2017 Annual Report
Partnering for shared successGivaudan – 2016 Annual ReportGivaudan at a glance

Givaudan at a glance
Our business in 2017109

Locations worldwide

46

Production sites

424 million
R&D spend

11,170

Full time employees

Sales in North America
CHF 1,352 million
Production sites
9

Annualsales in mature
markets

57%

Employees
2,231

Sales in Latin America
CHF 618 million
Production sites
6
Employees
1,471

Flavour Division
We make life taste delicious
We are dedicated to expanding the world’s expression throughflavours by bringing moments of delight with delicious flavour
and taste experiences. Our customers – global, international,
regional and local – are in the food and beverage industry andspan across key segments including beverages, sweet goods,
savoury, snacks and dairy. We explore the globe for ingredients,
innovate to bring our customers unique propositions, anddelight millions of consumers around the world.
www.givaudan.com – our company – about Givaudan  Disclosure 102 – 6, 102 – 7Givaudan – 2017 Annual Report13%

Sweet goods
Confectionery
Baked goods
Sugar confectionery
Chocolate
Chewing gum

15%

Dairy
Ice cream and yoghurt
Desserts
Yellow fats (margarines)

33%

Beverages
Soft drinks
Fruit juices
Instant beverages
Total 54%
of Group
sales

39%

Savoury
Ready-made meals
SnacksSoups and sauces
Meat and poultry

19.2 million
Hours worked safely

GHG emissions CDP score A ‘A Sense of Tomorrow’
Science-based targets for 2030

Leadership level

A new sustainability approach

Sales in Europe, Africa
and Middle East
CHF 1,723 million
Production sites
18
Employees
4,819

Sales in Asia Pacific
CHF 1,358 million
Production sites
13
Employees
2,649

Fragrance Division
We live to perfume life
The artistry of our perfumers encompasses a myriad of scented
stories for brands everywhere. Our customers – global,
international, regional and local – serve end-consumer markets
with fragrances for personal, home and laundry care brands aswell as prestige perfumes, which bring pleasure to millions daily.
And for nature-derived beauty performance, our Active Beauty
offers an extensive portfolio of award-winning active cosmetic
ingredients designed by teams that harness the power of nature
for cutting-edge cosmetics.

Annual sales
in high growthmarkets

43%

13%

18%

Fragrance Ingredientsand Active Beauty

Fine Fragrances
Signature fragrancesLine extensions
Total 46%of Group
sales

69%

Consumer Products
Fabric and personal care
Hair and skin careHousehold and air care
Oral carePerformance highlights

Performance highlights
Investing in the futureGroup sales and growth rate

Sales of CHF 5.1 billion
up 4.9% on a like-for-like basis 1

2017

4.9

2016

4.2

2015

4,404

3.7

2013

5.5
Group sales in millions of Swiss francs

up 11.7% year-on-year

Free cash flow of 11.8% of sales
Proposed dividend of CHF 58.00
2

per share, an increase of 3.6% year-on-year

1. Like-for-like excludes the impact of currency, acquisitions and disposals.
2. Subject to shareholder approval at the AGM on 22 March 2018.

Givaudan – 2017 Annual Report% growth LFL1

1,089

21.6

2016

24.1

1,126

2015

24.3

1,070

2014

23.9

1,053

2013

970

22.2
EBITDA in millions of Swiss francs

Net income of CHF 720 million

4,369

EBITDA and margin
2017

EBITDA margin of 21.6%

4,663
4,396

2.7

2014

EBITDA of CHF 1,089 million

5,051

EBITDA margin in %Free cash flow
2017

11.8

594

2016

12.8

597

2015

720

16.4

2014

604

13.7

2013

662

15.2
Free cash flow in millions of Swiss francs% of sales

Dividend per sharein Swiss francs
2017

582

2016

56

2015

54

2014

50

2013

47

1

2017 Annual Report
Partnering for shared success

True partnerships with our key stakeholders
are crucial in creating shared success and asustainable future.
In nurturing these partnerships and as part ofour 2020 strategy, we are determined to continue
our industry-leading investment in innovation
by increasing our network of strategic partners
and expanding our natural, sensorial andcosmetic capabilities. We invest significantly
in our talent and foster a great place to work.
Furthermore, we enhance our responsible
sourcing in collaboration with our suppliersand embrace our responsibility to minimise
our impact on the environment whilestrengthening the social and economic fabricof the communities in which we operate.

Givaudan – 2017 Annual Report

2

Title Subtitle
Aboutthis report

About this report
Presenting what matters most“Integrated Reporting, with its core aspectof value creation, offers the possibility ofpresenting what matters most.”Gilles Andrier, Chief Executive Officer

We continue our journey towards Integrated
Reporting based on the framework of theInternational Integrated Reporting Council,
which offers a platform for presenting whatmatters most and communicating the value
we create for our stakeholders.
Our priority is to provide clear, concise andmeaningful information on the topics that are
most important to our internal and external
stakeholders and most material to our ability
to create value. We have further integrated nonfinancial topics from our Sustainability Report.
References used in Givaudan reports
References to Givaudan’s Annual Report,
Sustainability Report, or website
References to GRI Standards disclosures
References to
UN Sustainable Development Goals

Givaudan – 2017 Annual ReportAbout this report

Our commitment

This report is about how our Company’s strategy, governance,
performance and prospects lead to the creation of value in the
short, medium and long term. The topics that are mostmaterial to our ability to create value over these periods form
the basis of the disclosures in this report. We focus on showing
how our financial and non-financial capital is transformed
through our strategy to create value for our stakeholders.
Givaudan adheres to legal requirements, good corporate
governance and follows best practices consistent with those ofmajor international companies. All information in this reportcomplies with the Swiss Code of Best Practice for Corporate
Governance and the SIX Directive for Corporate Governance.

Our journey

We aim to offer a concise presentation of how our financial andnon-financial capital contributes to our strategy, growth andbusiness development. The chapter ‘Strategic value creation’offers a view on how we create value and provides an overview
of our key achievements in 2017.
Sustainability is important for our long-term financial andoperational success, and is a key business driver and means ofgenerating new value. In the report we have further integrated
topics from our Sustainability Report, which will publishedseparately on 20 March 2018.
We have further developed the concept of Givaudan’s reporting
suite. Icons mark the content that addresses GRI Standards,
and the GRI index is listed at the end of this report. Where
relevant, references to our Sustainability Report and website
are included to ensure a full overview of the business, support
the connectivity of information and avoid repetition. This year
we have also identified which content is in line with the nine
United Nations Sustainable Development Goals (SDGs) webelieve we can have the most impact on.

What’s next

As we continue moving to Integrated Reporting, we will further
incorporate our sustainable development priorities andstrengthen our reporting suite. We will regularly review the
topics that are most material to our business to ensure they
best reflect our value creation activities.

3

Table of contents
Chairman’s introduction

04

Chief Executive Officer’s review

06

Market trends and business environment

10Strategic value creation

12

Our business model14

Our value chain

16

Our capabilities

17

Our 2020 strategy

18– Growing with our customers

19– Delivering with excellence23– Partnering for shared success

25

Performance review

30

Performance review – Group32

Business performance

33

Capital markets

36

Differentiating business enablers

38

Givaudan Business Solutions

40

From sourcing to supply

42

Our talent, performance and culture

44

Environment, health and safety

47

Risk management

49

Compliance

53

Regulatory and public policy

56

Governance report

58

Compensation report

78

Financial report92

Appendix168

Givaudan – 2017 Annual Report

4

Chairman’s introduction

Chairman’s introduction
Creating value with our partners

Givaudan finished a successful
second year of its 2020 strategy
with strong business momentum.
In 2017 we delivered solid
topline growth and free cash
flow generation, in line with
our projected average 2020
financial targets.
On the basis of Givaudan’s healthy performance in 2017, and its
continued solid financial position, the Board of Directors willpropose an increase in the dividend to CHF 58.00 at theAnnual General Meeting on 22 March 2018. This is theseventeenth increase since our listing on the Swiss stock
exchange.
The second year of our 5-year strategy cycle was marked by
one of persistent external challenges in the market, requiring
us to remain agile and adaptable. Raw material volatility
continued, leading to higher prices in certain categories. In
addition, consumers continued to demand more natural
products, increasing expectations from our customers todevelop more complex natural solutions. We take every
challenge as an opportunity to expand and deliver long term
value to our stakeholders. I have been impressed by the way
in which the business is able to respond to these challenges,
and continuously perform to remain the market leader.
The global economy is expected to continue to strengthen
next year, with forecasts predicting 2.9% growth in 2018–2019¹.

Givaudan – 2017 Annual Report

Set against a more positive economic outlook, there will
be continued headwinds from ongoing political, policy andeconomic uncertainties in many parts of the world. The widely
documented global megatrends of a growing global
population, increasing urbanisation and rising life expectation
continue to have implications for the flavour and fragrance
industry. Our 2020 strategy has been developed with thesetrends in mind, and I am confident we are in a strong position
to take advantage of these opportunities afforded to us.

I am confident we are in a strong
position to take advantage of theopportunities afforded to us.
Being responsive to our customers’ needs remains crucial,and in 2017 we made a number of investments to evolve ourbusiness. We started on our journey to implement Givaudan
Business Solutions, the foundation of our ‘Delivering with
Excellence’ pillar, which will allow us to deliver a superior
customer experience. As part of our 2020 strategy tostrengthen our offering for customers we acquired Vika B.V.
and Activ International, and are successfully integrating thesebusinesses into our portfolio. We also announced theacquisition of the Nutrition Division of Centroflora Group andare in exclusive negotiations with Expressions Parfumées. Inline with our strategic ambition for high growth markets, we
also continued to expand our footprint in India, Mexico, China
and Singapore.
To support our growth ambitions, we focused many of
our activities on our own Innovation programmes, particularlyin the areas of naturals and biotechnology. Through ongoingconnections and partnering with innovation ecosystems,
we want to strengthen our external collaborations to identify

Chairman’s introduction

5

I have every
confidence that
Givaudan willcontinue its
path of value
creation in theyears to come.
Calvin Grieder, Chairman

new opportunities and innovative solutions. Going forward,
we will focus on exploring new business and engagement
models with our partners, such as accelerators and incubators,
to bring innovation faster to market. The impact ofdigitalisation provides many new opportunities to change theway we do business. In this area, we see ever more
opportunities to harness the power of big data, and artificial
intelligence to provide new products and new engaging
experiences. The digital world also poses challenges aroundcyber security. We must respond by ensuring our systems
are robust and keeping pace with the rapid developmentsin these areas.

We will continue with our strong
focus on people development, ensuring
we have a strong team at every level.
In 2017, Joe Fabbri, Head of Environment, Health and Safety(EHS) and Sustainability retired from the Executive Committee.
Taking forward his responsibilities, Simon Halle-Smith, Head of
Human Resources is now also responsible for EHS and Willem
Mutsaerts will lead on Sustainability in addition to his Head of
Global Procurement role. We also announced further changes
to the Executive Committee in January 2018, as following a
distinguished 23-year career at Givaudan, Mauricio Graber,
President of the Flavour Division will leave Givaudan to takeup the role of CEO at Chr. Hansen. We are fortunate to have astrong group of senior leaders and an excellent talent andsuccession programme at Givaudan, which has allowed us toappoint Louie D’Amico, currently Head of Flavours Americas,
as the new President for the Flavour Division and a memberof the Executive Committee, effective 1 April 2018. I’d like toextend my warmest thanks to both Joe and Mauricio for theirsignificant contributions and many achievements at Givaudan.

We will continue with our strong focus on people
development, ensuring we have a strong team at every level.
Looking forward, I have every confidence that Givaudan willcontinue along its successful path, growing with its customers,
and delighting consumers with inspiring taste and scentexperiences. Through organic growth, our active acquisition
approach to find opportunities in adjacent spaces, and at thesame time keeping our costs well managed, we are well
positioned for the future and long term success.
Throughout the year, I’ve had the opportunity to meet manyof our employees around the world, and I am very proud of thedaily contributions made by each and every one of them tothe success of Givaudan. My thanks and gratitude goes to myfellow members of the Board of Directors, the Executive
Committee and all employees worldwide, for all of their hard
work and support.
Finally, I would like to express my thanks to our shareholders
and to you for your trust. Givaudan will continue with its longterm value creation for all stakeholders in the years to come.

Calvin Grieder
Chairman
1.	http://pubdocs.worldbank.org/en/997531493655496869/Global-Economic-ProspectsJune-2017-Highlights-Chapter-1.pdf Disclosure 102 – 10

Givaudan – 2017 Annual Report

6

Chief Executive Officer’s review

Chief Executive Officer’s review
Building strong partnerships withkey stakeholders

Gilles Andrier, Chief Executive
Officer, answers our shareholders’questions about Givaudan’s
performance in 2017, achieving
the second year of our 2020
strategy, and outlook on key
priorities for 2018.
What were Givaudan’s major financial
achievements in 2017?

With a set of solid results in 2016, the first year of our 2020
strategy, we continued through 2017 to maintain good businessmomentum against a backdrop of an improving environment
in the second half of 2017. Our topline growth, with sales of
CHF 5,051 million, an increase of 4.9% on a like for like basis, and8.3% in Swiss francs, as well as our free cash flow of 11.8% ofsales are both in line with the average financial targets we
set for 2020. Our growth is well balanced between our Flavour
and Fragrance divisions. We also continued to make strong
operational progress across all areas of our strategic pillars ofour 2020 strategy.

What were some of the challenges and how did
you overcome them?

While we welcomed an improved external market environment
through the second half of 2017, overall the market still remains
challenging, particularly with pressure from our customers
serving markets with fast and ever changing consumer desires.
The pace of change shows no signs of slowing, and it is our ability
to adapt and embrace change that allowed us to navigate thesechallenges and find new opportunities.

Givaudan – 2017 Annual Report

Following a prolonged period of weak macroeconomic growth inmature markets, we were pleased to see a return to a positive
growth performance in the mature markets of Western Europe,
the United States and Japan. There was good momentum in a
number of high growth markets such as Africa and Middle East,as well as in high growth markets in Europe. We saw an
improving growth momentum in other high growth markets,particularly in the second half of the year, in China. We remain
positive these high growth markets will continue to be an
important contributor to our growth.
We continue to accelerate our local and regional customer
strategy, build our capabilities with naturals as well with more
integrated solutions, and invest in the business with further
expansion of our footprint, particularly in high growth markets.
Foundations were laid for our new fragrance production hub inChangzhou, China, which will substantially increase ourmanufacturing capacity in the Asia Pacific region. We opened a
new creative centre in Mexico City, which will bring us closer tokey customers and their markets, in this region. A new fragrance
encapsulation centre in Singapore, will begin operations in 2018,
to enhance our leadership in encapsulation technology andproduction capabilities. We also continued to invest in our new
flavours savoury facility in Pune, India.

Our recent strategic acquisitions,complemented by our procurement
strength in naturals, position us as ourcustomers’ naturals solutions provider.

Chief Executive Officer’s review

7

We continued to
to make strong
operational
progress acrossall areas of ourstrategic pillars.
Gilles Andrier, Chief Executive Officer

Consumer demand for naturals continues to grow, particularly
for flavours, where 43% of consumers consider an ‘all natural’claim important to their purchasing decisions. We continue torespond to this through our recent strategic acquisitions,complemented by our procurement strength in naturals, toposition us as our customers’ naturals solutions provider.

What role did acquisitions play in supporting
customer growth in 2017?

Our approach to acquisitions is to identify companies thatstrengthen or complement our existing capabilities, and allow us
to provide even more solutions for our customers. We reachedthree important milestones this year in the Flavour Division withthe acquisition of Activ International, and Vika B.V. and theannouncement of the acquisition of the Nutrition Division ofCentroflora Group. This supports our commitment to provide
customers with a broader range of flavour and taste solutions
that match consumer demands for clean label, organic andnatural ingredients. We also continued to make good progresswith the integration of Spicetec which is already resulting in new
business opportunities.
To expand the capabilities of our fragrance business, we enteredinto exclusive negotiations to acquire Expressions Parfumées, aFrench fragrance creation house with a strong portfolio of local
customers. They are also the first perfume house to haveobtained the French Origin Guaranteed label and are pioneers ofnatural fragrance compounds. With each of these acquisitions, it
is important we manage the integration as smoothly as possible,
and work together to build the businesses.

What progress was made with Givaudan Business
Solutions (GBS)?

Ensuring every customer interaction is excellent at every touchpoint remains fundamental to our business, and our new GBS
organisation supports us to achieve this. It is the foundation of
our 2020 strategy pillar, ‘Delivering with excellence.’ Following an
extensive design phase, we started the implementation of GBS in
the summer of 2017, through a phased approach beginning with
Europe and APAC. GBS will provide best-in-class business services
and solutions that support the Company to further improve ouroperational efficiency, and increase our agility.

GBS will provide best-in-class businessservices and solutions that support
the Company to further improve ouroperational efficiency, and increase
our agility.
We officially opened our new GBS centre in Kuala Lumpur in
December 2017, which is strategically situated in Malaysia toenable Givaudan to deliver a superior customer experience as we
continue to grow in the region and work towards achieving our2020 ambition. In addition to Kuala Lumpur, we continued withthe ongoing setup of two other regional GBS delivery centres, in
Budapest and Buenos Aires.

Givaudan – 2017 Annual Report

8

Chief Executive Officer’s review

What role did partnerships play in the deliveryof the 2020 strategy for 2017?

Our collaborations with innovators, suppliers, employees andthe communities, in which we operate, drive responsible andsustainable growth.
We are working with a number of external collaborators tocreate value through innovation. We started MISTA, aprogramme that focuses on delivering services to start-ups
primarily in the Bay Area of San Francisco, and expands our
New Product Development business model. We continue to be afounding partner of MassChallenge Switzerland, which allows us
to connect and collaborate with high-tech start-ups that could
help us transform our business, and we are in discussions withseveral of this year’s finalists. Our investment in Sensorwake,a French start-up company, supports our ability to offer newopportunities for fragrance experience with the world’s firstolfactive alarm clock.
We officially launched DreamScentz™, an exciting patentpending technology, linking fragrance with improving people’squality of sleep. This new technology was developed from yearsof research in our Sensory Centre of Excellence in Ashford. Other
technology successes in 2017 include FreezeFrame®, to capture
freshness and add taste and vibrancy to convenience food, andGivaudan Active Beauty’s newest ingredient PrimalHyal™ Gold
was awarded Best Colour Cosmetics Ingredients at the Global
Beauty Industry Awards.
How we partner with our suppliers is also a key part of our2020 ambition. To build on our commitment to sustainableprocurement practices, we introduced ‘Sourcing for Shared
Value’, an approach covering three core areas of: Responsible
Sourcing, Sourcing at Origin and Communities at Source. It
reinforces our contribution to preserving the environment,
stimulating the well-being of communities from which wesource, and safeguarding resources for the long term.
Investing in our people is a critical part of ensuring sustained
success, through developing the skills of our people, promoting adiverse workforce and succession planning, these all contributeto fostering a great place to work. Our Leadership Senses
programme reached an important milestone this year, with all
four programmes of Begin, Grow, Evolve and Enhance up andrunning. Over 600 leaders have benefitted from this specificfocus on leadership needs. This also supports our focus on great
succession and talent planning giving people interesting andvaried career opportunities, and ensuring we can look within
to fill key positions as the need arises.

Givaudan – 2017 Annual Report

With sustainability a key enabler of the2020 strategy, how will ‘A Sense of Tomorrow’
support this?

Sustainable business is important for us, for our customers,
consumers and wider society. We are consolidating efforts inthree key focus areas: sourcing, innovation and the environment,
under the umbrella framework of ‘A Sense of Tomorrow’. By
further building sustainable practices into the way we source
materials, develop products and reduce our environmental
footprint, Givaudan will be better able to meet our customers’
needs today while anticipating ever-evolving challenges for ourindustry, our environment and society as a whole.

For the third year, we received
recognition from CDP for our climate
action leadership, and in 2017 we wereawarded an overall ranking of A.
As part of our commitment to deliver on our ‘Road to Paris’commitments, we will implement ambitious new science-basedtargets (SBTs) to reduce greenhouse gas (GHG) emissions. We
want to reduce GHG emissions from our operations and energy
supply by 30% by 2030, while having a goal to reduce GHG
emissions from our supply chain by 20% over the same period.
We also want to increase our use of renewable electricity andhave committed to sourcing 100% electricity from renewablesources by 2025. For the third year we received recognition from
CDP for our climate action leadership, and in 2017 we wereawarded an overall ranking of A. We became a member of theWorld Business Council for Sustainable Development (WBCSD),
working with over 200 leading businesses to transform global
food systems.

What are the priorities for the business in 2018?
We remain focused on continuing along the path of delivering
our 2020 strategy, being mindful of the shifting market
environment and maintaining our customer focused mindset.

Responding to the rapidly evolving consumer preferences, andworking with our customers, we will help them to make theirbrands desirable and successful. As required, we will pursue
opportunities to acquire companies that further strengthen ourcapabilities. We will continue with the implementation of GBS,
which will allow us to create the additional financial resources
needed to continue growing with our customers in the years
to come.

Chief Executive Officer’s review

9

Responding to the rapidly evolving
consumer preferences, and working
with our customers, we will help
them to make their brands desirable
and successful.
Harnessing our culture of innovation will remain critical to ensure
we provide our customers with the innovations they need, as
well as find ways to do things differently to remain the market
leader. We see many opportunities arising from digitalisation, increating differentiated services and new ways of working withcustomers, partners and employees.
Our people are at the heart of our business, and we will continue
to create a great a place to work where every employee is able
to contribute to our success. This is supported by our strong andeffective succession planning enabling us to appoint very
experienced leaders from within Givaudan, and ensuring we areable to successfully execute our 2020 strategy.
2018 will mark our 250 years heritage of engaging people’s
senses, and our raison d’être remains, to inspire emotion throughour creations every day, everywhere, as we strive for a better
tomorrow.
I am excited about the year ahead, and continuing our journey todeliver our 2020 strategy.

Gilles Andrier
Chief Executive Officer

Givaudan – 2017 Annual Report10Market trends and business environment

Market trends and business environment
Being agile in a fast-changing environment

Agility and flexibility in today’senvironment enable us to offer a
superior customer experience anddeliver on our 2020 strategy.

Technology and innovation drivers

Givaudan delivered a healthy financial performance in 2017 andcontinued to make significant investments for future growthacross the key areas of its business. We are proud of our agility
and flexibility in understanding and anticipating the trends inthe markets in which we operate.

Our Information Management and Technology (IM&T) teamseeks to leverage business opportunities stemming from therapid digital evolution, quickly deploying innovative digitaltechnologies across all areas of our business, with an increasing
focus on the opportunities in robotics and artificial intelligence.

Market environment

The rise of cybercrime has been rapid, and protecting ourbusiness environement is a top priority for our IM&T andEnterprise Risk Management teams.

As the global business scene emerges from a prolonged periodof weak macroeconomic growth in mature markets, there
remain pockets of volatility in both political and economic
terms, particularly in selected high growth markets. However,in 2017 there was a pleasing return to a positive growth
performance in the mature markets of Western Europe, theUnited States and Japan.
For Givaudan, high growth markets will continue to be an
important contributor to our future growth and we remain
positive about these markets. There was good momentum in a
number of high growth markets such as Africa and Middle East,as well as in high growth markets in Europe. We saw an
improving growth momentum in other high growth markets,particularly in the second half of the year, in China.
Today, 60% of the world’s people live in Asia and within sevenyears the population of India is expected to surpass that ofChina, when China’s population will be 1.4 billion and India’s
1.5 billion. This burgeoning growth is an important opportunity
for Givaudan.

The digital world holds exciting opportunities for us to offerdifferentiated services and new ways of working withcustomers, partners and employees. Internet of things, bigdata, social media and predictive analytics are changing theway we do business, and understanding these opportunities
allows us to adapt with agility.

The innovation challenge faced by Givaudan is the sheer speedof change: by the time our customers bring a product tomarket, consumers are often already seeking something evennewer – not only new products, but also new engaging
experiences. Yet innovation is more than simply creating
something new; for us it is about doing things differently, anddoing them better and before the competition. Our culture ofinnovation drives us and provides our customers with theinnovations they need.

Societal developments

In a world of continually changing consumer desires andcustomer needs, it is essential for us as a business to remain
agile and flexible. We monitor the global megatrends that havethe most significant impact on our business and the flavour
and fragrance industry to ensure that we can anticipatechanges. These include the growing consumer base, people
living longer and more environmentally aware and responsible
lives, and in an increasingly connected world.
www.givaudan.com – investors – vision and strategy – market trends

Givaudan – 2017 Annual ReportMarket trends and business environment

Regulatory environment

There have been significant regulatory changes in the flavour
and fragrance industry in recent years as authorities respond to
consumer demands for greater transparency of the ingredientsused by the industry. These changes impact our customers andtheir consumer products, and we work closely with them sothey may better understand the impact of the changes on theirproducts.
We invest considerable resources and capital to meet both newand existing regulatory requirements and ensure globally
compliant and safe products. Developing regulations are also
monitored so we can manage their potential impact andguarantee compliance of our products.
We are advocates for our industry through the support ofregulatory developments which are science-based and in thebest interests of consumers, and we support international
industry associations including the International Fragrance
Association (IFRA) and the International Organization of the
Flavor Industry (IOFI).

Sustainability approach

Our sustainability approach covers all aspects of Givaudan’sbusiness. We have aligned our approach with the United
Nations Sustainable Development Goals (SDGs), the frameworkthat encourages businesses, governments and otherorganisations to address the world’s most pressing challenges.
In 2017, we published ‘A Sense of Tomorrow’, a consolidated
approach to shaping a sustainable future for flavours andfragrances. It represents our commitment to working with
employees, customers, suppliers, producers, local communities
and many other stakeholders around the world. We created‘A Sense of Tomorrow’ by focusing on Givaudan’s most material
sustainability issues and identifying nine SDGs where we canhave the greatest impact. Under this approach we will focus on
three areas: sourcing, innovation and the environment.
‘A Sense of Tomorrow’ gives us a clear roadmap and an
opportunity to show leadership. We will focus on the threeareas with new tools, frameworks, expertise, targets andambitions to better address and raise expectations, helping us
to be our customers’ partner of choice.
www.givaudan.com – sustainability – sense of tomorrow

Environmental commitments

Consumers around the world are increasingly aware of issues
concerning climate change, the scarcity of resources and theneed to reduce waste. With these issues in mind, we willcontinue our work to reduce the environmental impact of ouractivities and create innovative new products that bring social
benefit to consumers.

11

We are committed to continuing the development of ourcapabilities in this area and seek to apply them at every
opportunity. For example, our expertise in green chemistry andtechniques such as biocatalysis enables us to make products
high in purity and yield through the use of less energy andfewer waste materials.
We are fully committed to excellence in climate action and are
implementing an ambitious agenda to take action for theenvironment across our operations and beyond. We have built
our climate action agenda on ambitious greenhouse gas (GHG)
emission reduction targets. Givaudan’s targets have been
approved by the independent Science Based Targets initiativein alignment with the global effort to keep a temperature
increase below the two-degree threshold, a key goal of the2015 Paris Agreement on climate action. Our commitment
helps many of our key customers reach their own GHG
reduction targets while offering them the added assurance
that their supply chains are secure today and fit for the future.

Industry trends

The Research and Markets report of March 2017 forecasts thatthe global flavour and fragrance industry will grow at a CAGR
of 4.2% from 2017 to 2022. The report also says the main driversof growth will be the increasing disposable income among the
middle classes, changing consumer preferences, and a growing
awareness among customers about buying products that
contain natural ingredients.
Sales by the global industry were estimated to be $24.5 billion
in 2016, up from $24.1 billion in 2015, according to Leffingwell &Associates, which also estimated the market share of the top
11 companies in the industry to have grown from 75.4% in 2015
to 78.0% in 2016.
The industry trend is for companies to diversify their portfolios
by adding adjacent categories, products and applications, aswell as complementary corporate structures. There have been
no major mergers and acquisitions in recent years, althoughsmaller acquisitions and partnerships continue to be a feature
for companies seeking growth in adjacent areas.
Our acquisitions over the last three years have been
opportunities to grow our business both within and beyond ourcore fragrance and flavour capabilities, for example byexpanding our offerings in naturals, integrated solutions andActive Beauty.

Market share

The flavour and fragrance industry has grown steadily in recent
years and the total market value is estimated to be worth
approximately US $24 billion.
The top four players are Givaudan, Firmenich, IFF and Symrise,with Givaudan the industry leader with annual sales of
CHF 5,051 million.

Givaudan – 2017 Annual Report

12 Strategic value creation Subtitle

Strategic value
creation
Our vision
To inspire emotion through ourcreations every day, everywhere,
as we strive for a better tomorrow.
Our mission
Together with our customers,
we craft memorable experiencesthat bring moments of delightto consumers.

In this section:

Givaudan – 2017 Annual Report

Our business model14

Our value chain

16

Our capabilities

17

Our 2020 strategy

18– Growing with our customers

19– Delivering with excellence23– Partnering for shared success25

4.9% sales growth

like-for-like, excluding the impact of currency,
acquisitions and disposals

11.8% free cash flow
as a percentage of sales

Start - ups targeted

MISTA programme started: focus on delivering services
to start-ups and expanding our New Product Development
business model

Delivery systems expanded
Seven additional patents granted and six newly filed

Leadership capabilities
strengthened

over 600 leaders benefitted from the programme's focus
on specific leadership needs

Givaudan – 2017 Annual Report

14Strategic value creation Our business model

Our business model
Value creation at Givaudan
Capital input

Value enhancing strategy

Financial capital– Equity of CHF 3,538 million– Free cash flow 11.8% of sales

business divisions
Our

Safeguarding our reputation–  Highest ethical standards in our interaction
with all our stakeholders–  Our values embodied in our Principles ofConductalue chain
Our v

tra
Our s tegy

People and talent–  L eadership development at all levels– Commitment to ensuring a diverse
workforce–  A nnual benchmarking studies for acompetitive compensation offering

VisionMission

po

ns

Su

Operations– 46 production sites in 22 countries – Sourcing over 10,000 raw materials

es

s
Re

–  Research and development
investments of CHF 424 million–  Worldwide, 481 employees in Science &Technology–  Founding partner of MassChallenge,
Switzerlands.

Innovation and Science & Technology

ib l

per

e gr

io r cFlavoo w th . S h are

us to m e r e x

u
ds

cc

ie
per

urs and Fragrance

nc

e

s

Internal control mechanism
External

Financial and macro-economic

2017 Annual Report – our business divisions – cover flap
– our vision and mission – page 12– our value chain – page 16– our strategy – page 18
Givaudan – 2017 Annual Report

Megatrends Management Approach (103 –2, 103 – 3): Topic 201, page 14 – 15
Disclosure 413 – 1, page 15

Strategic value creation Our business model

Value creation for our stakeholders

Customers–D elivering innovation and sustainable products to our customers–R esponsible Sourcing Policy since 2016, and we aim to have 90% of our raw
materials volume of natural origin to be sourced responsibly by 2020
– True partnership at each step of the value chain– E xpanding our global presence to ensure customer proximity

Employees–A diversified and fairly compensated workforce empowered to impact their world–O ur leaders are equipped and trained for the future through targeted leadershipprogrammes– Targeted technical and functional skills development and trainee programmes–S trong talent and succession planning offering broad career opportunities

Shareholders–S eventeenth consecutive increase in the dividend since our listing on the Swissstock exchange¹– I ncrease in share priceInnovators– Driving cross-divisional synergies and choices across innovation portfolios–C reating value through innovation to support customers today and tomorrow– E stablishing strategic partnerships in different innovation ecosystems–E xploring business applications enabled by new digital trends

15

Outcome 2017
Enhancing our position in naturals capabilities with theacquisitions of Activ International and Vika B.V.
Opening of new creative centre in Mexico City and
GBS centre in Kuala Lumpur

11,170 jobs worldwide
600 leaders nurtured through the Leadership Senses
programme
Since 2012, 90% of top positions are internally staffed
CHF 58.00 proposed dividend¹
CHF 20,794,035,672 market capitalisation

MISTA programme started: focusing on delivering
services to start-ups
One-time investment in Sensorwake
A three-year collaboration with CentraleSupélec

Suppliers–L ong-term partnerships and direct presence and collaboration in countries oforigin with producers and suppliers– Partnering with suppliers to reduce the carbon footprint of purchased goods
and services– Unlocking capabilities through supplier-enabled innovation in order to boost
our mutual innovation power

Communities–S upporting local communities from which we source through social andenvironmental projects–L ocal Green Teams engaged in social activities in the communities in which we
operate–S upporting the Givaudan Foundation to safeguard the future of communities andtheir fragile environment

SOMAVA, a new joint venture agreement with Henri
Fraise & Fils. 100% of our Madagascar vanilla beansfrom 2017 harvest will come from this new JV
Supplier partnerships and long-term agreements tosecure supply and reduce price volatility

Fair for Life certification for our clove leaf oil production
Active Green Teams on 61 Givaudan sites
A total of CHF 1,503,925 was directed to charitablespending for local communities

Internal control mechanism
Sustainability

Regulation

1. Subject to shareholder approval at the AGM on 22 March 2018.

Givaudan – 2017 Annual Report

16 Strategic value creation Our
Subtitle
value chain

Our value chain
Focusing on our customers

g

e
th

br

Our 2020 ambition of ‘Responsible growth. Shared success.’ is acommon goal that is about creating and sharing success withour customers. For us, success depends on how we best place
our customers at the centre of our strategy, our execution andour day-to-day activities. We seek to be recognised by ourcustomers for the way we truly engage with them across all
touch points in our value chain. We know the importance ofbeing able to customise to the needs of our global, international,
regional and local customers.

Customerorders

ief

Ra
w
ma
te
ria
ls
Ser
vic
es

ur

W

So

in

ni

n

We aim to deliver innovative,
sustainable and high quality
products to our customers,
creating value through a superior
customer experience.

ci nCreati

on

g

ch

sear

Su

Re

P ro duct ion

Customerpartnerships

ly

ng

pp

D
i
s
co
ve
ry
Co
n
s
u n d ume
er
r
s
t
an
di

Cash flows

Finance ouroperations

Givaudan – 2017 Annual Report

Returns toshareholders

Re-invest
in innovation

Strategic value creation Our capabilities 17

Our capabilities
Delighting consumers withcreative solutions

Consumerunderstanding

Creation

Innovation

Operational
excellence

We travel the minds andlives of consumers aroundthe world to create
uniquely relevant anddifferentiated tastes andscents for our customers’
brandsWe are motivated every
day to inspire delightand touch consumers’emotions

Our culture ofinnovation drives us toenhance our competitive
advantage sustainably,
create new horizons forour business and offer
leading-edge solutions
to our customers

Our global operations andrapid speed to market makeus a partner of choice,at our customers’ service
wherever they may be,whenever they need us

Global team experts in
category understanding,cultural insight andsensorial decoding

A team of passionate
flavourists and perfumers

Pioneering research anddevelopment teams

Global spread of operations,with local presence allowing
rapid speed to market

Close partnership withour customers

Focus on the science oftaste and smell

Unique product paletteand ingredients

Broad product offering fordiverse customer portfolio

Insights across countries,
life-stages and gender
Agile global consumertesting network

Supply chain excellence,
addressing customers’ needs
Sustainable sourcing of
raw materials

Givaudan – 2017 Annual Report

18 Strategic value creation Our
Subtitle
2020 strategy

Our 2020 strategy
Responsible growth. Shared success.

Our 2020 ambition is about creating
value for our stakeholders throughsustainable and responsible growth
and about shared success.
Being the partner of choice for our customers is a strategic
ambition, and the measure of this ambition is the value wecreate with customers through sustainable, responsible growth.

Our 2020 ambition is to create further value through profitable,
responsible growth by building on the three strategic pillars of
growing with our customers, delivering with excellence, andpartnering for shared success. This growth ambition translates
into financial targets of an average 4 – 5% sales growth and an
average 12 – 17% free cash flow over a five-year period by 2020.
Two years into our strategy, we remain on track to achieve
our financial targets and continue to make strong operational
progress in each of our strategic pillars.

Part of being the partner of choice is shared success with our
employees, suppliers, and our partners in science and technology,
all of whom are critical in delivering on this ambition.

4 – 5%

Average organic
sales growth 1

12 – 17%

Partnerof choiceGrowing withour customers

Deliveringwith excellence

Partnering forshared successHigh growthmarkets

Average free cash
flow as % of sales 1

Health andwell-being

Innovators

Suppliers

PeopleCommunities

Excellencein execution

Consumerpreferredproducts
1. Over a five-year period by 2020.

Givaudan – 2017 Annual Report

Integrated
solutions

Strategic value creation Growing with our customers

19

Growing with our customers
Leveraging capabilities to drive success

4.9%

Organic
sales growth

Success story

With customers at the heart of our business, we leverage ourknowledge of markets and consumer preferences to help
customers grow their brands.

Celebrating a flagship site

We set an ambitious financial target of 4 – 5% average organic
sales growth over the five-year period by 2020, and are well on
track in 2017 with sales of CHF 5,051 million, an increase of 4.9%
on a like-for-like basis.

Since opening in 2012, our Makó manufacturing facility in
Hungary has enabled us to meet increasing customer
demand for speed, agility and quality. With its large
capacity of production and its high level of automation,
the site has reached new standards in delivering withexcellence for our customers.

High growthmarkets
We focus our resources on further building our presence inmarkets where we see high growth opportunities and canaccompany our customers in growing their business.

Celebrating five years of operations, Makó has achieved
many milestones in key areas such as service, quality,
cost, safety and sustainability. The site not only
represents Givaudan’s leading position in the industry,
but also demonstrates to customers how we constantly
strive to deliver a superior customer experience.

Key achievements in 2017:–– Celebrating Silver Jubilee in Singapore. Our site inSingapore celebrated a great milestone: 25 years of successand achievement in the market.
–– New fragrance encapsulation centre in Singapore. With
foundations laid and operations expected to start in 2018,
the centre will enhance our leadership in encapsulation
technology and production capabilities.

Givaudan Flavour production site, Makó, Hungary–– Fragrance Creative Centre opened in Mexico City.
Strategically situated close to key customers and theirmarkets, the new centre offers expertise in fragrance
creation together with custom-built fragrance evaluation
services.
–– China fragrance production hub. Foundations werelaid during the year for our new facility in Changzhou,
Jiangsu province, which will substantially increase ourmanufacturing capacity in China. With a total investmentof about CHF 100 million, it is our largest investment in
China to date.

Givaudan – 2017 Annual Report20

Strategic value creation Growing with our customers

Success story

Cultivating innovative
thinking and sharing
Our new Fragrance Creative Centre in Mexico City
provides an environment that cultivates innovative
thinking, sharing and collaboration while bringing us
closer to key customers and their markets.
With about 2,800 square metres of space, the new centre
hosts our creative and development teams, applicationand technology labs, marketing and consumer market
research, as well as our commercial teams for Mexico andCentral America. It will play an important role by offeringexpert craftsmanship and a deep knowledge in fragrance
creation together with custom-built fragrance evaluation
services to deliver the finest quality perfumes.
Our business in Mexico began in 1949 and since thenwe’ve been innovating and developing as consumers’
tastes change and evolve. Today, by enhancing ourcreative capabilities in Mexico and Central America, weare supporting long-term business growth in the region,a key market in our 2020 strategy.

Health andwell-being
There are many opportunities for us to provide customers withsolutions to help them meet the increased demands ofconsumers around nutrition and healthier lifestyles.
Key achievements in 2017:–– Taste attributes playing a key role in the success ofhealthy products. We made significant headway supporting
customers in many areas of taste including thinking beyond
sugar replacement, and advancements in taste technologies
to deliver delicious plant and dairy proteins in nutritional
beverages and meat analogues.
–– Awards for Revivyl™. We made progress with microbiome,
winning two major industry awards for a uniquemicrobiome-based ingredient and gaining market success.
–– Partnership with Draco Natural Products. A strategic
partnership was established for the development of a new
proprietary line of bioactive botanical ingredients, based on
Chinese traditional medicine, for our Active Beauty business.
Draco’s expertise in effective naturally derived products willbring innovative solutions to our ingredients portfolio.
–– BisaboLife™ launched by Active Beauty. This sustainablemolecule, produced by an exclusive fermentation process, isfully bio-sourced and cares for a sensitive skin and scalp.

Success story

New Fragrance Creative Centre, Mexico

Thought leadershipin sustainable foods
We have a comprehensive strategy addressing growing
need and demand for natural ingredients, clean labels,sustainability and products that support health andwell-being, with a strong focus on Naturals.
Part of communicating our expanding Naturals
capabilities and thought leadership in this area wasthrough sponsoring and presenting at the four
Sustainable Foods Summits during 2017 – in San
Francisco, Amsterdam, São Paulo and Singapore – where
we had the opportunity to contribute to discussions on
key sustainability topics with senior executives fromacross the industry. This partnering for shared successwill help us to grow with our customers, a key pillar ofour 2020 strategy.

