EUR

100%
–
100%
100%
100%
100%
100%

84,300,000 HUF

100%

10,000,000

INR

100%

13,549,682,000

IDR

100%

101,400 EUR

100%

260,000,000 KRW

100%

–

2,000,001 EUR
4,012,500 EUR

–
100%
100%

1,000,000 MYR

100%

1,000,000 MXN

100%

40,000 EUR

100%

108,120,047 NZD

100%

249,934 PLN

100%

1,000,000 RON

100%

5,000,000 RUB

100%

111

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewCompanies
Spain
SIG Combibloc S.A., Madrid
Sweden
SIG Combibloc AB, Kista
Switzerland
SIG allCap AG, Neuhausen am Rheinfall
SIG Combibloc Services AG, Neuhausen am Rheinfall 9
SIG Combibloc Procurement AG, Neuhausen am Rheinfall
SIG Combibloc Receivables Management AG,

Neuhausen am Rheinfall

SIG Schweizerische Industrie-Gesellschaft GmbH,

Neuhausen am Rheinfall 10

SIG Technology AG, Neuhausen am Rheinfall
Taiwan
SIG Combibloc Taiwan Ltd., Taipei
Thailand
SIG Combibloc Ltd., Rayong
United Kingdom
SIG Combibloc Ltd., Houghton-le-Spring
USA
SIG Combibloc US Acquisition Inc., Wilmington
SIG Combibloc US Acquisition II Inc., Wilmington
SIG Combibloc Inc., Wilmington
SIG Holding USA, LLC, Wilmington
Vietnam
SIG Vietnam Ltd., Ho Chi Minh City
Joint ventures
Japan
DNP • SIG Combibloc Co., Ltd., Tokyo
Saudi Arabia
SIG Combibloc Obeikan Company Ltd., Riyadh
UAE
SIG Combibloc Obeikan FZCO, Dubai

As of 31 December 2019

Share capital 11

Interest

Accounting policy/basis of consolidation
Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability
to affect those returns through its power over the entity. Subsidiaries are consolidated from
their respective acquisition date, which is the date on which the Group obtains control.
Subsidiaries are deconsolidated from their respective disposal date, which is the date on
which control ceases. Any resulting gain or loss is recognised in profit or loss.

Interests in joint ventures

A joint venture is a contractual arrangement in which the Group has joint control and has
rights to the net assets of the arrangement rather than rights to its assets and obligations
for its liabilities. Investments in joint ventures are accounted for using the equity method.
On the date joint control is obtained, joint ventures are recognised at cost (including
transaction costs). Subsequent to initial recognition, the Group’s share of the profit or loss
and other comprehensive income is included in the consolidated financial statements until
the date on which joint control ceases.

Intra-group transactions and balances

Intra-group transactions and balances are eliminated upon consolidation. Unrealised gains
arising from transactions with joint ventures are eliminated to the extent of the Group’s
interest in the investee. Unrealised losses are eliminated in the same manner as unrealised
gains, but only to the extent that there is no evidence of impairment.

330,550 EUR

100,000

SEK

7,000,000 CHF
37,931,400 CHF
2,000,000 CHF

1,000,000 CHF

20,000 CHF
3,000,000 CHF

15,000,000 TWD

3,070,693,000 THB

1,500,000 GBP

10 USD
10 USD
27,000,000 USD
1,000 USD

2,000,000,000 VND

75,000,000

JPY

75,000,000 SAR

24,000,000 AED

100%

100%
100%
100%

100%

100%
100%

100%

100%
100%
100%
100%

100%

50%

1 Prior to the IPO, the parent company was SIG Combibloc Group Holdings S.à r.l. with its domicile in Luxembourg. In September 2018,
it converted from a Luxembourg limited liability company (“société à responsabilité limitée”) into a Luxembourg corporation (“société
anonyme”). SIG Combibloc Group Holdings S.A. then migrated its legal seat from Luxembourg to Switzerland and was reorganised as
a stock corporation (“Aktiengesellschaft”) and changed its name to SIG Combibloc Group AG.
The registered address of SIG Combibloc Group AG is Laufengasse 18, 8212 Neuhausen am Rheinfall, Switzerland. The registered
address of SIG Combibloc Group Holdings S.à r.l. was 6C, rue Gabriel Lippmann, L-5365 Munsbach, Grand Duchy of Luxembourg.
2 Established in the third quarter of 2019 and was the acquiring entity of Visy Cartons Pty Ltd. (see footnote 3 below and note 27).
3 Visy Cartons Pty Ltd. was acquired in the fourth quarter of 2019 (see note 27) and renamed to SIG Combibloc Australia Pty Ltd.

Its reporting date is 30 June.
In liquidation.

4
5 SIG Combibloc Holding GmbH was merged with SIG Euro Holding GmbH in the third quarter of 2019.
6
7 SIG Combibloc Holdings GP S.à r.l was liquidated in the second quarter of 2019.
8 Previously SIG Combibloc Holdings S.C.A. The Company was converted into a société à responsabilité limitée in the fourth quarter

In liquidation.

of 2018.

9 Previously SIG Combibloc Group AG, renamed to SIG Combibloc Services AG in the third quarter of 2018.
10 The functional currency of SIG Schweizerische Industrie-Gesellschaft GmbH changed from Swiss Francs to Euro in the year ended

31 December 2018. The IPO and the refinancing that took place, with consequential changes to the Group’s set up of intra-group
loans and flows of funds, triggered the change. The change in functional currency has been accounted for prospectively from the
date of change.

11 Unaudited.

112

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness Review
27 Business combination

Overview

The Group acquired 100% of the shares of Visy Cartons Pty Ltd. (“Visy Cartons”) on a cash free,
debt free basis from VisyPak Operations Pty Ltd. (a subsidiary of Pratt Consolidated Holdings
Pty Ltd.) on 29 November 2019. Visy Cartons will be part of the Group’s business in Asia Pacific.
Visy Cartons was renamed to SIG Combibloc Australia Pty Ltd. in December 2019.

Visy Cartons provides carton packaging solutions for beverages in Australia and New Zealand.
It operates a sleeves manufacturing facility in Australia and has approximately 160 full-time
employees. The Group acquired Visy Cartons to gain full access to the beverage carton market
in Australia and New Zealand. Synergies are expected from supply chain efficiencies and the
use of the Group’s latest technologies and solutions.

The following tables provide an overview of the consideration transferred and the recognised
amounts of assets acquired and liabilities assumed as of the acquisition date. The amounts
have been determined on a provisional basis.

(In € million)

Cash paid on acquisition date
Payable for expected completion account adjustments
Fair value of consideration

Intangible assets
Property, plant and equipment
Inventories
Deferred tax liabilities
Other net liabilities acquired
Fair value of identifiable net assets acquired

Fair value of consideration (paid in cash and payable)
Fair value of identifiable net assets acquired
Goodwill

Year ended
31 Dec.
2019

40.5
2.5
43.0

9.7
13.9
10.5
(2.5)
(3.1)
28.5

43.0
28.5
14.5

Acquisition-related costs have been recognised as part of other expenses (see note 8).

For the one month ended 31 December 2019, Visy Cartons contributed revenue of €4.2 million
and profit of €0.3 million to the Group’s results. If the acquisition had occurred on
1 January 2019, management estimates that consolidated revenue would have been
€1,822.9 million and that consolidated profit for the year would have been €109.5 million. In
determining these amounts, management has assumed that the fair value adjustments
(determined provisionally as of 31 December 2019) as of the date of acquisition would have
been the same if the acquisition had occurred on 1 January 2019.

Consideration transferred

In addition to the consideration of €40.5 million (AUD 65.8 million) already paid in cash on the
acquisition date, the Group estimates that it will have an obligation to pay an additional
amount of €2.5 million in cash upon the completion settlement expected to take place in the
first quarter of 2020. Any adjustment to the additional amount, for which the Group has
recognised a liability as of 31 December 2019, will be accounted for as if it had been made as of
the acquisition date.

Identifiable net assets acquired

The intangible assets of €9.7 million comprise customer relationships for which the useful lives
are assessed to be ten years. The property, plant and equipment balance of €13.9 million
principally comprises plant and equipment, including filling lines leased to customers under
contracts that qualify to be accounted for as operating leases. The fair value of the acquired
trade receivables was €11.1 million. Trade receivables comprised gross contractual amounts
due of €12.3 million, of which €1.2 million was expected to be uncollectable as of the
acquisition date.

Goodwill

The goodwill of €14.5 million mainly comprises expectations about expansion of the markets in
Australia and New Zealand, introduction of new products in these markets and the skills and
competence of the workforce. The goodwill is not expected to be deductible for tax purposes.
The goodwill has been allocated to the APAC segment for impairment testing purposes (see
note 14).

Assessment of fair values

The fair value of the customer relationships was assessed by applying the income approach,
under which future net cash flows expected to accrue directly or indirectly to the investor are
discounted to the present value. More specifically, the multi-period excess earnings method
was used. Tax amortisation benefits were considered. Regarding property, plant and
equipment, the fair values of production-related equipment and assets such as filling lines
were estimated using a cost approach (depreciated replacement cost) while published market
data was considered for other assets when possible. The fair value of inventories was
estimated based on the estimated selling price in the ordinary course of business less the
estimated cost of completion and sale, and reasonable profit margin.

113

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewAccounting policy

Business combinations are accounted for using the acquisition method at the acquisition
date, which is when control is obtained. The consideration transferred is generally
measured at fair value, as are the identifiable net assets acquired.

Goodwill is measured at the acquisition date as the fair value of the consideration
transferred (including, if applicable, the fair value of any previously held equity interests and
any non-controlling interests) less the net recognised amount (which is generally fair value)
of the identifiable assets acquired and liabilities assumed. If the excess is negative, a bargain
purchase gain is recognised immediately in profit or loss.

Any contingent consideration is measured at fair value at the date of acquisition. If such a
contingent consideration depends on the achievement of future earnings or other
performance targets, any changes in the fair value are recognised in profit or loss.

28 Joint ventures

The Group has investments in three joint ventures, which provide aseptic carton packaging
solutions in their respective geographic markets. The Group and its 50-50 joint venture
partner invested in the two joint ventures in the Middle East in 2001. The joint venture in Japan
was formed in 2018.

The Group’s share of the profit or loss of its joint ventures (net of income tax) is presented as
part of the Group’s profit or loss from operating activities due to the Group’s close interaction
with its joint ventures.

Composition of the Group’s joint ventures

The table below provides an overview of the Group’s joint ventures.

