Annual Report 2020
WE DELIVER
MORE
WE DELIVER
MORE
SIG is a leading systems and solutions provider for aseptic carton
packaging. We work in partnership with our customers to bring food
and beverage products to consumers around the world in a safe,
sustainable and affordable way.
We deliver more
Governance
For customers and consumers
61 Board of Directors
2
8
For our planet
14 For communities
65 Group Executive Board
68 Corporate Governance Report
Our Company
Compensation
21 Letter from the Chairman
and the Chief Executive Officer
92 Letter from the Chairwoman
of the Compensation Committee
24 Our business model
94 Compensation Report
26 Our strategy
29 Our team
31 Technology and innovation
Business review
34 Responsible business review
43 Regional review
43
46
48
EMEA
APAC
Americas
49 Key performance highlights
50 Financial review
59 Risk management
Financials
117 Consolidated financial statements
205 Financial statements of the Company
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WE DELIVER MORE
FOR
CUSTOMERS
AND
CONSUMERS
Annual Report 2020 3
BR A ZIL — EXPANDING OUR CUSTOMER PARTNERSHIPS
Over the last 15 years, our business in
Brazil has expanded rapidly, helped by the
construction and subsequent expansion
of our factory at Curitiba. This has enabled
us to be closer to our customers and to
respond rapidly to their needs. We have
combined our technology expertise with
our strong sales force and service excellence
to consistently win new customers.
9 filling machines
installed in 2020 with two new customers
in Sao Paulo and Paraná.
São Paulo
Paraná
We deliver more
For customers and consumers
Early in 2020 we started placing filling machines with Shefa
and Líder Alimentos, two large dairy companies in Brazil.
The filling machines were installed in record time and
production exceeded expectations, enabling the customers
to meet strong consumer demand for milk.
Together Shefa and Líder Alimentos ordered nine filling machines
and at the same time signed contracts for the supply of carton sleeves.
One of the key factors enabling SIG to win these contracts was the
format and volume flexibility of our system. Customers can fill a wide
variety of liquid dairy products – including plain, flavoured and plant-
based milks – as well as tea and juices.
“We are very happy with our new partnership
with SIG. The high flexibility and speed of the SIG
filling machines, as well as low waste rates, were
the main reasons for implementing this project
with SIG. The partnership will help us to expand
our product portfolio and to offer many more
options to consumers.”
Roberto Adabo
CEO at Shefa
Annual Report 2020
5
Placement of the filling machines commenced at the beginning of 2020.
The customers chose a combination of brand new and overhauled filling
machines from SIG’s existing stock. In order to speed up deployment and
the start of production, three of the filling machines were overhauled locally
in Brazil by SIG’s expert engineers. All nine filling machines were installed
within eight months – a record achievement given the complex engineering
of the filling machines and the need for flawless efficiency and sterility.
SIG IS THE PREFERRED PARTNER FOR SHEFA AND LÍDER ALIMENTOS
SIG’s close cooperation with both Shefa and
Líder Alimentos offers true product innovation
and differentiation as part of SIG’s Value
Proposition, which aims to deliver innovative
product and packaging solutions that enable
businesses to satisfy ever-changing needs.
We deliver more
For customers and consumers
From the outset, production was significantly
ahead of plan, driven by strong demand for milk
during COVID-19 related lockdowns.
And it was not just demand that exceeded expectations.
At SIG we undertake to deliver a high level of efficiency
on our machines and we also promise that waste rates
will be below a certain threshold. Our filling machines
exceeded the targeted efficiency level while waste rates
were well below the threshold set.
8 months
It took only eight months to install
all nine filling machines for both
of our partners in Brazil.
Annual Report 2020
7
São Paulo and Paraná
Through fast and efficient delivery and service,
we enabled Líder Alimentos and Shefa to meet
increased consumer demand for milk, which
became even more important as a source of
protein during lockdowns.
SIG aseptic packaging to meet
increasing customer and
consumer demand.
Shefa and Líder Alimentos are now offering
their entire product ranges – from plain milk
and flavoured dairy products to plant-based
milks and nectars – in SIG carton packs.
WE DELIVER MORE
FOR OUR
PLANET
Annual Report 2020 9
INNOVATING FOR SUSTAINABILIT Y
A strong focus on sustainable packaging
innovation has produced a decade of
industry firsts from SIG. Our SIGNATURE
portfolio is delivering for our business,
our customers and our planet.
1bn+ packs
sold with our aluminium-free combibloc
ECOPLUS packaging material
Environmental considerations are central to product
development at SIG as we create solutions to help customers
meet growing consumer demand for sustainable packaging
and adapt to an ever-changing world.
Fully recyclable and mainly made from renewable paper board,
our standard packs have a 28% to 70% lower carbon footprint
than alternative types of packaging. Over the past 10 years,
we have been leading the industry with a series of sustainable
innovations that reduce the impact of our packs even more.
We deliver more
For our planet
Our pioneering combibloc ECOPLUS packaging material, launched
in 2010, is the world’s first aluminium-free aseptic carton solution.
By eliminating the need for an aluminium foil barrier layer, it reduces
the carbon footprint of our standard packs by 27%.
Following this breakthrough, we went on to develop SIGNATURE 100,
the world’s first aseptic carton solution linked to 100% renewable
materials. Launched in 2017, our SIGNATURE 100 packaging material is
aluminium-free and links the polymers in the pack to renewable, forest-
based feedstock1. It cuts the carbon footprint of a standard pack by 58%.
150m+ packs
have been sold with our SIGNATURE 100 or
SIGNATURE Full Barrier packaging materials
SIGNATURE 100: MAKING THE CONNECTION
TO 100% FOREST-BASED MATERIAL
SIGNATURE 100 is the world’s first aseptic carton
solution linked to 100% renewable, forest-based
raw materials.
Aluminium-free. 82% renewable paper board.
Polymers linked to 100% forest-based materials.
WATCH ON YOUTUBE
1
Linked to tall oil, a residue from papermaking, via a certified mass balance system.
Annual Report 2020
11
With combibloc ECOPLUS and SIGNATURE 100, we are offering the most
sustainable packaging solutions on the market for UHT milk producers.
Our SIGNATURE Full Barrier packaging material enables other customers
to get the benefits of polymers linked to 100% renewable feedstock, while
maintaining the ultra-thin aluminium foil barrier layer needed to protect
more sensitive food products like juices and water. This cuts the carbon
footprint of our standard packs by 45%.
“SIGNATURE enables us to offer the most sustainable
packaging solution, which at the same time
guarantees the premium quality expected by our
valued CoolBest customers. Switching to this new
carton underlines our leading role in sustainability
within the fruit juice industry.”
Sabine Blom
Marketing Manager CoolBest at Riedel
SIGNATURE CIRCULAR: THE WORLD’S FIRST ASEPTIC CARTON WITH RECYCLED PLASTICS
Our SIGNATURE Circular solution, launched
in 2020, introduces post-consumer recycled
content in aseptic cartons for the first time2.
In a groundbreaking partnership with SABIC,
we are using chemical recycling to transform
used plastic packaging into high-quality
polymers that are safe for food packaging.
2
Linked to post-consumer recycled plastics
via a certified mass balance system.
We deliver more
For our planet
The polymers used in our SIGNATURE 100 and SIGNATURE Full
Barrier packaging materials are linked to renewable materials via an
innovative mass balance approach.
Independently certified to ISCC PLUS, this system ensures the amount
of forest-based raw materials we need are mixed in with conventional
fossil-based materials to produce polymers to the high grade required
for aseptic food packaging.
We use the same ISCC PLUS certified mass balance approach to link
the polymers used in our SIGNATURE Circular packaging material to
100% post-consumer recycled plastics.
The mass balance system supports a transition from fossil-based to
renewable or recycled raw materials within the conventional and highly
efficient polymer industry. This approach is endorsed by The Ellen
MacArthur Foundation as a way to advance the circular economy.3
From plastic to
paper straws
SIG was the first in the industry
to offer a paper straw solution
for aseptic cartons. We launched
both straight and U-shaped paper
straws in 2019.
3 Source: The Ellen MacArthur Foundation Network, Mass Balance White Paper 2020.
Annual Report 2020
13
“At Intermarché, our commitment to
sustainable development is a priority.
We decided early on to introduce SIG’s paper
straw solution for aseptic carton packs to offer
consumers a more sustainable alternative to
plastic straws, while maintaining the on-the-go
convenience of small-size packs.”
Alain Plougastel
Adhérent Intermarché
We are going further. Our mission
is to create food packaging that
makes the world a better place. And
our continued focus on sustainable
innovation will help us drive progress
on this journey WAY BEYOND GOOD.
WE DELIVER MORE
FOR
COMMUNITIES
Annual Report 2020 15
STANDING UP TO COVID-19 IN BANGLADESH
WITH CARTONS FOR GOOD
The Cartons for Good initiative, flagship
project of the SIG WAY BEYOND GOOD
Foundation, extended its support to
communities during the COVID-19
crisis and lockdown in Bangladesh.
Aid packages containing basic foodstuffs
and hygiene items have been distributed
to families in need.
20%
Nearly 20% of the population in
Bangladesh are malnourished and
almost half the children are underweight.
We deliver more
For communities
From Waste to Worth
Cartons for Good offers innovative solutions against food loss and
malnutrition. In Bangladesh, where the foundation is running the
project, surplus food is preserved in SIG packages for schools to
offer underprivileged children regular lunches throughout the year.
This means that they can come to school instead of having to work
for their food.
HOW IT WORKS
1 — Helping farmers
Farmers are paid for their surplus
vegetables. This gives them extra
income from crops they wouldn’t
otherwise be able to sell.
4 — Packaging is
collected for recycling
After use, the packs are
collected for recycling at a local
facility, so the materials can be
used again.
2 — Communities use
SIG packaging
Communities use the mobile
filling unit to cook the vegetables
and preserve them in SIG’s long-
life carton packages.
3 — Local schools help to
distribute the packs
The food is distributed to local
schools. Children get a healthy, hot
meal every day. This encourages
them to stay in school and gives
them better prospects for the future.
Annual Report 2020
17
The issue of food loss
Although nearly 20% of the population are mal-nourished
and almost half the children are underweight, large quantities
of food go to waste every day in Bangladesh. Each year at
harvest-time, farmers produce more food than they can sell
and, with no way to preserve the surplus crops, the food rots
and is thrown away.
“There used to be wastage of surplus crops
from our farming land, but this will now be put
to use with Cartons for Good. We can use the
extra money from selling the surplus for next
year’s farming and the SIG WAY BEYOND GOOD
FOUNDATION is taking care of children by
giving them school meals.”
Samsul Alam
Farmers’ Community Representative
We deliver more
For communities
Challenges to schooling in Bangladesh
Children living in Bangladeshi urban slums face many barriers when
it comes to going to and staying in school – in fact, only half of the
children living in these areas end up attending school. Aspects like
low family income and high population density amplify the problem.
Often, in order to ensure the family has something to eat, children
have to drop out of school to contribute as manual labourers.
This deprives the country of needed talent as well as thousands
of children of their hopes and dreams.
>1,000 aid packages
have been given to underprivileged families
where the adults had no income due to the lockdown.
SIG FOUNDATION: #CARTONS FOR GOOD
PROJECT IN BANGLADESH
The SIG WAY BEYOND GOOD FOUNDATION has
launched its flagship Cartons for Good project
in Bangladesh. Cartons for Good applies SIG’s
technology to empower communities to reduce
food loss, support farmers’ livelihoods and
promote children’s nutrition and education.
The project provides healthy school meals for
underprivileged children in partnership with
leading development NGO, BRAC.
Annual Report 2020
19
Extended support during crisis
During the COVID-19 lockdown, when schools were closed,
it became more important than ever for children as well as
their families to keep receiving healthy, nutritious food. That is
why the Cartons for Good team in Bangladesh has delivered
essential food and hygiene parcels to school children and their
families at a time when they need it most.
Rice, potatoes, onions, lentils, spices, eggs, soya bean oil,
mustard oil, salt, bars of soap and antiseptic soap were
included in the aid packages – alongside the Cartons for
Good packages produced from surplus vegetables which
otherwise would have been wasted.
“The packages help me much to
survive nowadays. As I am so much
in need, it is so helpful to me.”
Hazera (35)
mother of two girls
20
OUR
COMPANY
21 Letter from the Chairman
and the Chief Executive Officer
24 Our business model
26 Our strategy
29 Our team
31 Technology and innovation
Annual Report 2020
Our Company
Letter from the Chairman and the Chief Executive Officer
21
LETTER FROM THE CHAIRMAN
AND THE CHIEF EXECUTIVE OFFICER
Andreas Umbach
Chairman
Samuel Sigrist
Chief Executive Officer
As we look back on the unexpected events of 2020, we can be proud of what SIG has achieved.
The early implementation of a global pandemic preparedness plan, starting in China, enabled
our factories to keep running throughout the COVID-19 crisis. This in turn meant that we were
able to keep delivering to our customers and accommodate shifts in demand caused by the
crisis. It would be inaccurate, however, to attribute this continuity simply to good management
and processes. It is in large part due to the dedication and flexibility of our employees – most
notably those in our factories, who continued coming to work without interruption and adapted
to a tightening of our already rigorous health and safety practices. This ensured that our factories
remained fully operational. To all our employees, who performed at a high level despite the
many constraints, we extend our heartfelt thanks. We also want to thank our customers for their
close collaboration in our joint efforts to continue delivering essential nutrition to consumers.
Increased demand for liquid dairy in Europe and the Americas
The year was proof of the robustness of our business model and the resilience of our end markets.
This was notably the case for liquid dairy, which accounts for around 70% of our revenue and, in
addition to plain milk, includes a wide variety of products such as plant-based milks, creamers
and nutritional drinks. Sales of these products benefited from increased demand in Europe and
the Americas, as households consumed more during lockdowns. The need to prepare more
meals at home also boosted food sales in categories such as soups and sauces. Our aseptic
cartons enable food and beverages to be kept for up to 12 months while retaining all their
nutritional benefits – an ideal solution when people are shopping less frequently or ordering
online. In Asia Pacific, on the other hand, lockdowns had a negative impact on our business,
which is geared towards the on-the-go consumption habits typical of the lifestyles in the region.
Annual Report 2020 Our Company
Letter from the Chairman and the Chief Executive Officer
22
Ongoing investment and strong free cash flow generation
The fact that we were still able to grow our global core
revenue by 5.5% at constant exchange rates is testimony
to the portfolio effect created by the deliberate geographic
diversification of our business over many years. The
sustained top-line growth was accompanied by a slight
improvement in the adjusted EBITDA margin. A negative
impact from exchange rates, resulting from the impact
of the COVID-19 crisis on emerging market currencies,
was more than offset by operational leverage, lower
raw material costs and production efficiencies. Adjusted
net income increased to €232 million. Net capital
expenditure as a percentage of revenue was within the
target range of 8–10% and included investments relating
to the construction of a new plant in China, which is now
in operation. Free cash flow generation nevertheless
remained strong and we are proposing a dividend of
CHF 0.42 per share, compared with CHF 0.38 per share
for 2019.
To meet current and future customer demand, the new 120,000
square meter plant in China is situated at the Suzhou Industrial Park,
close to the Company’s existing production facility and Tech Centre.
Maintaining service excellence and winning new business
Our business plays a vital role in the food value chain. Many of our customers have expressed their
appreciation at the continuity of our supply and service during the crisis. Our service engineers
overcame many challenges in terms of travel and logistics in order to keep filling machines
running, helped by a variety of remote service options. We continued to place new filling machines
and to enter into new contracts, including a record win in Europe with the German dairy company
Hochwald. Whether we win a new customer or increase our presence with an existing one, the
flexibility of our system and its low waste rates consistently prove their worth.
Focus on environmental, social and governance issues
We also help our customers meet the growing societal demand for environmental stewardship.
We do not simply rely on the fact that our carton packs all have a more favourable environmental
profile than other forms of packaging. We have taken sustainability to the next level; and in
this report, you can read about innovations in the composition of our cartons which increase
renewable content and further reduce the carbon footprint. The progress in our technology
is not confined to our packs. We are also making advances in our filling machines which, for
example, reduce energy and water use. More broadly, as a company we continue to drive
systemic change to become a net positive business that gives more to people and the planet
than it takes out. We were one of the first companies in our industry to set a climate target that
is approved by the Science Based Targets Initiative (SBTi) and is in line with the goal of limiting
global warming to 1.5° above pre-industrial levels. And we measure our progress against a raft
of additional metrics which you will find detailed in our Corporate Responsibility Report to be
published in March 2021.
Environmental, social and governance (ESG) issues are an increasingly important part of our
ongoing dialogue with investors. In 2020, we published our ESG policies for the first time, in
order to give more visibility to our objectives and to demonstrate the level of attention we
have given to these topics over many years. However, we recognise that we can always do
more, as demonstrated by our current initiatives to promote diversity and inclusion > Our team.
Annual Report 2020 Our Company
Letter from the Chairman and the Chief Executive Officer
23
And we listen to feedback from our shareholders: We have made changes to our executive
compensation programme as from 2021 in response to feedback received after the 2020
Annual General Meeting. > Compensation Report
One of the consequences of the COVID-19 crisis was that the 2020 Annual General Meeting had
to be held digitally and without the physical presence of shareholders. Unfortunately, this will also
be the case for the 2021 Annual General Meeting. We greatly regret the loss of the opportunity to
meet with you, our shareholders, in person and would like to thank you for your ongoing support.
Further expanding our geographic footprint
The geographic diversification which stood us in good stead in 2020 will be further strengthened
by the planned acquisition, announced in November, of the 50 percent not already owned of
our Middle East and Africa joint venture. The transaction, which we expect to close in the first
quarter of 2021, enhances our geographic presence in a region with attractive growth prospects.
Aseptic carton, which can be transported and stored without refrigeration, is ideally suited to
countries with a hot climate. We will have the opportunity to move closer to customers and
consumers in the region, in order to create value through our consumer-centric innovation and
the delivery of sustainable and affordable food packaging solutions. The joint venture business
has an attractive financial profile as well as a well-invested footprint. The transaction will be
financed through a combination of cash and shares, leaving the leverage of the combined
business broadly unchanged. As a consequence, the Obeikan Investment Group (OIG), our
joint venture partner, will hold approximately five percent of the SIG share capital. Abdallah al
Obeikan, the CEO of OIG, will be proposed for election to our Board of Directors at the Annual
General Meeting on 21 April 2021. This will ensure that we continue to benefit from his expertise,
industry experience and knowledge of the Middle East and Africa region.
Changes to the Group Executive Board
After 12 years as CEO, Rolf Stangl took the decision to leave the Company at the end of 2020.
Rolf played a key role in expanding the business and in making SIG a leader in sustainability.
Most recently, he led the Company through the successful IPO in 2018 and steered it safely
through the challenges of the COVID-19 crisis. We would like to thank Rolf on behalf of the
Board of Directors and the entire Company and wish him all the best for the future.
The Board has always devoted close attention to succession planning and this has enabled
a seamless transition of the CEO role. We are pleased to welcome two new members to the
Group Executive Board: Frank Herzog succeeds Samuel Sigrist as Chief Financial Officer and
José Matthijsse joins as President & General Manager Europe. Both bring diverse experience
and a broad range of skills which ideally equip them for their new roles. We look forward to
working together to continue SIG’s successful track record. The Company continues to invest
and innovate and is well positioned for the future in an attractive industry. We will maintain our
focus on delivering value to our shareholders while pursuing our ambitious environmental and
societal objectives.
Andreas Umbach
Chairman
Samuel Sigrist
Chief Executive Officer
Annual Report 2020 Our Company
Our business model
OUR BUSINESS
MODEL
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.
INPUTS
PEOPLE
~5,500
employees with
>60 nationalities
111,556
hours of training
Focus on diversity &
inclusion
ENVIRONMENT
100%
100%
100% paperboard
from FSC™ Chain of
Custody-certified mills
of energy for
production from
renewable sources
ASI-certified
aluminium available
in all regions
FINANCIAL
€ 987m
property, plant &
equipment
OPERATIONS
9
sleeve production
plants (incl. JV)
€ 68m
net filler capital
expenditure
€ 51m
investment in R&D
2
1,266
filler assembly plants
fillers in the field
The full interactive version of our business model can be found online at
https://reports.sig.biz/annual-report-2020/our-company/our-business-model
THE SIG DIFFERENCE
1
ENGINEERING
KNOW-HOW
2
BROAD
GEOGRAPHIC
BASE
3
PARTNERSHIPS
WITH
CUSTOMERS
Annual Report 2020 25
OUTPUTS
PEOPLE
+21
Employee Net
Promoter Score
0.3
Lost Time Case Rate
4 %
voluntary turnover
rate
ENVIRONMENT
97 %
All packs fully
recyclable
of packs sold with
FSC™ label
Fillers with reduced
water and energy use
FINANCIAL
5.5 %
core revenue growth
at constant currency
OPERATIONS
~38 bn
packs produced in
2020
29.5 %
ROCE
€ 233 m
free cash flow
>270
different packaging
options
>10,000
different products
filled
1
2
3
Our unique sleeve-based filling
technology offers our customers
unmatched volume and format
flexibility, enabling them to meet
the rapidly changing demands of
consumers. The breadth of our filling
capabilities is complemented by
consumer-centric innovation and a
focus on sustainability. Our superior
system reliability, supported by over
600 service engineers worldwide,
ensures that our customers are part
of a safe and efficient supply chain.
Originally a European business,
SIG has steadily expanded its
international presence, realising
55% of its sales outside the EMEA
region in 2020. This expansion has
contributed to the resilience of the
business by diversifying the drivers of
growth. We operate sleeve factories
in each of our regions. With our
globally integrated footprint and
supply chain, we are able to support
customers locally and to meet their
needs quickly and efficiently.
Our filling and packaging
technology is at the heart of our
customers’ operations. We work
in close collaboration with our
customers to develop innovative
product and packaging solutions
that meet consumer demand for
differentiation, convenience and
sustainability. We enable customers
to increase their efficiency with
solutions for intelligent, automated
and fully integrated plants. All this
results in customer relationships that
span many years or even decades.
Our Company
Our strategy
26
OUR STRATEGY
Our dream is to see every consumer in the world
with a SIG pack in their hand and a smile on their
face, every single day. This dream is at the heart of
our corporate compass – a strategy made for growth.
Our goal is to be the leading solution provider for the
food and beverage industry, fulfilling our promise of
“Excellence – Engineered. Solutions – Delivered.”
The three strategic goals in our corporate compass are to “Grow above
market”, “Win at the customer” and “Foster a winning team”, accompanied
by our ambition to go WAY BEYOND GOOD for people and the planet.
Growth
Grow above market
Customer
Win at the customer
People
Foster a winning team
Responsibility
Going WAY BEYOND GOOD
Annual Report 2020 Our Company
Our strategy
27
1 Growth
Grow above market
Over this challenging year, which was marked
by the global COVID-19 pandemic, we
demonstrated the resilience of our strategy
and performance. We were able to grow our
core business with significant new customer
wins such as dairy brands Líder Alimentos
and Shefa in Brazil. We also increased our
share of wallet with existing customers,
including a major contract for 15 aseptic
filling lines at the new production site of
Hochwald, one of the largest German dairy
cooperatives.
Core revenue growth at
constant currency 2017–2020
5.7%
2 Customer
Win at the customer
In 2020, the pandemic posed many challenges
in terms of health and safety, travel, supply
chains and logistics. SIG is especially proud of
how its worldwide operations and technical
service teams performed throughout 2020.
To keep up with demand, many of our plants
have been operating day and night, and our
service technicians have done their utmost
to keep SIG filling lines running without
interruption at our customers’ sites. All to
ensure that our customers could provide a
continuous supply of food and beverages to
consumers. The letters of thanks we have
received from customers testify that we were
able to not only maintain but often increase
the level of customer satis faction in a very
challenging year.
SIG Net Promoter Score (NPS)
2020
2017
+39
+27
We continued to grow in new and emerging
segments such as plant-based dairy alter-
natives, protein drinks and water. And we
significantly strengthened our platform for
geographic growth through new customer
wins in South American countries like Chile
and Ecuador, the integration of Visy Cartons
in Australia and New Zealand and the
planned acquisition of the remaining 50%
of shares in SIG Combibloc Obeikan, our
joint venture in Middle East and Africa.
In 2020, sustainability proved to be a real
driver for growth with new customers
choosing our most sustainable packaging
solutions including the paper straw, combibloc
ECOPLUS and SIGNATURE. Our leading
environmental credentials and innovative
sustainable solutions have become an ever
more important decision criterion for new
projects and customer pitches.
PRIORITIES FOR 2021
AND BEYOND
– Integrate our Middle East
and Africa joint venture and
leverage SIG’s full solution
portfolio in the region
– Ramp up commercial produc-
tion at our new plant in China
– Fully leverage the environ-
mental advantages of aseptic
cartons and promote our
sustainable innovation
portfolio
Our strategy for winning at the customer
is underpinned by our solution-selling
approach and the key customer benefits
of our unique packaging and filling techno-
logy. These benefits include flexibility,
speed, differentiated filling capabilities and
Total Cost of Ownership, as well as sustain-
ability. We are successfully deploying our
digital service solutions to install new filling
lines and maintain existing lines. Increased
interest in our digital smart factory solutions
is resulting in further projects with customers
such as Almarai, the Middle East’s leading
food and beverage manufacturer.
PRIORITIES FOR 2021
AND BEYOND
– Extend our local sales and
marketing in recently added
countries such as India
– Create more value for our
customers through our
SIGNATURE portfolio and
sustainable solutions
– Further implement our digital
service, smart factory and
connected pack solutions
– Increase share of revenues
from new countries, new
segments and our sustainable
innovation portfolio
Annual Report 2020
Our Company
Our strategy
28
3 People
Foster a winning team
We aim to create an environment where each
of our approximately 5,500 employees world-
wide feels free to believe in more. We believe
that by fostering an inclusive culture, support-
ing fair and equal oppor tunities for everyone
and creating a working environment free of
biases, we enable our employees to develop
their full potential and deliver outstanding
service and performance. That is why, in 2020,
we introduced SIG’s new employer branding
with the slogan “We Believe in More”.
We want to foster a ”We Believe in More”
culture where people feel empowered to
dream big, go above and beyond and make
the impossible possible. Every innovation
or achievement at SIG starts with believing.
This is the driving force for us to always
eNPS 2018–202020
+21
2020
2018 -1
deliver the best solution – the perfect
package – for our customers.
In 2020, we made significant progress towards
our goal of becoming the best employer in our
industry and beyond. In our global employee
survey, we saw a significant increase in the
employee Net Promoter Score (eNPS) from –1
in 2018 to 21 in 2020 and achieved an overall
engagement level of 87%, up nine percentage
points from 2018 and above the industry
benchmark of 80%.
We began rolling out our new diversity and
inclusion training, which is mandatory for all
our leaders, and established a Diversity &
Inclusion Focus Group made up of employee
representatives to drive our diversity and
inclusion strategy across the business. We
have set ourselves the target of increas-
ing the female-to-male ratio in leadership
positions to 30%. On 1 February 2021, we
welcomed the first woman to our Group
Executive Board > Profile José Matthijsse.
We also introduced an employee share owner-
ship plan in 2020 to further align employee
interests with those of our shareholders.
4 Responsibility
Going WAY BEYOND GOOD
Our vision is to create a net positive,
regenerative food packaging system that
gives more to people and the planet than it
takes out. We want our packs to become like
trees – making the world a better place.
We started developing fully recyclable carton
packs made mostly from renewable materials
many years ago. These are part of a highly
efficient and versatile packaging system that
cuts food loss and gives customers all the
options to meet fast-changing consumer
needs. Five years ago, we committed to
becoming a net positive company by giving
more to the world than we take out and
going WAY BEYOND GOOD.
Today, we have embedded sustainability at
the heart of our business and are driving
systemic change to become a net positive
business.
In 2020, we continued to deliver the most
sustainable solutions to our customers.
We offer ASI-certified aluminium for all
SIG packs in Europe as standard, and it
is available in other regions as well. We
have sold over 150 million packs featuring
SIGNATURE, the world’s first aseptic carton
packaging material linked up to 100% to
renewable, forest-based materials. And new
customers in Europe and South America
have opted for our paper straw solutions,
the first for aseptic carton packs.
-58%
up to 58% carbon footprint reduction with our
sustainable innovations vs. a standard 1-litre SIG pack
PRIORITIES FOR 2021
AND BEYOND
– Roll out our diversity and
inclusion programmes and
training
– Promote our new employer
branding and foster a ‘We
Believe in More’ culture at SIG
– Further advance our talent and
succession management
– Implement the second phase
of our transformational
leadership training
PRIORITIES FOR 2021
AND BEYOND
Bring our vision of a net positive,
regenerative food packaging
system closer to reality with four
far-reaching actions:
– FOREST POSITIVE: working
with others to greatly expand
sustainable forestry
– CLIMATE POSITIVE: combining
sustainable innovation with our
Forest Positive actions to turn
our packaging into a carbon sink
that stores more carbon than
it emits
– RESOURCE POSITIVE:
making all packs from renew-
able or recycled materials using
renewable energy − and making
sure every carton is recycled
– FOOD POSITIVE: continuing to
innovate and work with partners
to deliver safe nutrition and
hydration to more people
Annual Report 2020
Our Company
Our team
29
OUR TEAM
SIG – The best place to turn your dreams into reality
We aim to create an environment where all of our approximately 5,500 employees worldwide
feels free to believe in more by helping our Company to explore new paths and create what’s
next. We believe that by fostering an inclusive culture, supporting fair and equal opportunities
for everyone and creating a working environment free of biases, we enable our employees to
develop their full potential and to feel recognised and rewarded.
Talent development
Our Company offers a wide 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, coaching and mentoring, plus on-the-
job learning experiences. All up-skilling and development requirements are identified as part
of the review and feedback process throughout the year. We identify talents that we need to
foster as well as gaps in our succession pipeline that we need to fill. The idea of our talent and
succession management is to establish frameworks, processes, tools and skills to systematically
and effectively identify, manage, actively develop and retain employees with high performance
and potential. We adapt our talent advancement approach to certain career paths in order to
prepare our talents for success in their targeted future role.
Our leadership programmes provide intensive training in the SIG Leadership Model so that
transformational leadership becomes our common leadership philosophy – inspiring and
empowering others to continuously learn, innovate and grow.
Employee satisfaction
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. We also
engage employees in the business through virtual Q&As with our CEO, town-hall meetings and
smaller group sessions with SIG C-Level executives. Furthermore, in 2020 we launched our new
employee value proposition, ‘Believe in More’ – both through internal communications and on
social media and on our SIG career website so as to engage existing and prospective employees.
As result, our net promoter score significantly improved and our sustainable engagement score
exceeded the industry benchmark in the 2020 survey.
Annual Report 2020 Our Company
Our team
30
So that our employees feel motivated and energised at work, we are implementing measures
that support a healthy work-life balance. We offer employee benefits reflecting the regional,
legal and cultural context. These include retirement benefits, health and life insurance, flexible
work arrangements (e.g. part-time positions, working from home), and parental benefits and
leave. We remunerate employees in line with existing market practices. We benchmark our
compensation approach against other companies to ensure that our compensation packages
are competitive in each of our markets. The Company ensures that performance is recognised
and rewarded in a fair and transparent manner.
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 other 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 inclusion
We believe that by fostering a more inclusive culture, empowering people with different abilities
and supporting equal opportunities, we can add value to our business, improve the lives of our
employees and make a significant contribution to society. We have established a diversity and
inclusion strategy with an overarching vision and set targets to improve our gender equality. To
sustain our D&I strategy and cultural change activities, we listen to our newly formed Diversity &
Inclusion Focus Group with diverse representatives from our global organisation. Our leaders
have been trained to recognise their unconscious biases and to create relevant conditions to
foster diversity and inclusion by actively driving change.
The Company is fully committed to preventing discrimination on any grounds, and we have
publicly committed to promoting diversity throughout our organisation as a signatory of the
German Diversity Charter (Charta der Vielfalt).
In our last Employee Engagement Survey, the vast majority agreed that the Company is
perceived as an open-minded organisation with a broad diversity of employees.
Annual Report 2020 Our Company
Technology and innovation
31
TECHNOLOGY AND
INNOVATION
Excellence – Engineered. Solutions – Delivered.
Our innovation capabilities enable us to address multiple customer needs and respond to
fast-changing consumer trends. We draw on the unmatched flexibility of our system to create
modular solutions that give customers the optionality they need. We spend approximately
3% of revenue on R&D, and our innovations are patent-protected.
Our R&D is conducted at two major Tech Centres in Linnich, Germany and Suzhou, China.
Here we design, engineer and test innovative packaging structures and shapes as well as new
product formulations. We conduct filling tests on the latest filling machines, and 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. The Tech Centre in Suzhou,
opened in 2018, is enabling us to faster serve the rapid innovation cycles that are typical of the
APAC region.
Our unique technology
The unique advantages of the SIG portfolio 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. Taking advantage of our differentiated
filling capabilities, customers fill more than 10,000 food and beverage products into our packs.
The flexibility of our system limits changeover 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
1
Product
solutions
2
Packaging
solutions
OUR PROMISE
Excellence – Engineered.
Solutions – Delivered.
8
Digital
marketing
solutions
7
Traceability
solutions
6
Supply chain
solutions
3
End-to-end design
solutions
4
Filling line
solutions
5
Service
solutions
Annual Report 2020 Our Company
Technology and innovation
32
Benefits for customers and the environment
In 2020, we introduced further enhancements to our filling machines, with benefits for the customer
and the environment. The temperature of the heaters that are required at various points in the
filling process can now be reduced during idle times, delivering an energy reduction of up to 85%.
Energy reduction
of up to
Water use reduction for filling
machines and for cleaning of up to
85%
50%
We also launched two water-saving solutions in 2020: a conversion kit for filling machines to
reduce water usage around the pocket chain and SureBrite, a cleaning machine that reduces
manual labour as well as water use for cleaning.
Digital solutions in the factory…
All new filling machines from SIG now come with industry-standard OPC Unified Architecture
(OPC-UA) connectivity built in. This enables horizontal machine-to-machine and vertical
communication within the entire production plant – from shop floor to top floor. All existing SIG
filling machines can now also be retrofitted with a simple plug-and-play installation providing
OPC-UA connectivity.