Givaudan – 2017 Annual ReportStrategic value creation Growing with our customers

Success story

Success story

Beauty from the natural world

Reinventing citrus

BisaboLife™ meets demands from consumers who areincreasingly integrating health and well-being into their
daily lives and are aware of sustainability concerns. For
our customers, it provides an innovative solution to meetthese demands by allowing them to replace ingredientsfrom unsustainable sources. Brands love this new
biosourced and natural soothing material which helps
care for consumers with sensitive skin.

We have modernised this olfactive family by sourcing
the best qualities at origin and combining them with ourcreative approach of crafting with purpose. And we havecombined different crafting techniques to deliver anolfactive vision for our perfumers, resulting in an
exclusive citrus collection appealing to customers for
its differentiation of top notes to base notes.

In our search for sustainable alternatives for the beauty
market, we have launched a new ingredient that is fully
bio-sourced and takes care of sensitive skin and scalp byfortifying and soothing the skin while restoring its comfort.

21

The citrus family is an important part of our perfumers’
palette, and we are re-inventing these ingredients toprovide building blocks for our creative teams so they
can be even more inspired.

The new ingredient brings together our knowledge andexpertise in science and technology to innovate
responsibly, and we are committed to developing new
and innovative products for our customers that respectsustainable processes as well as the environment.

Consumerpreferred products
We put customers at the heart of what we do, making themfeel valued, confident and understood. We are a true partner
at each step of the creation and value chain.
Key achievements in 2017:–– Expanding our natural flavour portfolio. Our procurement
strength in naturals and our existing knowledge base andexpertise in natural flavourings combined to position us as
our customers’ naturals solutions provider.
–– Creating awareness in naturals. Unique posts about
naturals were shared across all of the Company’s social
media channels as part of Flavour Division’s digital campaign,designed to showcase our expanding capabilities in natural
flavours and natural food solutions.

– Reinventing citrus. We source the best qualities of citrus
essential oils from Italian suppliers and with innovative
crafting technologies to create new exclusive ingredients:
seven ingredients have been added to our perfumers’
palettes bringing new olfactive signatures to consumers fromfizzy green notes to long lasting citrus effect.
–– Negotiations to acquire Expressions Parfumées. Thisacquisition will expand our presence with local and regionalcustomers, and grow our capabilities in natural ingredients.

–– Condé Nast partnership. We trained students in fragrance
appreciation and understanding at Condé Nast’s Center ofFashion & Design in Shanghai, engaging Chinese consumers
in the universe of perfume.

Givaudan – 2017 Annual Report

22 Strategic value creation Growing with our customers

Success story

Success story

Consumers demand naturals

Growing our portfolio
beyond flavours

Naturalness is an important demand driver in today’s
FMCG markets, with consumers increasingly looking for
products they can trust from recognised natural sources.
Natural flavours make up a large part of Givaudan’s global
flavour sales, and over 90% of our innovation resources are
dedicated to research in naturals. Sales of natural flavours
are growing rapidly with 43% of consumers considering an‘all natural’ claim important to their purchasing decisions.
Our recent strategic acquisitions, procurement strength
in naturals and existing knowledge base and expertise innatural flavourings make us our customers’ naturals
solutions partner.

Integrated
solutions
We look at opportunities to grow our business through waysthat go beyond our core flavour and fragrance capabilities,
enhancing the Company’s value proposition to customers andcreating new avenues for growth.
In 2016 we completed the acquisition of Spicetec Flavours &Seasonings, strengthening the breadth of our industry-leading
natural ingredients, flavour and taste solutions. In 2017 we
further continued to expand our capabilities in naturals andintegrated solutions, bringing added value to customers. These
acquisitions included:–– Activ International, acquired in January, which strengthens
our capabilities in natural savoury solutions and extracts;–– Vika B.V., acquired in September, which extends ourportfolio of natural dairy solutions and extracts;–– Centroflora Nutra, the nutrition division of CentrofloraGroup, which will further build our global offering of natural
extracts and expand our presence in Brazil. We announced
our intention to acquire this company in September.

Givaudan – 2017 Annual Report

Givaudan seeks to ensure responsible growth and sharedsuccess for shareholders, customers and all key
stakeholders. Part of this growth strategy is integrated
solutions and naturals, where we can grow our businessin ways that go beyond our core flavour and fragrance
capabilities.
In naturals, for example, our existing knowledge andexpertise in natural flavours has been strengthened evenfurther with the recent acquisition of companies thatbring complementary capabilities to enhance ourcustomer offerings.
The portfolios of these companies – Activ International,
Vika B.V. and Centroflora Nutra – strengthen our
Company’s value proposition to customers and enable
new opportunities for growth in our natural flavour
offerings. For Givaudan, Activ brings a range of naturaland organic flavours; Vika brings a broad set of natural
dairy and savoury solutions; while Centroflora Nutra
brings manufactured botanical extracts and dehydrated
fruits.
It’s all part of our strategy of growing our businessthrough naturals and integrated solutions.

Strategic value creation Delivering with excellence

23

Delivering with excellence
Driving excellence across the value chain

11.8%

Free cash flow
as % of sales

With customer needs in mind, we drive excellence across thevalue chain in delivering our products, services and businessprocesses.
We have set an ambitious financial target of 12 – 17% average
free cash flow as a percentage of sales and, with 11.8% free cash
flow in 2017, we are on track to achieve our 2020 target.

Excellencein execution
Givaudan Business Solutions
Givaudan Business Solutions (GBS) is the foundation of ourcommitment to deliver with excellence and is designed to
improve internal efficiencies, leverage best practices fromacross the organisation and increase our agility. GBS will enable
us to offer our customers a superior experience and contributeto meeting our 2020 financial targets.

Success story

Welcoming our new GBS
delivery centre in Kuala
LumpurWe officially opened our new Givaudan Business
Solutions (GBS) delivery centre in Kuala Lumpur at theend of 2017. The centre is strategically situated in
Malaysia to take advantage of its talent and technology.
Initially focusing on finance and procurement services,
the centre will begin implementing the full range of GBS
activities in 2019 and be home to the business services
and solutions that will form a platform for the Company’s
growth in this region.

We have a comprehensive approach supporting theorganisation during GBS implementation, and we are building
on our strong position to create the structure that best fits
Givaudan, doing so progressively over the next three years.
Key achievements with GBS in 2017:–– Implementation started. We started the implementationof GBS for pilot sites in Europe and for a limited scope ofactivities in Asia Pacific.

New GBS delivery centre in Kuala Lumpur–– Activities moved. The activities of the former Givaudan
Finance Services were moved into GBS, with the Budapest
and Buenos Aires locations established as the GBS centres
for Europe and the Americas respectively.
–– Asia Pacific centre opened. Kuala Lumpur, Malaysia isthe location of the GBS centre for the Asia Pacific region.
The centre was inaugurated in December 2017.

Givaudan – 2017 Annual Report

24

Strategic value creation Delivering with excellence

Information Management & Technology (IM&T)
As part of GBS, our IM&T teams offer continued support to ourbusiness. By optimally leveraging digital trends and technology,
they develop differentiating services and new ways of working
with our customers, partners and employees. This is achievedby using state-of-the-art technologies in processes such as
supply chain, master data management and procurement tomake them faster and smarter.
Key achievements for IM&T in 2017:–– CentraleSupélec collaboration. We established a threeyear partnership with this French institute of research andhigher education in engineering and science which will focus
on data science applied to our world of taste and smell.
–– GBS enablement. We were able to offer GBS the best of
starts, thanks to the delivery of digital solutions in areas suchas advanced planning and service management, leveraging
artificial intelligence and robotics process automation
techniques.
–– Soliance, Libragen, Induchem France and Spicetec
integrated. These recently acquired companies were
integrated into Givaudan systems, in support of our 2020
strategies.
–– Educative beauty app developed. A new app for Active
Beauty is to be used by experts to share Company advancesin scientific expertise with customers and consumers
worldwide.
Superior customer experience
From innovation to sales, our business divisions drive initiatives
to ensure we deliver with excellence and offer a superior
customer experience.
Key achievements in 2017:–– Superior Customer Experience (SCE). Our Flavour Division
introduced SCE, engaging all employees through an SCE
programme. SCE is about making our customers feel valued,
confident and understood, by creating positive impact andconsistently great experiences at all points of contact.
–– SCE core principles. Six core principles make it easier for
Flavours employees to understand SCE. These core principles
are anchored in our DNA, define our behaviour in theworking environment and help us build our customer-centricculture. For employees in all roles, the principles make iteasier to understand what SCE means.
–– Top supplier awards. Consumer products and finefragrances customers from around the world awarded us
for our creativity, sustainability and collaboration.

Givaudan – 2017 Annual Report

Excellence in operations
We are fully committed to excellence in climate action and are
implementing an ambitious agenda in taking action for theenvironment across our operations and beyond.
Key achievements in 2017:–– Science based targets. We announced ambitious sciencebased targets to reduce absolute Scope 1 and 2 GHG
emissions by 30% between 2015 and 2030. We also aim to
reduce Scope 3 GHG emissions by 20% over the same period.
–– CDP ‘A’ listing. For the third year, we gained a listing on
CDP’s ‘A’ list of companies leading the corporate response to
climate change.

Success story

Delivering excellence inmanufacturing operations
The Flavours manufacturing network has 34
manufacturing and six distribution sites which produce
hundreds of thousands of tonnes of ingredients andfinished products each year.
This is a vast network and every improvement inefficiency, responsiveness, quality, sustainability andsafety helps us move towards greater excellence inmanufacturing operations.
Flavours Operations uses Lean methodologies to simplify
processes and reduce waste, helping our teams to deliver
efficiently and effectively. Our operations costs, forexample, are now the lowest they have ever been.
In 2017, our Operations teams in Singapore and São Paulo,
Brazil were both awarded Lean Silver-Gold certification,
the first Givaudan Flavours manufacturing sites globallyto achieve this accreditation.

Strategic value creation Partnering for shared success

25

Partnering for shared success
Building to be the partner of choicePartner of choice

We nurture and value true partnerships with our key stakeholder
groups for shared success. These collaborations, which drive
responsible and sustainable growth, are with innovators,
suppliers, employees and communities in which we operate.

Innovators
Driven by a culture of innovation, we create new horizons forour business and offer differentiated and sustainable solutions
to our customers. By connecting and collaborating, we want tostrengthen internal and external collaborations for a Companywide, holistic approach to partners, customers and suppliers.
Key partnerships in 2017:–– Start-ups targeted. We piloted MISTA, a programmethat focuses on delivering services to start-ups primarily
in the Bay Area of San Francisco and expands our New
Product Development business model which targets
emerging start-ups in the food and beverage industry.
–– Academic partnership. Students at the University ofCalifornia, Berkeley are involved in a market opportunity
to transform the meat industry. We are helping students
create flavours and aromas for enticing non-meat proteins.
–– Sensorwake investment. A one-time investment wasmade in Sensorwake, a French start-up company leading
innovation in the consumer technology sector and which is
responsible for creating the world’s first olfactive alarm clock.
Our divisional and global Science & Technology teams drive
value in innovation. Achievements by these teams during 2017
helped to create value through innovation, supporting andgrowing the business today and looking for opportunities
for business growth tomorrow and the day after tomorrow:–– Freshness captured. Launch of FreezeFrame® in Flavours:
a technology for capturing the moment when ingredientsare at their freshest. It brings a fresh taste and vibrancy toconvenience food as if fresh ingredients were just added.
–– Cheese capabilities boosted. We strengthened ourcapabilities in cheese with the acquisition of Vika.
–– Protection on delivery systems expanded. We continued
to build our delivery systems portfolio with the granting ofseven additional patents and six newly filed.
–– Mechacaps® Kiln launched. This is a novel delivery
technology for controlled fragrance release in powder andliquid detergents, including single unit doses.
–– Global Beauty Industry Award. We gained Best Colour
Cosmetics Ingredient award for PrimalHyal™ Gold, a newingredient from Active Beauty. Created by means ofsustainable manufacturing processes, the ingredient allows
the incorporation of hyaluronic acid in oil-based formulas
such as pressed powder, body oil and suncare oil.
–– Juicy bloom booster. A very potent and diffusive fruity
and nature-identical odorant, Esterly™, was added to theperfumers’ palette. It supports and boosts juicy, matured
and fruity impressions, and adds a remarkable radiance andsignature to many perfumer creations.
–– Sleep quality optimised. We launched DreamScentz™, apatent-pending Fragrance technology to optimise the qualityof sleep. Through the link between fragrance, positive moodstates and a proper night’s sleep, we strive to provide
breakthrough solutions for people to sleep better.
–– Fine Fragrance with skin protection announced. Active
Beauty unveiled a concept called [Yu], a patent-pending
innovative fine fragrance featuring the active ingredient
Revivyl™, a holistic skin renewal accelerator.
–– Matcha tea inspired. Tea Dione™ was added to our
perfumers’ palette. It originates from a successful research
programme as a nature-identical version of a molecule foundin matcha tea and praised for its clean, milky matcha green
tea note refreshed with anisic facets.
Givaudan – 2017 Annual Report26

Strategic value creation Partnering for shared success

Success story

Success story

Adding vibrancy withfreshness flavour solutions

MassChallenge:
strengthening collaboration

We all know that ‘first burst’ of freshness in foods, thevibrancy of freshly added ingredients. But it’s a joy that
may not always be there, especially in convenience foods.

Becoming a founding partner of MassChallenge
Switzerland in 2016 was a key step for us in fostering aculture of open innovation. It’s a great opportunity toconnect and collaborate with hi-tech start-ups that could
transform our business and shape the future industry
landscape.

Our Flavours teams have developed a range of freshness
flavour solutions using FreezeFrame®, a technology tocapture freshness and add taste and vibrancy toconvenience foods.
Launched in 2017, initially in a range of seven top notes
and taste solutions, the new innovation fits with ourexisting flavour solutions and is a direct response to strong
consumer demand for fresher tasting convenience foods.
It’s an innovative approach that grew from Givaudan’s
Chef’s Council in New York, where we explored with someof the world’s leading chefs what makes a freshly preparedeating experience. It helped us understand what freshness
perception means and translate the taste of freshly
prepared food into vibrant flavour solutions that will
revitalise the eating experience of convenience foods.

During the MassChallenge accelerator programme in2017, for example, we talked with several finalists, one ofthem being the Swiss start-up Sleepiz, which offers
contact-free solutions to measure a patient’s vital signs
to enable a diagnosis of sleep disorders in the homeenvironment. From 2018, the MassChallenge platform
will be used as a foundation for the European Institute of
Innovation & Technology (EIT) Food Accelerator Network.

MassChallenge awards ceremony, November 2017

Success story

DreamScentz™ – offering sweet(smelling) dreams
Waking from your night’s sleep feeling relaxed, revitalised
and refreshed may no longer be just a dream, thanks toresearch from Givaudan that demonstrates the power offragrance in improving the quality of sleep.
A patent-pending technology that uses the power ofscent to enhance the quality of sleep, DreamScentz™ isbased on the link between fragrance, positive moodstates and a proper night’s rest. With consumers
increasingly looking for help to gain a better night’s sleep,
DreamScentz™ could be the innovative breakthroughsolution sought by people around the world. It’s about
turning the power of scent into a science that will also
add value to our customers’ products.

Givaudan – 2017 Annual ReportStrategic value creation Partnering for shared success

27

Success story
Suppliers
We seek to generate maximum value with suppliers throughlong-term and sustainable partnerships. These collaborations
aim to create mutual value on supply continuity, quality, cost,
innovation, responsibility and our ability to deliver the best
ingredients. As a result, they enable us to differentiate our
product offering to customers.
Key achievements in 2017:–– Supplier partnerships extended. We created additional
partnerships and long-term agreements with suppliers tosecure supply and reduce price volatility.
–– ‘Sourcing for Shared Value’ introduced. A comprehensive
approach was announced that further strengthens ourlong-term commitment to sustainable procurement
practices.
–– Vanilla bean agreement. A joint venture agreementwith Henri Fraise & Fils, called SOMAVA, gives us access to
70 years of experience in sourcing and curing vanilla beansfrom Madagascar.
–– Guarana supply secured. This agreement concerns thelong-term supply of guarana and helping local communities
by working in partnership with a local supplier in Brazil tosupport a cooperative of over 80 producer families in thesouthern Bahia region. The venture contributes to securing
a stable source of income for the producer families.
–– Supplier Enabled Innovation. A new Procurement
Innovation team was appointed to accelerate the creationof mutual value through Supplier Enabled Innovation.
–– Indirect Materials and Services. We worked closely with
suppliers in several areas in Indirect Materials and Services
such as logistics, maintenance and packaging to identify andimplement joint improvement projects.

Sourcing for shared value

Givaudan is committed to ensuring that all of our raw
materials are produced in a way that respects both,people and the environment. Our comprehensive
approach, Sourcing for Shared Value, builds on thislong-term commitment to sustainable procurement
practices. It reinforces our contribution to preserving theenvironment, stimulating the well-being of communities
from which we source, and safeguarding resources forthe long term.
By embedding social and environmental purpose in theway we source, we can best respond to our customers’
evolving needs and the increasingly stringent demands ofconsumers for more sustainable, healthier anddifferentiated products.
Success story

Creating mutual value

Close collaboration with suppliers and driving crossdivisional synergies are two factors enabling us to create
new value. An example of Supplier Enabled Innovation
during the year was an exclusive partnership with aflavour supplier that allows our perfumers access toinnovative, natural and sustainable apple oil.
Taking the purée from juice production to craft thisdelicious apple oil offers a super-premium product thatbrings a true, natural green apple top note to thefragrance pallet for the first time. It’s the sort of valuecreating collaboration that is a focus for our Procurement
Innovation team, formed in 2017.

Givaudan – 2017 Annual Report

28 Strategic value creation Partnering for shared successKey achievements in 2017:
PeopleWe are committed to fostering a great place to work where
our people are motivated to perform at their best, impact theirworld and contribute to the Company’s success. To ensuresustained success, we develop the skills of our people, nurturea pipeline of industry experts and future leaders, and strongly
promote a diverse workforce that works in an agile andcollaborative way.

Success story

Engaging creativity
in attracting talent
Designing engaging material to attract today’s talentand finding ways to strengthen our employer brand in acreative way, has helped promote Givaudan as employerof choice – both on a global and local level. During 2017,
we launched an engaging employer branding film anddeveloped customised digital material supporting local
recruitment activities. This multimedia material included
employee photographs and testimonials, a dedicatedwebpage as well as advertisements on a mix of digitalchannels. At the HVG Job Fair in Budapest, we won the
prize for “most creative approach to attracting talent”,
an encouraging recognition of our creativity.

–– Talent management developed. We continued to build
development plans in our talent management process. Our
Global HR talent council met four times during the year to
discuss cross-business talent development. The Executive
Committee, in addition to the in-depth talent reviews at the
beginning of the year, held dedicated talent reviews at theEC meetings throughout 2017.
–– Masterclasses extended. Our investment in targeted
technical and functional training continued with Masterclasses
now in place in both our business divisions. We also organised
academies for finance and controlling, and IM&T.
–– Leadership Senses completed. Designed to strengthen ourleadership capabilities, four Leadership Senses programmes
are now established, completing the rollout. Over 600
leaders have benefitted from the programme’s focus on
specific leadership needs.
–– Flavourist trainees graduated. Our global Flavourist
School programme ensures all flavourists are trained in thesame curriculum. Graduation of flavourist trainees took place
in EAME and Asia Pacific.
–– Employer branding boosted. An employer branding film
was launched to strengthen our global employer brand.
–– ‘Pay for Performance’ strengthened. We strengthened our‘Pay for Performance’ philosophy and increased transparencyof pay linked to individual job levels.
–– ONE Givaudan piloted. An engaging global onboarding
programme called ONE Givaudan was piloted. A first for us,
the programme reached 90 participants in pilots in fourglobal locations.

www.givaudan.com – careers – job search – budapest

Givaudan – 2017 Annual ReportStrategic value creation Partnering for shared success

Success story

ONE Givaudan
Onboarding new employees
Our people bring enormous value and strengthen ourbusiness. This is why it is important for us to integrate
our new employees from the very start. We arecommitted to providing a solid foundation to set them up
for success.
Launched in 2017, ONE Givaudan offers a holistic andengaging experience for new employees across all
regions. Global onboarding, a first for us, ensures thatnew joiners acquire fundamental knowledge about our
Company and its rich heritage, our business and our DNA.
Internal experts deliver the sessions with passion,communicating their expertise and the value we bring toour customers.
Participants have shared an appreciation of the content
and the opportunity to network with experts and peersfrom across the organisation. They leave with a great
sense of pride, motivated and engaged to begin theirjourney.
“This is such a great opportunity to leverage the diversityof our new joiners across our regions and introduce themthe value chain that puts the customers at the heart ofeverything we do. We have created a shared experience
where we come together to be part of ONE Givaudan.”Michèle Telio, Global learning and development
consultant.

––

29

Communities

Local communities where we source raw materials contributeto our business. We are committed to working together withthese communities in causes that benefit them and our raw
material supply chain. Our cross-functional site Green Teams
are dedicated to driving local sustainability activities.
Key achievements in 2017:–– Waste management progress. Our Cuernavaca site in
Mexico continued to make progress towards theirsustainability goal of zero waste to landfill by 2020. Furthersite initiatives in 2017 included identifying local waste
management partners who can guarantee disposal withpositive environmental effects.
–– Recycling citrus oil. Our Riverfront site in Pudong, China
has found ways of reusing citrus oil, a by-product of flavours
production. Two local companies now use the oil so we can
avoid incineration and related energy consumption.
–– ‘Year of Giving’. Employees in Dubai gave their support tothe ‘Year of Giving’ initiative by the United Arab Emiratespresident through blood donations and donations of clothes,
toys and books to labour camp workers.
–– Healthy eye programmes. Employees at our Jigani site inIndia continued their support for healthy eye programmes,
in partnership with the Vittala International Institute ofOphthalmology (VIIO) of Bangalore.
Disclosure 413 – 1

Success story

lifestyle@givaudan –it’s a winnerParticipants at ONE Givaudan

If you were lucky enough to visit our site in Dubai during
2017 you might have been surprised to see employees
dressed in the national costumes of countries around theworld, or cycling ‘around the world’ (statically), or evenwatching a movie. You might have even noticed themdancing, or cooking, or in yoga and meditation sessions.
Over 20 activities in three categories – wellness, nutrition
and fitness – were delivered over 12 months, helping 85
employees become fitter, healthier, engaged and fully on
board this enterprising initiative, lifestyle@givaudan.

Givaudan – 2017 Annual Report

30

Title Subtitle

Performance
review
Givaudan delivered a healthyfinancial performance in 2017
despite market challenges. This
performance is in line with our2020 financial targets and enables
us to maintain momentum increating long-term value creation
for all stakeholders.

In this section:

Givaudan – 2017 Annual Report

Performance review

32

Business performance – Group

33

Business performance – Flavour Division

34

Business performance – Fragrance Division

34

Capital markets

364.9% sales growth

like-for-like, excluding the impact of currency,
acquisitions and disposals

8.3% sales growth
in Swiss francs

CHF
EBITDA

1,089 million

21.6% EBITDA margin
11.8% free cash flow
as a percentage of sales

CHF

58.00

proposed dividend, subject to shareholder approvalat the AGM on 22 March 2018

32 Performance review Business performance

Performance review
Strong financial performance

Performance review – Group
2017

2016

PercentagechangeGroup sales

5,051

4,663

8.3%

Like-for-like sales growth (in %)

4.9%

4.2%

For the year ended 31 December, in millions of Swiss francs, except where indicated otherwise

Sales and results

Gross profit

2,250

2,128

as % of sales

44.5%

45.6%

EBITDA 1

1,089

1,126

as % of sales

21.6%

24.1%

Operating income

869

875

as % of sales

17.2%

18.8%

Income attributable to equity holders of the parent

720

644

as % of sales

14.2%

13.8%

5.7%
(3.3%)(0.7%)
11.9%

Balance sheet and cash flows
Operating cash flow

861

805

as % of sales

17.0%

17.3%

Free cash flow

594

597

as % of sales

11.8%

12.8%

Total assets

7,309

6,514

Equity in % of Total assets

48.4%

50.6%

Net debt

1,074

930

Leverage ratio (in %)

21%

19%

7.0%
(0.5%)
12.2%
15.5%

1.	EBITDA: Earnings Before Interest (and other financial income (expense), net), Tax, Depreciation and Amortisation. This corresponds to operating income before depreciation,amortisation and impairment of long-lived assets.
Note: Like-for-like excludes the impact of currency, acquisitions and disposals

Direct economic value generated and distributed 1
2017

2016

PercentagechangeRevenues

5,093

4,738

7.5%

Operating costs(3,073)(2,830)

8.6%

(79)

(106)

(25.5%)For the year ended 31 December, in millions of Swiss francs

Payments to governments
Payments to providers of capital

(557)

(546)

2.0%

Employee wages and benefits(1,141)(1,024)

11.4%

243

232

4.7%

Economic value retained

1.	Value added is defined as the value created by the activities of our business minus costs relating to operations, payments to governments and providers of capital, andemployee wages and benefits.

 Disclosure 102 – 7, 201 – 1Givaudan – 2017 Annual ReportPerformance review Business performance 33

Business performance – Group

Givaudan completed the year with good business momentum
and with the project pipeline and win rates being sustained athigh levels. The good growth was achieved across all productsegments and geographies, with recent acquisitions all
contributing positively. The Company continues to implement
price increases in collaboration with its customers to fullycompensate for the increases in input costs.
Group sales
Givaudan Group full year sales were CHF 5,051 million, an
increase of 4.9% on a like-for-like basis and 8.3% in Swiss francs
when compared to 2016.
Gross margin
The gross margin was 44.5% compared to 45.6% in 2016.
Despite continued productivity gains and cost discipline,
the decline in the gross margin was mainly due to the dilution
arising from the pricing actions to fully compensate forincreased input costs.
Earnings before Interest, Tax, Depreciation
and Amortisation (EBITDA)
The EBITDA was CHF 1,089 million in 2017 compared to
CHF 1,126 million in 2016, a decrease of 3.3% in Swiss francs and3.8% in local currency. The EBITDA margin was 21.6% in 2017
compared to 24.1% in 2016. The reduction is largely attributed
to the costs incurred in relation to the Givaudan Business
Solutions (GBS) programme with full year costs of CHF 107
million, of which CHF 47 million was cash, being partially offset
by non-cash gains resulting from changes in pension plans of
CHF 20 million. As a reminder, in 2016 the Group recognised a
net one-off non-cash gain of CHF 62 million resulting mainly
from changes in pension plans.
Operating income
The operating income was CHF 869 million compared to
CHF 875 million, a decrease of 0.8% versus 2016. Whenmeasured in local currency terms, the operating income
decreased by 1.5%. The operating margin decreased to 17.2%
in 2017 from 18.8% in 2016.
Financial performance
Financing costs in 2017 were CHF 42 million, versus
CHF 51 million for the same period in 2016. In 2017, the Group
continued to refinance at lower interest rates. Other financial
expense, net of income, were CHF 32 million in 2017, versus the
CHF 40 million reported in 2016, with increased hedging
costs offset by reduced currency volatility in markets where
currencies could not be hedged.
The income tax expense as a percentage of income before taxes
was 9%, compared to 18% in 2016 mainly arising from lower
tax expenses in the United States. Excluding items of a nonrecurring nature, the income tax expense as a percentage ofincome before taxes was 15%.

Net income
The net income increased to CHF 720 million in 2017 from
CHF 644 million in 2016, an increase of 11.7%. This results ina net profit margin of 14.2%, versus 13.8% in 2016. Basic earnings
per share increased to CHF 78.18 versus CHF 69.95 for thesame period in 2016.
Cash flow
Givaudan delivered an operating cash flow of CHF 861 million
in 2017, compared to CHF 805 million in 2016. As a percentage
of sales, working capital was essentially flat when compared
to 2016.
Total net investments in property, plant and equipment were
CHF 189 million, compared to CHF 135 million in 2016. During
2017 the Group continued its investments to support growth inhigh growth markets, most notably the new flavours savoury
facility in Pune, India, the Zurich Innovation Centre (ZIC) andthe fragrance division investments in Singapore and China.
Intangible asset additions were CHF 53 million in 2017,
compared to CHF 40 million in 2016 as the Company continued
to invest in its IT platform capabilities, including those tosupport the introduction of the Givaudan Business Solutionsorganisation. Total net investments in tangible and intangible
assets were 4.8% of sales in 2017, compared to 3.8% in 2016.
Operating cash flow after net investments was CHF 619 million
in 2017, versus the CHF 630 million recorded in 2016. Free cash
flow, defined as operating cash flow after investments andinterest paid, was CHF 594 million in 2017, versus CHF 597 million
for the comparable period in 2016. As a percentage of sales,
free cash flow in 2017 was 11.8%, compared to 12.8% in 2016.
Financial position
Givaudan’s financial position remained solid at the end of
the year. Net debt at December 2017 was CHF 1,074 million,
compared to CHF 930 million at December 2016, with theincrease driven by the Group’s acquisitions and investment
programme. At the end of December 2017 the leverage ratio
was 21%, compared to 19% at the end of 2016.
Givaudan Business Solutions
In July 2017 Givaudan announced the details of the planned
implementation of Givaudan Business Solutions, a globalorganisation providing best-in-class internal processes andservices.
The introduction of Givaudan Business Solutions is fully on
track, with the first implementation steps expected in thefirst half of 2018 in Europe and in Asia Pacific.
In 2017, the Group incurred costs of CHF 107 million, of which
CHF 47 million was cash, in relation to the preparation andfirst steps of the Givaudan Business Solutions organisation.

Givaudan – 2017 Annual Report

34 Performance review Business performance

Dividend proposal
At the Annual General Meeting on 22 March 2018, Givaudan’s
Board of Directors will propose a cash dividend of CHF 58.00 per
share for the financial year 2017, an increase of 3.6% versus 2016.
This is the seventeenth consecutive dividend increase following
Givaudan’s listing at the Swiss stock exchange in 2000.

Business performance – Flavour Division

Within the segments there was good growth in Beverages,
Snacks and Savoury as main contributors to the positive
growth.

Sales
Flavour Division sales were CHF 2,708 million, an increase of
5.3% on a like-for-like basis and 11.3% in Swiss francs. Including
Spicetec, acquired in July 2016, Activ International, acquired in
January 2017 and Vika B.V. acquired in September 2017, thegrowth was 12.4% in local currency.

North America
On a like-for-like basis, sales in North America grew 8.5% in
2017. The strong performance was a result of new wins andgrowth of existing business in the Beverages and Dairy
segments.

From a segment perspective, Dairy, Snacks and Beverages
were the main contributors to the division’s growth, with all
segments in positive territory.
Asia Pacific and North America experienced robust growthwhilst Latin America was negatively impacted by the economic
situation in Brazil. Europe, Africa and the Middle East delivered
good growth, driven by Beverages, Snacks and Savoury. Allregions delivered a high level of new wins in the key segments.
As a result of the 2020 strategy, sales in Naturals increased atdouble-digit levels and in high single-digits in the Health &Wellness area.
The EBITDA increased by 15.4% to CHF 603 million from
CHF 523 million in 2016. The EBITDA margin was 22.3% in 2017,
up from 21.5% in 2016.

Europe, Africa and Middle East
Sales increased by 5.1% on a like-for-like basis, with double-digit
growth in Africa and the Middle East led by Egypt, Saudi Arabia
and Nigeria and single-digit growth in the markets of Central
and Eastern Europe, led by Turkey and Russia. The mature
markets of Western Europe grew moderately led by the Benelux,
UK, Ireland and Italy.

Latin America
Latin America sales increased by 1.5%, against a strong
comparable of 17.1% in 2016. Good sales momentum inArgentina and Mexico was offset by the negative result
related to the economic situation in Brazil.
Flavour Division – Sales
in millions of Swiss francs
2017

2,708

2016

2,433

Flavour Division – EBITDA
in millions of Swiss francs

2017 2017

The operating income increased by 23.9% to CHF 473 million in 2016 20162017 from CHF 382 million for the same period in 2016. The
2015 2015
Flavour Division – Operating income
operating margin increased to 17.5% in 2017 from 15.7% in 2016.

603
523

2014
2014 inmillions of Swiss francs

Asia Pacific20132013 2017
473
Sales in Asia Pacific grew by 3.8% on a like-for-like basis.
382
2016
Singapore, India, Philippines and Thailand delivered a doubledigit performance, whilst Australia delivered a high single-digit
increase. Despite challenging market conditions, China
Business performance – Fragrance Division
reported good growth in the second half of the year, whilst
Indonesia saw a decline versus strong comparables in 2016.
Sales
Fragrance Division sales were CHF 2,343 million, an increase
Growth in the mature markets was driven by strong doubleof 4.5% on a like-for-like basis and 5.1% in Swiss francs.
digit growth in Singapore and positive performance comingfrom Taiwan and Oceania.
Total sales for Fragrance Compounds (Fine Fragrances andConsumer Products combined) increased by 4.8% on a
Local and regional customers continued to grow strongly
like-for-like basis. In Swiss francs, sales of compounds increased
across the region, whilst from a segment perspective,
to CHF 2,036 million from CHF 1,933 million in 2016.
Beverages, Dairy and Savoury contributed significantly tothe overall growth.

Givaudan – 2017 Annual ReportPerformance review Business performance 35

Fine Fragrances sales grew 7.2% on a like-for-like basis, driven
both by strong new business and low erosion levels.
Consumer Products sales increased by 4.1% on a like-for-likebasis, driven by all customer groups and balanced growth inboth high growth and mature markets.
Sales of Fragrance Ingredients and Active Beauty increased by
2.8% on a like-for-like basis. Sales in Active Beauty grew double
digit, driven by strong sales of the Active ingredients andEncapsulation systems. Sales of Fragrance ingredients were flatversus last year as a result of an improved performance in thelatter months of the year.
The EBITDA of the Fragrance Division was CHF 486 million in2017 compared to CHF 603 million in 2016, despite consistentunderlying profitability. The reduction is largely attributed tothe costs incurred in relation to the Givaudan Business Solutions(GBS) programme with full year costs of CHF 107 million in 2017,
partially offset by non-cash gains resulting from pension
changes of CHF 18 million. As a reminder, in 2016 the division
recognised a net one-off non-cash gain of CHF 62 million
resulting mainly from changes in pension plans.
As a result, the EBITDA margin was 20.7% in 2017 compared to
27.0% in 2016.
The operating income was CHF 396 million in 2017, versus
CHF 493 million for the same period in 2016. The operating
margin was 16.9% in 2017 compared to 22.1% in 2016.
As part of the Group’s 2020 strategy to expand the capabilities
of its fragrance business, Givaudan announced on December 18,
2017, that it had entered into exclusive negotiations to acquire
Expressions Parfumées, a French fragrance creation house.

Consumer products
The Consumer Products Business increased by 4.1% on a
like-for-like basis with balanced growth in both high growthand mature markets. This performance was supported by asolid increase with international customers and sustained
growth with local and regional customers which experienced
double-digit growth in 2016.
On a regional basis, Latin America continued to deliver
double-digit growth with all customer groups against strong
prior year comparables. Asia recorded a sustainable increase
driven by international customers, with particularly strong
results in the South Asia sub-region across all productsegments.
In Europe, Africa and Middle East, sales growth was reportedon all customer groups and all sub-regions. Sales in North
America showed strong year on year growth against a highprior year comparable thanks to all customer groups andproduct segments.
On a product segment basis, home care delivered solid sales
growth, whilst Oral care and fabric care segments also
contributed to the performance.
Fragrance Ingredients and Active Beauty
Sales of Fragrance Ingredients and Active Beauty increased by
2.8% on a like-for-like basis. Sales of Active Beauty weredouble-digit driven by strong sales on the Active ingredientsand Encapsulation systems. Sales of Fragrance ingredientswere flat versus last year as a result of an improved
performance in the latter months of the year. Sales ofFragrance Ingredients in Europe and South-America recorded
solid growth, whilst in Asia and North-America the sales were
below prior year levels.

Fine Fragrances
Fine Fragrances sales grew 7.2% on a like-for-like basis led bystrong new business wins across all customer groups. In mature
markets double-digit growth in Western Europe was delivered
through new business and the solid performance of existingfragrances. North America sales grew against a strong prioryear comparable driven by high new business levels offsetting
erosion. Growth in high growth markets was driven by the
Middle East with a combination of new business and volume
gains at a number of customers and growth in Latin America
in the second half of 2017.

Fragrance Division – Sales
in millions of Swiss francs

Fine Fragrances enjoyed a successful awards season for Givaudan
perfumes around the world. Numerous awards have been
received in the USA, Latin America and Europe across both men’s
and women’s fragrance categories. These awards confirm theleading role in the fine fragrance industry and recognize
Givaudan’s capabilities in creating products that consumers love.

Fragrance Division – Operating income
in millions of Swiss francs

2017

2,343

2016

2,230

Fragrance Division – EBITDA
in millions of Swiss francs
2017

486

2016

603

2017

396

2016

493

 Management Approach (103 – 2, 103 – 3): Topic 201,
pages 32 – 35

Givaudan – 2017 Annual Report

36 Performance review Capital markets

Capital markets
Long-term value creation

Givaudan’s strong track record in
financial performance has createdsignificant value for shareholders,through a year-on-year increase in
the dividend paid to shareholders,
as well as through positive
share price development and share
repurchase programmes.
We are proud of the value we have created for ourshareholders since our Company was listed on the Swiss stock
exchange in 2000. It is a success that we seek to continue,
through the delivery of our 2020 strategy and throughinvesting in the future long term growth of our Company.

SharesGivaudan’s strong financial performance since 2000 has
resulted in significant value creation for shareholders in termsof ‘Total Shareholder Return’. Over CHF 20 billion in value has
been created for shareholders in the form of dividend
payments, share repurchase programmes and share priceappreciation since the Company’s spin-off in 2000.
At the end of 2017, Givaudan had approximately 30,202
shareholders (99% are registered), owning 62% of the capital.
The top 20 shareholders, registered and non-registered,owned 58% of the capital. Swiss and US shareholders held
approximately 57% of all shares.
Market capitalisation
Givaudan’s market capitalisation amounted to
CHF 20,794,035,672 on 29 December 2017 which was the last
trading day of the year. This corresponds to an increase of
20.69% compared to the previous year.

Dividend policy and dividend proposal
Givaudan is strongly committed to return surplus cash toshareholders. The dividend has risen year‑on‑year since 2000,
when the Company was listed on the Swiss stock exchange. In
2017, Givaudan’s free cash flow was CHF 594 million.
At the Annual General Meeting on 22 March 2018, Givaudan’s
Board of Directors will propose a cash dividend of CHF 58.00
per share for the financial year 2017, an increase of 3.6%
compared to 2016. If approved, this will be the 17 th consecutive
dividend increase following Givaudan’s listing on the Swissstock exchange.

Investor relations

Timely and responsible information is important in partneringwith our stakeholders to ensure transparency and continuously
raise awareness about our Company.
Members of our Executive Committee, together with ourInvestor Relations team, hold regular roadshows andconferences during the year to meet existing and potential
shareholders. Site visits, annual conferences and global
presentations help to further increase awareness and giveinformation on the value we create for all our stakeholders.
Details of these meetings and roadshows can be found on
our website.
w ww.givaudan.com – investors – shareholder information – investor calendar –showcasing investor events
2017

20,7942016Marketcapitalisation*in millions of Swiss francs

17,2302017

20,7942016

17,230*At the last trading day of the year

Givaudan – 2017 Annual Report*At the last trading day of the yearPerformance review Capital markets

37

Key share figures
For the year ended 31 December. In Swiss francs except for number of shares

Market capitalisation (in millions)

2017

2016

20,794

17,2309,233,586

9,233,586

Share price as at 31 December

2,252

1,866

Share price, highest

2,289

2,106

Share price, lowest

1,716

1,674

Earnings per share – basic

78.18

69.95

Total shareholder return (in %)

23.69

5.32

Number of issued shares

Share price development
in %
600
500
400
300
200
100
0
2000

2001

2002

Givaudan

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

SMI

Dividend per share and free cash flowin Swiss francs | in millions of Swiss francs

54
47

56

581

50

36

15.4
6.5

18.8

19.5

20

20.6

273

2002

Free cash flow

21.5

22
662

549

295

2003

289

2004

720
604

597

594

2016

2017

512
437

390

203

2001

17.6

8.1

7

340

2000

16.3

2005

262

2006

157

145

2007

2008

117

2009

2010

2011

2012

2013

2014

2015

Dividend

1. Subject to shareholder approval at the AGM on 22 March 2018.

Givaudan – 2017 Annual Report

38 Differentiating business enablers

Givaudan Business Solutions

Differentiating
business enablers
Creating value through excellencein areas central to our sustainablebusiness are the enablers thatdifferentiate us. These enablers
range from Givaudan Business
Solutions, our people and EHS to
supply, regulatory, complianceand risk management.