Reporting
date

Country of
incorporation

31 Dec.
2019

31 Dec.
2018

Interest held at

Transaction costs, other than those associated with the issue of debt or equity securities
incurred in connection with a business combination, are expensed as incurred.

(In € million)

Significant judgements and estimates

Significant judgements and estimates were made by management relating to the accounting
for the acquisition of Visy Cartons. For example, the assessment of the fair values and the
useful lives of the customer relationships involved significant judgement and estimates.

SIG Combibloc Obeikan Company Ltd.
SIG Combibloc Obeikan FZCO
DNP • SIG Combibloc Co., Ltd.

31 Dec.
31 Dec.
31 Dec.

Saudi Arabia
UAE
Japan

50%
50%
50%

SIG Combibloc Obeikan Company Limited operates a sleeves manufacturing facility in Saudi
Arabia. Both the joint ventures in the Middle East deploy filling lines in the Middle East and
Africa and provide sleeves and other associated products and services to their customers.

In the year ended 31 December 2018, the Group invested in a newly formed joint venture in
Japan together with DNP. The two joint venture parties contributed €0.6 million each to the
formation of the joint venture. There have been no significant transactions with this joint
venture in the years ended 31 December 2019 and 31 December 2018.

114

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewSummary joint venture financial information

Joint venture impact on the consolidated financial statements

The following tables provide summary financial information about the three joint ventures,
representing the amounts presented in the IFRS financial statements of the joint ventures and
not adjusted for the Group’s ownership percentage.

Current
assets

Non-
current
assets

Total
assets

Current
liabilities

Non-
current
liabilities

Total
liabilities

Net
assets

(In € million)

31 December 2019
SIG Combibloc Obeikan

Company Ltd., Saudi Arabia

SIG Combibloc Obeikan FZCO, UAE
DNP • SIG Combibloc Co., Ltd., Japan
Total

61.9
168.1
6.0
236.0

110.1
200.7
–
310.8

172.0
368.8
6.0
546.8

31 December 2018
SIG Combibloc Obeikan

Company Ltd., Saudi Arabia

SIG Combibloc Obeikan FZCO, UAE
DNP • SIG Combibloc Co., Ltd., Japan
Total

63.6
106.1
3.7
173.4

84.8
129.2
–
214.0

148.4
235.3
3.7
387.4

45.5
96.4
6.2
148.1

85.3
83.4
2.7
171.4

99.1
218.7
–
317.8

144.6
315.1
6.2
465.9

33.4
90.1
–
123.5

118.7
173.5
2.7
294.9

27.4
53.7
(0.2)
80.9

29.7
61.8
1.0
92.5

(In € million)

2019

2018

Carrying amount as of 1 Jan.
Investment in joint venture in Japan
Share of profit (net of income tax) 1
Dividends received
Effect of movements in exchange rates
Other
Carrying amount as of 31 Dec.

Amount of goodwill in carrying amount of joint ventures as of 31 Dec.

198.7
–
15.4
(20.7)
0.8
(0.8)
193.4

153.0

206.9
0.6
12.3
(23.7)
2.0
0.6
198.7

152.4

1 An unrealised gain of €3.4 million recognised by one of the joint ventures in the Middle East resulting from an upstream sale of an asset

to the Group in the year ended 31 December 2018 (that will not be sold on) has in the consolidated financial statements been
eliminated against the asset purchased.

Guarantees

As of 31 December 2018, the Group provided guarantees with an aggregate maximum
exposure of €34.3 million to banks granting credit facilities to SIG Combibloc Obeikan
Company Ltd. As of 31 December 2019, the Group has been released of its guarantees for
outstanding joint venture debts.

(In € million)

2019
SIG Combibloc Obeikan Company Ltd., Saudi Arabia
SIG Combibloc Obeikan FZCO, UAE
DNP • SIG Combibloc Co., Ltd., Japan
Total

2018
SIG Combibloc Obeikan Company Ltd., Saudi Arabia
SIG Combibloc Obeikan FZCO, UAE
DNP • SIG Combibloc Co., Ltd., Japan
Total

Revenue

Expenses

Profit
after tax

Accounting policy

The accounting policy for joint ventures is included in note 26.

162.5
213.1
0.5
376.1

162.3
216.5
0.5
379.3

(143.2)
(200.4)
(1.7)
(345.3)

(145.3)
(208.7)
(0.7)
(354.7)

19.3
12.7
(1.2)
30.8

17.0
7.8
(0.2)
24.6

115

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness Review29 Related parties

Key management

The Group has related party relationships with its shareholders, its subsidiaries and joint
ventures, its key executive officers and Directors (including the members of the Group
Executive Board of SIG and the Board of Directors) and companies affiliated with Onex.

Shareholders

The Company’s shares are listed on SIX Swiss Exchange. To the best knowledge of the
Company, the publicly held shares as of 31 December 2019 represented 67.1% (47.4% as of
31 December 2018) of the issued shares. The remaining shares are held indirectly by Onex,
certain members of SIG management and a number of co-investors. Onex has in September
2019 sold 9.4% and in November 2019 sold 9.8% (expressed as a percentage of the issued
shares in the Company) that had been held by it, and held 31.8% of the issued shares as of
31 December 2019. Before its disposal of shares in September 2019, Onex was the ultimate
parent company of the Group.

Certain members of SIG management (key executive officers and Directors) participate in a
management equity plan that was established in 2015. They hold shares in the Company,
acquired at fair value, via its participation in two limited liability partnerships. No additional
shares have been, or will be, issued to these limited liability partnerships since the IPO. The
limited liability partnerships held 1.1% of the shares as of 31 December 2019 (1.7% as of
31 December 2018) of which 0.6% relates to members of the Group Executive Board (1.0% as
of 31 December 2018) and 0.02% relates to members of the Board of Directors (0.02% as of
31 December 2018).

Certain parties, including Onex, members of the SIG management and other co-investors
entered into investment and shareholders’ agreements in 2015 with respect to their
investment in the Company. These agreements, along with certain ancillary agreements
thereto, contain agreements among the parties with respect to, among other things, tag-along
rights, drag-along rights, pre-emptive rights and restrictions on the transfer of shares. The
agreements also contain provisions regarding the transfer of shares held by employees who
cease to be employees or officers and regarding circumstances in which such rights and
restrictions terminate. In conjunction with the Onex sale of shares in November 2019,
members of SIG management exercised tag-along rights under the pre-IPO management
equity plan and sold some of the shares they held in the Company (see above).

In addition to the indirect shareholdings in the Company via the limited liability partnerships,
members of the Board of Directors directly held 0.04% of the shares as of 31 December 2019
(0.03% as of 31 December 2018). Members of the Board of Directors associated with Onex
indirectly held 0.03% of the shares as of 31 December 2019 (0.07% as of 31 December 2018)
via minority investments in affiliates of Onex.

The Company’s key management include the members of the Group Executive Board of SIG
and the Board of Directors.

The table below includes information about compensation to the Group Executive Board.

(In € million)

Short-term employee benefits
Post-employment benefits
Share-based payment plans
Total compensation to the Group Executive Board

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

6.8
0.5
1.1
8.4

7.4
0.4
–
7.8

Short-term employee benefits for the year ended 31 December 2018 include an amount of
€2.5 million that was awarded to selected members of the Group Executive Board for their
significant contribution to the process of going public.

Since the beginning of the year ended 31 December 2019, the members of the Group
Executive Board are entitled to participate in a share-based long-term incentive plan. See
note 31 for additional information.

Compensation to the members of the Board of Directors totalled €1.6 million for the year
ended 31 December 2019 (€0.4 million for the year ended 31 December 2018). The members
of the Board of Directors have in 2019 received part of their compensation in restricted share
units (“RSUs”). See note 31 for additional information.

Further details about compensation paid to the members of the Group Executive Board and
the Board of Directors can be found in the Compensation Report included elsewhere in the
2019 Annual Report. Information about SIG shareholdings of these persons are included in the
section Shareholders above and in the Compensation Report.

Other related parties

The Group’s subsidiaries are listed in note 26. Information about the joint ventures is included
in note 28.

116

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewRelated party transactions and balances

The Group had a consulting services agreement with Onex, which was terminated without
compensation in connection with the IPO in September 2018. The Group paid Onex an
amount of €0.8 million under this agreement for the year ended 31 December 2018.

Onex continues to provide consultancy services to the Company on various matters without
any compensation other than for out-of-pocket expenses. The Company and Onex have
entered into an information sharing agreement on the mutual sharing of information including,
but not limited to, information to comply with legal, regulatory, tax and accounting
requirements. The agreement does not provide for any compensation payments.

Information about other related parties is provided in the following table.

OUR PEOPLE

This section covers information about the Group’s employee-related expenses and pension
plans as well as the Group’s share-based payment plans and arrangements that were
introduced in the year ended 31 December 2019. Details about compensation concerning the
Group’s key management (Group Executive Board and Board of Directors) are included in
note 29 on related parties.

30 Employee benefits

The Group operates various defined benefit plans, of which the largest is in Switzerland.

(In € million)

Joint ventures
Sale of goods and services (sleeves, liquid paper
board, filling machines and related goods and
services), revenue under royalty agreements
and other transactions/Net receivables

Dividends received

Onex portfolio companies
Purchase of goods/Payables (supplies

and machine parts):

– Erwepa/Davis Standard

Transaction values
for the years ended

Balance
outstanding as of

31 Dec.
2019

31 Dec.
2018

31 Dec.
2019

31 Dec.
2018

111.0
20.7

106.3
23.7

17.1
–

11.0
–

(4.1)

(0.4)

–

Overview of employee benefits

(In € million)

Salaries and wages accrued
Provision for annual leave
Provision for other employee benefits
Net defined benefit obligations:
Pension benefit liabilities
Total employee benefit liabilities

Current
Non-current
Total employee benefit liabilities

As of
31 Dec.
2019

As of
31 Dec.
2018

35.6
9.6
3.0

123.3
171.5

45.2
126.3
171.5

26.6
8.0
0.7

108.0
143.3

34.6
108.7
143.3

There were no other significant related party transactions during the years ended
31 December 2019 and 31 December 2018. Information about commitments to incur capital
expenditure with related parties is included in note 12.

The Group has a net defined benefit asset in the amount of €168.4 million as of 31 December
2019 (€129.3 million as of 31 December 2018). It relates to the defined benefit pension plan in
Switzerland. The Group’s net defined benefit liabilities relate to defined benefit pensions plans
in other countries.

Personnel expenses

Personnel expenses recognised in the statement of profit or loss and other comprehensive
income were €320.6 million in the year ended 31 December 2019 and €303.9 million in the
year ended 31 December 2018.