After successful piloting in the Middle East, the Plant 360 Asset Management solution,
co-developed with GE Digital, is now being rolled out in Asia-Pacific and the Americas.
… and in the supermarket
Our PAC.ENGAGE solution provides a variety of digital communication options that brands can
use 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 programs,
quizzes and more. In Brazil, milk producer Gloria wanted to raise its profile and better understand
where it fits in the Brazilian market. Gloria used the PAC.ENGAGE static code to set up a program
where consumers who scanned the code and completed a 10-minute survey were rewarded with
the chance to win prizes such as televisions, iPads and iPhones. The surveys provided Gloria with
a deeper consumer understanding than if they had used a more expensive research agency.
Continuous innovation
Through our consumer-led research, we help our customers bring new products to the market
in packs that perfectly match the product concept. We are also enabling customers to respond
to growing environmental concerns by offering fully renewable packaging, including the
industry’s first aluminium-free solutions – ECOPLUS and SIGNATURE 100. We have started to
replace fossil-based polyethylene with plant-based material (SIGNATURE 100 and Full Barrier)
via a mass-balance system and recently became the first company to offer beverage cartons
with circular polymers made from recycled post-consumer plastic waste.
And to show that we are always looking towards the future, SIG – together with Nestlé, Logitech
and other industry partners – is funding a new Chair for Sustainable Materials Research at EPFL,
the Swiss Federal Institute of Technology in Lausanne, Switzerland.
Annual Report 2020 33
BUSINESS
REVIEW
34 Responsible business review
43 Regional review
43
EMEA
46
APAC
48
Americas
49 Key performance highlights
50 Financial review
59 Risk management
Annual Report 2020 Business review
Responsible business review
34
RESPONSIBLE BUSINESS REVIEW
CO2 scope 1 and 2 emissions (t)
84.1k
2019: 105.8k
Going WAY BEYOND GOOD
Choosing a SIG carton is like planting a tree − it makes the world a better place. That is our
vision, and our WAY BEYOND GOOD ambitions will help us make it a reality.
Our mission
It is our mission to create food packaging that makes the world a better place by
• expanding forests across the world,
• taking carbon from the atmosphere,
• creating more resources for future generations, and
• ensuring nutrition and hydration comes safely to ever more people.
These far-reaching ambitions focus on four action areas that together will produce the biggest
positive impact – for the environment, society and our business. All four action areas are
interconnected. Each nurtures the others and all are needed to achieve sustainable change.
Building on strong foundations
We started developing fully recyclable carton packs made mostly from renewable materials many
years ago. These are part of a highly efficient and versatile filling system that cuts food loss and
helps customers meet fast-changing consumer needs.
Five years ago, we committed to becoming a net-positive company − giving more to society and
the environment than we take out. We call this going WAY BEYOND GOOD. In 2020, we completed
the first phase of our roadmap. Now we are setting new targets for 2025 and beyond.
Our approach covers all aspects of sustainability: social, environmental, economic and governance.
It affects everything we do – on our own and with our suppliers, customers and stakeholders.
WAY BEYOND GOOD is an integral part of our business strategy, our compass, and senior managers
are responsible for implementing specific workstreams and targets.
Accelerating progress
With sustainability firmly embedded at the heart of our business, we continue to drive systemic
change to become a net positive business and help create a net positive, regenerative food
packaging system.
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We will build on our responsible culture and industry-leading sustainable innovation to push
forward with WAY BEYOND GOOD. We are developing a clear roadmap to get us there. And we
will partner with stakeholders to accelerate positive change.
Throughout this journey, our bold ambitions will help us maintain our momentum as we learn
along the way and evolve our approach to overcome challenges and maximise impact as we get
ever-closer to our vision.
Forest Positive
Today, all our raw paperboard is sourced from sustainably managed forests. Next we are
focused on greatly expanding sustainable forestry across the world.
Sustainably managed forests help to preserve vital ecosystem functions, support biodiversity
and provide a wide range of essentials – from renewable raw materials to oxygen in the air
we breathe. Worldwide, one in five people depend on forests for their livelihoods. Forests also
have a critical role to play in tackling climate change because trees store carbon as they grow.
The UN aims not only to prevent further deforestation but to expand global forest area by 3% –
or around 120 million hectares – by 2030.
By sourcing renewable raw materials from sustainably managed forests, we are helping forests
– and the communities that depend on them – to thrive.
Our progress
Around 75% of every SIG pack is made from forest-based liquid packaging board. Our combibloc
ECOPLUS solution increases this to 82% and SIGNATURE 100 is the only aseptic carton in the
world that is linked to 100% forest-based materials.1
Our Forest Stewardship Council™ (FSC™) Chain of Custody certification (licence code FSC™
C020428) enables us – and our customers – to trace our raw materials back through the supply
chain to sustainably managed forests. FSC™ standards require forest management that supports
biodiversity, prevents deforestation and degradation, and respects the rights of workers, local
communities and indigenous peoples.
Over the last decade, we have led the industry in driving progress on FSC™ certification. Since
2009, all our liquid packaging board has come from FSC™-certified mills and – as of January 2021 –
100% of it is purchased with FSC™-Mix certification. This means that all our board is made with a
mix of fibres sourced from FSC™-certified sustainable forests and other FSC™-controlled sources.
We achieved this milestone by engaging with our board suppliers – large and small – to embrace
the wide-reaching benefits of FSC™ certification. And we are extending our forest positive
impact even further by calling on our customers to include the FSC™ logo on their packs to
raise consumer awareness of responsible sourcing and encourage them to buy more certified
products. Over 96% of the packs we sold in 2020 carried the logo.
100%
of our liquid packaging board comes with
FSC™-Mix certification (as of January 2021)
97%
of SIG packs sold in 2020
carried the FSC™ label
1
Linked to wood residues from paper making via an independently certified mass balance system.
Annual Report 2020 Business review
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“SIG has led the market with bold ambitions
for FSC™ certification and I’m impressed they
have been able to do it on a global scale.
The Company is showing the way for others
by making a commitment not just to meeting
requirements with 100% FSC™-certified board,
but to using FSC™ labelling on its packs as a
platform for consumer awareness.”
Kim Carstensen, Executive Director, Forest Stewardship Council
Climate Positive
Today, our packs offer the lowest-carbon solutions available. Next, we are combining
sustainable innovation with our Forest Positive actions to make food packaging like a
tree – taking carbon from the atmosphere and making the world a better place.
We have just witnessed the warmest decade on record, with greenhouse gas levels rising to new
records in 20192 despite the Paris Agreement to significantly reduce emissions globally. Changing
weather patterns and more frequent extreme weather events are already affecting lives and
livelihoods around the world.
Urgent action is needed to tackle the climate emergency, and we have joined other leading
companies in calling on governments to Recover Better by aligning COVID-19 recovery efforts
with the Paris goals.
Our progress
We have set bold targets, approved by the Science-Based Targets Initiative, to cut the carbon
footprint of our own operations by 60% in line with the latest climate science to keep global
warming below 1.5°C and reduce our value chain footprint per litre packed by 25% – both by 2030.
By switching to 100% renewable energy to manufacture our packs, we have achieved carbon
neutral production since 2018 – an industry first – and we are continuing to extend our on-
site renewable energy generation capacity. We now have 4.8MWp of rooftop solar arrays in
operation, with further installations in development to increase this total to around 18MWp.
We are also encouraging suppliers to use renewable energy and take steps to reduce their climate
impacts. Suppliers representing over 60% of our global aluminium foil supply are already certified
to the ASI standard, which sets strict limits for greenhouse gas emissions from the energy-intensive
aluminium production process. This helps to cut our own value chain footprint and has a wider
positive impact by decarbonising supply chains in our industry and beyond.
2 https://www.un.org/sustainabledevelopment/climate-change/
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Our low-carbon packaging solutions are helping to reduce the climate impact of the global food
supply system. With a resource-efficient design, a high proportion of renewable material and no
need for refrigeration, our packs have a life-cycle carbon footprint that is up to 70% lower than
alternative types of packaging such as plastic and glass bottles, cans and pouches.
The latest innovations in our SIGNATURE portfolio cut the carbon footprint of our standard
packs by a further 27% to 58%. We are also helping customers cut emissions from using our
filling machines in their factories. For example, our new upgrade kit can cut energy use by
around 85% in standby mode.
100%
renewable energy for
production since 2018
Resource Positive
Today, all our packs are recyclable, with some made entirely from renewable raw materials.
Next we are going to work on making all our packs exclusively from renewable or recycled
materials using only renewable energy and on ensuring every carton is recycled – all to
make sure we help create more resources for future generations.
The traditional take-make-waste economy is putting too much pressure on the planet’s finite
resources and limited capacity to absorb waste. A circular economy – one that designs out
waste, regenerates natural systems and keeps products and materials in circulation – can help
to relieve this pressure, prevent environmental impacts of packaging waste and halve carbon
emissions by 2030 in Europe alone.
Unlike most packaging alternatives, our cartons are made mainly from renewable materials
(around 75% on average). This means they are already contributing to the circular economy at the
start of their life by using renewable materials that support the regeneration of natural resources.
Our progress
SIGNATURE 100 is linked to 100% renewable material3, and our paper straw solution offers the
first renewable alternative to plastic straws for use with aseptic carton packs.
Some of our raw materials are made from by-products from other industries – such as wood
chips, papermaking residues and scrap aluminium. In a groundbreaking partnership with
SABIC, we have introduced the world’s first aseptic carton packaging material made from post-
consumer recycled material.
All our packs are designed to be fully recyclable, and we are working with others to boost
recycling rates and keep high-quality materials in circulation – including renewable fibres for
paper and board products, polymers and aluminium (separately and combined as PolyAl for
roof tiles and furniture).
3
Linked to wood residues from paper making via an independently certified mass balance system.
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Through industry partnerships, such as the Global Recycling Alliance for Beverage Cartons
and the Environment (GRACE), EXTR:ACT and 4evergreen, we are advocating for enabling
regulations and collaborating on specific projects to support the collection and recycling not
only of beverage cartons but other types of packaging, too.
We also partner with NGOs, customers and industry on local projects in priority countries –
including the innovative so+ma and Cidade+Recicleiros waste collection initiatives in Brazil
(which bring both environmental and social benefits), supermarket collection points with Nestlé
in Indonesia and a new recycling facility in Germany that will enable the recovery of polymers
and aluminium from PolyAl.
“Our ambition is to make 100% of our packaging
to be reusable or recyclable by 2025. But it is also
important that the infrastructure is in place to
allow recycling to happen. The Cidade+ Recicleiros
partnership between Nestlé and SIG is the basis
for the development of a lasting infrastructure that
will make a positive impact on the environment,
communities and business.”
Cristiani Vieira, Environmental Sustainability Manager, Nestlé
Food Positive
Today, our filling technology minimises food loss, and our packs keep food safe for months
without the need for refrigeration. Next we are going to continue to innovate and work
with partners and communities to deliver safe, affordable nutrition and hydration to ever
more people while further reducing food loss.
Nearly 690 million people are hungry and a further two billion do not have regular access to safe,
nutritious and sufficient food.4 At the same time, a third of food globally is lost or wasted5 which
has knock-on effects for climate and land use. The United Nations has called for a profound
change in the global food and agriculture system to feed the world’s growing population.6 And the
COVID-19 pandemic has shown how critical a resilient supply chain is to keep food supplies going.
Our aseptic packaging solutions are ideally suited to help customers preserve and deliver
nutritious food like milk, fruit juice and soup to consumers.
4 https://www.un.org/sustainabledevelopment/hunger/
5 https://www.un.org/sustainabledevelopment/sustainable-consumption-production/
6 https://www.un.org/sustainabledevelopment/hunger/
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Take milk, for example. It is full of essential vitamins, calcium and protein. But fresh milk is
perishable, only lasting a few days in the refrigerator or less. Our aseptic packaging system
preserves the milk – and its nutrients – for six months or more in a cost-effective way. And it can
be transported and stored safely without needing to keep it cold, which requires a lot of energy
and can be challenging in developing countries.
Our progress
In 2020, we produced 38 billion packs to help our customers deliver nutrition and hydration
to consumers around the world. We maintain robust quality and safety management systems
certified to recognised standards at all our plants.
With our highly efficient machines, less than 0.5% of packs – and their food contents – are lost
during filling. We are continually looking for ways to reduce this even further as we design new
machines and upgrade kits for existing ones. Through our new SIGCUBATOR programme, we
are making our highly efficient machines available for start-ups by enabling them to use spare
filling capacity to help them deliver nutritious new products.
We are creating innovative models to get food to the people who need it most through the
SIG WAY BEYOND GOOD Foundation – and exploring how to scale these models to expand our
positive impact.
Cartons for Good, the foundation’s flagship project, is helping to prevent food loss and malnutrition
in Bangladesh by using a down-sized filling unit to help communities preserve surplus crops in
SIG packs. Every month, it turns up to two tonnes of food loss into 6,000 meals for underprivileged
school children. During COVID-19 school closures, we maintained our support with regular aid
packages for the children and their families.
The latest campaign of our WAY BEYOND GOOD Champions focused on the role SIG cartons play
in delivering nutritious, healthy food. They invited employees from across the business to get
involved with interactive quizzes, nutrition webinars and virtual cooking competitions to present
their favourite recipe using food from SIG cartons. Teams around the world also donated food
to support people in need in their local communities.
<0.5%
industry-leading waste rate
for filling machines
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Sustainable innovation
Our focus on sustainable innovation is driving progress in all four of our WAY BEYOND
GOOD action areas.
Sustainability is one of the core value drivers for all our product development. We are guided by
independent ISO-compliant life-cycle assessments to ensure we take into account environmental
impacts – from sourcing raw materials to making, filling and distributing our packs through to
their disposal by consumers after use.
Our mainly renewable, fully recyclable, low-carbon packaging solutions can support the
transition to a low-carbon, circular economy. Over the last decade, we have been innovating
to cut their life-cycle impacts even further, raising the bar with a host of industry firsts (see
> For our planet).
Our progress
This year, we once again led the industry once again with the launch of SIGNATURE Circular, the
first aseptic carton solution made from post-consumer recycled material.7
Uptake of our most sustainable solutions – our SIGNATURE portfolio – continues to grow. We
have now sold over one billion packs with combibloc ECOPLUS and over 150 million packs with
SIGNATURE 100 or SIGNATURE Full Barrier packaging materials that use polymers linked to
100% renewable material.8
Customers such as Riedel, Hartung Nahrungsmittel Produktions and nutpods have extended
SIGNATURE Full Barrier to further products in their portfolios. Finnish start-up Juustoportti
chose our new combismile format with our SIGNATURE Full Barrier solution for its new range
of oat-based drinks. And Ste Laitière des Volcans d’Auvergne switched to our SIGNATURE 100
packaging material for its Les Fayes organic UHT milk in France.
Several customers are now using our paper straw solutions – the first in the industry – for small
format on-the-go packs, including Nestlé in Brazil and Ecuador, Tofusan in Thailand and seven
customers in Europe. This will save 10 tonnes of plastic a year for Intermarché alone.
We are also continuing to improve the efficiency of our new filling machines and introducing
technical upgrades to help customers reduce resource use from existing machines in their
factories. Our latest upgrade cuts water consumption by up to 50% and can be combined in a
‘green bundle’ with a kit that can cut energy use by around 85% during production stoppages.
Our technical service solutions have supported sustainability improvements for 37% of our
customers since 2016.
7/8 Via an independently certified mass balance system.
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Responsible culture
Our commitment to go WAY BEYOND GOOD for people and the planet is underpinned by
our responsible culture.
We take a responsible approach across the value chain – sourcing certified materials from
responsible suppliers, supporting our own employees and keeping them safe, managing
environmental impacts from our operations, engaging communities and acting with integrity
in everything we do.
In doing so, we are not only supporting our business and WAY BEYOND GOOD ambitions, we
can also have wider positive impacts. For example, when we training employees to adopt safe
behaviours at work they also take those safe behaviours home to their families.
Our progress
Transparency is part of our responsible culture. We have published detailed disclosures on
our commitments and approach to environmental, social and governance (ESG) topics, with
our last full CR Report for 2018 winning the edie Sustainability Leaders Award for Sustainability
Reporting and Communications in recognition of its transparent approach.
We train employees on our Code of Conduct, and all our production sites complete regular
SEDEX SMETA audits on ethics, labour rights, safety and environmental criteria. We expect
suppliers to meet similar high standards, and those supplying key raw materials are required to
meet the requirements of relevant certifications.
We offer the only aseptic cartons with all three key materials from certified sources – FSC™
liquid packaging board, ASI aluminium foil and ISCC PLUS polymers linked to 100% renewable
materials9. As of January 2021, 100% of the liquid packaging board used in our packs comes from
FSC™-certified forests. We now offer ASI-certified aluminium foil as standard for customers in
Europe and North America. And all the forest-based polymers we use are certified to ISCC PLUS
or REDcert2.
Keeping our people safe and well is always a priority, and we increased our focus on health
and wellbeing to support them through COVID-19. Our lost-time case rate further decreased in
2020, and two plants won our CEO Safety Excellence Award for reaching significant milestones
without lost-time cases.
Engagement levels have significantly improved in this year’s employee survey, and outperforming
the industry benchmark in every category. We continued to provide extensive training and
development opportunities, including more online options for those working remotely during
the pandemic, and we established an employee-led focus group to drive our diversity and
inclusion strategy.
9 Via an independently certified mass balance system.
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We also continued to engage with communities, with a particular focus on COVID-19 support.
Since 2016, we have increased the cumulative impact of our community engagement programmes
nearly tenfold compared with the baseline year.
Our responsible approach is recognised by leading independent raters and rankers, with a
Platinum rating from EcoVadis, an AA ranking from MSCI and a low risk score of 18.8 from
Sustainalytics. In 2020, we entered into new sustainability-linked loan facilities.
EcoVadis Platinum: top 1% for sustainability
We retained our position among the top 1% of
participating businesses with a Platinum rating
in the latest assessment on sustainability by
EcoVadis. This recognised assessment helps us
demonstrate our credentials to customers and
drive leading sustainability practices within our
business. Our new sustainability-linked loan is
also tied to our EcoVadis score. The rating is based
on a detailed independent assessment of our
policies, processes and performance with regard
to environment, labour and human rights, ethics
and sustainable procurement criteria.
2021Annual Report 2020 Business review
Regional review
43
REGIONAL REVIEW
EMEA
Core revenue
€798m
2019: €755m
Introduction
Growth at
constant currency
+5.6%
SIG’s aseptic carton packaging business originated in Germany, and our largest sleeve
production plant globally is in Linnich, where we also assemble filling machines and conduct
R&D and consumer trials.
Our presence in the Middle East and Africa has until now been through a 50/50 joint venture,
SIG Combibloc Obeikan. The joint venture’s sales are not consolidated, but our share of net
income is recognised in the Group income statement. On 25 November 2020, SIG announced
its intention to acquire the 50 percent of the joint venture which it does not already own. Upon
completion, the transaction will lead to full consolidation of the Middle East and Africa business.
2020 overview
Responding rapidly to increased orders in Europe
Europe is a relatively mature market with a high level of per capita milk consumption. Our
go-to-market strategy is based on winning new customers and growing with existing customers
by offering flexible and cost-efficient solutions. We are also entering into and growing in new
categories.
In 2020, our business saw an unexpected tailwind arising from the COVID-19 crisis. As lockdowns
were imposed across Europe in March, consumers stocked up on shelf-stable goods such as
those filled by SIG. The growth in demand for carton packs accelerated in the second quarter as
at-home consumption increased, with households eating more meals together and consuming
more beverages at home. At the same time, customers and retailers built stocks in order to
avoid a repeat of the shortages that occurred during the early days of the crisis. While these
stocks were partly drawn down in the second half of the year, a further wave of lockdowns
resulted in demand remaining at a high level.
A large portion of our business in Europe consists of litre packs which are suited for at-home
consumption. But it was not just the product range that met customers’ needs. The teams at our
factories worked tirelessly to meet the high level of demand, and in April our factories recorded
an all-time production record. We also overcame the many logistical challenges caused by the
crisis to ensure that we achieved on-time delivery and a high level of customer satisfaction.
Annual Report 2020 Business review
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Capitalising on growth opportunities in Middle East and Africa
SIG Combibloc Obeikan’s geographic territory spans 70 countries in Middle East and Africa (MEA),
with revenue currently generated in 17 countries. Growth potential comes from the young and
growing populations in countries where GDP per capita is on the rise, and it is further driven
by urbanisation and disposable income growth. Changing lifestyles and consumption habits
favour processed and packaged food, an area where our aseptic carton packaging solutions
play an important role. As household incomes remain low in many countries, the ability to
provide affordable solutions is also a key success factor.
Performance highlights
Meeting customer needs in Europe
In 2020, we further strengthened our presence with leading customers such as Arla, which use
our packs not only for the European market but also to export milk to Asia. Arla has a strong
sustainability positioning in Europe, which is perfectly complemented by our aluminium-free
structures ECOPLUS and SIGNATURE.
At the same time, our drive to win new customers continued and we fully leveraged the versatility
of our portfolio and our recent innovations.
We expanded our presence in the fast-growing category of plant-based milks. We signed
a contract with MONA, which is part of the Hain Celestial Group and one of the largest
co-packers and producers. The first filling machine was placed towards the end of the year and
now produces one-litre packs of rice, soy, almond and coconut milk, featuring our novel fully
resealable and leak-proof combiMaxx closure. In France, Tribillat has adopted SIG’s technology
for its flavoured soy drinks, also with combiMaxx.
“Just one small idea can change
an entire industry, and we identified
a gap in the market for a clean,
genuinely natural, plant-based shake.”
Gabriel Bean
Founder of GROUNDED
The London-based company GROUNDED has partnered with SIG to turn its innovative concept
for a 100% natural range of plant-based protein shakes, aimed at health-conscious mobile
consumers, into a commercial reality. The shakes were first produced at combiLab, SIG’s
consumer testing centre in Germany, and will subsequently be filled by the co-packer Framptons.
Gabriel Bean, founder of GROUNDED: “Just one small idea can change an entire industry, and
we identified a gap in the market for a clean, genuinely natural, plant-based shake – with no
compromises on natural ingredients and packaging. We spent more than six months sourcing
the right packaging that aligned with our values, and we found the perfect fit in SIG’s combidome.
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45
Finnish food producer Juustoportti
has launched a new range of
premium oat-based drinks in
SIG’s combismile carton packaging.
Its sustainability story and unique shape make it the perfect option for our range. Beyond the
carton, the team and people at SIG were just as aligned with our values, and we couldn’t have
found a better partnership with which to launch these products. They supported us all the way
from our first contact with their UK team through to their exceptional combiLab operation in
Germany. We look forward to continuing our partnership here with such professionals in their
field.”
Our combismile cartons made their European début in Finland with a launch by Finnish food
producer Juustoportti. Juustoportti has launched a new range of premium oat-based drinks –
Friendly Viking’s Oat Drinks – which will help to develop the on-the-go market. The range has
two drinking options – a single-action closure or a paper straw – with a drinksplus option to
allow the addition of healthy ingredients such as fruits or oats.
And the future looks very promising. In April, we announced that Hochwald, a leading German
dairy cooperative, has chosen SIG as its preferred partner for a new dairy production site. We
will supply 15 of the 16 new filling machines for the plant, which will have a capacity of more
than 800 million litres of milk a year. The plant is scheduled to come on-stream in 2022.
Liquid dairy wins in MEA
In 2020, SIG Combibloc Obeikan continued its strategic focus on liquid dairy, which represents a
cheap and easily accessible form of protein for consumers with limited purchasing power. Over
60% of the joint venture’s sales are now in liquid dairy, compared to less than half five years ago.
Mazoon Dairy, the largest integrated dairy company in the Sultanate of Oman, chose
SIG Combibloc Obeikan for the launch of a full range of liquid dairy products in various sizes and
formats. Mazoon Dairy will also use SIG packs for juices. Other dairy-related successes included
a further expansion of business with Almarai in Saudi Arabia, Zaki Group in Iraq and Tchin Lait
in Algeria, as well as a partnership with Al Jaied in Libya to launch the first evaporated milk in
aseptic carton packaging.
After a successful transition to SIG filling lines, Soummam in Algeria was able to launch new
formats and sizes to enter new product categories, including cream, enriched milk, blended milk
and flavoured milk for children, as well as food products such as béchamel sauce.
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APAC
Core revenue
€660m
2019: €667m
2020 overview
Growth at
constant currency
+1.2%
Most of the cartons we sell in Asia-Pacific are small in size and therefore suitable for on-the-go
consumption, in line with the behaviour and lifestyles of consumers in the region. The COVID-19
crisis naturally reduced the opportunities for purchasing and consuming such products. Taking
this into account, our sales in the region held up well, reflecting the essential nature of the
products we fill.
In China, customers built up safety stocks during the height of the COVID-19 crisis in order
to ensure sufficient supply given the logistical challenges at that time. Following the lifting of
lockdowns, consumption gradually returned to a more normal pattern in the second half of
the year. An increased concern with healthy nutrition in the aftermath of the crisis led to strong
demand for milk.
In the rest of Asia, lockdowns started later and continued for longer. With travel and tourism
curtailed, on-the-go consumption continued to be affected in the second half of the year.
Schools remained closed in some areas, causing school milk programmes for which our
cartons are used to be suspended. While these conditions did have a temporary impact on the
purchasing patterns of our customers, the medium- and long-term fundamentals for this sub-
region remain firmly intact.
Visy Cartons, acquired at the end of November 2019, was successfully integrated into the
Asia-Pacific region in 2020. Business in Australia progressed well during the year, and the
implementation of synergies is on track.
Performance highlights
Health concerns top of mind
New growth categories in Asia-Pacific include beverages with added benefits, such as vitamin
drinks, immune system boosters and nutritional drinks. One example is Prolac, a drink launched
in 2020 by Dutch Mill Thailand, which is made from milk and soy and boasts a high protein and
calcium content along with 13 vitamins and minerals.
Nestlé Vietnam launched a number of products in combismile packs. These included a drinking
yoghurt with fibre, inulin and protein under the Acti-V brand and an expansion of the Milo malted
milk range to cater to teenagers and young adults looking for nutritious on-the-go drinks.
Annual Report 2020 Business review
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47
“combismile is the best choice for winning over the hearts of our teenage audience. Not only is
the packaging highly suitable for value-added products, but with its round corners it can be easily
picked up and carried about. Add in the combiGo closure for easy opening and closing, and you
have a product that will, without a doubt, stand out on supermarket shelves.” – Mr Ali Abbas,
Dairy Business Director at Nestlé Vietnam.
Projects are underway to place combismile lines in India and Korea. Also in Korea, Daesang has
launched nutritional drinks in microwaveable Heat&Go packs, which have no aluminium layer
but offer a similar barrier function and shelf life to standard packs.
“combismile is the best choice
for winning over the hearts
of our teenage audience.”
Ali Abbas
Dairy Business Director of Nestlé Vietnam
Tofusan, the market leader in Thailand for pasteurised soy milk, teamed up with SIG to launch
Thailand’s first organic UHT soy milk in aseptic carton packs. Tofusan chose SIG because the
packaging solution perfectly matched its ‘less is more’ natural premium product. We also
recently won a new tender to place more filling machines with the state-owned Dairy Farming
Promotion Organization of Thailand (DPO), further expanding our strong partnership.
Most of our APAC business consists of single-serve packs which are suitable for on-the-go
consumption. We are now diversifying into larger formats and have won contracts to supply
litre-pack filling lines to YHS in Malaysia and Diamond in Indonesia.
Building for the future
In 2020, the construction of our second factory in Suzhou, China, continued according to plan,
with the new plant ready to open by the end of the year. The plant is designed to achieve world-
class environmental, safety and operational performance. It will be part of our Asia-Pacific
production network and will enable us to meet the expected growth in demand in the region.
SIG and Nestlé Vietnam launch
combismile in Vietnam to target the
growing demand for convenient
and nutritional on-the-go drinks
– Read more here!
Annual Report 2020 Business review
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48
Americas
Core revenue
€321m
2019: €330m
2020 overview
Growth at
constant currency
+14.7%
Our business in the Americas showed remarkable resilience in the face of COVID-19, benefiting
from both favourable consumption trends and customer wins. Growth was driven in particular by
strong demand in Brazil and Mexico. In the USA, a negative impact from the spread of the virus –
as foodservice sales were affected by closures due to lockdowns of outlets such as quick-service
restaurants and schools – was offset by increased at-home consumption of food products.
In Brazil, an increase in at-home consumption of milk, culinary products and dairy cream was
further stimulated by higher welfare payments during the height of the crisis. Overall, the market
became more polarised, with consumers focusing either on basic affordable products or on
indulgence purchases. SIG was able to help its customers meet these trends, by providing both
“pocket money” and basic formats and by offering premium product packs in multiple sizes.
After a strong performance in 2019, Mexico saw further growth in white milk consumption
in medium and large sizes. Demand continued to increase for recombined milk, which is an
affordable ready-to-drink dairy formula. Sales of evaporated milk, tomato products and sauces
also increased as people prepared more meals at home.
Performance highlights
In addition to the positive consumption trends in Brazil and Mexico, our performance in Brazil
reflected the success of filler placements made during the year with two large Brazilian dairy
companies, Shefa and Líder Alimentos. > For customers and consumers
We also continued to expand our partnership with Nestlé in Brazil. Thanks to the flexibility of
SIG’s system, Nestlé has launched four different pack sizes for sweet condensed milk to cater to
different consumer needs. Nestlé has also adopted SIG’s renewable and recyclable paper straw
solution for its NESCAU beverage range and SIG is the sole provider of small-size packaging for
NESCAU, which is the second largest brand of flavoured milk in Brazil.
Innovation did not stand still in the USA. The industry-leading coffee creamer company nutpods
introduced a zero-sugar oat creamer, expanding its offerings beyond its classic almond/coconut
line. Both lines are available in combidome, which combines the best features of a carton pack
with the best features of a bottle and demonstrates clear differentiation on the shelf. The strong
environmental footprint of the pack also perfectly aligns with the environmental positioning of
nutpods, which will continue to expand its combidome product offerings in 2021 and beyond.
We are continuing to expand our footprint in Latin American markets outside Brazil. We signed
an agreement with COLUN, the largest dairy company in Chile, replacing three competitor filling
machines with one SIG filling machine. This again demonstrates the advantages of our system
in offering flexibility and operational excellence to our customers.
Annual Report 2020 Business review
Key performance highlights
49
KEY PERFORMANCE HIGHLIGHTS
Core revenue
Core revenue growth1
Adjusted EBITDA
€1.80bn
2019: €1.77bn
2020
2019
5.5%
2019: 5.2%
2020
2019
€498m
2019: €485m
2020
2019
Adjusted net income
ROCE
Adjusted EBITDA margin
€232m
2019: €217m
2020
2019
29.5%
2019: 22.8%
2020
2019
Adjusted EPS diluted
Free cash flow
€0.73
€0.21 EPS diluted
1 At constant currency.
€233m
€0.73 per share
27.4%
2019: 27.2%
2020
2019
Leverage
2.7x
2019: 2.8x
Share information
for the year ended 31 December 2020
Market capitalisation
CHF 6.57bn
Number of issued shares
320,053,240
Share price on
31 December
Total shareholder return
in 2020
Share price closing high
Share price closing low
Average daily volume
CHF 20.5
35.3%
CHF 20.9
CHF 11.8
1,762,543
22
21
20
19
18
17
16
15
14
13
12
11
10
December
2019
March
2020
June
2020
September
2020
December
2020
SIG Combibloc
Swiss Performance Index
Switzerland SMI Mid
Annual Report 2020 Business review
Financial review
50
FINANCIAL REVIEW
Strong revenue and free cash flow performance
in unprecedented times.
“The year was proof of the robustness
of our business model and the resilience
of our end markets. We continued to invest
in the business and are well-positioned to
continue delivering shareholder value.”
Frank Herzog, Chief Financial Officer
Financial performance
Revenue
INCREASED GEOGRAPHIC CORE REVENUE DIVERSITY
32%
55%
2010
2020
68%
45%
Outside EMEA
EMEA
In 2020, geographical diversity supported our 2020 performance. Core revenue increased by
5.5% on a constant currency basis (1.7% as reported), reaching €1,796.4 million (total revenue
€1,816.1 million). Growth in 2020 was supported by our broad geographic reach and our role in
the supply chain for essential food and beverages.
EMEA, Americas and the acquisition of Visy Cartons in late 2019 were the key contributors to
growth in the year. The acquisition of Visy Cartons contributed 260 basis points to the constant
currency core revenue growth in 2020.
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CORE REVENUE 2020
by segment
SLEEVE & CLOSURE REVENUE 2020
by end market
€321m
2019: €330m
€798m
2019: €755m
9%
2019: 8%
22%
2019: 22%
€660m
2019: €667m
69%
2019: 70%
EMEA
APAC
Americas
LD
NCSD
Food
EMEA, with 5.6% growth, benefited from an increase in at-home consumption, as COVID-19
restrictions continued at varying levels in most European countries during the year. The growth
in EMEA is underpinned by the ramp-up of new filling lines at our customers’ sites, which are
contributing positively to revenue.
Growth in the Americas, 14.7% at constant currency, was primarily driven by the ramp-up of
large projects in Brazil, where we placed nine filling lines with two large dairy companies. The
ramp-up of these filling lines exceeded our expectations. Revenue in Mexico also increased, with
higher at-home consumption of liquid dairy as a result of the COVID-19 pandemic contributing
to the growth. These positive impacts were offset by the 32% depreciation of the Brazilian Real
against the Euro in 2020.
In APAC, the acquisition of Visy Cartons in November 2019 contributed €44.3 million to the segment
constant currency growth of 1.2%, this partly offset headwinds from COVID-19. Revenue in China
stagnated in the first half of the year, with lower on-the-go consumption during lockdowns. South
East Asian countries continued to face some form of restrictions throughout the second half of
2020, which also affected on-the-go consumption. The impact was amplified by travel and tourism
restrictions and by relatively high stock levels as well as weaker local currencies. While APAC was
negatively impacted by the pandemic in 2020, the mid- and long-term fundamentals remain intact.
