ANNUAL REPORT 2019 SEIZING OPPORTUNITIES Our Company Business Review Governance Compensation Financials WHO WE ARE SIG is a leading systems and solutions provider Contents for aseptic carton packaging. Our unique Our Company Compensation 03 Seizing opportunities 55 Letter from the Chairwoman of technology and outstanding innovation capacity 04 Letter from the Chairman and the Compensation Committee enable us to provide our customers with the Chief Executive Officer 56 Introduction 08 Market and industry review 56 Compensation governance end-to-end solutions for differentiated products, 10 Our business model 59 Compensation principles 11 Our strategy 60 Compensation framework for smarter factories and connected packs, all to 12 Our team the Board of Directors 13 Technology and innovation 63 Compensation framework for address the ever-changing needs of consumers. the Group Executive Board Business Review 70 Previous and discontinued 17 Regional review: compensation plans Founded in 1853, SIG is headquartered in 17 EMEA 70 Loans granted to members of Neuhausen, Switzerland. 20 APAC the Board of Directors or the 22 AMERICAS Group Executive Board 24 Responsible business review 71 Outlook for 2020 28 Key performance highlights 72 Report of the statutory auditor 29 Chief Financial Officer’s statement 34 Risk management Financials 73 Consolidated financial statements Governance 131 Financial statements 36 Board of Directors of the Company 38 Group Executive Board 40 Corporate Governance Report SIG 2019 Annual Report 02 Our Company Business Review Governance Compensation Financials SEIZING OPPORTUNITIES Our purpose We work in partnership with our customers to deliver food and beverages to consumers across the world in a safe, sustainable and affordable way. Our purpose is a core element of our corporate compass and underpins our dream of seeing every consumer in the world with a SIG carton pack in their hand and a smile on their face, every day. Our promise to our customers is Excellence – Engineered. Solutions – Delivered. Building on our Swiss engineering heritage that goes back more than 150 years, we offer state-of-the art filling equipment and superior technical service. We also deliver solutions that go beyond just the filling technology and packaging. We solve customers’ problems and offer new possibilities through an intelligent, holistic overview of their business needs. With our engineering know-how, we can transform our customers’ filling plants into intelligent, connected factories which are at the forefront of digital technology. Values and principles The three core elements of our corporate compass are encircled by the SIG company values and leadership principles that represent our behavioural framework, defining what we seek from employees and leaders. They link our strategy to daily business and provide a pathway to ensure the Company’s future success. SIG 2019 Annual Report 03 Our Company Business Review Governance Compensation Financials Letter from the Chairman and the Chief Executive Officer SEIZING OPPORTUNITIES 2019 was SIG’s first full year as a publicly listed company since returning to SIX Swiss Exchange in 2018. The listing has naturally brought greater awareness of our Company both in our home country Switzerland and abroad. During the year we have engaged with a broad base of investors internationally and have had many discussions with representatives of the media and other external stakeholders. This has given us the opportunity to explain the unique technology behind our solution business, consisting of filling lines, carton packs, closures and services. We have also been able to demonstrate the strong sustainability credentials which are intrinsic to our business. Our dream As a listed company we continue to pursue our expansion goals supported by the investments made in recent years. Our dream of seeing “Every consumer in the world with a SIG pack in their hand, and a smile on their face, every single day” may sound ambitious but it reflects the growing demand for packaged food globally. In fact, this dream is firmly grounded in the reality of providing safe, sustainable and affordable packaging solutions for essential food products to our customers around the world. SIG’s focus on sustainability dates back many years and it is an Rolf Stangl Andreas Umbach integral part of our corporate Chief Executive Officer Chairman compass and group strategy. SIG 2019 Annual Report 04 Our Company Business Review Governance Compensation Financials Letter from the Chairman and the Chief Executive Officer continued Consuming safely and on the go Sustainable solutions 2019 financial performance We help the food and beverage companies who are our Public concern over sustainability issues has intensified 2019 was another year of strong sales growth and cash customers to meet the differing needs of consumers over the last 12 months and the need for sustainable generation. Core revenue increased by 5.2% at constant globally. In many emerging markets