117

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewDefined benefit pension plans

Movement in net defined benefit obligation

The Group makes contributions to defined benefit pension plans. It operates defined benefit
pension plans in countries including Austria, France, Germany, Indonesia, Switzerland, Taiwan
and Thailand. The majority of the Group’s pension obligations are in Switzerland and are
subject to governmental regulations relating to the funding of retirement plans. The Group
generally funds its retirement plans in an amount equal to the annual minimum funding
requirements specified by government regulations covering each plan. It has generally
provided aggregated disclosures in respect of these plans on the basis that these plans are not
exposed to materially different risks.

The Group’s largest pension plan is the Swiss retirement plan. As of 31 December 2019, the
Swiss retirement plan comprises 75% (77% as of 31 December 2018) of the present value of
the Group’s pension plan obligations. Therefore, certain information applicable to the Swiss
retirement plan has been separately disclosed. As of 31 December 2019, the fair value of the
assets of the Swiss retirement plan exceeded the present value of its pension obligations by
€168.4 million (€129.3 million as of 31 December 2018). An assessment of the investment
strategy of the Swiss retirement plan is performed yearly.

Expected annual contributions to the Group’s defined benefit pension plans during the year
ending 31 December 2020 are estimated to be €4.9 million. The Group’s pension plans had a
weighted average duration of 13 years as of 31 December 2019 (13 years as of
31 December 2018).

Information about the net defined benefit obligation as of and for the year ended
31 December 2019 and the year ended 31 December 2018 is included below.

(In € million)

2019

2018

2019

2018

2019

2018

Defined benefit
obligation

Fair value of plan
assets

Net defined benefit
liability/(asset)

Carrying amount as of the beginning

of the year

Service cost
Interest cost/(income)
Administrative expenses
Total expense/(income) recognised in

497.0
7.6
4.7
–

500.2
6.4
4.0
–

(518.3)
–
(3.6)
0.5

(525.1)
–
(2.9)
0.5

(21.3)
7.6
1.1
0.5

(24.9)
6.4
1.1
0.5

profit or loss

12.3

10.4

(3.1)

(2.4)

9.2

8.0

Actuarial (gains)/losses arising from:
Demographic assumptions
Financial assumptions
Return on plan assets, excluding interest

income

Total remeasurement (gains)/losses

(2.9)
22.9

(4.2)
(0.5)

–
–

–

(43.3)

included in other comprehensive income

20.0

(4.7)

(43.3)

–
–

9.5

Contributions by the Group
Contributions by plan participants
Benefits paid by the plans
Effect of movements in exchange rates
Total other movements
Carrying amount as of the end of the year

–
1.7
(41.2)
14.7
(24.8)
504.5

–
1.6
(25.2)
14.7
(8.9)
497.0

(4.4)
(1.7)
41.2
(20.0)
15.1
(549.6)

(4.5)
(1.6)
25.2
(19.4)
(0.3)
(518.3)

(2.9)
22.9

(43.3)

(23.3)

(4.4)
–
–
(5.3)
(9.7)
(45.1)

(4.2)
(0.5)

9.5

4.8

(4.5)
–
–
(4.7)
(9.2)
(21.3)

Comprised of:
Swiss retirement plan
All other plans

376.9
127.6

384.7
112.3

(545.3)
(4.3)

(514.0)
(4.3)

(168.4)
123.3

(129.3)
108.0

Carrying amount as of the end of the year

504.5

497.0

(549.6)

(518.3)

(45.1)

(21.3)

Included in the statement of financial

position as:

Employee benefits (asset)
Employee benefits (liability)
Total net defined pension benefits

(168.4)
123.3
(45.1)

(129.3)
108.0
(21.3)

118

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewExpense recognised in profit or loss

The net pension expense is recognised in the following components in the statement of profit
or loss and comprehensive income.

The assumed discount rate and future salary increases are the assumptions with the most
significant effect on the defined benefit obligation. They are presented in the table below.

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

(In %)

Discount rates
Future salary increases

Swiss retirement plan

All plans

31 Dec.
2019

0.15%
1.50%

31 Dec.
2018

0.70%
1.50%

31 Dec.
2019

31 Dec.
2018

0.15% – 7.30%
0.00% – 9.00%

0.70% – 8.00%
0.00% – 9.00%

(In € million)

Cost of sales
Selling, marketing and distribution expenses
General and administrative expenses
Total net pension expense

thereof the Swiss retirement plan

Plan assets

(In € million)

Equity instruments
Debt instruments
Real estate
Other
Total plan assets

4.7
0.9
3.6
9.2

4.0

As of
31 Dec.
2019

149.2
216.3
162.0
22.1
549.6

3.6
1.2
3.2
8.0

3.5

As of
31 Dec.
2018

125.5
213.8
154.7
24.3
518.3

Approximately 99% of total plan assets are held by the Swiss retirement plan as of
31 December 2019 (99% as of 31 December 2018). The debt instruments consist principally of
corporate and government bonds. The equity and debt instrument values are based on
quoted market prices in active markets. The real estate is held through unlisted funds. The
investment policy of the Swiss retirement plan is to target an asset mix of around 25% equity
instruments, 45% debt instruments, 25% real estate funds and to hold 5% in cash.

Actuarial assumptions

The amounts recognised under the Group’s defined benefit pension plans are determined
using actuarial methods. The actuarial valuations involve assumptions regarding discount
rates, expected salary increases and the retirement age of employees. These assumptions are
reviewed at least annually and reflect estimates as of the measurement date. Any change in
these assumptions will impact the amounts reported in the statement of financial position,
plus the net pension expense or income that may be recognised in future years. The mortality
table used for the Swiss retirement plan for 2019 and 2018 was BVG 2015 GT.

While the Swiss retirement plan does not provide for compulsory benefit increases for
pensioners, increases have been granted from time to time at the discretion of the foundation
board, depending on the funding situation at the time.

The table below shows the effect on the defined benefit obligation of a change in the discount
rate and future salary increases.

(In € million)

Discount rates
50 basis points increase
50 basis points decrease

Future salary increases
50 basis points increase
50 basis points decrease

Swiss retirement plan

All plans

As of
31 Dec.
2019

As of
31 Dec.
2018

(4.2)
17.7

1.2
(1.1)

(1.3)
4.6

1.0
(1.0)

As of
31 Dec.
2019

(14.6)
29.6

2.2
(2.1)

As of
31 Dec.
2018

(9.4)
13.8

1.8
(1.7)

A 50 basis points decrease of the discount rate for the Swiss retirement plan would result in a
negative discount rate, which explains the increased sensitivity to downward changes in
discount rates.

119

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewAccounting policy
Short-term employee benefits

Short-term employee benefits are expensed in profit or loss as the related services are
provided. A liability is recognised for the amount expected to be paid under short-term cash
bonus or profit-sharing plans and outstanding annual leave balances if the Group has a
present legal or constructive obligation to pay this amount as a result of past services
provided by the employee and the obligation can be estimated reliably.

Pension obligations

The Group operates various defined benefit pension plans. The Group’s obligation with
respect to defined benefit plans is calculated separately for each plan by estimating the
amount of the future benefits to which employees are entitled in return for their services in
the current and prior years, discounting that amount to determine the present value of the
Group’s obligation and then deducting the fair value of any plan assets. The discount rate
used is the yield on high-quality corporate bonds that are denominated in the currency in
which the benefits will be paid and that have maturity dates approximating the terms of the
Group’s obligations. The calculations are performed annually by qualified actuaries using
the projected unit credit method. When the calculation results in a potential asset for the
Group (such as for the Group’s Swiss retirement plan), the recognised asset is limited to the
present value of economic benefits available in the form of reductions in future
contributions to the plan (the case for the Swiss retirement plan) or any future refunds from
the plan. To calculate the present value of economic benefits, consideration is given to any
applicable minimum funding requirements.

Remeasurements of the net defined liability, which comprise actuarial gains and losses, the
return on plan assets (excluding interest) and, if any, the effects of the asset ceiling
(excluding interest) are recognised immediately in other comprehensive income.

The net interest expense/(income) on the net defined benefit liability/(asset) for the period
is determined by applying the discount rate used to measure the defined benefit obligation
at the beginning of the annual period to the net defined liability/(asset) as of that time,
taking into account any changes from contributions and benefit payments. Net interest
expense and other plan expenses are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in
benefit that relates to past services or the gain or loss on curtailment is recognised
immediately in profit or loss. The Group recognises gains and losses on the settlement of a
defined benefit plan when the settlement occurs.

Termination benefits

Termination benefits, when applicable, are payable when employment is terminated by the
Group before the normal retirement date or whenever an employee accepts voluntary
redundancy in exchange for such benefits. Termination costs are expensed when the
Group can no longer withdraw the offer of the benefits or when the Group recognises any
related restructuring costs, whichever occurs earlier.

Significant judgements and estimates

Amounts recognised under the Group’s defined benefit pension plans are determined
using actuarial methods. These actuarial valuations involve various assumptions that reflect
estimates as of the measurement date. See the section “Actuarial assumptions” above for
an overview of the impact of any change in these assumptions.

31 Share-based payment plans and arrangements

The Group introduced two share-based long-term incentive plans in 2019 for certain members
of management. The members of the Board of Directors receive a part of their total
compensation under share-based payment arrangements. The Group expects to settle its
obligations under these plans and arrangements by using own shares (treasury shares) – see
note 24.

Share-based long-term incentive plans for SIG management
Performance share unit plan

Under its performance share unit (“PSU”) plan, the Group grants PSUs on an annual basis to
the members of the Group Executive Board and certain other members of management. One
PSU represents the contingent right to receive one SIG share. The number of granted PSUs is
determined by dividing each participant’s award under the plan by the fair value of one PSU at
the grant date. Vesting of the PSUs occurs three years after the grant date. The exact number
of PSUs that vests depends on the long-term performance of SIG during the vesting period.

The plan includes the following vesting conditions:

• Service condition: Employment at the vesting date.
• Two non-market performance conditions: Achievement of a cumulative diluted adjusted

earnings per share target and a cumulative free cash flow target.

• One market performance condition: Achievement of a relative total shareholder return

target, measured relative to the SPI® ICB Industry Industrials Index (with a vesting factor
capped at 1.0 for a negative absolute TSR).

At vesting, the three performance conditions are first assessed individually to determine the
level of achievement of the set targets (in a range from 0 to 200%). The achievement
percentage of each performance condition is then combined based on a relative weighting of
the performance conditions (50% for the total shareholder return target and 25% each for the
earnings per share and cash flow targets). The combined vesting multiple determines how
many shares the participants are entitled to at the end of the vesting period.

