Annual Report 2010irpages2.equitystory.com/champaper/pdf/gb/CPG_GB2010...Profile Sites and sales...

Annual Report 2010

Table of contents

4 TheChamPaperGroupataglance Profile

Sitesandsalesvolumes

6 TheChamPaperGroupshare

8 LettertoShareholders

12 Reportonbusinessperformancein2010

16 MarketsoftheChamPaperGroup

18 ExperiencingtheChamPaperGroup ConsumerGoods

IndustrialRelease

DigitalImaging

32 Consolidatedfinancialstatements Notestotheconsolidatedfinancialstatements

Reportofthestatutoryauditorsontheconsolidated

financialstatements

56 Financialstatementsof ChamPaperGroupHoldingAG Notestotheconsolidatedfinancialstatements

ofChamPaperGroupHoldingAG

Reportofthestatutoryauditorsonthe

financialstatements

66 CorporateGovernance

3 Tableofcontents

4

The Cham Paper Group at a glance

Thespecialitypapermarket

The speciality paper market offers higher margins than the commodity paper segment due

to made-to-measure practicality respectively increased customer convenience. The prices

in the speciality paper market are also more solid as a result of the often close interactions

between development, supply and production processes with the clients.

ChamPaperGroupataglance

Condinomillinfrastructure1papermachine;width:330cm

1filmpress

2supercalenders

Carmignanomillinfrastructure2papermachines;width:330cm

2in-linecoatingmachines

1off-linecoatingmachine

2supercalenders

Chammillinfrastructure2papermachines;width:320cm

2off-linecoatingmachines

1curtaincoater

1supercalender

Specialitypaper5.3 MTPA

Marketsize:USD 22 billion

Marketsize:USD 288 billion

Premiumpaper5.3 MTPA

Commoditypaper361.1 MTPA

Lowcyclicality

Cyclicality

•Operatingmargins•Customerloyalty

Totalmarketsize:382MTPA(USD310billion)

5

ChamPaperGroupSchweizAGCH-6330Cham

ChamPaperGroupItaliaS.p.A.IT-38083Condino(TN)

ChamPaperGroupItaliaS.p.A.IT-35010CarmignanodiBrenta(PD)

Sites and sales volumes

Sitesandsalesvolumes

Production sites (production and sales) Points of sale (representatives)

Turnoverin% Turnoverin%2010 2009

Europe 79.5% 84.0%

America 6.0% 5.5%

Asia 11.0% 7.0%

Restofworld 3.5% 3.5%

6

The Cham Paper Group share

I. Keyfigures

Numberofshares

Number of shares at 31 December 2010 2009 2008 2007 2006

Numberofregisteredshares 745'000 745'000 745'000 745'000 745'000

Treasuryshares 65.00 77.50 77.50 85.00 90.00

Numberofoutstandingregisteredshares 46'772 48'635 51'640 12'736 10'736

Nominalvalueperregisteredshare(inCHF) 698'228 696'365 693'360 732'264 734'264

Keyfiguresofshares

Key figures at 31 December 2010 2009 2008 2007 2006

Earningspersharefromcontinuedoperations(inCHF) –2.58 13.14 –0.71 22.05 39.45

Earnings/Loss(–)persharegroup(inCHF) –2.58 22.14 –27.44 26.89 –15.48

Shareholders‘equityperoutstandingshare(inCHF) 284.62 309.98 388.08 435.10 410.01

Grossdividend(incl.reductioninnominalvalue)(inCHF) 5.00 2) 12.50 n.m.1) 7.50 5.00

Dividendyield(in%) 2.29 6.6 n.m.1) 1.77 1.29

1) Thespin-offanddistributionof55%ofHammerRetexHoldingAGtotheshareholderswasacceptedatthegeneralassembly24April2009.LudamaHoldingAGsubmittedatakeoverbidatCHF109.45/sharetotheshareholders.

2) Proposaltothegeneralassembly27April2011

Stockexchangekeyfigures

Stock exchange price in CHF per share 2010 2009 2008 2007 2006

Highest 236 202 439 525 422

Lowest 200 84 215 374 335

Yearendprice 218 190 225 442 388

Averageoftradedsharesperday 900 650 955 1'588 758

Marketcapitalisationyearend(inMCHF) 162 142 168 329 289

ChamPaperGroupHoldingAG(stockexchangesymbol:CPGN)islistedontheSIXSwissExchange.Theregistered

sharesareincludedintheSPI(SwissPerformanceIndex).

SwissSecurityNumber:193185/ISIN-Code:CH0001931853

Ticker:CPGN/Bloomberg:CPGNSWEquity/Reuters:CPGN.S

TheChamPaperGroupshare

Sharepricedevelopment

1January2010until31December2010

0

50

200

150

100

250

01.01.09 01.07.0901.04.09 01.10.09 01.01.09 01.04.10 01.07.10 01.10.10 01.01.11

In CHF

7

II. ShareholderstructureasatDecember31,2010

TheChamPaperGroupshare

Majorshareholders

Shareholdergroup(BURUHoldingAG,PhilippBuhofer,HeinzBuhofer,alleHagendorn) 40.22%

ChamPaperGroupHoldingAG,Cham 6.28%

LB(Swiss)InvestmentAG,Zurich 4.01%

Freefloat(accordingtoSIX-Definition) 54.06%

Overview

Registeredshareholders 1'100

Registeredshares 90.00%

Notregisteredshares 10.00%

Shareholderswith1–499shares 991

Shareholderswith500–4’999shares 97

Shareholderswithmorethan5’000shares 12

III.Dividendpolicy

TheChamPaperGroupfollowsaresult-orienteddividend

policy.Normally,25to35%oftheoperationalnetprofit

isdistributedtotheshareholders(detailsseepage67).

IV.Informationpolicy

The Cham Paper Group provides information about its

half-year and annual results in the form of a half-year

reportandanannual report thatareavailable inprinted

and electronic form. The reports are mailed out upon

express requestonly,otherwise theyareavailableonly

electronically for thepurposeofeconomicandenviron-

mentalefficiency.Factsrelevantforthesharepriceare

announcedbywayof ad-hocpublications (Germanand

English).

For continuously updated information on the company,

shares, analyst opinions, media articles, dates and

FAQs,please refer to the InvestorRelations section at

www.cham-group.com. An up-to-the-minute investor

handbookalsoprovidesanin-depthlookatthestrategy,

marketsandcompetitorenvironmentoftheChamPaper

Group. On our website you can also subscribe to the

e-newslettersothatyou,atthesametimeasthemedia,

arekeptabreastofresultsandnewdevelopments.

V.Contact

ShareregisterFranziskaStöckli

Fabrikstrasse,CH-6330Cham

[email protected]

Phone+41417853403

Media&IR-contactEdwinvanderGeest/PhilippeBlangey

[email protected]

[email protected]

Phone+41432683232

VI.FinancialCalendar

Generalassembly27April2011,Lorzensaal,Cham

FinancialreportingHalf-yearreport2011:17August2011

Annualreport2011:14March2012

8

DearShareholders,

In2010theChamPaperGroupachievedanetrevenue

ofCHF339.5million.Thiscorrespondstoanincreaseof

8.6%ascomparedto2009,or16.3%whenadjustedfor

currencyeffects.Thevolumesoldof204,126tonnesof

specialitypaperswas11.9%abovethe2009figure,and

9%abovethefigurefor2008.Consequently,notonlyhas

thestabilisationofmarketdemandcontinued,theCham

PaperGrouphasalsosuccessfullyreturnedtoagrowth

pathafterthebrief,yetsharp,declineindemandatthe

beginningof2009.

Asalreadyin2009,theConsumerGoodssegment(47%

oftheGroup’srevenue)exhibitedanextremelyfavorable

showing,particularlywithregardtotheflexiblepackaging

product group, which achieved an additional growth of

8.5%. The net revenue increase of 11.4% in the com-

pany’ssecondlargestsegment,IndustrialRelease(45%

of Group revenue), reflected the economic recovery in

the industry. The as-yet small Digital Imaging segment

(8%) exhibited a strong performance, thanks to now-

establishedinnovativeproductsliketheTransjetpaper.

UnfortunatelytheChamPaperGroup’ssuccessfulposi-

tioning in themarketplaceandthebriskdemandfor its

productsarenotreflectedinitsprofitability.Inthefavour-

ablemarketenvironmentof lastyearthecompanywas

forced to absorb skyrocketing raw material costs; the

Swissmillwasunexpectedlyconfrontedwithasudden

sharpdeclineinthevalueoftheeuro,thecurrencyofits

keyexportmarkets.WhereastheItalianmillsagainoper-

atedmoreprofitablyascomparedto2009,themargins

atthetraditionallyprofitableSwissplantshranksubstan-

tially.TheGroup’soperatingprofitofCHF8.4millionfor

theyear(2009:CHF13.6million) isneverthelessdisap-

pointingdespitetheGroup’sstrongmarketperformance.

Inthelastanalysis,theGroup’snetprofitfor2010slipped

as the resultofnon-recurring items (reversalofcapital-

isedtaxlosscarryovers)tominusCHF1.8million.

StrategicplanningattwolevelsTheBoardofDirectorsandtheExecutiveManagement

Boardwereforcedtodealsimultaneouslywithtwocen-

tralissues:planningtosatisfyrisingdemandinthemedi-

umtermandinitiatingquick-actingmeasurestopreserve

theprofitabilityofproduction inSwitzerland,particularly

intheprimarymarketEurope(80%ofsalesrevenue).

Carried along by a strong tailwind in the face of powerful headwinds PhilippBuhofer

ChairmanoftheBoardofDirectors

Lettertoshareholders

9

TheBoardofDirectorshasbeenintensivelyengagedin

theGroup’sstrategicmedium-termplanningsince2009.

BasedontheGroup’sstrongpositioninthespecialitypa-

persmarketandthesuccessfuldevelopmentandmarket

launch of innovative products in the next few years to

come,theExecutiveManagementBoardandtheBoard

ofDirectorsarereckoningwithanincreaseinthevolume

sold that will exceed today’s capacities. The Group is

currently inaposition toproduce identicalChamPaper

qualityatalllocations,andthisenablesflexibleplanning.

Thisdevelopmentistheresultofstandardisedprocesses,

qualitymanagementimprovementsandthestandardsin-

troducedoverthepastthreeyears.Atthesametimea

growingrequirementforspecialitypaperswithattractive

growthrateshasarisen inAsiathatcannotbesatisfied

fromEuropeinthemediumterm,andnecessitateslocal

productioncapacities.

ExpansionofCham’sowncapacity in Italyandpro-ductionalliancesinEuropeInthecourseofstrategicproductionplanning,thethree

existingmillsinSwitzerlandandItalyweresubjectedto

in-depthanalysis togauge their futureoptimisationand

expansion capability. In addition, an investment project

forChinawasfullydevelopedfollowingin-depthmarket

andsiteinvestigations.

InapolicydecisiontheBoardofDirectorsspokeout in

favourofgraduallyincreasingtheproductioncapacityin

Condinoandlayingtheplansforastrategicexpansionof

theCarmignanomillor,inthealternative,examiningstra-

tegicproductionalliancesinthenortherneurozone.The

positioningandfurtherdevelopmentoftheChamsiteis

alsobeingexaminedindetail.Inthesecondhalfofthis

year theBoardofDirectorsplans topresent adetailed

strategy foroptimallyutilising theChamPaperGroup’s

marketopportunitiesinthespecialitypapersmarketdur-

ingthecomingdecade.

FocusonmaintainingprofitabilityinEuropeThe forex effects during the year under review under-

scores the timeliness of these strategic projects. As

mentionedabove,thesizablestrengtheningoftheSwiss

francagainsttheeurohadanegativeimpactontheprofit-

abilityofproductioninSwitzerland.Almost100%ofthe

productsmanufacturedby theChammill areexported,

theeuroareaaccountingforthecompany’slargestmar-

ket.Rawmaterialprices—whichincreasedbyapproxi-

matelyonethirdduring2010—werepassedoninade-

layedmannerbywayofpriceincreasesofjustunder10%

bytheendoftheyear.Unfortunatelyoffsettingexchange

lossesinasimilarmannerwasnotpossible.Whereasthe

Italianmillsprovedsuccessful inmaintaining theirEBIT

margin in the lower part of the 5%–12% target range,

thiswasnotpossibleattheSwissproductionsite.

Dr.RenéFurlerVice-Chairman


Dr.FelixThöniMember

10

Although the average sales prices continue to be up-

wardlyadjustedandthesalesteamisabletoprevailwith

thispricingtoacertainextent,particularlywithregardto

passingon increased rawmaterial costs, at theendof

2010theBoardofDirectorsandtheExecutiveManage-

mentBoarddecided that strategicobjectiveswouldbe

prioritised.Insodoing,thefocusintheshorttermison

boostingprofitabilityandachievingmargintargetsinthe

primarymarketsofEurope,withglobalgrowthbeinga

secondaryobjective.

Consequently theexpansion intoChina is to takeplace

intwosteps.Inordertobettercapitaliseonthemarket

opportunitiesofferedthere, theChamPaperGroupwill

continuetooptimise itssupplychain intoAsiasoas to

beabletomorequicklyservecustomerslocally.Should

thecurrentmarketsuccessprovesustainableinthenext

fewyearstocome,thefullydevelopedplantprojectwill

bereactivated.

Optimisationeffortswillalsocometofruitionin2011In2011theGroup’searningswillbenefitfromtheprice

increasesgraduallygoingintoeffectinparallelwithstabil-

isingrawmaterialcosts.Onthecostsidethebenefitsof

theoptimisationprojectsinpurchasingandprocurement

will also takeeffect, theseprojectshavingbeen identi-

fied in concert with a specialist consulting partner and

implementedstepbystepthroughoutthereportingyear.

Amongother things, thisextends topoolingpurchases

ofpulpandchemicalswithotherpapermanufacturers.In

addition,furthercomponentsoftheprocurementvolume

inSwitzerlandsuchasthesourcingofenergyandserv-

iceswereswitchedfromCHFtoEURinordertocounter

thecurrencyproblem.

BalancesheetremainsstableTheChamPaperGroupcontinues tohaveasoundbal-

ance sheet. Thanks to the strict discipline exercised in

payablesandreceivablesmanagement,theGroup’snet

workingcapitaldroppedtoonlyCHF83.5million(2009:

CHF90.4million)despitethesubstantialincreaseinvol-

ume,thisdropbeingdueinnosmallparttoexchangerate

effects.Atyearendcashandcashequivalentsamounted

toCHF61.8million,withtheGroup’snetdebtamounting

toCHF19.4millionandthegearingratioamodest9.8%

(2009:13%).Duringthereportingyear, theequity ratio

increasedfrom55.3%to57.6%.

Tax-favorable capital repayment of CHF 5.00 pershareproposedTheoperatingresultachievedbytheChamPaperGroup

during2010doesnotpermitanordinarydividendtobe

disbursedunderthedividendpolicyestablishedin2009.

InviewoftheGroup’ssoundfinancialsituation,itshigh

amounts of cash on hand and its intact business pros-

pects,theBoardofDirectorsproposesthatthegeneral

meeting of shareholders approve a special distribution

intheformofatax-favourablecapitalrepaymentofCHF

5.00pershare.


11

ChangesinthemanagementstructurePatrickSchmidassumedtheofficeofCFOoftheCham

PaperGroupon1July2010.Schmid(born1968)hasex-

tendedexperienceinthefinanceandpaperindustry,be-

ingCFOofChamPaperGroupSchweizAGsince2007,

theChamPaperGroup’sparentandmainoperation.

ContinuedrecoveryofsharepriceThesharepriceoftheChamPaperGrouprosebyCHF28

toCHF218ascomparedto itsstatuson31December

2009, thus equating to a performance of 21.3% when

takingthedisbursementofCHF12.50inJuly2010into

account.During2010 theSPI Index roseby2.9%.The

company’smarketcapitalisationofCHF162millionisstill

wellbelowitscarryingvalueofCHF198.7million.

Outlookfor2011We are reckoning with a continued favorable develop-

mentofdemandforourproducts.Oursaleseffortsare

payingoffandourproductinnovationsaremeetingwith

apositiveresponseinthemarketplace.Basedonabudg-

etedeuroexchange rateofCHF1.30,weexpect a re-

newed increase in sales volume in the mid single-digit

rangeandimprovedprofitability.

Wewouldliketotakethisopportunitytothankyou,Dear

Shareholders,CustomersandBusinessPartners,foryour

trust in the Cham Paper Group. We would also like to

extendawordofthanksforthededicationandcommit-

ment shownby theExecutiveManagementBoardand

allemployeesduringthischallenging2010financialyear:

youhaveenabledourGrouptostaythecoursedespite

havingtofightagainstpowerfulheadwinds.

PhilippBuhofer

ChairmanoftheBoardofDirectors

Dr.RenéFurler

Dr.FelixThöni

HansSchaller

UrsZiegler

HansSchallerMember

UrsZieglerMember


12

The Cham Paper Group has returned to a growthtrack after a 2009 characterised by turbulence. Thebrief, yet sharp, decline in demand in 2009 is defi-nitely a thing of the past. Demand trended signifi-cantlyupwardinallsegments.Ournewproductsarewellreceivedinthemarketandgiveusreasontobeoptimistic with regard to future volume increases.However,wecontinuetocontendwithaheadwind.Thepronouncedpriceincreasesforrawmaterials—reachingnewrecordhighs—werelargelypassedonwithsomedelaythroughsalesprices,yetthestrongSwissfrancmakesfortrueconcernsinceitposesasignificant burden to the profitability of the Chamsite.

Againstthisbackdroptheprojectsidentifiedforpre-servingourcompetitivenessandincreasingitfurtherwere systematically pursued and implemented. Atthesametime,thepursuitofnumerousinitiativestoaccelerateinnovation-drivengrowthcontinuedwithundiminishedstrength.

In2010theChamPaperGroupsold204,126tonnesof

specialitypapers.Thiscorrespondstoa11.9%increase

in volume as compared to crisis-stricken 2009, during

whichthesalesvolumedroppedbyatotalofonly2.5%

despite the sharpdecline at thebeginningof the year.

Nevertheless,eightadditionalweeksofshortenedwork-

ing hours had to be scheduled in 2010 in Switzerland.

Thisisdueparticularlytothesignificantboostinproduc-

tionefficiencylastyear,resultinginasubstantialincrease

in capacity. In Italy, capacityutilisation atbothmills re-

mainedhighthroughouttheyear.

Thenet revenueamountedtoCHF339.5million,8.6%

above the2009 figure.Thesales revenuegenerated in

localcurrencies,primarilytheeuroandtheUSdollar,rose

by16.3%ascomparedto2009.

ThepronouncedstrengtheningoftheSwissfrancagainst

thesetwocurrencieswasperceptibleintermsofprofit-

abilityattheEBITlevelandinthefinancialresult.Theop-

eratingprofitofCHF8.4millionachievedduringtheyear

wasnegativelyimpactedbyforexeffectsofalmostCHF

10million,thefinancialresultbeingworsenedbyanaddi-

tionalCHF4.2million.Thisispainfulandcastssomewhat

ofashadowontheGroup’sstrongmarketperformance.

Report on business performance in 2010

Reportonbusinessperformancein2010

PeterStuderCEO

13

The Cham mill has been able to continuously reduce

its currency dependency during the past three years.

Whereasaeurooverhang(earningsminuspurchasesin

euros)ofover60%arose in2008, itcurrentlyamounts

to slightly less than 40%. A further reduction is possi-

bleonlytoalimitedextent.Bycontrast,therevenuesin

USdollarsofca.10%areoffsetbypurchasesinapproxi-

matelythesameamount.SincetheChamPaperGroup

primarily competeswithEuropeanproducers, imposing

currency-inducedpriceincreasesispossibleonlytoalim-

iteddegree.

