Notes

In the reporting year, net sales were CHF 101.4 million below their prior-year level, despite new record figures in the Chemicals and Packaging divisions, owing in particular to the steep decline in demand for the Paper Division’s products. This corresponds to a decrease of 14.0 % (or -10.4 % at constant currency).

The other operating income of CHF 13.4 million (prior year: CHF 21.0 million) includes income from the sale of energy, recyclable materials and carbon credits, rental income, own work capitalized and various further operating income.

Personnel expense increased by CHF 1.2 million or 1.2 % in the year under review. Total headcount increased by 14 full-time equivalents (+1.2 %), driven by the high utilization of production facilities and the capacity expansions in the Chemistry and Packaging divisions.

The other operating expense of CHF 33.2 million (prior year: CHF 33.8 million) includes sales and administrative costs and various other operating expenses.

Interest expense includes the CHF 1.3 million (prior year: CHF 2.0 million) interest paid on the outstanding CHF 100 million corporate bond, which was repaid from the company’s own cash on its maturity on 12 October 2023 (see also Note 17, Financial liabilities).The ‘Bond’ line item for 2022 comprises the unsecured CHF 100 million 2 % corporate bond which matured on 12 October 2023.

The non-operating result consists of expenditure on and income from the disposal and rental of former production sites in Uetikon am See (Switzerland) and Full-Reuenthal (Switzerland) and real estate in Buchrain (Switzerland). The non-operating income derived primarily from the sale of industrial land at the Full-Reuenthal former production site. The non-operating expense includes, amon others, an increase in environmental provisions (see also Note 20, Provisions).

The CPH Group’s expected income tax rate for the year under review amounted to 15.4 % (prior year: 13.9 %). This is the weighted average tax rate based on the results before taxes and individual tax rates for each Group company in the year under review. The change in the expected income tax rate is due to the profit/loss situation and to changes in the tax rates at the various Group companies.

The difference between the expected income tax expense and the income tax expense disclosed in the income statement is largely attributable in both the year under review and the prior year to the use of non-capitalized tax loss carry forwards (see also Note 15, Financial assets).

The calculation of deferred income taxes was based on expected local tax rates at individual Group companies, which averaged 13.0 % (prior year: 13.3 %).

Non-capitalized tax loss carry forwards decreased in the year under review from CHF 13.3 million to CHF 7.4 million, primarily due to their use. Of these, CHF 0.2 million expire within a year (prior year: CHF 1.4 million) and CHF 0.0 million are of indefinite duration (prior year: CHF 0.1 million).

Earnings per share are calculated by dividing the net result for the year less the portion thereof attributable to minority shareholders by the average number of company shares held during the year (excluding treasury shares; see also Note 23, Treasury shares). The average number of such shares held in 2023 amounted to 5 998 512 (prior year: 5 999 868 ). On the basis of a net result attributable to shareholders of the company of CHF 78.9 million (prior year: CHF 101.0 million), this produces earnings per share of CHF 13.15 (prior year: CHF 16.83). Since the company has not issued any share options or convertible bonds, diluted earnings per share are identical to the earnings per share result.

Cash and cash equivalents decreased by CHF 36.0 million to CHF 107.6 million in the year under review as a result of the free cash flow and following the repayment of the outstanding corporate bond and the dividend distribution.

Gross trade receivables decreased by a substantial CHF 28.6 million in the year under review as a consequence of the lower net sales. The valuation allowance for doubtful receivables decreased by CHF 5.8 million as a result of the derecognition of long-standing receivables which are definitively no longer recoverable.

This position includes the current portion of the remaining receivable from Canton Zurich for the sale of the former production site in Uetikon am See (Switzerland) which the canton has retained as security in respect of the portion of the costs of cleaning up the adjacent bed of Lake Zurich that is to be borne by the CPH Group. This remaining receivable is reduced by the expenditure on the lake bed clean-up that is to be borne by the CPH Group, charged to the established provisions and paid by Canton Zurich (see also Note 15, Financial assets and Note 20, Provisions).

In the year under review, other receivables decreased by CHF 2.6 million from their prior-year level.

Inventories were CHF 11.0 million lower in the year under review than their prior-year level, owing primarily to declines in materials costs.

The Chemistry Division invested in various expansion projects at its Rüti ZH (Switzerland), Louisville (USA) and Lianyungang (China) operating sites in 2023. The Paper Division invested in maintaining and further improving the efficiency of its production facilities. The Packaging Division invested primarily in increasing manufacturing capacities and enhancing production efficiencies at its Perlen (Switzerland), Müllheim (Germany) and Anápolis (Brazil) sites.