SIG REVENUE SPLIT1
Fillers
7%
Sleeves
86%
Service
7%
1 Revenue split based on revenue generated through sale of filler system components and sleeves & closures for 2020.
Seasonality
The Group’s business experiences moderate seasonal fluctuations, primarily due to seasonal
consumption patterns and performance incentive programmes relating to sleeves that
generally end in the fourth quarter. Customers tend to purchase additional sleeves prior to
the end of the year, typically resulting in higher sales during the fourth quarter. Historically, this
Annual Report 2020
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52
has resulted 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. While this effect was visible in the first quarter of 2020,
sales and stock building in the fourth quarter of 2020 were less pronounced than in prior years.
ADJUSTED EBITDA 2020
by segment
NET CAPEX 2020
by segment
FILLERS 2020
in field (units)
€73m
2019: €84m
€274m
2019: €242m
€46m
2019: €38m
€24m
2019: €30m
160
2019: 151
687
2019: 678
1,266
€215m
2019: €229m
€82m
2019: €49m
419
2019: 404
EMEA
APAC
Americas
EMEA
APAC
Americas
EMEA
APAC
Americas
EBITDA
ADJUSTED EBITDA MARGIN1
EMEA
APAC
Americas
SIG Group
As of 31 Dec. 2020
As of 31 Dec. 2019
34.4%
31.6%
22.7%
27.4%
32.1%
33.5%
25.5%
27.2%
1 Adjusted EBITDA divided by revenue from transactions with external customers.
Adjusted EBITDA increased from €485.4 million in 2019 to €498.3 million in 2020. This increase was
primarily driven by a top-line contribution of €34.8 million reflecting the factors described above.
Raw material costs had a €20.9 million positive impact on adjusted EBITDA in 2020. As commodity
prices weakened in the first half of the year, we benefited from lower spot and hedged prices for
both polymers and aluminium, and we were also able to negotiate lower prices with selected
suppliers.
While we saw a significant contribution from revenue growth and raw material sourcing,
adjusted EBITDA was negatively impacted by an amount of €41.6 million as a result of foreign
currency fluctuations in 2020. This negative impact was largely due to the depreciation of the
Brazilian Real, and to a lesser extent the Thai Bath, against the Euro.
Increased carton demand in Europe and the continued execution of operational excellence
programmes in our production facilities contributed to production efficiency gains of €5.1 million
year on year.
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SG&A marginally increased by €4.0 million compared to 2019. COVID-19-related restrictions and
saving initiatives resulted in lower expenses in areas such as travel, which more than offset
investments in growth and higher employee costs. R&D investments as a proportion of revenue
were steady at approximately 3%.
Our joint ventures in the Middle East continued to generate strong cash flows, and the dividend
in 2020, at €23 million, was slightly above the prior year.
The adjusted EBITDA margin in EMEA was positively impacted by revenue contribution and
production efficiencies, as the increase in at-home consumption in Europe increased carton
demand. In addition, EMEA benefitted from lower raw material costs as described above.
Positive revenue contribution in the Americas and APAC were more than offset by currency
headwinds.
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 twelve-month rolling layered
approach.
In 2020, our results were negatively impacted by foreign currency fluctuations. The continuing
depreciation of the Brazilian Real after a particularly large drop in March was the main
contributor to this impact.
Capex
Net capex as a percentage of total revenue increased from 6.2% in 2019 to 8.0% in 2020.
Investments in property, plant and equipment increased, primarily relating to production
equipment for the new sleeves manufacturing facility in China. Higher net filler capex reflects a
lower proportion of upfront cash due to filler placements in the Americas, where our filling line
contracts are usually operating lease contracts with no upfront cash.
We placed 59 filling machines in the field in 2020. Taking account of withdrawals, the number of
filling machines globally reached 1,266, a net increase of 33.
GROUP NET CAPEX 2020
Upfront cash
-54
122
77
Gross filler
PP&E
Annual Report 2020 Business review
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54
Net income
Net income decreased from €106.9 million in 2019 to €68.0 million in 2020. The reduction in
profit in 2020 was mainly due to impairment losses related to the New Zealand paper mill,
further described in the section “Other” below, expenses relating to the repayment of term
loans in connection with the refinancing transactions in June and negative foreign currency
exchange impacts. These negative impacts were offset by the positive operating performance
described above, a reduction in the purchase price allocation (“PPA”) depreciation originating
from the Onex acquisition in 2015 and lower interest and tax expenses.
Adjusted net income increased from €217.4 million in 2019 to €232.3 million in 2020. This
increase was driven by the same operating performance factors described in net income above
and lower unadjusted financing expense.
(In € million)
Profit 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 repayment of secured term loans
Onex acquisition PPA depreciation and amortisation
Adjustments to EBITDA:
Replacement of share of profit of joint ventures
with cash dividends received from joint ventures
Restructuring costs, net of reversals
Unrealised gain on derivatives
Transaction- and acquisition-related costs
Impairment losses
Other
Tax effect on above items
Adjusted net income
Return on capital employed
2020
68.0
24.6
3.1
(0.5)
19.7
125.4
5.3
6.3
(21.5)
3.1
49.3
6.1
(56.6)
232.3
2019
106.9
(1.2)
2.8
1.5
–
136.5
5.3
1.8
(10.1)
4.3
2.8
1.6
(34.8)
217.4
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 670 basis
points in 2020 to 29.5%. At the adjusted effective tax rate of 25.5% in 2020, ROCE reached 31.4%.
The increase was primarily attributable to the increase in adjusted
EBITDA for reasons described above and the decrease in capital
employed as a result of the impairment of production-related assets
at our New Zealand paper mill as described in the section “Other”
below. Adding back the impairment to our capital employed would
result in a decrease in post-tax ROCE of 150 basis points.
29.5%
ROCE
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Cash flows
We continued in 2020 to generate strong net operating cash inflows of €425.8 million and free
cash flow of €233.2 million.
Net cash from operating activities was positively impacted by adjusted EBITDA growth of 2.7%,
described above, and net working capital inflows. These positive inflows were offset by refinancing
costs of €15.4 million and additional tax payments of approximately
€20 million. The additional payments were primarily driven by payments of
2019 tax liabilities in 2020.
Cash conversion
Investing cash flows were negatively impacted by additional capex compared
to 2019, as described above. Financing cash flows remained stable compared
to 2019, with a positive impact from lower mandatory loan repayments year on year offset by
additional lease payments and a higher 2019 dividend that was paid out in 2020.
71%
Net debt
(In € million)
Gross total debt1
Cash and cash equivalents2
Net total debt
Total net leverage ratio3
As of
31 Dec. 2020
As of
31 Dec. 2019
1,697.0
355.1
1,341.9
2.7x
1,614.4
261.0
1,353.4
2.8x
1 Current and non-current loans and borrowings (including lease liabilities, and with notes and credit facilities at principal amounts).
2
Includes restricted cash.
3 Net total debt divided by adjusted EBITDA.
Net leverage in 2020 was positively impacted by strong cash flow generation with €355.1 million
cash and cash equivalents at year end and an increased adjusted EBITDA year on year. Offsetting
the positive cash impacts were additional capitalisation of lease liabilities of
approximately €110 million in 2020, primarily related to our new sleeves
manufacturing facility in China and production equipment for closures.
Leverage
2.7x
Debt refinancing
In June, the Group refinanced its debt. We replaced two existing secured term loans, maturing
in 2023 and 2025, with a new unsecured term loan of €550 million and two issues of senior
unsecured notes in the aggregate amount of €1,000 million. We also entered into a new
€300 million revolving credit facility. The notes are traded on the Global Exchange Market of
Euronext Dublin.
2023 notes
2025 notes
Term loan
Principal amount Maturity date
€450 million
€550 million
June 2023
June 2025
Interest rate
1.875%
2.125%
€550 million
June 2025
Euribor +1.00%1, with a Euribor floor of 0.00%
Revolving credit facility
€300 million
June 2025
Euribor +1.00%1, with a Euribor floor of 0.00%
1 Subject to increase and decrease depending on net leverage ratio and reaching certain sustainability targets.
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The refinancing has enabled us to move from a secured to an unsecured debt structure on
investment grade terms and to diversify our sources of debt. With both the term loan and the
larger of the two note issues maturing in 2025, we have extended our
overall maturity profile at favourable terms. The new interest rates bring
down our average cost of debt to 1.6%, assuming a fully drawn-down
revolving credit facility and excluding the transaction costs.
Cost of debt
1.6%
Company rating
Ba2
BBB-
Stable
Stable
As of
June 2020
March 2020
Debt rating
Moody's
S&P
Other
Acquisition
We announced in November our plan to acquire from Obeikan Investment Group (“OIG”)
the remaining 50% of the shares in our two joint venture companies in the Middle East. The
acquisition will give SIG full control over a business with strong growth prospects in a growing
market and expand its global presence. We expect the acquisition to complete before the end
of the first quarter of 2021.
The consideration for the shares of the joint ventures will be made up of €167 million in cash
and 17.5 million newly issued SIG ordinary shares (to be issued out of authorised share capital).
After the transaction, OIG will hold approximately 5% of the issued SIG shares. The acquisition,
including the cash consideration, is expected to only marginally impact our Group leverage as
our joint ventures held, as of 31 December 2020, approximately €70 million of net debt.
Subject to the completion of the acquisition, Abdallah Obeikan, Chief Executive Officer of
OIG and currently Chief Executive Officer of the two joint ventures in the Middle East, will
be nominated for election to SIG’s Board of Directors at the next Annual General Meeting
in April 2020. Abdelghany Eladib, currently Chief Operating Officer of the joint ventures, will
become a member of SIG’s Group Executive Board and take on the role as President and
General Manager of Middle East and Africa on completion of the acquisition.
In 2020, the two joint venture companies generated revenue of approximately €266 million
(excluding revenue from inter-company transactions between the two joint venture companies)
and adjusted EBITDA of approximately €78 million. Post-acquisition, our previously external
sales to the joint venture companies will become inter-company sales, and the dividend we
received from the joint venture companies will be replaced by fully consolidating the joint
ventures’ adjusted EBITDA. SIG will split its current segment EMEA (“Europe, Middle East and
Africa”) into two segments: Europe and MEA (“Middle East and Africa”).
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New Zealand paper mill
We have been assessing the continued viability and different strategic alternatives for our paper
mill in New Zealand (Whakatane). The mill primarily produces liquid paper board for use by
SIG entities and our joint ventures in the Middle East. As a consequence of the assessments,
we recorded impairment losses of €38.0 million (€33 million net of taxes) on production-related
assets. The impairment losses were excluded from our calculation of adjusted EBITDA and
adjusted net income.
Subsequent to 31 December 2020, the Board of Directors made the decision to close the paper
mill and the Company will enter into the required consultation process with employees. The
mill would need significant investment to maintain its viability and the Group will benefit from
expanded sourcing opportunities with its existing third-party suppliers of liquid paper board.
As a result of the closure decision, management expects to recognise plant decommissioning
costs and redundancy costs of around €30 million in the first half of 2021. As assets of the mill
are monetised over time, the free cash flow impact of these costs is expected to be reduced
to approximately €15 million, of which €10 million would be the cash flow impact in 2021. The
benefits of the closure are expected to result in a pay-back period on the cash outflows in line
with the Group’s normal standards.
Dividend
To allow our shareholders to participate in the cash generative nature of our business, we have
set a dividend payout target of 50–60% of adjusted net income.
At the Annual General Meeting to be held on 21 April 2021, the Board of Directors will propose
a dividend payment for 2020 of CHF 0.42 per share, totalling CHF 134.4 million (equivalent to
€124.4 million as per the exchange rate as of 31 December 2020, and excluding any additional
shares in circulation as a result of the potential acquisition of the joint ventures in the Middle
East), payable out of foreign capital contribution reserves.
Dividend
TSR1
CHF 0.42
+35.3%
1 Dividend reinvested
Annual Report 2020 Business review
Financial review
58
Outlook
SIG will continue to focus on profitable growth by expanding its business with existing and new
customers and further developing sustainable solutions. In 2021, the Company expects to fully
consolidate revenues in the Middle East and Africa from the beginning of March, subject to final
completion of the transaction. On a like-for-like basis, the combined business is expected to
achieve core revenue growth at constant currency in the lower half of the 4–6% range, taking
account of the continuing restrictions in South East Asia affecting on-the-go consumption
and the general uncertainty about the continuing global effects of the COVID-19 crisis. This
represents an acceleration of the organic growth rate compared with 2020 excluding the effect
of consolidating Visy Cartons.
Assuming no major deterioration in exchange rates, the adjusted EBITDA margin, including the
consolidation of the Middle East and Africa business, is expected to be in the 27–28% range.
Net capital expenditure is forecast to be within the targeted 8–10% of revenue range in 2020.
The Company maintains its medium-term guidance of core revenue growth of 4–6% at constant
currency and an adjusted EBITDA margin of around 29%. Net capital expenditure should remain
within 8–10% of revenue. The Company plans to maintain a dividend payout ratio of 50–60% of
adjusted net income while reducing net leverage towards 2x.
Alternative performance measures
For alternative performance measures and their related reconciliations that are not included in this document,
please refer to the following link: https://reports.sig.biz/annual-report-2020/services/chart-generator
Annual Report 2020 Business review
Risk management
59
RISK 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 help the Group identify
and assess such risks.
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 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 the disclosure of potential risks to key stakeholders. At the
same time, the process makes all key executives aware 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 2020 to identify and
evaluate risks. Mitigating actions were also discussed during these risk management workshops
and subsequently signed off by the Board of Directors. In addition, a separate risk workshop was
held with the Group Executive Board in 2020 to discuss and validate the overall risk portfolio.
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 risk mitigation measures, including periodic reporting
to the Audit and Risk Committee and the Board of Directors. Each material risk identified
has a risk owner at management level who 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.
The Audit and Risk Committee regularly discusses risks that could materially impact our
business and financial position, as well as the development of internal controls to mitigate
such risks. 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 by regulatory or governmental agencies that could materially impact the Group’s
business or financial position. The Audit and Risk Committee, with the support of management,
informs the Board of Directors at least annually about any major changes in risk assessment,
risk management and any mitigation actions taken. In 2020, 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.
Annual Report 2020 60
GOVERNANCE
61 Board of Directors
65 Group Executive Board
68 Corporate Governance Report
1.
2.
3.
4.
5.
6.
7.
8.
9.
Group structure
and shareholders
Capital structure
Board of Directors
Committees
Frequency of meetings
of the Board of Directors
and its Committees
Areas of responsibility
Information and control
instruments vis-à-vis the
Group Executive Board
Group Executive Board
Compensation, shareholdings
and loans
10.
11.
Shareholders’ rights
of participation
Change of control
and defence measures
12. Auditors
13.
Information policy
Annual Report 2020
Governance
Board of Directors
61
BOARD OF DIRECTORS
Andreas Umbach
Chairman of the Board
Andreas Umbach is a Swiss and German citizen and has served
as the Chairman of the Board of Directors since the Initial Public
Offering in 2018. Mr Umbach has further served as chairman of
the board of directors of Landis+Gyr Group AG (SIX: LAND) since
July 2017, as chairman of the supervisory board of Techem Energy
Services GmbH since August 2018 and as chairman of the board
of directors of Rovensa SA since September 2020. He has been the
president of the Zug Chamber of Commerce and Industry since
2016. Mr Umbach previously served as a member of the board
of directors of Ascom Holding AG (SIX: ASCN) (2010–2020), from
2017–2019 as its chairman. He also served as a member of the
board of directors of WWZ AG (2013–2020) and as a member of the
board of directors of LichtBlick SE (2012–2016). 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 MSc in mechanical engineering (Diplomingenieur) from the
Technical University of Berlin.
Matthias Währen
Audit & Risk Committee Chair
Matthias Währen is a Swiss citizen and has served as a member of the
Board of Directors since the IPO. Mr Währen has further served as a
member of the board of directors of Keto Swiss AG since July 2020, of Bloom
Biorenewables SA since September 2020 and as a member of the board
of directors of ph. AG since December 2020, as well as being a member
of the board of trustees of the Givaudan Foundation (since 2013) and the
HBM Fondation (since 2018). Mr Währen was previously 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 auditing at Roche in 1983. Mr Währen holds
a master’s degree in economics from the University of Basel, Switzerland.
Annual Report 2020 Governance
Board of Directors
62
Colleen Goggins
Comp. Committee Chair
Colleen Goggins is an American citizen and has served as a member of the
Board of Directors since the IPO. From 2015 until the IPO, she served as an
advisory board member for the Company. Ms Goggins is also currently a
member of the board of directors of TD Bank Group (TSE: TD) (since 2012),
where she serves on the risk committee, a member of the supervisory board
of Bayer AG (ETR: BAYN) (since 2017), where she serves on the nominating
and ad hoc legal committee, and a member of the board of directors of
IQVIA (NYSE: IQV) (since 2017), where she sits on the audit and nominating
and governance committees. Ms Goggins is also a member of the advisory
boards of ZO Skin Heath and Sabert Inc. (since 2020). She has been a member
of the University of Wisconsin Foundation and a member of the board of
the University’s centre 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. Ms Goggins 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 chairwoman of the consumer group, company group chairwoman,
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 (“BSc”) 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
Audit & Risk Committee Member,
Nomination & Govern. Com. Member
Werner Bauer is a Swiss and German citizen and has served as a member of
the Board of Directors since the IPO. From 2015 until the IPO, he served as
an advisory board member for the Company. Mr Bauer is also currently vice
chairman of the board of directors of Givaudan SA (SIX: GIVN) (since 2014) and
Bertelsmann SE & Co. KGaA (since 2012), chairman of the board of trustees at the
Bertelsmann Foundation (since 2011), and a member of the board of directors
of Lonza Group AG (SIX: LONN) (since 2013). From 2011 until 2018 he also served
as a member of the board of directors of GEA Group AG. Prior to that he held 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
of chemical engineering at Hamburg University of Technology, after which he was
a professor in food bioprocessing and director of the Fraunhofer Institute for Food
Technology & Packaging at the Technical University of Munich. Mr Bauer holds a
degree and PhD in chemical engineering from the University of Erlangen-Nürnberg.
Annual Report 2020 Governance
Board of Directors
63
Wah-Hui Chu
Comp. Committee Member,
Nomination & Govern. Com. Member
Wah-Hui Chu is a Chinese citizen and has served as a member of
the Board of Directors since the IPO. From 2015 until the IPO, he
served as an advisory board member for the Company. Mr Chu
is currently also the founder and has been chairman of iBridge TT
International Limited (Hong Kong) since 2018, a member of the
board of directors of Mettler Toledo International (NYSE: MTD)
since 2007 and was the founder of M&W Consultants Limited
(Hong Kong) in 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 a 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 BSc in agronomy from the University of
Minnesota and an MBA from Roosevelt University.
Mariel Hoch
Audit & Risk Committee Member,
Comp. Committee Member
Mariel Hoch is a Swiss and German citizen and has served 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
is currently also a serving board member at Comet Holding AG
(SIX: COTN) (since 2016), where she also chairs the nomination
and compensation committee, at Komax Holding AG (SIX KOMN)
(since 2019), where she also sits on the audit committee, and
at MEXAB AG (since 2014). Ms Hoch served as a member of the
board of directors of Adunic AG from 2015 to 2018. She has been
a member of the foundation board of The Schörling Foundation
since 2013 and a member of the foundation board of the
Irene M. Staehelin Foundation since 2020. Ms Hoch has also
been 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 law degree and a PhD from the University of Zurich.
Annual Report 2020 Governance
Board of Directors
64
Nigel Wright
Nomination & Govern. Com. Chair
Nigel Wright is a Canadian citizen and has been a member of the
Board of Directors since 2014. Mr Wright is a senior managing
director at Onex Corporation (TSE: ONEX), 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 non-executive chair of Acacium
Group (since 2020), as non-executive chair of Childcare BV
(operating as KidsFoundation), as a non-executive director of
Justitia, 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. Mr Wright 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.
Annual Report 2020 Governance
Group Executive Board
65
GROUP EXECUTIVE BOARD
Samuel Sigrist
Chief Executive Officer1
Samuel Sigrist is a Swiss citizen and has served as CFO and
Chairman of the Middle East Joint Venture since 2017. With effect
from 1 January 2021, he became the new CEO of the SIG Group.
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.
1 Rolf Stangl was the Chief Executive Officer until 31 December 2020.
Frank Herzog
Chief Financial Officer since 1 January 20212
Frank Herzog joined SIG in 2021 as Chief Financial Officer.
Prior to SIG, Mr Herzog was the CFO of VFS Global, based in
Zurich and Dubai. He has previously held finance leadership
positions as CFO of Dematic Group in the USA and Head
of Corporate Finance at the KION Group in Germany. He
also gained extensive experience in investment banking at
Goldman Sachs, Rothschild and Citigroup. Mr Herzog is a
German citizen and holds a graduate business degree from
WHU Koblenz and a Master of Business Administration
degree from the University of Texas. Mr Herzog is based at
SIG’s headquarters in Neuhausen, Switzerland.
2
Samuel Sigrist was the Chief Financial Officer
until 31 December 2020.
Annual Report 2020 Governance
Group Executive Board
66
Ian Wood
Chief Supply Chain Officer
Ian Wood is a British citizen and joined SIG in 2018 as Chief Supply
Chain Officer and became CTO in 2020. 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
President & General Manager, Asia-Pacific
Lawrence Fok is a Singaporean 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, an MSc
in industrial & systems engineering from the National
University of Singapore, and a Grad. Dip. in financial
management from the Singapore Institute of Management.
Annual Report 2020 Governance
Group Executive Board
67
Ricardo Rodriguez
President & General Manager, Americas
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 BSc degree in aeronautical/mechanical engineering from the
Technological Institute of Aeronautics in Brazil, an MBA from
the Getúlio Vargas Foundation, and graduated from a specialist
business management course at IMD, Lausanne.
José Matthijsse
President & General Manager, Europe
since 1 February 20213
José Matthijsse has held the position of President
& General Manager, Europe, since she joined SIG in
2021. She came with considerable experience in the
food and beverage industry, having held senior and
general management positions at FrieslandCampina
and Heineken in a number of countries in Europe,
Americas and Africa. Ms Matthijsse is a Dutch
citizen and holds a Masters’ degree in Food Science
Technology from Wageningen Agricultural University
in the Netherlands. Ms Matthijsse is based in Linnich,
Germany.
3
Martin Herrenbrück was the President & General
Manager, Europe until 31 December 2020.
Annual Report 2020 Governance
Corporate Governance Report
68
CORPORATE GOVERNANCE
REPORT
This corporate governance report contains the
information that is stipulated by the directive
on information relating to corporate governance
issued by 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, Neuhausen am Rheinfall (the “Company”) is the parent company
of the SIG Group1, which directly or indirectly holds all other Group companies and interests
in joint ventures2. The shares of the Company are listed on SIX Swiss Exchange (symbol: SIGN,
valor number: 43 537 795, ISIN: CH0435377954). The market capitalization of the Company
amounted to CHF 6,573.9 million as of 31 December 2020.
Please see note 26 of the consolidated financial statements for the year ended 31 December 2020
for a comprehensive list of the Group’s subsidiaries and of its joint venture entities. 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 2020 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 (“Chief Executive Officer” or “CEO”) pursuant to the
Organisational Regulations.3 The Group Executive Board comprises six members, specifically
1 References to “SIG Group”, “Group” or “we” are to the Company and its consolidated subsidiaries.
2
On 24 November 2020, the Company entered into an agreement to purchase the remaining shares in its joint venture companies in Saudi Arabia (i.e. Al Obeikan SIG Combibloc
Company Ltd., Riyadh) and in the UAE (SIG Combibloc Obeikan FZCO, Dubai), subject to several customary closing conditions and approvals from regulatory authorities.
The closing of the transaction is contemplated to occur before the end of Q1 2021.
3
For a comprehensive description on the delegation please refer to art. 19 of the Articles of Association and the Organisational Regulations.
Annual Report 2020
Governance
Corporate Governance Report
69
the CEO, the chief financial officer (“Chief Financial Officer” or “CFO”), the chief technology
officer (“Chief Technology Officer” or “CTO”), 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”).4 For further information on the Group’s
segments please refer to note 7 of the consolidated financial statements for the year ended
31 December 2020. 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 2020 and
published by the Company via 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 20205:
Significant shareholders
Haldor Foundation3
Norges Bank (the Central Bank of Norway)
Fahad al Obeikan4, 5
% of voting rights1
Number of shares2
6.00%
5.94%
5.4577%
19,203,194
18,997,128
17,467,632
BlackRock, Inc. (parent company)
3.57% / 0.01%
11,434,1686 / 45,468
UBS Fund Management (Switzerland) AG
Ameriprise Financial, Inc.7
3.18%
3.042%
10,176,211
9,735,7728
1
2
3
4
5
6
7
8
According to SIX: https://www.six-exchange-regulation.com/en/home/publications/significant-shareholders.html/
According to SIX: https://www.six-exchange-regulation.com/en/home/publications/significant-shareholders.html/
Direct Shareholder: Winder Investment Pte Ltd.
Direct Shareholder: Al Obeikan Printing and Packaging Company CJS.
See also description of the transaction with Obeikan Investment Group below.
Of which the following voting rights were delegated by a third party and can be exercised at BlackRock, Inc.’s own discretion:
627,144 company shares.
Direct shareholders: Threadneedle Investment Funds ICVC, Threadneedle Management Luxembourg SA, Threadneedle Specialist
Investment Funds ICVC, Threadneedle Asset Management Limited, State Street Nominees Limited, Nortrust Nominees Limited,
Securities Services Nominees Ltd, Citi London.
Of which the following voting rights were delegated by a third party and can be exercised at Ameriprise Financial, Inc.’s
own discretion: 2,169,944 company shares.
Notifications made in 2020 in accordance with art. 120 et seqq. of the Financial Market
Infrastructure Act (“FMIA”) can be viewed using the following link: https://www.ser-ag.com/en/
resources/notifications-market-participants/significant-shareholders.html#/
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.
On 24 November 2020, the Company entered into an agreement to purchase the remaining
shares in its joint venture companies in Saudi Arabia (i.e. Al Obeikan SIG Combibloc Company Ltd.,
Riyadh) and in the UAE (i.e. SIG Combibloc Obeikan FZCO, Dubai) from Obeikan Investment Group
(“OIG”), subject to customary closing conditions and approvals from regulatory authorities.
4
5
Subject to and as of closing of the transaction with OIG referred to in Section 2.1, the Company will appoint Abdelghany Eladib,
currently Chief Operating Officer of Al Obeikan SIG Combibloc Company Ltd., to the Company’s Group Executive Board
as President & General Manager, Middle East and Africa.
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.
Annual Report 2020
Governance
Corporate Governance Report
70
As part of the purchase price consideration, SIG will transfer to OIG 17,467,632 newly issued
shares of the Company, to be created out of the Company’s authorized share capital. After
consummation of the closing, which is expected to occur before the end of Q1 2021, OIG will
hold approximately 5.175% of the shares in the Company.
As of 31 December 2020, the Company held 6,274 treasury shares.
1.3
Cross-shareholdings
The Company has no cross-shareholdings exceeding 5% in any company outside the Group.
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 2020.
It currently consists of 320,053,240 fully paid-up registered shares with a nominal value of
CHF 0.01 per share.
As part of the transaction to purchase the remaining shares in its joint venture companies in Saudi
Arabia (i.e. Al Obeikan SIG Combibloc Company Ltd., Riyadh) and in the UAE (i.e. SIG Combibloc
Obeikan FZCO, Dubai) from OIG, the Company intends to increase its share capital by
CHF 174,676.32 through issuing 17,467,632 fully paid-up registered shares with a nominal value
of CHF 0.01 per share. It is anticipated that this transaction will be completed before the end
of Q1 2021, subject to customary closing conditions and approvals from regulatory authorities.
2.2
Authorized and conditional share capital
The Company has authorized share capital and conditional share capital of CHF 640,106.48
each as of 31 December 2020.
The Board of Directors is authorized to increase the share capital at any time until 7 April 2022
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. See Section 2.1 of this report regarding the intention of the Company to
increase its share capital by issuing shares out of its authorized share capital.
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:
• CHF 160,026.62 for employee benefit plans
• CHF 480,079.86 for equity-linked financing instruments
Capital increases from authorized 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 authorized 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. However, the shares issued
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from authorized and conditional share capital under the exclusion of subscription and advance
subscription rights, respectively, is limited until 7 April 2022 to a single combined maximum of
32,005,324 shares (equalling CHF 320,053.24 or 10% of existing share capital).
Reference is made to the Articles of Association for the precise wording of provisions relating to
authorized and conditional share capital, in particular art. 4, 5 and 6 of the Articles of Association.
Among other matters, these contain details regarding the beneficiaries of the employee
benefit plan and 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). As a Luxembourg company, equity contributions were
made on 30 June 2017. 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.
See Section 2.1 of this report regarding the intention of the Company to increase its share capital
by issuing shares out of its authorized share capital as part of the transaction to purchase the
remaining shares in its joint venture companies in Saudi Arabia (i.e. Al Obeikan SIG Combibloc
Company Ltd., Riyadh) and in the UAE (SIG Combibloc Obeikan FZCO, Dubai).
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.
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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 which are entered into the main register of SIX SIS AG 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 who 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 if shares are acquired 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.1
The setting and cancelling of the limitation on transferability in the Articles of Association require a
resolution of the shareholders’ meeting of the Company 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 2020, the Company has no outstanding bonds or debt instruments
convertible into or option rights in the Company’s securities.
As of 31 December 2020, a total of 602,531 Performance Share Unit (“PSU”) and Restricted Share
Unit (“RSU”) awards were outstanding, subject to fulfilment of pre-defined vesting conditions
in connection with SIG’s compensation framework, in particular the SIG Long-Term Incentive
Plan. Each awarded PSU and RSU represents the contingent right to receive one SIG share. The
Group expects to settle its obligations under these plans and arrangements by using own shares
(treasury shares). Hence, the vesting of the PSUs and RSUs do not result in an increase of the
existing share capital. Please refer to the Compensation Report on pages 99 to 112 for further
information pertaining to any PSUs and RSUs awarded as an element of Board and executive
compensation.
1
For a comprehensive description of the limitations to transferability and nominee registration refer to art. 7
of the Articles of Association.
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Furthermore, the Group introduced in 2020 an equity investment plan (“EIP”) for a wider group
of management in leadership positions under which the participants may choose to invest in
shares in the Company at market value. The number of employees invited to participate in the
EIP is limited per year to 2% of the Group’s employees. The amount a participant may invest per
year is limited to the value of the annual short-term incentive target amount for the participant
in the relevant year. The shares are blocked for three years. For each purchased share, the
Group grants the participants two matching options to purchase another two shares at a pre-
defined exercise price at the end of a three-year vesting period. The Group expects to settle
its obligations under these plans and arrangements by using own shares (treasury shares).
Hence, the exercise of the EIP options is not expected to result in an increase of the existing
share capital. Please refer to note 31 of the consolidated financial statements for the year ended
31 December 2020 for additional information about the EIP options.
As part of the transaction to purchase the remaining shares in its joint venture companies in Saudi
Arabia (i.e. Al Obeikan SIG Combibloc Company Ltd., Riyadh) and in the UAE (i.e. SIG Combibloc
Obeikan FZCO, Dubai), OIG has a right to receive 17,467,632 fully paid-up registered shares with
a nominal value of CHF 0.01 per share, corresponding to 5.175% of the existing share capital. It is
anticipated that the closing of this transaction will be consummated before the end of Q1 2021,
subject to customary closing conditions and approvals from regulatory authorities.
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 members1:
Name
Nationality
Andreas Umbach
Swiss & German
Matthias Währen
Colleen Goggins
Werner Bauer
Wah-Hui Chu
Mariel Hoch
Nigel Wright
Swiss
American
Swiss & German
Chinese
Swiss & German
Canadian
Position
Chairman
Member
Member
Member
Member
Member
Member
Since
2018
2018
2018
2018
2018
2018
2014
Expires1
AGM 2021
AGM 2021
AGM 2021
AGM 2021
AGM 2021
AGM 2021
AGM 2021
1
All Board members are elected annually in accordance with Swiss corporate law and the Articles of Association.
All seven members of the Board were re-elected at the annual general meeting of the Company
(“Annual General Meeting” or “AGM”) on 7 April 2020 (“Annual General Meeting 2020” or
“AGM 2020”) for a one-year term of office.
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 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 served as advisory board members of the Company.
1
Subject to closing of the transaction with OIG referred to in Section 2.1 in advance of the AGM 2021 and certain other customary conditions, the Company undertook to
nominate at the AGM 2021 Mr Abdallah al Obeikan a new member of the Board. Such appointment would increase the total number of Board members to eight members.
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Andreas Umbach is a Swiss and German citizen and has served as the Chairman of the Board
of Directors since the Initial Public Offering in 2018. Mr Umbach has further served as chairman
of the board of directors of Landis+Gyr Group AG (SIX: LAND) since July 2017, as chairman of the
supervisory board of Techem Energy Services GmbH since August 2018 and as chairman of the
board of directors of Rovensa SA since September 2020. He has been the president of the Zug
Chamber of Commerce and Industry since 2016. Mr Umbach previously served as a member
of the board of directors of Ascom Holding AG (SIX: ASCN) (2010–2020), from 2017–2019 as its
chairman. He also served as a member of the board of directors of WWZ AG (2013–2020) and as
a member of the board of directors of LichtBlick SE (2012–2016). 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 MSc in mechanical engineering (Diplomingenieur) from the Technical
University of Berlin.
Matthias Währen is a Swiss citizen and has served as a member of the Board of Directors
since the IPO. Mr Währen has further served as a member of the board of directors of Keto
Swiss AG since July 2020, of Bloom Biorenewables SA since September 2020 and as a member
of the board of directors of ph. AG since December 2020, as well as being a member of the
board of trustees of the Givaudan Foundation (since 2013) and the HBM Fondation (since 2018).