120

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewThe grant date for the 2019 PSU awards was 1 April 2019. Nine employees were granted in
total 537,414 PSUs, of which 495,263 PSUs relate to members of the Group Executive Board.
The grant date fair value of one PSU is calculated based on a Monte Carlo simulation model,
which reflects the probability of over- or underachieving the market performance condition.
The model also takes into account various inputs such as the closing share price of one SIG
share on 1 April 2019 and adjusts for expected dividends (discounted at a risk-free interest
rate) to which the participants of the plan are not entitled until the PSUs vest after three years.
The fair value of one granted PSU was CHF 9.49 as of grant date.

Share-based payment expense

The share-based payment expense recognised as a personnel expense in the year ended
31 December 2019 relating to PSUs and RSUs granted under the two SIG management plans
amounts to €1.2 million, of which €1.1 million relates to members of the Group Executive
Board. The share-based payment expense recognised as part of general and administrative
expenses in the same period relating to blocked shares and RSUs granted under the
arrangements for the Board of Directors amounts to €0.6 million.

Restricted share unit plan

Accounting policy

The Group’s share-based payment plans and arrangements are all equity-settled payment
arrangements. The grant date fair value of the awards is recognised as an expense, with a
corresponding increase in equity (retained earnings), over the vesting period of the awards.
The amount recognised as an expense is adjusted to reflect the number of awarded
instruments for which the related service and any non-market performance conditions are
expected to be met, such that the amount ultimately recognised is based on the number of
awarded instruments that meet the related service and any non-market performance
conditions at the vesting date. Any market performance conditions are reflected in the
grant date fair valuation of the awarded instruments and there is no true-up during the
vesting period or at the vesting date for differences between expected and actual
outcomes. If there is no vesting period, the grant date fair value is immediately recognised
as an expense.

Under its restricted share unit (“RSU”) plan, the Group will grant RSUs on an annual basis to
selected employees. One RSU represents the contingent right to receive one SIG share, subject
to the fulfilment of a three year service vesting condition. The number of granted RSUs is
determined by dividing each participant’s individual award under the plan by the average
closing price of the SIG share of the last ten trading days immediately preceding the grant date.
Upon vesting, each eligible plan participant is entitled to receive SIG shares equal to the
number of vested RSUs.

The grant date for the 2019 RSU awards was 1 April 2019. Two employees were granted in total
28,038 RSUs. The grant date fair value of one RSU is calculated based on the closing share
price of one SIG share on 1 April 2019 and adjusted for expected dividends (discounted at a
risk-free interest rate) to which the participants of the plan are not entitled until the RSUs vest
after three years. The fair value of one granted RSU was CHF 9.27 as of grant date.

Share-based payment arrangements for members of the Board of Directors

The members of the Board of Directors receive 40% of their total compensation under
share-based payment arrangements. The compensation amount is fixed. The larger part of the
Board of Directors’ total share-based payment compensation is paid out in blocked SIG shares
while a smaller part is paid out in RSUs. The grant date is the date of the Annual General
Meeting, when the total compensation package for the next term of office is approved. The
compensation is paid out four times per term of office (i.e. there are four award dates, each
relating to work performed the quarter before the respective award date). The number of
blocked shares/RSUs is determined by dividing each board member’s individual compensation
amount for one award cycle by the average closing price of the SIG share of the last ten trading
days immediately preceding each award date. A three year blocking/vesting period applies to
the shares and RSUs. The RSUs carry the right to dividend equivalents during the vesting
period. The grant date fair value of one blocked share and one RSU is calculated based on the
closing share price of one SIG share on the date of the Annual General Meeting.

The Group has granted 40,842 blocked shares and 14,236 RSUs to the members of the Board
of Directors in the year ended 31 December 2019. The blocked shares have been delivered by
using treasury shares (see note 24). The fair value of one granted instrument was CHF 10.02 as
of grant date.

121

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewOTHER

This section provides details about the Group’s income tax exposure, different categories of
financial instruments (including derivative instruments), fair value information and off-balance
sheet information.

32 Income tax

This note covers the Group’s current and deferred income tax exposure, with corresponding
impacts on the statement of profit or loss and other comprehensive income and the
statement of financial position.

Amounts recognised in profit or loss

(In € million)

Current year
Adjustments for prior years
Current tax expense

Origination and reversal of temporary differences
Tax rate modifications
Adjustments for prior years
Deferred tax benefit

Income tax expense

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

(74.3)
3.0
(71.3)

33.1
(2.0)
(0.9)
30.2

(41.1)

(64.2)
0.3
(63.9)

62.2
(7.0)
7.8
63.0

(0.9)

Amounts recognised in other comprehensive income

The Group has recognised in other comprehensive income a deferred tax income of
€1.4 million relating to defined benefit plans for the year ended 31 December 2019 (€2.1 million
deferred tax income for the year ended 31 December 2018).

Reconciliation of effective tax expense

(In € million)

Profit/(loss) before income tax
Income tax using the Swiss tax rate 16%
Effect of tax rates in foreign jurisdictions
Non-deductible expenses
Tax exempt income
Withholding tax
Tax rate modifications
Unrecognised tax losses and temporary differences
Tax uncertainties
Tax on undistributed profits
Adjustments for prior years
Total income tax expense

Current tax assets and liabilities

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

148.0
(23.7)
(0.9)
(6.7)
8.7
(8.3)
(2.0)
(1.6)
(4.8)
(3.9)
2.1
(41.1)

(83.0)
13.3
10.1
(6.3)
5.7
(9.7)
(7.0)
(14.1)
(0.1)
(0.9)
8.1
(0.9)

Current tax assets of €1.2 million as of 31 December 2019 (€1.0 million as of
31 December 2018) represent the amount of income taxes recoverable with respect to current
and prior periods and arise from the payment of tax in excess of the amounts due to the
relevant tax authorities. Current tax liabilities of €43.5 million as of 31 December 2019
(€25.6 million as of 31 December 2018) represent the amount of income taxes payable with
respect to current and prior periods.

Current tax liabilities include an amount of €6.3 million (€3.8 million as of 31 December 2018)
for prior periods that will be reimbursed by Reynolds Group Holdings Limited and its
subsidiaries (“RGHL”, the owner of the SIG Group prior to 13 March 2015) in line with the share
purchase agreement that was signed when Onex acquired the SIG Group in 2015. The same
amount has been recognised as part of other receivables.

122

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewRecognised deferred tax assets and liabilities

Unrecognised deferred tax assets

As of
31 Dec.
2019

As of
31 Dec.
2018

21.8
(172.5)
(150.7)

12.1
(187.8)
(175.7)

Net
deferred
tax assets/
(liabilities)

(224.6)
63.0

2.1
(13.6)

Other
items

38.8
27.3

–
(13.6)

(In € million)

Included in the statement of financial position as:
Deferred tax assets
Deferred tax liabilities
Total recognised net deferred tax liabilities

(In € million)

Carrying amount as of

1 January 2018

Recognised in profit or loss
Recognised in other

comprehensive income

Other movements
Effect of movements in

exchange rates

Carrying amount as of
31 December 2018

Carrying amount as of

1 January 2019
Additions through

business combination
Recognised in profit or loss
Recognised in other

comprehensive income

Effect of movements in

exchange rates

Carrying amount as of
31 December 2019

Property,
plant and
equipment

Intangible
assets

Employee
benefits

Tax loss
carry-
forwards

(92.9)
(2.1)

(176.3)
35.0

–
–

(1.9)
0.4

2.1
–

7.7
2.4

–
–

(1.3)

(0.5)

(1.3)

0.6

(0.1)

(2.6)

(96.3)

(141.8)

(0.7)

10.7

52.4

(175.7)

(96.3)

(141.8)

(0.7)

10.7

52.4

(175.7)

(1.2)
3.1

–

(2.9)
20.3

–

1.1
2.3

1.4

–
(5.7)

–

(3.2)

(2.5)

(1.9)

(0.3)

0.5
10.2

–

3.8

(2.5)
30.2

1.4

(4.1)

(97.6)

(126.9)

2.2

4.7

66.9

(150.7)

The net deferred tax assets for other items mainly relate to inventories, receivables, deferred
revenue and derivatives. The Group reclassified in the year ended 31 December 2018 an
amount of €13.6 million from current tax liabilities to deferred tax liabilities relating to its tax
liability for unremitted and distributable earnings. The impact of this reclassification is
presented in “Other movements” in the table above. The reclassification is made on a
prospective basis as the nature of the change does not represent a correction of a material
prior year error.

Deferred tax assets have not been recognised with respect to tax losses in the amount of
€20.8 million as of 31 December 2019 (€23.0 million as of 31 December 2018) because it is not
probable that future taxable profit will be available against which the Group can utilise the
benefits therefrom. The unrecognised tax losses do not expire under the current applicable
tax legislation.

Accounting policy
Income tax expense is comprised of current and deferred tax. Income tax expense is
recognised in profit or loss except to the extent that it relates to a business combination or
items recognised directly in equity or in other comprehensive income.

For subsidiaries in which the profits are not considered to be permanently reinvested, the
additional tax consequences of future dividend distributions are recognised as income tax
expense.

Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the
year, using tax rates enacted or substantively enacted at the reporting date, and any
adjustment to tax payable or receivable in respect to previous years. Current tax assets and
liabilities are only offset if certain criteria are met.

Deferred tax
Deferred tax is recognised, using the balance sheet method, on temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for tax purposes. Deferred tax is not recognised for the following
temporary differences: the initial recognition of goodwill, the initial recognition of assets or
liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit, and differences relating to investments in subsidiaries and
joint arrangements to the extent that they probably will not reverse in the foreseeable
future and the Group is in a position to control the timing of the reversal of the temporary
differences. Deferred tax is measured at the tax rates that are expected to be applied to the
temporary differences when they reverse, based on tax rates that have been enacted or
substantively enacted at the reporting date.

Deferred tax assets are recognised for unused tax losses, unused tax credits and
deductible temporary differences to the extent that it is probable that future taxable profits
will be available against which they can be used. Future taxable profits are determined
based on business plans for individual subsidiaries in the Group. The recoverability of
deferred tax assets is reviewed at each reporting date. Unrecognised deferred tax assets
are reassessed at each reporting date and recognised to the extent that it has become
probable that future taxable profits will be available against which they can be used.

Deferred tax assets and liabilities are only offset if certain criteria are met.