where there is no packaging is now top of mind with all our customers, as exchange rates, comfortably within our target range of fully reliable cold chain, food preservation is a top well as with many consumers. However, SIG’s focus on 4% to 6%. Growth was driven in particular by markets priority. Our cartons enable beverages and liquid food to sustainability dates back many years and it is an integral outside Europe, demonstrating the success of our maintain their taste, appearance and nutritional qualities part of our corporate compass and group strategy. Our expansion initiatives. The adjusted EBITDA margin for the for up to 12 months without the need for refrigeration or cartons have one of the lowest carbon footprints, being Group at 27.2% was also within the target range for 2019. preservatives. This minimises waste and avoids the CO2 made largely out of renewable materials and fully We continued to invest in innovation and introduced emissions generated by a cold chain. Cartons are also recyclable, and we have pioneered structures that multiple new products in the course of the year. Recent highly attractive in countries where e-commerce is further enhance their environmental profile. More major launches such as combismile continued to ramp expanding, as they facilitate safe and cost-effective broadly, we focus on driving carbon footprints down and up and our most advanced sustainable solutions, transportation. on changing the narrative from carbon neutral to net including SIGNATURE PACK and EcoPlus, gained traction positive. In 2019, we became one of the first companies as customers sought to address growing consumer in our industry to set a climate target approved by the concerns over the environment. Adjusted net income Science-Based Targets Initiative (SBTi) as being in line reached EUR 217 million, above the 2018 pro forma level. Our dream is firmly grounded in with the goal of limiting global warming to 1.5°C above Free cash flow was also ahead of 2018 at EUR 267 million the reality of providing safe, pre-industrial levels. and we are proposing a dividend of CHF 0.38 per share, sustainable and affordable compared with CHF 0.35 per share in 2018. Governance and shareholders packaging solutions to our The Company held its first Annual General Meeting since Increasing share of wallet and winning customers around the world. the recent listing on 11 April 2019 in Schaffhausen. The new customers meeting was well attended with 81.8% of the share Our business model is based on supplying our capital represented. All the proposals of the Board of customers with an integrated system serviced by our Our flexibility in terms of packaging size and format means Directors were passed by a large majority. engineers in the field worldwide. New customers are that emerging market consumers can have access to often attracted to the SIG offering by the flexibility of our nutritional products at an affordable price. Milk is a The Board of Directors combines the knowledge and system and our ability to fill a wide array of products, primary source of protein for young and old alike and experience of the previous Advisory Board with the ranging from plain white milk to soups and sauces consumption continues to rise in many countries. In some addition of new members who have a background in containing pieces or chunks. Our ambition is to deliver more developed markets, producers including smaller publicly listed companies both in Switzerland and unrivalled operating efficiency, service and innovation start-up brands are diversifying into areas such as plant- abroad. Onex now has a single Board seat as David to not only maintain but also grow our share of wallet. based dairy alternatives, protein drinks and nutritional Mansell did not stand for re-election at the Annual Our success is evidenced by long-lasting customer supplements. Consumers’ changing lifestyles favour General Meeting. In the course of 2019, in line with relationships and a net promoter score that is regularly on-the-go consumption and the difference between common post-IPO practice, Onex reduced its holding best-in-class. The loyalty of our customers is something food and drink is blurring. These all represent new from 51% to 32% of the share capital. we prize very highly – it is never taken for granted and opportunities for us which can be maximised through we strive continuously to ensure that it is merited. our unique filling capabilities and our innovative formats and designs. SIG 2019 Annual Report 05 Our Company Business Review Governance Compensation Financials Letter from the Chairman and the Chief Executive Officer continued Growing the business globally while deepening industry have historically been few. However, in 2019 our local presence we were able to acquire Visy Cartons in Australia, We have a well established global filler base that forms establishing a presence in a market where SIG has until the bedrock of our future growth. Over the last 10 years, now had no direct presence.