TheGrouphadmorescope foraction in rawmaterials-

based pricing, with prices being immediately upwardly

adjustedtooffsetskyrocketingrawmaterialcosts,which

accountedfor50%to60%oftheproductioncosts.Pulp

expensespertonneofpaperincreasedbyanaverageof

overone thirdduring theperiodunder review. Inorder

toproducea11.9%highervolume,ca.50%morewas

spentonpulpascomparedto2009.TheExecutiveMan-

agementBoardandthesalesteamsucceededinincreas-

ingsalespricesbyanaverageofjustunder10%overthe

courseoftheyearbyengaginginintensivedialoguewith

customersonanequitablebasis.Inviewoftheslightflat-

teningofcostgrowthsincelatelastautumn,euro-based

marginsshouldgradually leveloff toa reasonable level

again.

Despitetheheadwindcreatedbyrawmaterialsandfor-

eign currencies and the gross margin narrowing from

46.5%to36.7%,theGroupachievedanEBITDAofCHF

29.3million(2009:CHF37.3million)andafreecashflow

ofCHF4.7million.TheGroupachievedthisinnosmall

partduetoitsrigorouspayablesandreceivablesmanage-

mentandstrictercostdiscipline,eventhoughexpenses

forsalesandmarketingactivitieswerehigher.

Thedropininterestcostsof45%hadapositiveimpact

on the Group’s financial result. As of the end of 2010,

theGrouphadanetdebtofonlyCHF19.4millionand

cashandcashequivalentsofCHF61.8million.Thedebt

burdeninItalywassuccessfullyfurtherreducedthrough

thecompany’sownresources.

Despiteengaginginhedgingactivitiesinpart,theGroup’s

financialresultwasburdenedbycurrencyeffect-induced

booklossesonreceivablestotalingmorethanCHF4mil-

lion.Startingin2011theeuroreceivablesbalancesheet

item in Switzerland will be additionally hedged. Due to

thecurrencysituationandtheresultingdepressedprofit

prospects for themill inCham,capitalised tax losscar-

ryoversalsohadtobereversedbyCHF3.4million,this

resultinginanetlossofCHF1.8million.


PatrickSchmidCFO

14

PositivedemandtrendinallthreecustomersegmentsAspointedoutabove,2010exhibitedafavorableshow-

ing on the market and demand side. In terms of sales

revenue,at79.5%(2009:84%)Europecontinuestobe

theChamPaperGroup’smostimportantmarketbyfar.

During the reporting year, the share of the Asian busi-

nessgrew from7%to11%,with thevolumesold ris-

ingby48%.ExportstotheAmericasandtherestofthe

world—at6%and3.5%respectively—remainedstable

ascompared to2009.Sales revenuesweredistributed

among the three customer segments as follows: Con-

sumerGoods47%(2009:48%),IndustrialRelease45%

(2009:44%),DigitalImaging8%(2009:8%).

In 2010 the growth trend continued in the Consumer

Goodssegment,particularlywithregardtoflexiblepack-

aging for the foodstuffs industry. The speciality papers

oftheChamPaperGroupareincreasinglybecominges-

tablishedinthemarket.During2010,alargenumberof

newcustomersweresuccessfullygained,primarilyinEu-

ropeandtheMiddleEast.After2009’s1%-plusgrowth,

the sales volume again increased by almost 12%. The

incomingordersfrombigaccountsinthetobaccoindus-

tryalsopickedupagain,withmarketsharebeinggained

inEuropeandan increasingnumberoforders received

fromChina.Inthebottlelabelsproductgroup,theprod-

uctrangecontinuedtobeconcentratedonhigher-margin

items.

The self-adhesive papers segment (Industrial Release)

alsosawasubstantialincreaseinquantitiessold.Estab-

lishedcustomers in theautomotiveandgraphicarts in-

dustriesbenefitedfromthecatch-upracetakingplacein

themarket,theresultbeingthattheirdemandrose.On

theotherhand, theGroupsucceeded insecuringnew,

primarily SME customers particularly in Asia, thanks to

stepped-upmarketingefforts and theexpansionof the

salesteamduringthepreviousyear.Atthesametime,

the increasingcapacityutilisationof themillswasused

todiscontinuelessdistinctivepapervarietiesandremove

themfromtheproductrange.

In the small yet attractive Digital Imaging segment the

Transjetpaperachievedadefinitivemarketbreakthrough

intextilegraphics.Anincreasingnumberoftextileprint-

ersareswitchingtheirproductionovertothisnewtech-

nologysothattheordersonhandarenowsignificantin

termsoftheirimpactontheincomestatement(seealso

page28ff.)Thesetextileprintersincludeestablishedcus-

tomersoftheChamPaperGroupinEurope,butalsoan

increasingnumberofnewcustomers inNorthAmerica

andAsia.Astolarge-formatinkjetpapers,therangewas

alsofocusedonpremium-value-addingproductsandcus-

tomers.


Dr.PeterMüllerMillManagerCham

15

Innovationtoensurefuturesalesvolumes...We are also making good progress at the innovation

level.Firstshowcasedintheautumnof2009,SilicoPre-

miumforself-adhesiveapplicationsenabledanentirear-

rayofprojectcustomerstobegained,thispapergaining

tractiononaccountofitspolyethylene-freesiliconisation

properties.Pilottestingwasconductedonsitewiththe

assistance of specialists from the Cham Paper Group,

whoactedastechnicalconsultants.Thepurposeofthis

pilottestingistoenablelowerimplementationcostsfor

customersbyprovidingthemwithdefaultmachineryset-

tings.Thiscost-savingandeco-friendlypaperisexpected

tobedeployedbyseveralcustomersasstandardstock

startingmid2011.Significant volumesareprojected to

begeneratedstartingin2012.

The development of BARnamic, a novel eco-friendly

packaging paper for the foodstuffs industry, has also

madeprogress (seealsopage20 ff.).Supplycontracts

havealreadybeensignedwiththefirstkeycustomers.In

addition,thefirstindustrialtestsweresuccessfullycom-

pleted at the end of the year. The Cham Paper Group

willofficiallylaunchthisproductinthefirsthalfof2011

soastoquicklygainafootholdinthemultipliermarkets

outlined above. High-volume production is projected to

commencetowardstheendof2011.

...andstrongercustomerrelationshipsThe transformation from paper supplier to service pro-

vider isalso takingplacewith regard to thecompany’s

market development efforts. On 2 and 3 September

2010,theChamPaperGroupextendedaninvitationtoits

1stGlobalInspirationDayshostedbyitinLucerne,with

more than100participants fromallover theworld tak-

ingadvantageofthisuniqueopportunity.Thisinnovation

forumwasdevoted to thecore topicsofSustainability,

LeadershipandPartnership.Presentations,paneldiscus-

sionsandworkshopsbrought customers togetherwith

variousexhibitorsandviews fromabroadspectrumof

differentdisciplines,andwithindustryrepresentatives.

OptimisingsourcingtosecureoperationalefficiencyAfterthesuccessfulcompletionoftheSpeedrestructur-

ingprogramoneyearago,inwhichthelogisticschainand

internal processes took front and center stage, various

projectswerelaunchedinconcertwithaspecialistpart-

nerat thebeginningof2010under thenameofSEAL,

theprojectsbeingdesignedtoproducecostsavingsand

improvements in purchasing and procurement opera-

tions.Theimplementationoftheassociatedpackageof

measures includingrevampingthepurchasingorganisa-

tionwasinitiatedbythebeginningof2011.Theresultsof

theseprojectswill impactCham’s incomestatement in

thecourseofthisyear.


GeroldZueggMillManagerCondino

JohannBoogMillManagerCarmignano

16

ConsumerGoods

Food Non-Food Tobacco Beverages&Liquids

IndustrialRelease

GraphicsReleaseLiners ReleaseLinerTapes ReleaseLinerLabels IndustrialProduction Facestock(Labels)

DigitalImaging

LargeFormatInkjetGraphics SublimationPrint/

TextileGraphics TranspromoPrint

MarketsoftheChamPaperGroup

17

Ourconsumergoodsrangeincludespaperforflexiblepack-

agingandlabelprinting.Thebasepapersservetoprotect

thecontentsofthepackageaswellasillustratingtheprod-

uctandprovidinginformation.

Consumerstodaydemandeasilyunderstandable,func-

tionalandenvironment-friendlypackaging.Onesurvey*has

shownthat87%ofEuropeanconsumerspreferpaper

packaging.For93%ofrespondents,paperisthemosten-

vironment-friendlyformofpackaging.Nofewerthan87%

likepaperpackagingbecauseitissimpleandsafetohandle.

Asaqualitysupplierintheconsumergoodssector,weoffer

brandnamemanufacturersinnovativepapersolutionsnoted

fortheirefficiencyandsafetyatallstagesoftheproduction

process.Theoutstandingpropertiesofourpapersensure

brilliantprintingresultsandhighlyeffectivepresentationof

brandnamegoods.

*IPSOSconsumersurvey2006,intheUK,France,Germany,Poland,

Sweden,BelgiumandSpain.

Ourindustrialreleasesolutionsconsistofthebasepapers

foundinrelease linersforfilms,tapesandself-adhesive

labels.Thesearecomplementedbypapersforprocessliners

inindustrialproductionaswellasfacestockpapersforthe

self-adhesiveindustry.

Theproductsareusedingraphicapplications,intheauto-

mobileandconstructionindustries,andforlabels.Theback-

ingpapersweredevelopedexclusivelyforthesespecific

applicationsandprovidethebasisforoutstandingrelease

properties.

Paperisanimportantrawmaterialintheself-adhesivein-

dustry.Around70%ofallreleaselinersand65%ofallthe

labelsusedworldwidearemadeofpaper.

Ourteamofprofessionalsliaisecloselywithourcustomers

todeveloptailor-madesolutions.Theseguaranteeefficiency,

reliabilityandconsistentqualityatallstagesofproduction

andfinishing.

TheChamPaperGroupcommandsaleadingpositioninthe

worlddigital imagingmarket.Wesupply inkjetpapersfor

largeformatdigitalimagingandindustrialinkjetprinting.Our

rangealso includessublimationpapersfordigital textile

printing.

Thelargeformat inkjetpapersaresuitablefor indoorand

outdoorapplications,whilecoatingsforspecificpurposes

guaranteecoloursofmaximumbrilliance.Oursublimation

papershaveexcellentrunnabilityandtransferqualities.

Comparedwithoffsetprinting,digitalimagingisbecoming

increasingly important.Around10to15%oftheworld’s

printingisaccountedforbydigitalimagingandthetrendis

upward.Theadvantageofthisprintingprocessisitsability

topersonalisecommunicationsandtoproduceadvertising

toolsinsmallrunsatveryshortnotice.

Wetestourproducts inthecompany’sownapplications

centreunderauthenticconditionsandoffertrainingcourses

forourcustomers.

MarketsoftheChamPaperGroup

ConsumerGoods

HowAnnateachestheclassthatsustainabilitycanalsobeprofitable

20

AnnaWegmüllercanhardlywaitfortheEcologyProjectWeekat

school.Shewantstoshowherclassmatesthatmakingpackag-

inggreenerisbecomingincreasinglycrucialforthemanufacturing

industry.

When packaging is fun

ConsumerGoods

EcologyProjectWeekFinallytheEcologyProjectWeekAnnahasbeenlooking

forwardtoisbeginning.Shehasdecidedtogiveatalkon

eco-friendlypackaging.Althoughmiddleschool student

Annaisonly13yearsoldsheissomewhatofanexpert

onthissubjectbecauseherfatherisalwaystalkingabout

it.

Whenherteacher,VerenaHeizmann,callsheruptothe

frontoftheclasssheisalittlenervous.Shequicklyhangs

upthepostershehasmadefortheoccasionontheblack-

board.

AlotofpackagingstillcausestroubleAnna waits until her classmates quiet down and then

holdsupapackageofgummibears.“Whatisthispack-

agingmadeof?”“Plastic,”callsoutavoicefromtheback

row.VerenaHeizmannreplies:“Andwhatisplasticmade

of?”WhenthereisnoanswerAnnauncoverspartofher

poster, revealing a picture of anoil refinery. “Plastic is

madeofoilandoilreserveswillsomedaybeusedup.”

Annatakesapackageofmuesliandshowsittotheclass.

Sarah’sarmshootsupintheair:“Aluminum,aluminum,”

shesays.“Iknowthisbecausewecan’tdisposeofthis

packagingtogetherwiththenewspapers.”Annanodsin

agreementandpointsoutthatthepackagingismadeof

acombinationofaluminumandplastic.Theteacheradds:

“Aluminumisametal.Incontrasttomanyothermetals

itcanberecycledanynumberoftimes,yetrecyclingitis

difficultandconsumeslotsofenergy.”

Pulpfromcertifiedforestplantationsissustainable...Aftertheclasshasrecognizedallthepackagingvarieties

presentedbyAnna,Annatellsthemwhateco-friendlyma-

terialcanbeusedtoreplacetheminpart.“It’seasy: in

thefuturesomeof thispackagingcanbereplacedwith

specialpapergrades.Paperprimarilyconsistsofpulpand

pulpisobtainedfromwood.Thegoodnewsis:woodis

arenewableresource.”Davidinterjects:“Butatreeonly

growsonce.When it’schoppeddown it’sgone.”Anna

explains: “Most paper manufacturers want to preserve

theenvironmentandbecertainthattheywillcontinueto

beabletosourcetheirrawmaterialsinthefutureaswell.

That’s why they procure wood only from forest planta-

tionsthatarereplanted.Thisisevidencedbycertifications

likeFSCorPEFC,whicharebackedby independentor-

ganisationsthatconductauditstodeterminewhetherthe

chopped-downtreesarereplanted.”

21 ConsumerGoods

…butpaperalsohastobeabletoprovidefortheadvantagesofmetalandplasticTheteacherasksskeptically:“Butwhyisn’tallpackaging

made of eco-friendly paper today?” Anna: “Food pack-

aginghas topossess variousproperties andbarriers in

order toprotect theproduct in transit and in thestore,

andtoalsoensuretheproduct’sshelflife.Itwasn’tuntil

theadventofnewmaterialsandprocessesthatsomeof

theseproperties couldbe incorporated in paper.”“But

foodproducersdon’tmakesomethingunlessitisprofit-

able,”interjectsFelix,thesonofastockbroker.“Yes,”

saysAnna,“butpapercostsaren’ttheonlyissue.Thanks

to sustainable packaging, disposal costs and taxes are

reducedaswell.Pluswhich, themanufacturer’s image

benefitsfromapositiveimpact.”

Sustainablepackagingcontributestoacompany’spositiveimage“Annaisright,”VerenaHeizmannsaystotheclass.“To-

day many food producers are under considerable pres-

sure by environmental organisations because they are

accused of causing the problem by creating packaging

waste in the first place. If manufacturers were able to

assumeresponsibilityfortheenvironmentwhileboosting

thebottomline,thiswouldbelikehavingtheircakeand

eating it, too.Satisfied,Felix?”“Sure,”hesays, thinks

foramomentandgiggles:“I’lltellthattomydad.He’ll

be wanting to know where he can purchase shares of

thiscompany!”

“It’seasy:Manypackaging

compositescanbereplacedwith

specialitypaper.”

TheChamPaperGrouphasdevelopedasustainablebarrier

paperforflexiblepackaging:BARnamic.BARnamicwillbe

launchedin2011.Technologicallyfeasibleapplicationswill

bedeployedinconcertwithinterestedcustomerstocreate

industrialseriessolutions.

Hotmelt sealing waxMetallised PETLamination adhesive

Paper

Print and varnish

Sealing layerBarrier layer

Paper

Print and varnish

Typical structure of today’s packaging composites

Possible new structure of a composite with BARnamic (barrier-coated paper)

IndustrialRelease

HowFlorianWegmüllerbenefitsfromInspirationDays

24

FlorianWegmüllerattendstheChamPaperGroup’s

InspirationDays.Thiseventnotonlyopensupnew

perspectivesforhiscompanybutforhisbusiness

partner’scompanyaswell.

When inspiration leads to new business ideas

Urgentlyneeded–newideasFlorianWegmüller,headofpurchasing forbasemateri-

als for the production of self-adhesive films at Graphix

Lamination Films GLF is satisfied: since sourcing from

theChamPaperGrouphis company’sproductionplan-

ningisflexible,stocklevelsarekeptlowwhilehiscom-

panyisabletoguaranteecustomersjust-in-timedelivery.

HisfavorableexperiencewiththeChamPaperGrouphas

piqued his interest in attending the two-day Inspiration

Daysevent.“Actually Icould recommendthisevent to

mybusinesspartnerPaulBoser,” thinksFlorian.“He’s

currentlylookingforinnovativeideasinordertoexpand

further. Although Boser operates in a market different

fromours, likeusheusesbackingpaper,albeit for the

productionofinsulatingsheetingusedinconstruction.”

2September2010TheChamPaperGroup’sInspirationDaysinLucerneAfter the introductory presentation given by trend re-

searcherDr.DavidBosshartentitled“BetweenMore&

Less”,FlorianWegmüllerisonthelookoutforhisbusi-

ness partner. He discovers him in the coffee bar. “Hi,

Paul,nicetoseeyoucouldmake it.”“Oh,hi,Florian!”

PaulBosersetshisemptycuponthecounterandglanc-

es at his watch. “Let’s go catch the panel discussion:

‘Sustainability, Leadership and Partnership’ sounds in-

triguing.Whichworkshopdidyouregisterfor?”

3September2010TheChamPaperGroup’sInspirationDaysAfter hearing the refreshing mind opener presentation

by legendary management thinker Dr. Kjell Nordström,

FlorianWegmüller introducesPaulBoser tohiscontact

attheChamPaperGroup,SabineSchmid.“Ms.Schmid

isinstrumentalinouralwaysbeingabletoprovidejust-in-

timedeliverytoyou.”“Whatacoincidence,”PaulBoser

sayswithagrin,turnstoSabineSchmidandadds:“Per-

hapsyoucanhelpmebeevenmoresuccessful.”

IndustrialRelease

25

The jocular exchange soon turns into a serious discus-

sion focusingon the results of thepanel discussionof

thepreviousday.“Thequestionsput tousbyourcus-

tomers about sustainability are becoming increasingly

specificandwearethinkingaboutwhereourprocesses

might be able to provide solutions,” says Paul Boser.

SabineSchmidpricksupherears:itsohappensthatthe

Cham Paper Group has just launched a backing paper

enablingcustomerstodispensewithaprocessstep,i.e.

the polyethylene coating step. Already acquainted with

thispaper,FlorianWegmüllernudgesSabineSchmidand

askswhetherSilicoPremiumorProbasemightbe just

theticketforBoser.Intheafternoonwhilethethreetour

the various production sheds of the Cham mill, Sabine

SchmidexplainsaboutthemanyadvantagesofSilicoPre-

miumandProbase.

Newcontacts,newinspirationsandnewstrategies“IseethattheInspirationDayshaveinspiredyou,”says

FlorianWegmüller glancing atPaulBoser,who isbusy

sortingthroughthebusinesscardshecollectedfromhis

new contacts. He concludes: “Although our business

segments are completely different they have things in

commonthatyoudon’trealisewhenhiddenawayinyour

officesittingatyourdesk.Sometimesyouneed toen-

gageinalittlefreethinkingandface-to-facediscussions

withexperiencedspecialists.”PaulBosernodsinagree-

mentandgrins.

“Sustainabilityisabusiness.”

IndustrialRelease

TheChamPaperGroup’sInspirationDaysThefocusoftheInspirationDaysorganisedbytheChamPaperGroupforthe

firsttimewasclear:everyparticipantwastotakeawaysomethingusefulforhis

orherday-to-daywork.Whetherintheformofspecificinputfornewstrategies,

newideasontacklingthechallengesofthefutureandseizingupontheopportu-

nitiesoffered,orenrichingone’snetworkofprofessionalandpersonalcontacts.

ThenextInspirationDaysareplannedfor2012.

DigitalImaging

HowGloriaWegmüllerrealisedthatinnovationsimplifiesthesearchforsponsors

28

GloriaWegmülleristhinkingabouthowshemighthelpher

sonTimandhisicehockeyteamtoachievefuturevictories.