Mr Währen was previously 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 auditing at
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 has served as a member of the Board of Directors
since the IPO. From 2015 until the IPO, she served as an advisory board member for the
Company. Ms Goggins is also currently a member of the board of directors of TD Bank Group
(TSE: TD) (since 2012), where she serves on the risk committee, a member of the supervisory
board of Bayer AG (ETR: BAYN) (since 2017), where she serves on the nominating and ad hoc
legal committee, and a member of the board of directors of IQVIA (NYSE: IQV) (since 2017), where
she sits on the audit and nominating and governance committees. Ms Goggins is also a member
of the advisory boards of ZO Skin Heath and Sabert Inc. (since 2020). She has been a member of
the University of Wisconsin Foundation and a member of the board of the University’s centre 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. Ms Goggins 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 chairwoman of the consumer group, company group chairwoman, 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 (“BSc”) 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.
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Werner Bauer is a Swiss and German citizen and has served as a member of the Board of
Directors since the IPO. From 2015 until the IPO, he served as an advisory board member for
the Company. Mr Bauer is also currently vice chairman of the board of directors of Givaudan SA
(SIX: GIVN) (since 2014) and Bertelsmann SE & Co. KGaA (since 2012), chairman of the board of
trustees at the Bertelsmann Foundation (since 2011), and a member of the board of directors of
Lonza Group AG (SIX: LONN) (since 2013). From 2011 until 2018 he also served as a member of
the board of directors of GEA Group AG. Prior to that he held 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 of chemical engineering at Hamburg University of Technology, after which
he was a professor in food bioprocessing and director of the Fraunhofer Institute for Food
Technology & Packaging at the Technical University of Munich. Mr Bauer holds a degree and PhD
in chemical engineering from the University of Erlangen-Nürnberg.
Wah-Hui Chu is a Chinese citizen and has served as a member of the Board of Directors since
the IPO. From 2015 until the IPO, he served as an advisory board member for the Company.
Mr Chu is currently also the founder and has been chairman of iBridge TT International Limited
(Hong Kong) since 2018, a member of the board of directors of Mettler Toledo International
(NYSE: MTD) since 2007 and was the founder of M&W Consultants Limited (Hong Kong) in 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 a 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 BSc
in agronomy from the University of Minnesota and an MBA from Roosevelt University.
Mariel Hoch is a Swiss and German citizen and has served 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 is
currently also a serving board member at Comet Holding AG (SIX: COTN) (since 2016), where she
also chairs the nomination and compensation committee, at Komax Holding AG (SIX: KOMN)
(since 2019), where she also sits on the audit committee, and at MEXAB AG (since 2014). Ms Hoch
served as a member of the board of directors of Adunic AG from 2015 to 2018. She has been
a member of the foundation board of The Schörling Foundation since 2013 and a member of
the foundation board of the Irene M. Staehelin Foundation since 2020. Ms Hoch has also been
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 law degree and a PhD 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 senior managing director at Onex Corporation (TSE: ONEX), 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 non-executive chair of Acacium Group (since
2020), as non-executive chair of Childcare BV (operating as KidsFoundation), as a non-executive
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director of Justitia, 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. Mr Wright 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.
As of 31 December 2020, there are no material business relationships of any Board member
with the Company or with any subsidiary or joint venture.
3.2 Number of permissible activities
In the interest of good governance, the Company’s Articles of Association limit the number of
outside mandates that may be held by members of our Board as follows:
(i) up to four mandates in listed firms;
(ii) up to ten mandates in non-listed firms2; and
(iii) up to ten mandates in foundations, associations, charitable organisations and other
legal entities.
Such a mandate is deemed to be any activity in the superior governing or administrative bodies
of legal entities that are obliged to be registered in the commercial register or any comparable
foreign register, other than 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 exercising of their
duties for 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 73.
3.4
Internal organisation – 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
2
Pursuant to art. 727 para. 1 number 1 CO.
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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 Association1, 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 2020, the members of the Compensation
Committee were Colleen Goggins (chairwoman), 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;
• 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);
1
https://www.sig.biz/investors/en/governance/articles-of-association
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• 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 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.2
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 2020, the members of the Audit and Risk Committee were
Matthias Währen (chairman), 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 judgments 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 Group 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
2
The organization, detailed responsibilities and reporting duties of the Compensation Committee are stipulated
in the Articles of Association.
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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 Group 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.
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 2020, the members of the Nomination and
Governance Committee were Nigel Wright (chairman), 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 Board 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,
assisting the Board to identify individuals who are qualified to become members of the Board or
qualified to become 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 the
effectiveness of the Board of Directors, its Committees and individual directors. It also oversees
the Company’s strategy and governance in relation to corporate responsibility for environmental,
social and governance matters, in particular regarding key issues that may affect the Company’s
business and reputation.
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.
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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 a meeting in writing.
The Board of Directors usually 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 redefine, the strategic orientation.
In view of the COVID-19 situation, the Board of Directors has adapted the schedule and format
of its meetings by increasing the number of meetings but shortening their duration and holding
most meetings virtually.
In the period under review, the Board has held six ordinary meetings, thereof one full-day in-
person meeting, five virtual half-day meetings plus a strategy meeting held in person split over
two half-days. In addition, the Board held five extraordinary virtual one-hour meetings. In all
of these meetings, the full Board was present. Therefore, the board meetings had an overall
attendance of 100% in the period under review.
For the period under review, the Compensation Committee held five meetings with an average
duration of approximately two hours, one of which was in-person and four were virtual meetings.
The meetings had an overall attendance rate of 100%. In addition, there was one combined
Compensation Committee and Nomination and Governance Committee virtual meeting lasting
one hour to jointly address overarching topics which was attended by all members of these
Committees.
In addition to the aforementioned joined meeting with the Compensation committee, the
Nomination and Governance Committee held four ordinary meetings with an average duration
of approximately 1.5 hours, one of which was in-person and three were virtual meetings.
Furthermore, the Nomination and Governance Committee held two extraordinary virtual
meetings for one hour each. The meetings had an overall attendance rate of 100%.
The Audit and Risk Committee held five meetings with an average duration of approximately
four hours, one of which was in-person and four were virtual meetings. The meetings had an
overall attendance rate of 100%. All of the meetings of the Audit and Risk Committee were
partially attended by the external auditors.
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 meetings of the Board of Directors were partially attended by
external advisers. Meetings of the Audit and Risk Committee were attended by the CFO and the
Chief Compliance Officer, and usually also by the CEO. Meetings of the Compensation Committee
were regularly attended by an external advisor to the Compensation Committee, the CEO and the
Vice President Group Human Resources. The Nomination and Governance Committee meeting
was attended by the CEO and by a member of management acting as Secretary.
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6.
Areas of responsibility
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 of Association or by
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:1
• 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 implementation of the resolutions adopted by the shareholders’ meeting;
• the notification of a judge in the event of over-indebtedness;
• the passing of resolutions regarding the subsequent payment of capital with respect to
non-fully paid-in shares and the respective amendments of the 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 determine the overall business strategy, taking into account the information, proposals
and alternatives presented by the CEO;
• 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, insofar as this is 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 its Committees, the CEO or the Group Executive Board.
1
A detailed description of these responsibilities and duties of the Board of Directors, its Committees and the Group Executive Board is
provided in the Articles of Association and the Organisational Regulations.
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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 companies2. 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.
7.
Information and control instruments vis-à-vis
the 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 the 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 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 ordinary 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, which 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.
2
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 and Swiss law.
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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 impact. Action to manage and contain these
risks is approved by the Board of Directors.
8.
Group Executive Board
8.1 Members of the Group Executive Board
The Group Executive Board is headed by the CEO and comprises six members, specifically the
CEO, the CFO, the CTO, the President & General Manager Asia-Pacific, the President & General
Manager Americas and the President & General Manager Europe.
The Company announced in press releases published on 31 August 2020 that by mutual
agreement Markus Boehm would cease his role as Chief Market Officer and member of the
Group Executive Board with effect from the end of 31 August 2020. In the same press release, the
Company also announced that Martin Herrenbrück has decided to take up a position outside SIG
and will leave the Company with effect from the end of 31 December 2020.1
Furthermore, the Company announced in press releases published on 9 November 2020 that
Rolf Stangl has decided to leave the Company to pursue personal interests and would cease his
role as CEO with effect from the end of 31 December 2020. Rolf Stangl was succeeded by Samuel
Sigrist with effect from 1 January 2021 and became the new CEO on that date. Frank Herzog
took over Samuel Sigrist’s position as CFO as of 1 January 2021 and also became a member of
the Group Executive Board on that date. Frank Herzog joined SIG Group from VFS Global, based
in Zurich and Dubai, where he was Chief Financial Officer.
As part of the transaction with OIG referred to in Section 2.1, the Company announced that
Abdelghany Eladib, currently Chief Operating Officer of Al Obeikan SIG Combibloc Company
Ltd., will join – subject to and as of completion of the acquisition with OIG – the Group Executive
Board as President & General Manager, Middle East and Africa.
The Group Executive Board comprised the following members on 31 December 2020:
Name
Rolf Stangl
Samuel Sigrist
Ian Wood
Lawrence Fok
Ricardo Rodriguez
Martin Herrenbrück1
Nationality
Swiss and German
Swiss
British
Position
CEO
CFO
CTO
Singaporean
President & General Manager Asia Pacific
Brazilian and Spanish
President & General Manager Americas
German
President & General Manager Europe
1
In office until 31 December 2020. On 12 January 2021, the Company announced the appointment of José Matthijsse to
succeed Martin Herrenbrück as President & General Manager Europe and member of the Group Executive Board with
effect from 1 February 2021.
The biographies on the following pages provide information about the Group Executive Board
members in office on 31 December 2020.
1
On 12 January 2021, the Company informed that it has announced José Matthijsse as President & General Manager Europe with effect
from 1 February 2021. Ms Matthijsse succeeds Martin Herrenbrück and will also become a member of the Group Executive Board.
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Rolf Stangl is a Swiss and German citizen and has served as a CEO from 2008 until
31 December 2020. As of 1 January 2021 he was succeeded as CEO by Samuel Sigrist. Mr Stangl
joined the Company in 2004 and has held a number of positions across the organisation,
including, among others, Head of Corporate Development and M&A, Chief Executive Officer
of SIG Beverage (a division subsequently divested) and CMO. Rolf Stangl joined the board of
directors of Pactiv Evergreen Inc. (NASDAQ: PTVE) in 2020. 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. With effect from 1 January 2021, he became the new CEO of the SIG Group.
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.
Ian Wood is a British citizen and joined SIG in 2018 as Chief Supply Chain Officer and became
CTO in 2020. 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 Singaporean 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,
an 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 BSc degree in aeronautical/mechanical engineering from
the Technological Institute of Aeronautics in Brazil, an MBA from the Getúlio Vargas Foundation,
and graduated from a specialist business management course at IMD, Lausanne.
Martin Herrenbrück is a German citizen and has served as President & General Manager
Europe from 2017 until 31 December 2020, when he left the Company. He previously held
the position of Head of Cluster Europe. Since joining SIG in 2006, Mr Herrenbrück served in a
variety of positions including Head of Cluster Asia-Pacific South, Head of Global Marketing and
various corporate development roles. Prior to joining SIG, he worked at Roland Berger Strategy
Consultants in Germany for several years. Mr Herrenbrück holds an MSc in management from
HHL Leipzig Graduate School of Management and an MBA from the KDI School of Public Policy
and Management in Seoul, South Korea.
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8.2 Number of permissible activities
In the interest of good governance, the Company’s Articles of Association limit the number of
outside mandates that may be held by members of the Group Executive Board as follows:
(i) up to one mandate in listed firms2;
(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 is deemed to be any activity in the superior governing or administrative bodies
of legal entities that are obliged to be registered in the commercial register or any comparable
foreign register, other than 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 exercising of their
duties for 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 94 until 114.
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.
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
2
Pursuant to art. 727 para. 1 number 1 CO.
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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. A revocation of the statutory restrictions of voting
rights requires the approval of a simple majority of votes cast, regardless of the number of
shareholders present or shares represented. Abstentions and invalid votes do not count as
votes cast.
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, who 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. Resolutions require the approval of a simple majority of votes represented.
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 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.
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10.5 Registration in the share register
Only shareholders who are registered in the share register as shareholders with voting rights on
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 record date designated
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 Persons1 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:
a)
a)
b)
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 and the Group
Executive Board may be subject to accelerated vesting or early lifting of restrictions under the
applicable plans.2
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
1
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, as well as all other companies directly or indirectly
held now or in the future by Onex Corporation, Toronto, Ontario, Canada.
2
For further information on compensation with respect to a change of control please refer to page 108 of the Compensation Report.
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from Luxembourg to Switzerland on 27 September 2018 and were re-elected at the AGM 2020.
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 cooperative, 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.
Bruno Rossi (audit expert) as auditor in charge has been responsible for auditing the financial
statements of the Company as well as the consolidated financial statements of the Group since
March 2020. The lead auditor has to rotate every seven years in accordance with Swiss law.
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:
(in CHF 1,000)
Audit
Audit-related services
Tax and other services
Total
2020
1,490
278
165
1,933
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 of 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.
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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.
There is also regular contact between the auditors, the Group Executive Board, and the Audit and
Risk Committee outside of meetings. PwC as external auditor of the Group partially attended all
five Audit and Risk Committee meetings in 2020 at which they discussed, among other topics,
the scope of the audit and certain audit results.
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. To 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.
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 summarized 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.
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.
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
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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 will 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 announcements (pull system):
https://www.sig.biz/investors/en/news-events/media-releases
Subscription for ad hoc announcements (push system):
At 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 Combibloc 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) 543 1229
jennifer.gough@sig.biz
Financial calendar
Key dates for 2021 include:
2020 full-year results
Intended publication of invitation to the 2021 Annual General Meeting
2021 Annual General Meeting
Release of first quarter 2021 key financial data
Publication of 2021 half-year report 2021
Release of third quarter 2021 key financial data
23 February 2021
26 March 2021
21 April 2021
4 May 2021
27 July 2021
27 October 2021
Annual Report 2020 91
COMPENSATION
92
Letter from the Chairwoman
of the Compensation Committee
94 Compensation Report
1.
2.
3.
4.
5.
6.
7.
8.
Introduction
Compensation governance
Compensation principles
Compensation framework
for the Board of Directors
Compensation framework
for the Group Executive Board
Shareholding Guidelines
Previous and discontinued
compensation plans
Loans granted to members
of the Board of Directors or
the Group Executive Board
9.
Outlook for 2021
115 Report of the statutory auditor
Annual Report 2020
Compensation
Letter from the Chairwoman of the Compensation Committee
92
LETTER FROM THE CHAIRWOMAN
OF THE COMPENSATION COMMITTEE
Colleen Goggins
Chairwoman of the Compensation Committee
Dear Shareholders,
On behalf of the Board of Directors and the Compensation Committee, I am pleased to
introduce the Compensation Report of SIG Combibloc Group AG (“SIG” or the “Company”) for
the year ended 31 December 2020. This report on compensation complements our business,
financial and corporate governance reports and describes SIG’s compensation system and its
governance, as well as the underlying principles that ensure that compensation, particularly the
variable components, are linked to the overall performance of SIG.
The principles guiding SIG’s compensation framework are to attract, engage and retain executives
and employees, to drive sustainable 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 to ensure
that it is aligned with these principles.
SIG welcomes feedback from its shareholders. In 2020, we increased the level of engagement
with shareholders and worked to consider and address shareholders’ comments and
questions. As you will read in the 2020 Compensation Report, certain changes and additions
will be incorporated from 2021 onwards. These include the addition of a clawback mechanism
in the equity-based Long-Term Incentive Plan (“LTIP”), an ESG metric in the Short-Term Incentive
Plan (“STIP”), increased levels of disclosure regarding non-compete provisions as well as higher
transparency regarding attainment of compensation-relevant performance metrics.
Annual Report 2020 Compensation
Letter from the Chairwoman of the Compensation Committee
93
To create a stronger shareholder alignment and performance orientation within the broader
leadership team below the Group Executive Board, an Equity Investment Plan was successfully
implemented in 2020. In addition to fostering strong shareholder alignment also below the
Group Executive Board level, the plan will enhance SIG’s attractiveness as an “employer of
choice” in an increasingly competitive employment market.
The principle of equal pay recognises that women and men are entitled to equal pay for
performing work of equal value. In 2020, equal pay gained increasing attention from the
Compensation Committee, as new regulatory developments shape the global landscape. The
Compensation Committee has reviewed the gender pay analysis of our main Swiss company,
conducted by an independent third party. We are happy to report that the analysis confirmed
that SIG is compliant with the requirements of Swiss law. The Compensation Committee will
further monitor this topic in an international context.
At the upcoming Annual General Meeting (“AGM”), we will ask our shareholders to approve
prospectively, in binding votes, the maximum aggregate amount of compensation for the Board
of Directors until the next AGM in 2022 and the maximum aggregate amount of compensation
for the Group Executive Board for the year 2022. Further, this Compensation Report will be
submitted to shareholders for a non-binding, consultative vote.
We believe that this report includes all relevant information regarding SIG's compensation
system and that our remuneration system rewards performance in a balanced and sustainable
manner that aligns well with shareholders’ interests and makes SIG an attractive employer.
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 your continued trust in SIG.
Colleen Goggins
Chairwoman of the Compensation Committee
Annual Report 2020 Compensation
Compensation Report
94
COMPENSATION REPORT
1.
Introduction
This Compensation Report has been prepared in compliance with Swiss laws and regulations,
including the Ordinance against Excessive Compensation in 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.
The Compensation Report contains the following information:
• A description of the compensation governance and compensation framework at SIG
• The compensation of the members of the Board of Directors (“Board”) for 2020
• The compensation of the Group Executive Board (“GEB”) for 2020
2.
Compensation governance
FIGURE 1: COMPENSATION GOVERNANCE AT SIG
Articles of
Association
approve
defined in
Annual
General
Meeting
(“AGM”)
Compensation
governance
decisions by …
Board of
Directors &
Compensation
Committee
defined in
Compensation
Committee
Charter
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. Figure 2 shows the relevant provisions on compensation in
the Articles of Association.
Annual Report 2020 Compensation
Compensation Report
95
FIGURE 2: RELEVANT PROVISIONS ON COMPENSATION IN THE ARTICLES OF ASSOCIATION OF SIG
Principles for the compensation of
the members of the Board of Directors
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.
Compensation approvals by the
General Meeting (Art. 27)
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)
Retirement benefits (Art. 30)
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.
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 the SIG homepage for investors
https://www.sig.biz/investors/en/governance/articles-of-association or downloaded
directly here: https://cms.sig.biz/media/6815/aoa-sig-combibloc-group-ag-2020_04_07.pdf.
The roles of the AGM and the Compensation Committee are described in more detail in
the following paragraphs. The general split of responsibilities and authorities between the
Board, the Compensation Committee and the AGM is illustrated in Figure 3.
FIGURE 3: AUTHORITY TABLE REGARDING COMPENSATION
Compensation principles (Articles of Association)
Compensation strategy and guidelines
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
CEO
Compensation
Committee
Board of
Directors
AGM
Approval
(subject to
AGM approval)
Approval
(in case of changes,
binding vote)
Proposal
Proposal
Proposal
Proposal
Proposal
Review
Approval
Approval
Approval
(subject to
AGM approval)
Approval
(subject to
AGM approval)
Approval
Approval
Approval
(binding vote)
Approval
(binding vote)
Compensation Report
Individual total compensation of the CEO
Individual total compensation of other
members of the Group Executive Board
Proposal
Approval
Approval
(consultative vote)
Proposal
Proposal
Review
Approval
Approval
Annual Report 2020 Compensation
Compensation Report
96
Role of the shareholders – 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 2021 AGM, as
illustrated in Figure 4:
FIGURE 4: OVERVIEW OF VOTES AT THE 2021 AGM
Board vote
(Binding)
Group Executive
Board vote
(Binding)
AGM 2021
AGM 2022
Vote at AGM 2021
Maximum aggregate
amount for the term
AGM 2021 – AGM 2022
Vote at AGM 2021
Maximum aggregate
amount for FY 2022
Report vote
(Consultative)
Vote at AGM 2021
Compensation Report
FY 2020
2020
2021
2022
Role of the Compensation Committee – activities during 2020
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. The Compensation Committee supports
the Board in discharging its duties, proposes 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 amounts of compensation to be submitted
to the Annual General Meeting for approval, and assists the Board in preparing the related
motions for the Annual General Meeting.
The Compensation Committee Chairwoman 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.
The Compensation Committee Chairwoman convenes the meetings of the Compensation
Committee as often as the business affairs of SIG require, but at least three times a year.
In 2020, the Committee held six meetings. Because of travelling restrictions due to the COVID-19
pandemic, all meetings after March 2020 were held as video conferences. The topics covered
are described in Figure 5. Details on the Compensation Committee members are provided in
the Corporate Governance Report on page 77. All members of the Committee had full meeting
attendance during 2020.
Annual Report 2020 Compensation
Compensation Report
97
FIGURE 5: TOPICS COVERED BY THE COMPENSATION COMMITTEE IN 2020
Agenda Item
Jan
Feb
Jul
Sep
Oct
Dec
Principles
and design of
compensation
plans
Market intelligence (recent developments in
compensation, legal, governance landscapes)
Long-term incentive framework for 2020
and onwards to enlarge participants group –
Proposal to the Board of Director to
implement Equity Investment Plan
Review and update of the Performance Share Plan
regulation – Proposal to the Board of Directors
to introduce a clawback clause
Compensation
Group Executive
Board
Short-Term Incentive Plan
– Target achievement 2019
– Target setting 2020
– General target framework review
– Define KPI measures 2021, including an ESG target
Long-Term Incentive Plan – Recommendation of plan
participants and target setting for grant 2020
Review target compensation for the CEO
and the Group Executive Board for 2021
Review compensation for the Board of Directors
Shareholding Guidelines Assessment
Review key terms of current and future employment
contracts for members of the Group Executive Board
Gender Pay Analysis according to new Swiss Law
AGM invitation including determination of the
maximum amounts of compensation for the Board
of Directors (for the term AGM 2020 to AGM 2021)
and the Group Executive Board (year 2021)
Analysis of the compensation voting results
of the AGM and the proxy advisors’ feedback
Compensation Report
Compensation
Board of Directors
General
framework
Communication
A performance review of members of the Board and of the Group Executive Board was
conducted by the Nomination and Governance Committee during 2020 with the members of
the Compensation Committee in attendance so that close coordination was ensured. In addition
to the ordinary meetings, as summarised in Figure 5, the Compensation Committee set up ad
hoc conference calls at short notice, for example, to discuss tasks related to personnel changes
in the Group Executive Board.
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. However, the
Compensation Committee also regularly holds private sessions (i.e. without the presence
of members of the Group Executive Board, senior managers or third parties). Further, all
members of the Board may attend any committee meeting as guests. The Chairman of the
Board and the CEO did not attend the meeting when their own compensation was discussed.
The Chairwoman of the Compensation Committee reported to the Board after each meeting
on the substance of the meeting and explained the proposals of the Compensation Committee
to the Board of Directors. All documents and the minutes of the Compensation Committee
meetings are available to all members of the Board. The Compensation Committee may decide
to consult external advisers for specific compensation matters. In 2020, the Compensation
Committee appointed HCM International Ltd. (“HCM”) as an external independent adviser on
Annual Report 2020 Compensation
Compensation Report
98
certain compensation matters as well as on target setting for the Long-Term Incentive Plan, as
described in the section Long-Term Incentive Plan. Other than for the aforementioned advice
on compensation matters, HCM was not appointed for any other mandates in 2020.
3.
Compensation principles
The compensation framework of SIG reflects the commitment to attract, engage and retain top
talent globally and to align the interests of SIG leaders with those of shareholders. 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 cases, relative to peers. SIG endeavours to make its compensation principles simple and
transparent for the benefit of shareholders, the Board and management. The compensation
principles are illustrated in Figure 6.
FIGURE 6: SIG COMPENSATION FRAMEWORK, OBJECTIVES AND PRINCIPLES
Objectives and principles
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
Be aligned with
shareholders'
interests
To assess SIG’s compensation system not only from an internal equity perspective but also from
an external competitiveness perspective, compensation is regularly benchmarked against that
of similar roles in comparable companies. The Compensation Committee uses this analysis to
review the composition, the level as well as the structure of the compensation of the Board and
the Group Executive Board on a regular basis.
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 recruiting market2.
In both cases, size criteria apply.
1
2
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.
The comparison group used for the compensation benchmarking analysis of the Group Executive Board initially conducted in 2018
and updated 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, SFS Group, Spirax-Sarco,
Straumann, Sulzer, Vifor Pharma, Weir.
Annual Report 2020 Compensation
Compensation Report
99
Figure 7 provides an overview of the compensation elements for the Board and the
Group Executive Board:
FIGURE 7: OVERVIEW OF COMPENSATION ELEMENTS
FOR THE BOARD OF DIRECTORS AND THE GROUP EXECUTIVE BOARD
Board of Directors
Group Executive Board
Annual base salary
Annual base fee
Annual Committee fee
Pension contributions
Other benefits
Short-Term Incentive Plan
Long-Term Incentive Plan
n
o
i
t
a
s
n
e
p
m
o
c
n
o
i
t
a
s
n
e
p
m
o
c
s
t
n
e
m
e
l
e
s
t
n
e
m
e
l
e
d
e
x
i
F
e
l
b
a
i
r
a
V
Additional details for each compensation element are included later in this report.
4.
Compensation framework for the Board of Directors
Compensation overview 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 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 Chairman 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 compensation levels for the members of the Board of
Directors remained unchanged from those established in 2018.
Annual Report 2020
Compensation
Compensation Report
100
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 8.
FIGURE 8: OVERVIEW OF THE BOARD OF DIRECTORS' FEES
Annual committee fees (in CHF, gross)
Annual base
fee (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
The individual sum of the annual base fee and, where applicable, the annual committee fee per
member is paid 60% in cash and 40% in blocked SIG shares.
The equity component is intended to further strengthen the long-term focus of the Board in
performing its duties and to align the Board members’ interests with those of SIG’s shareholders'.
Both the cash and share elements are paid out in arrears on a quarterly basis in four equal
instalments. A three-year blocking period is applied to the SIG shares, expiring at the third
anniversary of each respective grant. This approach is illustrated in Figure 9.
FIGURE 9: COMPENSATION APPROACH OF THE BOARD OF DIRECTORS
Share element
40%
Cash element
3-year blocking period
Share
element
60%
Cash
element
Pay mix
Term
Term +1
Term +2
Term +3
Annual Report 2020 Compensation
Compensation Report
101
Compensation awarded to the Board of Directors (Audited)
Table 1 summarises the compensation for 2020 of the seven non-executive members of
the Board. As in previous years, Nigel Wright is associated with Onex Corporation, a major
shareholder of SIG throughout a larger part of 2020, and waived any form of compensation for
his service on the Board in 2020.
TABLE 1: TOTAL COMPENSATION OF THE BOARD OF DIRECTORS IN 2020 (1 JANUARY–31 DECEMBER)
INCLUDING INFORMATION OF THE PRIOR YEAR
Members of the
Board of Directors on
31 December 2020
Andreas Umbach
Matthias Währen
Colleen Goggins
Werner Bauer
Wah-Hui Chu
Mariel Hoch
Nigel Wright
Total
Board
member-
ship
Chair
ARC1
CC2
NGC3
Settled in
cash, CHF4
Settled in
SIG shares,
CHF5
Social
security
payments,
CHF6
Total com-
pensation
earned in
2020, CHF
Total com-
pensation
earned in
2019, CHF
330,000
220,032
37,596
587,628
586,859
Chair
Chair
135,000
129,000
129,000
123,000
129,000
Chair
–
90,040
86,029
86,029
82,051
86,029
–
12,784
237,824
237,506
12,166
227,195
229,120
12,166
227,195
226,899
11,550
216,601
218,424
15,347
230,376
230,056
–
–
–
975,000
650,210
101,609
1,726,819
1,728,865
1 Audit and Risk Committee.
2 Compensation Committee.
3 Nomination and Governance Committee.
4
5
Represents gross amounts paid, prior to any deductions such as employee social security and income withholding tax.
Represents gross amounts settled in blocked SIG shares, prior to any deductions such as employee social security and income withholding tax. The number of blocked
SIG shares 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
first ten trading days of the third month of the quarter for which the blocked SIG shares are granted.
6 Employer social security contributions.
Annual Report 2020 Compensation
Compensation Report
102
Reconciliation of approved and paid compensation to the Board of Directors
The reconciliation of the approved and granted amounts is illustrated in Figure 10.
FIGURE 10: RECONCILIATION OF COMPENSATION OF THE BOARD OF DIRECTORS
2019
2020
2021
Start of year
01.01.2020
End of year
31.12.2020
AGM 2019
11.04.2019
AGM 2020
07.04.2020
AGM 2021
21.04.2021
CHF 1.1m
Compensation for the
period AGM 2019 to
December 2019
CHF 0.4m
Compensation for the
period January 2020 to
AGM 2020
CHF 1.3m
Compensation for the period
AGM 2020 to December 2020
CHF 1.7m
Compensation for 2020
CHF 1.5m
Compensation for the term
AGM 2019 to AGM 2020
CHF 1.3m
Compensation for the term
AGM 2020 to December 2020
CHF 2.3m
Amount approved by shareholders at the
AGM 2019 (for the term AGM 2019 to AGM 2020)
CHF 2.1m
Amount approved by shareholders at the
2020 AGM (for the term AGM 2020 to AGM 2021)
Annual Report 2020
Compensation
Compensation Report
103
5.
Compensation framework for the Group Executive Board
Compensation overview for the Group Executive Board
Compensation for 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 presented
in Figure 11. Compensation principles are reviewed by the Compensation Committee on a
regular basis.
FIGURE 11: ILLUSTRATIVE OVERVIEW OF COMPENSATION FRAMEWORK OF THE GROUP EXECUTIVE BOARD IN 2020
Long-Term
Incentive Plan
(LTIP) at target
Short-Term
Incentive Plan
(STIP) at target
LTIP grant
3-year performance/vesting period
Payment of Short-Term
Incentive Plan (STIP)
0–200% of target value
Base salary
Base salary
+ Pension contributions
+ Pension contributions
+ Other benefits
+ Other benefits
Vesting of
Long-Term
Incentive Plan (LTIP)
0–200% of number of
granted Performance
Share Units
Reporting year
Reporting year +1
Reporting year +2
Reporting year +3
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.
Annual Report 2020 Compensation
Compensation Report
104
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).
Members of the Group Executive Board with a Swiss employment contract, for example,
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.
The fair value of these benefits is part of the compensation and disclosed in Table 2.
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”) that are derived from
SIG’s business strategy. The targets are determined by the Board, based on the recommendation
of the Compensation Committee each year in advance, following a well-established 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 more ambitious target curves to achieve the maximum payout. 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 12). 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.
Group Executive Board members who have regional responsibilities have KPIs reflecting their
regional as well as the group-related 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 CEO and CFO, is assessed based on group performance
only. The framework is illustrated in Figure 12.
In 2020, the target individual short-term incentive equals 100% of the base salary for the
CEO and between 67% and 82% of the respective base salaries for other members of the
Group Executive Board.
Annual Report 2020 Compensation
Compensation Report
105
FIGURE 12: OVERVIEW OF THE GROUP EXECUTIVE BOARD STIP COMPENSATION FRAMEWORK IN 2020
Target individual
short-term incentive
(100% of base salary for CEO,
67%-82% of base salary for
other members of the
Group Executive Board)
Performance regarding
financial targets
Actual individual
short-term incentive
(0%–200% of individual
target short-term incentive)
KPIs
p Group adjusted EBITDA
u
Group core revenue
o
r
G
Group free cash flow
l Regional adjusted EBITDA
a
n
o
i
g
e
R
Regional core revenue
Regional adjusted Operating Net Working Capital
(ONWC) as a % of revenue
Weight 2020
Members of the Group
Executive Board WITHOUT
regional responsibility
Members of the Group
Executive Board WITH
regional responsibility
60%
20%
20%
50%
30%
20%
100%
50%
50%
Long-Term Incentive Plan (“LTIP”)
The LTIP offers eligible employees 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 13. 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 2020,
the LTIP grant in CHF amounted to 183% of the base salary for the CEO and between 107% and
183% of the base salary for other members of the Group Executive Board.
Annual Report 2020 Compensation
Compensation Report
106
FIGURE 13: OVERVIEW OF THE PRINCIPLES OF THE LTIP
LTIP grant in CHF
Fair value of one
Performance Share Unit
(PSU) at grant date
Performance conditions
50%
3 year
relative TSR1 with a
cap at 100% for a
negative absolute TSR
25%
3 year
cumulative diluted
adjusted EPS
25%
3 year
cumulative FCF
200%
0%
200%
0%
200%
0%
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
Number of PSUs
vested in SIG shares
1 SPI® ICB Industry Industrials (Return) Index
Performance period = 3 years
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 vested in SIG shares may vary
between 0% and 200% of the granted PSUs and is based on the achievement of the following
three weighted performance measures.
Performance measure
Weight
Description
Relative total
shareholder return
(rTSR)
Adjusted earnings per
share (EPS)
Free cash flow (FCF)
50%
25%
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 vested in SIG shares, the performance
against each performance measure 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 performance measure can be balanced by a higher performance in another performance
measure. Overall, the combined vesting multiple will never exceed 200%. If the performance
of each of the three performance measures 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 respective performance
period, the vesting factor of the relative TSR metric would be capped at 1.0.
Annual Report 2020 Compensation
Compensation Report
107
In setting the targets, the Compensation Committee has been supported by HCM International
Ltd., 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 the strategic plan as approved by the
Board, 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 performance measure
and submitted a recommendation to the Board, which approved the respective vesting curves
for the LTIP 2020 grant, illustrated in Figure 14.
FIGURE 14: OVERVIEW OF THE VESTING CURVE OF THE LTIP 2020
Performance measures
3 years total shareholder
return measured relative
to the SPI® ICB Industry
Industrials (Return) Index
3 years cumulative diluted
adjusted earnings per share
3 years cumulative
free cash flow
Threshold
(0% vesting)
Target
(100% vesting)
Cap
(200% vesting)
–16% of index
–0% compared to index
+10% of index
64.6% of target
62.5% of target
100% target as set by
the Board of Directors
100% target as set by
the Board of Directors
135.4% of target
137.5% of target
Other circumstances under which no PSUs vest include various forfeiture clauses relating to
termination of employment during the performance period of the LTIP.