In this section:

Givaudan – 2017 Annual Report

Givaudan Business Solutions

40

From sourcing to supply

42

Our talent, performance and culture

44

Environment, health and safety

47

Risk management

49

Compliance

53

Regulatory and public policy56

10,000>
different
raw materials
sourced in over 100 countries

11,170 full time employees
working in 109 sites in 50 countries

0.33 lost time injury rate
down 68% since 2009

40

Differentiating business enablers

Givaudan Business Solutions

Givaudan Business Solutions
Creating a platform for the future

Givaudan Business Solutions
will improve internal efficiencies,
leverage best practices acrossthe organisation and increase
our agility to better deliver tocustomers.

In an increasingly complex and challenging market
environment, we constantly seek ways to remain competitivein the long term and create opportunities to grow alongside
our customers. We saw the need to proactively evolve ourinternal processes to be better equipped to meet the changing
needs of our customers and their consumers.
We took the decision to design and build Givaudan Business
Solutions (GBS), the foundation of our strategic pillar ‘deliveringwith excellence’, to further improve our operational efficiency,
increase our agility and reduce our internal complexities. It will

enable us to offer our customers a superior experience and,ultimately, enable us to meet our 2020 financial targets. We willbuild on our strong position to create the structure that best
fits Givaudan, doing so progressively over the next three years.

Innovative and efficient solutions and services

The acronym GBS typically stands for Global Business Services
and refers to an entity that is often outsourced, managing basic
transactional activities, but our GBS is unique. Givaudan
employees, who embrace our DNA and commitment to thecustomer, make up our GBS teams. The solutions GBS provides
are fully in support of and aligned with the business and aredesigned to enable the new and innovative ways of working
that will increase our effectiveness.
The solutions from GBS have been designed to bestraightforward and easy to use, leverage innovation to enable
us to work in new ways, and scalable and replicable across ourbusiness divisions and geographies. In addition, we designed
solutions that aim to reduce internal complexities and add
value to the business, allowing our people to focus more oncore activities and their professional development.

GBS will take some processes from each of the following areas

Integrated businesssolutions

Procurement, supply chain,Enterprise Data Management(EDM), Finance & Controlling

Givaudan – 2017 Annual Report

Best practices
and businesssolutions

EHS & Sustainability,
Continuous
improvement,
Finance & Controlling

Simple employee
solutions
IM&T
Human resourcesDifferentiating business enablers

At the heart of GBS, we have designed seamlessly integrated
Supply Chain, Finance, Procurement and Enterprise DataManagement (EDM) solutions that will bring direct value toour customers. To drive excellence in execution throughout
Givaudan, GBS will be the home to a common continuous
improvement approach shared by the divisions and functions
so that we can harmonise our activities, better leverage bestpractices and address improvement opportunities more
systematically. Finally, we will focus on bringing simplicity to
our internal customers in the areas of HR, IM&T, Controlling,
EHS and Sustainability.
The benefits of a fully implemented GBS will include proactive
monitoring of our supply chain to ensure our customers getwhat they need, when they need it, every time; the use ofdigital innovation to speed up many of our processes, such asorder entry and confirmation, from days to hours. The transfer
of administrative activities from our local HR and Controlling
professionals will allow them to focus on supporting ourbusiness and our people through increased partnership withthe business.

One team, three delivery centres

As part of the design process, we recognised that someprocesses would be best executed locally, close to the markets
and our customers, while others would be better performed
centrally. As such, GBS will operate from three regional delivery
centres and a satellite supply chain location in North America. In
Europe and the Americas we will expand our existing centres in
Budapest, Hungary and Buenos Aires, Argentina. In Asia Pacific,
we have opened a new centre in Kuala Lumpur, Malaysia.
While the majority of GBS solutions will be delivered from thecentralised teams in these locations, collaboration with current
Givaudan sites will be essential.

Givaudan Business Solutions

41

Implementation

The implementation in Europe has begun, with the UK and
Germany as our pilot sites. In addition, the activities ofGivaudan Finance Services and Procurement support centres
were transitioned to GBS in August 2017. In Asia Pacific, Financeand IM&S procurement activities began the move in 2017, withthe other functional areas being implemented in 2019. We willcontinue to move activities into the GBS centres over the next
three years with implementation in North America and Latin
America starting in mid-2018.
GBS is a unique opportunity to simplify our current processes
and leverage innovation to build the platform that will enable
us to deliver with excellence in the future. However, this neworganisational structure and ways of working will have
implications for existing Givaudan locations. We are committed
to ensuring that all employees affected are supported as wemove forward with the implementation.
Givaudan will invest CHF 170 million until mid-2020.
This investment will generate annual recurring savings of
CHF 60 million once fully implemented.
When complete, we are confident we will have the platform
required to drive efficiency, leverage best practices fromacross the organisation and continually improve ourprocesses, to the benefit of all of our stakeholders.
 2017 Annual Report – strategic value creation –delivering with excellence – page 23

Implementation timeline

Q1

Q2

2017

Q3

Q4

Q1

Q2

2018

Q3

Q4

Q1

Q2

2019

Q3

Q4

Q1

2020

Q2

EUROPENORTH AMERICALATIN AMERICAASIA PACIFIC Wave I

ASIA PACIFIC Wave II

Givaudan – 2017 Annual Report42

Differentiating business enablers

From sourcing to supply

From sourcing to supply
Maximising value with suppliers

Our mission is to maximise value
with suppliers to create profitablebusiness and deliver the best
ingredients, enabling us
to differentiate our products.

external partners. Our professional procurement teamcollaborates in ways that enable us to contribute to theobjectives of Givaudan and our suppliers. The team aims tobe trusted advisors, involved in the Company’s markets
and capable of adapting to rapidly changing environments.

Raw materials

We are expanding our global category management team
to increase our sourcing coverage to the entire raw material
portfolio and transfer ‘purchase to pay’ activities to theGivaudan Business Solutions centres. To enhance stakeholder
collaboration, the global team will be enriched with several
additional internal business partner roles. This new

We bring our mission to life through our global procurement
strategy, which has mutual value creation at its heart. With afocus on financial, risk, innovation and responsible sourcing
related initiatives, we provide true value to our internal andProcurement by numbers

Spend
Analysis

We manage

CHF

2.5bn

spend per year

Givaudan – 2017 Annual Report

PeopleRaw
Materials

Supplier
Management

Contract
Management229

We source

3,000

We manage>

procurement
employees in

39 sites

10,000>different raw
materials in100>

countries

raw material
suppliers

12,000〜Indirect
Materials andServices

25,000>contracts

Differentiating business enablers

organisational structure optimises the utilisation of our talent,
determines the right priorities with our business partners andprovides the opportunity to increase our focus on risk,
responsibility and innovation through strong supplierpartnerships.

Indirect Materials and Services (IM&S)

The IM&S team is continuously enhancing the proximity to ourbusiness partners. The team engages with its internalcustomers in all sites to understand their needs. This close
collaboration is fundamental in determining the right focus on
strategic initiatives, negotiations and supplier management.
With the introduction of regional category management in theEurope, Africa, Middle East, Latin America and Asia Pacificregions, we further optimise our resource allocation between
global, regional and local teams, strengthening internalbusiness connections and best geographical distribution of
buying power.
These steps will strengthen collaboration with business
partners, operating efficiency and value creation for our
Company’s ambition to deliver a superior experience to ourcustomers.

Sourcing for Shared Value

In order to embed a sustainability purpose in our sourcing
activities, our approach is built to ensure our materials are
responsibly sourced, to secure a stable supply of our sourced
materials, and to ensure local producers and their communities
benefit from working with us.
–– Our Responsible Sourcing programme drives compliance inthe way products are produced and encourages suppliers toachieve high standards in health and safety, and in social,environmental and business integrity. The programme is theblueprint for how we work with our partners and suppliers toprotect fragile natural sources and lead supply chaintransparency in the flavour and fragrance industry.
–– Sourcing at Origin initiatives secure the supply and quality of
key natural ingredients in countries of origin by working
directly with producers and suppliers while fostering local
value creation. By investing in direct collection networks andexclusive farming partnerships in China, Indonesia, Malaysia
and Madagascar, Givaudan strengthens the local economic
fabric in countries of origin and contributes to more stable
incomes for thousands of smallholder producer families.
–– Communities at Source projects support producers and theircommunities through a range of projects in 11 countries
around the world. In the past 10 years, in collaboration with
NGOs, local partners and the communities themselves, wehave positively impacted thousands of producers and theirfamilies in the areas of agriculture and production practices,

From sourcing to supply 43

education, health and nutrition. We also support sourcing
communities in safeguarding their surrounding environment
and natural resources.
 w ww.givaudan.com – sustainability –sourcing for shared value

Innovation

Accelerating the creation of mutual value through Supplier
Enabled Innovation is a key goal, and a dedicated Procurement
Innovation team was appointed in 2017. This team is working
with the procurement organisation and our two divisions tooffer solutions that meet Givaudan’s business challenges.
Articulated around three core pillars of innovation – cost
innovation, incremental innovation and disruptive innovation –the team is defining a framework for long-term collaborationin raw materials and indirect material supply.

Supply chain

In 2017, we continued the implementation of our 2020 supply
chain strategy. This is aimed at bringing more agility, reflecting
fast-changing customer needs while continuing to reduce our
supply chain costs. The divisional supply chain functions worked
closely together in the design of the Givaudan Business Solutions
model, the new organisational entity that will host and provide
some supply chain services to the divisions in future.
Both business divisions saw another year of solid service levels
and continued to work on further improving supply chain cost
ratios while integrating recent acquisitions. The fully deployed
SAP platform and the tools and processes developed by the
supply chain excellence programme continued to provide a very
solid foundation for more advanced supply chain improvement
opportunities.
The strong collaboration between the divisional supply chainorganisations and procurement is resulting in valuable
synergies on risk management, supplier inbound optimisationand transport costs transparency.
Collaboration with sales teams and customers is vital in our
strategy to collect reliable forecast information as part of thesales and operations process that is now a key pillar.
Agility and a customer-centric mindset are central themes toour supply chain journey in 2017-2020. Our shared mission is todeliver superior value to our customers through agile, reliable
service and continuity of supply at optimised cost and withminimal environmental impact.
Disclosure 102 – 9, 102 – 10

Givaudan – 2017 Annual Report

44 Differentiating business enablers

Our talent, performance and culture

Our talent, performance and culture
Contributing to sustainable growth

Fundamental to our successare more than 11,100 employees
working at 109 sites in over
40 countries.
There are over 90 nationalities at Givaudan, creating aworkforce of many different cultures and backgrounds. Helping
customers build their brands, our people have a wide variety ofskills ranging from researchers to perfumers, evaluators andsensory scientists and from flavourists and food technologists to
production workers, and administrative and commercial teams.

Valuing people

In 2017, we hired 1,553 employees, and our turnover rate waslargely stable, at 10% compared to 9% in 2016. These new
employees joined a workforce that has a mix of age and genderin a variety of geographical locations with different
employment contracts and types of work. It is a priority for
us to have the right balance, aiming at attracting, developing
and retaining talented and creative professionals, engaged in
making a positive difference.

28% of employees are covered bycollective bargaining agreements.
Genuine dialogue is important in enabling employees and theCompany to better understand each other’s challenges and findways to resolve them. We have a proud history of constructive
dialogue with employee representatives and we support the
freedom of individuals to join trade unions or other employee
representative bodies. Givaudan regularly consults with
employee representatives, for example we continue to holdregular European Works Council consultations with a group of
employees, which represents works council members from all
European Union member states where we have operations. The
purpose is to inform and consult employees about significant

Givaudan – 2017 Annual Reportchanges in the organisation, ensure the right to freedom of
association and collective bargaining is not put at risk, and toreport any feedback to the Executive Committee. The last
European Works Council was held on 28 September 2017.
Communication is particularly important when employees areaffected by significant operational changes. We respect legal
local notice periods prior to the implementation of changes
that could substantially affect our employees, either throughdirect communication to our employees or through theirelected representatives, works councils or other groups. In
countries where there are collective agreements and where it
is mandatory, minimum notice periods regarding operationalchanges are specified. These range from no notice to threemonths, depending on the country and based on local laws
and practices.
 Management Approach (103 – 2, 103 – 3): Topic 401, 402, 407
Disclosure 102 – 41, 402 – 1, 407 – 1

TalentWe aim to nurture a pipeline of industry experts and future
leaders and to develop their skills for sustained success. We areable to strengthen our leadership capabilities through ourLeadership Senses programme, now a complete suite of four
programmes, each targeting a different level of the Company’s
leadership. A strong pool of local talent and industry experts is
also important in order to support growth in all markets. This isdone by further embedding our Talent Acquisition organisation
to support business needs.
We also invest in delivering targeted technical and functional
development programmes through Masterclasses for thebusiness divisions and our academies for Finance, Controlling,
Procurement and IM&T. Our perfumers and flavourists areaccompanied in their development by following programmes
in our Perfumery School and our global Flavourist School
programme.
 Management Approach (103 – 2, 103 – 3): Topic 404

Differentiating business enablers

Our talent, performance and culture

45

Staff turnover by age group, gender and region
Age range<30

Age range
30–50

Age range>50

Female

Male

Total

Asia Pacific

15%

6%

10%

7%

9%

8%

Europe, Africa and Middle East

18%

8%

8%

11%

8%

9%

Latin America

15%

10%

14%

11%

12%

12%

North America

17%

10%

11%

12%

10%

11%

Total 2017

16%

9%

11%

10%

10%

10%

Total 2016

15%

8%

8%

8%

10%

9%

Age range< 30

Age range
30 – 50

Age range> 50

Female

Male

Total

Asia Pacific

158

190

8

151

205

356

Europe, Africa and Middle East

270

371

33

309

365

674

Latin America

147

117

4

80

188

268

North America

103

120

32

94

161

255

Total 2017

678

798

77

634

919

1,553

Total 2016

653

811

145

635

974

1,609

Disclosure 401 – 1

New employee hires by age group, gender and region

Disclosure 401 – 1

Employees by employment type1
Full-time – women

Full-time – men

Part-time – womenPart-time – men

Total – women

Asia Pacific

1,168

1,498

9

3

1,177

1,501

Europe, Africa and Middle East

1,696

3,062

135

28

1,831

3,090

498

975

6

0

504

975
1,434

Latin America

Total – men

795

1,434

6

0

801

Total 2017

4,157

6,969

156

31

4,313

7,000

Total 2016

3,932

6,616

154

33

4,086

6,649

Permanent –women

Permanent –men

Temporary –women

Temporary –menTotal –
women

Total –
men

North America

Employees by employment contract1

Asia Pacific

1,156

1,477

21

24

1,177

1,501

Europe, Africa and Middle East

1,776

2,988

55

102

1,831

3,090

Latin America

500

973

4

2

504

975

North America

801

1,434

0

0

801

1,434

Total 2017

4,233

6,872

80

128

4,313

7,000

Total 2016

4,006

6,559

80

80

4,086

6,649

1. Social indicators include full-time employees and internal temporary employees. Regarding our recent acquisitions, employees at Active International are included,
employees at Vika B.V. are not included.

Disclosure 102 – 8Givaudan – 2017 Annual Report

46 Differentiating business enablers

Our talent, performance and culture

Performance

In order to create an environment where people are motivatedto perform at their best, we continue to focus on individual
performance and career discussions. This is in part achieved
through continuous feedback and coaching where the quality ofcommunication can help engender trust. In 2017, we launched an
initiative aimed at increasing positive conversations aroundpersonal performance, development and advancement at alllevels of the organisation.
Employees receiving regular performance and careerdevelopment reviews
in %

2017

Women

91

92

Men

63

63

2016

The discrepancy between the ratios for female and male employees is due to the factthat more men are under collective agreements.

Disclosure 404 – 3

With our commitment to an empowered workforce comes ourcommitment that all employees are paid at least – and in mostcases well above – the minimum salary stipulated by law orcollective agreements. Our compensation packages arecompetitive and enable us to attract, retain and motivate
qualified employees. We conduct annual benchmarking studies
to ensure our compensation offering is competitive. Salaries
are reviewed by taking into account macroeconomic data suchas cost of living and market evolution. In high inflation
countries, salaries may be reviewed more frequently thanannually. In addition, our profit sharing scheme allows nonmanagement employees to share in Company profits.
2017 Compensation Report – profit sharing plan – page 82

Management Approach (103 – 2, 103 – 3): Topic 202
Related to this topic is the ratio of basic salary andremuneration of women to men. This is a priority topic at
Givaudan and studies have been conducted in our key markets
where we operate. We strive to have equal pay for equal
responsibilities. For example, the results of the study of ourheadquarters in Switzerland show that the average base salarydifference between men and women is 0.7% for equivalentroles and skills sets. For total cash compensation (fixed andvariable pay) the difference is 0.8%. The study was conductedaccording to the methodology developed by the Swiss Federal
Office for Gender Equality.
Disclosure 405 – 2

CultureWe foster a positive environment of openness and curiosity,where we shape and share innovative ideas that drive
sustainable growth and create memorable flavours andfragrances. By being challenging, we perform with a mindset ofbest and see challenges as opportunities for a better future. We
anticipate what’s next, welcome debate and challenge the way
business is done. And by acting with heart and soul, we drive
positive change, establish true partnerships, take responsibility
for our actions and act with empathy and humility.
We need to know if we are on the right path, and so engaging
the voice of employees is important and our global Employee
Engagement Survey offers every employee the opportunity to
express how they feel about working at Givaudan. The latest
survey was conducted in September 2016 and showed that 87%
of employees were proud to work for Givaudan.
We embrace a balanced workforce throughout our organisation
and are fully committed to increasing inclusiveness and diversity
in our workforce. Our Diversity Position Statement outlines ourcommitment to ensuring a representative workforce thatreflects the diverse communities in which we operate. We aim
to increase the representation of high growth market
nationalities and women in managerial positions, and we
produce analytics to track progress in this regard. Our HR teams,
led by the Talent and Diversity Programme Manager, who was
appointed in 2016, were involved during 2017 in creating a ‘Better
Balance’ roadmap for the future.
w ww.givaudan.com – our company – corporate governance – position statements – diversity
Performance indicators
Composition of governance (Executive Committee and Board of Directors)
Executive
Committee/
Board

%

Women

3

20%

0

1

2

Men

12

80%

0

1

11

Men

Total

<30 30–50>50

Employees¹ categories and composition of governance bodies
Women
<30

30–50

>50

<30

30–50

>50

0

23

17

0

65

73

178

46 1,171239

39 1,140

508

3,143

Associates

657 1,680

480

931 3,035 1,209

7,992

Total

703 2,874

736

970 4,240 1,790 11,313

Seniormanagement
Middlemanagement

1. Including the Executive Committee.
All figures include full time and internal temporary employees; they exclude Vika B.V.

Management
Approach (103 – 2, 103 – 3): Topic 405, 406
Disclosure 405 – 1Givaudan – 2017 Annual ReportDifferentiating business enablers

Environment, health and safety

47

Environment, health and safety
Continuous EHS improvement

Protecting the environment,
safeguarding our employees’
health and ensuring the safetyof all who work at Givaudan are
key values in our Company.

Givaudan’s environment, health and safety (EHS) mission goesbeyond rules and processes by aiming to empower all
employees to take shared responsibility in safeguarding theenvironment and protecting their own health and safety as
well as that of their colleagues. This translates into a passion toensure that ‘Everyone gets Home Safe everyday’. In 2017, webegan the rollout of a new EHS strategy that builds on the
successful platform of the past and focuses on areas needing
reinforcement to achieve continued success.

Embedding EHS in our culture

Our goal is to enhance this EHS mindset in the daily activities ofall employees so it becomes second nature and the right thing
to do. To achieve this, we have created an EHS Excellencemodel to highlight and leverage the critical elements ofGivaudan’s DNA. This model, which is being rolled out in 2018,
uses a workshop approach to raise the visibility and impact of
our EHS culture even further. It also helps our leadership teams
assess their site and function against the desired culture and, inturn, agree on actions for improvement.
Fuelling further development in this area will be the training of
new EHS facilitators in an approach that will depart from thetraditional ‘centre outwards’ approach. This programme will
start in 2018 and enhance and support local ownership of EHS
matters. The people trained will gain external accreditationfrom IOSH (the UK-based Institution of Occupational Safety
and Health) as part of our investment in their skills anddevelopment.

Safeguarding our ability to deliver to customers

Stakeholder trust is key to the Company’s success, and wecontinue to strengthen our relationship with all our stakeholders
through an inclusive and professional approach to EHS matters.
This includes the implementation of our EHS Management
System, which covers elements such as EHS Directives,
Standards and compliance requirements. Helping to confirm thesuccessful implementation of these requirements are our EHS
internal audits – standard practice throughout our organisation.
Our stakeholders include the communities andneighbourhoods where we operate. They are critical to our
long-term success, as is our commitment to taking action for
the environment. We take every precaution to operate safely inthese communities while providing social and economic value,
and reducing our environmental footprint.
In 2017, our commitment to drive an ambitious climate action
was recognised by CDP, the non-profit global environmental
disclosure platform. CDP awarded Givaudan an A for climate
action leadership and A – for our commitment to water
management. It was our third year on the leadership level andwe have been disclosing greenhouse gas (GHG) emissions
through our participation in CDP since 2007.
During the year, we set ambitious emissions reduction targets
through the Science Based Targets initiative. We seek not only
to reduce emissions in our own operations, but also within ourvalue chain. We have therefore committed to achieving a 30%
GHG emissions reduction by 2030. We can achieve this byconverting our electricity supply to fully renewable sources by2025, and by leading significant energy consumption reduction
projects across our operations. Furthermore, we will engage
with our suppliers to reduce the carbon footprint of purchased
goods and services.
 2017 Sustainability Report, published in March 2018

Givaudan – 2017 Annual Report

48 Differentiating business enablers

Environment, health and safety

EHS organisational continuous improvement

Givaudan is committed to driving continuous improvementin EHS performance. This commitment is underlined by ouradherence to the Responsible Care® Global Charter, a voluntarycommitment by the global chemical industry to drive continuous
improvement and achieve excellence in EHS performance. We
have strengthened our position on occupational health byimplementing a new system of ergonomic assessments andan improved material handling and control programme.
Furthermore, our Global EHS Centre of Expertise oversees
areas such as environmental protection and climate action,material stewardship, hazardous material management,
occupational health, behavioural and process safety
management and odour emissions control, and manages
our Global Safety Laboratory.
Finally in 2017, we engaged in a new global travel assistanceprogramme benefitting all employees, and we continued touse and develop internal volunteer specialists as regional
champions who work in process safety, occupational healthand hazardous materials compliance.

Looking ahead

Empowering everybody to safeguard the environment andprotect people’s health and safety continues to be embedded inour culture. We know that a safe place to work is also a greatplace to work. EHS Weeks on sites around the world continued
in 2017 and are highly successful in engaging and energising ourpeople. We see a clear increase in the number of people
watching out for themselves and their colleagues and willcontinue to build on our EHS Weeks to help in implementing
our new EHS strategy.
Management Approach (103 – 2, 103 – 3): Topic 403 

Health and safety indicators
Health and safety data
2016

0

0

0

Number of LTIs

79

32

32

LTI rate

1.03

0.36

0.33

Lost day rate1
Number of Restricted Work
Cases (RWC)
Number of Medical
Treatment Cases (MTC)
Number of Total Recordable
Cases (TRC)

N/A

10.88

6.73

28

37

45

28

34

61

135

103

138

Total Recordable Case Rate2
Number of lost days ³

1.76
N/A

1.15
973

1.43
647

15,341,093 17,886,782

19,239,626

Number of hours worked ⁴
Absenteeism ⁵

N/A

2.4%

2.5%

1. Number of lost work days resulting from work-related accidents per 200,000
working hours. Calculation based on scheduled work days lost from the day
after the accident.
2. LTI and TRC are both according to the official OSHA definitions.
3. 2016 includes 236 days carried over from previous year. 2017 includes one day
carried over from previous year.
4. 9.7% of these represent external contractors for whom the Company is liable.
5. Compared to the number of normal available working days, includes correction for
employees working on a part-time basis.
Total recordable cases by region and gender
RegionWomen

Men

Asia Pacific37Europe, Middle East & Africa

1459

Latin America

08North America

9

38

Total

26

112

LTI rate Lost day rate

Absenteeism

LTI rate, lost day rate, absenteeism – by region
RegionAsia Pacific
Europe, Middle East & Africa

0

0

1.5%

0.49

7.34

3.8%

Latin America

0.14

2.38

0.9%

North America

0.57

17.77

2.4%

Disclosure 403 – 2Givaudan – 2017 Annual Report

2017

2009

Fatalities

Differentiating business enablers

Risk management 49

Risk management
An integral part of our businessWe have robust structures andprocesses in place to ensure theeffective management of risks toour business, and are committed
to the highest ethical standards
in the conduct of our business.

The pace of change has increased markedly in our industry inrecent years, and it is critical that our efforts in risk management
and compliance keep up with and even anticipate these changes.
However, efficiency and effectiveness in these areas also allows
us to identify business opportunities to the benefit of all
stakeholders.

Enterprise Risk Management

Risk taking is core to our innovation capacity, our entrepreneurial
success and ultimately our sustained value creation.
Enterprise Risk Management (ERM) is the process of assessing,treating and monitoring the effects of uncertainty that may
affect the attainment of Givaudan’s objectives, especially its
publicly stated strategic objectives, or jeopardise Givaudan’slong-term business success. Managing risk is an integral partof Givaudan’s business. We operate a structured system ofidentifying, assessing and deciding on responses to mitigate
key risks. Givaudan seeks to consciously take the appropriate
amount of risk, to manage these risks competently at the rightlevel of the organisation, and to seize related business
opportunities.

Principles and responsibilities

Our ERM approach is based on our Enterprise Risk
Management Charter, which was updated by the Board of
Directors in 2017. The approach is compliant with applicablelaws, SIX Directives, the Swiss Code of Best Practice for
Corporate Governance and in line with best practice. Givaudan
uses the COSO ERM: 2016 framework and ISO 31000 asreferences.
The ERM Charter describes the ERM principles, framework,
process and methodology and governance and defines theassociated roles and responsibilities and corresponding
delegated authorities. It also lays down the framework for thereporting mechanism.
The chart outlined on the next page describes the respectiveroles and responsibilities of each function.
ERM applies to the Flavour and Fragrance businesses, as wellas to support functions. It reviews all types of risks (threats andopportunities) in terms of their nature, their source and theirconsequences. For the top Company risks, the consequences
are stated in terms of impact on the EBITDA of the Group.
Givaudan’s principle-based approach to risk management:

Pragmatic and tailored to the Company
Aims at value creation and protection
Integral part of processes and decision-making
Addresses uncertainty explicitly
Structured, dynamic, iterative and responsive to change
Based on the best available information

The Board of Directors is responsible for defining and approving
the ERM approach. Execution of the overall ERM process isdelegated to the Executive Committee.

Givaudan – 2017 Annual Report50

Differentiating business enablers

Risk management

Givaudan’s ERM contributes to:–– safeguarding Company value and assets and a protectionof shareholder interests–– analysis and assessment of the threats and opportunities so
identified and determination of their likelihood of occurrence
and corresponding impact to understand the underlying risk
drivers–– exploiting strategic opportunities to further create
Company value–– formulation of the appropriate measures to exploit anopportunity and/or respond to a threat and–– improving awareness amongst all key internal stakeholdersof the nature and magnitude of the Company’s risks–– tracking and reporting of risks and risk response actions.

–– providing risk-based management information for effective
decision making–– improving compliance with good corporate governanceguidelines and practices as well as applicable laws andregulations
The annual ERM process includes the following steps:–– a structured and comprehensive identification andcompilation of essential threats and opportunities on thebasis of an overall risk universe, which includes internal andexternal benchmarks

Givaudan’s management is accountable for ensuring risks areappropriately and adequately identified and analysed in atimely manner. Risk response actions are taken at individualand combined levels. Management reports annually on thestatus of the risks and risk response actions to the Board of
Directors.
The annual assessment and management process iscoordinated by the Corporate Compliance Officer. Corporate
Internal Audit provides assurance on the effectiveness of therisk management process.

Enterprise Risk Management Framework

Board /Audit Committee
Executive Committee

1st Line:
Risk ownership

2nd Line:
Functional risk
management support

3rd Line:
Internal assurance– Line management– Core value chain
– Certain support functions(Finance, HR, IT)– ERM function– Legal and compliancefunctions, including
Regulatory, EHS– Sustainability– Internal audit– Other internal audit functions

Responsible for identifying,assessing, exploiting/mitigating, monitoring andreporting risk in own area

Expertise in analysing specificrisk categories

Independent reviews andassurance

Implements processes andprocedures in own area

Givaudan – 2017 Annual Report

Guidance and support for
managing specific risk
categories

External
assuranceand otherrequirements– Mandatory
external
financial audit– Regulators– Other external
stakeholders

Differentiating business enablers

At the strategic level, a member of the Executive Committee isdesignated as the risk owner for each top Company risk. He or
she has the responsibility for managing the risk on a Group-widebasis. Risks below the level of top risk are clustered by risk area.
Each cluster also has an Executive Committee member as its
owner, though the actual risks are owned at the appropriate
level of management.
2017 Governance Report, page 71
Risk categories

In 2017, Givaudan performed an in-depth risk review process tore-evaluate the Company’s risks and focused on further risk
response actions for the top Company risks on the basis of thework done in previous years.
The current major risk areas include the following:
Strategic risks
Business model risk
Our business model might become obsolete, specificallythrough the advent of digitisation.
Risk of changes in consumer preferences
Consumers may change their preferences for products withfragrances and/or flavours they want to consume and how
they acquire them.
Customer risk
Changes at our customers may change their way of working
with us and may negatively impact on our own strategy.
Competition risk
Changes in behaviour of existing competitors or new entrants
may change the competitive landscape, in particular in relation
to new business models. This may impact negatively on
Givaudan’s competitive position in one or more markets.
Givaudan addresses the above strategic risks by monitoring
the competitive landscape, regularly reviewing its own
business model and strategy, managing the relationships
with our customers and conducting consumer intelligence.
Sustainability risks
Risk of climate change / water scarcity
Climate change may lead to a number of effects which in turnimpact our ability to operate. These may include water scarcity
at one or more of our manufacturing sites or issues with our
supply, in particular of natural raw materials.

Risk management 51

We address climate change risk through a comprehensive
programme designed to minimise our impact on climate change:–– We have a plan to stabilise our GHG emissions until 2020 andreducing them thereafter in alignment with the 2015 United
Nations Climate Change Conference, COP 21 and approved
Science based targets.
–– We continue to work to reduce the environmental impact of
our activities. Our expertise in green chemistry and techniquessuch as biocatalysis enables us to make products high in purity
and yield, using less energy and fewer hazardous materials. We
will continue to develop our capabilities in this area and seek
to apply them at every opportunity in the future.
–– We are developing a global water strategy that includes local
action plans with priority actions for high-risk sites. A new
standard on water management is being developed and will
be part of our EHS directives and standards.

We address climate change risk
through a comprehensive programme
designed to minimise our impact on
climate change.
Operational risk
Disruption / breakdown of operations
A breakdown of our operations may threaten our ability to
produce and deliver quality products/services to competitive
prices on a timely basis. Such breakdown may be caused byinternal or external factors. Givaudan addresses this risk
through a number of processes including structural
architectural measures, behavioural measures and business
continuity planning.
Disruption of supply chains / suppliers
A disruption in the supply of the raw materials we require for our
production or volatility of raw material prices may negatively
impact our ability to produce at competitive prices and in atimely manner. Such disruption may be caused by external
factors such as climate change or a breakdown at one or more of
our suppliers. Givaudan’s procurement function has a process tomonitor and manage supply chain risks arising from raw
materials. Moreover, supply and price volatility are monitored
through a cross-functional risk management process which is
integrated with global supply chain management and enables us
to mitigate raw materials sourcing risks.

Givaudan – 2017 Annual Report52

Differentiating business enablers

Risk management

Environment, Health and Safety and operational risk
management
If Givaudan should operate in a way that is harmful to theenvironment and/or causes community nuisance (odour
emissions, waste water) this could result in fines, reputational
impact or even losing our license to operate.
Our Environment, Health and Safety (EHS) function regularly
carries out comprehensive risk assessments at the Company’s
production and major commercial sites. In 2017, the EHS Centreof Expertise further enhanced our process risk analysis
methodology and capabilities in line with leading industry
standards in order to identify actions and manage theminternally using a proprietary EHS Management System withformally documented solutions and closure records. Its main
focus is the chemical and powder handling processes.
Givaudan’s growth path of organic expansion and acquisitions
inevitably involves some essential large-scale projects. EHS, asa full team member, is involved from the beginning of eachproject to assess and minimise risks. Our EHS teams support
the design of all new building activities so that, in EHS terms,
the plants we build today use learnings from the past and are
fit for the future. In India, for example, a new EHS programme
designed specifically for contractors was a significant successin a large-scale construction site project.
Information technology risk
In a fast moving digital world, information and communication
technologies are critical for Givaudan to address new consumer
behaviours and to collaborate with its customers to give them
the best experience. However, digitalisation also creates new
threats and requires a permanent monitoring of information
security risks and an extension of the risk assessment scope.
In addition to continuously adapting its information andnetwork systems, Givaudan focuses on extensive awarenessprogrammes to all employees as critical stakeholders in theprotection of the digital space.
Financial risks
Please consult the Financial Report regarding our financial risk
management.
 2017 Financial Report – pages 112 – 116

Legal and regulatory risks
Product quality / product safety risk
A faulty product or one that is not compliant with regulations
or non-performing could expose Givaudan to consumer healthissues, customer complaints, warranty claims, returns andre-runs, product liability claims or litigation and lead to loss ofrevenues, market share and business reputation. Our flavour
and fragrance product safety assessment programme isdesigned to ensure that all products are safe for consumer use.
At the core of the programme is a systematic safety evaluation

Givaudan – 2017 Annual Reportof the ingredients used in our flavour and fragrance products,
and control of their use which is managed by our global IT
systems. All new ingredients are evaluated for human andenvironmental safety, as required, prior to their use. Our
flavour and fragrance products are created to comply with all
appropriate end consumer product safety regulations in themarkets in which they will be sold.

All new ingredients are evaluated forhuman and environmental safety prior
to their use.
In addition, Givaudan supports, and in many cases leads,
industry-wide programmes of the respective industry
associations (the International Fragrance Association and theInternational Organization of the Flavor Industry) for assuring
the safe use of flavours and fragrances in consumer products.
Legal and compliance risks
Should our employees, especially key individuals within theorganisation (Board members, Executive Committee members,senior management) display or tolerate behaviour that is illegal
or unethical, this could lead to reputational as well as financial
damage to Givaudan. The Corporate Compliance function
undertakes a regular assessment of Givaudan’s legal andcompliance risks at local and global levels and addresses any
issues with the Executive Committee and the Audit
Committee. Non-compliant behaviour is investigated andsanctioned in accordance with a comprehensive procedure.
Disclosure 102 – 11, pages 49 – 52

 

Differentiating business enablers

Compliance

53

ComplianceProtecting our reputation

Givaudan’s good reputation andname has been built over a longand rich history.

Principles of Conduct

The basis for Givaudan’s ethical standards is laid out in the
Company’s ‘Principles of Conduct’, last reviewed and updated in2016. The Principles of Conduct consist of three pillars: Legal &Ethical Business Dealings, Responsible Corporate Citizenshipand Protecting Givaudan’s Assets.

To preserve it, we are committed to adhere to the highest
ethical standards in the way we interact with all our
stakeholders – customers, suppliers, shareholders, employees,
competitors, government agencies and the communities inwhich we operate. Being open, transparent and honest in ourdealings with these stakeholders allows us to grow responsibly
and share our success.

Prevent

The Principles also include a section on ‘How we live thePrinciples’, which reiterates each employee’s responsibility for
ethics and integrity and explains the channels for reporting any
violation of the Principles, including the worldwide ComplianceHelpline. These ‘Principles of Conduct’, as well as any policies
specifying any principle, are available in all 15 Company languages.

DetectRespondAppropriateorganisationand leadership

Ongoing
assessment ofcompliance risksDuediligence
process

Investigationof compliancecases

Reporting toseniormanagement

Documents,
processes
and systems

People andtraining

CompliancereportingDisciplinary
actions

Process
improvement

Monitoring
and audit

Continuous
improvement

Givaudan – 2017 Annual Report

54 Differentiating business enablers

Compliance

The Principles of Conduct are supported and mirrored by
Givaudan’s Responsible Sourcing Policy, a code of conduct forour suppliers, which was also issued in 2016 to ensure thatour partners abide by the same high standards we do.

Organisation’s values and principles

Legal & ethicalbusiness dealings

Bribery and corruption
Gifts and entertainment  www.givaudan.com – our company –corporate governance – rules and policies
www.givaudan.com – our company –corporate governance – compliance

Organisation and process

To strengthen the implementation of the Principles ofConduct, in 2017 Givaudan updated its Compliance and Ethics
Programme Policy. The Compliance and Ethics Programme isbased on the compliance and fraud prevention concept of“prevent – detect – respond”. The Corporate Compliance
Officer oversees the administration of the Compliance andEthics Programme and coordinates with dedicated functions
for effective compliance management.
The Corporate Compliance Officer is assisted by a global
compliance team and a network of local compliance officers
and regional compliance coordinators to further enhance thefunction. The Group Data Protection Officer, reporting to the
Corporate Compliance Officer, oversees the implementation of
the Group Data Protection strategy to address changes thatwill happen on the entry into force of new legislation in theEuropean Union as well as in Switzerland.
The Corporate Compliance Officer carries out regularcompliance risk assessments with the local compliance officers
and corporate functions.
The Company has a Group-wide Compliance Helpline
system which allows employees to report suspected or actual
misconduct or violations of the Company’s policies on aconfidential basis and without fear of retaliation. It also has agrievance mechanism as part of its Responsible Sourcing Policy
to allow suppliers to bring grievances to the attention ofGivaudan.
The Company has a compliance incident investigation
procedure and process in place for investigations of complianceallegations received through any channel. Depending on thenature of the allegations, these cases are handled either locallyor centrally. Where required, outside forensic support is sought.
Other compliance processes include the process for selectionand engagement of third-party agents and distributors and theglobal vendor selection of the Procurement organisation.
Management of compliance with specific areas of operational
compliance risk such as product safety/regulatory, trade affairs,
environment, and occupational health and safety (EHS) is
ensured by specific dedicated corporate functions.

Givaudan – 2017 Annual ReportCompliance with the law andGivaudan Policies

Competition law
Insider dealing
Conflicts of interests
Ethical conduct
Responsible
corporate citizenship

Human rights
Preserving the environment
Diversity and fair treatment
Fair employment standards andsafe work environment
Child labourProtecting
Givaudan’s assets

Fraud against Givaudan
Open communication
Protection of confidential informationand trade secrets, intellectual property
Conduct in research, development,
application and creation

Management Approach (103 – 2, 103 – 3): Topic 205, 408, 
409, 412, pages 53 – 54

Anti-bribery management

The Principles of Conduct state that Givaudan has zerotolerance of bribery and corruption, and does not makefacilitation payments.
Most countries where Givaudan operates have strict antibribery laws, including the UK Bribery Act, the US Foreign
Corrupt Practices Act, the French Loi Sapin 2 and anti-bribery
laws and regulations of other countries where Givaudan either
already does business or intends to do so.
Anti-corruption compliance is managed as part of theGivaudan compliance management system through thefollowing instruments:–– Corruption is one of the risk areas regularly reviewed by the
Corporate Compliance Officer as part of a compliance risk
assessment.
–– Corruption and inappropriate gifts and entertainments areprohibited in Givaudan’s Principles of Conduct and they are
addressed in more detail in the Global Anti-Bribery, Gifts,
Entertainment and Hospitality policy, including the reportingof gifts and entertainment. Both documents are available toemployees in all major Company languages.
–– Givaudan has included corruption and gifts/entertainment in
its basic compliance training for all permanent employees andissues specific anti-bribery training to selected employees.

Differentiating business enablers–– Givaudan discloses charitable contributions and sponsorship.
–– As part of monitoring activities, the Compliance Helpline
allows employees to report compliance issues in confidence.
The helpline is open in all sites, and available in all major
Company languages.
–– Givaudan has a procedure for the selection and engagementof agents and distributors, which includes a formal due
diligence review and minimum requirements for agent
contracts and payments.