Imaginehersurprisewhenshelearnsthatthesolutionlies

inatextileprintinginnovation.

Looking to attract new sponsors with innovativetextile printing

4:9setbackfortheWhitePanthersAfter leaving work, corporate lawyer Gloria Wegmüller

has an important date: cheering her son Tim and his

team,theWhitePanthers,intheiricehockeygame.Un-

fortunatelytoavail:afterthefinalwhistlethescoreis4:9

infavoroftheopposingteam.

Onceagain,Gloriaislookingforthereasonsbehindthis

loss.Equipment?Ratheronthepoorside.Teamspirit?

Essentiallypresentbutnot visible.With theirhand-me-

downjerseys,theboysdon’tmakemuchinthewayofa

favorableimpressionontheiropponents.Theletteringon

the jerseysofmanyplayershaspartiallyflakedoff,and

jerseyno.8lookslikejerseyno.3.Gloriasuddenlyhasa

brightidea:theWhitePanthersneedasponsor,aprofes-

sionalcoachand,mosturgently,newjerseys.

DigitalprintinghasalsotakenthetextilemarketbystormThefamilyattendsagameof theZug IceHockeyClub

ontheweekend.AfterthefirstperiodfatherFloriancom-

ments: “That is one top-notch game!” “And they also

have top-notch jerseys, as is befitting of a top-notch

team,” adds Gloria. She has already told her husband

aboutherideaoflookingamongherclientsatthefirmfor

asponsor for theWhitePanthers.“ThePanthersneed

jerseys liketheirpromodels.Everyteenagershouldbe

able tohavehisnicknameprintedonhis jersey.”We’ll

beabletomoreeasilyfindasponsorifthelogosonthe

shirtsaremoreeye-catchingandeasiertoread.Unfortu-

nately,”shesighs,“thirtypersonalisedjerseysareprob-

ablyontheexpensiveside.”“Notnecessarily,”responds

Florian.“Nowadaystextileprintmotifscanbetransferred

directlyfromaspecialitypaperontothefabric.‘Transjet’

isthenameofthepaper.AttheInspirationDaysevent

organisedbytheChamPaperGroupIheardthatdigital

printinghasbecomefirmlyestablishedinthetextileseg-

ment because consumers are increasingly demanding

moreinthewayofpersonalisedproducts.Thispaperhas

now become an absolute standard in textile printing.”

Gloria’seyebrowsgoup:“Paper?”

DigitalImaging

29

AsimpleprintingprocesswithahugeeffectOneweeklaterGloriaWegmüllerhasfoundasportstex-

tilecompanythatemploysdigitalprinting.Thequotation

shereceivesmakesforapleasantsurprise:havingper-

sonalised jerseysmadeup is relatively economical and

deliverysoquickthattheteamwouldbeabletoappear

on the ice in their new jerseys on the next game day.

Gloriaconfirmstheorderonthephone,alsoinorderto

ironoutsomedetails.“Canwedesigneach jerseydif-

ferently?Wewouldlikeanicknameprintednexttoeach

player’sname.”“Noproblem,”saysthesalesman.Gloria

iscurious:“Howexactlyisprintingdonewiththisspecial-

itypaper?”“Theprinciplebehindtheprintingprocessis

simple:themotifisprintedontothepaperusingaspecial

ink and then pressed onto the fabric. The combination

ofheatandpressurecausestheinkonthepapertobe

transformed intoagasandabsorbedbythefabric.The

result is theprinted imagebecomespartof the jersey.

Thenthepaperissimplyremoved.”

ProfessionalismalwayspaysoffTwoweeks laterFlorianandGloriaWegmüller areat a

gameoftheWhitePanthers.Gloriaisextremelysatisfied

with the new jerseys and notices that some photogra-

phersarebusilysnappingpicturesoftheWhitePanthers

fromthesideoftheicehockeyrink.“Look,”shenudges

her husband, “the press has noticed the new jerseys.

Ifthelogoofoursponsorappearsmoreofteninthelo-

calmedia thepurchasewillhavemore thanpaid for it-

self.”“Thiswillmakethesearchforothersponsorsnext

yeareasier,”Florianadds.“Absolutely.Thenthere’llbe

newjerseys!”AtthismomentTimtakesaslapshotand

scoresthedecisivegoal,enablinghisteamtocarryoffa

5:4victory.

Transjetisasublimationpaperfordigitaltextileprinting.Comparedtootherproc-esses,thequalityofthedesignsprintedwithTransjetisunsurpassedwithregardtocrisp-ness,resolutionandcolorintensity.ThankstoTransjet,digitaltextileprintersforsports-wearcanofferpersonalisedproductsinanyquantitylargeorsmall,whileprovidingforpromptdelivery.

“Transjetisthestandard

nowadaysintextileprinting.”

DigitalImaging

30

31

Table of contentsFinancial Report

32 Consolidatedfinancialstatements Notestotheconsolidatedfinancialstatements

Reportofthestatutoryauditorsontheconsolidated

financialstatements

56 Financialstatementsof ChamPaperGroupHoldingAG Notestotheconsolidatedfinancialstatements

ofChamPaperGroupHoldingAG

Reportofthestatutoryauditorsonthe

financialstatements


TableofcontentsFinancialReport

32

Consolidatedincomestatement

1January–31DecemberNotes

2010TCHF

2009TCHF

Change%

Netrevenue 3 339'517 312'590 8.6%

Costofgoodsandservicessold –301'010 –261'786 15.0%

Grossprofit 38'507 50'804 –24.2%

Administrativeandgeneralexpense –16'696 –18'554 –10.0%

Marketing,sales,researchanddevelopmentexpense –17'015 –16'612 2.4%

Otheroperatingexpense 6 –1'385 –2'574 –53.8%

Otheroperatingincome 6 4'954 512 967.6%

Operatingprofit(EBIT) 8'365 13'576 –38.4%

Financialresult 7 –2'454 –3'856

Foreigncurrencyeffects –4'154 633

Netincome/loss(–)beforetaxes 1'757 10'353 –83.0%

Incometaxes 8 –3'554 –1'227

Netincome/loss(–)fromcontinuedoperations –1'797 9'126 n/a

Netincome/loss(–)fromdiscontinuedoperations 9 – 6'799

Netincome/loss(–)fortheyear –1'797 15'925 n/a

Attributableto:ShareholdersofChamPaperGroupHoldingAG –1'797 15'375

Attributableto:Minorityshareholders – 550

Earningspershare,undilutedanddiluted CHF CHF

Fromcontinuedoperations 10 –2.58 13.14

Fromdiscontinuedoperations 10 – 9.00

Total 10 –2.58 22.14

TheNotesformanintegralpartoftheconsolidatedfinancialstatements.

Consolidatedfinancialstatements

Cham Paper Group – Consolidated financial statements

33

Consolidatedbalancesheet

Notes31.12.2010

TCHF31.12.2009

TCHF

Assets

Cashandcashequivalents 11 61'747 77'660

Securitiesandderivativefinancialinstruments 12 – 803

Tradeaccountsreceivable 13 60'950 71'257

Inventories 14 59'831 57'082

Othershort-termreceivables 15 7'323 5'171

Accruedincomeandprepaidexpense 2'093 2'223

Totalcurrentassets 191'944 214'196

Tangiblefixedassets 16 143'170 166'393

Intangibleassets 17 5'399 2'189

Financialassets 634 694

Deferredtaxassets 8 3'526 7'009

Totalnon-currentassets 152'729 176'285

Totalassets 344'673 390'481

LiabilitiesTradeaccountspayable 37'327 37'920

Currentfinancialliabilitiesandderivativefinancialinstruments 18 33'181 40'317

Othercurrentliabilities 19 4'722 6'877

Accruedexpensesanddeferredincome 11'923 11'958

Currentprovisions 20 – 902

Totalcurrentliabilities 87'153 97'974

Non-currentfinancialliabilities 18 48'577 64'790

Othernon-currentliabilities 651 849

Deferredtaxliabilities 3'366 3'693

Pensionplanobligations 21 4'796 5'914

Non-currentprovisions 20 1'400 1'400

Totalnon-currentliabilities 58'790 76'646

Totalliabilities 145'943 174'620

Sharecapital 22 48'425 57'738

Capitalreserves 42'682 42'502

Treasuryshares 22 –14'630 –15'448

Retainedearnings 122'253 131'069

Totalshareholders’equity 198'730 215'861




34

Consolidatedcashflowstatement

Notes2010

TCHF2009

TCHF

Netincome/loss(–)fromcontinuedoperations –1'797 9'126

Depreciation 20'894 22'664

Impairments – 1'157

Netincome(–)/lossfromdisposalofpropertyandequipment –231 373

Increase/decrease(–)inprovisions(includingdeferredtaxes) 2'495 –1'436

Decrease(–)inpensionplanobligations –177 –448

Othernon-cashitems –55 –1'035

Decrease/increase(–)intradeaccountsreceivable 3'209 –1'653

Increase(–)/decreaseininventories –8'075 12'502

Increaseintradeaccountspayable 4'096 6'526

Increase(–)/decreaseinotherreceivables,accruedincomeandprepaidexpense –2'379 723

Decrease(–)/increaseinotherliabilities,accruedexpensesanddeferredincome –71 107

Cashflowfromoperatingactivitiesfromcontinuedoperations 17'909 48'606

Cashflowfromoperatingactivitiesfromdiscontinuedoperations 9 – –27'562

Netcashflowfromoperatingactivities 17'909 21'044

Purchaseoftangiblefixedassets 16 –11'211 –14'277

Proceedsfromthedisposaloftangiblefixedassets 16 1'463 47

Purchaseofintangibleassets 17 –4'157 –882

Loanstorelatedparties – –519

Proceedsfromthedisposalofsecurities 12 706 2'000

Cashflowfrominvestmentactivitiesfromcontinuedoperations –13'199 –13'631

Cashflowfrominvestmentactivitiesfromdiscontinuedoperations 9 – 58'463

Netcashflowfrominvestmentactivities –13'199 44'832

Repayment(–)ofcurrentfinancialliabilities –9'834 –21'979

Repayment(–)ofnon-currentfinancialliabilities –1'357 –3'031

Decrease(–)inotherinterest-bearingliabilities – –38

Paymentofdividendincash – –373

Capitalreduction –8'705 –

Saleoftreasuryshares 22 – 1'469

Purchaseoftreasuryshares 22 – –1'079

Cashflowfromfinancingactivitiesfromcontinuedoperations –19'896 –25'031

Cashflowfromfinancingactivitiesfromdiscontinuedoperations 9 – 21'245

Netcashflowfromfinancingactivities –19'896 –3'786

Translationeffectsoncashandcashequivalents –727 –35

Decrease(–)/increaseincashandcashequivalentsfromcontinuedoperations –15'186 9'944

Increaseincashandcashequivalentsfromdiscontinuedoperations 9 – 52'146

Cashandcashequivalentsasat1January 11 77'660 15'605

Cashandcashequivalentsasat31December 11 61'747 77'660



35

Shareholders’equitystatement

Retainedearnings

Sharecapital

TCHF

Capitalreserves

TCHF

TreasurysharesTCHF

Cumulativeforeign

currencytranslation

adjustmentsTCHF

Fairvalue

reservesTCHF

Retainedearnings

TCHF

Totalexcl.minorityinterests

TCHF

Minorityinterests

TCHF

Totalincl.minorityinterests

TCHF

Balanceasat1January2010 57'738 42'502 –15'448 –690 – 131'759 215'861 – 215'861

Cashflowhedges

Changesinfairvaluerecognisedinequity – – – – –309 – –309 – –309

NetlossfortheyearfortheGroup – – – – – –1'797 –1'797 – –1'797

Parvaluereduction –9'313 608 – – – – –8'705 – –8'705

Shareholdingplan – –428 818 – – – 390 – 390

Translationeffects – – – –6'710 – – –6'710 – –6'710

Balanceasat31December2010 48'425 42'682 –14'630 –7'400 –309 129'962 198'730 – 198'730

Retainedearnings

Sharecapital

TCHF

Capitalreserves

TCHF

TreasurysharesTCHF

Cumulativeforeign

currencytranslation

adjustmentsTCHF

Fairvalue

reservesTCHF

Retainedearnings

TCHF

Totalexcl.minorityinterests

TCHF

Minorityinterests

TCHF

Totalincl.minorityinterests

TCHF

Balanceasat1January2009 57'738 70'719 –17'123 –629 138 158'235 269'078 – 269'078

CashflowhedgesRealisedgainstransferredtoincomestatement – – – – –891 – –891 – –891

NetincomefortheyearfortheGroup – – – – – 15'375 15'375 550 15'925

Additions,minorityinterests – – – – – – – 54'225 54'225

Disposals,minorityinterests – – – – – – – –54'775 –54'775

Dividendinkind(incl.transactioncosts) – –26'932 – – 753 –41'478 –67'657 – –67'657

Cashdividend – – – – – –373 –373 – –373

Purchaseoftreasuryshares – – –1'079 – – – –1'079 – –1'079

Saleoftreasuryshares – –1'285 2'754 – – – 1'469 – 1'469

Translationeffects – – – –61 – – –61 – –61

Balanceasat31December2009 57'738 42'502 –15'448 –690 – 131'759 215'861 – 215'861



36

Notes to the consolidated financial statements

1. Valuationandaccountingmethods

1.1 GeneralremarksTheconsolidatedfinancialstatementsofChamPaperGroupHold-ing AG and its subsidiaries (“Group” or “Cham Paper Group”)havebeenpreparedinaccordancewithSwissFinancialReportingStandards(SwissGAAPFER)andcomplywiththerequirementsof Swiss law. The internal structuring, valuation and disclosureregulationsdraftedonthisbasishavebeenappliedconsistently.Theconsolidatedfinancialstatementsprovideatrueandfairviewofthecompany’snetassetsandfinancialandearningssituation.Theyarebasedonhistoricalcostswith theexceptionofcertainitems such as derivative financial instruments and securities,whicharecarriedon thebalancesheetat theircurrentvalue. Inpreparingtheseconsolidatedfinancialstatements,allSwissGAAPFERstandards relevant for theChamPaperGroupwereappliedthatarevalidforthereportingperiodsfrom1January2010.

Theconsolidatedfinancialstatementsof theChamPaperGroupwereapprovedbytheBoardofDirectorson15March2011andaresubjecttoapprovalbytheGeneralMeetingofShareholderson27April2011.

1.2ScopeandmethodofconsolidationTheconsolidatedfinancialstatementsof theChamPaperGrouparecomposedof theconsolidatedfinancialstatementsofChamPaper Group Holding AG and its subsidiaries. The subsidiariesformingthescopeofconsolidationarelistedinNote27.

SubsidiariesarecompaniesthataredirectlyorindirectlycontrolledbyChamPaperGroupHoldingAG.“Control” refers to thepos-sibilityofexercisingcontroloverfinancialandoperationalbusinessactivitiessoastobeabletoaccordinglyderiveabenefitfromit.ThisisusuallythecasewhenChamPaperGroupHoldingAGdi-rectlyorindirectlyownsmorethan50%ofthevotingrightsofacompany.Theminorityshareholderinterestsinthenetassetsandtheoperatingresultarereportedseparately.Companiesacquiredorsoldduringthefinancialyearare included in theconsolidatedfinancialstatementsfromoruntil thedateoftransferofcontrol.The purchase method is used for the consolidation of capital.Whenacompany isacquired,netassetsarevaluedattheircur-rentmarketvalue.Anysurplusresultfromthedifferencebetweenthepurchasecostsandtherevaluednetassetsofthecompanyacquired is designated as“goodwill”. Goodwill is offset againstshareholders’equityatthetimeofacquisitionwithoutanyimpacton income.TheeffectsoftheoreticalcapitalisationareshownintheNotestotheconsolidatedfinancialstatements.

Internal Group transactions and relationships and intercompanygainsareeliminated.

Investments inassociatesonwhichChamPaperGroupHoldingAGhasonlyasignificantinfluence(usuallywithvotingrightsbe-tween20%and50%)butoverwhichitdoesnotexerciseanycon-trolarerecognisedonthebalancesheetaccordingtotheequitymethodandreportedasinvestmentsinassociates.TheshareofCham Paper Group Holding AG in the results of the associatesis reported, less the respective taxes, in a separate item in theincomestatement.Minoritystakesoflessthan20%areshownathistoricalcostlessimpairments.

1.3ForeigncurrencytranslationThe individual subsidiaries prepare their financial statements inlocal currencies. The local currency (functional currency) corre-spondstothecurrencyof theprimaryeconomicenvironment inwhichthecompanyoperates.

Transactionsinforeigncurrenciesatthesubsidiariesaretranslatedatthedailyexchangerateprevailingatthetimeofthetransaction.Gainsandlossesfromforeigncurrencytransactionsandfromad-justmentstoforeigncurrencyholdingsonthereportingdatearerecognisedinincome.Foreigncurrencyeffectsonlong-terminter-nalGrouploansofanequitynaturearerecognisedinshareholders’equitywithoutanyimpactonincome.

The reporting currency in the consolidated financial statementsis the Swiss franc. The financial statements of the foreign sub-sidiariesinforeigncurrenciesaretranslatedintoSwissfrancsasfollows: Balancesheet itemsare translatedat theyear-endex-changerate,whileshareholders’equity istranslatedathistoricalratesanditemsintheincomestatementandcashflowstatementaretranslatedattheaverageexchangeratefortheyear.Thetrans-lationeffects resulting fromthe translationof thebalancesheetand income statement are recognised in shareholders‘ equity.When a company is sold, the cumulative translation effects arerecognised in the income statement as part of the gain or lossfromthesaleofthecompany.

Forthemajorcurrencies,thefollowingexchangeratesareused:

Year-endexchangeratesapplicabletobalancesheet

Averageexchangeratesfortheyearapplicableto

incomestatementandcashflowstatement

CHFfor 2010 2009 2010 2009

EUR1.00 1.25 1.49 1.38 1.51

USD1.00 0.94 1.04 1.04 1.09

GBP1.00 1.46 1.65 1.61 1.69

Notestotheconsolidatedfinancialstatements

37

1.4RecognitionofrevenueRevenueconsistsofalltheproceedsfromsalesderivedfromthedeliveryofproductsandservicestothirdpartieslesspricereduc-tionsandrebates,discounts,transportcostsandvalueaddedtax.Asageneralprinciple,proceedsfromsalesarerecognisedintheincome statement as soon as products have been shipped andthe associated benefits and risks have passed to the purchaserortheservicehasbeenprovided.Revenuesthatreducethecostofgoodsandservicessoldareoffsetagainsttherespectiveitem.

PrinciplespertainingtodiscontinuedoperationsNetrevenuefromtherentalofinvestmentpropertiesconsistsofnet rental income less non-occupancy and collection losses andis recognised in revenue. Direct administrative costs as well ascosts for the operation, maintenance and repair of investmentpropertiesbeingrentedoutarereportedseparatelyintheincomestatementasrealestateexpense.Thenetrevenuefromasaleisthedifferencebetweenthenetproceedsobtainedlesstransactioncostsandthelastreportedfairvalueorconstructioncostsoftheproperty sold. The sale is recognised on the date of transfer oftheassociatedbenefitsand risks.Thenet revenuefromgeneralcontractingcomprisesincomefromfeesandgains,includinggainsonthesaleofpromotionproperties.Feesandestimatedprofitsonbuildingsunderconstructionarereportedaccordingtothepercent-age-of-completionmethod.The respectivedegreeofcompletionisdeterminedbyindividualsurveysoftheprogressofworkonthebuildings.Anticipatedlossesareprovisionedimmediately.

1.5CashandcashequivalentsCashandcashequivalentscomprisecashonhand,cashinbankaccountsandpostalaccountsaswellasshort-termbankdepositssuchascallmoneyandtime-depositinvestmentswithanoriginaltimetomaturityofthreemonthsorlessandwhichareconvertibletoknownamountsofcashatanytime.Thisdefinitionisalsousedfortheconsolidatedcashflowstatement.Cashandcashequiva-lentsarereportedatnominalvalues.