The carrying value of tangible fixed assets includes CHF 8.0 million of assets held solely for investment purposes (prior year: CHF 8.1 million) and land use rights of CHF 1.7 million (prior year: CHF 2.0 million). The carrying value of leased tangible fixed assets (finance leases) amounts to CHF 0.0 million (prior year: CHF 0.1 million). These consist in particular of company cars, forklifts and other fixed assets (see also Note 17, Financial liabilities).

‘Minority interests in companies’ includes a 10 % equity holding in Renergia Zentralschweiz AG, Root (Switzerland). The company operates a waste incineration facility on land purchased from the CPH Group and supplies the Paper Division with around 60 % of its steam needs in the form of carbon dioxide-free low-pressure steam.

‘Deferred tax assets’ considers the impact in tax terms of valuation differences between the values stated on the consolidated balance sheet and the corresponding values applicable under fiscal law. These have largely arisen as a result of intragroup real estate transactions, for which use has been made of existing tax loss carry forwards.

‘Non-interest bearing receivables’ includes the non-current portion of the remaining receivable from Canton Zurich for the sale of the former production site in Uetikon am See (Switzerland) which the canton has retained as security in respect of the portion of the costs of cleaning up the adjacent bed of Lake Zurich that is to be borne by the CPH Group. This remaining receivable is reduced by the expenditure on the lake bed clean-up that is to be borne by the CPH Group from the established provisions and paid by Canton Zurich (see also Note 12, Other receivables and Note 20, Provisions).

‘Additions’ consist primarily of investments in software systems used in business operations.

As at the end of the previous year, other intangible assets include 98 000 carbon credits intended for sale. 96 000 such credits for 2021 were issued to the Paper Division by the Swiss Federal Office for the Environment in 2022. No such credits were issued in 2023. Some 140 000 such credits are expected to be issued for the 2022 and 2023 business years. These carbon credits are recognized at their zero acquisition cost. No income was earned from the sale of carbon credits in 2023 or 2022.

Goodwill deriving from acquisitions is offset directly against retained earnings in shareholders’ equity (see also Note 24, Retained earnings).

The ‘Bond’ line item for 2022 comprises the unsecured CHF 100 million 2 % corporate bond which matured on 12 October 2023. The outstanding portion thereof was repaid from the company’s own cash on its maturity on 12 October 2023.

Trade payables decreased by CHF 22.0 million in 2023, owing largely to lower materials and energy prices and the reduced production volumes of the Paper Division.

Other payables increased by CHF 1.2 million (see also Note 25, Occupational pensions).

Environmental provisions relate to the environmental protection measures required at former Chemistry Division production sites. These include the lake bed clean-up in Uetikon am See (Switzerland), the former production site in Full-Reuenthal (Switzerland) and obligations associated with various waste disposal sites. The lake bed clean-up began in 2022 and should be completed in two to three years. It is being conducted in close collaboration with Canton Zurich, which is serving as the project leader with the CPH Group represented in the project management group. 80 % of the costs of the clean-up are to be borne by the CPH Group and 20 % by Canton Zurich. The work is being financed with the funds generated by the sale of the Uetikon site to Canton Zurich in 2016. The costs involved are not cash-relevant, and reduce both the provisions effected for the work and the remaining receivable from Canton Zurich (see also Note 12, Other receivables and Note 15, Financial assets).

The provisions for major repairs relate to the renovation work needed on the weir in Perlen (Switzerland) under the concession requirements of Canton Lucerne. The related project planning is well advanced, and the work should be performed in the next few years.

For the provisions for deferred income taxes, please see Note 8, Income taxes. Other provisions include claims for customer complaints.

The provision amounts were reviewed as of the balance sheet date and adjusted in line with the latest estimates and assessments. New findings on the scope and the costs of the actions needed – in the light of the requirements of the authorities, work progress to date and inflation-based increases in construction costs – entailed an increase in the provision amounts (see also Note 7, Non-operating result).

The share capital of CHF 1.2 million consists of 6 000 000 registered shares of CHF 0.20 nominal value (unchanged from the prior year).

A total of 6 863 (prior year: 3 345) treasury shares were purchased in 2023 at an average purchase price of CHF 85.54 (prior year: CHF 63.62)per share. No such shares were sold in either the year under review or the prior year. A total of 2 033 (prior year: 3 345) shares with a vesting period of three years (with no further performance, profit or other vesting conditions) were definitively awarded in the form of share-based remuneration. The resulting personnel expense at a share price on assignment of CHF 88.54 (prior year: CHF 62.78) per share amounted to CHF 0.2 million (prior year: CHF 0.2 million).