123

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewSignificant judgements and estimates

Determining the Group’s worldwide income tax liability requires significant judgement and
the use of estimates and assumptions, some of which are highly uncertain. Each tax
jurisdiction’s laws are complex and subject to different interpretations by the taxpayer and
the respective tax authorities. Significant judgement is required in evaluating the Group’s
tax positions, including evaluating uncertainties. To the extent actual results differ from
these estimates relating to future periods, and depending on the tax strategies that the
Group may implement, the Group’s financial position may be directly affected.

Deferred tax assets represent deductions available to reduce taxable income in future
years. The Group evaluates the recoverability of deferred tax assets by assessing the
adequacy of future taxable income, including reversal of taxable temporary differences,
forecasted earnings and available tax planning strategies. Determining the sources of future
taxable income relies heavily on the use of estimates. The Group recognises deferred tax
assets when the Group considers it probable that the deferred tax assets will be
recoverable.

33 Financial instruments and fair value information

This note provides an overview of the Group’s financial instruments, including derivative
financial instruments, and their categorisation under IFRS. Further details about the different
types of financial assets and financial liabilities are provided throughout these consolidated
financial statements. This note also contains information about the fair value of the Group’s
financial instruments and some general accounting policies covering more than one type
of financial assets and liabilities.

Categories of financial instruments and fair value information

The Group’s financial assets and liabilities are classified into the following categories: financial
assets at amortised cost, financial assets at fair value through profit or loss, financial liabilities
at amortised cost and financial assets and liabilities at fair value through profit or loss.

The following tables present the carrying amounts of financial assets and liabilities as of
31 December 2019 and 31 December 2018. They also present the respective levels in the fair
value hierarchy for financial assets and liabilities measured at fair value. Items that do not meet
the definition of financial assets or liabilities are not included in the tables.

(In € million)

Cash and cash equivalents
Trade and other receivables
Other financial assets
Derivatives
Total financial assets

Trade and other payables
Loans and borrowings:
– Senior secured credit facilities
– Lease liabilities
Derivatives
Total financial liabilities

Carrying amount as of 31 December 2019

At
amortised
cost

At fair
value through
profit or loss
(mandatorily)

261.0
205.9
5.1

472.0

(493.2)

(1,539.2)
(53.5)

(2,085.9)

52.9

2.1
55.0

(13.7)
(13.7)

Fair value
hierarchy
Level
1 2 3

Total

261.0
258.8
5.1
2.1
527.0

(493.2)

(1,539.2)
(53.5)
(13.7)
(2,099.6)

See note 5.2 for the impact on the Group’s lease liabilities of the adoption of IFRS 16 Leases on
1 January 2019.

Carrying amount as of 31 December 2018

(In € million)

Cash and cash equivalents
Trade and other receivables
Derivatives
Total financial assets

Trade, other payables and other

liabilities

Loans and borrowings:
– Senior secured credit facilities
– Finance lease liabilities
Derivatives
Total financial liabilities

At
amortised
cost

At fair
value through
profit or loss
(mandatorily)

157.1
176.3

333.4

(442.3)

(1,564.9)
(26.5)

(2,033.7)

54.8
0.2
55.0

(20.0)
(20.0)

Fair value
hierarchy
Level
1 2 3

X
X

Total

157.1
231.1
0.2
388.4

(442.3)

(1,564.9)
(26.5)
(20.0)
(2,053.7)

124

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewThe Group measures derivative assets and liabilities at fair value. The fair value is calculated
based on valuation models commonly used in the market. These include consideration of
credit risk, where applicable, and discounts the estimated future cash flows based on the
terms and maturity of each contract, using forward interest rates extracted from observable
yield curves and market forward exchange rates at the reporting date. The derivatives are
categorised as level 2 fair value measurements in the fair value hierarchy as the measurements
of fair value are based on observable market data, either directly (i.e. as prices) or indirectly (i.e.
derived from prices). All changes in fair value are recognised in profit or loss as the Group does
not apply hedge accounting under IFRS 9.

Fair value of trade receivables to be sold under securitisation and factoring programmes

Trade receivables that will be sold under the Group’s securitisation and factoring programmes
are categorised as measured at fair value through profit or loss. They are sold shortly after
being recognised by the Group and the amount initially recognised for these trade receivables
is representative of their fair value.

Fair value of financial assets and liabilities at amortised cost

The carrying amount of the financial assets and liabilities that are not measured at fair value is
a reasonable approximation of fair value. Excluding transaction costs and an original issue
discount, this is also the case for the Group’s term loans that were entered into in connection
with the IPO.

Fair value of derivatives

The derivatives are entered into as part of the Group’s strategy to mitigate operational risks
(commodity and foreign currency exchange derivatives) and to mitigate financing risks (interest
rate swaps). See also note 25.

The following tables show the types of derivatives the Group had as of 31 December 2019 and
31 December 2018, and their presentation in the statement of financial position.

(In € million)

Current
assets

Non-
current
assets

Total
derivative
assets

Current
liabilities

Non-
current
liabilities

Total
derivative
liabilities

Commodity derivatives
Foreign currency exchange derivatives
Total operating derivatives

Interest rate swaps
Total financing derivatives

Total derivatives as of 31 Dec. 2019

0.8
1.3
2.1

–
–

2.1

–
–
–

–
–

–

0.8
1.3
2.1

–
–

(8.7)
(2.4)
(11.1)

–
–

2.1

(11.1)

–
–
–

(2.6)
(2.6)

(2.6)

(8.7)
(2.4)
(11.1)

(2.6)
(2.6)

(13.7)

(In € million)

Current
assets

Non-
current
assets

Total
derivative
assets

Current
liabilities

Non-
current
liabilities

Total
derivative
liabilities

Commodity derivatives
Foreign currency exchange derivatives
Total operating derivatives

Interest rate and cross-currency swaps
Total financing derivatives

Total derivatives as of 31 Dec. 2018

0.1
0.1
0.2

–
–

0.2

–
–
–

–
–

–

0.1
0.1
0.2

–
–

(18.2)
(0.6)
(18.8)

–
–

0.2

(18.8)

–
–
–

(1.2)
(1.2)

(1.2)

(18.2)
(0.6)
(18.8)

(1.2)
(1.2)

(20.0)

In connection with the refinancing in October 2018, the financing derivative balances
decreased. The Group had embedded derivatives in respect of both the redeemed notes and
the repaid term loans as well as interest rate swaps.

125

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness Review34 Contingent liabilities

The Group has contingent liabilities relating to legal and other matters arising in the ordinary
course of business. Based on legal and other advice, management is of the view that the
outcome of any such proceedings will have no significant effect on the financial position of the
Group beyond the recognised provision.

Accounting policy

Contingent liabilities are possible obligations arising from a past event to be confirmed by
future events not wholly within the control of the Group, or present obligations arising from
a past event of which the outflow of economic benefits is not probable, or which cannot be
measured reliably. Contingent liabilities are not recognised in the statement of financial
position, except for certain items assumed in a business combination, but are separately
disclosed.

35 Subsequent events

There have been no events subsequent to 31 December 2019 that would require an
adjustment to or disclosure in these consolidated financial statements.

Accounting policy

The specific accounting policies for the Group’s different types of financial assets and
liabilities are included in other sections of these consolidated financial statements. This
section includes the accounting policy for topics covering more than one note.

Initial recognition of financial assets and liabilities

The Group initially recognises loans and receivables and any debt issued on the date when
they are originated. All other financial assets and liabilities are initially recognised on the
trade date, when the entity becomes party to the contractual provisions of the financial
instrument.

Offsetting

Financial assets and financial liabilities are only offset and the net amount presented in the
statement of financial position when the Group currently has a legally enforceable right to
offset the amounts and intends to either settle them on a net basis or realise the asset and
settle the liability simultaneously.

Derivatives

Derivatives are measured at fair value with any related transaction costs expensed as
incurred. All derivatives with a positive fair value are presented as other current or non-
current assets in the statement of financial position, while all derivatives with a negative fair
value are presented as other current or non-current liabilities.

The gain or loss on remeasurement to fair value is recognised in profit or loss. Net changes
in the fair value of derivatives entered into as part of the operating business are presented
as part of profit from operating activities, while net changes in the fair value of derivatives
entered into in relation to the financing of the Group are presented in other finance income
or expenses. The Group does not apply hedge accounting under IFRS.

A derivative embedded in another contract is separated and accounted for separately when
its economic characteristics and risks are not closely related to those of its host contract, a
separate instrument with the same terms as the embedded derivative would meet the
definition of a derivative, and the host contract is not measured at fair value with the fair
value changes recognised in profit or loss. Changes in the fair value of a separated
embedded derivative are recognised immediately in profit or loss.

126

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewReport of the statutory auditor to the General Meeting
of SIG Combibloc Group AG Neuhausen am Rheinfall

Report on the audit of the consolidated financial statements

Opinion

We have audited the consolidated financial statements of SIG Combibloc Group AG and its
subsidiaries (the Group), which comprise the consolidated statement of profit or loss and
other comprehensive income for the year ended 31 December 2019, the consolidated
statement of financial position as at 31 December 2019, the consolidated statement of
changes in equity, the consolidated statement of cash flows, and notes to the consolidated
financial statements for the year then ended (pages 74 to 126), including a summary of
significant accounting policies.

Our audit approach
Overview

Overall Group materiality: EUR 17,800,000

We concluded full scope audit work at 7 wholly owned Group
companies in 6 countries. Our audit scope addressed over 84%
of the Group’s revenue.

Materiality

As key audit matter the following area of focus has been
identified:

• Carrying amount of goodwill

In our opinion, the accompanying consolidated financial statements 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 the International Financial Reporting Standards (IFRS) and comply with Swiss law.

Audit scope

Basis for opinion

We conducted our audit in accordance with Swiss law, International Standards on Auditing
(ISAs) 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, as well as the IESBA Code of Ethics for Professional
Accountants, 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.

Key audit
matters

127

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewMateriality
The scope of our audit was influenced by our application of materiality. Our audit opinion aims
to provide reasonable assurance that the consolidated financial statements are free from
material misstatement. Misstatements may arise due to fraud or error. They are considered
material if, individually or in aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for
materiality, including the overall Group materiality for the consolidated financial statements as
a whole as set out in the table below. These, together with qualitative considerations, helped
us to determine the scope of our audit and the nature, timing and extent of our audit
procedures and to evaluate the effect of misstatements, both individually and in aggregate, on
the consolidated financial statements as a whole.

Overall Group materiality
How we determined it
Rationale for the materiality
benchmark applied

EUR 17,800,000
1% of total revenue
We chose total revenue as the benchmark as, in our view,
it is the most appropriate benchmark considering the
Group’s current year’s result is impacted by effects from
purchase price accounting and transaction- and
acquisition-related costs. It is further a benchmark
against which the performance of the Group is
measured, and it is a generally accepted benchmark.