1.6SecuritiesThesecuritiesofcurrentassetsarereportedatfairvalue.Forlist-edsecurities, thiscorresponds to thestockmarketpriceon thebalancesheetreportingdate.Non-listedsecuritiesofcurrentas-setsarepresentedatacquisitioncostlessanyvalueadjustments.Changesinvalueareshownintheresultfortheperiod.

1.7DerivativefinancialinstrumentsandhedgingtransactionsTheGroupusesderivativefinancialinstrumentsprimarilytohedgerisks related tochanges in interest rates, foreigncurrenciesandpulpprices.Derivativefinancialinstrumentsprimarilycomprisefor-wardexchangecontracts,interestfuturesandpulpswaps.

Derivativefinancialinstrumentsaredifferentiatedaccordingtovar-iousmotives:Derivativesheld for tradingpurposesare reportedatthevalueprevailingonthereportingdate.Thechangesinvaluesince the lastvaluationare recognised in the result for theperi-od.Derivativesheld forhedgingpurposesarealsovaluedat fairvalues.Thechangesinvalueofderivativesclassifiedashedginginstrumentsforfuturecashflowsarerecognisedinshareholders’equityinthe“Fairvaluereserves”itemwithoutanyimpactonin-come.Thechangesinvalueofthehedgingtransactionrecognisedin shareholders‘ equity are recognised in the income statementfortheperiodinwhichthecashflowfromthehedgedunderlyingtransactionisrecognised.

1.8TradeaccountsreceivableTradeaccountsreceivablearerecognisedattheoriginalinvoicedamountslessallowancesforbaddebts.Allowancesforbaddebtsareestablishedforreceivableswhenthereisanobjectiveindica-tionthattheycannotberecovered.Thecarryingamountoftradeaccountsreceivableisreducedbytheallowances,andtherespec-tiveprojectedlossisexpensedtonetrevenueintheconsolidatedincomestatement.Tradeaccounts receivable thatareuncollect-iblearederecognisedviaallowancesorviatheincomestatement.

1.9InventoriesInventories are carried at the lower of acquisition or productioncostornetmarketvalue.Themeasurementisbasedontheaver-agevaluemethod.Theproductioncostsofworkinprogressandfinished goods include raw and ancillary materials, direct labourcosts,otherdirectlyallocatablecostsaswellasproductionover-headsassociatedwithmanufacturing.Financingcostsarenotin-cludedinproductioncosts.Discountsarerecognisedasprocure-mentpricereductions.Thenetmarketvalueistheestimatedsalesproceedslesstheproduct‘scostsofcompletionandsale.Theval-uesof inventoriesthataredifficulttoselland inventorieswithalowernetmarketvalueareadjusted.TheGroupdetermines thevalueadjustmentsforinventoriesthataredifficulttosellusingpastexperience.Thecorrespondingexpectedlossisexpensedtothe“costofgoodsandservicessold”itemintheconsolidatedincomestatement.Ifit isforeseeablethatthevalue-adjustedinventoriescanbeused,theirvalueisretroactivelyadjustedbywritinguptheinventoryassettotheloweroftheestimatednetmarketvalueortheoriginalacquisitionorproductioncost.

Prepaymentsreceivedfromcustomersforinventoriesarereport-ed under other current liabilities. Prepayments effected for thedeliveryofinventoryassetitemsarerecognisedunderinventories.


38

1.10FinancialassetsFinancialassetsareshownathistoricalcostlessimpairments.Im-

pairmentsarerecognisedintheperiodresultinincome.

1.11TangiblefixedassetsTangiblefixedassetsarecarriedattheiracquisitionorproduction

costlessdepreciationandanyimpairments.Tangiblefixedassets

aredepreciatedonastraight-linebasisoverthefollowingestimat-

edusefullives:

Years Years

Buildingsandplants 25 Plantequipment 5

Machinery,equipment 10 Vehicles 5

Productionmachinery 20 Hardware 5

Landandundevelopedproperties arenotdepreciated.Theyare

not land reservesheld forprofitabilitypurposes.Where tangible

fixedassetsconsistofsignificantcomponentsthathavedifferent

useful lives, the components aredepreciated separately.Repair

andmaintenancecostsareexpensedasincurredwithoutincreas-

ingthepreviousmarketvalueorvalue-in-use.Anexpenditurethat

increasesthemarketvalueorusefullifeofatangiblefixedassetis

capitalisedanddepreciatedoveramaximumperiodoftenyears.

LeasesoftangiblefixedassetsinwhichtheGroupessentiallyas-

sumesalltherisksandrewardsofownershipareclassifiedasfi-

nanceleases.Tangiblefixedassetsacquiredbymeansoffinance

leasesarecapitalisedattheinceptionoftheleaseatthelowerof

acquisitioncostornetmarketvalueoftheleasedpropertyorthe

presentvalueofthefutureleasepayments,andaresubsequently

depreciatedovertheshorteroftheleasetermortheirexpected

usefullife.Thecorrespondingleaseobligations,netofanyfinanc-

ingcharges,areincludedinthecurrentornon-currentportionof

financialliabilitiesdependingonwhentheybecomedue.

1.12GoodwillandintangibleassetsGoodwillarisingfromacquisitionsisoffsetagainstshareholders’

equityat the timeofacquisitionwithoutany impacton income.

TheeffectsoftheoreticalcapitalisationareshownintheNotesto

theconsolidatedfinancialstatements.

Acquiredintangibleassetsincludesoftware,trademarkrightsand

licensesandarerecognisedwheretheyyieldameasurableeco-

nomicbenefitforthecompanyovermorethanoneyear.Report-

ingisdoneatacquisitioncostlessstraight-linedepreciationover

amaximumof fiveyears, takinganyvalue impairments intoac-

count. Intangibles associatedwith the acquisitionof a company

arereportedasintangibleassetsattheirfairvalueasatthedate

ofacquisition.Theyareamortisedonastraight-linebasisoverthe

respectiveusefullifeofamaximumoffiveyears,takinganyvalue

impairmentsintoaccount.Therespectiveestimatedusefullifeof

intangibleassetsisreviewedonaregularbasis.

1.13ImpairmentAll assets are subjected to an impairment test on each report-

ingdate.Ifthereareindicationsforapossibleimpairmentofthe

valueof anasset, the recoverableamountof theassetvalue is

determined and an evaluation of the impairment is undertaken.

If theestimated recoverableamountof theassetvalue–which

represents thehigherofeither thenetmarketvalueorvalue in

use–islessthanthecarryingamount,thenthecarryingamountof

theassetvalueiseffectivelyreducedtotheestimatedrecoverable

amountinthesameperiodinwhichtheadjustmentofthevalue

takesplace.Thenetmarketvalueisthepricethatcanberealised

inanarm’slengthtransactionlessassociatedsalesexpenses.The

valueinuseiscalculatedonthebasisoftheestimatedfuturecash

flowexpectedtoresultfromtheuseoftheasset, includingany

cashflowattheendoftheasset’susefullife,anddiscountedus-

inganappropriatelong-terminterestrate.

1.14LiabilitiesLiabilities are measured at their nominal value. Current financial

liabilitiesareeitherdueorrenewablewithinoneyearunlessthe

Grouphasanunrestricted right toextend thematuritybymore

thantwelvemonthsbeyondthebalancesheetdate.

1.15CurrentvaluesThecurrentvalue (fair valueornetmarketvalue) is theamount

forwhich an asset, liability, or financial instrument couldbeex-

changedbetweenknowledgeableandwillingparties inanarm’s

lengthtransaction.Thecurrentvalueofpubliclytradedandtrad-

ablefinancialinstrumentsisdeterminedonthebasisoftheirstock

exchange prices. The current value of financial instruments not

publiclytradedisdeterminedusingrecognisedvaluationmethods

suchasthediscountedcashflowmethod.Itisassumedthatthe

amortisedcostsof financial assets and liabilitieswith a residual

lifeoflessthanoneyearroughlyapproximatetheircurrentvalue.


39

1.16TaxesIncometaxescompriseallcurrentanddeferredtaxesleviedonthesubsidiaries‘taxableresultsinaccordancewithlocaltaxregulationsincludingthewithholdingtaxpayableonprofitdistributionswithintheGroup.Incometaxesarerecognisedintheincomestatementexcept fordeferred taxeson transactions thatare recogniseddi-rectlyinshareholders‘equity.Capitalandrealestatetaxesarere-portedunderotheroperatingexpense.

Deferredincometaxassetsandliabilitiesarerecordedfortheef-fects under income tax law of all temporary differences arisingbetween the tax base of assets and liabilities and their carryingamounts for financial reporting purposes to the Group. Deferredincome taxesaredeterminedusing tax rates thatapply,orhavebeenannounced,onthebalancesheetdateinthecountrieswheretheGroupoperates.Deferredtaxassetsfromtaxlosscarryoversarerecognisedonlywhenitappearshighlyprobablethatfuturetax-ableprofitswillbeavailableagainstwhichthetaxlosscarryoverscanbeoffset.

Assetsandliabilitiesfromcurrentanddeferred incometaxesareoffsetagainstoneotheraslongasthecorrespondingincometaxesareleviedbythesametaxauthorityandalegallyenforceablerightforoffsettingexists.

1.17ProvisionsProvisionsareestablishedwhenalegalorconstructiveobligationexistsasaresultofpasteventswheretheobligationwilllikelyleadtoacashoutflowanda reliableestimateof thisoutflowcanbemade.Theprovisionsestablishedconstitutethebestpossibleesti-mateofthefinalobligation.Non-currentprovisionsarediscountedtotheirpresentvaluetotheextentthattheireffectsarematerial.RestructuringprovisionsarerecordediftheGrouphasadetailedformalrestructuringplanandtheBoardofDirectorshasmadeadecision to implement it. The breakdown into current and non-currentprovisionsisbasedontheassumptionthattheirutilisationisprobablewithinoneyearorlater.

1.18ContingentliabilitiesPotential liabilities whose existence has yet to be confirmed byfutureevents,orobligationswhoseamountcannotbereliablyesti-matedaredisclosedascontingentliabilitiesintheNotes.Valuationisdoneonthebasisofprobabilityandtheamountof thefutureclaimsandcosts.

1.19PensionplanobligationsThe employee benefit obligations of the subsidiaries for retire-ment,deathanddisabilityareinaccordancewithstatutoryrequire-mentsandprovisionsintherespectivecountries.ThemajorityoftheGroup‘semployeesarecoveredbydefinedbenefitordefinedcontributionpensionplans.TheSwissorganisationsoftheGrouphavelegallyindependentpensioninstitutionsthatarefinancedbywayofemployerandemployeecontributions.Anyactualeconom-icimpactonthecompanyexertedbypensionfundsiscalculatedonthereportingdate.Anyeconomicbenefitiscapitalisedprovidedthatthisisusedforthecompany’sfutureprovidentexpenses.Aneconomicobligationisrecognisedasaliabilitywheretherequire-mentsforcreatingaprovisionaresatisfied.Wherefreelydispos-ableemployercontributionreservesexist,theyarerecognisedasanasset.TheeconomicimpactsofoverfundingandunderfundinginthepensionfundsontheGroupandthechangeinanyemployercontributionreservesarerecognisedinpersonnelexpenseinad-ditiontothecontributionaccruedtotheperiod.Thepensionplansfor the subsidiaries in Italy are also valued as provisions or aretreatedasdefinedcontributionplans.

1.20TreasurysharesTreasury shares are recognised as a reduction in shareholders‘equity. The purchase costs, proceeds from a resale and othermovements are presented as a change in shareholders‘ equity.Treasury shares are non-voting shares and are not entitled todividends.

1.21ResearchanddevelopmentResearchanddevelopmentcostsarerecognisedinfullinincome.Thesecostsarecontainedinthe“marketing,sales,researchanddevelopmentexpense”item.


40

2. Changesinthescopeofconsolidation

Thescopeofconsolidationremainsunchangedascomparedtothatineffectasat31December2009.

3. Segmentreporting

TheGroupdevelops,producesandsellsspecialitypapers.TheGroup‘sgeographicalsegmentsarestructuredonthebasisofthelocationofthecountriesandthesimilaritiesoftheeconomicenvironment.Thisresultsinfourregions:Europe,theAmericas,Asia,andRestoftheWorld.

2010 Europe Americas Asia RestofworldTotalTCHF

Netrevenuewiththirdparties1) 270'217 20'070 36'751 12'479 339'517

Ofwhichnetrevenuefromdiscontinuedoperations – – – – –

Ofwhichnetrevenuefromcontinuedoperations 270'217 20'070 36'751 12'479 339'517

2009 Europe Americas Asia RestofworldTotalTCHF

Netrevenuewiththirdparties1) 269'139 16'862 22'732 10'688 319'421

Ofwhichnetrevenuefromdiscontinuedoperations –6'831 – – – –6'831

Ofwhichnetrevenuefromcontinuedoperations 262'308 16'862 22'732 10'688 312'590

1)Allocatedaccordingtosalesdestination

4. Personnelexpense

2010TCHF

2009TCHF

Wagesandsalaries –48'177 –49'162

Employeebenefits(incl.pensionplanexpense) –12'921 –13'335

Otherpersonnelexpense –1'432 –1'650

Totalpersonnelexpense –62'530 –64'147

Personnelexpenseisincludedontheconsolidatedincomestatementinthecostsoftherespectiveitems.Asof31December2010,theGrouphadaheadcountof659FTEs(2009:661FTEsincontinuedoperations).

5. Depreciationandamortisation

2010TCHF

2009TCHF

Depreciationoftangiblefixedassets –20'041 –21'503

Amortisationofintangibleassets –853 –1'161

Totaldepreciationandamortisation –20'894 –22'664

Depreciationandamortisationareincludedintheconsolidatedincomestatementinthecostsoftherespectiveitems.


41

6. Otheroperatingincome/expenses

2010TCHF

2009TCHF

Disbursedinsurancebenefits 2'528 261

Netgainsfromdisposaloftangiblefixedassets 920 3

Reversalofprovisions 598 –

Otherincome 908 248

Totalotheroperatingincome 4'954 512

Capitalandrealestatetaxes –452 –641

Impairment – –1'157

Netlossesondisposaloftangiblefixedassets –689 –376

Otherexpense –244 –400

Totalotheroperatingexpense –1'385 –2'574

7. Financialincomeandexpense

2010TCHF

2009TCHF

Interestincomefromcashandcashequivalents 168 212

Interestincomeonavailable-for-salefinancialassets 7 46

Otherfinancialincome 30 1

Totalfinancialincome 205 259

Interestexpenseofbankloansandmortgagenotes –2'315 –3'647

Lossesandgainsoninterestderivatives,net 201 –101

Otherfinancialexpense –545 –367

Totalfinancialexpense –2'659 –4'115

Financialresult –2'454 –3'856

8. Incometaxes

2010TCHF

2009TCHF

Currentincometaxes –405 –1'577

Deferredincometaxes –3'149 350

Totalincometaxesfromcontinuedoperations –3'554 –1'227

TheexpectedGrouptaxrateappliedtothecalculationofthedeferredincometaxesitemsequalstheweightedaveragetaxratebasedonthepre-taxprofitsofthesubsidiaries,amountingto24.6%in2010(2009:21.2%).

Asof31December2010,thedeferredtaxassetsamountedtoTCHF3,526(2009:TCHF7,009),ofwhichTCHF3,150(2009:TCHF6,570)wasattributabletocapitalisedtaxlosscarryovers.


42

Deferredtaxassetsfromtaxlosscarryoversarerecognisedonlywhenitappearshighlyprobablethatfuturetaxableprofitswillbeavail-ableagainstwhichthetaxlosscarryoverscanbeoffset.Asof31December2010,theGrouphadtax-deductiblelosscarryoversfromcontinuedoperationsofTCHF70,469(2009:TCHF73,815).Thetax-deductiblelosscarryoversexpireasfollows:

Taxlosscarryovers

2010TCHF

Taxeffect2010

TCHF

Taxlosscarryovers

2009TCHF

Taxeffect2009

TCHF

Totaltax-deductiblelosscarryovers 70'469 11'612 73'815 13'104

Recognisedasdeferredtaxassets –19'675 –3'150 –40'782 –6'570

Non-recognisedtax-deductiblelosscarryovers 50'794 8'462 33'033 6'534

Recognisedtax-deductiblelosscarryoversaccordingtoduedate:

Within1year – – – –

Between1and5years 19'675 3'150 40'782 6'570

After5years – – – –

Totalrecognisedtax-deductiblelosscarryovers 19'675 3'150 40'782 6'570

Non-capitalisedtax-deductiblelosscarryoversaccordingtoduedate:

Within1year 783 220 – –

Between1and5years 44'332 7'273 32'628 6'399

After5years 5'679 969 405 135

Totalnon-recognisedtax-deductiblelosscarryovers 50'794 8'462 33'033 6'534

Nonewtax-deductiblelosscarryoverswererecognisedasdeferredtaxassetsinFY2010or2009.Notax-deductiblelosscarryoversexpiredinFY2010(2009:TCHF0).

9. Discontinuedoperations

Theresultsandthecashflowstatementofthediscontinuedoperations(HammerRetexHoldingAGuntilthedistributionofthedividendinkindon9June2009)areasfollows:

2010TCHF

2009TCHF

Netrevenue – 6'831

Expense – –4'488

Operatingprofit – 2'343

Financialresult – –74

Pre-taxprofitfromdiscontinuedoperations – 2'269

Incometaxes – –367

After-taxprofitfromdiscontinuedoperations – 1'902

Transactioncostsfromtransactionswithminorityinterests(HammerRetex) – –580

Disposalgainfromtransactionswithminorityinterests(HammerRetex) – 6'465

Disposalloss(HunsfosFabrikkerAS) – –140

Taxeffectofdisposalgain – –848

Profitfromdiscontinuedoperations – 6'799


43

Alltherevenueandexpensesofthesebusinesssegmentsarepresentedseparatelyintheincomestatementasdiscontinuedoperations.

2010TCHF

2009TCHF

Cashflowfromoperatingactivities – –27'562

Cashflowfrominvestmentactivities – 58'463

Cashflowfromfinancingactivities – 21'245

Increase/decreaseincashandcashequivalentsfromdiscontinuedoperations – 52'146

Thecashflowfrominvestmentactivitiesfromdiscontinuedoperationsin2009includesthecashinflowofTCHF62,090fromthesaleofthesubsidiariesandthecashoutflowofTCHF2,786duetothedeconsolidationofHammerRetexandthecashoutflowofTCHF580forthetransactioncostsassociatedwiththesaleofminorityinterests.

Thecashflowfromfinancingactivitiesfromdiscontinuedoperationsin2009includesthecashoutflowforthetransactioncostsassoci-atedwiththedisbursementofthedividendsinkindofTCHF709.

10.Earningspershare

Theundilutedearningspersharearecalculatedbydividingthenetincomeasoftheendofthereportingperiodon31December2010and2009allocatabletotheshareholdersbytheweightedaveragenumberofdividend-bearingsharesoutstandingduringthisperiod.Insodoing,theaveragenumberoftreasurysharesheldbyChamPaperGroupHoldingAGandblockedsharesaredeductedfromthenumberofsharesissued.

2010 2009

Weightedaveragenumberofregisteredsharesoutstanding 696'365 694'529

ShareofresultofshareholdersofChamPaperGroupHoldingAG)(inTCHF) 2010 2009

Fromcontinuedoperations –1'797 9'126

Fromdiscontinuedoperations – 6'249

Total –1'797 15'375

Earningspershare,undiluted(inCHF) 2010 2009

Fromcontinuedoperations –2.58 13.14

Fromdiscontinuedoperations – 9.00

Total –2.58 22.14

Therewerenodilutingeffectsin2009and2010.