Compliance

55

Forced and child labour

We are against all forms of forced labour and exploitation ofchildren. Our Principles of Conduct stipulate that we will notprovide employment to children before they have completed
their compulsory education. In 2017, we had no incidents offorced or child labour at Givaudan.
 w ww.givaudan.com – our company –corporate governance – principles of conduct Management Approach (103 – 2, 103 – 3): Topic 408
Disclosure 408 – 1, 409 – 1

Management Approach (103 – 2, 103 – 3): Topic 205

Training and monitoring

New mandatory compliance training on the updated Principles
of Conduct was launched in 2017 to all employees worldwide.
The training material is available as online training in all major
Company languages and includes material on anti-bribery,corruption and corporate social responsibility. The completion
rate currently stands at 82%. All members of the Executive
Committee have completed the training.
Specific anti-bribery training also continued in 2017. Since 2013,
5,160 senior managers, including all members of the Executive
Committee and other employees whose work involves regularand direct contact with external stakeholders, have completed
this specific anti-bribery training out of 5,290 who have been
invited.
In 2017, the Company continued to review its policies andprocesses to ensure compliance with changing applicable law,
including the French Loi Sapin 2, as well as the EU’s General
Data Protection Regulation and other applicable dataprotection legislation.
Disclosure 205 – 2 

Human rights

Givaudan endorses the UN Guiding Principles on Business andHuman Rights and bases its human rights commitment on theInternational Bill of Human Rights, consisting of the Universal
Declaration of Human Rights and the International Labour
Organization’s fundamental conventions on Rights at Work.

Local communities

Communities where we operate around the world can beaffected by our business, and these local stakeholders may inturn impact our activities. We are active in developing andsustaining our relationships with these communities and takethe views of local representatives into account in oursustainability activities.
Formal links at most of our sites have been established withlocal authorities and with significant organisations
representing neighbours or working on specific environmental
and social issues.
 2017 Annual Report – strategic value creation –communities – page 29
Management Approach (103 – 2, 103 – 3): Topic 413 Charitable giving

We monitor charitable spend at every site and have had anannual budget allocation process for charitable giving for all
our sites since 2012. This spend is controlled and consolidated
by a sustainability controller. Every site manager is responsible
for how the site budget is spent, and each of these managers
has some freedom to allocate funding to local organisations
providing they comply with Givaudan guidelines and local laws
on non-profit organisations. In 2017, the total spend on
charitable giving for local communities was CHF 1,503,925.
Disclosure 102 – 16, pages 53 – 55
 

In 2017, we started a three-phase Human Rights Impact
Assessment that aims to meet best practice standards in the
management of human rights. The first phase is a high-level
human rights risk assessment of our operations which should
be completed in early 2018, and the full assessment is expected
to be finished in 2019.
Management Approach (103 – 2, 103 – 3): Topic 412 Disclosure 412 – 1Givaudan – 2017 Annual Report

56 Differentiating business enablers

Regulatory and public policy

Regulatory and public policy
Ensuring safe products in all markets

Our Regulatory and Product
Safety teams provide criticalinformation that enables
customers around the world
to use our products in theknowledge they are safe andcompliant for the intended use.
As new regulations are proposed and implemented in the
global flavour and fragrance industry, we are at the forefront of
ensuring our products comply with the relevant changes. We
work closely with our customers to help them understand thechanges as well as the impact they will have on their consumer
products. Beyond this direct support of our customers’ needs,
we continue to lead efforts to help shape the industry
landscape by committing resources and sharing expertise.

We are committed to ensuring thatour products are safe for consumers,
workers and the environment whenused as intended, and that theseproducts are compliant in the markets
around the world where we sell.
This advocacy, support and expertise is provided by 200
employees at over 25 locations with different skills, ranging
from scientists to trade and safety and toxicology experts.

Givaudan – 2017 Annual Report

Flavours

Consumer expectations continued to drive health initiatives
during the year. This resulted in government policies andadvocacy initiatives in areas such as reduced salt and sugar,
genetically modified consumables, naturalness, traceability,
and sustainability and organic movements. These initiatives are
gaining significant momentum in markets such as Brazil, India,
Africa and the Middle East.
Consumers also increased their demand for more
understandable, friendlier ingredient descriptions on labels. In
response, Givaudan launched a programme to create ingredientdeclarations on flavourings recognised by customers as spices
and ingredients. The global initiative, ‘Flavouring by Foodstuff’,
which involves the Regulatory teams working together with
our science and commercial teams, is expected to becompleted during the first part of 2018.
There was a continued global trend during the year forcountries, specifically in emerging markets, to align andharmonise their regulations with Codex Alimentarius standards
and provisions. Givaudan actively supports these efforts
through associations such as the International Organization of
the Flavor Industry (IOFI). This support is aimed at further
reductions in non-tariff barriers to trade, helping free global
trade and service to our customers in those countries.
Our team was also active in meeting a requirement byauthorities in Europe for additional toxicological testing for anumber of existing flavour ingredients. Because of consequent
restrictions, we have removed one ingredient due to EU
delisting the material and restricted the use levels of several
others, which is managed through our robust complianceengine. Our advocacy team continues to work through relevant
industry associations with the authorities on issues aroundcurrent flavouring ingredients, and we continue to ensurecompliance with regulations and provide correct classificationand labelling information.

Differentiating business enablers

From a regulatory point of view, the integration of the Spicetec
product portfolio was completed during the year and ourteams are working on the inclusion of the Activ and the Vika
portfolios.

Fragrances

Like their Regulatory colleagues in Flavours, our team in
Fragrances closely monitors changes in relevant legislation.
A significant bill during the year was the passing of California’s
Cleaning Product Right to Know Act 2017, the first of its typerequiring manufacturers of cleaning products to disclosechemical ingredients, including fragrance materials. Whilefragrance formula disclosure will be required, it does enable
some protection of intellectual property for manufacturers.
Givaudan is well prepared to support the implementation ofthis new disclosure law.
While this law is currently focused on the USA and concerns
only cleaning products, we expect that during 2018 it will
widen to cosmetics and in due course involve similar legislationand eventually move to other regions of the world as well.
We continue to encourage the industry to focus on consistentlevels of consumer disclosure while preserving the ability tomaintain intellectual property protection of fragrance formula,a balance that was well achieved in the Californian legislation.
Meanwhile in Europe the registration phase of REACH willend in May 2018, by which time all substances in scope must
be registered, and Givaudan is well placed to meet its
commitments. While this 10-year period of REACH registrationis coming to a conclusion, we foresee years of additional workneeded to support ECHA decisions on the evaluation of some ofour registrations that will continue to require significant
investment. In addition, we are continuing efforts to ensure
our remaining suppliers meet their commitments as well.

Product labelling

Transparency is increasingly expected in all areas of ourbusiness, from supply chain data to R&D information andformulas. It is important that we provide all the necessary
information for the proper handling of materials we sell toenable our customers to manage any environment, healthand safety risks associated with the use of our ingredients.

We evaluate all the ingredients usedin our formulas for any EHS impact
and this information is disclosed andfiled with the relevant regulatory bodies
whenever necessary.

Regulatory and public policy 57

relevant regulatory bodies whenever necessary. Quality andenvironmental data about our products, including safety
information, are made available to users through product labels
and safety data sheets (SDS). The SDS, which are available inmore than 45 languages, are attached to every consignment
and available to customers on request. For flavour products,
information related to allergen, GMO, organic, nutritional andreligious criteria can be provided.
Our procedures require product and service information forsourcing, content, safe use, and disposal. All of our soldproducts delivered to our customers are subject to productinformation requirements and regulations. We ensure that
100% of our products are safe for consumers under the
products’ intended purpose of use; the safety and quality ofour products is assured through stringent methodologies.
In Flavours, we are responding to the move from clean to clear
labelling and an increasing consumer desire to understandwhat goes into their food. They seek ingredients that soundfamiliar, natural and simple, and are easy to pronounce,
without a chemical association. Our ‘Flavouring by Foodstuff’
initiative aims to meet this need and although there areregional differences in regulatory requirements, our priority is
not to mislead customers in the changes we are introducing toour product labelling.
Management Approach (103 – 2, 103 – 3): Topic 416, 417 Disclosure 416 – 1, 417 – 1

Public policy

Givaudan does not fund any political party in any country. We
have an internal policy on charitable giving and community
support that excludes any direct or indirect political donations
or support. However, we support, and in many cases lead, thedevelopment of public policies that impact the flavour andfragrance industry.

We support and often lead industrywide programmes with international
industry associations such as IFRA
and IOFI.
We also support and often lead industry-wide programmes withinternational industry associations such as the International
Fragrance Association (IFRA) and the International Organizationof the Flavor Industry (IOFI). In addition, we work with manynational associations to help ensure the safe use of flavours andfragrances in consumer products.

We evaluate all the ingredients used in our formulas for any
EHS impact and this information is disclosed and filed with theGivaudan – 2017 Annual Report58 Governance report

GovernancereportWe continuously strive to improve
our robust framework of corporate
governance in order to ensure theeffective functioning of the governing
bodies of the Company.

In this section:

Givaudan – 2017 Annual Report

Group structure and shareholders

60

Capital structure

61

Board of Directors

63

Executive Committee

71

Compensation, shareholdings and loans

75

Shareholders’ participation

75

Change of control and defence measures

76

Auditors

76

Information policy

77New Chairman elected
Calvin Grieder was elected at the 2017 AGM andsucceeds Dr Jürg Witmer

4 Board Committees

ensuring strategic coverage of material issues

3 women represented

on the Board of Directors and Executive Committee combined

60

Governance report

Corporate governanceOur framework of checks and balances

The Governance chapter is alignedwith international standards
and has been prepared inaccordance with the ‘Swiss Codeof Obligations’, the ‘Directive on
Information Relating to Corporate
Governance’ issued by the
SIX Swiss Exchange and the‘Swiss Code of Best Practicefor Corporate Governance’ issued
by economiesuisse.
The internal corporate governance framework is based on
Givaudan’s Articles of Incorporation. The ‘Board Regulations ofGivaudan SA’, the Company’s organisational regulation, further
clarifies the duties, powers and regulations of the governing
bodies of the Company.
Except when otherwise provided by law, the Articles ofIncorporation and Givaudan’s Board Regulations, all areas ofmanagement are fully delegated by the Board of Directors,
with the power to sub-delegate to the Chief Executive Officer,
the Executive Committee and its members. The Board
Regulations of Givaudan also specifies the duties and thefunctioning of its four Board Committees.
The Articles of Incorporation, Board Regulations of Givaudan
and other documentation regarding Givaudan’s principles ofcorporate governance can be found at: w ww.givaudan.com  – our company –corporate governance – rules and policies

Givaudan – 2017 Annual Report

1. Group structure and shareholders
1.1 Group structure
1.1.1 Description of the issuer’s operational Group structure
Givaudan SA, the parent company of the Givaudan Group, with
its registered corporate headquarters at 5 Chemin de laParfumerie, 1214 Vernier, Switzerland (‘the Company’), is a‘société anonyme’, pursuant to art. 620 et seq. of the Swiss
Code of Obligations. It is listed on the SIX Swiss Exchange
under security number 1064593, ISIN CH0010645932.
The Company is the global leader in the flavour and fragrance
industry, offering its products to global, regional and local food,beverage, consumer goods, fragrance and cosmetics
companies. The Company operates around the world and has
two principal divisions: Flavour and Fragrance. The Flavour
Division consists of four business units: Beverages, Dairy,
Savoury and Sweet Goods. The Fragrance Division has threebusiness units: Fine Fragrances, Consumer Products, as well as
Fragrance Ingredients and Active Beauty.
Both divisions have a sales and marketing presence in all
major countries and markets as well as Research andDevelopment organisations. They share resources andknowledge in the areas of research and consumer
understanding, where applicable. Corporate functions include
Finance, Procurement, Science and Technology, Legal,
Compliance and Communications, as well as Human Resources(HR). In August 2017, the Company started the implementationof a new global organisational unit Givaudan Business
Solutions (GBS) to provide best-in-class internal processes andservices in the areas of Finance, Controlling, HR, Procurement,
Supply Chain, Environment, Health & Safety (EHS), Enterprise
Data Management, Information Management and Technology(IM&T), Sustainability and Continuous Improvement.
1.1.2 Listed companies within the scope of consolidation
The Company does not have any publicly listed subsidiaries.

Governance report 61

1.1.3 Unlisted companies within the scope of consolidation
The list of principal consolidated companies, their domiciles andthe shareholding is presented in appendix page 172 to theconsolidated financial statements of the 2017 Financial Report.
Note 1 to the consolidated financial statements as well as note
3 to the statutory financial statements offer more details
regarding the structure of the Group. All unlisted subsidiaries
are wholly-owned, unless otherwise indicated in notes 3 and 5
to the statutory financial statements mentioned above.
The 2017 Financial Report is printed in English as part of the2017 Annual Report or can be downloaded on the Company
website: w ww.givaudan.com – investors –online annual report – download centre

2.1 Capital on the disclosure deadline
Ordinary share capital
As at 31 December 2017, the Company’s ordinary share capitalamounted to CHF 92,335,860 fully paid in and divided into
9,233,586 registered shares with a par value of CHF 10.00 each.
The market capitalisation of the Company at 31 December 2017
was CHF 20,794,035,672.
2.2 Authorised and conditional capital in particular
Authorised share capital
The Company does not have any authorised share capital.
Conditional share capital
The Company’s share capital can be increased by:Disclosure 102 – 1, 102 – 2, 102 – 3, 102 – 5, 102 – 45

1.2 Significant shareholders
To the knowledge of the Company, the following were the only
shareholders holding more than 3% of the share capital ofGivaudan SA as at 31 December 2017 (or as at the date of theirlast notification under article 20 of the Stock Exchange Act):The notifications can be viewed on the following site: www.six-swiss-exchange.com – market data – shares –givaudan – overview – significant shareholders

The Company has not entered into any shareholder
agreements with any of its significant shareholders.
Significant shareholders
2017

in %

Beneficial owners
William H. Gates III – Cascade Investment

2. Capital structure

13.86BlackRock Inc

5.18

MFS Investment Management

5.04

Nominees
Nortrust N ominees Ltd.

14.90

Chase Nominees Ltd.

5.21

Messieurs Pictet & Cie.

4.40

1.3 Cross-shareholdings
The Company does not have any cross-shareholdings withany other company.

– issuing up to 161,820 shares through the exercise of
option rights granted to employees and/or the membersof the Board of Directors of the Group.
– issuing up to 463,215 shares through the exercise of
option or conversion rights granted in connection withbond issues of Givaudan SA or a Group company.
The Board of Directors is authorised to exclude theshareholders’ preferential right to subscribe to such bonds
if the purpose is to finance acquisitions or to issue
convertible bonds or warrants on the international capital
market. In that case, the bonds or warrants must be
offered to the public at market conditions, the deadline forexercising option rights must be not more than six years
and the deadline for exercising conversion rights must be
not more than 15 years from the issue of the bond or
warrants and the exercise or conversion price for new
shares must be at a level corresponding at least to themarket conditions at the time of issue.
– issuing up to 123,163 shares through the exercise of option
rights granted to the shareholders of Givaudan SA.
For the conditional share capital, the subscription rights ofthe shareholders are excluded.
The acquisition of shares through the exercise of option orconversion rights and the transfer of such shares are subject
to restrictions as described in the next section.

Givaudan – 2017 Annual Report62 Governance report

2.3 Changes in capital
The information regarding the year 2015 is available in notes
9 and 10 to the statutory financial statements of the 2015
Financial Report. Details of the changes in equity for the years
2016 and 2017 are given in notes 8 and 9 to the statutoryfinancial statements of the 2017 Financial Report.
2.4 Shares and participation certificates
The Company has one class of shares only. All shares areregistered shares with a par value of CHF 10.00 each. Subject tothe limitations described below, all shares have the same rights
in all respects. Every share gives the right to one vote and to an
equal dividend.
2.5 Dividend-right certificates
Other than the registered shares, dividend-right certificatesand participation certificates do not exist.
2.6 Limitations on transferability and nominee
registrations
2.6.1 Limitations on transferability for each sharecategory; indication of statutory group clauses andrules for granting exceptions
At the Annual General Meeting of shareholders on
20 March 2014, the previously existing registration and voting
rights restrictions were abolished. Today, the Company nolonger has limitations on transferability of shares.
2.6.2 Reasons for granting exceptions in the year
under review
This is not applicable because the Company has no limitations
on transferability of shares.
2.6.3 Permissibility of nominee registrations; indicationof any percent clauses and registration conditions
Subject to the provisions mentioned in the next paragraph,registration with voting rights in the Company’s shareregister is conditional on shareholders declaring that they
have acquired the shares in their own name and for theirown account.
Based on a regulation of the Board of Directors, nominee
shareholders may be entered with voting rights in the shareregister of the Company for up to 2% of the share capital
without further condition, and for more than 2% if they
undertake to disclose to the Company the name, address,
nationality and number of shares held by the beneficial owners.
2.6.4 Procedure and conditions for cancelling statutory
privileges and limitations on transferability
Limitations on transferability and nominee registrations may
be changed by a positive vote of the absolute majority of theshare votes represented at a shareholders’ meeting.
2.7 Convertible bonds and warrants/options
There are no bonds or warrants outstanding that areconvertible into shares of Givaudan SA.
Givaudan – 2017 Annual ReportGovernance report 63

LTR: Werner Bauer, Michael Carlos, Ingrid Deltenre, Calvin Grieder, Thomas Rufer, Lilian Biner, Victor Balli

3. Board of Directors

According to the Articles of Incorporation of Givaudan, theBoard of Directors may consist of between seven and nine
members.
Givaudan’s seven Board members have an in-depth knowledgeof their relevant areas of expertise, and provide contributions in
the areas of strategy, the flavour and fragrance industry,finance, research and innovation, marketing and regulatory
affairs. The Board’s knowledge, diversity and expertise are an
important asset in leading a company of Givaudan’s size in acomplex and fast-changing environment.
At the Annual General meeting in March 2017, Dr Jürg Witmer
retired from the Board of Directors and from the positionof Chairman. Calvin Grieder was elected new Chairman.
Prof. Dr-Ing Werner Bauer was appointed Vice-Chairman by
the Board.
As of 31 December 2017, the following were members of theBoard of Directors:

3.1 Members of the Board of Directors

Calvin Grieder
ChairmanEngineer
Swiss national, born 1955 in the USA
Non-executive
First elected in 2014
In 1980, Calvin Grieder started his career as Marketing Manager
with Georg Fischer Ltd in Switzerland and continued in various
executive positions at Swiss and German companies including
Bürkert Controls Ltd., Mikron Machines Ltd, Swiss Industrial
Company (SIG) Ltd and Swisscom Telecom Ltd, where he served
as Head of the Mobile and Internet business and Member of the
Executive Board. He was CEO of the international engineeringgroup Bühler from 2001 to 2016.
Until March 2017, Calvin Grieder held the following mandates incompanies that are quoted on an official stock exchange:
member and Vice-Chairman of the Board of Implenia AG.

Givaudan – 2017 Annual Report64 Governance report

Calvin Grieder holds the following mandates in companies thatare non-quoted: Chairman of the Board of Bühler Group, memberof the Board of Trustees of Avenir Suisse, owner and member ofthe Board of CGTech in Küsnacht (now Carivel7 AG), member ofthe Advisory Board of the ETH, Department of Mechanical andProcess Engineering, member of the Steering Committee ofdigitalswitzerland and member of the Foundation Board of the
Swiss Future Fund.
Calvin Grieder holds a Master of Science from the ETH Zurich andhas completed an Advanced Management Program (AMP) at
Harvard University.

Prof. Dr-Ing. Werner Bauer
Vice-Chairman
Businessman
German and Swiss national, born 1950
Non-executive
First elected 2014
Prof. Dr-Ing. Werner Bauer started his career as a university
professor in chemical engineering at the Technical University in
Hamburg, Germany. After serving as the Director of the
Fraunhofer Institute for Food Technology & Packaging and asProfessor in Food Processing Technology at the Technical
University of Munich from 1985 to 1990, he joined Nestlé as
Head of the Nestlé Research Centre in Lausanne in 1990. After
heading commercially Nestlé South and East Africa he joined
general management as Executive Vice-President in 2002,
responsible for technical, production, environment and R&D. In
2007 he became Executive Vice-President and Head of
Innovation, Technology, Research and Development, a position
from which he retired in September 2013.
Prof. Bauer holds the following mandates in companies that arequoted on an official stock exchange: member of the Boards of
Lonza Group AG and GEA Group AG. He holds the following
mandates in companies that are non-quoted: Chairman of theBoard of Trustees of the Bertelsmann Foundation, member andvice-chairman of the Board of Bertelsmann SE & Co. KGaA,
Chairman of the Board of Nestlé Deutschland AG (until June 2017).
Prof. Dr-Ing. Werner Bauer received a Diploma and a PhD in
Chemical Engineering from the University Erlangen-Nürnberg
in Germany.

Victor Balli
Director

Businessman
Swiss national, born 1957
Non-executive
First elected in 2016
Victor Balli started his professional career in 1985, working asa Financial Analyst & Business Development Manager with
EniChem International SA in Zurich and Milan. From 1991 to 1995,
he worked as a Principal with Adinvest AG, a corporate financeadvisory company with offices in Zurich, San Francisco, New
York, and London. Victor Balli held various positions at Minibar
between 1996 and 2005, most recently as Chief Executive Officer
EMEA as of 2005. Since 2007 Victor Balli has been Chief Financial
Officer and member of the Executive Committee of Barry
Callebaut, a position he will leave at the end of February 2018.
Victor Balli holds the following mandates in companies that arequoted on an official stock exchange: Member of the Board of
KWS Saat SE (as of 14 December 2017).
He holds the following mandates in companies that are nonquoted: Member of the Board of Niantic Finance AG. From
1 January 2018, Mr Balli will be member of the Board of theFederal Audit Oversight Authority.
Victor Balli has a Masters in Economics from the University of
St. Gallen and a Masters in Chemical Engineering from the Swiss
Federal Institute of Technology in Zurich.

Lilian Biner
Director

Businesswoman
Swedish national, born 1962
Non-executive
First elected 2011
Lilian Biner has senior management experience from retail andconsumer goods companies. These posts have most recently
included Chief Financial Officer and Executive Vice President
with Axel Johnson AB in 2007 and Head of Strategic Pricing forElectrolux Major Appliances Europe, a company she joined in2000 as head of HR and Organisational Development.
Lilian Biner holds the following mandates in companies that arequoted on an official stock exchange: Chairman of the Board of
Cloetta AB, member of the Boards of LE Lundbergföretagen andNobia AB. She left the Board of Thule Group AB in April 2017.
She holds the following mandates in companies that are
non-quoted: member of the Board of a-connect (group) ag.
Lilian Biner is a graduate of the Stockholm School of Economics.

Givaudan – 2017 Annual ReportGovernance report 65

Michael Carlos

Thomas Rufer

Businessman

Certified Public Accountant

French national, born 1950

Swiss national, born 1952

Non-executive

Non-executive

First elected 2015

First elected 2009

Michael Carlos started his career with Givaudan in 1984 as
General Manager in Hong Kong. He became Head of theEuropean Creative Centre in Argenteuil in 1992 where he was incharge of integrating the creative resources from Givaudan andRoure. In 1999, he was appointed Global Head of Consumer
Products and then President of the Fragrance Division in 2004,
a position from which he retired in 2014.

Thomas Rufer joined Arthur Andersen in 1976, where he held
several positions in audit and business consulting (accounting,organisation, internal control and risk management). He wasCountry Managing Partner for Arthur Andersen Switzerlandfrom 1993 to 2001. Since 2002, he has been an independent
consultant in accounting, corporate governance, risk
management and internal control.

Michael Carlos holds the following mandates in companies thatare quoted on an official stock exchange: member of the Boardof Deinove SA. He also holds the following mandates: Chairmanof the International Fragrance Association (IFRA), Chairman of
the Research Institute of Fragrance Materials, member of theBoard of Manus Bio Inc. since April 2017, and Chairman of theBoard of Scent Design SA.

He holds the following mandates in non-listed companies:
Member of the Swiss Takeover Board. Until 31 December 2017
Chairman of the Board of Directors of the Federal Audit
Oversight Authority.

Director

Director

Thomas Rufer has a degree in business administration(économiste d’entreprise HES) and is a Swiss Certified Public
Accountant.

Michael Carlos holds an MBA from the Indian Institute ofManagement and a degree in chemical engineering from theIndian Institute of Technology.

Ingrid Deltenre
Director

Businesswoman
Dutch and Swiss national, born 1960
Non-executive
First elected 2015
Ingrid Deltenre has held several executive positions in the press
and media including Director of Publisuisse from 1999 to 2004,
and Director of the leading public TV broadcaster in Germanspeaking Switzerland, Schweizer Fernsehen, from 2004 to
2009. In 2010, she became Director General of the Genevabased European Broadcasting Union (EBU), a position she held
until June 2017.
She holds the following mandates in companies that arequoted on an official stock exchange: member of the Board of
Banque Cantonale Vaudoise, and member of the Supervisory
Board of Deutsche Post/DHL.
She also is a member of the board of Agence France Presse anda member of the steering board of the Executive MBA of the
University of Zurich.
Ingrid Deltenre holds a Bachelor of Arts in Journalism and
Educational Sciences from the University of Zurich.

Givaudan – 2017 Annual Report

66

Governance report

Board of Directors, its committees and election dates 2017
Board of Directors 1
Calvin Grieder
Chairman since March 2017
Swissborn 1955
Member since 2014

Prof. Dr-Ing. Werner Bauer
German and Swissborn 1950
Member since 2014

Victor BalliSwissborn 1957
Member since 2016

Lilian Biner
Swedishborn 1962
Member since 2011

Dr. Jürg Witmer
Chairman until March 2017¹
Swissborn 1948
Member since 1999

Michael Carlos
Frenchborn 1950
Member since 2015

Ingrid Deltenre
Dutch and Swissborn 1960
Member since 2015

Thomas Rufer
Swissborn 1952
Member since 2009

Audit Committee

Compensation Committee

Thomas Rufer (Chairman), entire year
Lilian Biner, entire year
Victor Balli, entire year

Prof. Dr-Ing. Werner Bauer (Chairman), entire year
Ingrid Deltenre, entire year
Calvin Grieder, until March 2017
Victor Balli, from March 2017

– A ssists the Board in its oversight responsibilities withrespect to financial reporting– Ensures effectiveness and efficiency of internal control,risk management and compliance systems– A ssesses and overviews the internal and external
audit processes– Reviews and recommends the compensation policies tothe Board– Approves the remuneration for the Executive Committee– Prepares the Compensation Report

Nomination and Governance Committee

Innovation Committee

Dr Jürg Witmer (Chairman), until March 2017¹
Calvin Grieder (Chairman), from March 2017
Ingrid Deltenre, entire year
Lilian Biner, until March 2017
Michael Carlos, from March 2017

Michael Carlos (Chairman), entire year
Calvin Grieder, entire year
Prof. Dr-Ing. Werner Bauer, entire year

– A ssists the Board in applying principles of good
corporate governance– Prepares appointments to the Board and the
Executive Committee– A ssists the Board in scientific matters relating to theflavours, fragrances and cosmetics Industry– Identifies opportunities, proposes and screens potential
innovation partners

1. Dr. Jürg Witmer retired as Board member, as Chairman and as Chairman of the Nomination and Governance Committee on 23 March 2017.

Givaudan – 2017 Annual ReportGovernance report 67

3.2 Other activities and vested interests
Please refer to the biographies of the Board members describedin section 3.1 for their other activities and vested interests.
Except for those described in section 3.1, no Board member ofGivaudan SA holds any material permanent management or
consultancy functions for significant domestic or foreign interest
groups nor any significant official functions or political posts. The
Board of Directors assesses the independence of its members.
As at 31 December 2017, all members of the Board of Directors
were non-executive and, apart from Michael Carlos, all of theBoard members were independent in accordance with article
14 of the Swiss Code of Best Practice for Corporate Governance.
None of the Board members has important businessconnections with Givaudan SA or any of its affiliates. Michael
Carlos was President of the Fragrance Division of the Company
until the end of 2014.
3.3 Rules in the Articles of Incorporation on the numberof permitted activities pursuant to Art. 12 para. 1 point 1 of
the Ordinance against Excessive Compensation (OaEC)
Article 32 of the Articles of Incorporation of the Company
permits the following external mandates for members of theBoard of Directors:– Members of the Board of Directors may not hold more thanfour additional mandates in companies that are quoted on an
official stock exchange and seven additional mandates in
non-quoted companies– The following mandates are not subject to these limitations: mandates in companies which are controlled by the
corporation mandates held by order and on behalf of the corporation or
any controlled company. No member of the Board of
Directors or of the Executive Committee shall hold morethan ten such mandates
 mandates in associations, foundations, charitableorganisations, trusts, employee welfare foundations andother comparable structures. No member of the Board of
Directors or of the Executive Committee shall hold morethan 15 such mandates.
‘Mandates’ mean mandates in the supreme governing bodyof a legal entity which is required to be registered in the Swisscommercial register or a corresponding foreign register.
Mandates in different legal entities which are under joint
control are deemed one mandate.

3.4 Elections and terms of office
3.4.1 Principles of the election procedure, rules differingfrom the statutory legal provisions with regard to
the appointment of the Chairman, the members of theCompensation Committee and the independent proxy
The Company amended its Articles of Incorporation at theAnnual General Meeting 2014 to align with the newrequirements of the OaEC. The rules regarding the appointmentof the Chairman, the members of the Compensation Committee
and the independent proxy do not deviate from the statutory
legal provisions. All Board members, the Chairman, the membersof the Compensation Committee and the independent proxy
are elected annually and individually for one year, being the timefrom one ordinary Annual General Meeting to the next one.
3.4.2 For each Board member: date of first election
to Board and attendance of meetings
For the dates of first election to the Board and attendance ofBoard and committee meetings, please refer to the tables on
pages 66 and 68.
3.5 Internal organisational structure
3.5.1 Allocation of tasks among the Board members
The Chairman is elected annually at the Annual General
Meeting. He prepares the agenda and chairs meetings of theshareholders, convenes, prepares and chairs the meetingsof the Board of Directors, coordinates the work of the Board
committees, prepares and supervises the implementationof resolutions of the Board of Directors (to the extent notdelegated to a committee), supervises the course of businessand the activities of the Executive Committee, proposes
succession candidates for appointment to the Board of
Directors or to the Executive Committee and proposes theglobal remuneration of the Chief Executive Officer and othermembers of the Executive Committee to the Compensation
Committee.
The Chairman receives all invitations and minutes of Committee
meetings and is entitled to attend these meetings. The Chairman
further decides in cases which fall under the tasks and powersof the Board of Directors, but in which a timely decision of theBoard of Directors cannot be made because of urgency. In suchcases, the Chairman informs the members of the Board of
Directors as quickly as possible and the corresponding resolution
is minuted at the next Board meeting.
If the Chairman is unable to act, the Vice-Chairman exercises
his functions, assuming all his tasks and powers.

Givaudan – 2017 Annual Report68 Governance report

Meetings: attendance 2017
Number of
Board meetings / calls
attended
Board member

Jan – MarMar – Dec

Dr Jürg Witmer

2

n/aCalvin Grieder

25Victor Balli

2

5

Prof. Dr-Ing. Werner Bauer

2

5

Lilian Biner

2

5

Number of
Audit Committee
meetings attended
Jan –Mar

1

3

1

3

Michael Carlos

2

5Ingrid Deltenre

25Thomas Rufer

2

5

1

Meetings held in period

2

5

1

Meetings held in the year
Average length ofmeetings

Mar – Dec

Number of
Nomination and
GovernanceCommittee meetings
attendedNumber of Innovation
Committee meetings
attended

Jan – MarMar – Dec

Jan – MarMar – Dec

Jan – MarMar – Dec

1

n/a

2

n/a

n/a

3

0

2

n/a

2

2

2

0

2

1

n/a
0

2

2

n/a

3

2

1

3

2

1

3
3

2

3

2

0

7

4

4

4

2

1.2 days

3 to 4 hours

1.5 to 2 hours

1 to 1.5 hour

4 hours

3.5.2 For each committee of the Board of Directors:
list of members – tasks – areas of responsibility
The Board of Directors has established four Committees:
an Audit Committee, a Nomination and GovernanceCommittee, a Compensation Committee and an Innovation
Committee. Each committee is led by a Committee Chairman
whose main responsibilities are to organise, leadand minute the meetings. For the participation of theBoard members in the committees, please refer to the tableon page 66.
Audit Committee
The primary function of the Audit Committee is to assist theBoard in fulfilling its oversight responsibilities by reviewing thefinancial information, the systems of internal controls and theaudit process. It carries out certain preparatory work for the
Board of Directors as a whole. The Audit Committee currently
consists of three members of the Board. All of them have therequisite financial experience.
The Audit Committee ensures that the Company’s risk
management systems are efficient and effective. It promotes
effective communication among the Board, management, theinternal audit function and external audit. It reviews andapproves the compensation of the external auditors for theannual audit.
The Audit Committee met four times in 2017. Each meeting
lasted approximately three to four hours. The Head ofInternal Audit, the Chief Financial Officer, the Corporate
Compliance Officer and the External Lead Audit Partner
attended all meetings, apart from certain private sessions.

Givaudan – 2017 Annual Report

Number ofCompensation
Committee meetings
attendedCompensation Committee
The Compensation Committee reviews and recommends thecompensation policies to the Board of Directors. It approves the
remuneration of the Chief Executive Officer and the othermembers of the Executive Committee as well as all performancerelated remuneration instruments and pension fund policies.
Since the OaEC came into force, the Committee prepares theCompensation Report to be established by the Board.
The Compensation Committee consists of three members of
the Board. The Committee takes advice from external
independent compensation specialists and consults with the
Chairman and the Chief Executive Officer on specific matterswhere appropriate. Since the Annual General Meeting 2014, themembers of the Compensation Committee are elected by theshareholders from the re-elected Board members.
In 2017, the Compensation Committee met four times. The
average duration of each meeting was approximately 1.5 to 2
hours. During these meetings the Committee reviewed, among
other things, the short and long term incentive plan parameters
as well as the alignment of Executive Committee and Board of
Directors compensation with the Company’s principles andpolicy. Where appropriate, the Chairman, the Chief Executive
Officer, the Chief Financial Officer, the Head of Global Human
Resources and/or the Head of Compensation and Benefits
attended the meetings.
 2017 Compensation Report – page 80

Governance report 69

Nomination and Governance Committee
The Nomination and Governance Committee assists the Board
in applying the principles of good corporate governance. It
prepares appointments to the Board of Directors and the
Executive Committee and advises on the succession planning
process of the Company. It consists of three members of
the Board.
The Nomination and Governance Committee met four times
during 2017 to prepare changes in the composition of the Boardand the Board committees as well as senior management
succession. It also reviewed the independence of the Board
members. Each meeting lasted between one and one and ahalf hours.
Innovation Committee
The Innovation Committee advises the Board on scientificmatters relevant to the flavour and fragrance and cosmetics
industry, or other additional fields the Board may request. It
acts as a sounding board to the Board of Directors, offering
different perspectives and identifying opportunities in theinnovation space. It also proposes and screens potential
innovation partners and validates and reviews projects onrequest of management.
The Innovation Committee met twice during 2017 to discuss
innovation strategies for different areas of the Company. Eachmeeting lasted approximately four hours. The Head of Global
Science and Technology attended both meetings. Further
members of senior management as well as external advisors
also attended one or more of the meetings.
More information on the Board of Directors and the roles of
the Committees are described in the following sections ofGivaudan’s website: ww.givaudan.com – our company  –
w
management  – board of directors
www.givaudan.com – our company – management  –
board of directors – committees of the board

3.5.3 Work methods of the Board and its Committees
Board meetings are held periodically and also when mattersrequire a meeting, or on the written request of one of themembers of the Board. Ordinary Board meetings are held on
average once a quarter plus one additional ordinary Board
meeting to approve the Annual Report. The Chairman, after
consultation with the Chief Executive Officer, sets the agenda
for each Board meeting. Decisions may also be taken by
circulation (in writing, including by PDF sent by e-mail) or bytelecommunication (including telephone and videoconference), provided that none of the Board members
requests a formal meeting.

Meetings of Board Committees are usually held in connection
with Board meetings, with additional meetings scheduled as
required. The Board of Directors receives regular reports fromits Committees and the Chairman, as well as from the
Executive Committee.
The minutes of all Committee meetings are prepared by the
Board secretary and circulated to all Board members.
In preparation for Board and committee meetings, the Board
members involved receive pertinent information for prereading via a secure electronic document sharing system.
In 2017, the Givaudan Board of Directors held seven meetings,
including one constitutive meeting directly following thegeneral meeting of shareholders and one extraordinary
meeting by telephone. Regular meetings in Switzerland usually
last for one to one and a half days, while Board meetings at
Givaudan locations outside Switzerland last for two to threedays, including visits to sites and strategic locations anddiscussion with the management of the visited region.
Extraordinary meetings are usually shorter.

In October 2017, the Board visited the Company’s flavour andfragrance sites in the United States.
Apart from the constitutive meeting directly following thegeneral meeting of shareholders and the extraordinary meetingby telephone, the Company’s operational and financial
performance was presented by management and reviewed
by the Board during each Board meeting. The Board was also
informed about, and discussed, various aspects of theCompany’s future strategy, all major business development andinvestment projects, management succession planning andcompensation and other major business items as well as thefindings of Internal Audit and risk management. Except for theconstitutive meeting and certain closed sessions, the Chief
Executive Officer, the Chief Financial Officer and the presidentsof the two divisions were present at all meetings. The othermembers of the Executive Committee attended two meetings.
Selected senior managers were invited to address specificprojects at regular Board meetings. The Head of Corporate
Internal Audit and the Corporate Compliance Officer eachreported once to the Board of Directors.
In 2017, the Board conducted one annual self-assessment andhad continuous discussion of its own succession planning.
The attendance of Board members at Board and Committee
meetings in 2017 as well as the average durationof the meetings can be seen in the table on page 68.

Givaudan – 2017 Annual Report70 Governance report

3.6 Definition of areas of responsibility
The Board of Directors is responsible for the ultimate direction,
strategic supervision and control of the management of theCompany, as well as other matters which, by law, are under its
responsibility. This includes the establishment of medium- andlong-term strategies and of directives defining Company
policies and the giving of the necessary instructions in areas
such as acquisitions, major investments and long-term financial
commitments exceeding certain thresholds.
In accordance with Swiss law, the Articles of Incorporation and
the Board Regulations of Givaudan, the duties of the Board of
Directors include the following matters:– t he ascertainment of share capital increases to the extent
that these fall under the powers of the Board of Directors
and resulting confirmations and modifications to the Articles
of Incorporation– the verification of the special professional qualifications of
the auditors.
Except as otherwise provided by Swiss law, the Articles ofIncorporation and the Board Regulations, all other areasof management are fully delegated by the Board of Directors
to the Chief Executive Officer, the Executive Committee andits members.

– the ultimate management of the Company and, in particular,
the establishment of medium- and long-term strategies andof directives defining Company policies and the giving of thenecessary instructions

The Board Regulations can be found at:– the establishment of the organisation

3.7 Information and control instruments vis-à-vis
senior management
The Board recognises that in order to be able to carry out its
tasks of ultimate direction of the Company and supervision of
the management, it needs to be fully informed about all
matters that materially impact Givaudan. To ensure this, theBoard has at its disposal an information and control system
which comprises the following instruments:– the approval of the annual Group budget– the structuring of the accounting system and of the financial
controlling, as well as the financial planning– the assessment of the Company’s risk management– t he decision on investments in, or divestments of, fixed andtangible assets of a global amount exceeding the limit set by
the corporate investment guidelines established by the Boardof Directors– t he appointment and removal of the persons entrusted withthe management and representation of the Company, inparticular the Chief Executive Officer and the other membersof the Executive Committee–the ultimate supervision of the persons entrusted with the
management, in particular with respect to compliance withthe law, the Articles of Incorporation, regulations andinstructions given in any areas relevant to the Company,
such as working conditions, environmental protection,
trade practices, competition rules, insider dealing and ad
hoc publicity

www.givaudan.com – our company – corporate governance – rules and policies

Management information system
The Board ensures that it has sufficient information for
appropriate decision-making through a management
information system with wide-ranging information rights for
the Board members:– t he Chairman of the Board receives invitations and minutesof Executive Committee meetings on a regular basis and theChief Executive Officer and the Chief Financial Officer report
regularly to the Chairman of the Board of Directors– t he Chief Executive Officer and the Chief Financial Officer arepresent and report at all regular Board meetings and answer
all requests for information by the Board members about any
matter concerning Givaudan that is transacted. Other
members of the Executive Committee and selected senior
managers are regularly invited to address specific projects atregular Board meetings. All members of the Executive– the preparation of the annual business report, as well as theCommittee have a duty to provide information at meetings
preparation of the Annual General Meeting of shareholders andof the Board of Directors on request
the implementation of its resolutions– t he Head of Internal Audit and the Corporate Compliance– the notification of the court in case of insolvency
Officer report to the Board once a year. The Board also
receives annual reports on Environment, Health and Safety,– the decisions regarding the subsequent performance ofSustainability and Risk Management
contributions on shares not fully paid in– t he Head of Internal Audit and the Corporate Compliance
Officer are present and report at each meeting of the Audit

Givaudan – 2017 Annual ReportGovernance report 71

Committee. The Chief Financial Officer is also present at all
meetings of the Audit Committee, as are the external auditors– the Head of Human Resources, the Head of Compensation &Benefits and the Chief Executive Officer are present at each
Compensation Committee meeting, except when questionsof compensation for Executive Committee members arebeing deliberated. The Chairman also attends regularly themeetings of the Compensation Committee– all Board members have access to all Committee
meeting minutes– the Board of Directors receives summarised monthly reports
from the Executive Committee, which include performanceagainst key performance indicators. All Board members are
immediately informed on extraordinary events. They also
have direct access to the Givaudan intranet where all internal
information on key events, presentations and organisationalchanges are posted. In addition, the Board members receive
relevant information, including media releases andinformation to investors and financial analysts– in preparation for each Board meeting, the Board members
receive information and reports from the Executive
Committee and other members of senior management via asecure electronic document sharing system and other meansof communication– the Board of Directors visits at least one Givaudan country
operation per year, where Board members meet members ofsenior local management. Additionally, Board members areencouraged to visit country operations when travelling andto meet local and regional senior management to allow
Board members the opportunity of getting first-handinformation on local and regional developments andinteracting directly with management across the globe– the Board has regular access to the Chief Executive Officer,
Chief Financial Officer and the other members of the
Executive Committee. Any Board member may request fromthe Chief Executive Officer and other members of the
Executive Committee information concerning the course of
the business.
Risk management
Givaudan has established an internal risk management processthat is based on the Givaudan Enterprise Risk Management
Charter. It focuses on identifying and managing/exploiting risks.
The Board of Directors defines the strategic risk management
framework. This process is under the responsibility of the
Executive Committee. The risk management process follows
a structured assessment, review and reporting cycle that iscoordinated by the Corporate Compliance Officer to ensurea harmonised Group-wide approach.