Annual Report 2020 Compensation
Compensation Report
108
Compensation mix
Figure 15 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 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.
FIGURE 15: OVERVIEW OF THE COMPENSATION MIX FOR THE CEO
AND THE GROUP EXECUTIVE BOARD (EXCL. CEO) AT TARGET LEVEL
29%
fixed
components
38%
fixed
components
46
CEO
%
25
4
25
71%
variable
components
30
8
GEB
excl. CEO
% average
21
41
62%
variable
components
Base salary
Pension benefits /
other benefits
Target short-term
incentive
Granted long-term
incentive
For the Group Executive Board members excluding the CEO, the fixed components (annual
base salary and pension benefits / other benefits) vary between 32% and 48% (38% on average)
of the total target compensation and the variable components vary between 52% and 68%
(62% on average) of total compensation.
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 may provide, for a period of up to one year post-termination,
compensation for adherence to non-compete clauses. Payment for the non-compete period,
if any, amounts to a maximum of one year’s compensation, unless otherwise required by local
law. Such contracts do not include any severance payments or any change of control provisions
other than accelerated vesting and/or unblocking of unvested share awards.
In the event of a change of control, the LTIP will automatically terminate and all outstanding PSUs
vest 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.
Annual Report 2020 Compensation
Compensation Report
109
Compensation awarded to the Group Executive Board (Audited)
Table 2 summarises the total compensation for the six members of the Group Executive Board
active during 2020 and one member who left in the course of the year. The total compensation
for the Group Executive Board amounted to CHF 12.4 million.
TABLE 2: TOTAL COMPENSATION OF THE GROUP EXECUTIVE BOARD IN 2020,
INCLUDING INFORMATION OF THE PRIOR YEAR
CHF1
Annual base salary
Pension benefits
Short-term variable compensation (paid)2
Long-term variable
compensation (granted)3
Other benefits4
Social security contributions5
Total regular compensation
Accruals for non-compete agreements7
Group Executive
Board (including
the CEO) 2020
Group Executive
Board (including
the CEO) 2019
CEO,
Rolf Stangl 2020
CEO,
Rolf Stangl 2019
3,222,482
524,930
2,524,156
4,900,000
336,092
877,957
12,385,6176
3,017,876
3,214,722
536,405
3,410,295
4,700,000
331,256
966,097
13,158,775
–
875,000
129,619
875,000
1,600,000
32,204
265,302
3,777,125
1,898,746
875,000
129,518
1,224,720
1,600,000
28,916
303,876
4,162,030
–
1
Exchange rates 2020: EUR/CHF 1.07034; THB/CHF 3.0013; CNY/CHF 13.60521; BRL/CHF 18.41503.
Exchange rates 2019: EUR/CHF 1.11282; THB/CHF 3.20216; CNY/CHF 14.39436; BRL/CHF 25.23583.
2 Represents effective short-term variable compensation for 2020 which will be paid in 2021, after the publication of SIG’s audited consolidated financial statements.
3
Amount granted under the LTIP; the number of PSUs that vests depends on the achievement of the performance targets. The number of granted PSUs is equal to the
participants’ granted amounts under the LTIP divided by the fair value of one PSU at the grant date (CHF 15.05 for the 2020 PSU plan, 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
6
7
Employer social security contributions include estimates for the Short-Term Incentive Plan attributable to 2020 which will be paid in 2021
as well as for the Long-Term Incentive Plan at target level on accrual basis.
Including compensation for one member who left the Company in August 2020.
This item includes accruals for payments for non-compete agreements to three members of the Group Executive Board who left the Company in August (one member)
and as of 31 December 2020 (two members), including the CEO. The amount includes employer social security contributions on accrual basis.
The one-time effect for non-compete agreements of CHF 3.0 million is disclosed in the context
of personnel changes in the Group Executive Board and will be payable in 2021 and 2022. With
regard to the LTIP, these personnel changes resulted in the forfeiture of 341,414 PSUs out of the
2019 and 2020 grants, representing a total value (at grant fair value) of CHF 4.2 million.
These forfeitures are reflected in Table 4, which gives an overview of the PSUs granted under
the 2019 and 2020 grants.
Approved versus total regular compensation for the Group Executive Board
The total compensation for the Group Executive Board for 2020 of CHF 12.4 million (including
social security contributions) plus the extra one-off compensation of CHF 3.0 million relating
to non-compete arrangements for three members who left the GEB in 2020, is below the
maximum aggregate compensation amount of CHF 18.0 million, which was approved at the
Annual General Meeting on 11 April 2019 for 2020.
Annual Report 2020
Compensation
Compensation Report
110
STIP performance assessment
For 2020, the members of the Group Executive Board received base salary, Short-Term
Incentive Plan and Long-Term Incentive Plan and pension and other benefits, in line with the
compensation framework, as detailed in Figure 11. For the Group as a whole, 2020 results, as
illustrated in Figure 16 below, were below the targets for Group adjusted EBITDA and Group
core revenue, while the Group free cash flow KPI has been overachieved.
FIGURE 16: 2020 PERFORMANCE AT GROUP LEVEL RELEVANT
FOR STIP PERFORMANCE ASSESSMENT
Target achievement
0%
50%
100%
150%
200%
Performance
measure
Group adjusted
EBITDA
Group core
revenue
Group free
cash flow
Actual target achievement
The target achievement for the 2020 STIP was 82.9% for the CEO (140% in 2019), not reflecting
the termination agreement with the CEO, and between 84.8% and 128.0% for the other
members of the Group Executive Board (85% to 142% in 2019).
Annual Report 2020 Compensation
Compensation Report
111
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 one-time non-compete accruals, decreased by 5.9%. This movement is mainly
caused by the performance-related aspects regarding the STIP as well as some exchange rate
movements. There were no significant increases in base salaries nor in target STIP levels versus
the previous year.
Figure 17 illustrates the 2020 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.
FIGURE 17: OVERVIEW OF THE ACTUAL COMPENSATION MIX IN 2020
FOR THE CEO AND THE GROUP EXECUTIVE BOARD (EXCL. CEO)
(REFLECTS THE AMOUNT GRANTED UNDER THE LTIP)
29%
fixed
components
38%
fixed
components
46
CEO
%
25
4
25
71%
variable
components
30
8
GEB
excl. CEO
% average
21
41
62%
variable
components
Base salary
Pension benefits /
other benefits
Paid short-term
incentive
Granted long-term
incentive
Performance Share Unit Plan
In 2019, the PSU plan was introduced, and the members of the Group Executive Board and
selected other members of management were granted PSUs for the first time. A PSU grant
occurred again in 2020. Table 3 gives an overview of the PSU grants since 2019 and Table 4
shows the status of outstanding PSUs.
TABLE 3: OVERVIEW OF PERFORMANCE SHARE UNIT GRANTS
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
2020
01.04.2020
31.03.2023
CHF 15.05
342,198
325,586
2019
01.04.2019
31.03.2022
CHF 9.49
537,414
495,263
Annual Report 2020 Compensation
Compensation Report
112
TABLE 4: PERFORMANCE SHARE UNIT STATUS
As of 1 January
Granted PSUs
Vested PSUs
Forfeited PSUs throughout the respective year
Outstanding as of 31 December
2020
537,414
342,198
–
(341,414)
538,198
2019
–
537,414
–
–
537,414
6.
Shareholding Guidelines
In order to further strengthen the long-term focus of the members of the Board and the Group
Executive Board and to increase the alignment of their interests with those of SIG’s shareholders,
Shareholding Guidelines are in place. Members of the Board (including the Chairman) are
required to build up an investment in SIG shares worth the equivalent of 100% of their annual
base fees, within a three-year build-up period from the first equity grant date.
Similarly, members of the Group Executive Board are required to build up an investment in SIG
shares worth the equivalent of 100% of their annual base salary, or 200% for the CEO, within a five-
year build-up period, starting with their first grant under the equity-based compensation plan.
All blocked or unblocked SIG shares and vested or unvested entitlements to SIG shares (such
as Restricted Share Units, “RSUs”) but excluding Performance Share Units (“PSUs”), received
as compensation, and SIG shares acquired privately, either outright or beneficially, by the
members of the Board or Group Executive Board or their immediate family members count
toward meeting these thresholds.
If the Shareholding Guidelines are not met by a member of the Board or a member of the Group
Executive 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.
Shareholdings of the Board of Directors (Audited)
Table 5 shows the shareholdings of the Board as of 31 December 2020. 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.
Annual Report 2020 Compensation
Compensation Report
113
TABLE 5: SHAREHOLDINGS OF THE BOARD OF DIRECTORS AS OF 31 DECEMBER 2020
INCLUDING INFORMATION OF THE PRIOR YEAR
Number of directly or
beneficially held SIG
shares1
81,026
26,483
24,826
51,939
37,741
12,564
–
RSUs2
–
–
7,287
–
6,949
–
–
Andreas Umbach
Matthias Währen
Colleen Goggins
Werner Bauer
Wah-Hui Chu
Mariel Hoch
Nigel Wright
Total
Total shareholdings
including RSUs
31 Dec., 2020
Total shareholdings
including RSUs
31 Dec., 2019
81,026
26,483
32,113
51,939
44,690
12,564
–3
67,529
20,960
31,1074
46,6624
39,6574
7,287
106,4223
319,6245
234,579
14,236
248,815
1 Ordinary registered shares of SIG Combibloc Group AG, including blocked shares.
2 The RSUs will be converted into SIG shares after a three-year vesting period.
3
4
2019 indirectly attributable shareholdings through minority investment in affiliates of Onex Corporation, the majority
shareholder at the end of 2019. Onex Corporation and its affiliates sold their remaining shares in SIG on 3 December 2020,
and Onex Group thereby ceased to have a participation in SIG and no indirect shareholding is shown any more.
Thereof 23,820 shares held indirectly through partnership interests in Wizard Management II GmbH & Co. KG,
which held ordinary registered shares of SIG Combibloc Group AG (for further details see section 7).
5 Thereof 141,742 shares directly or beneficially held; 177,882 shares held indirectly.
Shareholdings of the Group Executive Board (Audited)
Table 6 shows the shareholdings of the Group Executive Board at 31 December 2020. 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.
TABLE 6: SHAREHOLDINGS OF THE MEMBERS OF THE GROUP EXECUTIVE BOARD
AS OF 31 DECEMBER 2020 INCLUDING INFORMATION OF THE PRIOR YEAR
Total shareholdings 31 Dec., 2020
Number of directly or beneficially
held SIG shares1
Total shareholdings
31 Dec., 2019
Rolf Stangl
Samuel Sigrist
Markus Boehm
Ian Wood
Lawrence Fok
Martin Herrenbrück
Ricardo Rodriguez
Total
–
200,063
n/a4
75,000
268,572
50,000
250,002
843,637
665,5442
290,0632
268,6482
84,2253
359,9552
134,6333
263,7022
2,066,770
1 Ordinary registered shares of SIG Combibloc Group AG.
2
3
4
Shares were held indirectly through partnership interests in Wizard Management I GmbH & Co. KG,
which held ordinary registered shares of SIG Combibloc Group AG (for further details see section 7).
Shares were held indirectly through partnership interests in Wizard Management II GmbH & Co. KG,
which held ordinary registered shares of SIG Combibloc Group AG (details see section 7).
Markus Boehm left the Group Executive Board in the course of the year so that the Shareholding Guidelines
no longer applies to him.
Annual Report 2020
Compensation
Compensation Report
114
7.
Previous and discontinued compensation plans
Management Equity Plan (“MEP”)
In 2015, when SIG was acquired by Onex, 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. It was intended to generate returns to the
eligible managers upon liquidity events. The shares in the Company were held by the managers
via two limited liability partnerships. In accordance with the plan regulations, management
exercised their right to withdraw from the management equity plan in the first half of 2020. The
shares were distributed to the participants into direct ownership. With these transactions the
MEP was closed in May 2020.
8.
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 to either Board or Group Executive Board members.
9.
Outlook for 2021
The Board has introduced a clawback clause into the LTIP which entitles the Board of Directors
to determine that PSUs forfeit in full or in part or that vested awards will be recovered in full or in
part in the event of financial misstatement or misconduct, following review of the specific facts
and circumstances. The clawback clause is in line with the performance-related principles of the
LTIP and protects the interests of shareholders and other relevant stakeholders.
Sustainability is ingrained in SIG’s business strategy and activities, and this has strengthened the
way we source, produce and sell. As a logical step, the Board of Directors decided to include in
the 2021 STIP Group targets an additional ESG-related measure. This is in line with SIG’s long-
term commitment to contribute more to society and the environment than is taken out and this
adjustment of the global STI framework is an important milestone on that journey.
Annual Report 2020 Compensation
Report of the statutory auditor
115
REPORT OF THE STATUTORY AUDITOR
to the General Meeting of SIG Combibloc Group AG
Neuhausen am Rheinfall
We have audited the accompanying compensation report of SIG Combibloc Group AG for the
year ended 31 December 2020. The audit was limited to the information according to articles
14–16 of the ordinance against Excessive Compensation in Stock Exchange Listed Companies
(Ordinance) contained in the tables labelled ‘audited’ on page 101, page 109 and pages 112–113
of the compensation report.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of
the compensation 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 compensation 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 compensation 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
compensation report with regard to remuneration, loans and credits in accordance with articles
14–16 of the Ordinance. The procedures selected depend on the auditor’s judgment, including
the assessment of the risks of material misstatements in the compensation 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 compensation 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 compensation report of SIG Combibloc Group AG for the year ended
31 December 2020 complies with Swiss law and articles 14–16 of the Ordinance.
PricewaterhouseCoopers AG
Bruno Rossi
Audit expert
Auditor in charge
Manuela Baldisweiler
Audit expert
Basel, 18 February 2021
Annual Report 2020 116116
FINANCIALS
117 Consolidated financial
statements
205 Financial statements
of the Company
Annual Report 2020 Financials ► Consolidated financial statements
Consolidated financial statements
Financials
1
117
Consolidated financial statements
for the year ended 31 December 2020
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 statement
See note 3 for further details on the consolidated financial statements.
118
119
120
121
122
130
142
158
174
184
192
200
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
118
2
Consolidated statement of profit or loss and other comprehensive income
(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 before income tax
Income tax expense
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
Basic earnings per share (in €)
Diluted earnings per share (in €)
Note
6, 7
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
1,816.1
(1,422.2)
393.9
1,783.9
(1,370.1)
413.8
8
8
28
23
32
9
10
10
29.3
(75.1)
(181.1)
(12.4)
17.4
172.0
2.6
(83.6)
(81.0)
91.0
(23.0)
68.0
(138.6)
7.8
(130.8)
(62.8)
0.21
0.21
20.4
(75.1)
(172.6)
(9.3)
15.4
192.6
12.0
(56.6)
(44.6)
148.0
(41.1)
106.9
60.0
24.0
84.0
190.9
0.33
0.33
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
119
3
Consolidated statement of financial position
As of
31 Dec.
2020
As of
31 Dec.
2019
Note
17
16
15
32
20
16
28
32
12
13
14
30
20
18
22
32
30
19
20
18
22
32
30
19
20
24
24
24
355.1
222.0
170.7
2.8
28.5
779.1
6.3
184.5
30.5
986.6
141.1
2,292.8
178.5
23.0
3,843.3
4,622.4
501.2
24.0
37.3
50.5
14.1
59.8
686.9
12.3
1,659.7
132.4
131.5
18.5
167.4
2,121.8
2,808.7
2.8
1,945.0
(220.7)
(0.1)
86.7
1,813.7
4,622.4
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
(In € million)
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
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
120
4
Consolidated statement of changes in equity
(In € million)
Equity as of 1 January 2020
Profit for the period
Share
capital
Note
Additional
paid-in
capital
Transla-
tion-
Treasury
shares
reserve
2.8
2,059.8
(82.1)
(0.1)
Retained
earnings
Total
equity
8.3 1,988.7
68.0
68.0
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
31
24
24
24
(138.6)
(138.6)
-
-
-
-
(138.6)
(138.6)
-
-
(0.6)
7.8
7.8
7.8
(130.8)
75.8
3.2
(62.8)
3.2
(0.6)
-
(114.8)
0.6
(0.6)
Total transactions with owners
-
-
-
2.6
(112.2)
Equity as of 31 December 2020
2.8
1,945.0
(220.7)
(0.1)
86.7 1,813.7
(114.8)
(114.8)
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
31
24
24
24
2.8
2,158.8
(142.1)
-
(124.0) 1,895.5
106.9
106.9
60.0
60.0
-
-
60.0
60.0
-
-
-
-
-
(0.5)
130.9
1.8
-
(99.0)
(99.0)
0.4
(0.4)
24.0
24.0
24.0
84.0
190.9
1.8
(0.5)
-
(99.0)
Total transactions with owners
-
-
(0.1)
1.4
(97.7)
Equity as of 31 December 2019
2.8
2,059.8
(82.1)
(0.1)
8.3 1,988.7
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
121
5
Consolidated statement of cash flows
(In € million)
Cash flows from operating activities
Profit 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
Net finance expense
Interest paid
Payment of transaction and other costs relating to financing
Income tax expense
Income taxes paid, net of refunds received
12, 13, 14
4, 12, 13
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
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
Interest received
27
12, 14
Net cash used in investing activities
Cash flows from financing activities
Proceeds from loans and borrowings
Repayment of loans and borrowings
Payment of lease liabilities
Payment relating to the IPO
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
17
Annual Report 2020
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
Note
68.0
106.9
31
28
23
22
32
11
28
22
22
22
24
24
277.7
43.9
(23.2)
3.2
(0.2)
(17.4)
81.0
(39.0)
(15.4)
23.0
(76.2)
325.4
32.6
(11.8)
26.9
12.9
39.8
425.8
(2.5)
(199.2)
0.7
22.7
2.1
(176.2)
1,550.0
(1,560.9)
(16.1)
-
(0.6)
(114.8)
1.1
(141.3)
108.3
261.0
(14.2)
355.1
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
(40.5)
(182.2)
4.2
20.7
0.5
(197.3)
-
(31.3)
(9.8)
(3.4)
(0.5)
(99.0)
4.6
(139.4)
101.4
157.1
2.5
261.0
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
122
6
BASIS 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.
1
Reporting entity and overview of the Group
SIG Combibloc Group AG (“SIG” or the “Company”) is domiciled in Switzerland and has since
28 September 2018 been listed on SIX Swiss Exchange.
The consolidated financial statements for the year ended 31 December 2020 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.
2
Preparation of the consolidated financial statements
The consolidated financial statements for the year ended 31 December 2020 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 18 February 2021. They also comply with the Listing Rules
of SIX Swiss Exchange and with Swiss company law.
The consolidated financial statements are presented in Euros (“€” or EUR) as the 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.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
123
7
3
Structure of the consolidated financial statements
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.
OUR
OPERATING
PERFORMANCE
6 Revenue
7 Segment
information
8 Other
income and
expenses
9 Alternative
performance
measures
10 Earnings per
share
11 Cash flow
information
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
OPERATING
ASSETS AND
LIABILITIES
12 Property,
plant and
equipment
13 Right-of-
use assets
14 Intangible
assets
OUR FINANCING
AND
FINANCIAL RISK
MANAGEMENT
OUR GROUP
STRUCTURE
AND RELATED
PARTIES
OUR PEOPLE
OTHER
21 Capital
management
26 Group
entities
30 Employee
benefits
22 Loans and
borrowings
27 Business
31 Share-based
combinations
payment plans
and
arrangements
23 Finance
28 Joint
income and
expenses
ventures
29 Related
parties
32 Income tax
33 Financial
instruments
and fair value
information
34 Contingent
liabilities
35 Subsequent
events
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
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.
4
Key events and transactions
The following events and transactions took place during the year ended 31 December 2020.
Refinancing
The Group refinanced its debt in June 2020, which involved the following transactions:
The issue of senior unsecured notes on the Global Exchange Market of Euronext Dublin.
The signing of a new senior unsecured term loan and a revolving credit facility.
The repayment and derecognition of existing secured term loans.
The impacts of the refinancing transactions on the Group’s financial position and
performance are described in more detail in note 22.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
124
8
New sleeves manufacturing facility in China
The lease of the Group’s second sleeves manufacturing facility in China commenced in
December 2020. The Group has during the year invested in its own production equipment
to be used in the new facility. For information about the impacts of the commencement of
the lease of the new sleeves manufacturing facility and the capital expenditure incurred on
the Group’s financial position and performance, see further notes 11, 12, 13 and 22.
COVID-19
Management considers that the business of SIG is well placed to withstand the impacts of
the global spread of the corona virus (COVID-19) and its repeated outbreaks due to its role
in the supply chain for essential food and beverages and its broad geographic reach. There
have been no significant COVID-19-related disruptions and operational impacts at any of
SIG’s plants up to the date of approval of these consolidated financial statements. See note
5.4 for additional details.
Changes in ownership
Onex Corporation (“Onex”), which acquired the Group in 2015, has since the Company’s
listing in 2018 gradually reduced its shareholding in the Company. Onex reduced its
shareholding to below 20% in August 2020 and sold all its remaining shares in the Company
in December 2020 (see further note 29).
Organisational changes in the Group Executive Board
The Group has during the year ended 31 December 2020 implemented or initiated
organisational changes in its Group Executive Board. The former Chief Financial Officer
(Samuel Sigrist) was appointed Chief Executive Officer effective 1 January 2021 following the
voluntary departure of the former Chief Executive Officer (Rolf Stangl). On the same date,
the appointment of Frank Herzog as Chief Financial Officer took effect. He joined the Group
from an unrelated business. The position of Chief Market Officer (formerly held by Markus
Boehm) was eliminated in August 2020, with the responsibilities of that position re-allocated
within the Group. Martin Herrenbrück, who held the position of President and General
Manager of Europe, voluntarily left the Group as of 31 December 2020. José Matthijsse took
over his position as President and General Manager of Europe effective 1 February 2021.
She joined the Group from a business in the food and beverage industry. See also note 29.
New Zealand paper mill
The Group has been assessing the continued viability and different strategic alternatives for
its paper mill in New Zealand (Whakatane). The mill primarily produces liquid paper board
for use by SIG entities and the Group’s joint ventures in the Middle East. As a consequence
of the assessments, impairment losses of €38.0 million on production-related assets were
recognised in the consolidated statements for the year ended 31 December 2020
(€33 million net of tax). See further notes 9, 12 and 15.
Subsequent to 31 December 2020, the Board of Directors made the decision to close the
paper mill and increase the sourcing of liquid paper board from existing third-party
suppliers. The Group will enter into the required consultation process with employees. As a
result of the closure decision, management expects to recognise plant decommissioning
and redundancy costs of around €30 million in the first half of 2021. As assets of the mill
are monetised over time, the operating and free cash flow impact of these costs is expected
to be reduced.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
125
9
Announcement of agreement to acquire the remaining shares of the
joint ventures in the Middle East
The Group announced on 25 November 2020 that it has entered into an agreement to
acquire the remaining 50% of the shares in its two joint ventures in the Middle East from
the joint venture partner Obeikan Investment Group (“OIG”). The joint ventures will thereby
become fully owned subsidiaries. The acquisition will give the Group full control over a
business with strong growth prospects in a growing market and expand its global presence.
The acquisition is expected to complete before the end of the first quarter of 2021. The
completion is subject to customary closing conditions and approvals from regulatory
authorities. The consideration for the shares of the joint ventures will be made up of
€167 million in cash and around 17.5 million newly issued SIG ordinary shares (to be issued
out of authorised share capital). After the transaction, OIG will hold approximately 5% of the
issued SIG shares.
In the year ended 31 December 2020, the two joint ventures generated revenue of
approximately €266 million (excluding revenue from inter-company transactions between
the two joint ventures) and adjusted EBITDA of approximately €78 million (see note 9 for
the Group’s definition of adjusted EBITDA). The net debt of the two joint ventures was
approximately €70 million as of 31 December 2020 (see note 21 for the Group’s definition
of net debt). For further information about the two joint ventures, see note 28.
Abdallah Obeikan, Chief Executive Officer of OIG and currently Chief Executive Officer of the
two joint ventures in the Middle East, will be nominated for election to SIG’s Board of
Directors at the next Annual General Meeting in April 2020 subject to completion of the
acquisition and other customary conditions. Abdelghany Eladib, currently Chief Operating
Officer of the joint ventures, will become a member of SIG’s Group Executive Board and take
on the role of President and General Manager of Middle East and Africa subject to and as of
completion of the acquisition. This will result in a split of SIG’s current segment EMEA
(“Europe, Middle East and Africa”) into two segments: Europe and MEA (“Middle East and
Africa”).
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 2020 are consistent with those applied in the consolidated
financial statements for the year ended 31 December 2019.
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 2020. The applicable standards and interpretations had no,
or no material, impact on the consolidated financial statements.
Regarding the comparative period, the Group adopted IFRS 16 Leases on 1 January 2019,
applying the standard’s modified retrospective approach. Assets leased by the Group are
since then 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. The
Group was not materially impacted by IFRS 16. The Group recognised lease liabilities on
1 January 2019 of €15.9 million relating to lease contracts that previously were accounted
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
126
10
for as operating leases. The same amount was recognised as right-of-use assets. Assets of
€27.6 million relating to lease contracts that were previously accounted for as finance leases
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. See notes 12
and 13.
5.3 Adoption of standards and interpretations in 2021 and
beyond
A number of new or amended standards and interpretations are effective for annual
periods beginning on 1 January 2021 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.
This also applies in respect of the amendments to IFRS 7 Financial Instruments: Disclosures,
IFRS 9 Financial Instruments and IFRS 16 Leases, which are effective from 1 January 2021, and
issued by the IASB as a result of the global reform of interest rate benchmarks.
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.
Management believes that the following accounting policies involve the most significant
judgements, estimates and assumptions:
Liabilities for various customer incentive programmes – see notes 6 and 18.
Impairment testing and recognition of impairment losses – see notes 12 and 14.
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.
Management is closely monitoring the effects of COVID-19. Management evaluates on an
ongoing basis how the COVID-19 pandemic impacts the Group’s financial position and
performance. It assesses various aspects such as the value of the Group’s assets (including
goodwill and pension assets), any impairment triggers, sales trends, liquidity needs and
exposure to market and credit risks. Considering that the Group (as well as its customer
base) is in a business that can be regarded as essential in the distribution of aseptic food
and beverages, the Group is overall currently not significantly impacted by the COVID-19
pandemic. The impact of COVID-19 on the Group in future periods is difficult to assess and
there is no assurance that the experience to date will be representative of future periods.
Significant judgements are involved regarding the assessment of the impact of COVID-19 on
the global economy, and new facts and circumstances may lead to adjustments of
management’s current estimates and assumptions. See also note 4.
Annual Report 2020
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Financials ► Consolidated financial statements
Consolidated financial statements
Financials
127
11
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.
Significant exchange rates
The following significant exchange rates against the Euro applied during the periods
presented:
Average rate for the year
Spot rate as of
31 Dec.
2020
31 Dec.
2019
31 Dec.
2020
31 Dec.
2019
1.65383
5.81232
7.86713
1.07034
24.35846
1.75466
35.66255
1.13971
1.61017
4.40968
7.73094
1.11282
21.56039
1.69855
34.75217
1.11967
1.58960
6.37350
8.02250
1.08020
24.41599
1.69840
36.72701
1.22710
1.59949
4.51570
7.82050
1.08540
21.22019
1.66531
33.41502
1.12340
Australian Dollar (AUD)
Brazilian Real (BRL)
Chinese Renminbi (CNY)
Swiss Franc (CHF)
Mexican Peso (MXN)
New Zealand Dollar (NZD)
Thai Baht (THB)
US Dollar ($ or USD)
Annual Report 2020
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Financials ► Consolidated financial statements
Consolidated financial statements
Financials
128
12
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 as lessee
The Group leases office buildings, production-related buildings and equipment, warehouses
and cars.
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.
5.5.3
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.
Annual Report 2020
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Financials ► Consolidated financial statements
Consolidated financial statements
Financials
129
13
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.
Annual Report 2020
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Financials ► Consolidated financial statements
Consolidated financial statements
Financials
130
14
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 86% of the Group’s revenue from its offering of aseptic carton packaging
solutions relates to the sale of sleeves and closures in the year ended 31 December 2020
(87% in the year ended 31 December 2019). The remaining 14% consists of revenue relating
to filling lines and to servicing of the Group’s deployed filling lines (13% in the year ended
31 December 2019).
Composition 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.
2020
Year ended
31 Dec.
2019
1,716.2
99.9
1,816.1
1,691.8
92.1
1,783.9
1,796.4
1,766.9
Core revenue represents revenue generated from the Group’s core activities and excludes
revenue from sales of folding box board, which amounted to €19.7 million for the year
ended 31 December 2020 and €17.0 million for the year ended 31 December 2019. Core
revenue is not a defined performance measure in IFRS (see further note 9).
The 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.
(In € million)
Revenue from sale of sleeves and closures
Filling line revenue
Service revenue
Other revenue
Total revenue
Annual Report 2020
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
1,498.8
121.0
119.0
77.3
1,816.1
1,472.7
111.9
113.4
85.9
1,783.9
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
131
15
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.
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.
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 sale price) for the use of filling lines that
are deployed under sale 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 relationship is expected to
last and the ten-year estimated useful life of a filling line. The control and significant risks and rewards
of ownership are retained by the Group in respect of such sale contracts (see further note 5.5.2).
When sales incentives are offered to customers, only the amount of revenue that is highly probable
not to be 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 sales trends, which
are affected by the business seasonality and competitiveness of promotional programmes being
offered. Estimates are reviewed quarterly for possible revisions.
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132
16
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 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.
The 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).
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17
Segment financial information
The following tables present financial information about the Group’s segments and Group
Functions. The same measurement basis is used when presenting the segment information
as is used in the Group’s consolidated financial statements.
(In € million)
EMEA
APAC Americas
Total
segments
Group
Functions
Reconciling
items
Total
Year ended 31 December 2020
Revenue from transactions
with external customers
Revenue from inter-segment
transactions
797.5
679.5
320.8
1,797.8
18.3
- 1,816.1
Segment revenue
1,027.3
695.4
321.0
2,043.7
229.8
15.9
0.2
245.9
44.5
62.8
(290.4)
-
(290.4) 1,816.1
Core revenue from transactions
with external customers1
797.5
659.8
320.8
1,778.1
18.3
- 1,796.4
Adjusted EBITDA2
274.1
215.0
72.8
561.9
(63.6)
Capital expenditure:3
PP&E (excl. filling
machines)3, 4
Net filling machines3, 4
Net capital expenditure3
(58.7)
(100.0)
(47.0)
(205.7)
6.5
(17.3)
(6.7)
(24.0)
(52.0)
(29.9)
(81.9)
(4.4)
(41.4)
(45.8)
(73.7)
(78.0)
(151.7)
(3.2)
9.7
6.5
-
-
-
-
-
498.3
(199.2)
(76.9)
(68.3)
(145.2)
(In € million)
EMEA
APAC Americas
Total
segments
Group
Functions
Reconciling
items
Total
Year ended 31 December 2019
Revenue from transactions
with external customers
Revenue from inter-segment
transactions
755.1
683.8
329.5
1,768.4
15.5
- 1,783.9
Segment revenue
992.8
696.5
329.5
2,018.8
237.7
12.7
-
250.4
40.6
56.1
(291.0)
-
(291.0) 1,783.9
Core revenue from transactions
with external customers1
755.1
666.8
329.5
1,751.4
15.5
Adjusted EBITDA2
242.2
228.9
84.1
555.2
(69.8)
- 1,766.9
-
485.4
Capital expenditure:3
PP&E (excl. filling
machines)3, 4
Net filling machines 3, 4
Net capital expenditure3
(62.1)
(86.1)
(40.9)
(189.1)
6.9
-
(182.2)
(16.0)
(14.2)
(30.2)
(34.1)
(14.7)
(48.8)
(3.4)
(34.9)
(38.3)
(53.5)
(63.8)
(117.3)
(4.8)
11.7
6.9
-
-
-
(58.3)
(52.1)
(110.4)
1
2
3
4
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, EBITDA and adjusted EBITDA.
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.
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.
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18
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 eight manufacturing facilities that produce carton sleeves (two in
Germany and in China, and one each in Austria, Thailand, Brazil and Australia). The second
facility in China became operational in December 2020 (see further notes 13 and 22). 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 (see note 4
regarding a strategic assessment of the paper mill). 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 below table 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
Switzerland1
China
Thailand
Austria
Other countries
Total non-current assets
1
The Company's country of domicile is Switzerland.
As of
31 Dec.
2020
As of
31 Dec.
2019
1,076.8
492.5
619.9
484.4
339.4
613.0
3,626.0
1,110.7
501.9
547.9
548.7
342.6
749.8
3,801.6
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.
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135
19
The below table 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.
2020
Year ended
31 Dec.
2019
296.1
211.7
129.6
13.1
1,165.6
1,816.1
292.4
198.0
151.3
12.3
1,129.9
1,783.9
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.
2020
Year ended
31 Dec.
2019
21.5
3.7
0.7
3.4
29.3
10.1
4.0
0.7
5.6
20.4
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Financials ► Consolidated financial statements
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136
20
Composition of other expenses
(In € million)
Net foreign currency exchange loss
Transaction- and acquisition-related costs
Other
Total other expenses
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
(8.1)
(3.1)
(1.2)
(12.4)
(4.1)
(4.1)
(1.1)
(9.3)
For the year ended 31 December 2020, the Group recognised a net foreign currency
exchange loss of €8.1 million (a net loss of €4.1 million for the year ended 31 December
2019). Foreign currency exchange losses mainly arose due to the depreciation of the Thai
Baht against the Euro and the US Dollar, and the depreciation of the Brazilian Real against
the Euro. The Brazilian Real foreign currency exchange losses were mitigated by Brazilian
Real hedging gains.
Transaction- and acquisition-related costs are excluded in the calculation of adjusted
EBITDA and adjusted net income (see note 9 for further details).
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, free cash flow and net leverage ratio.
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.
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. Information about the Group’s net leverage ratio
is included in note 21.