11.Cashandcashequivalents

2010TCHF

2009TCHF

Cashonhand,cashinbankaccountsandinpostalaccounts 41'747 24'385

Short-termbankdeposits 20'000 53'275

Totalcashandcashequivalents 61'747 77'660


44

12.Securitiesandderivativefinancialinstruments

2010TCHF

2009TCHF

Securities – 706

Derivativefinancialinstruments – 97

Totalsecuritiesandderivativefinancialinstruments – 803

SecuritiesThesecuritiesrecognisedinthecurrentassetsincludefixed-interestdebtsecuritiesthataretradedonstockexchanges.Securitiesareheldaspartofthemanagementofcashandcashequivalentsandthereforeareallocatedtocurrentassets.ThesecuritiesareinSwissfrancs.

DerivativefinancialinstrumentsTheGroupusesderivative financial instrumentsaspartof itsGroup-wide riskmanagement.Thederivative financial instrumentsarereportedattheircurrentvalues.Thefollowingtableshowsthemarketvalue(gross)ofthederivativefinancialinstrumentsasat31De-cember2010and2009bytypeofcontractandassetcategory:

2010 Contractornominalvalue

notrecognisedTCHF

Positivemarketvalue

recognisedTCHF

Negativemarketvalue

recognisedTCHF

Heldfortradingpurposes

Interestratederivatives–interestfutures 13'028 – 566

Heldforhedgingpurposes

Rawmaterialderivatives—pulpswaps 45'554 – 369

Totalderivativefinancialinstruments 58'582 – 935

2009 Contractornominalvalue

notrecognisedTCHF

Positivemarketvalue

recognisedTCHF

Negativemarketvalue

recognisedTCHF

Heldfortradingpurposes

Interestratederivatives–interestfutures 19'165 – 891

Foreigncurrencyderivatives–forwardexchangecontracts 5'284 97 –

Totalderivativefinancialinstruments 24'449 97 891

Contractornominalvaluesshowtheoutstandingtransactionvolumeasatthebalancesheetdate.

Rawmaterialderivativeshedgethecashflowrisksoffutureplannedpulppurchasesbymeansofswaptransactions.Theamountandthetimelineofthehedgedfutureplannedpulppurchasesarebasedoncontractuallyagreeddeliveryquantitiesanddatesforspecialitypapersoveraplannedtimeframeofamaximumoftwelvemonths.Asof31December2010,theGrouphedgedfutureplannedpulppurchasesofatotalof60,000tonnes(2009:none)bywayoftwocontracts.

Thenetgainfromhedgingtransactionsrecognisedintheconsolidated incomestatementunderthecostofgoodsandservicessoldamountedtoTCHF0inFY2010(2009:TCHF1,077).


45

13.Tradeaccountsreceivable

2010TCHF

2009TCHF

Tradeaccountsreceivablefromproductdeliveries,gross 65'206 76'211

Allowancesforbaddebts –4'256 –4'954

Totaltradeaccountsreceivable,net 60'950 71'257

Insuredreceivables 49'682 52'767

14.Inventories

2010TCHF

2009TCHF

Rawmaterials 15'920 15'469

Workinprogressandfinishedgoods 33'721 31'157

Consumablesandsupplies 2'503 2'617

Spareparts 6'357 7'254

Advancepaymentstosuppliers 3'425 2'044

Valueadjustmentsforinventories –2'095 –1'459

Totalinventories 59'831 57'082

Thevaluesofinventoriesthataredifficulttosellandinventorieswithalowernetmarketvalueareadjusted.TheGroupdeterminesthevalueadjustmentsforinventoriesthataredifficulttosellusingpastexperience.

15.Othercurrentreceivables

2010TCHF

2009TCHF

VATreceivables 3'073 2'498

Payrollreceivables 1'821 975

Otherreceivables 2'429 1'698

Othercurrentreceivables 7'323 5'171


46

16.Tangiblefixedassets

2010Unde-

velopedproperties

TCHF

Landandbuildings

TCHF

Machinery,equipment

andvehiclesTCHF

Productionequipment

TCHF

Constructioninprogress

TCHFTotalTCHF

Acquisitioncostsasat1January 478 88'216 231'186 222'956 1'816 544'652

Transfersbetweencategories1) – – 2'460 775 –3'235 –

Additions – 429 5'067 901 4'814 11'211

Disposals – – –12'895 –15'955 – –28'850

Exchangedifferences – –5'021 –24'063 –9'266 –99 –38'449

Acquisitioncostsasat31December 478 83'624 201'755 199'411 3'296 488'564

Cumulativedepreciationasat1January – –45'924 –180'391 –151'944 – –378'259

Depreciation – –2'093 –10'293 –7'655 – –20'041

Disposals – – 12'231 15'404 – 27'635

Exchangedifferences – 2'427 18'500 4'344 – 25'271

Cumulativedepreciationasat31December – –45'590 –159'953 –139'851 – –345'394

Carryingamountasat31December 478 38'034 41'802 59'560 3'296 143'170

Carryingamountasat1January 478 42'292 50'795 71'012 1'816 166'393

1)Transfersbetweenvariouscategoriesoftangiblefixedassetsasaresultofthecompletionofconstructioninprogress

2009Unde-

velopedproperties

TCHF

Landandbuildings

TCHF

Machinery,equipment

andvehiclesTCHF

Productionequipment

TCHF

Constructioninprogress

TCHF

Investmentpropertiesundercon-

structionTCHF

TotalTCHF

Acquisitioncostsasat1January 478 98'380 230'757 223'706 5'540 31'803 590'664

Transfersbetweencategories1) – – 1'132 10'699 –11'831 – –

Changesinthescopeofconsolidation – –11'786 –2'167 – – –46'660 –60'613

Classifiedasassetsheldforsale – 864 – – – – 864

Additions – 790 5'373 41 8'095 14'857 29'156

Disposals – – –3'735 –11'447 – – –15'182

Exchangedifferences – –32 –174 –43 12 – –237

Acquisitioncostsasat31December 478 88'216 231'186 222'956 1'816 – 544'652

Cumulativedepreciationasat1January – –46'010 –174'063 –155'163 – – –375'236

Changesinthescopeofconsolidation – 2'401 2'071 – – – 4'472

Depreciation,continuedoperations – –2'188 –11'045 –8'270 – – –21'503

Depreciation,discontinuedoperations – –150 –39 – – – –189

Impairment – – –1'157 – – – –1'157

Disposals – – 3'635 11'427 – – 15'062

Exchangedifferences – 23 207 62 – – 292

Cumulativedepreciationasat31December – –45'924 –180'391 –151'944 – – –378'259

Carryingamountasat31December 478 42'292 50'795 71'012 1'816 – 166'393

Carryingamountasat1January 478 52'370 56'694 68'543 5'540 31'803 215'428

1)Transfersbetweenvariouscategoriesoftangiblefixedassetsasaresultofthecompletionofconstructioninprogress


47

ThecarryingvaluesofthepledgedtangiblefixedassetsforfinancialliabilitiesamounttoTCHF58,385(2009:TCHF67,229).

ThefireinsurancevalueoftangiblefixedassetsamountstoTCHF929,375(2009:TCHF1,087,326).Tangiblefixedassetsareinsuredattheirreinstatementvalue.

17.Intangibleassets

2010 SoftwareTCHF

TrademarkrightsTCHF

TotalTCHF

Acquisitioncostsasat1January 13'973 – 13'973

Additions 4'157 – 4'157

Disposals –5'970 – –5'970

Exchangedifferences –201 – –201

Acquisitioncostsasat31December 11'959 – 11'959

Cumulativeamortisationasat1January –11'784 – –11'784

Depreciation –853 – –853

Disposals 5'880 – 5'880

Exchangedifferences 197 – 197

Cumulativeamortisationasat31December –6'560 – –6'560

Carryingamountasat31December 5'399 – 5'399

Carryingamountasat1January 2'189 – 2'189

2009 SoftwareTCHF

TrademarkrightsTCHF

TotalTCHF

Acquisitioncostsasat1January 14'340 1'064 15'404

Changesinthescopeofconsolidation –757 –1'064 –1'821

Additions 882 – 882

Disposals –491 – –491

Exchangedifferences –1 – –1

Acquisitioncostsasat31December 13'973 – 13'973

Cumulativeamortisationasat1January –11'539 –636 –12'175

Changesinthescopeofconsolidation 757 742 1'499

Depreciation,continuedoperations –1'161 – –1'161

Depreciation,discontinuedoperations – –106 –106

Impairment – – –

Disposals 158 – 158

Exchangedifferences 1 – 1

Cumulativeamortisationasat31December –11'784 – –11'784

Carryingamountasat31December 2'189 – 2'189

Carryingamountasat1January 2'801 428 3'229


48

EffectsoftheoreticalcapitalisationofgoodwillIfgoodwillwerecapitalisedanddepreciatedoverfiveyearsbywayofregularamortisation,thefollowingtheoreticalvalueswouldresultunderSwissGAAPFER:

2010TCHF

2009TCHF

Goodwillatthetimeofacquisition(11.09.2008) 2'322 2'322

Cumulativetheoreticaldepreciation 1'083 619

Theoreticalimpairment – –

Theoreticalclosingbalance,goodwill,31December 1'239 1'703

Theoreticaleffectonpre-taxresult 464 464

18.Financialliabilities

2010TCHF

2009TCHF

Short-termbankloans 22'294 20'837

Short-termportionoflong-termbankloans 10'322 18'589

Derivativefinancialinstruments 565 891

Totalcurrentfinancialliabilities 33'181 40'317

Long-termbankloans 3'123 10'043

Mortgagenotes 45'454 54'747

Totalnon-currentfinancialliabilities 48'577 64'790

Totalamountofsecuredfinancialliabilities 58'385 67'229

Thefinancialliabilitiesaresecuredbymortgagenotesonland,buildingsandproductionequipment.

FinanceleaseliabilitiesTherewerenofinanceleaseliabilitiesasof31December2010or31December2009.

19.Othercurrentliabilities

2010TCHF

2009TCHF

VATliabilities 137 290

Payrollliabilities 2'297 2'795

Taxliabilities 1'161 3'177

Othercurrentliabilities 1'127 615

Totalothercurrentliabilities 4'722 6'877


49

20.Provisions

2010Restructuring

TCHFGuarantees

TCHFOtherTCHF

TotalTCHF

Asat1January 200 – 2'102 2'302

Additions – – – –

Reversals –200 – –420 –620

Utilisation – – –282 –282

Exchangedifferences – – – –

Asat31December – – 1'400 1'400

Shownontheconsolidatedbalancesheetas:

Currentprovisions – – – –

Non-currentprovisions – – 1'400 1'400

2009Restructuring

TCHFGuarantees

TCHFOtherTCHF

TotalTCHF

Asat1January 200 2'600 1'055 3'855

Changesinthescopeofconsolidation – –2'485 –60 –2'545

Additions – 30 1'400 1'430

Reversals – – – –

Utilisation – –145 –296 –441

Exchangedifferences – – 3 3

Asat31December 200 – 2'102 2'302

Shownontheconsolidatedbalancesheetas:

Currentprovisions 200 – 702 902

Non-currentprovisions – – 1'400 1'400

Theotherprovisionscontaindeferralsforconstructionmeasures.

21.Pensionplanobligations

ThemajorityoftheGroup‘semployeesarecoveredbypensionplansthatareco-financedbythesubsidiaries.Asarule,thepensionplansarefinancedthroughemployeeandemployercontributionstofoundationsthatareindependentoftheGroup.Thebenefitsfromtheseplansvarydependingonthelegal,taxandeconomicsituationsofthecountryinwhichtheemployeesarehired.TheGroup’soccupationalpensionschemeinSwitzerlandisalegallyindependentpensionfund.Inadditiontothelegallyregulatedsocialinsuranceplans,withintheGroupinItalythereisanindependentpost-employmentbenefitplan.Aliabilityisreportedontheconsolidatedbalancesheetsincethispensionplanhasnoseparateassetstocoveritsobligations.


50

Economicbenefit/economicobligationandpensionplanexpenseOverfunding/underfunding

Economicshareoforga-nisation

Changeascomparedto

previousyearorrecognised

inincomeduringFY

Amountsac-cruedduring

period

Pensionplanexpenseshareofpersonnel

expense

31.12.10TCHF

31.12.10TCHF

31.12.09TCHF

2010TCHF

2010TCHF

2010TCHF

2009TCHF

Corporatewelfarefunds/corporatepensionfunds – – – – – – –

Pensionfundswithoutanyoverfunding/underfunding – – – – 1'795 1'795 1'815

Pensionfundswithoverfunding – – – – – – –

Pensionfundswithunderfunding – – – – – – –

Pensionplanswithoutassetsoftheirown – –4'796 –5'914 177 – 235 249

Total – –4'796 –5'914 177 1'795 2'030 2'064

In2010and2009therewasnooverfunding/underfundingorchangesrecognisedinincome.ThecontributionsaccruedtotheperiodamountedtoTCHF1,795in2010(2009:TCHF1,815).

Noemployercontributionreservesexistedin2010or2009.

Asof31December2010,therewerenoobligationstowardpensionplans.

22.Sharecapitalandtreasuryshares

2010 Numberofregisteredshares

Parvaluepershare

CHFCarryingamount

TCHF

Totalregisteredsharesissued 745'000 65.00 48'425

Totaltreasuryshares 46'772 65.00 –14'630

Totalsharesoutstanding 698'228 65.00 –

2009 Numberofregisteredshares

Parvaluepershare

CHFCarryingamount

TCHF

Totalregisteredsharesissued 745'000 77.50 57'738

Totaltreasuryshares 48'635 77.50 –15'448

Totalsharesoutstanding 696'365 77.50 –

Atthe98thAnnualGeneralMeetingon29April2010,theshareholdersofChamPaperGroupHoldingAGdecidedtoreducethecom-pany‘ssharecapitalfromTCHF57,738toTCHF48,425byreducingtheparvalueofthe745,000registeredsharesfromCHF77.50toCHF65.00pershare.ThedecreaseinparvalueofTCHF9,313wasdisbursedtotheshareholders.

Atthe97thAnnualGeneralMeetingon24April2009,theshareholdersofChamPaperGroupHoldingAGdecidedtodistribute55%ofthesharesofHammerRetexHoldingAGbywayofadividendinkind.Inaddition,theshareholdersapprovedthedistributionofacashdividendofCHF373,348.Thedistributionstookplaceon9June2009bywayofaratioofoneshareofHammerRetexHoldingAGforeachshareofChamPaperGroupHoldingAG(formerly:IndustrieholdingChamAG)andbywayofthedisbursementofliquidfundsofCHF0.53846perregisteredshareofChamPaperGroupHoldingAG.The51,640treasurysharesheldbyChamPaperGroupHoldingAGwerenotentitledtoadividend.

Thenon-distributable,statutoryorlegalreservesamountedtoTCHF19,500asof31December2010.


51

TreasurysharesTheChamPaperGroupstartedasharebuy-backprogramon28April2008withamaximumtotalvalueofTCHF20,000.Thesharebuy-backprogramwasdiscontinuedasof17April2009.InFY2009theGroupsold11,305treasurysharesatanaveragetransactionprice(netmarketvalue)ofCHF130pershareandpurchased8,300treasurysharesatanaveragetransactionprice(netmarketvalue)ofCHF130pershare.Asof31December2010,theChamPaperGroupheld46,772treasuryshares(2009:48,635).

Thenumberoftreasurysharesasat31December2010and2009was:

2010TCHF

2009TCHF

Holdingsasat1January 48'635 51'640

Shareholdingplan –1'863 –

Purchases – 8'300

Sales – –11'305

Holdingsasat31December 46'772 48'635

23.Non-recognisedcommitmentsandcontingencies

OperatingleasecommitmentsThesubsidiariesholdnumerouscontractsforoperatingleases,mainlyforequipmentandvehiclesaswellasfortheleaseofanexternalwarehouse.TotalexpensesinFY2010foroperatingleasesamountedtoTCHF678(2009:TCHF713).Futureminimumpaymentsundernon-cancellableoperatingleasesaredueasfollows:

2010TCHF

2009TCHF

Within1year 760 591

Between1and5years 1'121 815

Total 1'881 1'406

CapitalcommitmentsAspartofordinarybusinessoperations,thesubsidiariesenteredintovariouscontractualcommitmentsforthepurchaseoftangiblefixedassetsandintangibleassetsasfollows:

2010TCHF

2009TCHF

Capitalcommitmentsfortangiblefixedassets 903 1'965

Capitalcommitmentsforintangibleassets 1'468 32

Total 2'371 1'997

GuaranteeobligationsAsof31December2010,guaranteesgivenaspartofordinarybusinessoperationsamountedtoTCHF766(2009:TCHF649).


52

24.Relatedpartytransactions

SubsidiariesandassociatesAnoverviewofsubsidiariesandassociatesissetoutinNote27.TransactionsbetweentheparentcompanyandthesubsidiariesaswellasthosebetweenthesubsidiariesoftheGrouphavebeeneliminatedintheconsolidatedfinancialstatements.

ShareownershipAsof31December2010,theBoardofDirectorsmembersandtheirrelatedpartiesownedatotalof314,253registeredsharesofChamPaperGroupHoldingAG(31December2009:271,529registeredshares).Asof31December2010,threeExecutiveManagementBoardmembersownedatotalof150registeredsharesofChamPaperGroupHoldingAG(31December2009:fourmemberswithatotalof230registeredshares).

SalesoftreasurysharestorelatedpartiesDuringFY2010nosalesweremadetorelatedparties.In2009,theChamPaperGroupsold7,250treasurysharestonon-executiveBoardofDirectorsmembersand50treasurysharestoanExecutiveManagementBoardmember.Thesalespricewasestablishedinaccord-ancewithmarketconditionsprevailingatthetime.

ShareholdingplanUnderanewshareholdingplanthatwasintroducedasof1January2010,ChamPaperGroupHoldingAGallottedmembersoftheBoardofDirectors1,863treasurysharesin2010attheaveragesharepriceofCHF209.00ineffectinNovemberinlieuoffeesandattendanceallowances.NoshareswereallottedtoExecutiveManagementBoardmembers.

CompensationofthemembersoftheBoardofDirectorsandtheExecutiveManagementBoardForinformationonthecompensationoftheBoardofDirectorsandtheExecutiveManagementBoard,pleaserefertopage60and61ofthefinancialstatementsofChamPaperGroupHoldingAG.

25.Riskmanagement

Group’sriskmanagementRiskmanagementisafundamentalelementofbusinesspracticeaswellasanintegralpartoftheGroup‘sbusinessplanning.Inordertosustainablyachievecorporateobjectives,theGroupusesvariousriskmanagementandcontrolsystemsthataresetupnotonlyfortheearlyidentificationandanalysisofrisksbutalsofortakingappropriatecountermeasures.Strategicandoperativerisksareconsidered.Riskmanagement,theinternalcontrolsystemandqualitymanagementarecloselylinkedandcoordinated.

Aformal,enterprise-wideriskassessmentisperformedbytheExecutiveManagementBoardatleastonceayear.Significantoperationalrisksaredefinedinadetailedriskcatalogueandriskmatrixandanalysedaccordingtotheirprobabilityofoccurrenceandpossibleextentofdamageorloss.Thisassessmentenablesthecausesandsuitablemeasuresperrisktobederivedforthepurposeofmitigatingoreliminatingtherisk.

TheBoardofDirectorsofChamPaperGroupHoldingAGhasapprovedtheriskassessmentandmonitorstheimplementationoftheac-tionsdefinedinthecatalogueofcountermeasuresbytheExecutiveManagementBoard.Intheeventoftheemergenceofunexpectedindividualrisks,theBoardofDirectorsisalsoimmediatelyinformedoftherisksidentifiedandtheactionstakenandprocessesimple-mentedbytheExecutiveManagementBoardtomitigateoreliminatethem.


53

26.Eventsafterthebalancesheetdate

AfterthebalancesheetreportingdateanduntiltheapprovaloftheconsolidatedfinancialstatementsbytheBoardofDirectorson15March2011therewerenosignificanteventsthatmightnegativelyimpactthestatementsmadeinthe2010financialstatementsorthatwouldhavetobedisclosedhere.