For each identified strategic top-level Company risk a memberof the Executive Committee is designated as the risk ownerwith the responsibility to manage the risk on a Group-widebasis. Once a year the Executive Committee reports to theBoard on the risk management process, the strategic risks andthe mitigation actions. Corporate Internal Audit provides
assurance on the effectiveness of the risk management process.
2017 Annual Report – differentiating business enablers – risk management – pages 49 – 52

Internal audit
The Corporate Internal Audit function is established as anindependent and objective corporate function reporting
directly to the Audit Committee.
Its role is to evaluate and contribute to the continuous
improvement of the Company’s risk management and control
systems. This specifically includes the analysis and evaluation of
the effectiveness of business processes and recommendations
for adjustments where necessary.
Corporate Internal Audit uses a risk-based audit approach
aimed at providing assurance on all relevant business processes
across Givaudan entities. This approach follows a businessprocess audit methodology that provides value to the local
entities and to the Group’s management.
Givaudan corporate strategy, risk management findings, past
audit results, management input, changes in organisation andCorporate Internal Audit experience are the elements taken
into account to build the annual internal audit plan. Effective
communication and reporting ensure an efficient
implementation of the audit recommendations. For specificaudits of affiliates, the internal audit function is supported bydedicated staff from EY. The internal audit activity is reported
to the full Board of Directors once a year.
Disclosure 102 – 18, pages 63 – 71

 

4. Executive Committee
The Executive Committee, under the leadership of the Chief
Executive Officer, is responsible for all areas of operational
management of the Company that are not specifically reservedto the Board of Directors.
The Chief Executive Officer is appointed by the Board of
Directors upon recommendation of the Nomination
Committee. Subject to the powers attributed to him, he has
the task of achieving the strategic objectives of the Company
and determining the operational priorities. In addition, heleads, supervises and coordinates the other members of the
Executive Committee, including convening, preparing andchairing the meetings of the Executive Committee.

Givaudan – 2017 Annual Report72 Governance report

LtR: Willem Mutsaerts, Mauricio Graber, Tom Hallam, Gilles Andrier, Maurizio Volpi, Anne Tayac, Simon Halle-Smith, Chris Thoen

The members of the Executive Committee are appointed by the
Board of Directors on recommendation of the Chief Executive
Officer after evaluation by the Nomination Committee. The
Executive Committee is responsible for developing theCompany’s strategic as well as long-term business and financial
plans. Key areas of responsibility also include the management
and supervision of all areas of the business development on an
operational basis, and approving investment decisions.
The tasks and powers of the Executive Committee include theapproval of investments, leasing agreements and divestments
within the corporate investment guidelines. The Executive
Committee approves important business projects, prepares
the business plan of the Company and the budgets of theindividual divisions and functions.
In addition, it plays a key role – together with the Human
Resources organisation – in the periodic review of the talentmanagement programme, including succession planning for key
positions. Alliances and partnerships with outside institutions,such as universities, think tanks and other business partners, arealso monitored by the Executive Committee.
The members of the Executive Committee are individually
responsible for the business areas assigned to them.

Givaudan – 2017 Annual Report

Sustainability
The Head of Global Procurement and Sustainability, a member ofthe Executive Committee, heads the Company’s sustainability
programme. He is supported by a cross-functional corporate
sustainability steering committee and a sustainability leadershipteam made up of internal specialists in corporate responsibility
and sustainability to implement the programme. The Head of
Global Procurement and Sustainability reports annually to theBoard of Directors on sustainability matters.
The Executive Committee meets generally on a monthly basis to
discuss general Company business and strategy. In 2017, theCommittee held eight meetings at Company sites around theworld, each meeting lasting between one and three days. In
addition, the Chief Executive Officer, the Chief Financial Officer
and the presidents of the two divisions held an additional
four meetings.
These meetings are an opportunity to interact with local
management and to visit Givaudan locations across the globe.
Each major region is visited at least once a year to ensure aclose interaction with all the different business areas.

Governance report 73

4.1 Members of the Executive Committee

Mauricio Graber

Gilles Andrier

Mexican national

Chief Executive Officer
French national
Born in 1961
Appointed in 2005
Gilles Andrier spent the first part of his career with Accenture
in management consulting before joining Givaudan in 1993 as
Fragrance Division Controller and Assistant to the Chief
Executive Officer. He later held various positions including
Head of Fragrance Operations in the USA and Head ofConsumer Products in Europe. He was appointed Head of Fine
Fragrances, Europe in 2001 before becoming Global Head ofFine Fragrances in 2003 and then CEO of Givaudan in 2005.
Other mandates held by Gilles Andrier are: independent
non-executive Director of Albea SA, member of the Board of
the Swiss-American Chamber of Commerce (until June 2017),
and Co-Chairman of the Board of the Natural Resources
Stewardship Circle.
Gilles Andrier graduated with two Masters in Engineering fromENSEEIH Toulouse.

Tom Hallam

Chief Financial Officer
British and Swiss national
Born in 1966
Appointed in 2017
Tom Hallam began his career in the UK working in various
industries and positions. He moved to Switzerland in 1996 tojoin Serono in Geneva, where he held a number of positions ofincreasing responsibility including Financial Director for
Manufacturing Operations, and in 2001 he was appointed Vice
President, Corporate Finance. Tom joined Givaudan in 2008 as
Group Controller, based in Vernier, Switzerland withresponsibility for financial reporting and compliance, strategicplanning and management of Givaudan’s business development
process. He was appointed Chief Financial Officer effective
1 January 2017.
Tom Hallam graduated from the University of Manchester, UKwith a BA (Hons) in Accounting and Finance and subsequently
qualified as a member of the Chartered Institute ofManagement Accountants.

President Flavour Division
Born in 1963
Appointed in 2006
Mauricio Graber began his career with Givaudan in 1995 as
Managing Director for Latin America with Tastemaker. When
Tastemaker was acquired by Givaudan, Mauricio Graberbecame Managing Director for Mexico, Central America andthe Caribbean before becoming Vice-President for Latin
America in 2000. He was appointed President of the Givaudan
Flavour Division in 2006.
Other mandates held by Mauricio Graber are: member ofthe Board of the International Organization of the Flavor
Industry (IOFI).
Mauricio Graber holds a BSc in Electronic Engineeringfrom Universidad Autónoma Metropolitana and a Masters
in Management from the JL Kellogg Graduate School ofManagement, Northwestern University, USA.

Maurizio Volpi

President Fragrance Division
Italian national
Born in 1969
Appointed in 2015
Maurizio Volpi began his career in consumer goods with P&G
and Reckitt Benckiser in Italy, working in various marketingroles. In 2000, he joined Givaudan Italy as Account Manager in
Milan before moving to Argenteuil in 2003 as Head ofMarketing Consumer Products Europe. Maurizio Volpi
subsequently took on roles of increasing responsibility at the
global level: Head of Global Marketing Consumer Products,
Head of Global Marketing and Consumer Market Research forboth Consumer Products and Fine Fragrances, and World
Account Manager for Unilever. He was appointed Regional
Head of Western and Eastern Europe (WEE) for the Consumer
Products business in 2012 and in 2015 became President of
the Givaudan Fragrance Division.
Maurizio Volpi holds a degree in Economics from the Bocconi
University in Milan, Italy.

Givaudan – 2017 Annual Report

74

Governance report

Simon Halle-Smith

Anne Tayac

British national

French national

Born in 1966

Born in 1968

Appointed in 2015

Appointed in 2016

Simon Halle-Smith began his career in the pharmaceuticalindustry in 1991. He worked with Eli Lilly & Company in the UK
in Clinical Trial Project Management, Sales and Human
Resources. In 2004, he joined Quest as HR Director for the UK,
before being appointed European HR Director in 2005. When
Quest was acquired by Givaudan in 2007, he continued as
European HR Director before being appointed Head of HR for
the Fragrance Division in 2009. In 2015, Simon Halle-Smith
became Head of Global Human Resources and a member of the
Executive Committee. He took on the additional responsibility
for Environment, Health and Safety (EHS) as of March 2017.

Anne Tayac began her career as a Quality Assurance
coordinator with Robertet in Grasse. She joined Givaudan
France in 1996 as Head of Quality Management before being
promoted to Global Head of Fragrance Quality Management in1998. Anne relocated to Vernier in 2003 where she assumedroles of increasing responsibility in Quality Management,
Customer Care, SAP deployment change management,
Fragrance and Flavour Supply Chain Excellence and was mostrecently responsible for leading Global Fragrance Operations.
She was appointed as Head of Givaudan Business Solutions(GBS) in August 2016.

Simon Halle-Smith has a Bachelors in Biology and Chemistry
and a PhD in Biochemistry from the University of East Anglia in
the UK.

Anne Tayac has a Master in Flavours and Fragrances from
Sciences University in Le Havre, France and in Analytical Control
and Quality from Sciences University in Marseille, France.

Willem Mutsaerts

Chris Thoen

Dutch national

American and Belgian national

Born in 1962

Born in 1960

Appointed in 2015

Appointed in 2015

Willem Mutsaerts joined Givaudan in 1989, initially withresponsibility for sales in Benelux. He moved on to become
Regional Account Manager for the APAC region in Singapore
before being appointed Head of Global Purchasing for
Fragrances. In 2001, he took commercial responsibility for
Fragrance consumer products in the EAME region, and in 2007
was appointed Head of Global Operations Fragrances.
Willem Mutsaerts became Head of Global Procurement and amember of the Executive Committee in October 2015. As of
March 2017, he took on the additional responsibility of head ofGivaudan’s Sustainability programme.

Chris Thoen began his career in enzymology and plant genetics
with Plant Genetic Systems in Ghent before joining Procter &Gamble in Brussels in 1988. At P&G, he held positions ofincreasing responsibility in the Fabric & Home Care andPersonal Health Care division. In 2009, he became Managing
Director of the Global Connect + Develop Office responsible forOpen Innovation with external partners at corporate level.
Chris Thoen joined Givaudan as Head of Science andTechnology for Flavours in 2011. He was appointed Head of
Global Science and Technology in 2015.

Head of Global Human Resources and EHS

Head of Global Procurement and Sustainability

Willem Mutsaerts has a degree in international marketing andis the holder of an MBA obtained at Golden Gate University in
Singapore.

Head of Givaudan Business Solutions

Head of Global Science & Technology

Other mandates held by Chris Thoen are: member of the Boardof Directors of MassChallenge CH Association and member ofthe Board of the Association EIT Food CLC West IVZW.
Chris Thoen holds a Masters in Chemistry and a PhD in
Biochemistry from the University of Antwerp, Belgium.

Givaudan – 2017 Annual ReportGovernance report 75

Changes to the Executive Committee
At the end of June 2017 Joe Fabbri, Head of Global Environment,
Health and Safety (EHS) and Sustainability retired from the
Executive Committee. Simon Halle-Smith, Head of Global
Human Resources, took on the additional responsible for EHS,
and Willem Mutsaerts, Head of Global Procurement, assumed
the additional responsibility for Sustainability.

4.4 Key elements of all management contracts between
the issuer and companies (or natural persons) not
belonging to the GroupThe Company has not entered into any management contracts
with third parties that fall within the scope of Subsection
4.4 of the SIX Directive on Information Relating to Corporate
Governance.

4.2 Other activities and vested interests
Please refer to the biographies of the members of the Executive
Committee described in section 4.1 for their other activities andvested interests.

5. Compensation, shareholdings and loans

Except for those described in section 4.1, no member ofthe Executive Committee of Givaudan SA holds any material
permanent management or consultancy functions for
significant domestic or foreign interest groups nor any
significant official functions or political posts.

In accordance with the Swiss Code of Obligations and the SIX
Directive on Corporate Governance, Givaudan publishes thedetails of the remuneration of its Board of Directors and its
Executive Committee in the separate ‘Compensation Report’ inthis Annual Report as well as in the 2017 Financial Report.

4.3 Rules in the Articles of Incorporation on the numberof permitted activities pursuant to Art. 12 para. 1 point 1
OaEC
Article 32 of the Articles of Incorporation of the Company
permits the following external mandates for members of the
Executive Committee:

6. Shareholders’ participation– members of the Executive Committee may, subject toapproval by the Board of Directors, hold up to two mandates
in quoted or non-quoted companies– the following mandates are not subject to these limitations: mandates in companies which are controlled by the
corporation mandates held by order and on behalf of the corporation or
any controlled company. No member of the Board of
Directors or of the Executive Committee shall hold morethan ten such mandates mandates in associations, foundations, charitableorganisations, trusts, employee welfare foundations andother comparable structures. No member of the Board of
Directors or of the Executive Committee shall hold morethan 15 such mandates.
‘Mandates’ mean mandates in the supreme governing bodyof a legal entity which is required to be registered in the Swisscommercial register or a corresponding foreign register.
Mandates in different legal entities which are under joint
control are deemed one mandate.

Disclosure 102 – 18, pages 71 – 75

 

6.1 Voting rights and representation restrictions
6.1.1 All voting rights restrictions; indication of any
statutory group clauses and rules on granting exceptions,particularly in the case of institutional voting rights
representatives
At the Annual General Meeting of shareholders on 20 March
2014, the previously existing registration and voting rights
restrictions were removed. Today, the Company has nolimitations on voting rights for ordinary shareholders.
For restrictions on nominee shareholders, see section 2.6.3.
6.1.2 Reasons for granting exceptions in the year
under review
Not applicable as the Company does not have any voting rights
restrictions for ordinary shareholders.
6.1.3 Procedure and conditions for abolishing statutory
voting rights restrictions
Any change in the above rules requires a positive vote of theabsolute majority of the share votes represented at ashareholders’ meeting, as prescribed by Swiss law.
6.1.4 Statutory rules on participation in the general
meeting of shareholders if they differ from applicablelegal provisions
There are no deviations from the Swiss legal provisions.
Any shareholder who, on the day determined by the Board of
Directors, is registered as a shareholder with voting rights has
the right to attend and to vote at the shareholders’ meeting.
Each shareholder may be represented at the shareholders’meeting by another shareholder who is authorised by a writtenproxy, by a legal representative or by the independent voting
rights representative (‘independent proxy’) elected by the
Annual General Meeting of shareholders.
Givaudan – 2017 Annual Report

76 Governance report

6.1.5 Information on any rules which might be laid downin the Articles of Incorporation on the issue of instructions
to the independent proxy, and any rules in the Articles ofIncorporation on the electronic participation in thegeneral meeting of shareholders
Article 10 of the Articles of Incorporation of the Company
states that the Board of Directors establishes the rules onshareholder participation and representation in theshareholders’ meeting, including the rules on proxies andvoting instructions (by electronic means or otherwise).
6.2 Statutory quorums
The Articles of Incorporation of Givaudan SA follow the
majority rules prescribed by Swiss law for decisions of general
meetings of shareholders.
6.3 Convocation of the general meeting of shareholders
The convocation of shareholders registered with voting rights
to general shareholders’ meetings is made by publication in the
Swiss official trade journal (SHAB/FOSC) at least 20 days prior
to the day of the meeting. Shareholders representing at least
10% of the share capital may demand in writing that ashareholders’ meeting be convened, setting forth the items to
be included on the agenda and the proposals.
6.4 Agenda
Shareholders representing shares for a nominal value of at least
CHF 1 million may demand in writing at least 45 days before themeeting that an item be included in the agenda, setting forth
the item and the proposal.
6.5 Inscriptions into the share register
Shareholders will be registered with a right to vote in the shareregister of Givaudan SA until the record date set by the Boardof Directors for each shareholders' meeting. The register date
for the ordinary general meeting is specified in the invitationand is set approximately two weeks before the meeting. Only
shareholders who hold shares registered in the share registerwith a right to vote at a certain date, or their representatives,
are entitled to vote.
Givaudan SA has not granted any exceptions to this rule.

7. Change of control and defence measures
7.1 Duty to make an offer
The Articles of Incorporation of Givaudan SA do not containany rules on opting out or opting up under Swiss law.
General Swiss legal provisions apply, which provide that anyone
who acquires more than 33.3% of the voting rights of a listedcompany is required to make a public offer to acquire all listed
securities of the Company that are listed for trading on the SIX
Swiss Exchange.

Givaudan – 2017 Annual Report

7.2 Clauses on changes of control
In the event of a change of control, restricted share units (RSU)
and performance shares granted, as the case may be, by theCompany to members of the Board of Directors and to a totalof 421 senior management and employees may vest
immediately. All other defence measures against change ofcontrol situations previously in effect were deleted by the
Board of Directors in 2007.

8. Auditors
8.1 Duration of the mandate and term of office of thelead auditor
At the Annual General Meeting of shareholders on 26 March
2009, Deloitte SA was first appointed as Group and statutory
auditor of Givaudan SA and its affiliates and has held the audit
mandate since that time. At the Annual General Meeting ofshareholders on 23 March 2017, Deloitte SA was reappointed as
statutory auditor for the business year 2017. Since March 2016,
the responsible lead auditor for the Givaudan audit at Deloitte
has been Ms Karine Szegedi Pingoud, Partner.
The Audit Committee and the Board reconsider on an annual
basis whether the statutory auditors should be proposed for
re-election to the shareholders’ meeting.
8.2 Auditing fees
The fees of Deloitte for professional services related to theaudit of the Group’s annual accounts for the year 2017 were
CHF 3.4 million. This amount includes fees for the audit ofGivaudan SA, its subsidiaries, and of the consolidated financial
statements.
8.3 Additional fees
In addition, for the year 2017, Deloitte rendered tax andcompliance related services for a total of CHF 0.9 million.
8.4 Informational instruments pertaining to theexternal audit
The external auditor presents the outcome of the audit directly
to the Audit Committee after the end of each reporting year.
The Audit Committee is also responsible for evaluating theperformance of Deloitte as external auditors pursuant to a setof defined criteria. In addition, the Committee reviews andapproves the compensation and evaluates and approves otherservices provided by the external auditor. During 2017 Deloitte
attended all four of the Audit Committee meetings.
The scope of the audit is defined in an engagement letter
signed by the Chairman of the Audit Committee and theChief Financial Officer.

Governance report 77

9. Information policy
Givaudan’s Principles of Disclosure and Transparency aredescribed in detail at:
w ww.givaudan.com – our company  – 
corporate governance – rules and policies

Givaudan's Articles of Incorporation can be found at:
w ww.givaudan.com – our company  – 
corporate governance – rules and policies

Hard copies of Company publications such as the Annual Report
are available on request.
All Corporate publications such as the Annual Report, theHalf Year Report and the Sustainability GRI Report can also
be downloaded from Givaudan’s website at:
w ww.givaudan.com  – media – publications 

Quarterly sales information and other media releases canbe found at:
www.givaudan.com – media – media releases All relevant information can also be found at:
w ww.six-swiss-exchange.com – market data – shares – Givaudan – company details

The complete calendar of events is available at:
w ww.givaudan.com – investors – shareholder information – investor calendar

For further information please contact:
Peter Wullschleger, Givaudan Media and Investor Relations
Chemin de la Parfumerie 5, 1214 Vernier, Switzerland
T +41 22 780 9093
E group.investors@givaudan.com

Givaudan – 2017 Annual Report

78 Compensation report

Compensation
reportFair and competitivecompensation is essential toattract, motivate and retain
the best talent in the industry.

In this section:

Givaudan – 2017 Annual Report

Compensation governance

80

Compensation principles

81

Compensation of Givaudan executives

82

Compensation of the Executive Committee

87

Compensation of the Board of Directors

88

Share ownership guidelines

90

Ownership of Givaudan securities

90

Statutory Auditor's Report91Compensation report 79

CHF 22.8 million
total compensation (fixed & variable)of the Executive Committee

CHF 2.9 million

total compensation of the Board of Directors

Competitive compensation
to attract, motivate and retain
the best talent in the industry

Fair compensation

with consistent salary scale to reflect job levels,
functions and geographic regions

Pay for performance

rewarding employees for their contribution
to business results

Givaudan – 2017 Annual Report80Compensation report

Compensation Report
Attract, motivate and retain

Givaudan aims to attract,
motivate and retain the highest
calibre of professional andexecutive talent to sustain its
leadership position within theflavour and fragrance industry.
The Company’s compensation
policies are an essential
component of this strategy,
and as such a key driver oforganisational performance.
Our compensation programmes are aligned to our strategy andreflect the performance of the business and of individuals. We
have rigorous governance, policies and processes to ensurethat our compensation practices are aligned with our principles
of integrity, fairness and transparency.
This report on compensation, complementing our businessand financial reports, has been prepared in compliance with
the Ordinance against Excessive Compensation at Listed Stock
Companies (OaEC) and with the Directive on Information
relating to Corporate Governance, issued by the SIX Swiss
Exchange. The report also comprises information required under
the Swiss Code of Obligations and takes into account therecommendations set out in the Swiss Code of Best Practicefor Corporate Governance of Economiesuisse.

Givaudan – 2017 Annual Report

1. Compensation governance
1.1 Compensation Committee
The Compensation Committee supports the Board of Directors(Board) in establishing and reviewing compensation policies.
It regularly reviews Company-wide programmes in regard tobase salary, pension and benefit plans. The Compensation
Committee also annually reviews and approves theperformance targets and related payouts under the annual
incentives and share-based long-term incentives, while theapplicable performance criteria are set by the Board.
The Compensation Committee is also responsible for reviewing
and approving individual compensation and benefits of each
Executive Committee member as well as recommending
compensation for the Board.
The Compensation Committee consists of three independent
members of the Board and is currently chaired by Prof. Dr-Ing.
Werner Bauer. The Chief Executive Officer is regularly invited
to Compensation Committee meetings. The Head of Global
Human Resources acts as secretary of the Compensation
Committee. The Chairman of the Compensation Committee
may invite other executives as appropriate. However,executives do not participate in discussions regarding theirown compensation.
The Compensation Committee meets three to five times a year
and informs the Board of its deliberations, recommendations
and resolutions after each meeting. The minutes of themeetings are available to the full Board. The Committee utilises
independent external consultants to benchmark thecompensation of senior management and the Board.
 Governance Report – page 68

Compensation report 81

I. Compensation Committee standing agenda items and approvals
Timing

Agenda items

Proposed 1

Beginning ofyear

Compensation Report

Compensation Committee

Board of Directors 3

Prior year annual incentive achievement

CEO

2

Compensation Committee

Set current year performance targets

CEO

2

Compensation Committee

Long-term incentive award allocation

CEO 2

Compensation Committee

Maximum amounts for shareholder voting on
Executive Committee and Board compensation

Compensation Committee

Board of Directors(preliminary) 3

Long-term incentive achievement
against targets

CEO 2

Compensation Committee

Compensation of the Executive Committee

CEO 2

Compensation Committee

Compensation of the Board of Directors

Compensation Committee

Changes to compensation system (if any)Compensation Committee

Preview of key items for next year

CEO / Compensation
Committee

Mid-year /end of year

Consultation

Approved

Board of Directors
Chairman

Board of Directors–

1. CEO compensation proposed by Chairman of the Compensation Committee.
2. Individual concerned does not attend/abstains.
3. Subject to shareholders' vote (binding vote on maximum compensation amounts, consultative vote on Compensation report).

Table I above summarises the Compensation Committee
standing agenda items and approvals.
1.2 Specific activities in 2017
In 2017, beside its regular activities throughout the year,
the Compensation Committee undertook a comprehensive
review of the Performance Share Plan. Accordingly, changes
to the PSP payout matrix will be introduced in 2018,reflecting our overall increasingly challenging targets andconversely further limiting payouts in the event of lower
performance. Further details are provided in section 3.6.
Additionally, an increase in share ownership requirements
for Executive Committee members was introduced in
September 2017 under revised Guidelines. Further details
are provided in section 6.
1.3 Governance rules
The Articles of Incorporation of Givaudan include rules on
the principles applicable to performance-related pay and to
the allocation of equity securities, convertible rights andoptions (Arts. 23-25), additional amounts for payments to
Executive Committee members appointed after the voteon pay at the shareholders’ meeting (Art. 27), loans, credit
facilities and post-employment benefits for the Executive
Committee and Board (Arts. 30 and 31) and the vote on pay
at the shareholders’ meeting (Art. 26).
Full details on these rules are available on the Givaudan’s
website: w ww.givaudan.com – our company –corporate governance – rules and policies

In line with Givaudan’s Articles of Incorporation, at the 2018
Annual General Meeting the Board will submit the following
maximum aggregate amounts for shareholder approval:– Compensation of the Board for the period until the 2019
ordinary shareholders’ meeting– Short-term variable compensation of the Executive
Committee for the 2017 fiscal year–F
 ixed and long-term variable compensation of the Executive
Committee for the 2018 fiscal year
The calculation approach to be applied for determining theamounts to be approved by shareholders is aligned with theCompensation Report valuation methodologies.
Givaudan will also submit the 2017 Compensation Report to a
consultative vote at the 2018 Annual General Meeting.

2. Compensation principles
2.1 Board of Directors
In order to reinforce their independence in exercising theirsupervisory duties, members of the Board receive fixedcompensation only. They are not eligible to any performancebased compensation and are not insured in the Company
pension plans.
The Board compensation is paid in cash and in the form ofRestricted Share Units (RSUs). RSUs are a right to receive sharesof Givaudan after a three-year blocking period. They link thecompensation with the share price evolution of the Company
and strengthen the alignment with shareholders' interests.

Givaudan – 2017 Annual Report82 Compensation report

2.2 Executives and employees
The ability to attract, motivate and retain the right talented
employees globally is key to the continued success of Givaudan.
Our competitive remuneration policy supports this ambition
and is based on the following principles:– Annual Incentive Plan: this plan covers all managers andexecutives globally. It rewards participants for theachievement of financial targets and other organisational andindividual objectives. Depending on the achievement of
performance criteria, payouts can vary between 0% and 200%of target payout.

–P ay for performance: through our variable pay plans,
employees participate in the Company's overall success andare rewarded for their contribution to business results.

– Performance Share Plan (PSP): this plan links executives andselected manager compensation to the evolution of theGivaudan share price and long-term business objectives
through the award of Performance Shares. Depending on theachievement of performance criteria, participants may receive
between zero and two Givaudan shares per performance
share at the end of the three-year vesting period.

–A lignment of interests: Givaudan seeks to align management
and shareholders’ interests by rewarding long-term value
creation through share-based programmes.
– E xternal competitiveness: overall compensation positioning
should enable Givaudan to attract and retain highly talented
individuals critical to its success.

– Benefits (indirect compensation): benefit plans seek to address
current and future security needs of employees. These
generally include retirement, health, death and disability
benefits. Benefits-in-kind such as Company vehicles areoffered to certain employees according to local market
practice.

– I nternal consistency and fairness: internal pay scales reflect
job level, function and geographic market.
Givaudan’s total compensation in 2017 is composed of thefollowing elements:

As illustrated in table II below, every Givaudan employee’s
remuneration is linked to Company performance throughcash-based and/or share-based variable pay plans and isaligned with Givaudan’s compensation principles.

– Base salary: base salaries are regularly benchmarked in eachlocation and pay scales are reviewed annually according to local
market evolution. As a general rule, pay scales are built aroundmarket median.

3. Compensation of Givaudan executives
3.1 Compensation benchmarking
The compensation of Givaudan executives, in terms of both
structure and level, is regularly benchmarked against– Profit Sharing Plan: non-management employees participate in
the global Profit Sharing Plan. Payouts are based on yearly
evolution of Group EBITDA.

II. Givaudan compensation

Compensation

Participants (numberof participants)

PayoutBase salary

All employees (11,000)

Cash

Attract and retain highly talented
individuals. Provides internalconsistency and fairness

Nurture a pipeline ofindustry experts and future
leaders to develop skills forsustained successProfit Sharing Plan

Non-management
employees (7,000)

Cash

Contribution to Group financial
objectives

Reward our people to share inGroup profit

Annual Incentive Plan 1

Manager and executives(4,000)Cash

Contribution tofinancial objectives

Achieve annual organic sales
growth and EBITDA target andindividual performance
objectives

Performance Share Plan 1 Executives and selected(PSP)managers (400)Givaudanshares 2

Alignment of managementwith long-term targets
and shareholders’ interests

Achieve long-term organic
sales growth and free cash
flow targets

Benefits

Insurances,
Protection against risk, attract and Same as base salarypension, fringe retain
benefits

All employees (11,000)

Link to compensation
principles

1. The Annual Incentive Plan and PSP plan are described in more detail in the next sections.
2. Unless local laws prevent allocation of Givaudan shares, in which case payout is in cash.

Givaudan – 2017 Annual Report

Alignment with the business strategy

Compensation report 83

individuals in similar positions within listed European
companies that are comparable in size and internationalpresence. Comparable companies included in ourcompensation surveys may consist of:– Flavour and fragrance companies– European companies in related industries: consumer products food and beverage speciality chemicals– Swiss multinational companies of a size similar to Givaudan(excluding the financial services sector).
To the extent that the median size of the peer group ofcompanies differs from Givaudan’s size (taking into accountrevenue, market capitalisation and number of employees),
regression techniques are applied to adjust raw survey results
for strict comparability.
All benchmarking activity related to Executive Committee
positions is performed by independent consultants.
Benchmarking for other executive positions is performedinternally by the Compensation unit, using survey data provided
by external consultants. Givaudan’s executive compensation
targets base pay at the market median. Executives have theopportunity to be rewarded with above-median pay forsustained outstanding performance from a number of variable
compensation components. These variable elements reflectachievements against quantitative targets established by the
Board, as well as the contribution and leadership qualities ofindividual executives. Variable compensation, particularly
long-term components, represents a significant portion of an
executive’s total compensation. The weight of variable
compensation increases with executives’ level of responsibility
and the impact of their position on Company results.
In 2017, Executive Committee compensation was benchmarked
against a peer group of other Swiss multinational companies ofa size similar to Givaudan. This peer group consisted of Swiss
Leader Index (SLI) companies, excluding the five largest
companies and financial services institutions. The benchmark
included 18 companies: Actelion, Adecco, Aryzta, Clariant, Dufry,
Galenica, Geberit, Kuehne + Nagel, LafargeHolcim, Lonza,
Richemont, Schindler, SGS, Sika, Sonova, Swatch, Swisscom
and Syngenta.

III. Executive compensation benchmark
Below
medianAbove
medianMedianFixed pay1■■

Short-term incentive2■

Long-term incentive3
Total compensation■

1. Includes base salary, pension and other benefits
2. Annual Incentive Plan (please refer to section 3.5)
3. Performance Share Plan (please refer to section 3.6)

The results confirm that total compensation of the Executive
Committee is aligned with the market. The long-term incentive
compensation is positioned above median, which is in line with
Givaudan policy and reflects our strong focus on rewarding
outstanding performance over the long term.
In 2017, independent consulting services were contracted with EY
to conduct this Executive Committee benchmark. EY provides
additional advisory and tax services.
3.2 Compensation mix
The total compensation of Givaudan executives consists ofdirect and indirect compensation components.
–D irect compensation consists of base salary, annual incentive
and share-based components– I ndirect compensation includes retirement coverage, healthbenefits, death and disability protection as well as certain
benefits-in-kind according to local market practice.
The chart below illustrates the direct compensation mix attarget for Givaudan executives in 2017.
IV. Direct compensation mix policy guidelines
CEO

30%

18%

52%

Executive Commitee*

33%

15%

52%

Divisional Comittees

43%

Key Functional Heads

55%

Other Executives

65%

15%

42%
15%

30%
15%

20%

* Excluding CEO
Fixed pay

Annual incentive

Performance shares

Givaudan – 2017 Annual Report

84 Compensation report

The table below illustrates the structure and purpose of thetwo incentive schemes.

Performance criteria
In 2017, the Annual Incentive Plan for Executive Committee
members was based on the following performance criteria:

V. Variable compensation overview
AnnualIncentive Plan

Performance
Share Plan

Participants

Managers andexecutives

Key talent andexecutives

PurposeTo reward managers
and executives for theachievement of annualorganisational targets
and overall individual
performance

To link compensation
to shareholder value
creation andachievement ofbusiness objectives

GrantsAnnual grant

Annual grantVesting

End of each year

3 years

Conditions forvesting

Achievement ofannual EBITDA andsales growth targets

Achievement relative
sales growthand FCF/sales targets
over 4 years

PayoutCashShares1

1. U
 nless local laws prevent allocation of Givaudan shares, in which casepayout is in cash.

3.3 Clawback provisions
As part of the Givaudan compensation programme andensuring appropriate risk management, all incentive-based
compensation (Annual Incentive and PSP) is subject toclawback provisions. The respective plan rules provide theCompensation Committee with absolute discretion to cancel
any payouts that would otherwise be due, including forreasons linked to an individual’s performance or behaviour.
With regard to the PSP, this means that any right to receive
Givaudan shares at the end of the vesting period will lapse if
such a determination is made by the Compensation
Committee. In 2017, the Compensation Committee did not
exercise clawback for any current or former Executive
Committee members.
3.4 Base salary
Base salaries are established on the basis of the scope andresponsibilities of the function, the external value of the roleand the profile of the incumbent in terms of skills, experienceand individual performance. To ensure market
competitiveness, base salaries are reviewed annually. Basesalary adjustments (if any) are based primarily on market
evolution, taking into consideration the executive’s
performance and contribution to Company results.
3.5 Annual Incentive Plan
The Annual Incentive Plan is designed to reward managers’
and executives’ individual performance and contribution to
Givaudan annual objectives.

Givaudan – 2017 Annual Report– S ales Growth targets in local currencies: 50%– EBITDA margin targets: 50%
For the purpose of the Annual Incentive Plan, EBITDA isexpressed as a percentage of sales. Measurement at Grouplevel is considered, except where divisional level is more
appropriate having regard to the members’ scope of
responsibility.
Givaudan's compensation system has been designed foralignment with our Company's vision and strategy andenshrines the principles of pay-for-performance. To provide
shareholders the ability to assess this performance link andin line with Givaudan's commitment to transparency, theCompany discloses ex-post the overall payout factor under
its variable pay plans. The disclosure approach protects theCompany's commercially sensitive, forward-looking
information. Provision of such information, such as relating to
Annual Incentive Plan performance targets, could otherwise
put the Company and its shareholders at a competitive
disadvantage. Details of the Performance Share Plan
threshold, targets and maximum are presented in theCompensation Report.
Annual incentive payouts for managers and executives below
the Executive Committee level are based on a mix oforganisational performance objectives, cascaded from
Givaudan Group objectives, and individual performance,
taking into consideration achievement of personal objectives,
day-to-day job responsibilities and the demonstration of
behaviours in line with the Givaudan core values.
Incentive targets, caps and payouts
Expressed as a percentage of base salary, annual incentives attarget were the following in 2017:–C
 hief Executive Officer: 80%–C hief Financial Officer and Division Presidents: 60%–O ther Executive Committee members: 50%–D ivision Management Committee members: 35% – 50%–O ther executives and managers: 10% – 35%
Based on the performance achievements, incentive payouts
may vary between 0% and a cap of 200% of target incentive.
Minimum threshold achievement is required, otherwise noannual incentive is paid.
In 2017, sales growth and the EBITDA were above target. This
resulted in an average of 117% of target payout for the Chief
Executive Officer as well as the other members of the Executive
Committee. Table VI summarises historical annual incentive
achievement against target since 2011.

Compensation report 85

VI. Historical annual incentive achievement
2017

117%
117%

2016

114%
113%
104%

2015

104%

Performance target setting
Performance is measured on the vesting date based on theextent performance criteria have been met over the previous
four years. Measuring performance over an extended four-year
period is consistent with the long-term outlook of thebusiness. The performance criteria that apply to grants are a
combination of:–R elative average sales growth as compared to the sales
growth of selected peer group companies; and

101%

2014

101%
135%

2013

134%

2012

104%
102%

2011

82%
82%
Executive Committee including CEO

Target 100%

CEO

3.6 Performance Share Plan
Executives and selected management members are eligible toparticipate in the Performance Share Plan (PSP). The PSP is
designed to reward executives and key talent who significantly
influence the long-term success of the business.
Within the PSP, participants are granted Performance Sharesannually. The total number of Performance Shares granted, andthe plan parameters generally, are approved each year by theCompensation Committee. Givaudan applies a policy to cap the
maximum value of PSP allocations. For Executive Committee
members the annual total grant value per member is 2 to 3
times annual base salary.
Performance Shares vest three years from grant date based on
the achievement of performance criteria measured over the
performance period. The operation of the PSP is summarised in
the following diagram:–C umulative Free Cash Flow (FCF) margin, expressed as apercentage of cumulative sales.
The structure of performance criteria calculation has been
specifically designed to be challenging.
For average sales growth, the peer group includes companies
from the flavour and fragrance industry that publish sales inlocal currency. These companies represent in total
approximately 75% of this market. The peer companies
currently included in the group are Firmenich, Hasegawa, IFF,
Robertet, Sensient, Symrise and Takasago. The performance
range for relative sales growth extends from -2% to +2%
annualised sales growth versus peer group over the four-year
performance period.
In the case of FCF margin, final achievement is calculated as
the average of the reported FCF margin for each of the four
performance years. This means that the Givaudan’s FCF foreach year of the performance period is summed, and thiscumulative result is divided by the sum of Givaudan’s sales ineach year of the performance period. The assessment over four
years ensures that the performance targets are stringent andreward sustained Company performance. The performance
range extends from 9% to 19%.
Target setting and testing against targets follows adherence tostrict governance policies. Careful consideration is given to
Givaudan's performance and its projections. In addition, areference test against historical achievements is conducted.

VII. Operation of the PSP
Performance criteria

2017

2018

VIII. Historical FCF margin vs set target

2019

2020

March
Grant date

March
Vesting date

Receiveperformance
shares

Receive 0–2
Givaudan shares
per performance
share, based on
the achievementof performance
criteria

Reference test
target setting1

Target2013 PSP

2014 PSP

2015 PSP

2016 PSP

9.2%

10.3%

11.2%

14.5%

10%

13%

14%

14%

1. Cumulative FCF margin of the related previous 4 years

Givaudan – 2017 Annual Report

86 Compensation report

Share payout caps
Based on the extent that performance criteria are met, theactual number of shares vesting at the end of the performance
period may vary between 0% and 200% of the Performance
Shares initially granted. The level of vesting is dependent on the
combination of performance achievement against both criteria.
A payout of 200% would require an achievement level above themaximum threshold for both criteria.
An achievement level below the minimum threshold on either
measure results in a 0% payout.