We agreed with the Audit Committee that we would report to them misstatements above EUR
1,780,000 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.

At the end of 2019, the Group’s financial statements are a consolidation of 50 wholly owned
subsidiaries and 3 equity accounted joint ventures entities comprising the Group’s operating
businesses and centralised functions across 34 different geographical locations.

We identified 7 wholly owned Group companies in 6 countries for which, in our opinion, a full
scope audit was necessary because of their size or risk characteristics. For a further 6 Group
companies in 4 countries, specified procedures on selected account balances were performed
to increase audit comfort on the Group’s “Cash & Cash Equivalent” and “Trade and Other
Payables” balance. In addition, on a rotational basis, we analysed the financial statements of
selected Group Companies for significant or unusual developments. None of the Group
Companies not considered as a full scope audit accounted individually for more than 6% of the
Group’s revenue.

All relevant subsidiaries of the Group are audited by local PwC firms. To ensure sufficient and
appropriate involvement of the Group auditor in the audit of the 6 Group companies audited
by our component auditors abroad, we held conference calls with the respective audit teams
responsible for the audit during the different phases of the audit and also conducted selected
site visits or a review of work-papers. We discussed risks identified and challenged the audit
approach in response to the risks relevant to the respective components. Furthermore, we
obtained a memorandum of examination from our component auditors and assessed the
results and impact on the Group’s consolidated financial statements and challenged the
component auditor’s conclusion.

Key audit matters
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.

128

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewCarrying amount of goodwill
Key audit matter
As per 31 December 2019, the carrying
amount of Goodwill amounted to €1,622
million of which €14.5 million relate to
the acquisition of Visy Cartons Pty Ltd.
on 29 November 2019.

The valuation of Goodwill is a key audit
matter based on the magnitude of the
balance and inherent judgement involved
and assumptions used as part of
Management’s impairment assessment.

Specifically the assumptions related to
future cash flows and the determination of
the discount rates require a significant level
of judgement by Management.

Refer to Note 14 – Intangible Assets, Note
27 – Business Combination and Note 5.4 –
Critical accounting judgements, estimates
and assumptions in the consolidated
financial statements.

How our audit addressed the key audit matter
We audited the proper allocation of Goodwill to the
respective group of cash-generating units (“CGUs), including
the allocation of goodwill arising from the Group’s
acquisition of 100% of the shares of Visy Cartons Pty Ltd in
2019.

We further assessed whether the groups of CGUs identified
are the appropriate basis to be used for impairment testing.

With the involvement of PwC’s internal valuation experts,
we challenged and evaluated Management’s value in use
calculation for each group of CGUs.

This included an assessment of the appropriateness of the
model used, as well as challenging of the key assumptions
made by Management, such as the discount rates applied
and the cash flow forecasts.

• We evaluated the reasonableness of the discount rates,
as determined by Management, by assessing the cost
of capital for the Group, as well as considering territory
specific factors.

• We challenged Management’s cash flow assumptions
and sensitivity analysis applied to such cash flows
based on other internal forward-looking
documentation available and by benchmarking them
against external market data for the industry and
respective region.

• We further ensured the consistency of Management’s

cash flow assumptions with the Group’s current 5-year
business plan approved by the Board of Directors.

In addition, we performed a retrospective review by
comparing the 2019 expectation in the 2018 forecast model
to the 2019 actual result to assess Management’s historical
forecast reliability.

We further performed independent sensitivity analyses
around the key assumptions to ascertain the extent of
change in those assumptions that either individually or
collectively would be required for the goodwill to be
impaired.

Additional comfort was further provided by comparing the
carrying amount of the Group’s consolidated equity to the
market capitalisation of the Group.

As a result of our procedures, we determined that the
conclusions reached by Management with regards to the
carrying amount of Goodwill is reasonable and supportable.

Other information in the annual report

The Board of Directors is responsible for the other information in the annual report. The other
information comprises all information included in the annual report, but does not include the
consolidated financial statements, the stand-alone financial statements and the remuneration
report of SIG Combibloc Group AG and our auditor’s reports thereon.

Our opinion on the consolidated financial statements does not cover the other information in
the annual report and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to
read the other information in the annual report and, in doing so, consider whether the other
information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on
the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.

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 IFRS 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, ISAs
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.

129

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewAs part of an audit in accordance with Swiss law, ISAs and Swiss Auditing Standards, we
exercise professional judgment and maintain professional scepticism throughout the audit.

We also:

•

Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made.

• Conclude on the appropriateness of the Board of Directors’ use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the
Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures
in the consolidated financial statements or, if such disclosures are inadequate, to modify
our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial

statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair
presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the

entities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance
of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the Board of Directors or its relevant committee regarding, among
other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.

We also provide the Board of Directors or its relevant committee with a statement that we
have complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Board of Directors or its relevant committee, we
determine those matters that were of most significance in the audit of the consolidated
financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such
communication.

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

Thomas Brüderlin
Audit expert
Auditor in charge

Basel, 20 February 2020

Manuela Baldisweiler
Audit expert

130

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewFinancial statements
for the year ended 31 December 2019

SIG Combibloc Group AG

Income statement

Balance sheet

Notes

Proposal of the Board of Directors for the appropriation
of the retained earnings

Proposal of the Board of Directors for the appropriation
of the capital contribution reserve

Report of the statutory auditor on the audit of the financial statements

132

133

137

138

131

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewIncome statement

Balance sheet

Year ended
31 Dec.
2019

Year ended
31 Dec.
2018

1 Jan. to
27 Sept.
2018 1

28 Sept. to
31 Dec.
2018

(in CHF thousand)

Income from investments
Other income
Total income

Personnel expenses
Other operating expenses
Total operating expenses

Note

3.1
3.2

3.2

125,227.2
7,085.3
132,312.5

(5,801.7)
(9,583.8)
(15,385.5)

–
1,229.5
1,229.5

(1,118.4)
(1,902.8)
(3,021.2)

–
–
–

–
(566.1)
(566.1)

–
1,229.5
1,229.5

(1,118.4)
(1,336.7)
(2,455.1)

Profit/(loss) from operating activities

116,927.0

(1,791.7)

(566.1)

(1,225.6)

Finance income
Finance expenses
Profit/(loss) from operating

activities before non-recurring
items and income tax

Non-recurring expenses
Profit/(loss) before income tax

Income tax income/(expense)
Profit/(loss) for the period

136.8
(1,084.1)

221.1
(45.1)

158.0
–

63.1
(45.1)

115,979.7

(1,615.7)

(408.1)

(1,207.6)

3.3

–
115,979.7

6.5
115,986.2

(5,136.4)
(6,752.1)

(169.3)
(6,921.4)

(260.0)
(668.1)

–
(668.1)

(4,876.4)
(6,084.0)

(169.3)
(6,253.3)

1 The Company changed its functional currency in 2018. EUR balances were translated into CHF at 1.13160 at the date of change of the

functional currency. See note 2.2 for further details.

Cash and cash equivalents
Trade receivables
– Due from Group companies
Current interest-bearing receivables
– Due from Group companies
Other current receivables
– Due from third parties
Accrued income and prepaid expenses
Total current assets

Investments
Total non-current assets
Total assets

Trade payables
– Due to third parties
– Due to Group companies
Current interest-bearing liabilities
– Due to Group companies
Other current liabilities
– Due to third parties
Accrued expenses
Total current liabilities

Non-current liabilities
Total non-current liabilities

Total liabilities

Share capital
Legal reserves
– Capital contribution reserve
Retained earnings
– Loss brought forward
– Profit/(loss) for the period
Treasury shares
Total shareholders’ equity

Total liabilities and shareholders’ equity

Note

3.4

3.5

3.6

3.7

3.8

3.9

3.10

3.11

3.12

3.13

As of
31 Dec.
2019

366.3
7,565.9
7,565.9
1,774.3
1,774.3
12.5
12.5
305.7
10,024.7

As of
31 Dec.

2018 1

452.0
1,323.6
1,323.6
6,716.6
6,716.6
398.3
398.3
358.9
9,249.4

2,443,789.8
2,443,789.8
2,453,814.5

2,443,804.0
2,443,804.0
2,453,053.4

1,334.0
890.2
443.8
6,475.6
6,475.6
648.6
648.6
3,116.1
11,574.3

1,126.4
1,126.4

7,095.0
756.9
6,338.1
3,601.1
3,601.1
131.4
131.4
5,009.6
15,837.1

–
–

12,700.7

15,837.1

3,200.5
2,330,816.2
2,330,816.2
107,174.2
(8,812.0)
115,986.2
(77.1)
2,441,113.8

3,200.5
2,442,827.8
2,442,827.8
(8,812.0)
(1,890.6)
(6,921.4)
–
2,437,216.3

2,453,814.5

2,453,053.4

1 The Company changed its functional currency in 2018. EUR balances were translated into CHF at 1.13160 at the date of change of the

functional currency. See note 2.2 for further details.

132

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewNOTES

1 General information

SIG Combibloc Group AG (“SIG” or the “Company”) is domiciled in Neuhausen am Rheinfall,
Switzerland and is listed on SIX Swiss Exchange.

Prior to its initial public offering (“IPO”) on 28 September 2018, the Company was named
SIG Combibloc Group Holdings S.à r.l. (also the “Company”, as explained below) with its
domicile in Luxembourg. In September 2018, it converted from a Luxembourg limited liability
company (“société à responsabilité limitée”) into a Luxembourg corporation (“société
anonyme”). SIG Combibloc Group Holdings S.A. then migrated its legal seat from Luxembourg
to Switzerland and was reorganised as a stock corporation (“Aktiengesellschaft”) and changed
its name to SIG Combibloc Group AG.

“Company” refers to SIG Combibloc Group AG in relation to the period from and after the IPO
and to SIG Combibloc Group Holdings S.à r.l. in relation to the period before the IPO.

2 Summary of significant accounting policies

The financial statements of the Company for the year ended 31 December 2019 have been
prepared in accordance with Swiss law. Where not prescribed by law, the significant accounting
and valuation policies applied are described below.

2.1 Exclusion of a cash flow statement and certain note disclosures

SIG Combibloc Group AG prepares its annual consolidated financial statements in line with
IFRS, a recognised standard. It further includes a management report (CFO statement) in its
annual report. In accordance with Swiss law (Art. 961d Para 1 CO), the Company has therefore
elected not to include in its financial statements a cash flow statement and a management
report.

2.2 Foreign currency translation

The Company maintains its accounting in Swiss Francs (CHF), which is also its functional
currency, and the balance sheet and income statement are also presented in this currency.