27.Subsidiaries

Companyasat31December2010 Registeredoffice Activity Currency

Sharecaptial

inTCHF

Directholdingasa%

Indirectholdingasa%

Financialholdingcompany

IndustrieverwaltungsgesellschaftChamAG CHCham s CHF 50 100% –

ChamPaperGroup

ChamPaperGroupAG CHCham s CHF 10'000 100% –

ChamPaperGroupSchweizAG CHCham l n CHF 85'000 – 100%

ChamPaperGroupImmobilienAG CHCham s CHF 5'000 – 100%

ChamPaperGroupItaliaS.p.A. ITCarmignano l n EUR 25'000 – 100%

ChamPaperGroupManagementAG CHCham s CHF 100 – 100%

ChamPaperGroupDeutschlandGmbH DEDüsseldorf l EUR 26 – 100%

ChamPaperGroup(France)S.à.r.l. FRParis l EUR 32 – 100%

ChamPaperGroup(UK)Ltd. UKForestRow l GBP 10 – 100%

CondinoEnergiaS.r.l. ITCondino n EUR 2'000 – 100%

s Holdingcompany,financingandservicesn Research,developmentandproductionl Salesanddistribution

Allcompaniesarefullyconsolidated.


54

Report of the statutory auditor on the consolidated financial statements

Reportofthestatutoryauditorontheconsolidatedfinancialstatements

55 Reportofthestatutoryauditorontheconsolidatedfinancialstatements

56

Financial statements of Cham Paper Group Holding AG

Incomestatement

1January–31DecemberNotes

2010TCHF

2009TCHF

Dividendandparticipationincome 3 41'033 55'097

Incomefromsecuritiesandfinancialinvestments,net 53 22

Interestincomefromcashandcashequivalents 60 196

Interestincomefromsubsidiaries 650 2

Gainsfromtreasuryshares 35 –

Otherincome – 430

Totalincome 41'831 55'747

Valueadjustmentsfortreasuryshares 7 – –703

Disposallossontreasuryshares – –1'285

Otherfinancialexpense –16 –13

Administrativeexpense 5 –1'365 –2'911

Taxexpense 6 –69 –687

Totalexpense –1'450 –5'599

Netincomefortheyear 40'381 50'148

TheNotesformanintegralpartofthesefinancialstatements.

FinancialstatementsofChamPaperGroupHoldingAG

57

Balancesheet

Asat31December,priortoappropriationofavailableearnings Notes

31.12.2010TCHF

31.12.2009TCHF

Assets

Cashandcashequivalents 49'530 66'895

Securities – 706

Treasuryshares 7 8'887 9'241

Receivables 150 89

Prepaidexpenses 192 57

Totalcurrentassets 58'759 76'988

Participations 4 143'745 143'745

Loanstosubsidiaries 50'533 –

Totalnon-currentassets 194'278 143'745

Totalassets 253'037 220'733

Liabilities

Liabilities 8 30

Liabilitiestosubsidiaries 974 420

Accruedexpenses 1'564 1'468


Shareholders’equity

Sharecapital 48'425 57'738

Legalreservesfromcapitalcontributions 27'465 –

Otherlegalreserves 22'815 50'280

Reservesfortreasuryshares 14'630 15'448

Freereserves 86'849 35'423

Retainedearningsbroughtforward 9'926 9'778

Netincomefortheyear 40'381 50'148

Totalshareholders’equity 8 250'491 218'815

Totalliabilitiesandshareholders'equity 253'037 220'733

TheNotesformanintegralpartofthesefinancialstatements.

FinancialstatementsofChamPaperGroupHoldingAG

58

1. IntroductionThefinancialstatementsofChamPaperGroupHoldingAG,Fabrikstrasse,6330Cham,Switzerland,complywiththerequirementsoftheSwissCodeofObligations.

2. ValuationandaccountingmethodsSecurities(withtheexceptionoftreasuryshares)arereportedatthelowerofacquisitioncostormarketvalue.Allotherassets,includingparticipationsandloans,arepostedatacquisitioncostlesssuitablevalueadjustments.Allliabilitiesarevaluedatnominalvalues.AssetsandliabilitiesdenominatedinaforeigncurrencyaretranslatedintoSwissfrancsatyear-endexchangeratesexceptforparticipations,whicharetranslatedathistoricalrates.Transactionsinforeigncurrenciesduringtheyeararecarriedoutattheexchangeratesprevailingonthetransac-tiondates.Exchangerategainsandlossesarepostedontheincomestatementwiththeexceptionofunrealisedgains,whicharesetaside.

3. ParticipationincomeParticipationincomeinFY2010consistsofdividendsfromsubsidiariesofTCHF41,033(2009:netincomeofTCHF55,097).

4. ParticipationsTheparticipationsofChamPaperGroupHoldingAGinsubsidiariesarelistedinNote27oftheconsolidatedfinancialstatements.

5. AdministrativeexpenseInFY2010,administrativeexpenseamountedtoTCHF1,365(2009:TCHF2,911),ofwhichTCHF0(2009:TCHF1,457)wasattributabletothetransactioncostsassociatedwiththesaleofHammerRetex.

6. TaxexpenseInFY2010,taxexpenseamountedtoTCHF69(2009:TCHF687),ofwhichTCHF0(2009:TCHF680)wasattributabletothepayableincometaxesassociatedwiththesaleofHammerRetex.

7. TreasurysharesInFY2010,notreasuryshareswerepurchasedorsold(2009:purchaseof8,300treasurysharesatatotalpurchasepriceofTCHF1,079andsaleof11,305treasurysharesatatotalsalespriceofTCHF1,469).

Duetothenewshareholdingplan,non-executivemembersoftheBoardofDirectorswereallotted1,863treasurysharesattheaveragesharepriceineffectinNovember2010ofCHF209.00inlieuoffeesandattendanceallowances.NoshareswereallottedtoExecutiveManagementBoardmembers.

In2010treasuryshareswerenotadjustedtotheirhighermarketvalue(2009:valueadjustmentofTCHF703).Thenumberoftreasurysharesasat31December2010amountedto46,772(2009:48,635).ThenumberoftreasurysharesheldbyChamPaperGroupHoldingAGwasdeterminedinaccordancewiththerequirementsofart.659boftheSwissCodeofObligations.Treasurysharesarenotentitledtodividends.

NotestotheFinancialStatementsofChamPaperGroupHoldingAG

Notes to the Financial Statements of Cham Paper Group Holding AG

59 NotestotheFinancialStatementsofChamPaperGroupHoldingAG

8. Changesinshareholders’equity

SharecapitalTCHF

Reservesfromcapitalcontri-

butionsTCHF

Generallegalreserves

TCHF

Reservesfortreasury

sharesTCHF

Freereserves

TCHF

Retainedearningsbroughtforward

TCHFTotalTCHF

Balanceasat1January2009 57'738 – 50'280 11'619 39'252 18'699 177'588

Adjustmentofreservesfortreasuryshares – – – 3'829 –3'829 – –

Paymentofdividendinkind – – – – – –8'548 –8'548

Paymentofdividendincash – – – – – –373 –373

Netincomefortheyear – – – – – 50'148 50'148

Balanceasat31December2009 57'738 – 50'280 15'448 35'423 59'926 218'815

Reclassificationofreservesfromcapitalcontributions – 27'465 –27'465 – – – –

Allocationtofreereserves – – – – 50'000 –50'000 –

Adjustmentofreservesfortreasuryshares – – – –818 818 – –

Reductionofsharecapital –9'313 – – – 608 – –8'705

Netincomefortheyear – – – – – 40'381 40'381

Balanceasat31December2010 48'425 27'465 22'815 14'630 86'849 50'307 250'491

Asof31December2010,thesharecapitalofChamPaperGroupHoldingAGconsistedof745,000registeredshareswithaparvalueofCHF65.00each.ThesharecapitaldecreasedfromTCHF57,738on31December2009toTCHF48,425on31December2010duetothereductionofthesharecapitalonaccountofthedecreaseinparvalueofthe745,000registeredsharesfromCHF77.50toCHF65.00pershare.ThedecreaseinparvalueofTCHF9,313wasdisbursedtotheshareholders.

Asof31December2009,thesharecapitalofChamPaperGroupHoldingAGconsistedof745,000registeredshareswithaparvalueofCHF77.50each.

9. SignificantshareholdersAccordingtotheinformationavailable,thefollowingshareholdersheldmorethan3%ofthesharesofChamPaperGroupHoldingAGasat31December2010:Buhofershareholdergroup(BURUHoldingAG,PhilippBuhofer,HeinzBuhofer,allHagendorn)with40.22%(2009:BURUHoldingAG(andPhilippBuhofer),Hagendorn,with34.59%,HeinzBuhofer,Hagendorn,with5.28%),LB(Swiss)InvestmentAG,Zurich,with4.01%(2009:5.68%).

ChamPaperGroupHoldingAGisnotawareofanyshareholders‘agreementsorotherarrangementsbetweenthesignificantsharehold-ersofthecompanyregardingtheregisteredsharesofChamPaperGroupHoldingAGheldbythemorregardingtheexerciseofshare-holders‘rights.

60

10.CompensationoftheBoardofDirectorsandtheExecutiveManagementBoardmembers

CompensationoftheBoardofDirectorsmembersAllmembersoftheBoardofDirectorsarenon-executivemembers.ThetotalcompensationofthemembersoftheBoardofDirectorsofChamPaperGroupHoldingAGandthecompensationofthecurrentandformermembersoftheBoardofDirectorsforFY2009and2010wereasfollows:

CompensationofBoardofDirectorsmembersin2010 PositionBasesalary

TCHF

Attendancefee

TCHF

Consultancyfee

TCHFTotalTCHF

Percentagedisbursed

inshares1)

PhilippBuhofer Chairman 224 35 – 259 100%

Dr.RenéFurler ViceChairman 49 30 – 79 50%

HansSchaller Member 35 32 – 67 25%

Dr.FelixThöni2) Member 35 34 164 233 25%

UrsZiegler Member 43 29 – 72 100%

TotaldisbursedtoBoardofDirectorsmembers 386 159 164 709

CompensationofBoardofDirectorsmembersin2009 PositionBasesalary

TCHF

Attendancefee

TCHF

Consultancyfee

TCHFTotalTCHF

PhilippBuhofer Chairman 186 44 – 230

Dr.RenéFurler ViceChairman 46 40 – 86

HansSchaller3) Member 22 27 100 149

Dr.FelixThöni Member 35 37 – 72

UrsZiegler Member 35 34 – 69

TotaldisbursedtocurrentBoardofDirectorsmembers 324 182 100 606

Dr.JürgMüller4) Member – – 25 25

TotaldisbursedtoformerBoardofDirectorsmembers – – 25 25

TotalcompensationofBoardofDirectorsmembers 324 182 125 631

1)Thepercentagedisbursedofthebasesalaryandtheattendancefeesintheformofshareswasaccountedforwithasupplementarychargeof20%,thisbeingincludedinthebasesalary.

2)Dr.FelixThönireceivesaconsultancyfeeforamandaterelatingtotheFinance&ControllingDepartmentandforspecialprojects.3)HansSchallerwasnewlyelectedbytheshareholderstotheBoardofDirectorsattheGeneralMeetingofShareholdersof24April2009. In2009hereceivedaconsultancyfeeforthetemporaryassistancerenderedbyhimtotheExecutiveManagementBoard.4)Dr.JürgMüllerreceivedaconsultancyfeeforafixedtermofengagementrelatingtothestrategicorientationoftheChamPaperGroup.Heresigned

fromtheBoardofDirectorsattheGeneralMeetingofShareholdersof24April2009.


61

CompensationoftheExecutiveManagementBoardmembers

ThetotalcompensationoftheExecutiveManagementBoardmembersforFY2009and2010wasasfollows:

CurrentmembersTCHF

Membersresig-ningduringFY

TCHF

Total2010

TCHF

Total2009

TCHF

Basesalary 1'068 589 1'657 2'252

Bonuses1) 184 54 238 336

Paymentstopensionplans 150 41 191 314

Terminationbenefits – – – 480

TotalcompensationofExecutiveManagementBoardmembers 1'402 684 2'086 3'382

1)Computationofbonusesisbasedontheresultoftheprecedingyear.

Thecontentandmethodofdeterminingcompensationandshareholdingschemesaredescribedonpage75f.

ThehighestcompensationpaidtoanExecutiveManagementBoardmemberinFY2010wasTCHF467toPeterStuder,CEOoftheChamPaperGroup(2009:DaanWaubertdePuiseau,ManagingDirectoroftheChamPaperGroupItaliaS.p.A.,TCHF600).

InthecourseofFY2010,compensationtotalingTCHF684(2009:TCHF2,157includingterminationbenefitsofTCHF480)wasdisbursedtoresigningmembersoftheExecutiveManagementBoard.

NoloansweregrantedtomembersoftheBoardofDirectorsortheExecutiveManagementBoardinFY2010and2009.

11.ShareownershipofBoardofDirectorsandExecutiveManagementBoardmembers

Asof31December2010,theBoardofDirectorsmembersandtheirrelatedpartiesownedatotalof314,253registeredsharesofChamPaperGroupHoldingAG(31December2009:271,529registeredshares).Relatedpartiesarespouses,childrenunder18yearsofageand,asapplicable,othercloserelatives,companiesbelongingtoorcontrolledbythesepersons,andlegalentitiesorindividualsactingastheirtrustees.DirectandindirectshareownershipbycurrentBoardofDirectorsmembersissetoutbelow:

Name Position31December2010

Numberofregisteredshares31December2009

Numberofregisteredshares

PhilippBuhofer1) Chairman 299'673 257'746

Dr.RenéFurler ViceChairman 595 300

HansSchaller Member 86 –

Dr.FelixThöni Member 289 200

UrsZiegler Member 13'610 13'283

1)Ofwhich256,196(2009:254,746)registeredsharesheldviaBURUHoldingAGand39,311(2009:0)registeredsharesbyrelatives


62

Asof31December2010,theExecutiveManagementBoardmembersandtheirrelatedpartiesownedatotalof150registeredsharesofChamPaperGroupHoldingAG(31December2009:230registeredshares).ShareownershipoftheExecutiveManagementBoardmembersissetoutbelow:

Name Position31December2010

Numberofregisteredshares31December2009

Numberofregisteredshares

PeterStuder CEO 70 70

NicolasFrochaux(resignationasof30June2010) CFO – 80

Dr.PeterMüller MillManagerCham 50 50

GeroldZuegg MillManagerCondino 30 30

12.Informationaboutriskassessment

TheBoardofDirectorsofChamPaperGroupHoldingAGevaluatescorporateriskapplyingasystematicriskidentificationandanalysisprocess.Basedondetailedriskcataloguesandriskmatrices,specificrisksaredefinedandevaluatedbytheExecutiveManagementBoardandacorrespondingcatalogueofcountermeasuresdeveloped.TheBoardofDirectorsofChamPaperGroupHoldingAGhasapproved the riskassessmentandmonitors the implementationof theactionsdefined in thecatalogueofcountermeasuresby theExecutiveManagementBoard.Intheeventoftheemergenceofunexpectedindividualrisks,theBoardofDirectorsisalsoimmediatelyinformedoftherisksidentified,theactionstakenandprocessesimplementedbytheExecutiveManagementBoardtomitigateorelimi-natethem.


63

Proposedappropriationofavailableearnings

2010CHF

2009CHF

Balancebroughtforwardfrompreviousyear 9'925'973 9'777'988

Netincomefortheyear 40'380'920 50'147'985

Reversaloflegalreservesfromcapitalcontributions 3'481'825 –

Totalavailableearnings 53'788'718 59'925'973

Appropriationofavailableearnings

Allocationtofreereserves –40'000'000 –50'000'000

Dividend –3'481'825 –

Balancetobecarriedforward 10'306'893 9'925'973

Totaldisbursedasdividend 3'481'825 –

Minusportionconsistingofreservesfromcapitalcontributions –3'481'825 –

Portionconsistingofotherreservesandavailableearnings – –

TheoperatingresultachievedbytheChamPaperGroupduringthereportingyeardoesnotpermitanordinarydividendtobedisbursed.

DuetotheGroup’scurrentcashreservesandinviewofitssoundbusinessprospects,theBoardofDirectorsproposesthatthegeneralmeetingofshareholdersapproveaspecialdistributionfromthereservesfromcashcontributionsofCHF5.00pershare,thisnotbeingsubjecttothepaymentofcapitalgainswithholdingtax.TheBoardofDirectorsalsoproposesthatCHF40,000,000beallocatedtothefreereserves.


64

Report of the statutory auditor on the financial statements

Reportofthestatutoryauditoronthefinancialstatements

65 Reportofthestatutoryauditoronthefinancialstatements

66

TheChamPaperGroupiscommittedtocontemporarycorporategovernance.ThestatementsbelowcomplywiththecurrentDirec-tiveonInformationRelatingtoCorporateGovernance(DCG)oftheSIXSwissExchangeanddescribe theprinciplesand regulationsrelatingtotheorganisation,managementandmonitoringofChamPaperGroupHoldingAGanditssubsidiariesasat31December2010.TheseprinciplesarecontainedintheArticlesofAssociationandintheOrganisationalRegulationsoftheBoardofDirectors.

1. Groupstructureandshareholders

1.1GroupstructureCham Paper Group Holding AG, with its headquarters in 6330Cham,isapubliclimitedcompanyorganisedaccordingtothelawsofSwitzerland.Initscapacityofaholdingcompanyitholds,eitherdirectly or indirectly, all companiesbelonging to theGroup. Thescopeofconsolidationdoesnotincludeanylistedcompanies.TheunlistedcompaniesthatarepartofthescopeofconsolidationofChamPaperGroupHoldingAGarepresentedonpage53oftheconsolidated financialstatementswithdetailsofeachcompany,itsregisteredoffice,sharecapitalandshareholdings.TheGroup’soperationalmanagementstructureasat1January2011isshownintheorganisationalchartbelow.

1.2SignificantshareholdersAsof31December2010,1,100shareholderswereenteredintheshareregisterofChamPaperGroupHoldingAG(2009:820share-holders). The following shareholders and shareholder groups,knowntoChamPaperGroupHoldingAGfromtheshareregisterandfromthedisclosuresofparticipatinginterestsintheSwissOf-ficialGazetteofCommerce,eachheldmorethanthreepercentofthesharecapitalasat31December2009and2010:

2010 2009

Buhofershareholdergroup(BURUHoldingAG,PhilippBuhofer,HeinzBuhofer,allHagendorn) 40.22% 34.59%1)

ChamPaperGroupHoldingAG,Cham 6.28% 6.53%

HeinzBuhofer,Hagendorn

incl.intheBuhofer

group 5.28%

LB(Swiss)InvestmentAG,Zurich 4.01% 5.68%1)ExcludingHeinzBuhofer

InthenotificationtotheSIXSwissExchangeof3November2009,PhilippBuhoferwasdisclosedasactingjointlyorasanorganisedgroup in concert with BURU Holding AG (Buhofer shareholdergroup).Hispersonalholdingasof31December2010amountedto0.56%ofthesharecapitalofChamPaperGroupHoldingAG.

CorporateGovernance

Cham Paper Group Holding AG

Board of Directors

CEO

Peter Studer

Corp. Communications & Services

Franziska Stöckli

CFO

Patrick Schmid

Sales/Marketing

Peter Studer

Mill Manager Cham

Dr. Peter Müller

Mill Manager Carmignano

Johann Boog

Mill Manager Condino

Gerold Zuegg

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67

InthenotificationtotheSIXSwissExchangeof9April2010,HeinzBuhoferwasdisclosedasactingjointlyorasanorganisedgroupinconcertwithBURUHolding.Assuch,hebelongstotheBuhofershareholdergroup.Hispersonalholdingasof31December2010amountedto5.28%ofthesharecapitalofChamPaperGroupHol-dingAG. In thenotificationof9April 2010, theshareholdersofBURUHoldingAGthatarenotshareholdersofChamPaperGroupHoldingAGweredisclosedtotheSIXSwissStockExchange2).