A 100% payout can be obtained where a target combination of
the performance criteria is met, such as when relative averagesales growth is in line with the peer group and cumulative FCF
margin is 14%.
Participants do not receive any dividends or have any voting
rights in respect of Performance Shares during the vesting
period.
In general, Performance Shares lapse on cessation of
employment. In specific circumstances such as death, disabilityor retirement, Performance Shares may vest subject tosatisfaction of the performance criteria. In case of a change ofcontrol, Performance Shares may vest immediately.
IX. Performance Share Plan payout matrix

Average Sales Growth compared to peer group

200%

1.5
1
0.5

Criteria

Performance Payout

Average sales growth-0.5%
compared to peer group
Cumulative
FCF/sales*

14.5%

Payout105%of performance
shares granted* Formula = Σ (Free cash flow margin reporting year x sales in reporting currency inyear / Σ Sales in reporting currency in year)

3.7 Previous long-term incentive plan arrangements
Previous awards under legacy LTIP arrangements included stock
options, Restricted Share Units and Performance Shares. Allawards under the previous plans have now vested. The
Performance Shares under the previous long-term incentive were
granted in 2008 and vested in 2013 to an achievement level of
50% based on testing against the predefined economic value
generation measured over a five-year period.
3.8 Proposed long-term incentive plan changes
In 2017, Givaudan undertook a comprehensive review of the PSP
in regards to feedback from shareholders, suitability of the plansince inception and the future direction of the Company. Basedon the review, including consideration of adapting/replacing the
PSP and evolving market practice, Givaudan concluded that theoverall current LTIP design should be retained. It was confirmedthat the PSP is ideally tailored to Givaudan, adhering to ourcompensation principles in particular delivering on the pay for
performance principle.

100%

0

Within the overall design and based on the above considerations,
Givaudan determined that some adjustments to the existing
programme are appropriate. In particular, the performancematrix has been revised, and the following new features will be
introduced in 2018:

-0.5
-1
-1.5
-2

For reference, Givaudan tests performance against otherbenchmark metrics, including relative total shareholder return(TSR), and we continue to outperform the market in many
regards. For instance, Givaudan’s TSR measured over recent
four year periods has generally been at or above third quartile
compared to our benchmark peer group.
X. 2014 PSP achievement

Different combinations of relative sales growth and FCF
achievements within the above ranges lead to payouts between
0% and 200%, ranked according to their long-term economic
value generation for the Company.

2vest below target (or not at all) such as was the case for theprevious Givaudan Performance Share Plan having vested in2013 at 50% of target payout.

0%
9

11

13

15

17

19

Cumulative FCF / Sales
Darker region represents target achievement region for 100% payout

Vesting in 2017
The 2014 PSP vested on 29 March 2017 with a 105% payout(2016: 145% payout). This reflects above target achievement on
FCF and slightly below target achievement on relative sales
growth. In the event of lower levels of achievement the PSP will

Givaudan – 2017 Annual Report–T he performance range for relative sales growth will be shiftedto a range of -1.5% to 2.5% (currently -2% to 2%)–A payout cap at 100% will be introduced in cases where relative
sales growth may be below the peer group, even if exceptional
FCF margin is achieved; and–A chieving threshold, target and maximum payout will be mademore challenging overall.

Compensation report 87

XI. Executive Committee compensation summary

in Swiss francs
Base salaryPension benefits 3
Other benefits 4
Total fixed compensation
Annual incentive 5
Number of performance shares granted 6
Value at grant 7

Gilles Andrier
CEO 2017

Executive
Executive
Committee members Committee members
1
Gilles Andrier(excluding CEO)(excluding CEO) 2
CEO 2016
2017
2016

Total
2017

Total
2016

1,045,952

1,035,599

3,970,375

3,819,306

5,016,327

4,854,905

445,076442,705

1,048,011

1,558,506

1,493,087

2,001,211

114,688

111,061

800,451

792,134

915,139

903,195

1,605,716

1,589,365

5,818,837

6,169,946

7,424,553

7,759,311

977,142944,804

2,513,556

2,342,717

3,490,698

3,287,521

1,777

1,686

5,549

5,441

7,326

7,127

2,881,583

2,882,048

8,998,258

9,300,845

11,879,841

12,182,893

Total variable compensation

3,858,725

3,826,852

11,511,814

11,643,562

15,370,539

15,470,414

Total compensation

5,464,441

5,416,217

17,330,651

17,813,508

22,795,092

23,229,725

442,000

438,000

1,413,000

1,427,000

1,855,000

1,865,000

Employer social security 8

1.	Represents (a) full year compensation of seven Executive Committee members, (b) partial year compensation of the outgoing Chief Financial Officer, Matthias Währen, who
stepped down from his role on 1 January 2017 and retired on 30 June 2017 and (c) full year compensation for Joe Fabbri who stepped down from his Executive Committee roleon 1 July 2017 and retired on 31 December 2017.
2.	Represents full year compensation of eight Executive Committee members and partial year compensation of one new Executive Committee members who was appointed on
1 August 2016.
3.	Company contributions to broad-based pension and retirement savings plans and annualised expenses accrued for supplementary executive retirement benefit.
4.	Represents annual value of health and welfare plans, international assignment benefits and other benefits in kind.
5.	Annual incentive accrued in reporting period based on performance in the reporting period.
6.	2017 Performance shares vest on 15 April 2020, 2016 Performance shares vest on 15 April 2019.
7.	Value at grant calculated according to IFRS methodology and based on 100% achievement of performance targets.
8.	2017 estimated social security charges based on 2017 compensation; 2016 estimated social security charges based on 2016 compensation.

The combination of the above reinforces that retaining theleading position at or above our peers is a key feature to delivering
long-term success. In parallel, FCF margin will be retained as anequal contributor to payout potential, with the provision that theextent to which outperformance on FCF may counterbalancelower sales growth achievement is significantly restricted.

3.9 Benefits
The Executive Committee members participate in the benefits
plans of the Company, consisting mainly of retirement, insurance
and health care plans that are designed to provide a reasonablelevel of protection for the employees and their dependants in
respect of the risks of retirement, ill-health, disability and death.

In addition, the overall mix of performance criteria of the variable
compensation programmes (Annual Incentive and PSP) wereconsidered and it was concluded that they remain appropriate
and consistent with our disclosed strategy. This includes that thedifferent measurement approaches, such as absolute and relative
assessment, over the various time periods are differentiated andaligned with ensuring appropriate annual and long-term
achievement of targets.

Executive Committee members are also provided with certain
executive perquisites and benefits in kind according tocompetitive market practice. The aggregate monetary value ofthese benefits is evaluated at fair value and disclosed in thecompensation tables.

Finally, the review confirmed the PSP vesting and performance
testing periods remain appropriate to Givaudan and are alignedwith market practice. Considering the compensation principles’
objective to ensure alignment of Executive Committee memberswith shareholders, the share ownership guidelines were reviewed
and the minimum holdings will be increased in 2018 to two times
annual base salary. Further details are provided in section 6.
Further details of the updated PSP will be disclosed in the 2018
Compensation Report.

4. Compensation of the Executive Committee
4.1 Compensation levels in 2017
In 2017, total compensation reported remained stable compared
to 2016.
Total compensation for 2017 represented:– f ull year compensation for eight Executive Committee
members (including CEO)– f ull year compensation for Joe Fabbri who stepped down fromthe Executive Committee on 1 July 2017 and provided
transitional services and support on strategic projects until his
retirement on 31 December 2017

Givaudan – 2017 Annual Report

88 Compensation report–p artial year compensation for the former Chief Financial
Officer, Matthias Währen, who stepped down on 1 January 2017and provided transitional services and support on strategic
projects until his retirement on 30 June 2017, i.e. compensation
for 9.5 full time equivalent members (including CEO).
Total compensation for 2016 represented full year compensationof eight Executive Committee members and partial year
compensation of one new Executive Committee member, Anne
Tayac, who was appointed Head of Givaudan Business Solutions
on 1 August 2016, i.e. compensation for 9.4 full time equivalent
members (including CEO).
Further details are provided in section 4.6.
Executive Committee member compensation has been set inaccordance with our compensation principles, including
consideration of roles and responsibilities and with reference to
our compensation benchmarks.
4.2 Highest total compensation
The Chief Executive Officer, Gilles Andrier, received the highest
total compensation in 2017. For compensation details, pleaserefer to table XI.
4.3 Other compensation, fees and loans to members orformer members of the Executive Committee
No other compensation or fees were accrued for or paid to any
member or former member of the Executive Committee during
the reporting period. No member or former member of the
Executive Committee or related parties had any loan outstanding
as of 31 December 2017.
4.4 Special compensation of Executive Committee members
who left the Company during the reporting period
Matthias Währen retired from his role as Chief Financial Officer
on 30 June 2017. He did not receive any special compensation as aresult of his retirement. All compensation is included in thecompensation table XI.
4.5 Employment contract termination clauses of Executive
Committee members
Employment contracts of Executive Committee members havebeen amended for compliance with the OaEC and our Articles ofIncorporation. Accordingly, contractual entitlements are within
the specified thresholds, in particular the maximum contractual
notice period is six months and any non-compete clause does notexceed 12 months. No additional compensation or benefits areprovided in the case of change in control, except for long-term
incentive awards that may vest immediately.
All contractual arrangements of Executive Committee members
are approved by the Compensation Committee of the Board.

Givaudan – 2017 Annual Report

4.6 Compensation voting for Executive Committee
members
The compensation paid is within the amounts approved byshareholders in the respective Annual General Meeting. For 2016
compensation and as already disclosed in the respective
Compensation Report, an additional supplementary amount of
CHF 142,204 was paid in accordance with the Givaudan Articles
of Incorporation (Art. 27).
The fixed and long term variable compensation approved for 2017
was CHF 19,800,000 (2016: CHF 19,800,000).
The annual incentive, short term variable compensation amountfor 2017 was CHF 3,490,698 and will be submitted for approval at
the 2018 Annual General Meeting (2016: CHF 3,287,520).

5. Compensation of the Board of Directors
Compensation of Board members consists of Director fees,
Committee fees and Restricted Share Units (RSUs). Fees arepaid at the end of each year in office completed. RSUs give
participants the right to receive Givaudan shares (or a cash
equivalent in countries where securities laws prevent theoffering of Givaudan securities) at the end of a three-year
blocking period. During this period Board members must hold
RSUs (accordingly are restricted from trading RSUs or theunderlying Givaudan shares), thereby aligning with shareholderinterests over the longer term. Board members are entitled toreceive Givaudan shares regardless of membership status sothat, for example, if re-election does not occur during the
restriction period, awarded RSUs are retained by the respective
Board member. Such practice has been implemented in linewith best practice in support of Givaudan’s commitment toensuring Board independence.
The annual fees for Board membership and additional functions
are summarised in the table XII. The fees are consistent withprior year levels.
XII. Board of Directors fees – Summary
Restricted Shares
Annual fees (CHF) Compensation (CHF) 3
Chairman of the Board ¹

400,000

Vice-Chairman of the Board ¹

100,000

145,000

Board membership

100,000

145,000

Chairman – Audit Committee ²

55,000Chairman – Other Committees 2

40,000Membership – All Committees

25,000580,000

1. Incl. Board membership fees
2. Incl. Committee membership fees
3. Number of RSUs granted represents the closest match to the values displayed

The Chairman of the Board does not receive any additional
Board Membership or Committee fees. Similarly, a Committee
Chairman does not receive any additional Committee
Membership fees.

Compensation report 89

XIII. Board of Directors compensation summary
2017
in Swiss francs

CalvinGrieder
Chairman 5

Victor
Balli 5

Prof. Dr-Ing.
WernerBauer 5

LilianBiner 5

MichaelCarlos 5

IngridDeltenre 5

ThomasRufer 5Dr Jürg
Witmer 6

Total
2017 1

Director fees 2

325,000

100,000

100,000

100,000

100,000

100,000

100,000

100,000

1,025,000

Committee fees 2

61,25043,75065,00031,25058,75050,00055,00010,000375,000

Total fixed (cash)

386,250

143,750

165,000

131,250

158,750

150,000

155,000

110,000

1,400,000

360

90

90

90

90

90

90

900

Value at grant 4583,776

145,944

145,944

145,944

145,944

145,944

145,944

1,459,440

Total compensation

970,026

289,694

310,944

277,194

304,694

295,944

300,944

Number of RSUs granted 3

110,000

2,859,440

1.	Represents total compensation for the Board of Director paid in respect of the reporting year, reported in accordance with the accrual principle.
2.	Represents Director and Committee fees paid in respect of the reporting year, reported in accordance with the accrual principle.
3.	R SUs vest on 15 April 2020.
4.	Economic value at grant according to IFRS methodology, with no discount applied for the vesting period.
5.	T he function of each member of the Board of Directors are indicated on pages 63-65 in the Corporate Governance section of the 2017 Annual Report.
6.	Retired at the Annual General Meeting in March 2017.

Estimated social security charges based on 2017 compensation amounted to CHF 205,000 (2016: CHF 221,000 ).
In addition to the above, payments to Board members for out-of-pocket expenses amounted to CHF 70,000 (2016: 70,000).
2016
in Swiss francs

Dr Jürg
AndréWitmerChairman 7 Hoffmann 6,7Victor
Balli 5,7

Prof. Dr-Ing.
WernerBauer 7

LilianBiner 7

MichaelCarlos 7

IngridDeltenre 7

CalvinGrieder 7Peter
Kappeler 6,7

ThomasRufer 7Total
2016 1
1,125,000

Director fees 2400,000

25,00075,000100,000

100,000

100,000

100,000

100,000

25,000100,000

Committee fees 2

40,00010,00018,75065,00050,00040,00050,00050,0006,250

55,000385,000

Total fixed (cash)

440,000

35,00093,750165,000

150,000

140,000

150,000

150,000

31,250155,000

1,510,000

Number of RSUs granted 3
Value at grant 4
Total compensation

340

85

85

85

85

85

85

85

935

581,196

145,299

145,299

145,299

145,299

145,299

145,299

145,299

1,598,289

239,049

310,299295,299285,299295,299295,299

300,299

3,108,289

1,021,196

35,00031,2501.	Represents total compensation for the Board of Director paid in respect of the reporting year, reported in accordance with the accrual principle.
2.	Represents Director and Committee fees paid in respect of the reporting year, reported in accordance with the accrual principle.
3.	R SUs vest on 15 April 2019.
4.	Economic value at grant according to IFRS methodology, with no discount applied for the vesting period.
5.	Elected at the Annual General Meeting in March 2016.
6.	Retired at the Annual General Meeting in March 2016.
7.	The function of each member of the Board of Directors are indicated on pages 80-84 in the Corporate Governance section of the 2016 Annual Report.

Each Board member receives an additional amount of
CHF 10,000 to cover out-of-pocket expenses. This amount is
paid for the coming year in office. The RSUs are also granted forthe same period.
Board fees are aligned with the total Board compensation
approved by shareholders at the 2016 Annual General Meeting
and with market practice. In 2017, Board member compensation
was benchmarked against a peer group of other Swiss
multinational companies of a size similar to Givaudan. This peergroup consisted of Swiss Leader Index (SLI) companies that
disclose board fee policy information, excluding the five largest
companies and financial services institutions. The benchmark
included 17 companies: Actelion, Adecco, Aryzta, Clariant, Dufry,
Geberit, Kuehne + Nagel, LafargeHolcim, Lonza, Richemont,
Schindler, SGS, Sika, Sonova, Swatch, Swisscom and Syngenta.

5.1 Compensation of the Board member withthe highest compensation
The Board member with the highest compensation in 2017
was Calvin Grieder, Chairman of the Board since 23 March 2017.
For compensation details please refer to table XIII.
5.2 Other compensation, fees and loans to members orformer members of the Board
No additional compensation or fees were paid to any memberof the Board. No Board member or related parties had any loan
outstanding as of 31 December 2017.
5.3 Special compensation of members of the Board who
left the Company during the reporting period
No such compensation was incurred during the reporting
period.

The compensation paid to the Board members for the reporting
period is shown in table XIII.
Givaudan – 2017 Annual Report90Compensation report

5.4 Compensation voting for members of the Board
The compensation paid to the Board members for theperiod between the 2016 and 2017 Annual General Meetings(CHF 3,073,289) is within the amount approved by shareholders
at the 2016 Annual General Meeting (CHF 3,300,000). Amounts
approved at the 2017 Annual General Meeting (CHF 2,950,000)
will be paid by the end of the year in office and validated in the2018 Compensation Report. Such approved and paid amounts
will differ from those shown in the Board compensation
summary table which, according to the OaEC, must include
compensation paid in the reporting year.

XIV. Board of Directors: ownership of Givaudan securities
2017
in numbers
Calvin Grieder, Chairman

SharesUnvested RSUs

119

536

1,089

266

Victor Balli
Prof. Dr-Ing. Werner Bauer

175

Lilian Biner

496

266

Michael Carlos

921

266

Ingrid Deltenre

26

266

Thomas Rufer

709

266

Total 2017

3,360

2,041

6. Share ownership guidelines

Total 2016

5,546

2,797

Givaudan introduced share ownership guidelines (Guidelines) in
2013, under which Executive Committee members must holdapproximately one time their annual base salary in Givaudan
shares. This requirement should be met by 2016, or within three
years from the beginning of the calendar year after joining the
Executive Committee.

7.2 Executive Committee
The Chief Executive Officer and other members of the
Executive Committee, including persons closely connected tothem, held 6,423 Givaudan shares. For further details, pleaserefer to table XV showing:

In September 2017, Givaudan introduced updated Guidelines.
Under the new Guidelines, requirements were increased for
all Executive Committee members to two times annual basesalary in Givaudan shares. In general, the Guidelines shouldbe met within five years from the beginning of the calendar
year after joining the Executive Committee. Transitionalarrangements to the new Guidelines are in place for Executive
Committee members appointed before 2016, such that all
such members should reach the new Guideline holding
requirement latest 2020.
Ownership of Givaudan shares by Executive Committee
members as per 31 December 2017 is shown in table XV.

7. Ownership of Givaudan securities
7.1 Board of Directors
As per 31 December 2017, the Chairman and other Board
members, including persons closely connected to them held
3,360 Givaudan shares in total. For further details, please referto table XIV showing:–T he shares held individually by each Board member as per
31 December 2017.
–T he RSUs that were granted in 2015 – 2017 and were still
owned by members of the Board as per 31 December 2017.
The Company is not aware of any other ownership of shares,
share options/option rights, RSUs or Performance Shares as per
31 December 2017 by persons closely connected to members of
the Board.

Givaudan – 2017 Annual Report– The shares held individually by each member of the Executive
Committee as per 31 December 2017.
– The unvested Performance Shares that were granted in
2015–2017 and were still owned by members of the Executive
Committee as per 31 December 2017.
XV. Executive Committee: ownership of Givaudan securities
2017
in numbers

SharesUnvested
performance shares

Gilles Andrier, CEO

3,300

4,909

Tom Hallam

220

1,014

Mauricio Graber

750

2,817

Maurizio Volpi

785

2,313

Simon Halle-Smith

105

1,277

Willem Mutsaerts

199

1,361

Anne Tayac

110

917

Chris Thoen

685

1,337

Total 2017

6,154

15,945

Total 2016

4,460

19,278

No member of the Executive Committee held any share options
or option rights as at 31 December 2017 (31 December 2016: nomember of the Executive Committee held any share options or
option rights).
One person closely connected to a member of the Executive
Committee owned 269 unvested Performance Shares as at
31 December 2017.
The Company is not aware of any other ownership of shares,
share options/option rights, RSUs or Performance Shares as per
31 December 2017 by persons closely connected to members of
the Executive Committee.

Compensation report 91

Deloitte SA
Rue du Pré-de-la-Bichette 1
1202 Geneva
Switzerland
Phone: +41 (0)58 279 8000
Fax: +41 (0)58 279 8800
www.deloitte.ch

Report of the statutory auditor
To the General Meeting of Givaudan SA, Vernier

We have audited the accompanying compensation report of Givaudan SA for the year ended December 31, 2017. Our audit is limited
to the information provided in section 4 and 5 presented on page 87 to 90 in accordance with the articles 14 to 16 of the Ordinanceagainst Excessive compensation in Stock Exchange Listed Companies (Ordinance).
Responsibility of the Board of Directors
The Board of Directors is responsible for the preparation and overall fair presentation of the compensation report in accordancewith Swiss law and the Ordinance against Excessive compensation in Stock Exchange Listed Companies (Ordinance). The Board of
Directors is also responsible for designing the remuneration system and defining individual remuneration packages.
Auditor’s Responsibility
Our responsibility is to express an opinion on the compensation report. We conducted our audit in accordance with Swiss AuditingStandards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the compensation report complies with Swiss law and articles 14 – 16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the compensation report with regard
to compensation, loans and credits in accordance with articles 14 – 16 of the Ordinance. The procedures selected depend on theauditor’s judgment, including the assessment of the risks of material misstatements in the compensation report, whether due tofraud or error. This audit also includes evaluating the reasonableness of the methods applied to value components ofremuneration, as well as assessing the overall presentation of the compensation report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
OpinionIn our opinion, sections 4 and 5 of the compensation report of Givaudan SA for the year ended December 31, 2017 comply with
Swiss law and articles 14 – 16 of the Ordinance.

Deloitte SA

Karine Szegedi PingoudJoëlle Herbette

Licensed Audit Expert
Auditor in Charge

Licensed Audit Expert

Geneva, 24 January 2018

Givaudan – 2017 Annual Report

92

Financial
ReportDetailed contents:
Consolidated financial statements

Consolidated Income Statement for the year
ended 31 December

94

Consolidated Statement of Comprehensive
Income for the year ended 31 December

95

Consolidated Statement of Financial Position
as at 31 December

96

Consolidated Statement of Changes in Equity
for the year ended 31 December

97

Consolidated Statement of Cash Flows for theyear ended 31 December

98

Notes to the consolidated financial statements

9. Share-Based Payments

129

10. Jointly Controlled Entities

130

11. Other Operating Income

130

12 Other Operating Expense130

13. Expenses by Nature

131

14. Financing Costs

131

15. Other Financial (Income) Expense, Net

131

16. Income Taxes

132

17. Earnings per Share134

1. Group Organisation

99

18. Cash and Cash Equivalents

134

2. Summary of Significant Accounting Policies

99

19. Accounts Receivable – Trade134

3. Critical Accounting Estimatesand Judgments

111

20. Inventories

135

21. Property, Plant and Equipment

136

4. Foreign Exchange Rates

112

22. Intangible Assets

137

5. Financial Risk Management

112
121

23. Investment Property

138

6. Acquisitions

121

24. Debt

139

7. Segment Information

123

25. Changes in liabilities arising fromfinancing activities

141

8. Employee Benefits

Givaudan – 2017 Annual ReportWed Moluptatur Ditia

26. Provisions

141

27. Own equity instruments

142

28. Equity

143

29. Commitments

143

30. C
 ontingent Liabilities

144

31. Related Parties

144

32. Board of Directors and Executive
Committee Compensation

145

33. List of Principal Group Companies

148

34. D
 isclosure of the Process of Risk
Assessment

149

35. Other information

149

Simos soloriberis quate

93

Report of the Statutory Auditor

Statutory Auditor’s Report on theConsolidated Financial Statements

150

Statutory Financial Statements ofGivaudan SA (Group Holding Company)

Income Statement for the year ended
31 December

156

Statement of Financial Position as at
31 December

157

Notes to the Statutory Financial Statements

1. General Information

158

2. Summary of accounting principles adopted

158

3. Subsidiaries

159

4. Cash and cash equivalents

160

5. Jointly Controlled Entities

160

6. Debt

160

7. Indirect Taxes

160

8. Equity

161

9. Own Shares

162

10. Board of Directors and Executive
Committee Compensation

162

11. E xceptional Events

162

12. Other information

162

Appropriation of available earnings

Proposal of the Board of Directors to theGeneral Meeting of Shareholders

163

Report of the Statutory Auditor

Statutory Auditor’s Report on the Financial
Statements

164

Givaudan – 2017 Annual Report94 Financial report Consolidated financial statements

Consolidated financial statements
Consolidated Income Statement
For the year ended 31 Decemberin millions of Swiss francs, except for earnings per share data

Sales

Note

2017

2016

7

5,051

4,663
(2,535)

Cost of sales(2,801)Gross profit

2,250

2,128

as % of sales

44.5%

45.6%

Selling, marketing and distribution expenses

(669)

(640)

Research and product development expenses

(424)

(400)

Administration expenses

(178)

(186)

Share of (loss) profit of jointly controlled entities

10

–

(1)

Other operating income

11

42

75

Other operating expense

12

(152)

(101)

Operating income
as % of sales

869

875

17.2%

18.8%

Financing costs

14

(42)

(51)

Other financial income (expense), net

15

(32)

(40)

795

784

16

(75)

(140)

720

644

Income before taxes
Income taxes
Income for the period
Attribution
Income attributable to equity holders of the parent
as % of sales

720

644

14.2%

13.8%

Earnings per share − basic (CHF)

17

78.18

69.95

Earnings per share − diluted (CHF)

17

77.54

69.34

The notes on pages 99 to 149 form an integral part of these financial statements.

Givaudan – 2017 Annual ReportFinancial report Consolidated financial statements

95

Consolidated Statement of Comprehensive Income
For the year ended 31 Decemberin millions of Swiss francs

Note

Income for the period

2017

2016

720

644

Items that may be reclassified to the income statement
Cash flow hedges
Movement in fair value, net

3

(14)

Gains (losses) removed from equity and recognised in the consolidated income statement

15

5

10

Movement on income tax

16

–

1

63

(125)

–

2

(148)

Exchange differences arising on translation of foreign operations
Change in currency translation
Movement on income tax

16

Items that will not be reclassified to the income statement
Defined benefit pension plans
Remeasurement gains (losses) of post employment benefit obligations

8

55

Movement on income tax

16

(38)

33

Other comprehensive income for the period

88

(241)

Total comprehensive income for the period

808

403

808

403

Attribution
Total comprehensive income attributable to equity holders of the parent
The notes on pages 99 to 149 form an integral part of these financial statements.

Givaudan – 2017 Annual Report

96 Financial report Consolidated financial statements

Consolidated Statement of Financial Position
As at 31 Decemberin millions of Swiss francs

Note

2017

2016

Cash and cash equivalents

5,18

534

328

Derivative financial instruments

5

16

9

Derivatives on own equity instruments

27

Financial assets at fair value through income statement

5

2

1

Accounts receivable – trade

3

5,19

1,147

996

Inventories

20

902

788

Current tax assets

16

32

26

123

96

Prepayments
Other current assets

5

Current assets

98

96

2,854

2,343

Derivative financial instruments

5

1

–

Property, plant and equipment

21

1,579

1,442

Intangible assets

22

2,482

2,311

Deferred tax assets

16

207

259

Post-employment benefit plan assets

8

21

12

Financial assets at fair value through income statement

5

63

59

Jointly controlled entities

10

33

35

Investment property

23

16

Other long-term assets
Non-current assets
Total assets
Short-term debt

53

53

4,455

4,171

7,309

6,514

5,24

308

7

Derivative financial instruments

5

12

32

Accounts payable - trade and others

5

662

494

149

143

Accrued payroll & payroll taxes
Current tax liabilities

16

49

46

Financial liability: own equity instruments

27

93

57

Provisions

26

57

6

195

174

1,525

959

Other current liabilities
Current liabilities
Derivative financial instruments
Long-term debt

5

60

62

5,24

1,300

1,251

Provisions

26

67

59

Post-employment benefit plan liabilities

8

644

722

Deferred tax liabilities

16

99

93

76

75

Non-current liabilities

2,246

2,262

Total liabilities

3,771

3,221

Other non-current liabilities

Share capital

28

92

92

Retained earnings and reserves

28

5,682

5,477

Own equity instruments
Other components of equity

28

(157)

(109)

27,28

(2,079)(2,167)

Equity attributable to equity holders of the parent

3,538

3,293

Total equity

3,538

3,293

Total liabilities and equity

7,309

6,514

The notes on pages 99 to 149 form an integral part of these financial statements.

Givaudan – 2017 Annual ReportFinancial report Consolidated financial statements

97

Consolidated Statement of Changes in Equity
For the year ended 31 December

2017
in millions of Swiss francs

RetainedShareearnings
Capital and reserves

Own equity
instruments

Note

28

28

27,28

Balance as at 1 January

92

5,477

(109)

Income for the period
Total comprehensive income for the period

720

Dividends paid

(515)

Movement on own equity instruments, net
Net change in other equity items
Balance as at 31 December

92

(73)

(1,519)

(575)

8

63

17

88

8

63

17

808

720

(515)
(48)

(515)

(48)

(563)

5,682

(157)

Own equity
instruments

Note

28

28

27,28

Balance as at 1 January

92

5,373

(79)

Cash flow
hedges(1,456)

(558)

3,538

Remeasurement of post
Currency employmenttranslation
benefitdifferences
obligations

Total equity

8(70)(1,396)

(505)

3,415

(3)

(123)

(115)

(241)

(3)

(123)

(115)

644

Other comprehensive income for the period
Total comprehensive income for the period

644

Dividends paid

(495)

Movement on own equity instruments, net

(30)

92

403
(495)
(30)

(45)

Net change in other equity items
Balance as at 31 December

(65)

644

Transfers

3,293

(48)

RetainedShareearnings
Capital and reserves

Income for the period

Total equity

8

720

Other comprehensive income for the period

2016
in millions of Swiss francs

Cash flow
hedgesRemeasurement of post
Currency employmenttranslation
benefitdifferences
obligations

45

(540)

(30)

5,477

(109)

(73)

(1,519)

45

(525)

(575)

3,293

The notes on pages 99 to 149 form an integral part of these financial statements.

Givaudan – 2017 Annual Report

98 Financial report Consolidated financial statements

Consolidated Statement of Cash Flows
For the year ended 31 Decemberin millions of Swiss francs

Note

Income for the period

2017

2016

720

644
140

Income tax expense

1675Interest expense

14

29

42

14,15

45

49

Non-operating income and expense
Operating income

869

875

Depreciation of property, plant and equipment

21

114

113

Amortisation of intangible assets

22

104

132

21,22

2

6

Impairment of long-lived assets
Other non-cash items– share-based payments– pension expense8– additional and unused provisions, net

26– other non-cash items

35

33

14

(23)

69

10

(52)

(10)

Adjustments for non-cash items

286

261

(Increase) decrease in inventories

(107)

(38)

(Increase) decrease in accounts receivable

(125)

(107)

(Increase) decrease in other current assets

(29)

(53)

Increase (decrease) in accounts payable

136

55

Increase (decrease) in other current liabilities

1252(Increase) decrease in working capital

(113)

(91)

Income taxes paid

(73)

(127)
(45)

Pension contributions paid

8

(53)

Provisions used

26

(10)

(8)

(45)

(48)

Purchase and sale of own equity instruments, net
Impact of financial transactions on operating income/expense, net(12)Cash flows from (for) operating activities

861

805
299

Increase in long-term debt

25

350

(Decrease) in long-term debt

25

(17)

–

Increase in short-term debt

25

670

463

(Decrease) in short-term debt

25

(705)

(663)

Cash flows from debt, net

298

99

(24)

(33)
(8)

Interest paid

25

Purchase and sale of derivative financial instruments, net

25–

Others, net

25

(7)

–

267

58

Cash flows from financial liabilities
Distribution to the shareholders paid

28

Cash flows from (for) financing activities

(515)

(495)

(248)

(437)

Acquisition of property, plant and equipment

21

(191)

(136)

Acquisition of intangible assets

22

(53)

(40)

Payments for investment property

23

(1)

Increase in share capital of jointly controlled entities

10

Acquisition of subsidiary, net of cash acquired

6

(224)

(331)

(9)

Proceeds from the disposal of property, plant and equipment

21

2

1

Interest received

3

2

Dividends received from jointly controlled entities

2

Purchase and sale of financial assets at fair value through income statement, net–

Impact of financial transactions on investing, net

35

Others, net

23

(2)

(13)

Cash flows from (for) investing activities

(429)

(503)

Net increase (decrease) in cash and cash equivalents

184

(135)

Net effect of currency translation on cash and cash equivalents

22

(15)

Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
The notes on pages 99 to 149 form an integral part of these financial statements.
Givaudan – 2017 Annual Report

18

328

478

534

328

Financial report Notes to the consolidated financial statements 99

Notes to the consolidated financial statements
1. Group Organisation

Givaudan SA and its subsidiaries (hereafter ‘the Group’) operate under the name Givaudan. Givaudan SA is a limited liability
company incorporated and domiciled in Switzerland. The Group is headquartered in Vernier, near Geneva, Switzerland.
Givaudan is a leading supplier of creative fragrance and flavour products to the consumer goods industry. It operates in over
100 countries and has subsidiaries and branches in more than 40 countries. Worldwide, it employs 11,170 people. A list of theprincipal Group companies is shown in Note 33 to the consolidated financial statements.
The Group is listed on the SIX Swiss Exchange (GIVN).

2. Summary of Significant Accounting Policies

The significant accounting policies applied in the preparation of these consolidated financial statements are set out below.
These policies have been consistently applied to all years presented, unless otherwise stated.
2.1 Basis of Preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS)
as issued by the IASB and Swiss law.
They are prepared under the historical cost convention as modified by the revaluation of financial assets and financial liabilities atfair value through the income statement, and of own equity instruments classified as derivatives. Historical cost is generally basedon the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sellan asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardlessof whether that price is directly observable or estimated using another valuation technique.
The preparation of the consolidated financial statements requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, andreported amounts of revenues and expenses during the reporting period. It also requires management to exercise its judgmentin the process of applying the Group's accounting policies. Critical accounting estimates and judgments are disclosed in Note 3.
Givaudan SA's Board of Directors approved these consolidated financial statements on 24 January 2018.
2.1.1 Changes in Accounting Policies and Disclosures
Standards, amendments and interpretations effective in 2017
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2016,as described in the 2016 consolidated financial statements, with the exception of the adoption as of 1 January 2017 of the standards
described below:
Amendments to IAS 7: Disclosure Initiative improve the information provided to the users of financial statements on an entity’s
financing activities. Entities shall provide disclosures to enable users of financial statements to evaluate changes in liabilities arisingfrom financing activities. The adoption of the amendments to IAS 7 resulted in a modification of the information disclosed on debt,
with a reconciliation of the carrying amount of the debt at the beginning and end of the period (See Note 24 Debt) and on thechanges in liabilities arising from financing activities (See Note 25 Changes in liabilities arising from financing activities).
Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses clarify that unrealised losses on debt
instruments measured at fair value and measured at cost for tax purposes give rise to a deductible temporary difference regardlessof whether the debt instrument’s holder expects to recover the carrying amount of the debt instrument by sale or by use.
The adoption of these amendments does not change the current practice applied by the Group.

Givaudan – 2017 Annual Report

100

Financial report Notes to the consolidated financial statements

Annual Improvements to IFRS Standards 2014 – 2016 Cycle set out amendments across three different standards, related basis
for conclusions and guidance, out of which one is effective in 2017; amendments to IFRS 12 Disclosure of Interests in Other Entities.
The adoption of these amendments has no impact because the Group does not hold currently assets classified as held for sale.
The Group has adopted the cost model in compliance with IAS 40 Investment property.
2.1.2. IFRSs and IFRICs issued but not yet effective
New and revised standards and interpretations, issued but not yet effective, have been reviewed to identify the nature of the futurechanges in accounting policy and to estimate the effect of any necessary changes in the consolidated financial statements andsupporting notes upon their adoption.
a) Issued and effective for 2018
IFRS 9 Financial Instruments (as revised in 2014). The Group has early adopted this standard in 2016.
IFRS 15 Revenue from Contracts with Customers. IFRS 15 deals with revenue recognition and establishes principles for reporting
useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows
arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service andthus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces existing revenue
recognition guidance including IAS 18 Revenues, IAS 11 Construction Contracts and IFRIC 13 Customers Loyalty Programme.
The Group has evaluated the impacts of this standard. Contracts with customers relate primarily to the delivery of manufactured
products and molecules of fragrance and flavour to the agreed upon specifications and may contain additional performanceobligations for certain clients such as the assignment of specific application technologies, joint market research and particular
stock conditions. Most of these additional performance obligations are not distinct because they are highly dependent on thedelivery of manufactured products and molecules of fragrance and flavour. Generally, the transaction price includes estimating
variable consideration such as rebates granted to customers.
The Group assessed that the adoption of the standard does not impact its consolidated financial statements. Therefore theretrospective transition method will not require a restatement of the consolidated financial statements.
The clarifications to IFRS 15 issued in April 2016 do not change the above described assessment.
Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions clarify the accounting forcash-settled share-based payment transactions that include a performance condition, the classification of share-based paymenttransactions with net settlement features, and the accounting for modifications of share-based payment transactions fromcash-settled to equity-settled. The adoption of these amendments has no impact on the current share-based payments
programmes held within the Group.
Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts do not change the impact of
the earlier adoption of IFRS 9 as the Group is not affected by IFRS 4.
Amendments to IAS40: Transfers of Investment Property reinforce the principle for transfers into, or out of, investment
property under IAS 40. The Group has not yet evaluated the impact of these amendments on its consolidated financial statements.
Annual Improvements to IFRS Standards 2014 – 2016 Cycle set out amendments across three different standards, related basis
for conclusions and guidance, out of which two are effective in 2018, namely amendments to IFRS 1 First-time Adoption ofInternational Financial Reporting Standards and amendments to IAS 28 Investments in Associates and Joint Ventures. These
amendments are not relevant for the Group.

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements

101

IFRIC 22: Foreign Currency Transactions and Advance Consideration sets out requirements about which exchange rate touse when recording a foreign currency transaction on initial recognition in an entity’s functional currency. The adoption of thisinterpretation does not change the current practice applied by the Group.
b) Issued and effective for 2019 and after
Amendments to IFRS 10 and IAS 28: Sales or Contribution of Assets between an Investor and its Associate or Joint Venture
clarify that in a transaction involving an associate or joint venture the extent of gain or loss recognition depends on whether theassets sold or contributed constitute a business. The adoption of these amendments has no impact on the accounting of the joint
arrangements currently held by the Group.
IFRS 16 Leases provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases, andlessors to confirm the continuation of classifying leases as operating or finance. The Group is currently evaluating the accounting
impact of the adoption of this standard.
IFRIC 23 Uncertainty over Income Tax Treatments clarifies the accounting for uncertainties in income taxes. The clarification
confirms the current practices of the Group.
Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures clarify that an entity must apply IFRS 9 Financial
Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint
venture but to which the equity method is not applied. The adoption of these amendments has no impact on the joint
arrangements currently held by the Group.
Amendments to IFRS 9: Prepayment Features with Negative Compensation address the concerns about how IFRS 9 Financial
Instruments classifies particular prepayable financial assets. These amendments are not relevant as the Group does not enter insuch particular instruments.
IFRS 17 Insurance Contracts establishes the principles for the recognition, measurement, presentation and disclosure of insurance
contracts. The standard is not relevant for the Group as it does not operate in the insurance business.
2.2 Consolidation
The subsidiaries that are consolidated are those companies controlled, directly or indirectly, by Givaudan SA. The Group controls anentity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability toaffect those returns through its power over the entity. The Group reassesses whether or not it controls an investee if there areindications of a change in facts and circumstances.
Companies acquired during the year are consolidated from the date on which operating control is transferred to the Group, andsubsidiaries to be divested are included up to the date on which control passes to the acquirer.
The acquisition method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured
as the fair value of the assets acquired, shares issued and liabilities undertaken or assumed at the date of acquisition. Identifiable
assets acquired and liabilities and contingent liabilities assumed are measured initially at their fair values at the acquisition date.
Acquisition related costs are expensed as incurred. The excess of the cost of acquisition over the fair value of the Group’s share of
net assets of the subsidiary acquired is recognised as goodwill.
Where necessary, changes are made to the accounting policies of subsidiaries to bring and ensure consistency with the policies
adopted by the Group.
Assets and liabilities, equity, income, expenses and cash flows resulting from inter-company transactions are eliminated in fullon consolidation.
Disclosure 102 – 45

Givaudan – 2017 Annual Report102 Financial report Notes to the consolidated financial statements

2.3 Interest in a Joint Venture
A joint venture is a joint arrangement whereby the Group and other parties that have joint control of the arrangement have rights
to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which
exists when the strategic, financial and operating decisions relating to the activities of the joint venture require the unanimous
consent of the parties sharing control.
The results and assets and liabilities of joint ventures are incorporated in the consolidated financial statements using the equity
method of accounting until the date on which the Group ceases to have joint control over the joint venture. Under the equity
method, an investment in a joint venture is initially recognised at cost and adjusted thereafter to recognise the Group's share of
the income statement and the other comprehensive income of the joint venture. Adjustments are made where necessary tobring the accounting policies in line with those adopted by the Group. Unrealised gains and losses on transactions between theGroup and a jointly controlled entity are eliminated to the extent of the Group’s interest in the joint venture.
2.4 Foreign Currency Valuation
2.4.1 Functional and presentation currency
Items included in the financial statements of each entity in the Group are measured using the functional currency of that entity.
The functional currency is normally the one in which the entity primarily generates and expends cash. The consolidated financial
statements are presented in millions of Swiss francs (CHF), the Swiss franc being the Group’s presentation currency.
2.4.2 Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of thetransactions, or using a rate that approximates the exchange rates on the dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at the reporting period-end rates of monetary assets andliabilities denominated in foreign currencies are recognised in other financial income (expense), net, except for:– Exchange differences deferred in equity as qualifying cash flow hedges on certain foreign currency risks and qualifying net
investment hedges.
– Exchange differences on monetary items to a foreign operation for which settlement is neither planned nor likely to occur,
therefore forming part of the net investment in the foreign operation, which are recognised initially in other comprehensive
income and reclassified from equity to the income statement on disposal of the net investment or on partial disposal when
there is a loss of control of subsidiary or a loss of joint control over a jointly controlled entity.
– Exchange differences on foreign currency borrowings relating to assets under construction which are included in the cost of
those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings.
Non-monetary items that are measured in terms of historical cost in foreign currencies are not retranslated.
2.4.3 Translation of the financial statements of foreign subsidiaries
For the purpose of presenting consolidated financial statements, the assets and liabilities of Group companies reporting incurrencies other than Swiss francs (foreign operations) are translated into Swiss francs using exchange rates prevailing at the endof the reporting period. Cash flows, income and expenses items of Group companies are translated each month independently at
the average exchange rates for the period when it is considered a reasonable approximation of the underlying transaction rate.
All resulting exchange differences are recognised in other comprehensive income and accumulated in equity.
2.5 Segment Reporting
The operating segments are identified on the basis of internal reports that are regularly reviewed by the Executive Committee,
the members of the Executive Committee being the chief operating decision makers, in order to allocate resources to the segments
and to assess their performance. The internal financial reporting is consistently prepared along the lines of the two operating
Divisions: Fragrances and Flavours.

