Notes

Net sales for 2024 for the remaining divisions of Chemistry and Packaging were a decrease of 10.6 % on the prior year (or of 8.5 % at constant currency), owing to declines in materials costs. The net sales and earnings of the spun-off Paper Division are shown up to its separation on 25 June 2024.

EBIT for the spun-off Paper Division for 2024 was reduced by a CHF 22.3 million non-cash expense deriving from the spin-off. See also Note 34.

The other operating income of CHF 15.9 million (prior year: CHF 13.4 million) includes income from the sale of energy, recyclable materials and carbon credits, rental income, own work capitalized and various further operating income largely from the spun-off Paper Division.

Personnel expense for the remaining Chemistry and Packaging divisions increased by CHF 1.4 million or 2.1 % in the year under review. The increase is attributable in particular to the acquisition of the new Sorbchem India subsidiary. See also Note 33.

The other operating expense of CHF 27.6 million (prior year: CHF 33.2 million) includes sales and administrative costs and various other operating expenses.

The non-operating result consists of expenditure on and income from the sales and the rental of former production sites in Uetikon am See (Switzerland) and Full-Reuenthal (Switzerland) and real estate in Buchrain (Switzerland). The non-operating income for 2023 derived primarily from the sale of industrial land at the Full-Reuenthal former production site. The non-operating expense for 2023 included an increase in environmental provisions (see also Note 20, Provisions).

The expected 2024 income tax rate for CPH Group AG amounted to 32.8 % (prior year: 15.4 %). 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 expected 2024 income tax rate for CPH Group AG excluding the spun-off Paper Division amounted to 17.8 % (prior year: 17.4 %).

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 impact 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 14.7 % (prior year: 13.0 %).

Non-capitalized tax loss carry forwards decreased in the year under review from CHF 7.4 million to CHF 1.5 million, owing primarily to the spin-off of the Paper Division. Of these, CHF 0.0 million expire within a year (prior year: CHF 0.2 million), CHF 0.8 million expire within two to seven years (prior year: CHF 6.5 million) and CHF 0.7 million are of indefinite duration (prior year: CHF 0.6 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 2024 amounted to 5 997 394 (prior year: 5 998 512). On the basis of a net result attributable to shareholders of the company of CHF 4.6 million (prior year: CHF 45.0 million), this produces earnings per share of CHF 0.78 (prior year: CHF 13.15). 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 76.0 million to CHF 31.6 million in the year under review, owing primarily to the spin-off of the Paper Division.

Gross trade receivables decreased by CHF 24.0 million in the year under review owing primarily to the spin-off of the Paper Division. The valuation allowance for doubtful receivables also saw a decrease of CHF 1.2 million.

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 to be borne by CPH Group AG. This remaining receivable is reduced by the expenditure on the lake bed clean-up to be borne by CPH Group AG, 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 9.6 million from their prior-year level, also as a result of the spin-off of the Paper Division.

Inventories were CHF 27.2 million lower in the year under review than their prior-year level, owing primarily to the spin-off of the Paper Division.

The Chemistry Division invested in various expansion projects at its Rüti ZH (Switzerland), Louisville (USA) and Lianyungang (China) operating sites in 2024. The Packaging Division invested primarily in increasing manufacturing capacities and enhancing production efficiencies at its Perlen (Switzerland), Müllheim (Germany) and Suzhou (China) sites. Up until its spin-off, the Paper Division invested in maintaining and further improving the efficiency of its production facilities.

The carrying value of tangible fixed assets includes CHF 0.6 million of assets held solely for investment purposes (prior year: CHF 8.0 million) and land use rights of CHF 1.8 million (prior year: CHF 1.7 million).

Up until the spin-off of the Paper Division with effect from 25 June 2024, ‘Minority interests in companies’ included a 10 % equity holding in Renergia Zentralschweiz AG, Root (Switzerland). This company operates a waste incineration facility on land purchased from CPH Group AG and supplies the paper business 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. Up until the spin-off of the Paper Division with effect from 25 June 2024, these largely arose as a result of intragroup real-estate transactions, for which use was 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 to be borne by CPH Group AG. This remaining receivable is reduced by the expenditure on the lake bed clean-up to be borne by CPH Group AG, charged to 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.

Other intangible assets at the end of 2023 included 98 000 carbon credits intended for sale which were held by the subsequently spun-off Paper Division. These carbon credits are recognized at their zero acquisition cost. The income from their sale is reported under other operating income.

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

Current financial liabilities include bank loans in CHF and CNY at interest rates between 1.5 % and 3.4 %. Long-term financial liabilities include bank loans in INR at an interest rate of 9.8 %.

Trade payables decreased by CHF 36.9 million in 2024, owing primarily to the spin-off of the Paper Division.

Other current payables decreased by CHF 5.3 million (see also Note 25, Occupational pensions).

Environmental provisions relate to the environmental protection measures required at former Zeochem 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 three to five years. It is being conducted in close collaboration with the Canton Zurich Building Department, which has the project lead, with CPH Group AG represented in the project steering group. 80 % of the costs of the clean-up are being borne by CPH Group AG and 20 % thereof 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 related to the renovation work needed on the weir in Perlen (Switzerland) under the concession requirements of Canton Lucerne.

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

The provision amounts were reviewed as at the balance sheet date and adjusted in line with the latest estimates and assessments. For 2023, 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 0.9 million consists of 6 000 000 registered shares of CHF 0.15 nominal value. Share capital was reduced by CHF 0.3 million from its previous CHF 1.2 million (and the shares’ nominal value by CHF 0.05 from the previous CHF 0.20 per share) with the spin-off of the Paper Division effective 25 June 2024.