Adjusted EBITDA
Adjusted EBITDA is used by management for business planning and to measure operational
performance. Management believes that adjusted EBITDA provides investors with further
transparency into 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
Annual Report 2020
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Financials ► Consolidated financial statements
Consolidated financial statements
Financials
137
21
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.
The following table reconciles profit to EBITDA and adjusted EBITDA.
(In € million)
Profit for the period
Net finance expense
Income tax expense
Depreciation and amortisation
EBITDA
Adjustments to EBITDA:
Replacement of share of profit of joint ventures with
cash dividends received from joint ventures
Restructuring costs, net of reversals
Unrealised gain on derivatives
Transaction- and acquisition-related costs
Impairment losses
Other
Adjusted EBITDA
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
68.0
81.0
23.0
277.7
449.7
5.3
6.3
(21.5)
3.1
49.3
6.1
498.3
106.9
44.6
41.1
287.1
479.7
5.3
1.8
(10.1)
4.3
2.8
1.6
485.4
The Group has a number of ongoing restructuring programmes focused on reducing costs,
streamlining the organisation and reducing headcount to be more closely aligned with the
Group’s needs and changing market demands. For the year ended 31 December 2020,
restructuring costs primarily relate to a move of production resources within the APAC
segment and organisational changes in the leadership team. See also notes 19 and 29.
Transaction- and acquisition-related costs include acquisition-related costs and costs for
pursuing other initiatives.
Impairment losses for the year ended 31 December 2020 primarily relate to impairment of
production-related assets comprising the Group’s paper mill in New Zealand (€38.0 million)
and impairment losses resulting from the reallocation of production within the APAC
segment. See further notes 4, 12 and 15.
The “Other” category for the year ended 31 December 2020 mainly includes termination
benefits relating to the former CEO (see further note 29) and integration costs in respect of
Visy Cartons, which was acquired in November 2019. For the year ended 31 December 2019,
“Other” mainly includes operational process-related costs.
Annual Report 2020
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Financials ► Consolidated financial statements
Consolidated financial statements
Financials
138
22
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 Group
was acquired by Onex in 2015. No adjustments are made for PPA depreciation and
amortisation other than in connection with the Onex acquisition.
The following table reconciles profit for the period to adjusted net income.
(In € million)
Profit 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 repayment of secured term loans
Onex acquisition PPA depreciation and amortisation
Adjustments to EBITDA:
Replacement of share of profit of joint ventures with
cash dividends received from joint ventures
Restructuring costs, net of reversals
Unrealised gain on derivatives
Transaction- and acquisition-related costs
Impairment losses
Other
Tax effect on above items
Adjusted net income
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
68.0
106.9
24.6
3.1
(0.5)
19.7
125.4
5.3
6.3
(21.5)
3.1
49.3
6.1
(56.6)
232.3
(1.2)
2.8
1.5
-
136.5
5.3
1.8
(10.1)
4.3
2.8
1.6
(34.8)
217.4
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Financials ► Consolidated financial statements
Consolidated financial statements
Financials
139
23
10
Earnings per share
Basic and diluted earnings per share
Basic earnings per share are calculated by dividing the consolidated profit 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 reflects the effect of
potentially dilutive shares under
the Group’s share-based payment plans and
arrangements.
The following table shows the weighted average numbers of shares outstanding before and
after adjustments for the effect of potentially dilutive shares.
Weighted average number of ordinary shares
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
Issued shares as of 1 January 2020
Effect of treasury shares held
Weighted average number of shares as of 31 December 2020 - basic
Effect of share-based payment plans and arrangements
Weighted average number of shares as of 31 December 2020 - diluted
320,053,240
(10,732)
320,042,508
15,552
320,058,060
320,053,240
(8,360)
320,044,880
34,373
320,079,253
The below table shows the profit 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)
Profit for the period
Weighted average number of shares for the period - basic (in numbers)
Basic earnings per share (in €)
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
68.0
320,044,880
106.9
320,042,508
0.21
0.33
Profit for the period
Weighted average number of shares for the period - diluted (in numbers)
68.0
320,079,253
106.9
320,058,060
Diluted earnings per share (in €)
0.21
0.33
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).
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140
24
The following table 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 €)
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
232.3
320,044,880
217.4
320,042,508
0.73
0.68
Adjusted net income
Weighted average number of shares for the period - diluted (in numbers)
232.3
320,079,253
217.4
320,058,060
Adjusted earnings per share - diluted (in €)
0.73
0.68
11
Cash flow information
This note includes information about the Group’s cash flows as well as 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.
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 (excl. filling machines)
Gross filling machines
Capital expenditure (gross)
Upfront cash (for filling machines)
Net capital expenditure
Annual Report 2020
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
76.9
122.3
199.2
(54.0)
145.2
58.3
123.9
182.2
(71.8)
110.4
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Financials ► Consolidated financial statements
Consolidated financial statements
Financials
141
25
Free cash flow
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. Free cash
flow is not a defined performance measure in IFRS (see further note 9).
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
Non-cash transactions
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
425.8
22.7
(199.2)
(16.1)
233.2
438.1
20.7
(182.2)
(9.8)
266.8
Non-cash transactions for the year ended 31 December 2020 include the derecognition of
capitalised transaction costs and original issue discount in the amount of €17.6 million
resulting from the repayment of the secured term loans in June 2020 (see notes 22, 23
and 25). Other non-cash transactions include the initial recognition of leases on the
statement of the financial position (see notes 13 and 22). Notably for the year ended
31 December 2020, the increase in right-of-use assets and lease liabilities compared to the
prior year is mainly due to the commencement in December 2020 of the 20-year lease of
the Group’s second sleeves manufacturing facility in China (with an initial lease liability and
related right-of-use asset recognised of approximately €60 million each) but also to an
increase of leases of production equipment for closures. The granting of instruments under
the Group’s 2019 and 2020 equity-settled share-based payment plans and arrangements
are also non-cash transactions (see note 31).
Cash outflows under lease contracts
The total cash outflow for the Group’s lease contracts for the year ended 31 December 2020
was €21.8 million (€15.7 million for the year ended 31 December 2019).
Annual Report 2020
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26
OUR 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. Other liabilities mainly comprise deferred
revenue relating to advance payments received in relation to filling lines deployed under
contracts accounted for as operating leases.
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 that qualify to be accounted for as operating leases (see
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. The Group is a
lessor only in respect of its filling lines deployed with its customers.
Composition of PP&E
(In € million)
Cost
Accumulated depreciation
and impairment losses
Land Buildings
Plant and
equipment
Work in
progress
Filling
lines
Total
40.1
181.6
620.7
156.0
854.2 1,852.6
Carrying amount as of 31 December 2019
40.1
-
(47.0)
134.6
(399.6)
-
(332.9)
(779.5)
221.1
156.0
521.3 1,073.1
Cost
Accumulated depreciation
and impairment losses
Carrying amount as of 31 December 2020
Carrying amount as of 1 January 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 December 2019
38.1
173.2
610.2
187.0
875.2 1,883.7
(9.5)
28.6
39.3
-
-
-
-
-
-
-
0.8
40.1
(64.4)
108.8
148.2
0.5
-
(14.3)
-
(9.2)
-
7.6
1.8
134.6
(443.7)
(8.5)
(371.0)
166.5
178.5
504.2
(897.1)
986.6
250.2
3.5
6.4
(13.3)
(4.3)
(75.5)
-
49.3
4.8
221.1
170.0
167.7
2.8
-
-
-
-
(186.6)
2.1
461.1 1,068.8
178.2
13.9
(27.6)
(9.7)
(177.2)
(2.8)
-
29.5
6.5
4.7
-
(5.4)
(92.5)
(2.8)
129.7
20.0
156.0
521.3 1,073.1
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
143
27
(In € million)
Land Buildings
Plant and
equipment
Work in
progress
Filling
lines
Total
Carrying amount as of 1 January 2020
Additions
Disposals
Depreciation
Impairment losses
Transfers
Effect of movements in exchange rates
Carrying amount as of 31 December 2020
40.1
-
-
-
(9.2)
-
(2.3)
28.6
134.6
0.8
-
(9.1)
(11.6)
1.6
(7.5)
108.8
221.1
2.4
(0.1)
(62.3)
(13.1)
34.7
(16.2)
166.5
156.0
191.7
-
-
(8.6)
(149.3)
(11.3)
521.3 1,073.1
199.3
(0.5)
(160.2)
(43.8)
(2.3)
(79.0)
4.4
(0.4)
(88.8)
(1.3)
110.7
(41.7)
178.5
504.2
986.6
Notes 7 and 11 include further information about the Group’s capital expenditure with
regard to its production equipment and filling lines.
Depreciation and impairment 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
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
154.3
1.0
4.9
160.2
170.9
1.2
5.1
177.2
The impairment losses recognised in the year ended 31 December 2020 primarily relate to
production-related assets of Whakatane, the Group’s paper mill in New Zealand. Out of the
total amount of impairment losses of €43.8 million, €32.5 million relate to the paper mill
(see further note 4). The remaining amount mainly relates to impairment losses resulting
from the reallocation of production within the APAC segment. The recoverable amounts of
the impaired assets are not material. The impairment losses are recognised as part of cost
of sales in the statement of profit or loss and other comprehensive income.
Capital expenditure commitments
As of 31 December 2020, the Group had entered into contracts to incur capital expenditure
of €62.0 million (€99.7 million as of 31 December 2019) 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, including some remaining
investments in relation to the second sleeves manufacturing facility in China that became
operational in December 2020, which explains the decrease in commitments between the
two periods. The new facility is leased by the Group (see note 13).
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
144
28
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 15 to 40 years
Plant and equipment:
Production-related equipment and machinery 4 to 12 years
Furniture and fixtures 3 to 8 years
Filling lines (leased assets, SIG as the lessor) 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.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
145
29
13
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.
Composition of right-of-use assets
(In € million)
Cost
Accumulated depreciation
and impairment losses
Carrying amount as of 31 December 2019
Cost
Accumulated depreciation
and impairment losses
Carrying amount as of 31 December 2020
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
Carrying amount as of 1 January 2020
Additions
Depreciation
Other adjustments
Effect of movements in exchange rates
Buildings
Plant and
equipment
29.9
(5.8)
24.1
113.1
(12.6)
100.5
-
12.0
14.3
2.0
0.9
(5.3)
(0.2)
0.4
24.1
24.1
86.1
(7.3)
(0.2)
(2.2)
Cars
4.9
(1.6)
3.3
7.5
(3.6)
3.9
-
2.8
-
2.3
0.1
(1.6)
(0.3)
-
3.3
3.3
3.0
(2.1)
(0.2)
(0.1)
3.9
Total
61.2
(12.2)
49.0
170.0
(28.9)
141.1
-
15.9
27.6
14.4
1.5
(10.0)
(1.0)
0.6
49.0
49.0
112.9
(17.5)
(0.6)
(2.7)
141.1
26.4
(4.8)
21.6
49.4
(12.7)
36.7
-
1.1
13.3
10.1
0.5
(3.1)
(0.5)
0.2
21.6
21.6
23.8
(8.1)
(0.2)
(0.4)
36.7
Carrying amount as of 31 December 2020
100.5
The Group’s most significant leases are the 20-year lease of its second sleeves
manufacturing facility in China that commenced in December 2020, and the 20-year lease
of the SIG Tech Centre in China that commenced in 2018. Together, these two leases make
up the larger part of the carrying amount of leased buildings. Approximately 70% of the
increase in buildings in the year ended 31 December 2020 is related to the lease of the new
sleeves manufacturing facility (see also note 11). The Group has entered into an increased
number of leases of production equipment for closures during the current year compared
to the prior year. The larger part of the plant and equipment category relates to leases of
production equipment for closures with a lease term of four to five years. The lease term of
other assets is most commonly in the range of three to five years.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
146
30
Depreciation of right-of-use assets
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.
2020
Year ended
31 Dec.
2019
11.8
3.0
2.7
17.5
5.8
1.8
2.4
10.0
The Group has entered into lease contracts that have not yet commenced. The present
value of estimated future lease payments under these lease contracts approximates
€35 million as of 31 December 2020 (€74 million as of 31 December 2019). These contracts
mainly concern production equipment for closures, with the leases expected to commence
within the next twelve to fifteen months. As of 31 December 2019, the lease commitments
mainly related to the 20-year lease of the Group’s second sleeves manufacturing facility in
China but also to leases of production equipment for closures.
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.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
147
31
14
Intangible assets
The largest portion of the Group's intangible assets is goodwill, arising as a result of the
acquisition of the 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.
Composition of intangible assets
(In € million)
Goodwill
Trade-
marks
Customer
relation-
ships
Technology
and other
assets
Total
Cost
Accumulated amortisation
and impairment losses
Carrying amount as of 31 December 2019
1,621.9
309.6
-
-
(305.4)
340.8
(177.2)
188.0
(482.6)
2,460.3
1,566.7
311.1
614.6
366.6
2,859.0
1,621.9
309.6
646.2
365.2
2,942.9
Cost
Accumulated amortisation
and impairment losses
Carrying amount as of 31 December 2020
Carrying amount as of 1 January 2019
Additions
Additions through business combination
Amortisation
Effect of movements in exchange rates
-
1,566.7
1,583.7
-
14.5
-
23.7
Carrying amount as of 31 December 2019
1,621.9
Carrying amount as of 1 January 2020
Additions
Amortisation
Impairment losses
Effect of movements in exchange rates
1,621.9
-
-
-
(55.2)
Carrying amount as of 31 December 2020
1,566.7
-
311.1
298.2
-
-
-
11.4
309.6
309.6
-
-
-
1.5
311.1
(351.7)
262.9
(214.5)
152.1
388.6
-
9.7
(63.6)
6.1
340.8
340.8
-
(62.5)
-
(15.4)
262.9
216.1
1.6
-
(36.3)
6.6
188.0
188.0
1.0
(37.5)
(0.1)
0.7
152.1
(566.2)
2,292.8
2,486.6
1.6
24.2
(99.9)
47.8
2,460.3
2,460.3
1.0
(100.0)
(0.1)
(68.4)
2,292.8
The acquisition of Visy Cartons in 2019 resulted in an increase of goodwill and customer
relationships. See further note 27.
Research and development
Research and development costs (excluding depreciation and amortisation expense) are
recognised as a component of general and administrative expenses, totalling €50.9 million
for the year ended 31 December 2020 and €51.7 million for the year ended 31 December
2019.
Annual Report 2020
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Financials ► Consolidated financial statements
Consolidated financial statements
Financials
148
32
Amortisation of intangible assets
Amortisation of intangible assets is recognised in the following components in the
statement of profit or loss and other comprehensive income.
(In € million)
Cost of sales
General and administrative expenses
Total amortisation
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
62.6
37.4
100.0
63.9
36.0
99.9
Annual impairment tests of goodwill and trademarks with indefinite
useful lives
Goodwill with a carrying amount of €1,566.7 million as of 31 December 2020
(€1,621.9 million as of 31 December 2019) and trademarks with indefinite useful lives with
a carrying amount of €311.1 million as of 31 December 2020 (€309.6 million as of
31 December 2019) 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).
Goodwill
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 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 are based on financial plans approved
by management. Cash flows after the five-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
following table. The goodwill that resulted from the acquisition of Visy Cartons in November
2019 is allocated to APAC and was considered as of 31 December 2019. The table also
includes information about the key assumptions used in the impairment test.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
149
33
(In € million or %)
EMEA
APAC
Americas
Year ended 31 December 2020
Growth
rate
Carrying
amount
Pre-tax
discount rate
757.2
632.7
176.8
1.25%
2.5%
2.25%
6.1%
7.8%
10.8%
Total goodwill
1,566.7
Year ended 31 December 2019
Growth
rate
Carrying
amount
Pre-tax
discount rate
757.2
657.3
207.4
1,621.9
1.25%
2.5%
2.25%
7.1%
9.0%
12.1%
No impairment of goodwill was identified in either 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. The Group is overall
currently not significantly impacted by the COVID-19 pandemic (see notes 4 and 5.4).
Management does not believe that the effects of the COVID-19 pandemic will have any
significant long-term negative impacts on the Group’s estimated future cash flows.
However, there is no assurance that the Group’s experience to date, which has been
reflected in the assessment of future cash flows, will be representative of future periods.
Trademarks with indefinite useful lives
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 have been
discounted to their present value using a pre-tax discount rate at Group level of 7.6% (8.8%
in the 2019 annual impairment test) and a terminal growth rate at Group level of 2.0% (2.0%
in the 2019 annual impairment test). The WACC is used to determine the discount rate. The
royalty fees for the first five years are based on financial plans approved by management.
Cash flows after the five-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.
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.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
150
34
Accounting 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 10 years
Technology assets (including patented and non-patented
technology and know-how) 6 to 10 years
Other intangible assets (including software) 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
As of
31 Dec.
2020
As of
31 Dec.
2019
50.0
21.0
99.7
170.7
56.8
17.2
93.2
167.2
As of 31 December 2020, inventories included a provision of €15.5 million due to write-
downs to net realisable value (€17.2 million as of 31 December 2019).
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
151
35
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 €727.4 million in the year
ended 31 December 2020 (€715.9 million in the year ended 31 December 2019).
Spare parts in the amount of €5.4 million related to production equipment of the Group’s
paper mill in New Zealand were impaired and recognised as an expense in cost of sales in
the statement of profit or loss and other comprehensive income in the year ended
31 December 2020 (nil in the year ended 31 December 2019). See further notes 4 and 12.
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.
16
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 below table 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
Total current and non-current receivables
As of
31 Dec.
2020
As of
31 Dec.
2019
86.3
16.2
13.4
32.6
16.3
57.2
222.0
6.3
228.3
109.6
52.9
22.7
20.2
16.8
49.4
271.6
5.6
277.2
The payment terms for the Group’s trade receivables for sleeve sales are on average
between 30 and 40 days.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
152
36
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
As of
31 Dec.
2020
As of
31 Dec.
2019
65.0
9.7
4.6
7.0
86.3
(5.0)
91.3
86.1
15.4
6.2
1.9
109.6
(3.4)
113.0
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% (with an expected loss rate of 100% when due more than 270 days). 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. See further section “Credit
risk” in note 25.
The below table 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
Securitisation programme
2020
3.4
2.5
(0.9)
5.0
2019
3.8
(0.4)
-
3.4
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.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
153
37
Trade receivables sold under the securitisation programme amounted to €115.6 million as
of 31 December 2020 (€112.5 million as of 31 December 2019), of which €92.1 million
(€95.8 million as of 31 December 2019) has been derecognised and €23.5 million
(€16.7 million as of 31 December 2019), 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 €2.1 million in the year ended 31 December 2020 (€2.4 million as of
31 December 2019) and is presented as part of other finance expenses.
Factoring programmes
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
€13.3 million as of 31 December 2020 (€24.7 million as of 31 December 2019). The interest
expense paid under the factoring programme amounted to €0.3 million in the year ended
31 December 2020 (€0.6 million as of 31 December 2019) 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.
Trade receivables at fair value through profit or loss
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.
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.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
154
38
17
Cash and cash equivalents
(In € million)
Cash and cash equivalents (unrestricted)
Restricted cash
Total cash and cash equivalents
As of
31 Dec.
2020
353.3
1.8
355.1
As of
31 Dec.
2019
254.9
6.1
261.0
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 that
are subject to an insignificant risk of changes in value (€12.5 million as of 31 December 2020
and €35.6 million as of 31 December 2019). 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
(In € million)
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
Related party payables
Other non-current payables
Non-current payables
As of
31 Dec.
2020
As of
31 Dec.
2019
163.9
0.7
238.7
8.1
5.9
83.9
501.2
2.6
9.7
12.3
179.6
2.9
210.7
9.5
6.2
83.4
492.3
2.7
7.7
10.4
Total current and non-current trade and other payables
513.5
502.7
Liabilities with an impact on the Group’s revenue
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 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 2020 and 31 December 2019, 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
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
155
39
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 2020, the Group had contract liabilities in the amount of €11.4 million
(€11.6 million as of 31 December 2019). 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 2019 has been recognised as revenue in 2020.
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.
19
Provisions
The Group’s provisions mainly relate to dismantling costs, warranties and restructuring
programmes.
Composition of provisions
(In € million)
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
Carrying amount as of 1 January 2020
Provisions made
Provisions used
Provisions reversed
Effect of movements in exchange rates
Carrying amount as of 31 December 2020
Current
Non-current
Carrying amount as of 31 December 2020
Annual Report 2020
Dismantling
Product
warranty
Restructur
-ing
Other
Total
11.2
2.3
(0.2)
(1.8)
0.7
12.2
0.1
12.1
12.2
12.2
1.6
-
-
(0.9)
12.9
0.1
12.8
12.9
8.4
5.8
(4.9)
(1.8)
0.1
7.6
7.6
-
7.6
7.6
8.5
(3.0)
(3.0)
(0.5)
9.6
9.6
-
9.6
13.3
2.2
(10.6)
(0.4)
-
4.5
3.6
0.9
4.5
4.5
6.3
(6.9)
-
-
3.9
2.6
1.3
3.9
3.3
0.8
(0.3)
(0.5)
-
3.3
0.8
2.5
3.3
3.3
4.3
(0.7)
(0.2)
(0.5)
6.2
1.8
4.4
6.2
36.2
11.1
(16.0)
(4.5)
0.8
27.6
12.1
15.5
27.6
27.6
20.7
(10.6)
(3.2)
(1.9)
32.6
14.1
18.5
32.6
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
156
40
Restructuring provision
The Group’s restructuring programmes are focused on reducing costs, streamlining the
organisation and adjusting headcount to be more closely aligned with the Group’s needs
and changing market demands. Payments are generally expected to be executed within the
next one or two years. See also notes 9 and 29.
Other provisions
Other provisions mainly relate to legal claims.
Accounting policy
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.
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.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
157
41
20 Other assets and liabilities
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. Prior to the refinancing transactions in June 2020, the Group also had
interest rate swaps. See notes 25 and 33 for additional details about the Group’s derivatives.
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.
2020
As of
31 Dec.
2019
17.6
10.9
28.5
23.0
23.0
51.5
2.1
20.1
22.2
29.3
29.3
51.5
As of
31 Dec.
2020
As of
31 Dec.
2019
5.1
54.7
59.8
-
167.4
167.4
227.2
11.1
48.8
59.9
2.6
162.4
165.0
224.9
Deferred revenue relates to deployment of filling lines under lease and sale 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 sale contracts and over in general six years for lease contracts.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
158
42
OUR FINANCING AND FINANCIAL RISK
MANAGEMENT
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 give confidence to the
Group’s shareholders, holders of senior unsecured notes and lenders under the senior
unsecured 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 the indenture governing the senior unsecured
notes and the credit agreement for the senior unsecured credit facilities, as well as to ensure
the payment of an appropriate level of dividends to the shareholders.
As part of monitoring the Group’s financial position, the Directors evaluate the Group’s net
debt and development of its net leverage ratio. Net leverage is defined by the Group as net
debt divided by adjusted EBITDA. Net debt comprises the Group’s current and non-current
loans and borrowings (including lease liabilities, and with notes and credit facilities at
principal amounts) less cash and cash equivalents (including any restricted cash). See note 9
for the definition of adjusted EBITDA. The Group is under the credit agreement for its senior
unsecured credit facilities required to not exceed a net leverage ratio of 4.5x until
31 December 2020 (4.25x until 31 December 2021 and 4.0x thereafter). Note 22 includes
further details about the Group’s loans and borrowings.
The table below presents the components of net debt and the net leverage ratio.
(In € million)
Gross total debt
Cash and cash equivalents
Net total debt
Total net leverage ratio
As of
31 Dec.
2020
1,697.0
355.1
1,341.9
2.7x
As of
31 Dec.
2019
1,614.4
261.0
1,353.4
2.8x
The Company purchases its own shares on the market. The repurchased shares are
intended to be used to settle the Group’s obligations under its share-based payment plans
and arrangements offered to certain members of management and the Board of Directors
(see notes 24 and 31).
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.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
159
43
22
Loans and borrowings
The Group has in the year ended 31 December 2020, via some of its subsidiaries, issued
senior unsecured Euro-denominated notes and entered into new senior unsecured credit
facilities. The senior unsecured credit facilities consist of one Euro-denominated term loan
and a multi-currency revolving credit facility. The Group repaid its existing Euro-
denominated secured term loans, mainly using the proceeds received from the refinancing
transactions. The credit agreement covering the new senior unsecured credit facilities was
negotiated with a new loan syndicate. Liabilities under lease contracts where SIG is the
lessee are also included in loans and borrowings.
Composition of loans and borrowings
The below table shows the carrying amount of the Group’s loans and borrowings.
(In € million)
Senior secured credit facilities
Lease liabilities
Current loans and borrowings
Senior unsecured notes
Senior unsecured credit facilities
Senior secured credit facilities
Lease liabilities
Non-current loans and borrowings
Total loans and borrowings
As of
31 Dec.
2020
As of
31 Dec.
2019
-
24.0
24.0
992.2
544.5
-
123.0
1,659.7
39.0
11.8
50.8
-
-
1,500.2
41.7
1,541.9
1,683.7
1,592.7
The following table presents the components of the carrying amount of the loans and
borrowings.
As of
31 Dec.
2020
1,000.0
(7.8)
992.2
550.0
(1.4)
(4.1)
544.5
147.0
As of
31 Dec.
2019
-
-
-
1,560.9
(11.2)
(10.5)
1,539.2
53.5
1,683.7
1,592.7
(In € million)
Principal amount
Deferred transaction costs
Senior unsecured notes
Principal amount (including repayments)
Deferred original issue discount
Deferred transaction costs
Senior unsecured/secured credit facilities
Lease liabilities
Total loans and borrowings
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
160
44
Notes – 2020 refinancing
On 18 June 2020, SIG Combibloc PurchaseCo S.à r.l. issued €1,000 million aggregate
principal amount of senior unsecured notes. The proceeds from the issue of notes were,
together with the proceeds from the new term loan and available cash, used to repay the
existing secured term loans. The notes are traded on the Global Exchange Market of
Euronext Dublin.
The below table provides a summary of the main terms of the senior unsecured notes.
Principal amount
Maturity date
Interest rate
2023 notes
2025 notes
€450 million
€550 million
18 June 2023
18 June 2025
1.875%
2.125%
Interest on the notes is paid semi-annually. The notes can be redeemed in whole or in part
prior to 18 March 2023 for the 2023 notes, and prior to 18 March 2025 for the 2025 notes,
at par plus a make-whole premium. The notes can be redeemed in whole or in part on or
after 18 March 2023 for the 2023 notes, and on or after 18 March 2025 for the 2025 notes,
at a price equal to 100% of their respective principal amounts.
Directly attributable transaction costs in the form of arrangement and advisory fees relating
to the issue of notes totalled €9.1 million are being amortised over the maturity of the
respective notes issue, using the effective interest method.
The obligations under the notes are guaranteed on a senior subordinated basis by Group
subsidiaries in Austria, Brazil, Germany, Luxembourg, Switzerland, the United Kingdom and
the United States. The indenture governing the notes contains customary restrictive
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 2020.
Senior unsecured credit facilities – 2020 refinancing
Certain subsidiaries, including SIG Combibloc PurchaseCo S.à r.l., have in June 2020 entered
into new senior unsecured credit facilities, consisting of one Euro-denominated term loan
and a multi-currency revolving credit facility. The proceeds from the new term loan were,
together with the proceeds from the issue of notes and available cash, used to repay the
existing secured term loans.
The below table provides a summary of the main terms of the new unsecured term loan
and the revolving credit facility.
Principal amount Maturity date
Interest rate
Term loan
Revolving credit facility
€550 million
€300 million
June 2025
June 2025
Euribor+1.00%, with a Euribor floor of 0.00%
Euribor+1.00%, with a Euribor floor of 0.00%
Interest on the term loan is paid semi-annually. The margin of 1.00% will be subject to half-
yearly adjustments based on the Group’s net leverage (as defined in the credit agreement).
The margin will also be subject to a maximum 0.05% per annum increase or decrease based
upon the achievement of certain annual sustainability-linked targets (greenhouse gas
emissions, or “GHG” emissions, and rankings per the EcoVadis Report). No repayments of
the term loan are due prior to maturity. The Group has the right to repay the term loan in
whole or in part without premium or penalty.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
161
45
Directly attributable transaction costs in the form of arrangement and advisory fees for the
term loan amounted to €4.6 million and are, together with an original issue discount of
€1.5 million, being amortised over the term of the loan, using the effective interest method.
The amount available under the multi-currency revolving credit facility is €299.4 million as
of 31 December 2020 due to €0.6 million in letters of credit being outstanding under an
ancillary facility. The Group pays a fee for the undrawn revolver amount per year for the
right to use the revolving credit facility (35% of the margin percentage on an annualised
basis applied to the undrawn balance of the revolving credit facility).
The obligations under the senior unsecured credit facilities are guaranteed by Group
subsidiaries in Austria, Brazil, Germany, Luxembourg, Switzerland, the United Kingdom and
the United States. The credit agreement contains customary positive 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 2020.
Senior secured credit facilities – pre 2020 refinancing
In June 2020, the Group fully repaid its secured term loans existing as of that time without
premium or penalty by using available cash and the proceeds from its new term loan and
issue of notes.
The difference between the carrying amount of the secured term loans as of the repayment
date and the amount paid is presented as part of the net finance expense. The derivatives
associated with the secured term loans were also derecognised. See also note 23.
The below table provides a summary of the main terms of the repaid secured term loan 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 Euribor floor of 0.00%
Euribor+2.50%, with a Euribor floor of 0.00%
Euribor+1.75%, with a Euribor floor of 0.00%
Up until the final repayment of term loan A, the Group made repayments in quarterly
instalments of 0.625% of the initial principal amount. No repayments of term loan B were
due prior to maturity.
The obligations under the senior secured credit facilities were guaranteed and secured by
Group subsidiaries. The credit agreement contained customary affirmative and negative
covenants. It also contained customary events of default. The Group was in compliance with
all covenants and there were no events of default as of 31 December 2019.
The amount available under the multi-currency revolving credit facility was €297.4 million
as of 31 December 2019 due to €2.6 million in letters of credit being outstanding under an
ancillary facility.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
162
46
Lease liabilities
A maturity analysis of the Group’s lease liabilities is included below.
(In € million)
Less than 1 year
Between 1 and 5 years
More than 5 years
Contractual
undiscounted
cash flows
2020
2019
Interest
Lease liabilities
2020
2019
2020
2019
31.2
70.3
142.1
243.6
13.8
32.1
26.3
72.2
7.2
27.3
62.1
96.6
2.0
5.8
10.9
18.7
24.0
43.0
80.0
147.0
11.8
26.3
15.4
53.5
The Group’s lease liabilities mainly relate to leases of office buildings, production-related
buildings and equipment, warehouses and cars (see also note 13). The increase of lease
liabilities in the current year is largely attributable to the commencement of the 20-year
lease of the Group’s second sleeves manufacturing facility in China. As of 31 December 2020,
€60.0 million of the total lease liabilities related to this new lease. The remaining increase in
lease liabilities between the years is mainly related to an increased number of leases of
production equipment for closures in the current year.
Note 13 includes information about lease contracts to which the Group has committed but
where the lease has not yet commenced.
Changes 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 transactions in the
year ended 31 December 2020 relate to the issuance of senior unsecured notes and the
entering into of new senior unsecured credit facilities as well as the repayment of the
secured term loans.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
163
47
Cash flows
(In € million)
Principal amount1
Transaction costs
Original issue discount
Loans and borrowings, excl.
lease liabilities
from/(used in):
1 Jan.
2020
Financing
activities
Operating
activities
1,560.9
(10.5)
(11.2)
(10.9)
-
-
-
(13.0)
(1.5)
1,539.2
(10.9)
(14.5)
Lease liabilities
53.5
Total loans and borrowings 1,592.7
(16.1)
(27.0)
-
(14.5)
Capitalised cost for revolving
credit facility
Interest: Accrued/paid
Derivative (assets)/liabilities
from financing activities
(0.8)
6.2
1,598.1
(0.8)
-
(27.8)
(0.9)
(38.4)
(53.8)
Net effect
of early
repay-
-ment
of loans
Fair value
changes
and other
non-cash
movements
Effect of
move-
ments in
exchange
rates
31 Dec.
2020
-
9.5
10.0
19.5
-
19.5
0.7
-
20.2
-
2.1
1.3
3.4
112.3
115.7
0.3
38.1
154.1
- 1,550.0
-
(11.9)
-
(1.4)
- 1,536.7
(2.7)
147.0
(2.7)
1,683.7
-
-
(2.7)
(1.5)
5.9
1,688.1
2.6
-
(2.7)
(0.5)
0.6
-
-
Total (assets)/liabilities
from financing activities
and cash/non-cash changes 1,600.7
(27.8)
(56.5)
19.7
154.7
(2.7)
1,688.1
1
The cash flow amount relating to the principal amount of loans and borrowings (excluding lease liabilities) shows the net effect of issuing notes (€1,000.0 million of
cash inflow) and entering into a new unsecured term loan (€550 million of cash inflow) and repayment of debt (€1,560.9 million of cash outflow, split between
quarterly repayments of €7.8 million relating to the secured term loan A and €1,553.1 million relating to the final repayment of the secured term loans A and B). For
further information, see previous sections in this note and note 23.
Cash flows
from/(used in):
1 Jan.
2019
Financing
activities
Operating
activities
Fair value
changes
and other
non-cash
movements
Effect of
move-
ments in
exchange
rates
31 Dec.
2019
1,592.2
(13.1)
(14.2)
(31.3)
-
-
1,564.9
(31.3)
26.5
1,591.4
(1.1)
3.3
1,593.6
(5.8)
(37.1)
-
-
(37.1)
-
-
-
-
-
-
-
(41.7)
(41.7)
-
2.6
3.0
5.6
32.4
38.0
0.3
44.6
82.9
- 1,560.9
-
(10.5)
-
(11.2)
- 1,539.2
0.4
0.4
-
-
0.4
53.5
1,592.7
(0.8)
6.2
1,598.1
1.2
-
(1.3)
2.7
-
2.6
1,594.8
(37.1)
(43.0)
85.6
0.4
1,600.7
(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
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
164
48
Accounting policy
Loans and borrowings (the notes and 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 twelve 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 notes and 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
(including modifications that do not reflect movements in market rates of interest), 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 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).