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements 103

The business units of each Division, respectively Fine Fragrances, Consumer Products, and Fragrance Ingredients and Active
Beauty for the Fragrance Division and Beverages, Dairy, Savoury and Sweet Goods for the Flavour Division, are not considered as
separately reportable operating segments as decision making about the allocation of resources and the assessment of
performance are not made at this level.
Inter-segment transfers or transactions are set on an arm’s length basis.
Information about geographical areas is determined based on the Group’s operations; Switzerland, Europe, Africa and Middle East;
North America; Latin America and Asia Pacific. Revenues from external customers are shown by destination.
2.6 Sales of Goods
Revenue from sales of goods is measured at the fair value of the consideration received or receivable in the ordinary course of theGroup’s activities. Sales of goods are reduced for estimated volume discounts, rebates, and sales taxes. The Group recognises
revenue when the amount can be reliably measured, it is probable that future economic benefits will flow to the entity and whensignificant risks and rewards of ownership of the goods are transferred to the buyer.
2.7 Research and Product Development
The Group is active in research and in formulas, technologies and product developments. In addition to its internal scientificefforts, the Group collaborates with outside partners.
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Internal developments or developments obtained through agreements on formulas, technologies and products costs arecapitalised as intangible assets when there is an identifiable asset that will generate probable economic benefits and when thecost can be measured reliably. When the conditions for recognition of an intangible asset are not met, development expenditureis recognised in the income statement in the period in which it is incurred.
2.8 Employee Benefit Costs
Wages, salaries, social security contributions, annual leave and paid sick leave, bonuses and non-monetary benefits are expensed
in the year in which the associated services are rendered by the Group’s employees.
2.8.1 Pension obligations
A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement,
principally dependent on an employee’s years of service and remuneration at retirement. Plans are usually funded by paymentsfrom the Group and employees to financially independent trusts. The liability recognised in the statement of financial positionis the aggregate of the present value of the defined benefit obligation at the statement of financial position date less the fairvalue of plan assets. Where a plan is unfunded, only a liability representing the present value of the defined benefit obligation isrecognised in the statement of financial position. The present value of the defined benefit obligation is calculated by independentactuaries using the projected unit credit method twice a year, at interim and annual publication. This reflects the discounted
expected future payment required to settle the obligation resulting from employee service in the current and prior periods. The
future cash outflows incorporate actuarial assumptions primarily regarding the projected rates of remuneration growth, andlong-term indexation rates. Discount rates, used to determine the present value of the defined benefit obligation, are based on
the market yields of high quality corporate bonds in the country concerned. Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period
in which they arise. Past service costs are recognised immediately in the income statement. Pension assets and liabilities indifferent defined benefit schemes are not offset unless the Group has a legally enforceable right to use the surplus in one plan
to settle obligations in the other plan.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into publicly or privately
administrated funds. The Group has no further payment obligations once the contributions have been made. The contributions arecharged to the income statement in the year to which they relate.

Givaudan – 2017 Annual Report104 Financial report Notes to the consolidated financial statements

2.8.2 Other post-retirement obligations
Some Group companies provide certain post-retirement healthcare and life insurance benefits to their retirees, the entitlement
to which is usually based on the employee remaining in service up to retirement age and completing a minimum service period.
The expected costs of these benefits are accrued over the periods in which employees render service to the Group.
2.9 Share-Based Payments
The Group has established a performance share plan to align the long-term interests of key executives and members of the Boardof Directors with the interests of the shareholders.
Key executives are awarded a portion of their performance-related compensation in equity-settled share-based paymenttransactions. The costs are recorded in each relevant functions part of the employees’ remuneration as personnel expenses witha corresponding entry in equity in own equity instruments for equity-settled share-based payment transactions. The different
share-based payments are described below:
2.9.1 Performance Share Plan
Key executives are awarded a portion of their performance-related compensation in equity-settled share-based paymenttransactions in the form of a performance share plan.
The performance share plan is established with Givaudan registered shares and a vesting period of three years. The Group has at
its disposal either treasury shares or conditional share capital.
The cost of equity-settled instruments is expensed as employee remuneration over the vesting period, together with acorresponding increase in equity in own equity instruments. The cost is determined by reference to the fair value of the shares
expected to be delivered at the date of vesting. Performance conditions are included in the assumptions in which the number ofshares varies. No market conditions are involved.
The fair value is determined as the market price at grant date reduced by the present value of dividends expected or any otherexpected distribution to the shareholders to be paid during the vesting period, as participants are not entitled to receive dividends
or any other distribution to the shareholders during the vesting period.
At each statement of financial position date, the Group revises its estimates of the number of shares that are expected to bedelivered. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation.
2.9.2 Restricted Shares Plan
The members of the Board of Directors receive a portion of their compensation in equity-settled share-based paymenttransactions in the form of restricted share units.
Restricted shares are set generally with a vesting period of three years, during which the restricted shares cannot be settled ortransferred. The Group has at its disposal treasury shares for the delivery of the restricted shares.
The cost of these equity-settled instruments to be expensed, together with a corresponding increase in equity, over the vesting
period, is determined by reference to the fair value of the restricted shares granted at the date of the grant. Service conditions areincluded in the assumptions about the number of restricted shares that are expected to become deliverable. No performance
conditions are included.
The fair value is determined as the market price at grant date reduced by the present value of dividends expected or any otherexpected distribution to the shareholders to be paid during the vesting period, as participants are not entitled to receive dividends
or any other distribution to the shareholders during the vesting period.
At each statement of financial position date, the Group revises its estimates of the number of restricted shares that are expected
to be delivered. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation.

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements 105

2.10 Taxation
Income taxes include all taxes based upon the taxable profits of the Group, including withholding taxes payable on the distributionof retained earnings within the Group. Other taxes not based on income, such as property and capital taxes, are included either inoperating expenses or in financial expenses according to their nature. The Group’s liability for current income tax is calculatedusing tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred income taxes are provided based on the full liability method, under which deferred tax consequences are recognised for
temporary differences between the tax bases of assets and liabilities and their carrying values. Deferred tax liabilities are generally
recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary
differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against
which those items can be utilised. Management considers that these tax benefits are probable on the basis of business projections
on the relevant entities.
Such deferred tax assets and liabilities are not recognised if the temporary difference arises from initial recognition of an asset or
liability in a transaction other than a business combination that at the time of the transaction affects neither the accounting nor
the taxable income.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset isrealised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and interests in jointly controlled
entities, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that thetemporary difference will not reverse in the foreseeable future. Current tax assets and liabilities are offset and deferred income tax
assets and liabilities are offset when the income taxes are levied by the same taxation authority and when there is a legally
enforceable right to offset them.
Current and deferred tax are recognised as an expense or income in the income statement, except when they relate to items thatare recognised outside the income statement, in which case the tax is also recognised outside the income statement.
2.11 Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and demand deposits with banks and similar institutions. Cash equivalents areheld for the purpose of meeting short-term cash commitments (maturity of three months or less from the date of acquisition) andare subject to an insignificant risk of changes in value.
2.12 Financial Assets
Financial assets are classified as financial assets at fair value through the income statement except for trade receivables which areclassified at amortised cost. The classification depends on the nature and purpose of the financial assets and is determined at thetime of initial recognition.
Regular way purchases or sales of financial assets require delivery of assets within the time frame established by regulation orconvention in the marketplace. All regular way purchases or sales of financial assets are recognised and derecognised at thesettlement date i.e. the date that the asset is delivered to or by the Group. Financial assets are classified as current assets, unlessthey are expected to be realised beyond twelve months of the statement of financial position date.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers
the financial asset and substantially all the risks and rewards of ownership of the asset to another party. On derecognition of afinancial asset in its entirety, the following amounts are recognised in the income statement: (i) the difference between the asset’s
carrying amount and the sum of the consideration received and receivable; (ii) the cumulative gain or loss that had beenrecognised in other comprehensive income and accumulated in equity.
Dividend income from investments is recognised in the line Other financial income (expense), net when the right to receive payment
has been established. Interest income is accrued on a time basis and included in the line Other financial income (expense), net.

Givaudan – 2017 Annual Report106 Financial report Notes to the consolidated financial statements

2.12.1 Financial assets at fair value through the income statement
Financial assets such as debt instruments, equity securities, investment funds and derivatives not designated as effective hedging
instruments are classified in this category.
Debt instruments are held with the objective to manage cash flows by both collecting their contractual cash flows and sellingthem at market price when needed. The main purpose of such instruments is to fund obligations related to employees. They aredesignated as financial assets measured at fair value through the income statement to avoid recognition inconsistency resulting
from changes in fair values of the financial assets and the obligations.
Other financial assets which are not debt instruments are held with the main objectives to participate in long-term partnerships,
to hedge certain financial risks, and to fund obligations related to employees. Their designation as financial assets measured at fairvalue through the income statement is in line with management intentions to hold such assets.
These financial assets are initially measured at fair value whereas directly attributable transaction costs are expensed in theincome statement. At the end of each period, the carrying value is adjusted to the fair value with a corresponding entry in theincome statement until the investment is derecognised.
The subsidiaries in the United States of America entered over the years into various life insurance contracts called corporateowned life insurance (COLI) to fund long-term obligations related to employees. For both the COLI contracts and the associatedlong-term obligations, adjustments to the fair value, gains and losses, are recognised in the income statement.
For quoted equity instruments, the fair value is the market value, being calculated by reference to share exchange quoted selling
prices at close of business on the statement of financial position date. Non-quoted financial assets are valued at fair value based on
observable market transactions or if not available based on prices given by reputable financial institutions or on the price of thelatest transaction.
2.12.2 Financial assets at amortised cost
Trade receivables are the only financial assets classified as subsequently measured at amortised cost. They reach the objective ofcollecting contractual cash flows over their life.
Trade receivables are carried at amortised cost less allowances for loss. They generally do not contain a significant financing
component. The allowance loss measurement is then determined by applying a simplified approach equalling the lifetime expectedcredit losses. Under this approach the tracking of changes in credit risk is not required but instead the base lifetime expected credit
loss at all times is applied. An allowance for loss is made for potentially impaired receivables during the year in which they are
identified based on a periodic review of all outstanding amounts. Losses are recorded within selling, marketing and distribution
expenses in the income statement. Trade receivables are deemed as impaired when there is an indication of significant financial
difficulties of the debtor (delinquency in or default on payments occurs, probability of bankruptcy or need for financial reorganisation).
Trade receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
2.13 Derivative Financial Instruments and Hedging Activities
Most derivative instruments are entered into to provide economic hedges. They are initially recognised at fair value on the date aderivative contract is entered into and are subsequently measured at their fair value. The method to recognise the resulting gain orloss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged.
The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items,
as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents
its assessment, both at hedge inception and on an ongoing basis, as to whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
Movements on the hedging reserve in shareholders’ equity are shown in the statement of changes in equity. These derivatives arepresented as current or non-current on the basis of their settlement dates.

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements

107

2.13.1 Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in
the cash flow hedge reserve within other comprehensive income, limited to the cumulative change in fair value of the hedged item
on a present value basis from the inception of the hedge. The gain or loss relating to the ineffective portion is immediately
recognised in financing costs in the income statement.
Amounts accumulated in equity are reclassified to the income statement in the periods when the hedged transaction affects theincome statement, in the same line as the recognised hedged item. However, when the hedged forecast transaction results in therecognition of a non-financial asset or liability, the amounts are transferred from equity and included in the initial measurement of
the cost of the non-financial asset or liability.
When forward contracts are used to hedge forecast transactions such as future debt issuance, management assumes that thesources of hedge effectiveness in regards of the characteristics of the hedging relationship is sufficiently immaterial to exclusively
perform a qualitative assessment.
When the hedging instrument expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the ultimate
forecast transaction occurs. If the forecast transaction is no longer expected to occur, any cumulative gain or loss existing in equity
is immediately taken to the income statement.
2.13.2 Derivatives at fair value through the income statement
Certain derivative instruments do not qualify for hedge accounting and are accounted for at fair value through the income statement.
At each statement of financial position date, these derivative instruments are valued at fair value based on quoted market prices,with the unrealised gain or loss recognised in the income statement. They are derecognised when the Group has lost control of thecontractual rights of the derivatives, at which time a realised gain or loss is recognised in the income statement.
2.14 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using a weighted average cost formula.
The cost of finished goods and work in process comprises raw materials, direct labour, other direct costs and related production
overheads but excludes borrowing costs. Cost of sales includes the corresponding direct production costs of goods manufactured
and services rendered as well as related production overheads. Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs necessary to make the sale.
2.15 Property, Plant and Equipment
Property, plant and equipment are initially recognised at cost of purchase or construction and subsequently at cost lessaccumulated depreciation and accumulated impairment losses. The cost of an item of property, plant and equipment includes
expenditure that is attributable to the purchase or construction. It includes, for qualifying assets, borrowing costs in accordancewith the Group’s accounting policy (see Note 2.19), and cost of its dismantlement, removal or restoration, related to the obligation
for which an entity incurs as a consequence of installing the asset.
The assets are depreciated on a straight-line basis, except for land, which is not depreciated. Estimated useful lives of major classesof depreciable assets are as follows:– Buildings and land improvements– Machinery and equipment– Office equipment– Motor vehicles

40 years5 – 15 years
3 years
5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date.

Givaudan – 2017 Annual Report108 Financial report Notes to the consolidated financial statements

The carrying values of plant and equipment are written down to their recoverable amount when the carrying value is greater thantheir estimated recoverable amount (see Note 2.18).
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount with gains being recognised
within other operating income and losses being recognised within other operating expense within the income statement.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it isprobable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. Subsequent costs such as repairs and maintenance are recognised as expenses as incurred.
2.16 Leases
Leases of assets are classified as operating leases when substantially all the risks and rewards of ownership of the assets are
retained by the lessor. Operating lease payments are charged to the income statement on a straight-line basis over the term of
the lease. The Group holds only operating leases.
2.17 Intangible Assets
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of theacquired subsidiary at the date of acquisition. Goodwill on acquisitions is recognised in the statement of financial position as anintangible asset. Goodwill is tested annually for impairment or more frequently when there are indications of impairment, andcarried at cost less accumulated impairment losses. Impairment charges on goodwill are not reversed. Any goodwill or fair value
adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are recognised in thelocal currency at the effective date of the transaction and translated at year-end exchange rates. For the purpose of impairment
testing, goodwill is allocated to the cash-generating units being the Group’s reportable operating segments: Fragrance Division
and Flavour Division.
Intangible assets acquired in a business combination are identified and recognised separately from goodwill when they satisfy thedefinition of an intangible asset and their fair values can be measured reliably.
Internal developments are capitalised as intangible assets when there is an identifiable asset that will generate probable economic
benefits and when the cost can be measured reliably. Costs include all costs directly attributable to preparing the asset for use.
Development costs previously recognised as an expense are not recognised as an asset in subsequent periods.
Separately acquired intangible assets are capitalised when the identifiable asset will generate probable economic benefits andwhen its cost can be measured reliably.
Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is on astraight-line basis over the estimated economic useful life of the asset. Useful life is determined based on the character of the asset
and may be indefinite. In that case, asset is not amortised but annually tested for impairment. Estimated definite useful life ofmajor classes of amortisable assets are as follows:– Name and product brands– Software/ERP system– Process-oriented technology– Client relationships

Givaudan – 2017 Annual Report

2 – 7 years
3 – 7 years
5 – 20 years
15 – 23 years

Financial report Notes to the consolidated financial statements 109

Gains or losses arising on the disposal of intangible assets are measured as the difference between the net disposal proceeds andthe carrying amount with gains being recognised within other operating income and losses being recognised in other operating
expense within the income statement.
2.18 Impairment of Long-Lived Assets
Non-financial assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes incircumstances indicate that the carrying amount may not be recoverable. When the recoverable amount of a non-financial asset,
being the higher of its fair value less cost to sell and its value in use, is less than its carrying amount, then the carrying amount isreduced to the asset’s recoverable value. This reduction is recognised as an impairment loss within other operating expense within
the income statement. Value in use is determined by using pre-tax cash-flow projections over a five-year period and a terminal
value. These are discounted using a pre-tax discount rate that reflects current market conditions of the time value of money andthe risks specific to the asset.
Intangible assets with indefinite useful life are tested for impairment annually, and whenever there is an indication that the asset
may be impaired.
An impairment loss is reversed if there has been a change in the circumstances used to determine the recoverable amount.
A previously recognised impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss has
been recognised.
2.19 Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets thatnecessarily take a substantial period of time to prepare for their intended use, are added to the cost of those assets, until such timeas the assets are substantially ready for their intended use.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets isdeducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in the income statement in
the period in which they are incurred.
2.20 Accounts Payable – Trade and Others
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business fromsuppliers and are carried at amortised cost.
2.21 Debt
The proceeds of straight bonds, of private placements and of debt issued are recognised as the proceeds received, net oftransaction costs incurred. Any discount arising from the coupon rate, represented by the difference between the net proceeds andthe redemption value, is amortised using the effective interest rate method and charged to interest expense over the life of thebonds or the private placements. Debt is derecognised at redemption date.
Debt is classified within current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
twelve months after the statement of financial position date.
2.22 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, for which it isprobable that an outflow of resources embodying economic benefits will be required to settle the obligation, and for which areliable estimate of the amount of the obligation can be made. Provisions are reviewed regularly and are adjusted where necessary
to reflect the current best estimates of the obligation.

Givaudan – 2017 Annual Report

110

Financial report Notes to the consolidated financial statements

2.23 Own Equity Instruments
Own equity instruments are own shares and derivatives on own shares. Purchases and sales are accounted for at the settlement date.
Purchases of own shares are recognised at acquisition cost including transaction costs as a deduction from equity. The original cost of
acquisition, results from resale and other movements are recognised as changes in equity, net. Treasury shares acquired by the executionof own equity derivatives are recognised at the execution date market price.
The settlement and the contract for derivatives on own shares determine the categorisation of each instrument. When the contract
assumes the settlement is made by exchanging a fixed amount of cash for a fixed number of treasury shares, the contract is recognisedin equity except for a forward contract to buy and write put options which is recognised as a financial liability. When the contract
assumes the settlement either net in cash or net in treasury shares or in the case of option of settlement, the contract is recognised as a
derivative. Instruments recognised in equity are recognised at acquisition cost including transaction costs. Instruments recognised as
financial liabilities are recognised at the net present value of the strike price of the derivative on own shares with the interest charge
recognised over the life of the derivative in the line Financing costs of the income statement. They are derecognised when the Group has
lost control of the contractual rights of the derivative, with the realised gain or loss recognised in equity.
At each statement of financial position date, instruments recognised as derivatives are valued at fair value based on quoted market
prices, with any unrealised gain or loss recognised in the line Other financial income (expense), net in the income statement. They are
derecognised when the Group has lost control of the contractual rights of the derivatives, with any realised gain or loss recognised.
2.24 Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown inequity as a deduction, net of tax, from the proceeds.
2.25 Statement of Cash Flows
Cash flows from operating activities arise from the principal activities of the Group in the Fragrance and Flavour businesses.
The indirect method is used whereby the operating income is adjusted for the transactions of a non-cash nature in order to derive
the cash generated from operations. It includes income tax paid on all activities.
Cash flows from financing activities are primarily the proceeds from the issue and repayment of the debt instruments, the dividend
payment to shareholders and interest paid. Cash flows from long-term and short-term borrowings are reported separately ofgross cash receipts and gross cash payments.
Cash flows from investing activities arise principally from the investments in property, plant and equipment and intangible assets,from the acquisition of subsidiaries, and from the transactions with jointly controlled entities.
2.26 Distribution to the Shareholders
Dividend distributions or distributions out of statutory capital reserves from “capital contributions – additional paid-in capital” arerecognised in the period in which they are approved by the Group’s shareholders.

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements 111

3. Critical Accounting Estimates and Judgments

The estimates and underlying assumptions are reviewed on an ongoing basis and are based on historical experience and otherfactors, including expectation of future events that are believed to be reasonable under the circumstances.
3.1 Critical Accounting Estimates and Assumptions
The key assumptions concerning the future, and other key sources of estimation uncertainty at the statement of financial positiondate, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year, are for the most part related to:1)	The impairment of goodwill requiring estimations of the value in use of the cash-generating units to which goodwill
is allocated (see Note 22)2)	The impairment of long-lived assets requiring estimations to measure the recoverable amount of an asset or group of assets(see Note 21 and 22)3)	The calculation of the present value of defined benefit obligations requiring financial and demographic assumptions(see Note 8)4)	The determination and provision for income taxes requiring estimated calculations for which the ultimate tax determinationis uncertain (see Note 16)
5)

The provisions requiring assumptions to determine reliable best estimates (see Note 26)6)	The contingent liabilities assessment (see Note 30)
If, in the future, estimates and assumptions, which are based on management’s best judgement at the date of the financial
statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in theyear in which the circumstances change.
3.2 Critical Judgments in Applying the Entity’s Accounting Policies
In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those
involving estimates, which have the most significant effect on the amounts recognised in the consolidated financial statements:– Computer software and Enterprise Resource Planning: Computer software is internally developed programmes or modifications
that result in new or in substantial improvements of existing IT systems and applications (see Note 22).
– Internal developments on formulas, technologies and products: The outcome of these developments depends on their final
assemblage and application, which varies to meet customer needs, and consequently the future economic benefits of thesedevelopments are not certain. Thus the criteria for the recognition as an asset of the internal developments on formulas,technologies and products are generally not met. The expenditures on these activities are recognised as expense in the period
in which they are incurred.

Givaudan – 2017 Annual Report112 Financial report Notes to the consolidated financial statements

4. Foreign Exchange Rates
ISO code

Units

31 Dec 2017

Average 2017

Dollar

USD

1

0.97

0.98

1.02

0.99

1.00

0.96

Euro

EUR

1

1.17

1.11

1.07

1.09

1.09

1.07

Pound

GBP

1

1.32

1.27

1.25

1.34

1.48

1.47

Yen

JPY

100

0.86

0.88

0.87

0.91

0.83

0.80

Singapore dollar

SGD

1

0.73

0.71

0.70

0.71

0.71

0.70

Real

BRL

1

0.30

0.31

0.31

0.29

0.25

0.29

Foreign currency to Swiss francs exchange rates

31 Dec 2016 Average 201631 Dec 2015 Average 2015

Renminbi

CNY

1

0.15

0.15

0.15

0.15

0.15

0.15

Mexican peso

MXN

100

4.96

5.20

4.93

5.33

5.83

6.09

RupiahIDR

10,000

0.72

0.73

0.75

0.74

0.73

0.72

5. Financial Risk Management
5.1 Capital Management
The objective of the Group when managing capital is to maintain the ability to continue as a going concern whilst maximising
shareholder value through an optimal balance of debt and equity.
In order to maintain or adjust the capital structure, management may increase or decrease leverage by issuing or reimbursing
debt, and may propose to adjust the amounts distributed to the shareholders, return capital to shareholders, issue new shares andcancel shares through share buyback programmes.
The Group monitors its capital structure on the basis of a leverage ratio, defined as net debt divided by the equity plus net debt.
Net debt is calculated as the total of the consolidated short-term and long-term debt, less cash and cash equivalents.
Equity is calculated as the total equity attributable to equity holders of the parent excluding the defined benefit pension plans
remeasurement elements.
The Group has entered into several private placements which contain various covenants with externally imposed capitalrequirements. The Group was in compliance with these requirements as at 31 December 2017 and 2016.
The leverage ratio as at 31 December was as follows:
Note

2017

Short-term debt

24

308

7

Long-term debt

24

1,300

1,251

Less: cash and cash equivalents

18

(534)

(328)

in millions of Swiss francs

2016

Net Debt

1,074

930

Total equity attributable to equity holders of the parent

3,538

3,293

558

575

EquityRemeasurement of post employment benefit obligations

4,096

3,868

Net Debt and Equity

5,170

4,798

Leverage ratio

21%

19%

The Group intends to maintain its medium term leverage ratio below 25%.

Givaudan – 2017 Annual Report8Financial report Notes to the consolidated financial statements 113

5.2 Financial Risk Management
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk),credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the Group’s financial performance. The Group generally enters into financial
derivative transactions to hedge underlying business related exposures.
Risk management is carried out by a team within the central treasury department (hereafter “Group Treasury”) under the risk
management policies approved by the Board of Directors. The Board of Directors provides written principles for overall risk
management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk and credit risk,
use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
Group Treasury monitors and manages financial risks relating to the operations of the Group through internal risk reports
which analyse exposures by degree and magnitude of risk. To manage the interest rate and currency risk arising from theGroup’s operations and its sources of finance, the Group enters into derivative transactions, primarily interest rate swaps,
forward currency contracts and options. Compliance with policies and exposure limits is reviewed by the treasury controllingon a continuous basis. Group Treasury issues monthly reports for the Chief Financial Officer and quarterly reports for the Audit
Committee.
Categories of financial instruments
The accounting policies for financial instruments have been applied to the line items below:
At fair value
through theincomestatement

NoteAt
amortised
cost

Cash and cash equivalents

18

534

Derivative financial instruments

5.3

16

Financial assets at fair value through income statement

5.3

2

Accounts receivable – trade

19

2017
in millions of Swiss francs

Derivatives
used forhedge
accounting

Otherfinancialliabilities

Total

Current financial assets

Other current assets a

534
16
2

1,147

1,147

98

98

Non-current financial assets
Derivative financial instruments b

5.3

Financial assets at fair value through income statement

5.3

Total financial assets as at 31 December

1

1

63
1,779

81

63
1

1,861

Current financial liabilities
Short-term debt

24

Derivative financial instruments

5.3

308

308

662

662

1,300

1,300

2,270

2,342

12

12

Accounts payableNon-current financial liabilities
Derivative financial instruments b

5.3

Long-term debt

24

Total financial liabilities as at 31 December

60
12

60

60

a) Other current assets consist of other receivables non trade.
b) Derivatives qualified as hedge accounting on non-current transactions are classified and presented as non-current assets or liabilities (see Note 2.13).

Givaudan – 2017 Annual Report114 Financial report Notes to the consolidated financial statements

2016
in millions of Swiss francs

At amortised
Note
cost

At fair value
through theincomestatement

Derivatives
used forhedge
accounting

Otherfinancialliabilities

Total

Current financial assets
Cash and cash equivalents

18

Derivative financial instruments

5.3

9

Financial assets at fair value through income statement

5.3

1

Accounts receivable – trade19

Other current assets a

328

328
9
1

996

996

192

192

Non-current financial assets
Derivative financial instruments b

5.3

Financial assets at fair value through income statement

5.3

Total financial assets as at 31 December

–

–

59
1,516

59

69

–

1,585

Current financial liabilities
Short-term debt

24

Derivative financial instruments

5.3

7

7

32

32

Accounts payable

494

494

1,251

1,251

1,752

1,846

Non-current financial liabilities
Derivative financial instruments b

5.3

Long-term debt

24

Total financial liabilities as at 31 December

62
32

62

62

a)	O ther current assets consist of other receivables non trade.
b)	Derivatives qualified as hedge accounting on non-current transactions are classified and presented as non-current liabilities (see Note 2.13).

The carrying amount of each class of financial assets and liabilities disclosed in the previous tables approximates the fair value. The fairvalue of each class of financial assets and liabilities, except financial assets at amortised cost, is determined by reference to published pricequotations and is estimated based on valuation techniques using the quoted market prices. Given the nature of the Group’s accounts
receivable trade items, the carrying value is considered as equivalent to the fair value.
5.2.1 Market Risk
The Group’s activities primarily expose it to the financial risks of changes in foreign currency exchange rates, interest rates and commodity
prices. The Group enters into a number of derivative financial instruments to manage its exposure to foreign currency risk and interest raterisk, including:– Currency derivatives, mainly forward foreign exchange contracts, to hedge the exchange rate risk arising from recorded transactions.
– Interest rate swaps and other instruments to mitigate the risk of interest rate increases and/or to optimally manage interest rate costs
depending on the prevailing interest rate environment.
Market risk exposures are measured using sensitivity analysis. There has been no change during the year in the structure of the Group’s
exposure to market risks or the manner in which these risks are managed.
5.2.1.1 Foreign Exchange Risk
The Group operates across the world and is exposed to movements in foreign currencies affecting its net income and financial position. Foreignexchange risk arises from future commercial transactions, recognised assets and liabilities, and net investments in foreign operations.
It is the Group’s policy to enter into derivative transactions to hedge current, forecasted foreign currency transactions, and translation risk
arising from certain investments in foreign operations with a functional currency different from the Group’s presentation currency.

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements 115

While these are hedges related to underlying business transactions, the Group generally does not apply hedge accounting on transactions
related to management of its foreign exchange risk. In 2017, the Group applied hedge accounting on the foreign currency risk related to theacquisition of Vika B.V. and the foreseen acquisitions of Centroflora Nutra and Expressions Parfumées.
Group Treasury centrally manages foreign exchange risk management activities against the functional currency of each subsidiary, and isrequired to hedge, whenever cost-effective, their largest exposures.
The measurement of the foreign currency risk expresses the total exposure by currency, which is in the opinion of Group Treasury arepresentative manner to monitor the risk. It measures the cumulative foreign exchange risk of all subsidiaries of recognised assets andliabilities that are denominated in a currency (e.g. USD) that is not the subsidiary’s functional currency (e.g. other than USD).
The following table summarises the significant exposures to the foreign currency risk at the date of the consolidated statement offinancial position:
Currency exposure 2017
in millions of Swiss francs

USD

EUR

CHF

GBP

SGD

Currency exposure without hedge a

337

(415)

(75)

(155)

144

Hedged amount

(332)

411

38

152

(160)

5b

(4)

(37)

(3)

(16)

Currency exposure including hedgea) + long position; - short position.
b) Mainly due to unhedged positions in countries where hedging is not cost-effective.
Currency exposure 2016
in millions of Swiss francs

USD

EUR

CHF

GBP

SGD

Currency exposure without hedge a

388

(42)

(6)

(149)

121

Hedged amount

(406)

22

4

148

(127)

Currency exposure including hedge(18) b

(20)

(2)

(1)

(6)

a)	+ long position; - short position.
b)	Mainly due to unhedged positions in countries where hedging is not cost-effective.

In the exposure calculations, the intra Group positions, except those related to net investments in foreign operations, are included.
The following table summarises the sensitivity to transactional currency exposures of the main currencies at 31 December.
The sensitivity analysis is disclosed for each currency representing significant exposure:
Currency risks 2017
in millions of Swiss francs

USD

EUR

CHF

GBP

SGD

Reasonable shift

11%

6%

6%

10%

7%

Impact on income statement if the currency strengthens against all othercurrencies

(1)

–

(2)

–

(1)

Impact on income statement if the currency weakens against all other currencies

1

–

2

–

1

Currency risks 2016
in millions of Swiss francs

USD

EUR

CHF

GBP

SGD

Reasonable shift

13%

8%

8%

11%

7%

Impact on income statement if the currency strengthens against all othercurrencies

(4)

(2)

–

–

–

Impact on income statement if the currency weakens against all other currencies

4

2

–

–

–

The sensitivity is based on the exposure at the date of the consolidated statement of financial position and based on assumptions
deemed reasonable by management, showing the impact on income before tax. Management uses historical volatilities of thesignificant currencies contributing to the exposure to determine the reasonable change.

Givaudan – 2017 Annual Report116 Financial report Notes to the consolidated financial statements

5.2.1.2 Interest Rate Risk
The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest rates,
and invests in debt financial instruments. Borrowings issued at variable rates expose the Group to cash flow interest rate risk
which is partially counterbalanced by cash held at variable rates. Borrowings issued at fixed rates expose the Group to fair valueinterest rate risk.
Group Treasury manages interest rate risk centrally by simulating various scenarios on liabilities taking into consideration
refinancing, renewal of existing positions and hedging. Hedging strategies are applied by either positioning the liabilities orprotecting interest expense through different interest cycles. Hedging activities are regularly evaluated to align interest rateviews and defined risk limits. Group Treasury manages interest rate risk mainly by the use of interest rate swap contracts andforward interest rate contracts.
The following table shows the sensitivity to interest rate changes:
As at 31 December 2017
in millions of Swiss francs

150 basis points increase

25 basis points decrease

Impact on income statement––

Impact on equity

65

(13)

150 basis points increase

25 basis points decrease

As at 31 December 2016
in millions of Swiss francs

Impact on income statement––

Impact on equity

64

(13)

The sensitivity is based on exposure on liabilities at the date of the consolidated statement of financial position using assumptions
which have been deemed reasonable by management showing the impact on the income before tax.

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements 117

Cash flow hedges
Inception
date

Hedged items

Hedge instruments

Objectives

Comments

2009

Highly probable future
debt issuances in 2011.

Several forward starting interest rate swaps
commencing in 2011, totalling CHF 200 million
with an average rate of 2.69% and a 5 year
maturity.

Protection against future
In June 2011, the Group issued a 2.50% 7 year
increases in CHF interest rates public bond (maturity 15 June 2018) with aand to fix the interest rates.
nominal value of CHF 300 million.
Correspondingly, hedge positions assigned tothis bond issuance of CHF 200 million have beenclosed. The amortisation of the realised loss of
CHF 14 million was recognised in Financing costs
over 5 years until 15 June 2016.

2009

Highly probable future
debt issuances in 2012.

Several forward starting interest rate swaps
commencing in 2012, totalling CHF 250 million
with an average rate of 2.70% and a 5 year
maturity and CHF 50 million with an averagerate of 2.45% and a 3 year maturity.

Protection against future
In December 2011, the Group issued a dual
increases in CHF interest rates tranche public bond, totalling CHF 300 million,
and to fix the interest rates.
respectively of CHF 150 million at a rate of
1.250% for 5 years and CHF 150 million at therate of 2.125% for 10 years. Correspondingly,
hedge positions assigned to this bond issuance
have been closed. The amortisation of therealised loss was recognised in Financing costs
for CHF 4 million over 3 years until 7 December
2014, and CHF 28 million over 5 years until 7
December 2016.

2011/
2012

Highly probable future
debt issuances in 2014.

Several forward starting interest rate swaps
commencing in 2014, totalling CHF 250 million
with an average rate of 1.54% and a 5 year
maturity.

Protection against future
increases in 0interest rates
and to fix the interest rates.

2012

Highly probable future
debt issuances in 2016.

Several forward starting interest rate swaps
commencing in 2016, totalling CHF 75 million
with an average rate of 1.63% and a 5 year
maturity.

Protection against future
In December 2016, the Group issued a 0.000%
increases in CHF interest rates 6 year public bond with a nominal value ofand to fix the interest rates.
CHF 100 million; and a 0.625% 15 year publicbond with a nominal value of CHF 200 million.
Correspondingly, hedge positions assigned tothis bond issuance have been closed.
The amortisation of the realised loss of
CHF 8 million is recognised in Financing costs
over 5 years until 7 December 2021.

2012

Highly probable future
private placements
issuance in the USA in2013.

Several derivatives instruments fixing theinterest rate at 1.80% on average for a total
amount of USD 100 million.

Protection against
short-term increases in
USD interest rates andto fix the interest rates.

2012/
2014

Highly probable future
debt issuances in 2018.

Several forward starting interest rate swaps
commencing in 2018, totalling CHF 150 million
with an average rate of 1.90% and a 5 year
maturity.

Protection against future
The cash flow hedges were effective
increases in CHF interest rates during the year.
and to fix the interest rates.

2014/
2015

Highly probable future
debt issuances in 2020.

Several forward starting interest rate swaps
commencing in 2020, totalling CHF 75 million
with an average rate of 2.12% and a 10 year
maturity.

Protection against future
The cash flow hedges were effective
increases in CHF interest rates during the year.
and to fix the interest rates.

2014/
2015

Highly probable future
debt issuances in 2021.

Several forward starting interest rate swaps
commencing in 2021, totalling CHF 125 million
with an average rate of 2.05% and a 10 year
maturity.

Protection against future
The cash flow hedges were effective
increases in CHF interest rates during the year.
and to fix the interest rates.

2014/
2015

Highly probable future
debt issuances in 2024.

Several forward starting interest rate swaps
commencing in 2024, totalling CHF 100 million
with an average rate of 2.35% and a 10 year
maturity.

Protection against future
The cash flow hedges were effective
increases in CHF interest rates during the year.
and to fix the interest rates.

2016/
2017

Highly probable future
debt issuances in 2031.

Several forward starting interest rate swaps
commencing in 2031, totalling CHF 100 million
with an average rate of 0.92% and a 10 year
maturity.

Protection against future
The cash flow hedges were effective
increases in CHF interest rates during the year.
and to fix the interest rates.

In March 2014, the Group issued a 1.00%
6.5 year public bond with a nominal value of
CHF 100 million; and a 1.75% 10 year public bondwith a nominal value of CHF 150 million.
Correspondingly, hedge positions assigned tothis bond issuance have been closed.
The amortisation of the realised loss of
CHF 15 million is recognised in Financing costs
over 5 years until 19 March 2019.

The cash flow hedges were effective during theperiod. The amount of USD 1 million(equivalent to CHF 1 million) deferred in
hedging reserve in other comprehensive income
is recycled over the next 10 years as Financing
cost from 6 February 2013, date when theproceeds were received.

Givaudan – 2017 Annual Report

118

Financial report Notes to the consolidated financial statements

5.2.1.3 Price Risk
The Group is exposed to equity price risk arising from equity investments held classified at fair value through income statement.
The Group manages its price risk through a diversification of portfolios within the limits approved by the Board of Directors.
The Group holds its own shares to meet future expected obligations under the various share-based payment schemes.
Sensitivity analysis
The Group’s equity portfolio is composed exclusively of US shares. The benchmark for the reasonable change is an average ofhistorical volatility of US indexes (16% for the last three years).
The sensitivity analysis has been determined based on the exposure to equity price risks at the end of the reporting period:
2017 − reasonable shifts: 16%US
in millions of Swiss francs

Equity priceincrease

Equity pricedecrease6(6)Equity priceincrease

Equity pricedecrease

5(5)Impact on income statement
2016 − reasonable shifts: 16%US
in millions of Swiss francs

Impact on income statement

5.2.2 Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group.
Commercial Credit risk is managed by the Group’s subsidiaries and monitored on a Group basis whilst counterparty risk related tofinancial institutions is centrally managed within the Group Treasury function.
Trade receivables are subject to a policy of active risk management which focuses on the assessment of country risk, credit limits,ongoing credit evaluation and account monitoring procedures. Generally, there is no significant concentration of trade receivables
or commercial counterparty credit risk, due to the large number of customers that the Group deals with and their wide
geographical spread with the exception of one single external customer that generates revenues, mainly attributable to the
Fragrance Division, of approximately CHF 583 million (2016: CHF 552 million). Countries, credit limits and exposures arecontinuously monitored.
The credit risk on liquid funds, derivatives and other monetary financial assets is limited because the counterparties are financial
institutions with investment grade ratings.
The following table presents the credit risk exposure to individual financial institutions:
2017
Total
in Mio CHF

Max. with any
individual bankin Mio CHF

2016

Numberof banks

Total
in Mio CHF

Max. with any
individual bankin Mio CHF

Numberof banks

AAA − range

7

7

1

46

46

1

AA − range

147

147

1

60

59

2

A − range

225

121

7

47

41

5

BBB − range

155

91

6

169

76

6

The carrying amount of financial assets recognised in the consolidated financial statements which is net of impairment losses,
represents the Group’s maximum exposure to credit risk.