The Company changed its functional currency in 2018. The accounting records and the
financial statements of SIG Combibloc Group Holdings S.à r.l. were presented in Euros (“EUR”
or “€”), which was also its functional currency. The migration of the Company into Switzerland
and the changed Group financing structure resulting from the IPO in 2018 triggered a change
in functional currency from Euros to Swiss Francs. The change in functional currency has been
accounted for prospectively from the date of change. Balances as of the date of change of the
functional currency were translated from Euros into Swiss Francs at the exchange rate of
1.13160.

The exchange rates used for the balance sheet items are the closing rates as of 31 December
2019 and 31 December 2018. Excluding the impact from the change in functional currency in
2018, balances denominated in foreign currencies are translated into CHF as follows:

•

Investments expressed in a currency other than CHF are translated into CHF at the
exchange rate at the date of their acquisition. At the balance sheet date, such investments
are maintained at their historical exchange rate. Liabilities which are economically linked
to investments and expressed in a currency other than CHF are maintained at their
historical exchange rate at the end of the year.

• All other monetary assets and liabilities expressed in a currency other than CHF are
translated into CHF at the exchange rate prevailing at the year end. All exchange
differences resulting from this translation are presented in the income statement. Any
unrealised exchange gains included therein are not considered significant.

Income and expenses denominated in foreign currencies are translated into CHF at the rate at
the transaction date.

The following significant exchange rate has been applied.

EUR to CHF

1.11282

1.15485

1.08540

1.12690

Average rate for the year

Spot rate as of

31 Dec.
2019

31 Dec.
2018

31 Dec.
2019

31 Dec.
2018

133

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness Review2.3 Transaction costs

3.5 Current interest-bearing receivables

Transaction costs related to the listing of the shares on 28 September 2018 have been partially
deducted from the capital contribution reserve and partially expensed in the income
statement. Refer to note 3.3, 3.11 and 3.12 for further details.

Current interest-bearing receivables due from Group companies include an interest-bearing
inter-company EUR loan granted to SIG Combibloc Services AG.

2.4 Investments

Investments are initially recognised at cost. Investments are analysed on an annual basis for
impairment indicators and are, if needed, adjusted to their recoverable amount.

2.5 Treasury shares

Own shares held by the Company are accounted for as treasury shares. Treasury shares are
initially recognised at acquisition costs and deducted from equity with no subsequent
measurement. If the treasury shares are disposed of, the resulting gain or loss is recognised in
the income statement.

Information relating to income statement and balance sheet items

3.1 Income from investments

Income from investments consists of a dividend received from SIG Combibloc Holdings S.à r.l.
in the amount of CHF 125,227.2 thousand that was mainly used to pay the dividend of
CHF 112,011.6 thousand to the shareholders in the year ended 31 December 2019.

3.2 Other operating income and expense

Other operating income primarily consists of management fees charged to direct or indirect
subsidiaries. Other operating expenses primarily consist of consultancy costs and fees paid to
the Board of Directors (to the Advisory Board prior to the IPO in 2018).

3.3 Non-recurring expenses

Non-recurring expenses in the year ended 31 December 2018 include IPO-related costs that
relate to the listing of existing shares on SIX Swiss Exchange. In addition, selected members of
the Group Executive Board were awarded a total of CHF 2.9 million for their significant
contribution to the process of going public.

3.4 Trade receivables

Trade receivables due from Group companies as of 31 December 2019 include
management fees charged to direct or indirect subsidiaries for 2019 of CHF 7,565.9
thousand (CHF 1,323.6 thousand as of 31 December 2018).

3.6 Investments

The following subsidiaries are directly held by the Company.

Name and legal form

Registered office

Capital

Votes

Capital

Votes

As of 31 Dec. 2019

As of 31 Dec. 2018

SIG Combibloc

Holdings S.à r.l. 1

SIG Combibloc Holdings

GP S.à r.l. 2

6C. rue Gabriel

Lippmann L – 5365
Munsbach
6C. rue Gabriel

Lippmann L – 5365
Munsbach

100%

99.99%

100%

1 Previously SIG Combibloc Holdings S.C.A. The Company was converted into a société à responsabilité limitée in the fourth quarter

of 2018.

2 SIG Combibloc Holdings GP S.à r.l. was liquidated in the second quarter of 2019.

The subsidiaries indirectly held by the Company are listed in note 26 of the consolidated
financial statements of the Company for the year ended 31 December 2019.

A capital contribution of CHF 1,143,873.6 thousand was made to SIG Schweizerische Industrie-
Gesellschaft GmbH on 2 October 2018, an indirect subsidiary of the Company.

3.7 Trade payables

Trade payables due to Group companies as of 31 December 2019 mainly relate to intra-group
recharges. Trade payables due to Group companies in the comparative period mainly relate
on-charging of IPO-related costs.

3.8 Current interest-bearing liabilities

Current interest-bearing liabilities due to Group companies include an interest-bearing
inter-company CHF loan from SIG Combibloc Services AG.

3.9 Accrued expenses

Accrued expenses primarily consist of employee benefit obligations of CHF 2,610.7 thousand
(CHF 3,284.9 thousand as of 31 December 2018). The balance as of 31 December 2018 also
includes accruals for IPO-related expenses of CHF 1,203.0 thousand. There were no payments
outstanding to the pension funds as of 31 December 2019 or 31 December 2018.

134

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness Review3.10 Non-current liabilities

Issue of shares in IPO in 2018

Non-current liabilities primarily consist of liabilities arising due to share-based plans and
arrangements introduced in 2019 for certain members of management and Board of Directors
as described in note 31 of the consolidated financial statements of the Company for the year
ended 31 December 2019.

3.11 Share capital

(Number of shares)

Balance as of 1 January 2018
Conversion of share categories
Capital increase on

27 September 2018

Balance as of 31 December 2018

(Initial)

ordinary
shares

Ordinary
shares
(class A1-A5)

Non-redeemable
preference
shares
(class P1-P5)

Total
shares

14,877,361
200,175,879

100,084,864
(100,084,864)

100,091,015
(100,091,015)

215,053,240
–

105,000,000
320,053,240

–
–

–

–
–

–

105,000,000
320,053,240

320,053,240

Balance as of 31 December 2019

320,053,240

Prior to the IPO

As of 1 January 2018 and prior to the IPO, the share capital consisted of 215,053,240 shares
totalling €2,150.5 million.

Conversion of shares

The Company issued 105,000,000 new shares in the IPO, each with a nominal value of
CHF 0.01. The gross proceeds from the IPO amounted to CHF 1,181.3 million
(CHF 11.25 per share), resulting in an increase in the share capital of CHF 1.1 million and an
increase in the capital contribution reserve of CHF 1,180.2 million. Costs incurred of
CHF 43.7 million that were directly attributable to the issue of the new shares have been
recognised as a deduction from equity (the capital contribution reserve). The net proceeds
from the IPO amount to CHF 1,137.6 million.

After the IPO

As of 31 December 2019 and 31 December 2018, the share capital consists of 320,053,240
shares, issued and fully paid, representing CHF 3.2 million of share capital.

Authorised share capital and conditional share capital

The Company has authorised share capital and conditional share capital of CHF 640,106.48
each as of 31 December 2019 and 31 December 2018.

3.12 Capital contribution reserve

The capital contribution reserve consists of the following.

(In CHF thousand)

Capital contribution reserve as of 1 January 2018 1
Conversion of share categories
Premium from the net proceeds from the IPO
Capital contribution reserve as of 31 December 2018

Capital contribution reserve as of 1 January 2019
Dividend payment of CHF 0.35 per share out of the capital contribution reserve
Dividend not paid on treasury shares held by the Company
Capital contribution reserve as of 31 December 2019

Balance

1,306,031.7
283.0
1,136,513.1
2,442,827.8

2,442,827.8
(112,018.6)
7.0
2,330,816.2

The Company changed its functional currency in 2018. EUR balances were translated into CHF at 1.13160 at the date of change of the
functional currency. See note 2.2 for further details.

The net proceeds from the IPO of CHF 1,137.6 million, less the nominal share capital of
CHF 1.1 million, have been allocated to the capital contribution reserve.

135

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewTo the best of the Company’s knowledge, no other shareholder holds 3% or more of
SIG Combibloc Group AG’s total share capital and voting rights on 31 December 2019 and
2018, respectively.

4.3 Shares held directly or indirectly by the Board of Directors and the Group

Executive Board, including any related parties

As of 31 December 2019, the members of the Board of Directors as of that date directly, or
indirectly, held the following number of shares and restricted share units.

Number
of directly or
beneficially
held shares 1 5

Number
of indirectly
held shares 1

Total
shareholdings

Unvested
restricted
share units 5

Total
shareholdings,
including
restricted
share units

67,529
20,960
–
22,842
8,888
7,287
–
n/a
127,506

–
–
23,820 2
23,820 2
23,820 2
–
106,422 3
n/a
177,882

67,529
20,960
23,820
46,662
32,708
7,287
106,422
n/a
305,388

–
–
7,287
–
6,949
–
–
n/a
14,236

67,529
20,960
31,107
46,662
39,657
7,287
106,422
n/a
319,624

Board of Directors

Andreas Umbach
Matthias Währen
Colleen Goggins
Werner Bauer
Wah-Hui Chu
Mariel Hoch
Nigel Wright
David Mansell 4
Total

3
4
5

shares of SIG Combibloc Group AG (figures rounded).
Indirectly attributable through minority investment in affiliates of Onex Corporation, the major shareholder (figures rounded).
The mandate of David Mansell ended at the AGM 2019 so that the Shareholding Guidelines no longer apply for him.
The members of the Board of Directors receive 40% of their total compensation under share-based payment arrangements. The larger
part of the Board of Directors’ total share-based payment compensation is paid out in blocked SIG shares while a smaller part is paid
out in restricted share units (“RSUs”). A three year blocking/vesting period applies to the shares/RSUs. Further details about the
compensation of the Board of Directors, including terms, number and value of instruments granted, are included in the Compensation
Report and in note 31 of the consolidated financial statements included elsewhere in this Annual Report.

In the revision to the capital contribution principle that took effect on 1 January 2020,
withholding tax exempt distributions from the capital contribution reserve of Swiss listed
companies are generally only permissible to the extent that at least the same amount is
distributed out of other reserves. These provisions do not apply to repayments of so-called
foreign capital contribution reserves. The Company has as of 31 December 2019 a capital
contribution reserve of CHF 2,330.8 million, which is confirmed by the Swiss Federal Tax
Administration. Foreign capital contribution reserves included in the capital contribution
reserve amount to CHF 1,306.3 million. The whole dividend will be distributed out of foreign
capital contribution reserves.