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
165
49
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 change in fair value of derivatives
Finance income
Interest expense on:
- Senior unsecured notes
- Senior unsecured/secured credit facilities
- Lease liabilities
Amortisation of original issue discount
Amortisation of transaction costs
Net foreign currency exchange loss
Net change in fair value of derivatives
Net interest expense on interest rate swaps
Net effect of early repayment of secured term loans
Other
Finance expenses
Net finance expense
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
2.1
-
0.5
2.6
(10.7)
(18.2)
(2.9)
(1.3)
(3.1)
(19.6)
-
(0.6)
(19.7)
(7.5)
(83.6)
(81.0)
2.8
9.2
-
12.0
-
(33.9)
(2.2)
(3.0)
(2.8)
-
(1.5)
(1.3)
-
(11.9)
(56.6)
(44.6)
The Group used proceeds from its new term loan and issue of notes in June 2020 as well as
available cash to repay its existing secured term loans. The net expense effect of the early
repayment of the existing secured term loans is €19.7 million, of which €2.1 million relates
to cash settlement of interest rate swaps. For additional details, see notes 22 and 25.
Net change in fair value of derivatives consists of fair value changes on financing-related
derivatives.
In the year ended 31 December 2020, the net foreign currency exchange loss primarily
consists of negative translation effects on Euro-denominated debt held by a US Dollar
functional currency entity and on intra-group loan payables, primarily resulting from the
weakening of the Brazilian Real against the Euro.
Other finance expenses primarily consist of revolver commitment fees, securitisation and
factoring expenses and interest expense on current tax liabilities.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
166
50
24
Equity
This note includes information about the Company’s share capital and dividend payments.
The other components of equity consist of additional paid-in capital, the translation reserve,
treasury shares and retained earnings. The Company’s shares are listed on SIX Swiss
Exchange.
Issued share capital
The Company has 320,053,240 shares in issue as of 31 December 2020 (also as of
31 December 2019 and 1 January 2019), all 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. The 320,053,240 shares represent
€2.8 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 2020 and 31 December 2019.
The Board of Directors’ authority to increase the share capital out of authorised share
capital is limited until 7 April 2022. 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).
However, the shares issued from authorised and conditional share capital under the
exclusion of subscription and advance subscription rights, respectively, is limited until
7 April 2022 to a single combined maximum of 32,005,324 shares (equalling CHF 320,053.24
or 10% of existing share capital).
The authorised share capital can be used for various purposes. This creates a flexibility to
into
seek additional capital,
CHF 160,026.62 for employee benefit plans and CHF 480,079.86 for equity linked financing
instruments.
if required. The conditional share capital
is divided
See note 4 for information about a planned issue of shares out of the Company’s authorised
share capital in connection with the acquisition of the remaining shares in the two joint
ventures in the Middle East that is expected to be closed in the first quarter of 2021.
Treasury shares
The Company purchases its own shares on the market to settle its obligations under its
share-based payment plans and arrangements (see note 31). The Company held
6,274 shares for this purpose as of 31 December 2020 (6,158 as of 31 December 2019),
representing an amount of €0.1 million (€0.1 million as of 31 December 2019). All treasury
shares are carried at acquisition cost.
(Number of treasury shares or in € million)
Number
Amount
Number
Amount
2020
2019
Balance as of 1 January
Purchases
Transfer under share-based payment plans
and arrangements
Balance as of 31 December
6,158
40,000
(39,884)
6,274
(0.1)
(0.6)
0.6
(0.1)
-
47,000
(40,842)
6,158
-
(0.5)
0.4
(0.1)
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
167
51
Dividends
For the year ended 31 December 2020, the Board of Directors will propose to the Annual
General Meeting to be held on 21 April 2021 a dividend payment of CHF 0.42 per share,
totalling CHF 134.4 million (which, as per the exchange rate as of 31 December 2020, would
equal €124.4 million). This amount excludes any additional shares in circulation as a result
of the planned acquisition of the remaining shares in the two joint ventures in the Middle
East (see note 4). The dividend payment to be proposed is not recognised as a liability.
A dividend of CHF 0.38 per share, totalling CHF 121.6 million (€114.8 million) was paid to
shareholders out of the capital contribution reserve (additional paid-in capital) in April 2020.
The dividend payment was not recognised as a liability as of 31 December 2019.
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.
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 are subsequently 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.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
168
52
Liquidity 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 multi-currency 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 €353.3 million
(€254.9 million as of 31 December 2019) and access to an additional €299.4 million under
its revolving credit facility as of 31 December 2020 (€297.4 million as of 31 December 2019).
The following table includes information about the remaining contractual maturities for the
Group’s non-derivative financial liabilities as of 31 December 2020. 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 2020
Trade and other payables
Loans and borrowings:
- Senior unsecured notes
- Senior unsecured credit facilities
- Lease liabilities
Total non-derivative
financial liabilities
Carrying
amount
Total
Up to
1 year 1-2 years 2-5 years
More than
5 years
Contractual cash flows
(505.4)
(505.4)
(493.1)
(4.0)
(7.5)
(0.8)
(992.2)
(544.5)
(147.0)
(1,073.0)
(579.7)
(243.6)
(20.1)
(6.7)
(31.2)
(20.1)
(6.7)
(20.8)
(1,032.8)
(566.3)
(49.5)
-
-
(142.1)
(2,189.1)
(2,401.7)
(551.1)
(51.6)
(1,656.1)
(142.9)
The agreements with the Group’s notes holders and the lenders under the senior unsecured
notes 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
agreements at all times.
The interest payments on the senior unsecured credit facilities are variable. The interest
rate amounts included in the above table that relate to those facilities will therefore change
if the market interest rate (Euribor) changes. The interest rate amounts are also subject to
change depending on the Group’s net leverage and the achievement of sustainability-linked
targets.
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 2020
and 31 December 2019 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.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
169
53
The following table includes information about the remaining contractual maturities for the
Group’s non-derivative financial liabilities as of 31 December 2019.
Carrying
amount
Total
Up to
1 year 1-2 years 2-5 years
More than
5 years
Contractual cash flows
(493.2)
(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)
(In € million)
As of 31 December 2019
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.
In 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 systematically hedges its major transactional currency exposures,
using a twelve-month rolling layered approach. See also note 8.
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 systematically hedging its major transaction currency exposures (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 2020.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
170
54
Type
Non-deliverable
forwards
Non-deliverable
forwards
Currency forwards
Currency swap
Currency forwards
Currency forwards
Currency forwards
Currency swap
Currency swap
Currency swap
Currency swap
Currency forwards
Currency forwards
Currency forwards
Currency forwards
Currency swap
Currency forwards
Currency forwards
Currency swap
Currency swap
Contract
type
Curr-
ency
Contracted
volume
Counter-
currency
Contracted
conversion range
Contracted
date of maturity
Buy
Sell
Buy
Sell
Sell
Buy
Buy
Sell
Sell
Buy
Buy
Sell
Sell
Buy
Buy
Buy
Buy
Buy
Sell
Sell
€
€
€
€
$
€
$
€
$
€
$
€
$
€
€
€
$
$
€
$
20,145,000
BRL
4.9116 - 6.9580
Jan. 2021 - Dec. 2021
820,000
32,054,177
320,000
17,865,000
27,850,000
23,105,000
3,100,000
3,500,000
845,000
1,220,000
13,935,000
22,215,000
3,179,500
37,948,000
50,000,000
1,144,226
33,300,000
16,000,000
5,390,000
BRL
THB
THB
THB
CNY
CNY
CNY
CNY
NZD
NZD
NZD
NZD
AUD
$
$
AUD
MXN
$
MXN
6.6684
34.6594 - 37.6264
35.9631
29.7565 - 32.4070
7.7613 - 8.4257
6.5749 - 7.1830
7.8471 - 8.0323
6.5452 - 6.6122
1.7338 - 1.7852
0.6560 - 0.6683
1.7155 - 1.8562
0.5871 - 0.7129
1.6122 - 1.6859
1.0873 - 1.2321
1.2199
0.7566 - 0.7569
19.6999 - 25.6022
1.2279
Jan. 2021
Jan. 2021 - Dec. 2021
Apr. 2021
Jan. 2021 - Dec. 2021
Jan. 2021 - Dec. 2021
Jan. 2021 - Dec. 2021
Jan. 2021 - Apr. 2021
Jan. 2021
Jan. 2021 - Oct. 2021
Jan. 2021
Jan. 2021 - Dec. 2021
Jan. 2021 - Dec. 2021
Jan. 2021 - Jun. 2021
Jan. 2021 - Dec. 2021
Jan. 2021
Jan. 2021 - May 2021
Jan. 2021 - Dec. 2021
Jan. 2021
21.2402 - 23.1884 Feb. 2021 - May 2021
The following table provides an overview of the outstanding foreign currency exchange
derivative contracts 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
Curr-
ency
Contracted
volume
Counter-
currency
Contracted
conversion range
Contracted
date of maturity
Buy
Buy
Sell
Buy
Sell
Buy
Buy
Sell
Buy
Sell
Buy
Sell
Buy
Sell
€
$
$
€
$
€
$
€
$
$
€
€
$
$
23,880,000
BRL
4.4065 - 4.8779
Jan. 2020 - Dec. 2020
745,000
BRL
3.8485 - 4.0652
Jan. 2020 - Apr. 2020
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
BRL
THB
THB
CNY
CNY
NZD
NZD
NZD
$
$
MXN
MXN
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 - 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
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
171
55
The Group’s primary transaction currency exposure as of 31 December 2020 and
31 December 2019 related 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 2020 (31 December 2019) would have resulted in an additional unrealised
foreign currency exchange loss of €14.1 million as of 31 December 2020 (an additional
unrealised foreign currency exchange loss of €8.2 million as of 31 December 2019).
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 feedstocks) 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 anticipated 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 €18.8 million in the year ended 31 December
2020 and an unrealised gain of €10.6 million in the year ended 31 December 2019 relating
to its derivative commodity contracts as a component of other income. The Group
recognised a realised loss of €18.7 million in the year ended 31 December 2020 and a
realised loss of €21.5 million in the year ended 31 December 2019 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 2020.
Type
Unit of
measure
Contracted
volume
Contracted
price range
Contracted
date of maturity
Aluminium swaps
Aluminium premium swaps
Polymer swaps
Polymer swaps
Polymer swaps
Monomer swaps
metric tonne
metric tonne
metric tonne
metric tonne
metric tonne
metric tonne
22,800
8,340
36,480
8,280
28,860
24,540
$1,564.00 - $1,893.00
$129.00 - $166.50
€1,218.00 - €1,294.00
€1,199.00 - €1,254.00
$915.00 - $1,020.00
€863.00 - €905.00
Jan. 2021 - Dec. 2021
Jan. 2021 - Dec. 2021
Jan. 2021 - Dec. 2021
Jan. 2021 - Dec. 2021
Jan. 2021 - Dec. 2021
Jan. 2021 - Dec. 2021
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
172
56
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
Polymer swaps
Polymer swaps
Polymer swaps
Monomer swaps
metric tonne
metric tonne
metric tonne
metric tonne
metric tonne
metric tonne
23,040
8,280
36,060
8,100
29,400
22,920
$1,750.00 - $1,979.00
$159 - $171
€1,344 - €1,410
€1,339 - €1,420
$980.00 - $1,175.00
€975 - €993.50
Jan. 2020 - Dec. 2020
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 €14.3 million on the Group’s profit from a
remeasurement of commodity derivative contracts as of 31 December 2020 (an impact of
€14.4 million on the profit as of 31 December 2019), assuming a 10% parallel upward or
downward movement in the price curve used to value the commodity derivative contracts
and assuming all other variables remain constant.
Interest rate risk
After the refinancing in June 2020, the Group’s interest rate risk primarily arises from its new
term loan and drawings of the revolving credit facility at variable interest rates (see note 22)
but also from its cash and cash equivalents. The Group pays a fixed interest rate on its notes.
Prior to the refinancing, the Group’s interest rate risk primarily arose from its secured term
loans at variable interest rates. The Group had entered into interest rate swaps to hedge a
portion of the cash flow exposure that arose on the secured term loans that were repaid in
June 2020. The interest rate swaps were terminated at market rates in connection with the
repayment of the secured term loans (see notes 22 and 23). The Group had not designated
the interest rate swaps as hedging instruments, thus the fair value changes have been
recognised in profit or loss.
The interest rate profile of the Group’s significant interest-bearing financial instruments as
of 31 December 2020 and 31 December 2019 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
Annual Report 2020
As of
31 Dec.
2020
As of
31 Dec.
2019
3.9
(1,147.0)
(1,143.1)
-
(1,143.1)
355.1
(550.0)
(194.9)
-
(194.9)
5.1
(53.5)
(48.4)
(800.0)
(848.4)
261.0
(1,560.9)
(1,299.9)
800.0
(499.9)
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
173
57
A 100 basis point increase in the variable component (six-month Euribor) of the interest rate
on the new term loan would increase the annual interest expense by €2.6 million as of
31 December 2020. A 100 basis point increase in the variable component (three-month
Euribor) of the interest rate on the secured term loans that were repaid in June 2020 would
have increased the annual interest expense by €4.6 million as of 31 December 2019.
Credit risk
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. As the Group’s customers are in the food and beverage industry,
management does not believe that there are any material changes to the Group’s exposure
to credit risk due to the COVID-19 pandemic.
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.
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.
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).
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
174
58
OUR GROUP STRUCTURE AND
RELATED PARTIES
This section provides details about the Group’s subsidiaries and joint ventures, including
certain updates regarding the acquisition of Visy Cartons in 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 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 2020 and 31 December 2019, unless specifically
stated. The reporting date of all Group entities is 31 December.
The table does not list subsidiaries of the Group’s joint ventures. In the context of the SIX
Information relating to Corporate Governance,
Exchange Regulation Directive on
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 corresponds to more than 5% of the
total revenue of such joint venture in the relevant year.
Companies and countries
Parent company
Switzerland
SIG Combibloc Group AG, Neuhausen am Rheinfall1
Subsidiaries
Argentina
Combibloc S.R.L., Buenos Aires
Australia
SIG Australia Holding Pty Ltd., Melbourne
SIG Combibloc Australia Pty Ltd., Broadmeadows2
Whakatane Mill Australia Pty Ltd., Melbourne3
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., Sao Paulo
SIG Combibloc do Brasil Ltda., Sao Paulo
Chile
SIG Combibloc Chile SpA, Santiago4
Annual Report 2020
As of 31 December 2020
Share capital8
Interest
3,200,532 CHF
100%
724,015,120 ARS
100%
32,100,000 AUD
40,000,001 AUD
-
1,000,000 EUR
35,000 EUR
4,500,000 EUR
100%
100%
-
100%
100%
100%
50,000,000 BDT
100%
109,327,434 BRL
722,386,462 BRL
100%
100%
5,016,722,134 CLP
100%
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
175
59
As of 31 December 2020
Share capital8
Interest
95,000,000 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%
-
-
34,000,000
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%
330,550 EUR
100%
100,000 SEK
100%
Companies and countries
China
SIG Combibloc (Suzhou) Co. Ltd., Suzhou
Czech Republic
SIG Combibloc s.r.o., Hradec Králové
France
SIG Combibloc S.à.r.l., Asnières Cedex
Germany
SIG Combibloc GmbH, Linnich
SIG Combibloc Systems GmbH, Linnich
SIG Combibloc Zerspanungstechnik GmbH, Aachen
SIG Euro Holding GmbH, Linnich
SIG Information Technology GmbH, Linnich
SIG International Services GmbH, Linnich
Hungary
SIG Combibloc Kft., Budapest5
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 S.à r.l., Munsbach
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
OOO SIG Combibloc, Moscow
Spain
SIG Combibloc S.A., Madrid
Sweden
SIG Combibloc AB, Kista
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
176
60
Companies and countries
Switzerland
SIG allCap AG, Neuhausen am Rheinfall
SIG Combibloc Services AG, Neuhausen am Rheinfall
SIG Combibloc Procurement AG, Neuhausen am Rheinfall
SIG Combibloc Receivables Management AG, Neuhausen am Rheinfall
SIG Schweizerische Industrie-Gesellschaft GmbH, Neuhausen am Rheinfall
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
Al Obeikan SIG Combibloc Company Ltd., Riyadh6, 7
UAE
SIG Combibloc Obeikan FZCO, Dubai7
As of 31 December 2020
Share capital8
Interest
7,000,000 CHF
37,931,400 CHF
2,000,000 CHF
1,000,000 CHF
20,000 CHF
3,000,000 CHF
100%
100%
100%
100%
100%
100%
15,000,000 TWD
100%
3,070,693,000 THB
100%
1,500,000 GBP
100%
10 USD
10 USD
27,000,000 USD
1,000 USD
100%
100%
100%
100%
2,000,000,000 VND
100%
75,000,000
JPY
50%
75,000,000 SAR
50%
24,000,000 AED
50%
1
2
The registered address of SIG Combibloc Group AG is Laufengasse 18, 8212 Neuhausen am Rheinfall, Switzerland.
Visy Cartons Pty Ltd. was acquired in the fourth quarter of 2019 (see note 27) and renamed to SIG Combibloc Australia Pty Ltd.
3 Whakatane Mill Australia Pty Ltd was liquidated in the second quarter of 2020.
4
5
6
Previously SIG Combibloc Chile Ltd. The company converted into a Sociedad por Acciones (SpA) in the first quarter of 2020.
SIG Combibloc Kft. was liquidated in the second quarter of 2020.
Previously SIG Combibloc Obeikan Company Ltd., renamed to Al Obeikan SIG Combibloc Company Ltd. in the third quarter of 2020.
7 On 25 November 2020, the Group announced its intention to acquire the remaining shares in the two joint ventures in the Middle East. The transaction is expected
to close before the end of the first quarter of 2021. See note 4.
8
Unaudited.
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.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
177
61
Accounting policy/basis of consolidation (continued)
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.
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 on 29 November 2019. Visy Cartons provides carton packaging
solutions for beverages in Australia and New Zealand, including SIG’s aseptic carton
packaging solutions. It operates a sleeves manufacturing facility in Australia. The Group
acquired Visy Cartons to gain full access to the beverage carton market in Australia and New
Zealand, and to realise synergies from supply chain efficiencies and the use of the Group’s
latest technologies and solutions. Visy Cartons was renamed to SIG Combibloc Australia Pty
Ltd. in December 2019 and is part of the Group’s business in Asia Pacific.
Finalisation of the acquisition accounting in 2020
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.
(In € million)
Cash paid on acquisition date
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
Goodwill
40.5
2.5
43.0
9.7
13.9
10.5
(2.5)
(3.1)
28.5
14.5
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
178
62
The final consideration transferred totals €43.0 million. The Group paid €40.5 million
(AUD 65.8 million) in cash on the acquisition date. Management had estimated that it would
have an obligation to pay an additional €2.5 million upon the completion settlement and
had therefore recognised a liability in the same amount as of 31 December 2019. The
completion settlement was finalised in March 2020 and resulted in an additional
consideration of €2.5 million. Consequently, there was no impact from the agreed
additional payment on the amount of goodwill of €14.5 million initially recognised. The fair
value of the identifiable net assets acquired was determined on a provisional basis as of
31 December 2019 but was deemed final in the second half of 2020. The goodwill arising on
the acquisition thereby remains unchanged at €14.5 million.
Other information
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 has been allocated to the APAC
segment for impairment testing purposes. The intangible assets acquired comprise
customer relationships for which the useful lives are assessed to be ten years. The property,
plant and equipment balance 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 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.
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
as of the date of acquisition would have been the same if the acquisition had occurred on
1 January 2019.
Accounting policy
Business combinations are accounted for using the acquisition method when the acquired set of
activities and assets meets the definition of a business. Business combinations are accounted for 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.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
179
63
Accounting policy (continued)
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.
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.
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.
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, OIG, invested in the two joint ventures in the Middle East in 2001. The joint venture
in Japan was formed in 2018 with the joint venture partner DNP.
On 25 November 2020, the Group announced its intention to acquire the remaining shares
in the two joint ventures in the Middle East. The transaction is expected to close before the
end of the first quarter of 2021. For further information about the planned acquisition, see
note 4.
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 below table provides an overview of the Group’s joint ventures.
Companies
Reporting
date
Country of
incorporation
Interest held at
31 Dec.
2020
31 Dec.
2019
Al Obeikan SIG Combibloc Company Ltd.1
SIG Combibloc Obeikan FZCO
DNP • SIG Combibloc Co., Ltd.
31 Dec.
31 Dec.
31 Dec.
Saudi Arabia
UAE
Japan
50%
50%
50%
50%
50%
50%
1
Previously SIG Combibloc Obeikan Company Ltd., renamed to Al Obeikan SIG Combibloc Company Ltd. in the third quarter of 2020.
Al Obeikan SIG Combibloc Company Ltd. operates a sleeves manufacturing facility in Saudi
Arabia from which it supplies sleeves, also to SIG Combibloc Obeikan FZCO. Both of 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.
There have been no significant transactions with the joint venture in Japan in the years
ended 31 December 2020 and 31 December 2019.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
180
64
Summary joint venture financial information
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.
(In € million)
31 December 2020
Al Obeikan SIG Combibloc Company
Ltd., Saudi Arabia
SIG Combibloc Obeikan FZCO, UAE
DNP • SIG Combibloc Co., Ltd., Japan
Total
31 December 2019
Al Obeikan SIG Combibloc Company
Ltd., Saudi Arabia
SIG Combibloc Obeikan FZCO, UAE
DNP • SIG Combibloc Co., Ltd., Japan
Total
(In € million)
Current
assets
Non-
current
assets
Total
assets
Current
liabilities
Non-
current
liabilities
Total
liabilities
Net
assets
57.7
161.5
1.4
220.6
90.5 148.2
177.5 339.0
2.0
0.6
268.6 489.2
31.6
123.3
1.2
156.1
81.0
184.8
-
265.8
112.6
308.1
1.2
421.9
35.6
30.9
0.8
67.3
61.9
168.1
6.0
236.0
110.1 172.0
200.7 368.8
6.0
-
45.5
96.4
6.2
310.8 546.8
148.1
99.1
218.7
-
317.8
144.6
315.1
6.2
465.9
27.4
53.7
(0.2)
80.9
Revenue Expenses
Profit
after tax
2020
Al Obeikan SIG Combibloc Company Ltd., Saudi Arabia
SIG Combibloc Obeikan FZCO, UAE
DNP • SIG Combibloc Co., Ltd., Japan
Total
2019
Al Obeikan SIG Combibloc Company Ltd., Saudi Arabia
SIG Combibloc Obeikan FZCO, UAE
DNP • SIG Combibloc Co., Ltd., Japan
Total
141.4
208.4
7.0
356.8
162.5
213.1
0.5
376.1
(125.2)
(190.9)
(6.0)
(322.1)
(143.2)
(200.4)
(1.7)
(345.3)
Joint venture impact on the consolidated financial statements
(In € million)
Carrying amount as of 1 January
Share of profit (net of income tax)
Dividends received
Effect of movements in exchange rates
Other
Carrying amount as of 31 December
Amount of goodwill in carrying amount of joint ventures as of 31 Dec.
Accounting policy
The accounting policy for joint ventures is included in note 26.
Annual Report 2020
2020
193.4
17.4
(22.7)
(3.8)
0.2
184.5
150.8
16.2
17.5
1.0
34.7
19.3
12.7
(1.2)
30.8
2019
198.7
15.4
(20.7)
0.8
(0.8)
193.4
153.0
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
181
65
29
Related parties
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).
Shareholders
The Company’s shares are listed on SIX Swiss Exchange.
Onex and a number of co-investors related to it gradually reduced their shareholding in the
Company in 2020. Onex ceased to be a related party to the Company in August 2020, when
its shareholding was reduced to below 20% (to 10.1% of the issued shares). Onex sold its
remaining shares in the Company in December 2020. See also the below section “Related
party transactions and balances”. According to the disclosure notifications reported to the
Company during 2020 and published by the Company via the electronic publishing platform
of SIX Swiss Exchange, Onex did not report any shareholding of 3% or more of the voting
rights of the Company as of 31 December 2020 (32.9% as of 31 December 2019).
Certain members of SIG management participated in a management equity plan that was
established in 2015. They held shares in the Company, acquired at fair value, via its
participation in two limited liability partnerships. The limited liability partnerships held 1.1%
of the shares as of 31 December 2019. In accordance with the plan regulations,
management exercised their right to withdraw from the management equity plan in the first
half of 2020. As such, they no longer indirectly hold shares in the Company through such
limited liability partnerships.
The members of the Group Executive Board directly held 0.3% of the Company’s shares as
of 31 December 2020 (indirectly 0.6% as of 31 December 2019). The members of the Board
of Directors directly held 0.07% of the Company’s shares as of 31 December 2020 (directly
0.04% and indirectly 0.06% as of 31 December 2019).
Key management
The Company’s key management include the members of the Group Executive Board of SIG
and the Board of Directors.
The below table includes information about compensation to the Group Executive Board.
(In € million)
Short-term employee benefits
Post-employment benefits
Share-based payments
Termination benefits
Total compensation to the Group Executive Board
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
6.0
0.5
2.1
5.5
14.1
6.8
0.5
1.1
-
8.4
An expense of €5.5 million have been recognised in the year ended 31 December 2020 for
termination benefits (including non-compete agreements) concerning three former
members of the Group Executive Board. The Chief Market Officer (Markus Boehm) left the
Company in August 2020 when the Group announced organisational changes in the Group
Executive Board, including the elimination of his position and a reallocation of his
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
182
66
responsibilities within the Group. The President and General Manager of Europe (Martin
Herrenbrück) announced in August 2020 that he would leave the Company as of
31 December 2020. The Chief Executive Officer (Rolf Stangl) announced in November 2020
that he would also leave the Company as of 31 December 2020. Their terminations have
been reflected in the measurement of the amount recognised as a share-based payment
expense, considering the good and bad leaver clauses in the share-based payment plans in
which the three former members of the Group Executive Board participated.
See note 31 for information about the participation of the members of the Group Executive
Board in share-based payment plans.
Compensation to the members of the Board of Directors totalled €1.6 million for the year
ended 31 December 2020 (€1.6 million for the year ended 31 December 2019). The
members of the Board of Directors receive part of their compensation in blocked shares
(blocked shares and restricted share units in the year ended 31 December 2019). 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
2020 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.
Related party transactions and balances
Onex used to provide consultancy services to the Company on various matters without any
compensation other than for out-of-pocket expenses. Since December 2020, Onex no
longer provides consultancy services to the Company. The information sharing agreement
between SIG and Onex was terminated on 6 August 2020, when Onex ceased to be a related
party to the Company.
Information about other related parties is provided in the following table. Transactions with
Onex portfolio companies are reported up until 6 August 2020.
Transaction values for
the years ended
31 Dec.
2020
31 Dec.
2019
Balance outstanding
as of
31 Dec.
2020
31 Dec.
2019
100.2
0.4
22.7
111.0
-
20.7
10.1
-
-
17.1
-
-
6.3
4.1
-
-
(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
Purchase of goods
Dividends received
Onex portfolio companies
Purchase of goods (supplies and machine parts):
- Erwepa/Davis Standard
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
183
67
There were no other significant related party transactions during the years ended
31 December 2020 and 31 December 2019. As of 31 December 2020, the Group had no
commitments to incur capital expenditure with related parties (€9.3 million for the year
ended 31 December 2019, concerning Erwepa).
The Group announced on 25 November 2020 that it has entered into an agreement to
acquire the remaining 50% of the shares in its two joint ventures in the Middle East. The
acquisition is expected to complete before the end of the first quarter of 2021. See further
note 4.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
184
68
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. 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.
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.
2020
As of
31 Dec.
2019
41.1
9.4
2.9
128.6
182.0
50.5
131.5
182.0
35.6
9.6
3.0
123.3
171.5
45.2
126.3
171.5
The Group has a net defined benefit asset in the amount of €178.5 million as of
31 December 2020 (€168.4 million as of 31 December 2019). It relates to the defined benefit
pension plan in Switzerland. The Group’s net defined benefit liabilities relate to defined
benefit pension plans in other countries.
Personnel expenses
Personnel expenses recognised in the statement of profit or loss and other comprehensive
income were €347.0 million in the year ended 31 December 2020 and €320.6 million in the
year ended 31 December 2019.
Defined benefit pension plans
The Group makes contributions to defined benefit pension plans. It operates defined
benefit pension plans in countries including Austria, France, Germany, India, 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 2020, the
Swiss retirement plan comprises 74% (75% as of 31 December 2019) of the present value of
the Group’s pension plan obligations. Therefore, certain information applicable to the Swiss
Annual Report 2020
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Consolidated financial statements
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185
69
retirement plan has been separately disclosed. As of 31 December 2020, the fair value of
the assets of the Swiss retirement plan exceeded the present value of its pension obligations
by €178.5 million (€168.4 million as of 31 December 2019). 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 2021 are estimated to be €5.0 million. The Group’s pension plans had
a weighted average duration of 14 years as of 31 December 2020 (13 years as of
31 December 2019).
Movement in net defined benefit obligation
Information about the net defined benefit obligation as of and for the year ended
31 December 2020 and the year ended 31 December 2019 is included below.
(In € million)
Carrying amount as of the beginning
of the year
Service cost
Interest cost/(income)
Administrative expenses
Curtailments
Total expense/(income) recognised in
profit or loss
Actuarial (gains)/losses arising from:
Demographic assumptions
Financial assumptions
Return on plan assets,
excluding interest income
Total remeasurement (gains)/losses
included in other comprehensive
income
Defined benefit
obligation
Fair value of plan
assets
Net defined benefit
liability/(asset)
2020
2019
2020
2019
2020
2019
504.5
7.1
1.8
-
0.2
497.0
7.6
4.7
-
-
(549.6)
-
(0.9)
0.5
-
(518.3)
-
(3.6)
0.5
-
(45.1)
7.1
0.9
0.5
0.2
(21.3)
7.6
1.1
0.5
-
9.1
12.3
(0.4)
(3.1)
8.7
9.2
9.0
9.3
(2.9)
22.9
-
-
-
-
9.0
9.3
(2.9)
22.9
-
-
(25.7)
(43.3)
(25.7)
(43.3)
18.3
20.0
(25.7)
(43.3)
(7.4)
(23.3)
Contributions by the Group
Contributions by plan participants
Benefits paid by the plans
Effect of movements in exchange rates
-
1.7
(25.6)
1.2
-
1.7
(41.2)
14.7
Total other movements
(22.7)
(24.8)
(4.8)
(1.7)
25.6
(2.5)
16.6
(4.4)
(1.7)
41.2
(20.0)
15.1
(4.8)
-
-
(1.3)
(6.1)
(4.4)
-
-
(5.3)
(9.7)
Carrying amount as of the end
of the year
Comprised of:
Swiss retirement plan
All other plans
Carrying amount as of the end
of the year
Included in the statement of financial
position as:
Employee benefits (asset)
Employee benefits (liability)
Total net defined pension benefits
Annual Report 2020
509.2
504.5
(559.1)
(549.6)
(49.9)
(45.1)
376.4
132.8
376.9
127.6
(554.9)
(4.2)
(545.3)
(4.3)
(178.5)
128.6
(168.4)
123.3
509.2
504.5
(559.1)
(549.6)
(49.9)
(45.1)
(178.5)
128.6
(49.9)
(168.4)
123.3
(45.1)
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Financials ► Consolidated financial statements
Consolidated financial statements
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70
Expense 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.
(In € million)
Cost of sales
Selling, marketing and distribution expenses
General and administrative expenses
Total net pension expense
thereof the Swiss retirement plan
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
4.1
0.9
3.7
8.7
4.6
4.7
0.9
3.6
9.2
4.0
Expense recognised in other comprehensive income
The remeasurement of the Group’s defined benefit pension plans in the year ended
31 December 2020 resulted in a €7.8 million increase, net of income tax, in other
comprehensive income (an increase of €24.0 million, net of income tax, in the year ended
31 December 2019).
Plan assets
(In € million)
Equity instruments
Debt instruments
Real estate
Other
Total plan assets
As of
31 Dec.
2020
As of
31 Dec.
2019
152.8
224.1
159.9
22.3
559.1
149.2
216.3
162.0
22.1
549.6
Approximately 99% of total plan assets are held by the Swiss retirement plan as of
31 December 2020 (99% as of 31 December 2019). 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 2020 and 2019 was BVG 2015 GT.
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71
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 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 below table.
(In %)
Discount rates
Future salary increases
Swiss retirement plan
All plans
As of
31 Dec.
2020
0.10%
1.50%
As of
31 Dec.
2019
As of
31 Dec.
2020
As of
31 Dec.
2019
0.15%
1.50%
0.10% - 6.60% 0.15% - 7.30%
0.0% - 9.0% 0.00% - 9.00%
The below table 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.
2020
As of
31 Dec.
2019
As of
31 Dec.
2020
As of
31 Dec.
2019
(4.8)
20.0
1.1
(1.0)
(4.2)
17.7
1.2
(1.1)
(15.3)
32.2
2.0
(1.9)
(14.6)
29.6
2.2
(2.1)
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.
Accounting 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.
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72
Accounting policy (continued)
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.
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31
Share-based payment plans and arrangements
The Group has three share-based long-term incentive plans for certain members of
management. The members of the Board of Directors receive a part of their total
compensation under share-based payment arrangements. These plans and arrangements
have an insignificant impact on the Group’s result. 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
Since 2019, the Group grants performance share units (“PSUs”) annually to the members of
the Group Executive Board and certain other members of management. The terms and
vesting conditions of the 2020 PSU plan are equivalent to the terms and vesting conditions
of the 2019 PSU plan.
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.
The 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 the grant date 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 grant date for the 2020 PSU plan was 1 April 2020 (1 April 2019 for the 2019 PSU plan).
Under the 2020 PSU plan, eight employees were granted in total 342,198 PSUs, of which
325,586 PSUs relate to members of the Group Executive Board. Under the 2019 PSU plan,
nine employees were granted in total 537,414 PSUs, of which 495,263 PSUs related to
members of the Group Executive Board. For the 2020 plan, the fair value of one PSU was
CHF 15.05 as of grant date (CHF 9.49 for the 2019 plan).