AsfarasChamPaperGroupHoldingAGisaware,thesignificantshareholdersofthecompanyhavenotenteredintoanysharehol-ders‘agreementsamongthemselvesnorhavetheyenteredintoanyagreements regarding theexerciseof voting rightsorotherrightsrelatedtothesharesofChamPaperGroupHoldingAG.

1.3Cross-shareholdingsChamPaperGroupHoldingAGdoesnothaveanycross-sharehol-dingsinothercompaniesexceedingthemaximumlimitof5%intermsofcapitalorvotingrights.

2. Capitalstructure

2.1SharecapitalThenominalsharecapitalofChamPaperGroupHoldingAGwasCHF48,425,000asat31December2010.Thesharecapitalisdi-videdinto745,000fullypaid-upregisteredshareswithaparvalueofCHF65.00pershare.All shareshave thesamevoting rightsandareentitledtothesamedividend.Thereisonlyonecategoryofregisteredshares.

ThesharesofChamPaperGroupHoldingAGarelistedontheSIXSwissExchangeandaretradedinthesmall&midcapssegment(securities number: 193185, ISIN code: CH0001931853, tickersymbol:CPGN).ForfurtherinformationaboutthesharesofChamPaperGroupHoldingAG,pleaserefertopages6and7.

Cham Paper Group Holding AG suspended the share buy-backprograminitiatedinFY2008inAprilof2009.TheGroupdidnotac-quireanyothersharesviathissharebuy-backprograminFY2010.Thetreasurysharesacquiredaspartofthisprogramhavenotbeenvoided.Asof31December2010,ChamPaperGroupHoldingAGheld46,772registeredsharesinthecompany‘sownholdings(31December2009:48,635registeredsharesinthecompany‘sownholdings).Thiscorrespondsto6.28%ofthesharecapitalofChamPaperGroupHoldingAG.

2.2ConditionalandapprovedcapitalThereisnoconditionalorapprovedcapital.

2)Theindividualdisclosurenotificationspublishedduringtheyeararepublicly

accessibleatwww.six-exchange-regulation.com/publications/published_noti-

fications/major_shareholders_en.html.

2.3ChangesincapitalAtthe98thGeneralMeetingofShareholderson29April2010,andbasedonthespeciallyqualifiedauditor‘sreport,theshareholdersdecidedtoreducethesharecapitalofChamPaperGroupHoldingAGofCHF57,737,500byCHF9,312,500toCHF48,425,000byreducingtheparvalueofthe745,000registeredsharesfromCHF77.50toCHF65.00pershare,tousethereductionamountofCHF12.50pershareasadisbursementtoshareholders,andtoamendtheArticlesofAssociationaccordingly.InFY2009nochangesweremadetothecompany’scapital.Asof31December2009 thenominal sharecapitalofChamPaperGroupHoldingAGamountedtoCHF57,737,500.TheparvalueoftheregisteredsharesamountedtoCHF77.50.

Atthe96thGeneralMeetingofShareholderson17April2008,andbasedonthespeciallyqualifiedauditor‘sreport,theshareholdersdecidedtoreducethesharecapitalofChamPaperGroupHoldingAGofCHF63,325,000byCHF5,587,500toCHF57,737,500byreducingtheparvalueofthe745,000registeredsharesfromCHF85.00toCHF77.50pershare,tousethereductionamountofCHF7.50pershareasadisbursementtoshareholders,andtoamendtheArticlesofAssociationaccordingly.

ForfurtherinformationaboutthedevelopmentofthesharecapitalstructureofChamPaperGroupHoldingAGduring the last twoyears,pleaserefertothetablesonpage59ofthefinancialstate-mentsofChamPaperGroupHoldingAG.

2.4ParticipationanddividendrightcertificatesChamPaperGroupHoldingAGhasnot issuedanyparticipationcertificatesordividendrightcertificates.

2.5RestrictionsontransferabilityandnomineeentriesTransferoftheregisteredsharesofChamPaperGroupHoldingAGisnotsubjecttoanyrestrictions.Theonlyrequirementforentryintheshareregisterisadeclarationthattheshareholderhasacquiredthesharesinhisorherownnameandonhisorherownaccount.Otherwisetherearenootherentryrestrictions.

2.6ConvertiblebondsandoptionsCham Paper Group Holding AG has no outstanding convertiblebondsnorhasitissuedanytradableoptions.

2.7DividendpolicyandappropriationofavailableearningsChamPaperGroupHoldingAGpursuesadividendpolicyaccor-dingtowhich25%to35%ofthenetoperatingprofitisdesignatedfordistribution.Thisensuresthatprofitsarelargelyplowedbackintothecompanyforfinancingitslong-termgrowth.TheproposalmadebytheBoardofDirectorstotheGeneralMeetingofShare-holders pertaining to the appropriation of the available earningsalwaystakesaccountofthecompany’scurrentfinancialsituation.

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3. BoardofDirectors

3.1MembersoftheBoardofDirectorsTheBoardofDirectorsofChamPaperGroupHoldingAGiscomposedoffivenon-executivemembers.NoneoftheservingmembersoftheBoardofDirectorsbelongedtotheExecutiveManagementBoardofChamPaperGroupHoldingAGorthatofanyofitssubsidiariesorengagedinanysignificantbusinessrelationswithanyofitssubsidiariesduringanyofthethreefinancialyearsprecedingthereportingperiod.

Name PositionElectiontotheBoardofDirectors Endofterm AuditCommittee

CompensationandNominationCommittee

PhilippBuhofer Chairman 2004 2011 Member Member

Dr.RenéFurler ViceChairman 2000 2011 – Chairman

UrsZiegler Member 2007 2011 – Member

Dr.FelixThöni Member 2008 2011 Chairman –

HansSchaller Member 2009 2011 Member –

Name

Yearofbirth,nationality

Position

Professionalbackground

Education

Activitiesingoverningand

supervisorybodies

PhilippBuhofer

1959,Swisscitizen

ChairmanoftheBoardofDirectorssince2006MemberoftheBoardofDirectorssince2004

Since1997:independentbusinessmanandBoardofDirectorsmember1987–1997:EPAAG,Zurich,GroupHeadPurchasingandSales,overallresponsibilityforprocure-ment,ExecutiveManagementBoardmember,DelegateandChairmanoftheBoardofDirectors1984–1987:Purchasing,MetroInternational,Baar,Switzerland,Düsseldorf,Germany,andHongKong1978–1981:professionalpilotinLouisiana,SouthCarolina,USA

BusinessEconomicsdegreefromtheSchoolofEconomicsandAdministrationofLucerne

MemberoftheBoardofDirectors,KardexAG,ZurichChairmanoftheBoardofDirectors,RapidHoldingAG,DietikonDelegateoftheBoardofDirectors,BURUHoldingAG,HagendornCo-ownerofDAXHoldingAG,HagendornBoardmemberinvariousSMEs

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Name


Position


Education


supervisorybodies

Dr.RenéFurler

1949,Swisscitizen

ViceChairmanoftheBoardofDirectorssince2008MemberoftheBoardofDirectorssince2000

Since2001:ChairmanoftheExecutiveBoard,HGCOMMERCIALE,Zurich1999–2001:CEO,ZZWancorAG,Regensdorf1994–1999:HeadofConstructionMaterialsDivision,ZürcherZiegeleienAG(nowConzzeta),Zurich1985–1994:HeadofConstructionMaterials,HardAG,Volketswil1980–1984:fieldservicerepresentative,ProductManagerConstructionMaterials,ZürcherZiegeleienAG(nowConzzeta),Zurich

EquivalentofMEngfromETHZurichEquivalentofMAinEconomics,UniversityofZurichEquivalentofDSc,ETHZurich

MemberoftheBoardofDirectors,AlcoverAG,ZugMemberoftheBoardofDirectors,SIAHausAGBoardmemberofvarioussubsidiariesofHGCOMMERCIALE,Zurich

Name


Position


Education


supervisorybodies

UrsZiegler

1948,Swisscitizen

MemberoftheBoardofDirectorssince2007

1980–2009:CEO,ZieglerPapierAG,Grellingen1975–1980:DirectorofCustomerProjectsandConsultancy,EldagAG,Zurich1975–1980:DirectorofBusinessManagementandITOrganisation,COCAG,Zurich1973–1975:FinancialAccounting,EldagAG,Basel

EquivalentofMAinEconomics,UniversityofSt.Gallen

MemberoftheBoardofDirectors,ZieglerPapierAG

Name


Position


Education


supervisorybodies

Dr.FelixThöni

1959,Swisscitizen


Since2010:ManagementConsultant,Cham2003–2009:CFO,CharlesVögeleGroup,Pfäffikon1992–2002:CFO,GavazziGroup,Steinhausen1988–1991:AreaController,SchindlerManagementAG,Ebikon

EquivalentofPhDofEconomics,UniversityofSt.Gallen

MemberoftheBoardofDirectors,RaiffeisenbankCham,Cham

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70

Name


Position


Education

Activitiesingoverningandsuper-

visorybodies

HansSchaller

1944,Swisscitizen


2003–2009:CEO,Chemie+PapierHolding,Perlen1996–2002:CEO,PerlenGroup,Perlen1980–1996:CEO,GipsunionAG,Holderbank1978–1980:BusinessControllerEurope,KontronAG,Zurich1973–1978:ProjectManagerConsultancy,HayekEngineeringAG,Zurich1970–1973:MarketResearchManager,BritishAmericanTobacco,Geneva

EquivalentofMAinEconomics,UniversityofSt.Gallen

MemberoftheBoardofDirectors,Healthco-BreitschmidAG,KriensMemberoftheBoardofDirectors,CuradenInternationalAG,Kriens

CorporateGovernance

3.2OtheractivitiesandinterestsWith the exception of the positions mentioned under 3.1, themembers of the Board of Directors are not engaged in any ac-tivities inexecutivemanagementandsupervisorybodiesorper-manent management and consultancy functions for significantinterestgroups.

3.3ElectionsandtermofofficeMembersoftheBoardofDirectorsareelectedbytheshareholdersattheGeneralMeetingofShareholdersforatermofoneyear,oneyearbeingtheperiodfromoneGeneralMeetingofShareholderstothecloseofthenext.Ifelectionsareheldtoelectreplacementsforboardmembersmid-term,thosesoelectedcompletethetermofofficeofthememberstheyarereplacing.Electionstakeplaceon an individual basis.Re-election is permissible. There is no li-mittothenumberoftermsofofficethatanyonemembermayserve.However,uponreachingtheageof70BoardofDirectorsmembersmustlaydowntheirofficeatthenextGeneralMeetingofShareholders.TheshareholdershavetherighttovoteBoardofDirectorsmembersoutofofficeattheGeneralMeetingofShare-holders.ThenumberofBoardofDirectorsmembersislimitedtobetweenfiveandseven.TheaveragetimethepresentBoardofDirectorsmembershaveservedisapproximatelyfouryears,theiraverageagebeingca.58.

3.4 Internalorganisation

3.4.1AllocationofresponsibilitieswithintheBoardofDirectorsTheBoardofDirectorshastheultimateauthoritytomakedecis-ionsexceptwhere this is reserved toshareholdersbyoperationofthelawortheArticlesofAssociation.TheBoardofDirectorsisresponsiblefortheoveralldirection,supervisionandcontroloverexecutive management. It enacts guidelines for the company’sbusinesspolicyand informs itself regularlyaboutthecompany’sperformanceandbusinesssituation.ThemainresponsibilitiesoftheBoardofDirectorsare:

• DefiningtheGroup’sorganisationalandstrategicdirection• Ultimate supervision of the Group’s business operations and

monitoringofitsperformance• Approvalofsignificantacquisitionsanddisposals• Establishingsystemsandprocedures for theGroup’saccoun-

tingandfinancialcontrolandplanning• EstablishingtheGroup’sbusinesspolicy,inparticularitsinvest-

mentandfinancialpolicy• Approvalofbudgetsincludinginvestmentsandfinancialplans• DraftingtheAnnualReport,preparationandconductingofthe

General Meeting of Shareholders, and the implementation oftheresolutionsadoptedbyit

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• Establishingthekeyprinciplesofcorporategovernanceandgui-delinesfortheGroup’sinformationandcommunicationpolicy

• Appointment and dismissal of persons charged with the ma-nagementandrepresentationoftheGroupanddesignatingau-thorisedsignatories

• Establishingtheorganisationandmonitoringoftheinternalcon-trolsystem

• Informingthecompetentauthoritiesintheeventofexcessliabi-litiesoverassets.

3.4.2BoardofDirectorcommitteesTheBoardofDirectorsisassistedbytwocommittees.

AuditCommitteeTheAuditCommitteeassiststheBoardofDirectorsinperformingitsdutiesofultimatefinancialsupervisionofthecompanyandinmanaging its interactions with the external auditors. The maintasksoftheAuditCommitteeare:

• AuditingtheconsolidatedfinancialstatementsandthefinancialstatementsofChamPaperGroupHoldingAG intandemwiththeExecutiveManagementBoardandtheexternalauditors

• Evaluatingtheappropriatenessandeffectivenessoftheaccoun-tingandreportingprinciplesusedforconsolidation

• Assessingthepresenceofaneffectiveinternalcontrolsystemincludingriskmanagement

• EvaluatingandselectingexternalauditorstobenominatedforelectionbytheGeneralMeetingofShareholders

• Assessingtheperformanceoftheexternalauditorsandverify-ingtheirindependence

• Reviewingthefeesoftheexternalauditorsandthecompatibili-tyoftheirauditingactivitieswithanyotherconsultingactivitiesinwhichtheymaybeengaged

• Reviewing information concerning corporate governance forcompliancewiththeguidelinesoftheSIXSwissExchange

• DecidingwhethertheBoardofDirectorscanberecommendedtosubmittheconsolidatedfinancialstatementsandthefinancialstatements of Cham Paper Group Holding AG to the GeneralMeetingofShareholdersforadoptionbyit.

The Audit Committee has no decision-making authority, but itratherassessestheaforementionedmattersandpreparesthein-dividualandconsolidatedfinancialstatementsforapprovalbytheBoardofDirectors.MeetingsareattendedbytheCFO,andinpartalsobytheCEOand,asnecessary,byrepresentativesoftheex-ternalauditors.TheAuditCommitteemeetsat leastonceeverysixmonths,morefrequentlyasmayprovenecessary.InFY2010fourmeetingswereheld,each lastingapproximatelyhalf aday.Representativesoftheexternalauditorsattendedthreemeetings.

TheAuditCommitteeconsistsofDr.FelixThöni(Chairman),Phi-lipp Buhofer and Hans Schaller. Because of their professionalbackground,themembersoftheAuditCommitteehavesufficientexperienceandcompetencyinaccountingandfinancialmanage-menttobeabletoperformtheirresponsibilities.

CompensationandNominationCommitteeThe Compensation and Nomination Committee establishes theprinciplesforcompensationoftheBoardofDirectors,theCEOandmembersoftheExecutiveManagementBoard.ItalsoestablishestheguidelinesfortheselectionofcandidatesformembershipontheBoardofDirectorsandtheExecutiveManagementBoard.ThemaintasksoftheCompensationandNominationCommitteeare:

• EstablishingthecompensationprinciplesfortheBoardofDirec-tors,theCEOandtheExecutiveManagementBoardmembers

• EstablishingthefinancialcompensationfortheBoardofDirec-tors,theCEOandtheExecutiveManagementBoardmembers

• EvaluatingtheperformanceoftheCEO• EvaluatingtheperformanceoftheBoardofDirectors• Establishing the principles for the selection of candidates for

electiontotheBoardofDirectorsandselectingcandidates• Establishingtheprinciplesfortheselectionofthesuccessorto

theCEO,ExecutiveManagementBoardmembersandselectingcandidates

• ReviewingthestatusofthepensionfundofChamPaperGroupHoldingAGanditssubsidiaries

TheCompensationandNominationCommitteehasnodecision-makingauthority,butitratherassessestheaforementionedmat-ters and prepares them for approval by the Board of Directors.The Compensation and Nomination Committee meets at leastonceeverysixmonths,andmorefrequentlyasmayproveneces-sary.TheCompensationandNominationCommitteeconsistsofDr.RenéFurler(Chairman),PhilippBuhoferandUrsZiegler.InFY2010,twomeetingswereheld,eachlastingabouthalfaday.

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3.4.3FunctioningoftheBoardofDirectorsanditscommitteesTheBoardofDirectorsmeetsattheinvitationoftheChairmanasoftenastheconductofbusinessdemands,howeveratleastonceeveryquarter.Inaddition,extraordinarymeetingsordecisionsbywayofcircularalsotakeplaceasrequired.TheBoardofDirectorsmeetsonceayearforastrategyseminar.DecisionsaremadebytheentireBoardofDirectors.TheChairmangenerallychairs theBoardofDirectorsmeetingsandcaststhetie-breakingvoteintheeventof ties.Healsoplansandrunsthesemeetings.MeetingsoftheBoardofDirectorsandtheiragendasarepreparedbytheChairmaninconsultationwiththeCEO.EachmemberoftheBoardofDirectorsmayconveneameetingor request thatan itembeplaced on the agenda. The members of the Board of Directorsaresenttheagendasanddocumentationinadvanceofthemee-tings.ApartfromtheBoardofDirectorsmembers,meetingsarealsoattendedbytheCEOandCFOand,dependingontheagenda,byotherExecutiveManagementBoardmembers.Dependingonthematterbeingdiscussed,theBoardofDirectorsmayalsoinviteotherthirdpartiestobepresentatmeetings.WhendealingwithmattersthatrelateonlytoChamPaperGroupHoldingAGorthatare of a particularly confidential nature, only Board of Directorsmembers are in attendance. Minutes are taken of the delibera-tionsanddecisionsofthemeetings.In2010theBoardofDirectorsheldtenmeetings,ofwhichfivewerehalf-daymeetingsandfivewerefull-daymeetings.Twoofthesemeetingswereconvenedasextraordinarymeetings.Anexternallegalcounselwaspresentatninemeetings.

TheBoardofDirectorshasestablished twopermanentcommit-teesfromamongitsmembers,theAuditCommitteeandtheCom-pensationandNominationCommittee,todealwithclearlydefinedsubjectareas.ThesetwocommitteesprimarilyhaveanadvisoryandmonitoringfunctionandtheyreporttotheBoardofDirectorssoastoenableittoprepareitsdecisionsorexerciseitssupervi-soryfunction.ThemembersofbothcommitteesareappointedbytheBoardofDirectors.

TheBoardofDirectorsisaconstituentbody;itelectstheChairmanandViceChairmanfromamongitsmembers.TheViceChairman‘srole is to represent theChairman if he isunable to attendor isotherwiseengaged.3.4.4DelegationofAuthoritywithintheBoardofDirectorsandtheExecutiveManagementBoardTheBoardofDirectorsofChamPaperGroupHoldingAGdelega-tesoperationalmanagementcompletelytotheCEO.Bythesametoken, theCEO is responsible foroperationalmanagement.TheCEOisassistedincarryingoutthistaskbymembersoftheExecu-tiveManagementBoardwhoreportdirectlytohim.TheauthoritiesandresponsibilitiesoftheExecutiveManagementBoardaredeter-minedinparticularbythebudgetapprovedbytheBoardofDirec-tors,theOrganisationalRegulationsandtheestablishedstrategy.

3.4.5InformationandcontrolinstrumentsTheBoardofDirectorsexercises its ultimate supervisionof theExecutive Management Board by way of a structured reportingsystem as well as management accounting and budgeting pro-cesses.Generally,theCEOandCFOattendthemeetingsoftheBoardofDirectorsandkeepthemembers informedofbusinessperformanceanddevelopmentsincludingkeydataaboutthecorebusinesses,financialinformation,existingandimpendingrisksaswellasinformationaboutdevelopmentsinkeymarketsandpro-jects.Everymonth,theBoardofDirectorsreceivesacomprehen-sivewrittenreportaboutthebusinessperformanceanddevelop-ments,financialresults,marketdevelopments,andkeyeventsintheChamPaperGroup.