3.13 Treasury shares

The movement in the number of treasury shares during the year was as follows.

(Number of treasury shares or in CHF thousand)

Number

Amount

Balance as of 1 January 2019
Purchases
Transfer under share-based payment plans and arrangements
Balance as of 31 December 2019

–
47,000
(40,842)
6,158

–
(532.5)
455.4
(77.1)

No treasury shares are held by the Company’s subsidiaries or joint ventures.

4 Other information

4.1 Employees

The number of full-time equivalent employees in 2019 and 2018 did not exceed ten on an
annual average basis.

4.2 Significant shareholders

To the best knowledge of the Company, the following shareholders each owned more than 3%
of voting rights as of 31 December 2019 and 2018.

Name and legal form

Onex Corporation 1
Winder Investment Pte Ltd 2
AlphaGen Capital Limited, Henderson Global Investors Limited,

Janus Capital Management 3

1 Beneficially owned by Mr Gerald Schwartz, Canada.
2 Beneficially owned by Haldor Foundation, Liechtenstein.
3 Beneficially owned by Janus Henderson Group PLC, United Kingdom.

Voting rights as of

31 Dec.
2019

32.9%
6.0%

31 Dec.
2018

52.6%
6.0%

<3.0%

3.7%

136

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewAs of 31 December 2018, the members of the Board of Directors as of that date directly, or
indirectly, held the following number of shares.

Board of Directors

Andreas Umbach
Matthias Währen
Colleen Goggins
Werner Bauer
Wah-Hui Chu
Mariel Hoch
Nigel Wright
David Mansell
Total

Number
of directly or
beneficially
held shares 1

Number
of indirectly
held shares 1

Total
shareholdings

48,888
13,333
–
15,555
8,888
–
–
–
86,664

–
–
23,820 2
23,820 2
23,820 2
–
170,634 3
62,379 3
304,473

48,888
13,333
23,820
39,375
32,708
–
170,634
62,379
391,137

4.4 Other

There are no further items to disclose according to Art. 959c Swiss Code of Obligations.

Proposal of the Board of Directors for the appropriation
of the retained earnings

(In CHF thousand)

Losses brought forward from previous year
Profit/(loss) for the period
Retained earnings at the end of the period

Retained earnings to be carried forward

As of
31 Dec.
2019

(8,812.0)
115,986.2
107,174.2

As of
31 Dec.
2018

(1,890.6)
(6,921.4)
(8,812.0)

107,174.2

(8,812.0)

1 Ordinary registered shares of SIG Combibloc Group AG.
2 Shares are held indirectly through partnership interests in Wizard Management II GmbH & Co. KG, which holds ordinary registered

shares of SIG Combibloc Group AG (figures rounded).
Indirectly attributable through minority investment in affiliates of Onex Corporation, the major shareholder (figures rounded).

The Board of Directors proposes to the Annual General Meeting to carry forward retained
earnings of CHF 107,174.2 thousand.

As of 31 December 2019 and 31 December 2018, the members of the Group Executive Board
as of these dates directly, or indirectly, held the following number of shares and performance
share units.

Proposal of the Board of Directors for the appropriation
of the capital contribution reserve

Group Executive Board

Rolf Stangl, Chief Executive Officer
Samuel Sigrist
Markus Boehm
Ian Wood
Lawrence Fok
Martin Herrenbrück
Ricardo Rodriguez
Total

As of 31 Dec. 2019

Number of
directly,
beneficially or
indirectly 4
held shares 1

Unvested
performance
share units 5

665,544 2
290,063 2
268,648 2
84,225 3
359,955 2
134,633 3
263,702 2
2,066,770

168,599
79,031
52,688
52,688
47,419
47,419
47,419
495,263

As of
31 Dec. 2018

Number of
directly,
beneficially or
indirectly 4
held shares 1

1,065,471 2
464,362 2
549,703 2
99,107 3
509,612 2
166,610 3
422,160 2
3,277,025

1 Ordinary registered shares of SIG Combibloc Group AG.
2 Shares are held indirectly through partnership interests in Wizard Management I GmbH & Co. KG, which holds ordinary registered

shares of SIG Combibloc Group AG (figures are rounded).

3 Shares are held indirectly through partnership interests in Wizard Management II GmbH & Co. KG, which holds ordinary registered

shares of SIG Combibloc Group AG (figures are rounded).
Indirect ownership of shares can change in case of an exit, depending on the reason for resignation.

4
5 Members of the Group Executive Board participate in a share-based long-term incentive plan under which they were granted

performance share units (“PSUs”) in 2019. One PSU represents the contingent right to receive one SIG share. Vesting occurs three
years after the grant date. The exact number of PSUs that vests depends on the long-term performance of SIG during the vesting
period. Further details about this incentive plan, including terms, number and value of instruments granted, are included in the
Compensation Report and in note 31 of the consolidated financial statements included elsewhere in this Annual Report.

(In CHF thousand)

Capital contribution reserve
Proposed dividend of CHF 0.38 per share (2018: CHF 0.35 per share)

out of the capital contribution reserve

Dividends not paid on treasury shares held by the Company

As of
31 Dec.
2019

As of
31 Dec.
2018

2,330,816.12 2,442,827.8

(121,620.2)

(112,018.6)
7.0

Capital contribution reserve carried forward after cash dividend

2,209,196.0 2,330,816.2

Provided that the proposal of the Board of Directors is approved by the Annual General
Meeting, the dividend will amount to CHF 0.38 per share payable out of the capital contribution
reserve. Dividends will not be paid on treasury shares.

137

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewReport of the statutory auditor to the General Meeting
of SIG Combibloc Group AG Neuhausen am Rheinfall

Report on the audit of the financial statements

Opinion
We have audited the financial statements of SIG Combibloc Group AG, which comprise the
income statement for the year ended 31. December 2019, the balance sheet as at 31
December 2019, and notes for the year then ended (pages 132 to 137), including a summary of
significant accounting policies.

In our opinion, the accompanying financial statements as at 31 December 2019 comply with
Swiss law and the company’s articles of incorporation.

Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our
responsibilities under those provisions and standards are further described in the “Auditor’s
responsibilities for the audit of the financial statements” section of our report.

Our audit approach
Overview

Overall materiality: CHF 12,200,000

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

• Valuation of investments in subsidiaries

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.

Key audit
matters

138

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewMateriality
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 Group materiality
How we determined it
Rationale for the materiality
benchmark applied

CHF 12,200,000
0.5% of total equity
We chose total equity as the benchmark because it is a
relevant and generally accepted benchmark for
materiality considerations relating to a holding company.
We chose 0.5% of total equity to determine materiality as
this is a commonly used benchmark in practice.

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.

Valuation of investments in subsidiaries
Key audit matter
As at 31 December 2019, SIG Combibloc Group’s
direct investment in subsidiaries amount to CHF
2,444 million (about 99.6 % of total assets). The
indirect subsidiaries incl. investments in joint
ventures of SIG Combibloc Group AG are shown in
Note 26 to the Group’s consolidated financial
statements.

How our audit addressed the key audit matter
We obtained and reviewed Management’s
impairment assessment.

We assessed whether the market capitalisation of
the Group covers as of 31 December 2019 the book
value of the investment.

As a result of our procedures, we determined that
the carrying amount of investments in subsidiaries
has been appropriately assessed by Management.

Investments in subsidiaries are valued individually
and are initially recorded at cost less necessary
impairment charges.

Management analyses investments in subsidiaries
on an annual basis for potential impairment
indicators. This is done by comparing the
investment’s book value with the IFRS equity value
of the subsidiary (adjusted for possible
contributions made into indirect subsidiaries) and
by comparing the IFRS equity value of the SIG
Combibloc Group AG against the IFRS equity value
of the consolidated financial statements. In case
both methods indicate a potential impairment
indicator, the book value of the investment is
compared to the market capitalisation of the
Group.

Should the market capitalisation of the Group not
cover the book value of the investment, the value
in use of the Group is considered.

Refer to Note 2.4 – Investments and Note 3.6 –
Investments.

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.

139

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewAuditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with Swiss law and Swiss Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.

As part of an audit in accordance with Swiss law and Swiss Auditing Standards, we exercise
professional judgment and maintain professional scepticism throughout the audit.

We also:

•

Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control.

From the matters communicated with the Board of Directors or its relevant committee, we
determine those matters that were of most significance in the audit of the financial statements
of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.

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 retained earnings and reserves
complies with Swiss law and the company’s articles of incorporation. We recommend that the
financial statements submitted to you be approved.

• Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made.

PricewaterhouseCoopers AG

• Conclude on the appropriateness of the Board of Directors’ use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the
entity’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures
in the financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the entity to cease to continue as
a going concern.

Thomas Brüderlin
Audit expert
Auditor in charge

Basel, 20 February 2020

Manuela Baldisweiler
Audit expert

140

SIG 2019 Annual ReportFinancialsOur CompanyGovernanceCompensationBusiness ReviewDISCLAIMER
The Annual Report contains certain “forward-looking statements” that are based on our current expectations,
assumptions, estimates and projections about us and our industry. Forward-looking statements include, without
limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and
may contain the words “may”, “will”, “should”, “continue”, “believe”, “anticipate”, “expect”, “estimate”, “intend”, “project”,
“plan”, “will likely continue”, “will likely result”, or words or phrases with similar meaning. Undue reliance should not be
placed on such statements because, by their nature, forward-looking statements involve risks and uncertainties,
including, without limitation, economic, competitive, governmental and technological factors outside of the control of
SIG Combibloc Group AG (“SIG”, the “Company” or the “Group”), that may cause SIG’s business, strategy or actual results
to differ materially from the forward-looking statements (or from past results). Factors that could cause actual results to
differ materially from the forward-looking statements are included without limitations into our offering memorandum
for the IPO. SIG undertakes no obligation to publicly update or revise any of these forward-looking statements, whether
to reflect new information, future events or circumstances or otherwise. It should further be noted that past
performance is not a guide to future performance. Please also note that interim results are not necessarily indicative of
the full-year results. Persons requiring advice should consult an independent adviser.

For definitions of alternative performance measures and their related reconciliations that are not included in this
Annual Report, please refer to the following link www.sig.biz/investors/en/performance/key-figures

Some financial information in this annual report has been rounded and, as a result, the figures shown as totals in this
presentation may vary slightly from the exact arithmetic aggregation of the figures that precede them.

Please note that combismile is currently not available in Germany, Great Britain, France, Italy or Japan.

141

SIG 2019 Annual Report