Three members of the Group Executive Board left the Company in the year ended
31 December 2020 (see further note 29). As a result, the total number of PSUs for both the
2019 and 2020 plans was reduced by 341,414 PSUs. These forfeited PSUs had an impact on
the share-based payment expense recognised for the year ended 31 December 2020. As of
31 December 2020, a total of 538,198 PSUs were outstanding.
Annual Report 2020
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Financials ► Consolidated financial statements
Consolidated financial statements
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74
Restricted share unit plan
Since 2019, the Group annually grants restricted share units (“RSUs”) to a small number of
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 fair value of one RSU
is calculated based on the closing share price of one SIG share on the grant date 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 grant date for the 2020 RSU award was 1 April 2020 (1 April 2019 for the 2019 RSU plan).
Under both the 2020 and 2019 RSU plans, two employees were granted a small number of
RSUs. For the 2020 plan, the fair value of one RSU was CHF 13.60 as of grant date (CHF 9.27
for the 2019 plan).
Equity investment plan
In 2020, the Group introduced an equity investment plan (“EIP”) for a wider group of
management in leadership positions under which the participants have the choice to invest
in SIG shares at market value. The shares are blocked for three years. For each purchased
share, the Group grants the participants two matching options to purchase another two
shares at a pre-defined exercise price at the end of a three-year vesting period.
The grant date for the 2020 EIP award was 31 May 2020. 66 employees were granted in total
220,588 options. The fair value of one option, calculated using the Black-Scholes model, was
CHF 2.82 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 share-based
payment compensation is paid out in SIG shares that are blocked for three years. In the year
ended 31 December 2019, a couple of members received RSUs instead of blocked shares.
The grant date is the date of the Annual General Meeting (generally held in April), when the
total compensation package for the next term of office is approved. The compensation is
paid out four times during the one-year long term of office (i.e. there are four award dates,
each relating to work performed during the quarter before the respective award date). The
number of blocked shares 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 first ten trading days of the third month of the quarter for which the blocked shares are
granted. The fair value of one blocked share is calculated based on the closing share price
of one SIG share on the grant date.
The Group granted 39,884 blocked shares to the members of the Board of Directors in the
year ended 31 December 2020 (40,842 blocked shares and 14,236 RSUs 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 14.93 as of grant date (CHF 10.02
for the year ended 31 December 2019).
Annual Report 2020
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Financials ► Consolidated financial statements
Consolidated financial statements
Financials
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75
Share-based payment expense
The share-based payment expense recognised as a personnel expense in the year ended
31 December 2020 relating to the PSU, RSU and equity investment plans for SIG
management amounts to €2.6 million, of which €2.1 million relates to members of the
Group Executive Board (€1.2 million for the year ended 31 December 2019, of which
€1.1 million related 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 the arrangement for the Board of Directors
amounts to €0.6 million (€0.6 million for the year ended 31 December 2019).
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.
Annual Report 2020
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Financials ► Consolidated financial statements
Consolidated financial statements
Financials
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76
OTHER
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. Management believes that its accruals for tax liabilities are
sufficient for all open tax years based on its assessment of existing facts, prior experiences
and interpretations of tax laws.
The Swiss tax reform became effective on 1 January 2020. It eliminates certain tax privileges
for Swiss companies, which were no longer accepted internationally. At the same time,
Cantonal and Municipal corporate tax rates were reduced, and new internationally accepted
tax benefits introduced. The impact on the Group of the Swiss tax reform is not significant
(see also the below section “Reconciliation of effective tax expense”).
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
Recognition of previously unrecognised tax losses
Adjustments for prior years
Deferred tax benefit
Income tax expense
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
(70.1)
1.3
(68.8)
43.2
-
1.5
1.1
45.8
(74.3)
3.0
(71.3)
33.1
(2.0)
-
(0.9)
30.2
(23.0)
(41.1)
Amounts recognised in other comprehensive income
The Group has recognised in other comprehensive income a deferred tax income of
€0.3 million relating to the remeasurement of defined benefit plans for the year ended
31 December 2020 (€1.4 million deferred tax income for the year ended 31 December 2019).
Annual Report 2020
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Financials ► Consolidated financial statements
Consolidated financial statements
Financials
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77
Reconciliation of effective tax expense
The following table presents the Group’s reconciliation between profit before income tax
and the income tax expense. The reconciliation is based on the Company’s applicable Swiss
tax rate and adjusts for the effect of tax rates applied by Group companies in other
jurisdictions as the Group’s business activities and taxable income are mostly located
outside of Switzerland. The effect of tax rates in foreign jurisdictions is made up from the
difference between the Company’s applicable Swiss tax rate and the statutory tax rates per
each individual jurisdiction. The Company’s applicable Swiss tax rate decreased from 16%
to 14.29% in the year ended 31 December 2020 due to the Swiss tax reform, which became
effective on 1 January 2020 (see further the introductory section of this note).
(In € million)
Profit before income tax
Income tax using the Swiss tax rate of 14.29% (2019: 16%)
Effect of tax rates in foreign jurisdictions
Non-deductible expenses
Tax exempt income
Withholding tax
Tax rate modifications
Recognition of previously unrecognised tax losses
Unrecognised tax losses and temporary differences
Tax uncertainties
Tax on undistributed profits
Adjustments for prior years
Income tax expense
Current tax assets and liabilities
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
91.0
(13.0)
4.0
(6.8)
4.9
(8.7)
-
1.5
(6.3)
(1.5)
0.5
2.4
(23.0)
148.0
(23.7)
(0.9)
(6.7)
8.7
(8.3)
(2.0)
-
(1.6)
(4.8)
(3.9)
2.1
(41.1)
Current tax assets of €2.8 million as of 31 December 2020 (€1.2 million as of 31 December
2019) 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 €37.3 million as of 31 December 2020 (€43.5 million as
of 31 December 2019) represent the amount of income taxes payable with respect to
current and prior periods.
Current tax liabilities include an amount of €6.5 million (€6.3 million as of 31 December
2019) for prior periods that will be reimbursed by PEI Holdings Company LLC (a company
associated with Reynolds Group Holdings Limited, the owner of the Group prior to 13 March
2015) in line with the share purchase agreement that was signed when Onex acquired the
Group in 2015. The same amount has been recognised as part of other receivables.
Annual Report 2020
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Financials ► Consolidated financial statements
Consolidated financial statements
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78
Recognised deferred tax assets and liabilities
(In € million)
Included in the statement of financial position as:
Deferred tax assets
Deferred tax liabilities
Total recognised net deferred tax liabilities
As of
31 Dec.
2020
As of
31 Dec.
2019
30.5
(132.4)
(101.9)
21.8
(172.5)
(150.7)
The below table provides details about the components of deferred tax assets and liabilities.
Property,
plant and
equipment
Intangible
assets
Employee
benefits
Tax loss
carry-
forwards
Other
items
Net
deferred tax
assets/
(liabilities)
(96.3)
(141.8)
(0.7)
10.7
52.4
(175.7)
(In € million)
Carrying amount as of 1 Jan. 2019
Additions through business
combination
Recognised in profit or loss
Recognised in other comprehensive
income
Effect of movements in exchange rates
(1.2)
3.1
-
(3.2)
(2.9)
20.3
-
(2.5)
Carrying amount as of 31 Dec. 2019
(97.6)
(126.9)
Carrying amount as of 1 Jan. 2020
Recognised in profit or loss
Recognised in other comprehensive
income
Effect of movements in exchange rates
(97.6)
8.6
(126.9)
19.3
-
3.0
-
4.1
Carrying amount as of 31 Dec. 2020
(86.0)
(103.5)
1.1
2.3
1.4
(1.9)
2.2
2.2
1.1
0.3
(0.6)
3.0
-
(5.7)
-
(0.3)
0.5
10.2
-
3.8
(2.5)
30.2
1.4
(4.1)
4.7
66.9
(150.7)
4.7
(0.1)
66.9
16.9
-
-
4.6
-
(3.8)
80.0
(150.7)
45.8
0.3
2.7
(101.9)
The net deferred tax assets for other items mainly relate to inventories, receivables,
deferred revenue, liabilities for customer incentive programs and, for the year ended
31 December 2020, to a lesser extent derivatives.
Unrecognised deferred tax assets
Deferred tax assets have not been recognised with respect to tax losses in the amount of
€23.0 million as of 31 December 2020 (€20.8 million as of 31 December 2019) because
management has assessed that 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.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
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79
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.
Significant 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.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
196
80
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 2020 and 31 December 2019. 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 unsecured notes
- Senior unsecured credit facilities
- Lease liabilities
Derivatives
Total financial liabilities
Carrying amount as of 31 December 2020
At
amortised
cost
At fair value
through
profit or loss
(mandatorily)
355.1
194.0
3.9
553.0
(505.4)
(992.2)
(544.5)
(147.0)
(2,189.1)
16.2
17.6
33.8
(5.1)
(5.1)
Fair value
hierarchy
Level
1 2 3
x
x
x
Total
355.1
210.2
3.9
17.6
586.8
(505.4)
(992.2)
(544.5)
(147.0)
(5.1)
(2,194.2)
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
197
81
(In € million)
Cash and cash equivalents
Trade and other receivables
Other financial assets
Derivatives
Total financial assets
Trade, other payables and other liabilities
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
x
x
x
Total
261.0
258.8
5.1
2.1
527.0
(493.2)
(1,539.2)
(53.5)
(13.7)
(2,099.6)
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 loan that was entered into in June 2020.
The fair value of the notes was €1,042 million as of 31 December 2020.
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 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, for the secured term loans repaid in June 2020).
The following tables show the types of derivatives the Group had as of 31 December 2020
and 31 December 2019, 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
Total derivatives as of 31 December 2020
11.4
6.2
17.6
17.6
-
-
-
-
11.4
6.2
17.6
17.6
(0.8)
(4.3)
(5.1)
(5.1)
-
-
-
-
(0.8)
(4.3)
(5.1)
(5.1)
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
198
82
(In € million)
Commodity derivatives
Foreign currency exchange derivatives
Total operating derivatives
Interest rate swaps
Total financing derivatives
Total derivatives as of 31 December 2019
2.1
Current
assets
Non-
current
assets
Total
derivative
assets
Current
liabilities
Non-
current
liabilities
Total
derivative
liabilities
0.8
1.3
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)
The 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.
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.
Annual Report 2020
Annual Report 2020
Financials ► Consolidated financial statements
Consolidated financial statements
Financials
199
83
Accounting policy (continued)
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.
34 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 between 31 December 2020 and 18 February 2021 (the date
these consolidated financial statements were approved) that would require an adjustment
to or disclosure in these consolidated financial statements, expect for the disclosures given
in note 4 regarding organisational changes in the Group Executive Board and the strategic
assessment of the Group’s paper mill in New Zealand resulting in a decision to close the
paper mill. This statement is also applicable regarding the assessment of information
relating to the COVID-19 pandemic (see note 5.4).
Annual Report 2020
Annual Report 2020
Financials
Report of the statutory auditor
200
REPORT 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 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 2020, the consolidated
statement of financial position as at 31 December 2020, 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, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements (pages 118 to 199) give a true and fair view
of the consolidated financial position of the Group as at 31 December 2020 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.
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 International Code of Ethics for
Professional Accountants (including International Independence Standards) of the International
Ethics Standards Board for Accountants (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit approach
OVERVIEW
Materiality
Audit scope
Key audit
matters
Overall Group materiality: EUR 17,000,000
We concluded full scope audit work at 7 wholly owned Group companies in
6 countries. Our audit scope addressed over 81% of the Group's revenue.
As key audit matter the following area of focus has been identified:
Recoverability of carrying amount of goodwill
Annual Report 2020 Financials
Report of the statutory auditor
201
Materiality
The scope of our audit was influenced by our application of materiality. Our audit opinion aims to
provide reasonable assurance that the consolidated financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material
if, individually or in aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for
materiality, including the overall Group materiality for the consolidated financial statements as a
whole as set out in the table below. These, together with qualitative considerations, helped us to
determine the scope of our audit and the nature, timing and extent of our audit procedures and
to evaluate the effect of misstatements, both individually and in aggregate, on the consolidated
financial statements as a whole.
Overall Group materiality
EUR 17,000,000
How we determined it
1% of total revenue
Rationale for the materiality
benchmark applied
We chose total revenue as the benchmark as, in our view, it is the most
appropriate measure considering the Group’s current year’s result is
impacted by effects from purchase price accounting, impairment losses
as well as transaction and refinancing related costs. It is further a
generally accepted benchmark.
We agreed with the Audit Committee that we would report to them misstatements above
EUR 1,700,000 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 2020, the Group’s financial statements are a consolidation of 48 wholly owned
subsidiaries and 3 equity accounted joint ventures comprising the Group's operating businesses
and centralised functions across 33 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 performed on a
selective basis a review of their work-papers. We discussed risks identified and challenged the
audit approach in response to the risks relevant to the respective components. Furthermore,
Annual Report 2020 Financials
Report of the statutory auditor
202
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.
RECOVERABILITY OF CARRYING AMOUNT OF GOODWILL
Key audit matter
How our audit addressed the key audit matter
As per 31 December 2020, the carrying amount of
Goodwill amounted to €1,567 million.
We audited the proper allocation of Goodwill to the
respective group of cash-generating units (“CGUs”).
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 and Note 5.4 –
Critical accounting judgements, estimates
and assumptions in the consolidated financial
statements.
We 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.
• 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 bench-marking them against external market
data for the industry and respective regions.
• We further ensured the consistency of
Management’s cash flow assumptions with
the Group’s current 5-year business plan as
approved by the Board of Directors.
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.
We also assessed whether the market capitalisation
of the Group covers the carrying amount of it’s
consolidated equity.
As a result of our procedures, we determined that
the conclusions reached by Management with
regards to the recoverability of the carrying amount
of goodwill is reasonable and supportable.
Annual Report 2020 Financials
Report of the statutory auditor
203
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.
As 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.
Annual Report 2020 Financials
Report of the statutory auditor
204
• 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 communicate
with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, actions taken to eliminate threats or safeguards applied.
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
Bruno Rossi
Audit expert
Auditor in charge
Manuela Baldisweiler
Audit expert
Basel, 18 February 2021
Annual Report 2020 Financials ► Financial statements
Financial statements
Financials
1
205
Financial statements
for the year ended 31 December 2020
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
206
207
208
215
215
216
Annual Report 2020
Annual Report 2020
Financials ► Financial statements
Financial statements
Financials
2
206
Income statement
(in CHF thousand)
Income from investments
Other income
Total income
Personnel expenses
Other operating expenses
Total operating expenses
Profit from operating activities
Finance income
Finance expenses
Profit before income tax
Income tax income
Profit for the period
Note
3.1
3.2
3.3
3.2
Year ended
31 Dec.
2020
Year ended
31 Dec.
2019
116,138.0
7,377.9
125,227.2
7,085.3
123,515.9
132,312.5
(13,225.7)
(7,924.7)
(5,801.7)
(9,583.8)
(21,150.4)
(15,385.5)
102,365.5
116,927.0
38.1
(291.5)
136.8
(1,084.1)
102,112.1
115,979.7
0.3
6.5
102,112.4
115,986.2
Annual Report 2020
Annual Report 2020
Financials ► Financial statements
Financial statements
Financials
3
207
Note
3.4
3.5
As of
31 Dec.
2020
512.3
7,865.2
7,865.2
-
-
11.2
11.2
388.5
8,777.2
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
3.6
2,443,789.8
2,443,789.8
2,443,789.8
2,443,789.8
2,452,567.0
2,453,814.5
3.7
3.8
3.9
3.10
3.11
3.12
3.13
3.14
1,161.9
1,070.6
91.3
18,322.1
18,322.1
3,151.9
3,151.9
2,937.0
25,572.9
5,423.6
5,423.6
5,423.6
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
1,126.4
30,996.5
12,700.7
3,200.5
2,209,198.0
2,209,198.0
209,286.6
107,174.2
102,112.4
(114.6)
3,200.5
2,330,816.2
2,330,816.2
107,174.2
(8,812.0)
115,986.2
(77.1)
2,421,570.5
2,441,113.8
2,452,567.0
2,453,814.5
Balance sheet
(in CHF thousand)
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
- Due to third parties
Total non-current liabilities
Total liabilities
Share capital
Legal reserves
- Capital contribution reserve
Retained earnings
- Profit/(loss) brought forward
- Profit for the period
Treasury shares
Total shareholders’ equity
Total liabilities and shareholders’ equity
Annual Report 2020
Annual Report 2020
Financials ► Financial statements
Financial statements
Financials
4
208
Notes
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. References to “Group“ are to the Company
and its consolidated subsidiaries.
2
Summary of significant accounting policies
The financial statements of the Company for the year ended 31 December 2020 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
International Financial Reporting Standards (“IFRS”), a recognised standard. It further
includes a management report (Financial review) in its annual report. In accordance with
Swiss law (Art. 961d para 1 of the Swiss Code of Obligations, (“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 exchange rates used for the balance sheet items are the closing rates as of 31 December
2020 and 31 December 2019. 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
1.07034
1.11282
1.08020
1.08540
Average rate for the year
Spot rate as of
31 Dec.
2020
31 Dec.
2019
31 Dec.
2020
31 Dec.
2019
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209
2.3
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.
2.4
Treasury shares
Own shares held by the Company are accounted for as treasury shares. Treasury shares are
initially recognised at acquisition cost and deducted from equity with no subsequent
remeasurement. If the treasury shares are disposed of, the resulting gain or loss is
recognised in the income statement.
3
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. of CHF 116,138.0 thousand (CHF 125,227.2 thousand in the year ended 31 December
2019), which was mainly used to pay a dividend of CHF 121,620.2 thousand to the
shareholders in the year ended 31 December 2020 (a dividend of CHF 112,011.6 thousand
in the year ended 31 December 2019).
3.2 Other income and other operating expenses
Other operating income primarily consists of management fees charged to direct or indirect
subsidiaries. Other operating expenses primarily consist of fees paid to the Board of
Directors and consultancy costs.
3.3
Personnel expenses
Personnel expenses in the year ended 31 December 2020 include an amount of
CHF 5,664.4 thousand of termination benefits (including non-compete agreements) relating
to two former members of the Group Executive Board. The Chief Executive Officer (Rolf
Stangl) and the Chief Market Officer (Markus Boehm) both left the Company in 2020 as
further described in notes 4 and 29 of the consolidated financial statements of the Company
for the year ended 31 December 2020. Their terminations also resulted in the forfeiture of
a number of performance share units (“PSUs”) granted under the 2019 and 2020 share-
based payments plans, which has been reflected in the measurement of the amount
recognised as a share-based payment expense in the year ended 31 December 2020 (as
part of personnel expenses). See also notes 3.11 and 4.3.
3.4
Trade receivables
Trade receivables due from Group companies as of 31 December 2020
include
management fees charged to direct or indirect subsidiaries for 2020 in the amount of
CHF 7,865.2 thousand (CHF 7,565.9 thousand as of 31 December 2019).
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3.5 Current interest-bearing receivables
Current interest-bearing receivables due from Group companies for the year ended
31 December 2019 included an interest-bearing inter-company EUR loan granted to
SIG Combibloc Services AG, which was repaid in 2020.
3.6
Investments
The following subsidiary is directly held by the Company.
Name and legal form
Registered office
Capital
Votes
Capital
Votes
As of 31 Dec. 2020
As of 31 Dec. 2019
SIG Combibloc Holdings S.à r.l.
6C. rue Gabriel Lippmann
L - 5365 Munsbach
100%
100%
100%
100%
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 2020.
3.7
Trade payables
Trade payables due to Group companies as of 31 December 2020 and 31 December 2019
mainly relate to intra-group recharges.
3.8 Current interest-bearing liabilities
Current interest-bearing liabilities due to Group companies for the year ended 31 December
2020 include an interest-bearing inter-company CHF loan and an interest-bearing inter-
company EUR loan from SIG Combibloc Services AG. Only the EUR loan was included in the
balance for the year ended 31 December 2019.
3.9 Other current liabilities
For the year ended 31 December 2020, an amount of CHF 3,010.7 thousand representing
the current portion of the termination benefits relating to two former members of the
Group Executive Board is included in other current liabilities.
3.10 Accrued expenses
Accrued expenses for the year ended 31 December 2020 primarily consist of employee
benefit obligations of CHF 2,365.8 thousand (CHF 2,610.7 thousand as of 31 December
2019). There were no payments outstanding to the pension funds as of 31 December 2020
or 31 December 2019.
3.11 Non-current liabilities
For the year ended 31 December 2020, an amount of CHF 2,326.1 thousand representing
the non-current portion of the termination benefits (including non-compete agreements)
relating to two former members of the Group Executive Board is included in non-current
liabilities (see also note 3.3). The remaining balance primarily consists of liabilities arising
due to share-based payment plans and arrangements 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 2020.
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211
3.12 Share capital
As of 31 December 2020, the share capital consists of 320,053,240 shares, issued and fully
paid, representing CHF 3.2 million of share capital (also as of 31 December 2019).
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 2020 and 31 December 2019.
The Board of Directors’ authority to increase the share capital out of authorised share
capital is limited until 7 April 2022. 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).
However, the shares issued from authorised and conditional share capital under the
exclusion of subscription and advance subscription rights, respectively, is limited until
7 April 2022 to a single combined maximum of 32,005,324 shares (equalling CHF 320,053.24
or 10% of existing share capital).
The authorised share capital can be used for various purposes. This creates a flexibility to
seek additional capital,
into
CHF 160,026.62 for employee benefit plans and CHF 480,079.86 for equity linked financing
instruments. See note 4.4 for information about a planned issue of SIG ordinary shares out
of the authorised share capital of the Company in the first quarter of 2021.
if required. The conditional share capital
is divided
3.13 Capital contribution reserve
The capital contribution reserve consists of the following:
(In CHF thousand)
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
Capital contribution reserve as of 1 January 2020
Dividend payment of CHF 0.38 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 2020
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 “foreign
capital contribution reserves”. The Company has as of 31 December 2020 a capital
contribution reserve of CHF 2,209.2 million, which is confirmed by the Swiss Federal Tax
Administration. Foreign capital contribution reserves included in the capital contribution
reserve amount to CHF 1,184.7 million. The whole dividend paid in 2020 was distributed out
of foreign capital contribution reserves. The whole dividend to be proposed to the Annual
General Meeting in April 2021 is expected to be distributed out of foreign capital
contribution reserves.
Balance
2,442,827.8
(112,018.6)
7.0
2,330,816.2
2,330,816.2
(121,620.2)
2.0
2,209,198.0
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212
3.14 Treasury shares
The movement in treasury shares during the year was as follows:
(Number of treasury shares or in CHF thousand)
Number
Amount
Number
Amount
2020
2019
Balance as of 1 January
Purchases
Transfer under share-based payment plans
and arrangements
Balance as of 31 December
6,158
40,000
(77.1)
(665.1)
-
47,000
-
(532.5)
(39,884)
6,274
627.6
(114.6)
(40,842)
6,158
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 2020 and 2019 did not exceed ten on an
annual average basis.
4.2
Significant shareholders
According to the disclosure notifications reported to the Company during 2020 and
published by the Company via 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 2020 and 2019.
Significant shareholders
Onex Corporation1
Winder Investment Pte Ltd2
Norges Bank (the Central Bank of Norway)
Al Obeikan Printing and Packaging Company CJS3
BlackRock Inc
UBS Fund Management (Switzerland) AG
Ameriprise Financial
Voting rights as of
31 Dec. 2020
31 Dec. 2019
<3.0%
6.0%
5.9%
5.5%
3.6%
3.2%
3.0%
32.9%
6.0%
<3.0%
<3.0%
<3.0%
<3.0%
<3.0%
1
2
3
Beneficially owned by Mr Gerald Schwartz, Canada.
Beneficially owned by Haldor Foundation, Liechtenstein.
Reported as beneficially owned by Fahad al Obeikan, Riyadh, Saudi Arabia. However, the shares will not be transferred to Al Obeikan Printing and Packaging Company
CJS until the completion of the Group’s planned acquisition of the remaining shares in its two joint ventures in the Middle East. See also notes 3.12 and 4.4.
To the best of the Company's knowledge, no other shareholder held 3% or more of SIG
Combibloc Group AG's total share capital and voting rights as of 31 December 2020 and
2019, respectively.
Onex Corporation (“Onex”), which acquired the Group in 2015, has since the Company’s
listing in 2018 gradually reduced its shareholding in the Company. As of 31 December 2020,
Onex no longer reported any shareholding of 3% or more of the voting rights of the
Company.
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213
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 2020, the members of the Board of Directors as of that date directly held
the following number of shares and restricted share units.
Board of Directors
Andreas Umbach
Matthias Währen
Colleen Goggins
Werner Bauer
Wah-Hui Chu
Mariel Hoch
Nigel Wright
Total
Number of directly
or beneficially
held shares1, 2
Unvested restricted
share units2
Total
shareholdings
81,026
26,483
24,826
51,939
37,741
12,564
-
234,579
-
-
7,287
-
6,949
-
-
14,236
81,026
26,483
32,113
51,939
44,690
12,564
-
248,815
1 Ordinary registered shares of SIG Combibloc Group AG, including blocked shares.
2
The members of the Board of Directors receive 40% of their total compensation under share-based payment arrangements. The share-based payment
compensation is paid out in blocked SIG shares. A three-year blocking period applies to the shares. In the prior year, a smaller part of the share-based payment
compensation was paid out in restricted share units (“RSUs”) with a three-year vesting period. 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.
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 shares1, 4
Number of
indirectly
held shares1
Total
shareholdings
Unvested
restricted
share units4
Total
shareholdings,
including
restricted
share units
67,529
20,960
-
22,842
8,888
7,287
-
127,506
-
-
23,8202
23,8202
23,8202
-
106,4223
177,882
67,529
20,960
23,820
46,662
32,708
7,287
106,422
305,388
-
-
7,287
-
6,949
-
-
14,236
67,529
20,960
31,107
46,662
39,657
7,287
106,422
319,624
Board of Directors
Andreas Umbach
Matthias Währen
Colleen Goggins
Werner Bauer
Wah-Hui Chu
Mariel Hoch
Nigel Wright
Total
1 Ordinary registered shares of SIG Combibloc Group AG, including blocked shares.
2
3
4
Shares were held indirectly through partnership interests in Wizard Management II GmbH & Co. KG, which held ordinary registered shares of SIG Combibloc Group
AG (figures rounded).
Indirectly attributable through minority investment in affiliates of Onex Corporation, the former major shareholder (figures rounded).
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 was paid out in blocked SIG shares while a smaller part was 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.
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214
As of 31 December 2020 and 31 December 2019, the members of the Group Executive
Board as of these dates held the following number of shares and performance share units.
As of 31 Dec. 2020
As of 31 Dec. 2019
Number of
directly or
beneficially
held shares1
Unvested
performance
share units2
Number of
directly,
beneficially or
indirectly
held shares1
Unvested
performance
share units2
-
200,063
n/a
75,000
268,572
50,000
250,002
843,637
56,200
135,510
n/a
92,556
77,320
15,807
77,320
454,713
665,5443
290,0633
268,6483
84,2254
359,9553
134,6334
263,7023
2,066,770
168,599
79,031
52,688
52,688
47,419
47,419
47,419
495,263
Group Executive Board
Rolf Stangl, Chief Executive Officer
Samuel Sigrist
Markus Boehm5
Ian Wood
Lawrence Fok
Martin Herrenbrück
Ricardo Rodriguez
Total
1 Ordinary registered shares of SIG Combibloc Group AG.
2 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 and 2020. 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 the 2020 and 2019 incentive plans, 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.
3
4
Shares were held indirectly through partnership interests in Wizard Management I GmbH & Co. KG, which held ordinary registered shares of SIG Combibloc Group
AG (figures are rounded).
Shares were held indirectly through partnership interests in Wizard Management II GmbH & Co. KG, which held ordinary registered shares of SIG Combibloc Group
AG (figures are rounded).
5 Markus Boehm was not a member of the Group Executive Board as of 31 December 2020 (see further below).
The Company has during the year ended 31 December 2020 implemented or initiated
organisational changes in its Group Executive Board. Samuel Sigrist (Chief Financial Officer
until 31 December 2020) was appointed Chief Executive Officer effective 1 January 2021
following the voluntary departure of the former Chief Executive Officer (Rolf Stangl) on
31 December 2020. On 1 January 2021, Frank Herzog was appointed as Chief Financial
Officer. The position of Chief Market Officer (formerly held by Markus Boehm) was
eliminated in August 2020. Martin Herrenbrück, who held the position of President and
General Manager of Europe, voluntarily left the Group as of 31 December 2020. José
Matthijsse took over his position as President and General Manager of Europe effective
1 February 2021. See also note 3.3.
4.4 Other
The Company announced on 25 November 2020 that the Group has entered into an
agreement to acquire the remaining 50% of the shares in the two joint ventures in the
Middle East from the joint venture partner Obeikan Investment Group (“OIG”).
The acquisition is expected to complete before the end of the first quarter of 2021. The
completion is subject to customary closing conditions and approvals from regulatory
authorities. The consideration for the shares of the joint ventures will be made up of
€167 million in cash and around 17.5 million newly issued SIG ordinary shares (to be issued
out of authorised share capital of the Company). See note 4 of the consolidated financial
statements of the Company for the year ended 31 December 2020 for additional details
about the planned acquisition.
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215
Management considers that the business of SIG is well placed to withstand the impacts of
the global spread of a novel strain of corona virus (COVID-19) due to its role in the supply
chain for essential food and beverages and its broad geographic reach. The Company, and
its subsidiaries, is overall currently not significantly impacted by the COVID-19 pandemic.
There have been no events subsequent to 31 December 2020 that would require an
adjustment to or disclosure in these financial statements except for the disclosures given in
note 4.3 regarding organisational changes in the Group Executive Board.
There are no further items to disclose according to Art. 959c of Swiss Code of Obligations.
Proposal of the Board of Directors for the appropriation of the
retained earnings
(In CHF thousand)
Profit/(loss) brought forward from previous period
Profit for the period
Retained earnings at the end of the period
As of
31 Dec.
2020
107,174.2
102,112.4
209,286.6
As of
31 Dec.
2019
(8,812.0)
115,986.2
107,174.2
Retained earnings to be carried forward
209,286.6
107,174.2
The Board of Directors proposes to the Annual General Meeting to be held on 21 April 2021
to carry forward retained earnings of CHF 209,286.6 thousand.
Proposal of the Board of Directors for the appropriation of the
capital contribution reserve
(In CHF thousand)
Capital contribution reserve
Proposed dividend of CHF 0.42 per share (2019: CHF 0.38 per share)
out of the capital contribution reserve
Dividends not paid on treasury shares held by the Company
As of
31 Dec.
2020
As of
31 Dec.
2019
2,209,198.0
2,330,816.2
(134,422.4)
(121,620.2)
2.0
Capital contribution reserve carried forward after cash dividend
2,074,775.6
2,209,198.0
Provided that the proposal of the Board of Directors is approved by the Annual General
Meeting to be held on 21 April 2021, the dividend will amount to CHF 0.42 per share and is
expected to be paid out of the Company’s foreign capital contribution reserve. The
proposed amount of CHF 134,422.4 thousand excludes any additional shares in circulation
as a result of the planned acquisition of the remaining shares in the two joint ventures in
the Middle East (see notes 3.12 and 4.4). Dividends will not be paid on treasury shares.
Annual Report 2020
Annual Report 2020
Financials
Report of the statutory auditor
216
REPORT 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 2020, the balance sheet as at 31 December 2020,
and notes for the year then ended, including a summary of significant accounting policies. In our
opinion, the financial statements (pages 206 to 215) as at 31 December 2020 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.
We are independent of the entity in accordance with the provisions of Swiss law and the
requirements of the Swiss audit profession and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Our audit approach
Materiality
The scope of our audit was influenced by our application of materiality. Our audit opinion
aims to provide reasonable assurance that the financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material
if, individually or in aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for
materiality, including the overall materiality for the financial statements as a whole as set out
in the table below. These, together with qualitative considerations, helped us to determine the
scope of our audit and the nature, timing and extent of our audit procedures and to evaluate
the effect of misstatements, both individually and in aggregate, on the financial statements as
a whole.
Overall materiality
CHF 12,100,000
How we determined it
0.5% of total equity
Rationale for the materiality
benchmark applied
We chose total equity as the benchmark because it is a relevant
and generally accepted measure for materiality considerations relating
to a holding company.
Annual Report 2020 Financials
Report of the statutory auditor
217
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
We have determined that there are no key audit matters to communicate in our report.
Responsibilities of the Board of Directors for the financial statements
The Board of Directors is responsible for the preparation of the financial statements in accordance
with the provisions of Swiss law and the company’s articles of incorporation, and for such internal
control as the Board of Directors determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the
entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Board of Directors either
intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with Swiss law and Swiss Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
As part of an audit in accordance with Swiss law and Swiss Auditing Standards, we exercise
professional judgment and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made.
Annual Report 2020 Financials
Report of the statutory auditor
218
• Conclude on the appropriateness of the Board of Directors’ use of the going concern basis
of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the entity’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the entity to cease to continue as a going concern.
We communicate with the Board of Directors or its relevant committee regarding, among other
matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we
have complied with relevant ethical requirements regarding independence, and communicate
with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, actions taken to eliminate threats or safeguards applied.
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 available 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.
PricewaterhouseCoopers AG
Bruno Rossi
Audit expert
Auditor in charge
Manuela Baldisweiler
Audit expert
Basel, 18 February 2021
Annual Report 2020 DISCLAIMER AND CAUTIONARY STATEMENT
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 circular for the issue of notes in June 2020.
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. Persons requiring advice should consult an independent adviser.
The declaration and payment by the Company of any future dividends and the amounts of any such dividends will depend
upon SIG’s ability to maintain its credit rating, its investments, results, financial condition, future prospects, profits being
available for distribution, consideration of certain covenants under the terms of outstanding indebtedness and any other
factors deemed by the Directors to be relevant at the time, subject always to the requirements of applicable laws.
Definitions of the alternative performance measures used by the SIG and their related reconciliations are posted under the
following link: https://reports.sig.biz/annual-report-2020/services/chart-generator
Some financial information in this Annual Report has been rounded and, as a result, the figures shown as totals 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.
Annual Report 2020