TheBoardofDirectorscommitteesmeetregularlywithmembersof the Executive Management Board and external consultants,including representatives of the external auditors. The externalauditorsareaccountabletotheAuditCommittee,theBoardofDi-rectors,andultimately to theshareholders.Uponcompletinganaudit,theexternalauditorssubmitthefinancialreporttotheAuditCommitteeanddiscussitsfindingswithit.Theauditorsreportina comprehensivemanner to theBoardofDirectors, in sodoingassessing reportingandaccounting, the internalcontrolsystem,andtheperformanceandresultsoftheaudit.

3.4.6RiskassessmentandinternalcontrolsystemforfinancialreportingInviewofarticle728aof theSwissCodeofObligations,whichwent intoeffecton1January2008,theGroupintroducedauni-form internal control system (ICS) for financial reporting. In thiscontext,fundamentalrelevantaccountingandreportingriskswereidentified and analysed with regard to their probability of occur-renceanddamagepotential.Keyinternalcontrolswereidentifiedanddocumentedfortherisksidentifiedinthisriskassessmentashavingahighprobabilityofoccurrenceandposingahighdamagepotential. The key controls identified were documented both atthe level of theoverall company and at the level of the variousbusinessprocessesandsystemsofthesubsidiaries.Keycontrolsrelatetocontrolactivitiesintheallocationofauthorityandthere-gulationofcontrolmeasures.Keycontrolsmustbedocumentedatminimumbyprocessdescriptionsandbydetailspertainingtothecontrolobjectivesandcontrolandriskdescriptions.Assessmentoftheeffectivenessofcontrols,identificationofweaknessesandtheadoptionofcorrectivemeasuresarecarriedoutbytheExecu-tiveManagementBoard.TheCFOreports regularly to theAuditCommittee on the effectiveness of the internal control system.Theexternalauditorsperformverificationoftheexistenceofanin-ternalcontrolsystemandreportinacomprehensivemannertotheAuditCommitteeortheBoardofDirectors,assessingtheinternalcontrolsystemandtheauditors’findings.

These principles for establishing and implementing the internalcontrolsystemandperformingriskassessmentarecontainedintheBoardofDirectors‘regulationsgoverningtheinternalcontrolsystem.

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4. ExecutiveManagementBoard

4.1MembersoftheExecutiveManagementBoardAsof31December2010,themembersoftheExecutiveManagementBoardoftheChamPaperGroupwereasfollows:

Name


Position


Education


supervisorybodies

PeterStuder

1968,Swisscitizen

CEO,ChamPaperGroup,Cham

Since2010:CEO,ChamPaperGroup,Cham2009–2010:COO,ChamPaperGroup,Cham2007–2009:MillManager,PapierfabrikenCham-TeneroAG,Cham2004–2007:Vice-DirectorofResearchandDevelopment,ChamPaperGroup,Cham2000–2004:Kimberly-Clark,BalsthalandReigate,England,ExecutiveManagementBoardmemberandHeadofResearchandDevelopment1997–2000:SwissFederalDepartmentofDefense,CivilProtectionandSports,Berne1995–1997:Developmentengineer,MPA(Sihl),Bern

EquivalentofMScinChemistry,UniversityofAppliedSciences,SchoolofEngineeringandInformatics,Burgdorf,SwitzerlandEquivalentofMBA,UniversityofAppliedSciences,SchoolofEngineeringandArchitecture,Bern

Boardmember,AssociationofSwissPulp,PaperandCardboardManufacturers(ZPK),ZurichBoardmember,Employer‘sFederationofSwissPaperIndustries(ASPI),ZurichBoardmember,ZugTechnologyForum(TFZ),ZugBoardmember,IndustryGroup,ZugChamberofCommerce

Name


Position


Education

PatrickSchmid

1968,Swisscitizen

CFO,ChamPaperGroup,Cham

Since2010:CFO,ChamPaperGroup,Cham2005–2010:HeadofFinance&Controlling,PapierfabrikenCham-TeneroAG,Cham2001–2005:HeadofERPSubproject,PapierfabrikenCham-TeneroAG,Cham1998–2001:HeadofFinancialAccounting,PapierfabrikenCham-TeneroAG,Cham1995–1998:AssistanttoHeadofControlling/FinanceandcentralofficeofIndustrieholdingChamAG,Cham

BusinessEconomicsdegree,Economicsprogram,LucerneUniversityofAppliedSciencesandArtsGraduatediplomainCorporateFinance,LucerneUniversityofAppliedSciencesandArts/UniversityofAppliedSciencesofCentralSwitzerland

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Name


Position


Education


supervisorybodies

Dr.PeterMüller

1971,Germancitizen

MillManager,Cham,Switzerland

Since2009:MillManager,ChamPaperGroupSchweizAG,ChamSince2007:HeadofProductionandEngineering,PapierfabrikenCham-TeneroAG,Cham2003–2007:HeadofPaperManufacture,PapierfabrikenCham-TeneroAG,Cham2002–2003:ProductionManager,HunsfosFabrikkerAS,Norway2001:HiredintotheChamPaperGroup

EquivalentofPhDinChemistry,TechnicalUniversity,Darmstadt,GermanyMBA,CityUniversity,Bellevue,Washington,USA

ChairmanoftheboardofGesellschaftfürErdgastransporteSchweiz(GETS)AG

Name


Position


Education

JohannBoog

1948,Swisscitizen

MillManager,Carmignano,Italy

Since2009:MillManager,ChamPaperGroupItaliaS.p.A.,CarmignanoInterimmanagerandconsultantforvariousinternationalcorporationsformorethan20years

BasictechnicaltrainingBusinessEconomicsdegree,UniversityofAppliedSciences,LucerneSchoolofAccountingExpertiseandAuditing,Zurich

Name


Position


Education

GeroldZuegg

1949,Italiancitizen

MillManager,Condino,Italy

Since1992:MillManager,ChamPaperGroupItaliaS.p.A.,Condino1985–1992:ProductionManager,CartieradiCarmignanoS.p.A.,Condino1981–1985:HeadCoatingandReeling&Cutting,CartieradelGarda(BertelsmannGroup)1977–1981:ProductionManager,CartieradiCarmignanoS.p.A.,Carmignano

PaperEngineering,UniversityofAppliedSciences,Munich,Germany

CorporateGovernance


4.2OtheractivitiesandinterestsWiththeexceptionofthepositionsmentionedunder4.1,Executi-veManagementBoardmembersdonotengageinanyotheracti-vitiesorassociatedinterests.

4.3ManagementcontractsChamPaperGroupHoldingAGhasnotenteredintoanymanage-mentcontractswiththirdparties.

5. Compensation,shareholdingsandloans

5.1Contentandmethodofdeterminingcompensationandshareholdingschemes

BoardofDirectorsThecompensationprinciplesandtheamountofcompensationpa-yabletoBoardofDirectorsmembersaredeterminedbytheBoardof Directors acting on a proposal from the Compensation andNomination Committee. Consultancy briefs for members of theBoardofDirectorssubjecttoadditionalcompensationaregrantedbytheentireBoardofDirectorsandrequiretheconsentofama-jorityofthemembers.Suchconsultancybriefsareclearlydefinedandarelimitedintime.

Themembersof theBoardofDirectors receiveanannualcom-pensation inkeepingwith theirdutieson theBoard.Theannualcompensationisbasedonabasesalaryincludinganexpenseal-lowance plus attendance fees. The base salary depends on theindividual’spositionon theBoardofDirectors.TheChairmanoftheBoardofDirectorsreceivesabasesalaryincludinganexpenseallowance of CHF 170,000. The Vice Chairman of the Board ofDirectorsreceivesabasesalaryincludinganexpenseallowanceofCHF40,000.TheothermembersoftheBoardofDirectorsreceiveabasesalaryofCHF30,000,whichalsoincludesanexpenseallo-wance.TheexpenseallowancescompensatethemembersoftheBoardofDirectorsfortravelandothernecessaryout-of-pocketex-pensesincurredintheperformanceoftheiractivitiesontheBoard.TheattendancefeesvaryaccordingtothenumberofmeetingsoftheBoardofDirectorsand itscommittees.ForeachmemberoftheBoardofDirectors,theattendancefeesamounttoCHF3,000foranall-daymeetingandCHF1,500forahalf-daymeeting.Forthe committee meetings, the attendance fees for the chairmanamounttoCHF4,000foranall-daymeetingandCHF2,000forahalf-day meeting. The attendance fees for the other committeemembersareequaltothoseoftheBoardofDirectorsmeetings.

TheoverallamountofcompensationofthemembersoftheBoardofDirectorsandthecompensationofcurrentandformermembersoftheBoardofDirectorsforFY2010and2009arestatedonpage60ofthefinancialstatementsofChamPaperGroupHoldingAG.

ExecutiveManagementBoardTheprinciplesofcompensationof theCEOandotherExecutiveManagementBoardmembersareestablishedbytheCompensa-tionandNominationCommittee.Thetargetsandamountof theperformancebonusfortheCEOandtheExecutiveManagementBoardaredraftedintheCompensationandNominationCommit-tee and approved by the Board of Directors. Once the financialyearhasended,targetachievementisdeterminedandassessedby the same people who set the targets. The performance bo-nusesarepaidout inApril of the following financial yearand/oroptionallyintheformofshares(cf.section5.2,shareholdingplan).

Compensation of the CEO and other Executive ManagementBoard members consists of a base salary and a performancebonus.Thebasesalarycomprisesagrosssalary (compensationbefore deduction of employee social security contributions), ex-penseallowancesandremunerationinkind(companycar).Annualperformancebonusesarepaid toExecutiveManagementBoardmembers under a bonus plan. The amount of these bonusesdepend on the achievement of the corporate targets and indivi-dual targets,bothofwhichareestablished inadvance.Theper-formancebonus isdetermined foreachExecutiveManagementBoardmemberasapercentageofthatmember’sgrosssalary.FortheCEO,thebonusamountstoamaximumof40%ofhisorhergrosssalary,andamountstoamaximumof30%ofthegrosssala-ryoftheotherExecutiveManagementBoardmembers.Nobonusispayableiftheminimumcriteriafortargetachievementarenotsatisfied.Thebonusiscappedbythemaximumcriteria.Thetar-getsincludequantitativeandqualitativeperformancetargets.Thequantitativeperformancetargetsarebasedontheachievementofthefollowingtargets:operatingprofit,freecashflowandkeynetworkingcapitalfigures.Theseitemshaveaweightingof70%.Thequalitativetargetsextendtoperformancegoalsthatmustfeatureclearlymeasurablecriteria.Theyareaccordeda30%weighting.The performance bonuses are paid out in April of the followingyearoroptionallyintheformofshares(from2011)(cf.section5.2,shareholdingplan).

The total amount of compensation of Executive ManagementBoardmembers,compensationofformerExecutiveManagementBoard members and the highest compensation paid to any onemember of the Executive Management Board for FY 2010 and2009arestatedonpage61ofthefinancialstatementsofChamPaperGroupHoldingAG.

5.2ShareholdingplanDuringtheyearunderreview,ashareholdingplanwasintroducedforthemembersoftheBoardofDirectorsandtheExecutiveMa-nagementBoard.Thesharesforthisprogramareissuedfromthecompany’sownholdings.

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Undertheshareholdingplan,themembersoftheBoardofDirec-torsestablishatthebeginningofthefinancialyearwhatshareoftheircompensationtheywouldliketoreceiveintheformofsharesforthecurrentyear(25%,50%,75%or100%).Thissharemaybechangedduringthecourseoftheyear,thisapplyingtothere-mainderoftheyear.Theallocationofsharesusuallytakesplaceon31Decemberoftherespectiveyear.Thesharepriceapplicabletotheallocationofsharesisbasedontheweightedaveragepriceineffectduringtheprecedingmonth,generallyNovember.Uponallocation,thesharesremainblockedforoneyear.Duringthisves-tingperiodtheydonotentitletopaymentofadividendorentitletheholdertoavote.AllBoardofDirectorsmembersareeligibleforparticipationintheplanwhohaveworkedonafull-timebasisduringtherespectivefinancialyear.Theportionofcompensationdrawnincashissubjecttodisbursementonaquarterlybasis.

ThemembersoftheExecutiveManagementBoardhavetheop-tionofreceivingtheperformancebonusesduethemintheformofshares,either inwholeor inpart(25%,50%,75%or100%).Theallocationofsharesusuallytakesplaceon30Aprilofthefol-lowing year. The share price applicable to the allocation of sha-res isbasedon theweightedaverageprice ineffectduring thepreceding month, generally March. Upon allocation, the sharesremainblocked foroneyear.During this vestingperiod theydonotentitletopaymentofadividendorentitletheholdertoavote.AllmembersoftheExecutiveManagementBoardareeligibleforparticipationwhoareinthecompany’semployon31Marchofthefollowingyear.

5.2AllocationofsharesduringtheyearunderreviewDuringtheyearunderreview,1,863sharesofChamPaperGroupHoldingAGwereallocatedtomembersoftheBoardofDirectorsor relatedparties.Noshareswereallocated tomembersof theExecutive Management Board or related parties during the re-portingyearsincetheshareholdingplandoesnotcomeintoeffectuntil2011.

5.4TerminationbenefitsDuring theyearunder review,no terminationbenefitsweredis-bursedoragreed.

6. Shareholders‘rightsofparticipation

Theshareholders‘rightsofparticipationaredefinedintheArticlesofAssociationofChamPaperGroupHoldingAG.The followingremarkscontainextractsfromtheArticlesofAssociationofChamPaperGroupHoldingAG.AfullversionoftheArticlesofAssociati-oncanbeconsultedonthewebsite,underInvestorRelations/Cor-porateGovernance/ArticlesofAssociation,or:http://ir.champaper.com/cgi-bin/show.ssp?id=730&companyName=champaper&language=English.

6.1RestrictionsonvotingrightsandrepresentationEach registered share entitles to one vote at the General Mee-tingofShareholdersofthecompany.Thisnotwithstanding,votingrightsmaybeexercisedonlybypersonswhoseregisteredsharesareenteredintheshareregisterofChamPaperGroupHoldingAGashavingvotingrights.AccordingtoSwisscorporatelaw,regist-rationissubjecttoadeclarationthattheshareholderhasacquiredthesharesinhisorherownnameandonhisorherownaccount.According to the Articles of Association, the Board of Directorsmayrefusetomakeanentrywithvotingrightsintheshareregis-teronlyunderthefollowingcircumstances:

• providedthat,andforaslongas,acceptanceoftheapplicantasa shareholderwithvoting rightsmighthinder thecompany inprovidingevidenceofSwisscontrolasrequiredbySwissfede-rallaw,inparticulartheFederalLawontheAcquisitionofRealEstatebyNon-Residents,or

• wheretheapplicant,despitehavingbeenrequestedbythecom-panytodoso,doesnotexpresslydeclarehimselforherselftobeacquiringthesharesinhisorherownnameandonhisorherownaccount.

No restrictionson voting rightsof this kindweremade in2010and2009.

A shareholder may be represented at the General Meeting ofShareholdersonlybyanauthorised legal representative,anothershareholderentitledtovote,ChamPaperGroupHoldingAGasthestatutoryrepresentative,anindependentvotingrepresentativeoracustodialrepresentative.

6.2VotingquorumsTheArticlesofAssociationofChamPaperGroupHoldingAGdonotstipulateanyspecialquorumsthatgobeyondtheprovisionsofSwisscorporatelaw.

6.3ConvocationoftheGeneralMeetingofShareholdersTheGeneralMeetingofShareholdersisconvenedinaccordancewithstatutoryrequirements.

6.4AgendaShareholderswhorepresentshareswithaparvalueofatleastonemillionSwissfrancsmaymakewrittenrequestsforproposalsforitemstobeplacedontheagenda.Suchproposalsmustbesub-mittedinwritingtotheBoardofDirectorsatleastsixtydayspriortotheGeneralMeetingofShareholders.

6.5EntryintheshareregisterShareholdersmayrequestthattheybeenteredintheshareregis-teratanytime.Asageneralrule,shareholdersmaybeenteredintheshareregisteruptooneweekbeforetheGeneralMeetingofShareholders.

CorporateGovernance


7. Changeofcontrolanddefensemeasures

7.1ObligationtosubmitabidTherearenoprovisionsintheArticlesofAssociationconcerningtheobligationtosubmitabid.Legalprovisionsapplyinthisregard.

7.2Change-of-controlclauseThere are no change-of-control clauses with members of theBoard of Directors or with members of the Executive Manage-mentBoard.

8. Auditors

8.1RetainershipandtermofofficeoftheleadauditorPriceWaterhouseCoopers,Zug,hasbeenretainedasthestatutoryauditorsandGroupauditorssince2010.NorbertKühnis,theres-ponsibleleadauditor,assumedhisofficeinthesameyear(2010).Theretainershipoftheauditorsisdecidedeachyearandmustberenewed annually. The Group auditor and the statutory auditorsarere-electedeachyearbytheGeneralMeetingofShareholders.

8.2AuditingfeesandadditionalfeesThe following fees were invoiced by PriceWaterhouseCoopers,Zug, or Ernst & Young AG, Zurich, for its services rendered asGroupauditorsandstatutoryauditorsofChamPaperGroupHol-dingAGanditssubsidiaries:

2010TCHF

2009TCHF

Ordinaryaudits 186 313Audit-relatedfees 0 355Taxadvisoryservices 43 63Total 229 731

Feesforauditservicescoverthoseserviceswhichmustbeperfor-medeveryyearinordertorenderanassessmentontheconsoli-datedfinancialstatementsandtodrawupreportsonthefinancialstatementsofthesubsidiariesasrequiredbylocallaw.

Feesforaudit-relatedservicescoverotherverificationservicesbythe auditors that donotnecessarily have tobeprovidedby theGroupauditor.

Fees for taxservicesextendtoallservices thatareprovidedbythetaxsectionoftheGroupauditorapartfromthoserelatedtotheaudititself.Taxservicescovercompliancewithtaxlegislation,taxplanningandtaxadvice.

8.3 InformationtoolsoftheexternalauditorsTheauditorsnormallyattendthemeetingsoftheAuditCommit-tee.Theyreportorallyand inwritingonthefindingsof theirau-dits.EvaluationandmonitoringoftheauditorsisperformedbytheAudit Committee, which makes recommendations to the BoardofDirectors.Inparticular,theAuditCommitteeevaluatestheper-formance, fees, and independence of the statutory auditors. In2010,theauditorsattendedatotalofthreehalf-daymeetingsoftheAuditCommittee.

9. Informationpolicy

TheChamPaperGroupprovidesinformationaboutitshalf-yearandannualresultsintheformofahalf-yearreportandanannualreportthatareavailable inprintedandelectronic form.The reportsaremailedoutuponexpressrequestonly,otherwisetheyareavailableonlyelectronicallyforthepurposeofeconomicandenvironmentalefficiency.Factsrelevantforthesharepriceareannouncedbywayofad-hocpublications(GermanandEnglish).

For continuously updated information on the company, shares,analystopinions,mediaarticles,datesandFAQs,pleaserefertotheInvestorRelationssectionatwww.cham-group.com.Anup-to-the-minuteinvestorhandbookalsoprovidesanin-depthlookatthestrategy,marketsandcompetitorenvironmentoftheChamPaperGroup.Onourwebsiteyoucanalsosubscribetothee-newslettersothatyou,atthesametimeasthemedia,arekeptabreastofresultsandnewdevelopments.

10.Contactaddressesandcalendar

ShareregisterFranziskaStöckliFabrikstrasse,[email protected]:+41(41)7853403

MediaandInvestorRelationsEdwinvanderGeest/[email protected]@cham-group.comPhone:+41(43)2683232

GeneralMeetingofShareholders27April2011,Lorzensaal,Cham

Financialreporting2011Half-yearResults:17August20112011AnnualReport:14March2012

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