The non-distributable retained earnings of the CPH Group amounted to CHF 17.2 million at the end of 2022 (prior year: CHF 17.2 million).

Goodwill arising from acquisitions is offset against retained earnings in shareholders’ equity at the time of the acquisition. The impact of a theoretical capitalization of goodwill, applying a five-year useful life, on the consolidated balance sheet and income statement is shown below:

The CPH Group has various pension schemes in place, which are each aligned to local conditions and requirements in the countries concerned. The table below offers an overview of the funding surplus or deficit and the economic shares attributable to the employer:

‘Pension plans with surplus’ refers to the CPH Group Pension Scheme, which is domiciled in Root (Switzerland). This is a legally autonomous foundation with a board of trustees on which employer and employees are equally represented. The CPH Group Pension Scheme meets the occupational pension provision needs of the Group’s Swiss-based companies under its own responsibility on a defined contribution basis. The benefits are determined on the basis of the existing retirement assets. They therefore depend on the contributions paid, the vested benefits contributed and the purchases, in each case including interest. The scheme is funded by statutorily prescribed employer’s and employees’ contributions. The existence of any funding surplus or deficit is determined on the basis of the scheme’s annual financial statements (after deduction of fluctuation reserves), which are compiled in accordance with Swiss GAAP FER 26. At the end of 2023 the scheme showed a funding surplus of CHF 3.5 million (prior year: CHF 0.2 million). This surplus is available in full to the scheme’s beneficiaries, which is why no economic share is capitalized.

The ‘Patronage fund’ refers to the Perlen Group Assistance Fund, which is domiciled in Buchrain (Switzerland). The fund provides pension benefits for employees and financial assistance for employees and their families in hardship situations. The fund can also be used to finance the employer’s contributions to the occupational pension schemes of the Group’s Swiss-based companies. The existence of any funding surplus or deficit is determined on the basis of the fund’s annual financial statements (after deduction of fluctuation reserves), which are compiled in accordance with Swiss GAAP FER 26. At the end of 2023 the fund showed a funding surplus of CHF 13.8 million (prior year: CHF 13.2 million). This surplus is available in full to the employer, which is why the corresponding amount is capitalized as an economic share under financial assets.

‘Pension plans with deficit’ refers to the defined-benefits pension scheme in the USA which has been frozen since the end of 2015. The associated pension obligations have not increased since 2015, and no new beneficiaries are being admitted to the scheme. The scheme should be liquidated in 2024. The funding deficit of CHF 1.3 million, determined using the current liability method, is an economic liability of the CPH Group, and is recognized under current liabilities (prior year: funding deficit of CHF 1.6 million, recognized under other non-current liabilities).

‘Pension plans without surplus/deficit’ includes a defined-contribution 401(k) pension plan in the USA and other non-material pension plans in other countries. Such plans have neither a funding surplus nor a funding deficit, so no economic shares are recognized on the balance sheet.

The CPH Group had accumulated an employer contribution reserve in previous years. This developed as follows in 2022:

The open currency hedging contracts are hedges on future cash flows, primarily in EUR and USD. No derivative financial instruments held to hedge balance sheet items or for trading purposes are recognized.

The non-capitalized operating lease liabilities relate primarily to premises rentals and vehicles.

As in the prior year, there were no off-balance-sheet sureties or guarantee obligations towards third parties at the end of the year under review.

Off-balance-sheet purchase obligations not terminable within one year for the acquisition of fixed assets, materials and energy totalled CHF 130.5 million at the end of the year under review (prior year: CHF 113.6 million).

The following transactions were effected for services rendered with related companies of the CPH Group and members of its Board of Directors:

As in the prior year, no loans or credits were granted to related parties in the year under review.

CPH Chemie + Papier Holding AG acquired the remaining 8 % shareholding in Jiangsu Zeochem Technology Co. Ltd., Lianyungang, China on 18 September 2023 and now holds 100 % of the company’s shares. The purchase price amounted to CHF 2.4 million. CHF 1.4 million of this was derecognized in shareholders’ equity under minorities, and the remaining CHF 1.0 million was offset as goodwill against retained earnings.

The CPH Group announced its purchase of the Indian-based Sorbead India and Swambe Chemicals company in January 2024. The acquisition marks the Group’s entry into the Indian market in line with its international expansion strategy. The transaction is expected to close in the second quarter of 2024. Apart from this, no events occurred between the balance sheet date and 9 February 2024, the date of the approval and release for publication of these annual consolidated financial statements by the Board of Directors, which would require adjustments to the Group’s assets, equity and liabilities or would need to be disclosed here. These consolidated financial statements are also subject to the approval of the Annual General Meeting of 20 March 2024.