A total of 7 390 (prior year: 6 863) treasury shares were purchased in 2024 at an average purchase price of CHF 67.88 (prior year: CHF 85.54)per share. A total of 129 treasury shares were sold at an average sale price of CHF 83.40 in the year under review (prior year: none). A total of 5 891 (prior year: 2 033) 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 84.73 (prior year: CHF 88.54) per share amounted to CHF 0.5 million (prior year: CHF 0.2 million).

The non-distributable retained earnings of CPH Group AG amounted to CHF 9.9 million at the end of 2024 (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 on the consolidated balance sheet and income statement, applying a five-year useful life, is shown below:

CPH Group AG has various pension plans in place, which are each aligned to local conditions and requirements in the countries concerned. The table below gives an overview of their funding surpluses and funding deficits and the economic shares attributable to the employer:

‘Pension plans with surplus’ refers to the CPH Group AG Pension Scheme, which is domiciled in Root (Switzerland) and to which are also affiliated the Perlen Industrieholding AG and UBV Holding AG corporate groups originating also from the former Uetikon chemicals factory. This is a legally autonomous foundation with a board of trustees on which employer and employees are equally represented. The CPH Group AG Pension Scheme meets the occupational pension provision needs of CPH Group AG’s Swiss-based companies under its own responsibility on a defined- contributions basis. Benefits are determined on the basis of each member’s accumulated individual retirement savings. They therefore depend on the savings contributions made, any vested benefits paid in and any further buy-in amounts, 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 2024, the scheme showed a funding surplus of CHF 10.3 million (prior year: CHF 3.5 million). Any such funding surplus is available in full to the scheme’s beneficiaries, which is why no economic share is capitalized.

The ‘Patronage fund’ refers to the CPH Group AG Assistance Fund, which is domiciled in Buchrain (Switzerland). This is provided for all Swiss-based employees, and also has affiliated to it the Perlen Industrieholding AG and UBV Holding AG corporate groups originating also from the former Uetikon chemicals factory, though the fund maintains separate funding surplus/deficit accounts for each of these groups. The fund provides both regular occupational pension benefits 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 CPH Group AG’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 2024 the fund showed a funding surplus assignable to CPH Group AG of CHF 6.0 million (prior year: CHF 13.8 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. The year-on-year change in the funding surplus amount is attributable largely to the spin-off of the former Paper Division with effect from 25 June 2024.

‘Pension plans with deficit’ includes for 2023 a defined-benefits pension plan in the USA which had been frozen since the end of 2015. This plan was liquidated in 2024. The liquidation gain of CHF 1.1 million resulted in a corresponding reduction in occupational pension expense.

‘Pension plans without surplus/deficit’ includes a defined-contributions 401(k) pension plan in the USA and other non-significant 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.

CPH Group AG had accumulated an employer contribution reserve in previous years. This developed as follows in 2024:

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.

At the end of the reporting period, there were no off-balance-sheet purchase obligations for the acquisition of fixed assets, materials and energy not terminable within one year (end of prior year: CHF 131 million).

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

The total of transactions with related parties was higher for 2024 as a result of non-recurring costs incurred in the preparation and execution of the spin-off of the Paper Division.

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

CPH Group 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.

Zeochem AG acquired 100 % of the shares of Sorbchem India Private Limited, a company domiciled in Vadodara (India) into which had been assimilated the activities of the former Sorbead India and Swambe Chemicals, on 29 April 2024. Sorbchem India sells and distributes molecular sieves and packaging materials and manufactures chromatography gels for use in the packaging and the pharmaceutical sectors.

The table below shows the market value of the assets and liabilities acquired at the time of purchase:

The CHF 19.9 million difference between the acquired net assets of CHF 13.3 million and the acquisition cost of CHF 33.2 million was taken to shareholders’ equity in the form of goodwill. After deduction of also-acquired cash and cash equivalents of CHF 0.2 million and a not-yet-paid purchase price liability of CHF 0.2 million, the resulting net cash flow from the acquisition of subsidiaries amounted to CHF 32.8 million. The 2024 consolidated income statement includes net sales from acquired subsidiaries of CHF 6.2 million. Net sales for 2024 up to the date of acquisition amounted to CHF 3.5 million.

The company’s shareholders resolved at the Extraordinary General Meeting of 20 June 2024 to create two separate companies: CPH Group AG (the former CPH Chemie + Papier Holding AG) and Perlen Industrieholding AG. The separation was effected by spinning off the paper business by means of a capital reduction and the distribution of a dividend-in-kind under which, effective 25 June 2024, every CPH Group AG shareholder was awarded one registered share of Perlen Industrieholding AG for every CPH Group AG share held.

As a result of the spin-off, the following companies left the scope of consolidation of CPH Group AG:

The net sales and earnings of the spun-off Paper Division up until its spinning-off with effect from 25 June 2024 are shown in Note 1, Segment information.

The following table shows the carrying values of the assets and liabilities of the spun-off entity:

With total net assets derecognized of CHF 211.9 million plus goodwill recycled from equity and cumulative currency translation differences of CHF 20.9 million on the one hand and the CHF 210.5 million net market value of the capital reduction/distribution-in-kind on the other, a difference resulted of CHF 22.3 million. This amount was taken to the consolidated income statement as non-cash result from the spin-off activity.

As a further step in its international expansion strategy, CPH Group AG announced its acquisition of the LOG Pharma company with production sites in Israel and Hungary in December 2024. The closing of the purchase transaction took place on 5 February 2025. Apart from this, no events occurred between the balance sheet date and 18 February 2025, 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 company’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 18 March 2025.