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements 119

5.2.3 Liquidity Risk
The Group manages liquidity risk by maintaining sufficient cash, marketable securities, availability of funds through an adequate
amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying
businesses, Group Treasury maintains flexibility in funding by maintaining availability under committed and uncommitted credit lines.
Group Treasury monitors and manages cash at the Group level and defines the maximum cash level at subsidiary level. Cash surpluses
held by subsidiaries over and above amounts required for working capital management are transferred to the central treasury centre.
The surplus of cash is generally invested in interest bearing current accounts, time deposits, money market deposits and funds. Whennecessary, intercompany loans are granted by the Group to subsidiaries to meet their non-recurrent payment obligations.
The following table analyses the Group’s remaining contractual maturity for financial liabilities and derivative financial instruments.
The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which theGroup is obliged to pay. The table includes both interest and principal cash flows:2017
in millions of Swiss francs

Up to 6monthsShort-term debt (excluding bank overdrafts)(308)

Accounts payable(662)

Net settled derivative financial instruments

6 − 12months1−5
yearsOver 5
years

Total

(308)
(662)
(2)

Gross settled derivative financial instruments − outflows(1,394)(524)

Gross settled derivative financial instruments − inflows

(18)

(41)

(61)
(1,918)

1,396

526

Long-term debt

(20)

(8)

(588)

(823)

(1,439)Balance as at 31 December

(988)

(8)

(606)

(864)

(2,466)2016
in millions of Swiss francs

Up to 6months6 − 12months1−5
yearsOver 5years

Accounts payable
Net settled derivative financial instruments

1,922

(494)

Total

(494)

–

(14)

(48)

(62)

Gross settled derivative financial instruments − outflows(1,335)(266)

Gross settled derivative financial instruments − inflows

1,314

264

(19)

(5)

(662)

(702)

(1,388)

(534)

(7)

(676)

(750)

(1,967)Long-term debt
Balance as at 31 December(1,601)
1,578

5.3 Fair Value Measurements
The following tables present the Group’s assets and liabilities that are measured subsequent to initial recognition at fair value,grouped into levels 1 to 3 based on the degree to which the fair value is measured:–  Level 1 inputs to measure fair value are those derived from quoted prices (unadjusted) in active markets for identical assets or
liabilities;–  Level 2 inputs to measure fair value are those derived from inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and–  Level 3 inputs to measure fair value are those derived from valuation techniques that include inputs for the asset or liability thatare not based on observable market data (unobservable inputs).

Givaudan – 2017 Annual Report

120

Financial report Notes to the consolidated financial statements

2017
in millions of Swiss francs

Level 1

Level 2

Level 3

Total

Financial assets at fair value through income statement
Forward foreign exchange contracts

16

Swaps (hedge accounting)1

1

Corporate owned life insurance

32

32

Equity securities

2

Debt securities
Total assets

2

16

15

17

16

16

80

82

Financial liabilities at fair value through income statement
Forward foreign exchange contracts

12

12

Swaps (hedge accounting)60

60

Swaps (no hedge accounting)––Total liabilities

72

72

2016
in millions of Swiss francs

Level 1

Level 2

Level 3

Total

Financial assets at fair value through income statement
Forward foreign exchange contracts

99

Swaps (hedge accounting)

–

–

29

29

Corporate owned life insurance
Equity securities

1

13

14

Debt securities

–

17

17

Total assets

1

68

69

Financial liabilities at fair value through income statement
Forward foreign exchange contracts

31

31

Swaps (hedge accounting)62

62

Swaps (no hedge accounting)1

1

Total liabilities

94

94

Financial assets and liabilities at fair value through income statement are measured with Level 1 and Level 2 inputs. They mainly
consist of forward foreign exchange contracts that are measured using quoted forward exchange rates and yield curves derived
from quoted interest rates matching maturities of the contracts, of interest swaps that are measured using quoted interest rates
and yield curves derived from quoted interest rates matching maturities of the contracts, and of corporate owned life insurance(COLI) that are measured on quoted instruments with similar credit ratings and terms in a mix of money market, fixed income andequity funds managed by unrelated fund managers.
There was no transfer between Level 1 and 2 in the period. The Group did not carry out any transactions on level 3 type assets
during 2017 and 2016, nor did it have any assets in this category at 31 December 2017 and 2016.

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements 121

6. Acquisitions

During 2017 Givaudan made two acquisitions, Activ International and Vika B.V.
On 16 January 2017, 100% of the share capital of Activ International and its affiliates was acquired for a purchase price of CHF 114 million.
Activ International offers a range of natural and organic flavours, marine extracts, seafood and vegetable based culinary solutions tocustomers. Activ operates from locations in Bienne (Switzerland), Somerset (New Jersey, USA), Melaka (Malaysia), Mitry-Mory (Paris,
France) and Arequipa (Peru), employing globally 165 employees.
The goodwill of CHF 75 million on the acquisition relates mainly to the value of the qualified workforce and expected synergies that do
not meet the criteria for recognition as separable intangible assets.
The assets acquired and liabilities assumed of Activ International are recorded at fair value at the date of acquisition. Total net assets
acquired of CHF 39 million consist of cash (CHF 3 million), working capital (CHF 8 million), fixed assets (CHF 16 million), intangible assets
which are made up of process knowledge, research expertise, client relationships, name and product brands (CHF 32 million), deferred tax
liabilities (CHF 8 million) and other liabilities (CHF 12 million). The total purchase price of CHF 114 million was settled in cash, resulting in a
goodwill of CHF 75 million. The value of acquired assets and liabilities has been finalised, no adjustment was made to the acquisition
values.
On 1 September 2017, Givaudan acquired 100% of the share capital of Vika B.V. and its affiliates for a purchase price of CHF 116 million.
Vika offers a range of natural dairy ingredients, fonds and stocks, as well as meat and plant based extracts to customers in the food andbeverage industry. Vika operates from locations in Ede (The Netherlands), Higham Ferrers (United Kingdom), Maasmechelen (Belgium)
and Auckland (New Zealand), employing globally 200 employees.
The identifiable assets and liabilities of Vika are recorded at fair value at the date of acquisition. Total net assets acquired of CHF 76 million
consist of cash (CHF 3 million), working capital (CHF 14 million), fixed assets (CHF 24 million), intangible assets which are made up
of process knowledge, research expertise, client relationships, name and product brands (CHF 73 million), deferred tax liabilities(CHF 20 million) and other liabilities (CHF 18 million). The total purchase price of CHF 116 million was settled in cash, resulting in a
goodwill of CHF 40 million that relates mainly to the value of the qualified workforce and expected synergies that do not meet thecriteria for recognition as separable intangible assets.
In compliance with IFRS 3, these values determined are provisional and the Group has twelve months from the date of acquisition to
finalise the allocation of the acquisition price.

7. Segment Information

Management has determined the operating segments based on the reports reviewed by the Executive Committee that are used toallocate resources to the segments and to assess their performance. The Executive Committee considers the business from a divisional
perspective:
Fragrances	Manufacture and sale of fragrances into three global business units: Fine Fragrances, Consumer Products and,Fragrance Ingredients and Active Beauty; andFlavours	Manufacture and sale of flavours into four business units: Beverages, Dairy, Savoury and Sweet Goods.
The information of these business units are reviewed by the Executive Committee primarily by region.
The performance of the operating segments is based on EBITDA as a percentage of sales.

Givaudan – 2017 Annual Report

122

Financial report Notes to the consolidated financial statements

Business segments
Fragrancesin millions of Swiss francs

Segment sales
Less inter segment sales a
Segment sales to third parties
EBITDA

Flavours

Group

2017

2016

2017

2016

2017

2016

2,343

2,230

2,717

2,446

5,060

4,676

–

–

(9)

(13)

(9)

(13)

2,343

2,230

2,708

2,433

5,051

4,663

486

603

603

523

1,089

1,126

as % of sales

20.7%

27.0%

22.3%

21.5%

21.6%

24.1%

Depreciation

(48)

(51)

(66)

(62)

(114)

(113)

Amortisation

(42)

(59)

(62)

(73)

(104)

(132)

(2)

(6)

(2)

(6)

90

59

123

113

213

172

40

30

40

30

25

41

22

7

47

48

105

112

105

112

115

100

290

262

405

362

Impairment of long-lived assets
Addition to Property, plant and equipment
Acquisition of Property, plant and equipment
Addition to Intangible assets
Acquisition of Intangible assets
Total Gross Investmentsa)	Transfer prices for inter-divisional sales are set on an arm's length basis.

The amounts by division provided to the Executive Committee are measured in a consistent manner in terms of accounting policies
with the consolidated financial statements.

Reconciliation table to Group’s operating income
Fragrances

FlavoursGroupin millions of Swiss francs

2017

2016

2017

2016

2017

2016

EBITDA

486

603

603

523

1,089

1,126

Depreciation

(48)

(51)

(66)

(62)

(114)

(113)

Amortisation

(42)

(59)

(62)

(73)

(104)

(132)

(2)

(6)

(2)

(6)

396

493

473

382

869

875

16.9%

22.1%

17.5%

15.7%

17.2%

18.8%

Impairment of long-lived assets
Operating income
as % of sales
Financing costs

(42)

(51)

Other financial income (expense), net

(32)

(40)

Income before taxes
as % of sales

795

784

15.7%

16.8%

2017

2016

2,036

1,933

307

297

Entity-wide disclosures
The breakdown of revenues from the major group of similar products is as follows:in millions of Swiss francs

Fragrance Division
Fragrance Compounds
Fragrance Ingredients and Active Beauty
Flavour Division
Flavour Compounds

2,708

2,433

Total revenues

5,051

4,663

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements

123

The Group operates in five geographical areas: Switzerland (country of domicile); Europe, Africa and Middle East;
North America; Latin America; and Asia Pacific.
Segment sales a

Non-current assets b

in millions of Swiss francs

2017

2016

2017

2016

Switzerland

49

45

1,490

1,435

1,312

1,205

625

436

362

351

54

50

1,352

1,151

1,182

1,235
135

EuropeAfrica and Middle East
North America
Latin America

618

591

151

Asia Pacific

1,358

1,320

592

497

Total geographical segments

5,051

4,663

4,094

3,788

a) 	Segment sales are revenues from external customers and are shown by destination.
b) 	Non-current assets other than financial instruments, deferred tax assets, post-employment benefit assets. They consist of property, plant and equipment, intangible assets
and investments in jointly controlled entities.

Revenues of approximately CHF 583 million (2016: CHF 552 million) are derived from a single external customer. These revenues aremainly attributable to the Fragrance Division.

8. Employee Benefits

The following amounts related to employee remuneration and benefits are included in determining operating income:in millions of Swiss francs

2017

2016

Wages and salaries

841

783

Social security costs

121

115

Post-employment benefits: defined benefit plans

14

(23)

Post-employment benefits: defined contribution plans

33

19

Equity-settled instruments

35

44

Cash-settled instruments(5)

Change in fair value on own equity instruments
Other employee benefits
Total employees' remuneration

–
97

91

1,141

1,024

Defined Benefit Plans
The Group operates a number of defined benefit and defined contribution plans throughout the world, the assets of which are
generally held in separate trustee-administered funds. The pension plans are generally funded by payments from employees andby the relevant Group companies, taking account of the recommendations of independent qualified actuaries. The most significant
plans are held in Switzerland, United States of America and United Kingdom (further information by country is disclosed at the endof this note).
During 2016, the defined benefit plans held in the United States of America and United Kingdom have been frozen whichmeans that no further build up of benefits will occur in these plans. These freezes resulted in one-off non-cash gains of
CHF 55 million in the United States of America and CHF 7 million in the United Kingdom recognised in the line “other operating
income” in the consolidated income statement.
During 2017, the defined benefit plan held in Switzerland was amended principally by reducing the conversion rate used to convert
the retirement savings capital into a pension and by increasing savings contributions from both the employees and employer. These
plan amendments resulted in a one-off non-cash gain of CHF 4 million recognised net in the line “other operating income” in the
consolidated income statement.

Givaudan – 2017 Annual Report

124

Financial report Notes to the consolidated financial statements

During 2017, the supplemental medical coverage of the US post-retirement medical plan was changed. The plan amendment
resulted in a one-time past service gain of CHF 16 million recognised in the line “other operating income” in the consolidated
income statement.
Non-pension plans consist primarily of post-retirement healthcare and life insurance schemes, principally in the
United States of America.
The amounts recognised in the consolidated income statement are as follows:2017
in millions of Swiss francs

Pension Non-pension
Plans
Plans

Total

2016
Pension Non-pension
Plans
Plans

Current service cost

30

4

34

37

Gain arising from settlement

(4)

(16)

(20)

(62)

2

Total

39
(62)

Total included in employees' remuneration

26

(12)

14

(25)

2

Net interest cost included in financing costs

10

2

12

10

3

(23)
13

Total components of defined benefit cost

36

(10)

26

(15)

5

(10)

Funded obligations

32

(13)

19

(17)

5

(12)

Unfunded obligations

4

3

7

2

–

2

Of which arising from:

The amounts recognised in other comprehensive income are as follows:2017
in millions of Swiss francs

Pension Non-pension
Plans
Plans

Total

2016
Pension Non-pension
Plans
Plans

Total

(Gains) losses from change in demographic assumptions

(10)

1

(9)

25

(1)

24

(Gains) losses from change in financial assumptions

30

3

33

188

2

190

9

–

9

11

(6)

5

Return on plan assets less interest on plan assets

Experience (gains) losses

(88)

–

(88)

(71)

–

(71)

Remeasurement (gains) losses of post employment benefit
obligations

(59)

4

(55)

153

(5)

148

Funded obligations

(60)

4

(56)

148

(5)

143

Unfunded obligations

1

1

5

–

5

Of which arising from:

The amounts recognised in the statement of financial position are as follows:2017
in millions of Swiss francs

Pension Non-pension
Plans
Plans

Total

2016
Pension Non-pension
Plans
Plans

Total

Funded obligations
Present value of funded obligations(2,128)(56)(2,184)(2,094)(70)(2,164)

Fair value of plan assets

1,640

–

1,640

1,538

1

1,539

Recognised asset (liability) for funded obligations, net

(488)

(56)

(544)

(556)

(69)

(625)

Unfunded obligations
Present value of unfunded obligations

(74)

(11)

(85)

(80)

(11)

(91)

Recognised asset (liability) for unfunded obligations

(74)

(11)

(85)

(80)

(11)

(91)

Total defined benefit asset (liability)

(562)

(67)

(629)

(636)

(80)

(716)

Deficit recognised as liabilities for post employment benefits

(583)

(67)

(650)

(648)

(80)

(728)

21

12

(629)

(636)

(80)

(716)

Surplus recognised as part of the other long-term assets
Total net asset (liability) recognised

Givaudan – 2017 Annual Report

21
(562)

(67)

12

Financial report Notes to the consolidated financial statements 125

Amounts recognised in the statement of financial position for post-employment defined benefit plans are predominantly noncurrent. The non-current portion is reported as non-current assets and non-current liabilities. The current portion is reported as
current liabilities within other current liabilities.
Changes in the present value of the defined benefit obligation are as follows:
2017

2016

in millions of Swiss francs

Pension Non-pension
Plans
Plans

Balance as at 1 January

2,174

81

2,255

Current service cost

30

4Interest cost

39

2

(Gains) losses from change in demographic assumptions

(10)

1

(Gains) losses from change in financial assumptions

30

3

Experience (gains) losses

9

Employee contributions11

Benefit payments

(79)

(4)

Settlements a

(4)

(16)

Currency translation effects

2

(5)

(3)

(53)

–

(53)

Balance as at 31 December

2,202

67

2,269

2,174

81

2,255

Total

Pension Non-pension
Plans
Plans

Total

2,038

84

2,122

34

37

2

39

41

46

3

49

(9)

25

(1)

24

33

188

2

190

–

9

11

(6)

5

1

12

10

1

11

(83)

(66)

(4)

(70)

(20)

(62)

Amounts recognised in the income statement

Amounts recognised in the other comprehensive income(62)a)	Settlements related to the freeze in the United States of America and United Kingdom (2016) and to plan amendments in Switzerland and the United States of America (2017).

Changes in the fair value of the plan assets are as follows:
2017

2016

in millions of Swiss francs

Pension Non-pension
Plans
Plans

Balance as at 1 January

1,538

1

1,539

1,491

1

1,492

29

–

29

36

–

36

Return on plan assets less interest on plan assets

88

–

88

71

–

71

Employer contributions

50

3

53

42

3

45

Employee contributions

11

1

12

10

1

11

Benefit payments

Total

Pension Non-pension
Plans
Plans

Total

Amounts recognised in the income statement
Interest income
Amounts recognised in the other comprehensive income

(79)

(4)

(83)

(66)

(4)

(70)

Currency translation effects

3

(1)

2

(46)

–

(46)

Balance as at 31 December

1,640

1,640

1,538

1

1,539

Debt

386

24%

489

32%

Equity

590

36%

602

39%

Property

214

13%

215

14%

Insurances policies and other

450

27%

233

15%

1,640

100%

1,539

100%

Plan assets are comprised as follows:2017

in millions of Swiss francs

Total

2016

The investment strategies are diversified within the respective statutory requirements of each country providing long-term
returns with an acceptable level of risk. The plan assets are primarily quoted in an active market with exception of the property
and insurance policies.
Givaudan – 2017 Annual Report126 Financial report Notes to the consolidated financial statements

The plan assets do not include Givaudan registered shares. They do not include any property occupied by, or other assets used by,
the Group.
The Group operates defined benefit plans in many countries for which the actuarial assumptions vary based on local economic andsocial conditions. The assumptions used in the actuarial valuations of the most significant defined benefit plans, in countries withstable currencies and interest rates, were as follows:
Weighted percentage

2017

2016

Discount rates

1.8%

1.9%

Projected rates of remuneration growth

1.8%

1.7%

Future pension increases

0.8%

0.8%

Healthcare cost trend rate

4.9%

5.0%

The overall discount rate and the overall projected rates of remuneration growth are calculated by weighting the individual rates
in accordance with the defined benefit obligation of the plans.

Sensitivity analysis
The defined benefit obligations are calculated on the basis of various financial and demographic assumptions. The below
information quantifies the consequences of a change in some key assumptions.
The effects ((gain)/loss) of the change in assumptions are as follows:in millions of Swiss francs

Change inassumption

Discount rate

0.5%

Salary increases

0.5%

Pension increases

0.5%

Medical cost trend

1.0%Life expectancy

1 yearEffects of the change

Increase inassumption

Decrease inassumption

on the current service cost(4)

5

on the defined benefit obligation

(182)

201

on the current service cost1

(1)

on the defined benefit obligation

9(9)

on the current service cost2–

on the defined benefit obligation

125

(43)

on the current service cost––on the defined benefit obligation

3(3)

on the current service cost1

(1)

on the defined benefit obligation

77

(78)

Information by country
Switzerland
According to the Swiss Federal Law on Occupational Retirement, Survivors and Disability (LPP/BVG), the pension plan is managed byan independent, legally autonomous entity which has the legal structure of a foundation. The plan was amended during the second
half of 2017 principally by reducing the conversion rate used to convert the retirement savings capital into a pension and by increasing
savings contributions from both the employees and employer.
The Board of Trustees of the foundation is composed of equal numbers of employee and employer representatives. Each year the
Board of Trustees decides the level of interest, if any, to apply to the retirement accounts in accordance with the pension policy. It isalso responsible for the investment of the assets defining the investment strategy for long-term returns with an acceptable level ofrisk. The foundation provides benefits on a defined contribution basis.
The majority of the employees are participants to the plan and are insured against the financial consequences of old age,disability and death. The employer and employees pay contributions to the pension plan at rates set out in the foundation rules
based on a percentage of salary. The amount of the retirement account can be taken by the employee at retirement in theform of pension or capital.

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements

127

Under IAS19 employee benefits, the pension plan is classified as defined benefit plan due to the promises and underlying benefits
guarantees. Consequently the pension obligation is calculated by using the projected unit credit method.
The Group expects to contribute CHF 24 million to these plans during 2018.
United States of America
The main US pension plan is qualified under and is managed in accordance with the requirements of US federal law. In accordancewith federal law the assets of the plan are legally separate from the employer and are held in a pension trust. The plan was frozen
during the first six months of 2016 and consequently no further accrual of benefits will continue as at the date of enforcement of theplan change.
The law requires minimum and maximum amounts that can be contributed to the trust, together with limitations on the amountof benefits that may be provided under the plan. There are named fiduciaries that are responsible for ensuring the plan is managedin accordance with the law. The fiduciaries are responsible for the investment of the assets defining the investment strategy forlong-term returns with an acceptable level of risk. The plan provides benefits on a defined benefit basis.
The accrued benefits based on service to the plan freeze are payable at retirement and on death in service. With exceptions for
optional lump sum amounts for certain sections of the plan, the benefits are paid out as annuities.
Under IAS19 employee benefits, the pension obligations are calculated by using the projected unit credit method.
The Group expects to contribute CHF 5 million to these plans during 2018.
United Kingdom
The two occupational pension schemes (Quest UK Pension Scheme and Givaudan UK Pension Plan) are arranged under theapplicable UK Pension Schemes and Pensions Acts and managed as legally autonomous pension trusts by the Boards of Trustees.
The plans were frozen during the second half of 2016 and consequently no further accrual benefits will continue as at the date ofenforcement of the plan change.
The Boards of Trustees are composed of two employee representatives and four employer representatives, for the Quest UK
Pension Scheme, and three employee representatives, three employer representatives plus two pensioner representatives for
the Givaudan UK Pension Plan. The Boards of Trustees are responsible for the investment of the assets defining the investment
strategy for long-term returns with an acceptable level of risk. In their respective sections, both trusts provide benefits on adefined benefit basis and are now frozen to future accruals and members.
The accrued benefits based on service to the plan freeze are payable at retirement and on death in service. With exceptions fortrivial amounts, transfer values, lump sum death benefits and tax free lump sums, the benefits are paid out as annuities.
Under IAS19 employee benefits, the pension obligations in the defined benefit sections of both the Quest UK Pension Schemeand the Givaudan UK Pension Plan are calculated by using the projected unit credit method.
The Group expects to contribute CHF 8 million to these plans during 2018.
Rest of the world
The Group operates other retirement plans classified either as defined benefit or defined contribution plans in some othercountries. No individual plan other than those described above is considered material to the Group.
The Group expects to contribute CHF 3 million to these plans in 2018.

Givaudan – 2017 Annual Report

128

Financial report Notes to the consolidated financial statements

The funding position of the funded defined benefit plans are as follows:
As at 31 December 2017
in millions of Swiss francs

Switzerland

United Statesof America

United Kingdom

Other countries

Total

1,202

453

390

83

2,128

Fair value of plan asset

823

403

370

44

1,640

Deficit / (surplus)

379

50

20

39

488

68.5%

89.0%

94.9%

53.0%

77.1%

Switzerland

United Statesof America

United Kingdom

Other countries

Total

1,208

442

366

78

2,094

Fair value of plan asset

797

382

316

43

1,538

Deficit / (surplus)

411

60

50

35

556

66.0%

86.4%

86.3%

55.1%

73.4%

Present value of defined benefit obligation

Funding ratio
As at 31 December 2016
in millions of Swiss francs

Present value of defined benefit obligation

Funding ratio

Key assumptions
2017
in percentage

Switzerland

United Statesof America

UnitedKingdom

Discount rate

0.70

3.70

2.40

Future salary increases

2.00

n/a

n/a

Future pension increases

0.00

n/a

2.25

Future average life expectancy for a pensioner retiring at age 65

23.4

21.8

23.0

Switzerland

United Statesof America

UnitedKingdom

2.60

2016
in percentage

Discount rate

0.60

4.25

Future salary increases

2.00

n/a

n/a

Future pension increases

0.00

n/a

2.55

Future average life expectancy for a pensioner retiring at age 65

23.3

21.8

23.2

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics andexperience in each territory. Mortality assumptions for the most important countries are based on the following tables:
(i)
(ii)
(iii)

Switzerland: BVG2015
United States of America: RP2014
United Kingdom: S2PA

Allowance for future improvements in mortality have been allowed for as appropriate in each country. In Switzerland the generational
rates have been used. In the United States of America the published rates have been adjusted and projected in accordance with the
MP2017 scale. In the United Kingdom the rates reflect the latest (2016) CMI projections with a 1.25% long term rate of improvement.
Disclosure 201 – 3, pages 123 – 128

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements

129

9. Share-Based Payments
Performance share plan
Performance shares are granted on a yearly basis. The performance shares are converted into tradable and transferable shares ofGivaudan SA after the vesting period, subject to performance conditions. The performance metric is a combination of the averagesales growth of selected peer companies and the cumulative free cash flow margin. There is no market vesting condition involved
and participation in this plan is mandatory.
Year of grantCommencing date

Vesting date

Number of shares expected
to be delivered at vesting date

Fair value
at grant date (CHF)2015

31 Mar 2015

31 Mar 2018

23,6281,595.92016

31 Mar 201615 Apr 201922,181

1,709.4

2017

31 Mar 201715 Apr 2020

23,232

1,621.6

The cost of the equity-settled instruments of CHF 33 million (2016: CHF 42 million) has been expensed in the consolidated income
statement. A marginal portion of the number of shares expected to be delivered can be settled in cash in the jurisdictions where aphysical delivery is not admitted.

Equity-settled instruments related to restricted shares
Restricted shares shown in the table below have been granted on a yearly basis. These shares are tradable and transferable after
the vesting period. Participation in these plans is mandatory.
Restricted shares outstanding at the end of the year have the following terms:
Number of
restricted
share 2017

Commencing date

Vesting date

Restricted shareat grant date
(CHF)

2014

31 Mar 2014

31 Mar 2017

1,214.4

2015

31 Mar 2015

31 Mar 2018

1,595.9

1,092

1,092

2016

31 Mar 201615 Apr 2019

1,709.4

935

935

2017

31 Mar 201715 Apr 2020

1,621.6

900

Year of grant

Number of
restricted
share 2016

1,190

Of the 2,927 outstanding restricted shares (2016: 3,217), no share (2016: none) was deliverable. The cost of these equity-settled
instruments of CHF 2 million (2016: CHF 2 million) has been expensed in the consolidated income statement.
Movements in the number of restricted shares outstanding are as follows:
Number of restricted shares

As at 1 January
Granted

2017

2016

3,217

3,407

900

935

Delivered/Sold(1,190)(1,125)As at 31 December

2,927

3,217

For these plans, the Group has at its disposal treasury shares.

Givaudan – 2017 Annual Report

130

Financial report Notes to the consolidated financial statements

10. Jointly Controlled Entities
Year ofincorporation

Name of Joint ventures

Principal activity

Country ofincorporation

Ownership
interest

Production of fragrance ingredients

China

49%

Innovative natural ingredients

USA

49%

2014

Jiangsu Xinrui Aromatics Ltd

2014

BGN Tech LLC

2015

Natural Extracts International Ltd

Natural ingredient derivatives production

Mauritius

49%

2016

Vanilla International Ltd

Natural ingredient collection and extract

Mauritius

49%

Summarised financial information in respect of the Group’s joint ventures is set out below. The following net assets represent 100%of the jointly controlled entities:
As at 31 Decemberin millions of Swiss francs

2017

2016

Current assets

113

114

Non-current assets

67

41

Current liabilities

(99)

(79)

Non-current liabilities

(14)

(5)

Total net assets of joint ventures

67

71

As at 31 Decemberin millions of Swiss francs

2017

2016

Income36

9

Expenses

(35)

(11)

2017

2016

11. Other Operating Income
in millions of Swiss francs

Gains on disposal of fixed assets

1

Other income

4175

Total other operating income

4275

For the year ended 31 December 2017, the Group recognised one-off non-cash gains of CHF 16 million in the United States ofAmerica and CHF 4 million in Switzerland (2016: CHF 55 million in the United States of America and CHF 7 million in the United
Kingdom) related to defined benefit plans.

12. Other Operating Expense
in millions of Swiss francs

2017

2016

Project Related expenses a

107

14

Amortisation of intangible assets

1247

Impairment of long-lived assets

2

6

Losses on disposal of fixed assets

4

4

Environmental provisions

1

4

Business taxes

15

12

Acquisition and integration related expenses

1

1

Other expenses

10

13

Total other operating expense

152

101

a)	Primarily relates to Givaudan Business Solutions (GBS).

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements

131

13. Expenses by Naturein millions of Swiss francs

2017

2016

1,980

1,769

8

1,141

1,024

21,22

220

251

Note

Raw materials and consumables used
Total employee remuneration
Depreciation, amortisation and impairment charges
Transportation expenses

48

45

Freight expenses

96

89
116

Consulting and service expenses

140

Energies

56

53

IT related costs

50

46

Other expenses
Total operating expenses by nature

451

395

4,182

3,788

2017

2016

14. Financing Costs
in millions of Swiss francs

NoteInterest expense
Net interest related to defined benefit pension plans

8

29

42

12

13
(5)

Derivative interest (gains) losses–

Amortisation of debt discounts

1

1

Total financing costs

42

51

in millions of Swiss francs

2017

2016

Fair value and realised (gains) losses from derivatives instruments, net (at fair value through income statement)

(79)

88

Exchange (gains) losses, net

103

(59)

15. Other Financial (Income) Expense, Net

Realised (gains) losses from financial instruments measured at fair value through income statement––

Unrealised (gains) losses from financial instruments measured at fair value through income statement

(8)

(4)

Interest (income) expense(3)

1

Capital taxes and other non business taxes

10

9

Other (income) expense, net

95

Total other financial (income) expense, net

32

40

Givaudan – 2017 Annual Report

132

Financial report Notes to the consolidated financial statements

16. Income Taxes

Amounts charged to (credited in) the consolidated statement of comprehensive income are as follows:2017

in millions of Swiss francs

Other
Income comprehensive
statement
incomeOwn equity
instruments

Total

2016
Other
Income comprehensive
statement
incomeOwn equity
instruments

Total

Current taxes– in respect of current year100

– in respect of prior years

(17)

(3)

(1)

96

117

(17)

(10)

34

33

–

117
(10)

Deferred taxes– in respect of current year

(6)

40

– reclassified from equity to income statement––– in respect of prior years(2)

1

Total income tax expense

75

38

–

(36)

–

(3)

3

3

(36)

3

107

–
(1)

(1)

–

112

140

Since the Group operates globally, it is subject to income taxes in many different tax jurisdictions. As such, in determining theprovision for income taxes, judgment is required as there are transactions for which the ultimate tax determination is uncertain at thetime of preparing the financial statements. As a result, any differences between the final tax outcome and the amounts that were
initially recorded impact the current and deferred taxes in the period in which such final determinations are made.
The Group calculates on the basis of the income statement its average applicable tax rate as a weighted average of the tax rates in the
tax jurisdictions in which the Group operates, including research tax credits and withholding tax on dividends, interest and royalties.
The Group’s average applicable tax rate differs from the Group’s effective tax rate as follows:

Group's average applicable tax rate

2017

2016

16%

20%

Tax effect ofIncome not taxable

(2%)

(2%)

Expenses not deductible

1%

1%

Change in tax rate

(2%)

Other adjustments of income taxes of prior years(3%)

Other differences

(1%)

(1%)
–

Group's effective tax rate

9%

18%

The variation in the Group’s average applicable tax rate arises due to changes in the composition of the Group’s profitability within
the Group’s subsidiaries, in accordance with the Group’s business profile in terms of geographical presence, product mix andcustomer portfolio, as well as external factors related to changes in local statutory tax rates.
In December 2017, the United States of America introduced a new tax law with an effective date of 1 January 2018. The newlaw contains a Corporate Tax rate of 21% compared to 35% under the previous tax law. The revised rate has been applied to thetemporary differences recognised in the 2017 statement of financial position of the Group’s United States subsidiaries.

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements

133

Income tax assets and liabilities
Amounts recognised in the statement of financial position related to income taxes are as follows:
As at 31 Decemberin millions of Swiss francs

2017

Current income tax assets

32

26

Current income tax liabilities

(49)

(46)

Total net current income tax asset (liability)

(17)

(20)

Other
differences

Total

Property,plant &
equipment

Intangible
assets(94)(58)

Acquisition

(3)

(25)

(Credited) debited to consolidated income statement

11

24

2017
in millions of Swiss francs

Net deferred tax asset (liability) as at 1 January(Credited) debited to other comprehensive income

Pension Tax loss carryplans
forward

190
(7)

32
(26)

(38)

(Credited) debited to own equity instruments

2016

96

166

1

(27)

6

8

(3)

(41)

–

–

Currency translation effects

(1)

–

(1)

–

4

2

Net deferred tax asset (liability) as at 31 December

(87)

(59)

144

6

104

108

Deferred tax assets

207

Deferred tax liabilities(99)

Net deferred tax asset (liability) as at 31 December

108

2016
in millions of Swiss francs

Net deferred tax asset (liability) as at 1 January

Property,plant &
equipment

Intangible
assets

(89)

(64)

173

(6)

6

(15)

Pension Tax loss carryplans
forwardOther
differences

Total

59

89

168

(25)

7

(33)

Acquisition(Credited) debited to consolidated income statement(Credited) debited to other comprehensive income

33(Credited) debited to own equity instruments
Currency translation effects
Net deferred tax asset (liability) as at 31 December

3

36

(3)

(3)

1

–

(1)

(2)

–

(2)

(94)

(58)

190

32

96

166

Deferred tax assets

259

Deferred tax liabilities(93)

Net deferred tax asset (liability) as at 31 December

166

Amounts recognised in the statement of financial position for deferred taxes are reported as non-current assets and non-current
liabilities; the current portion will be charged or credited to the consolidated income statement during 2018.
Deferred tax assets on loss carry forwards of CHF 6 million (2016: CHF 32 million) have been recognised, the majority of which expires
after 2021. The management considers that there will be future taxable profit available against which these tax losses can berecovered. There are no significant deferred tax assets on unused tax losses which have not been recognised (2016: CHF 4 million).
Deferred tax assets on tax credits of CHF 69 million (2016: CHF 59 million) have been recognised.
A deferred tax liability of CHF 25 million has been recognised in 2017 (2016: CHF 24 million) for certain foreign subsidiaries which have
undistributed earnings subject to withholding tax when paid out as dividend as the parent entity is in a position to forecast the timingof distributions expected in the foreseeable future, whereas no deferred tax liability could be recognised for undistributed earnings of
CHF 467 million (2016: CHF 429 million).

Givaudan – 2017 Annual Report134 Financial report Notes to the consolidated financial statements

17. Earnings per Share
Basic earnings per share
Basic earnings per share is calculated by dividing the net income attributable to shareholders by the weighted average number ofshares outstanding:
2017

2016

720

644

Ordinary shares

9,233,586

9,233,586

Treasury shares(24,120)(27,646)

Income attributable to equity holder of the parent (in millions of Swiss francs)
Weighted average number of shares outstanding

Net weighted average number of shares outstanding
Basic earnings per share (CHF)

9,209,466 9,205,940
78.18

69.95

Diluted earnings per share
For the calculation of diluted earnings per share, the weighted average number of shares outstanding is adjusted to assume
conversion of all potentially dilutive shares:
Income attributable to equity holder of the parent (in millions of Swiss francs)
Weighted average number of shares outstanding for diluted earnings per share of 76'464 (2016: 81,316)
Diluted earnings per share (CHF)

2017

2016

720

644

9,285,930 9,287,256
77.54

69.34

18. Cash and Cash Equivalents
in millions of Swiss francs

2017

2016

Cash on hand and balances with banks

273

207

Short-term investments

261

121

Balance as at 31 December

534

328

19. Accounts Receivable – Tradein millions of Swiss francs

2017

2016

Accounts receivable

1,162

1,009

Notes receivable
Less: allowance for doubtful accounts
Balance as at 31 December

Givaudan – 2017 Annual Report

1

1

(16)

(14)

1,147

996

Financial report Notes to the consolidated financial statements 135

Ageing list:in millions of Swiss francs

Neither past due nor impaired

2017

2016

1,062

939

Less than 30 days

71

48

30 − 60 days

14

9

60 − 90 days

4

4

Above 90 days

12

10

Less: allowance for doubtful accounts
Balance as at 31 December

(16)

(14)

1,147

996

Movement in the allowance for doubtful accounts:in millions of Swiss francs

2017

2016

Balance as at 1 January

(14)

(11)

Increase in allowance for doubtful accounts recognised in consolidated income statement

(5)

(5)

Amounts written off as uncollectible––

Reversal of allowance for doubtful accounts

3

1

(16)

(14)

Currency translation effects
Balance as at 31 December

1

No significant impairment charge has been recognised in the consolidated income statement in 2017 or in 2016. Past due andimpaired receivables are still considered recoverable. The carrying amount of accounts receivable – trade is considered tocorrespond to the fair value.

20. Inventories
in millions of Swiss francs

2017

2016

Raw materials and supplies

359

312

Work in process

3426Intermediate and finished goods

549

482

Less: allowance for slow moving and obsolete inventories

(40)

(32)

Balance as at 31 December

902

788

In 2017 the amount of write-down of inventories was CHF 35 million (2016: CHF 36 million). At 31 December 2017 and 2016 no
significant inventory was valued at net realisable value.

Givaudan – 2017 Annual Report

136

Financial report Notes to the consolidated financial statements

21. Property, Plant and Equipment

Land

Buildings
and land
improvements

Balance as at 1 January

95

722

531

94

1,442

Additions

–

1

4

208

213

Acquisitions

13

14

12

1

Disposals

–

(2)

(3)

Transfers–

2017
in millions of Swiss francs

Machinery,equipment Construction
and vehicles
in progress

Total

Net book value

40
(5)

41

67

Impairment

(2)

–

(108)
(2)

Depreciation

(33)

(81)

(114)

Reclassified as investment property

(2)

(13)

–

Currency translation effects

3

10

5

2

20

Balance as at 31 December

109

738

535

197

1,579

Cost

109

1,218

1,627

197

(465)

(1,088)

Accumulated depreciation
Accumulated impairment

(15)

3,151
(1,553)

(15)

(4)

109

738

535

Land

Buildings
and land
improvements

Balance as at 1 January

91

708

530

55

1,384

Additions

3

9

3

157

172

Acquisition

3

17

10

–

(1)

(4)
81

Balance as at 31 December

2016
in millions of Swiss francs

(19)
197

1,579

Machinery,equipment Construction
and vehicles
in progress

Total

Net book value

Disposals
Transfers

35

Impairment(6)

Depreciation

(33)

30
(5)

(116)
(6)

(80)

(113)

Currency translation effects

(2)

(7)

(9)

(2)

(20)

Balance as at 31 December

95

722

531

94

1,442

Cost

95

1,180

1,598

94

(440)

(1,063)

Accumulated depreciation
Accumulated impairment
Balance as at 31 December95

At 31 December 2017 and 2016 no significant capitalised borrowing costs were accounted for.

Givaudan – 2017 Annual Report

(18)

(4)

722

531

2,967
(1,503)
(22)

94

1,442

Financial report Notes to the consolidated financial statements

137

22. Intangible Assets
2017
in millions of Swiss francs

Goodwill

Process-oriented
technology
and other

Client relationships

Name andproduct brands

Software / ERP
system

Total

1,791

184

203

3

130

2,311

Net book value
Balance as at 1 January
Additions
Acquisitions

4
115

Amortisation

43

47

34

68

3

–

220
(104)

(34)

(28)

(2)

(40)

Currency translation effects

6

2

–

–

–

8

Balance as at 31 December

1,912

190

243

4

133

2,482

Cost

1,912

Accumulated amortisation
Accumulated impairment
Balance as at 31 December

2016
in millions of Swiss francs

863

483

7

667

3,932

(669)

(240)

(3)

(534)

(1,446)

(4)

(4)

1,912

190

243

4

133

2,482

Goodwill

Process-oriented
technology
and other

Client relationships

Name andproduct brands

Software / ERP
system

Total

1,707

173

143

3

171

2,197

Net book value
Balance as at 1 January
Additions
Acquisition

12
150

Amortisation

36

30

81

1

48
262

(30)

(24)

(1)

(77)

Currency translation effects

(66)

(1)

3

–

–

(64)

Balance as at 31 December

1,791

184

203

3

130

2,311

Cost

1,791

Accumulated amortisation
Accumulated impairment
Balance as at 31 December

(132)

823

415

4

624

3,657

(635)

(212)

(1)

(494)

(1,342)

203

3

130

2,311

(4)
1,791

(4)

184

Classification of amortisation expenses is as follows:2017
in millions of Swiss francs

Fragrances

Flavours

2016

Total

Fragrances

Flavours

Total

Cost of sales

9

9

18

10

6

16

Selling, marketing and distribution expenses

15

23

38

16

20

36

Research and product development expenses

9

21

30

8

21

29

Administration expenses

3

3

6

2

2

4

Other operating expenses

6

6

12

23

24

47

Total

42

62

104

59

73

132

Givaudan – 2017 Annual Report

138

Financial report Notes to the consolidated financial statements

Impairment test for goodwill
Goodwill is allocated to the Group’s cash-generating units (CGUs), which are defined as the Fragrance Division and the Flavour
Division. Goodwill allocated to these two CGUs was CHF 590 million (2016: CHF 572 million) to the Fragrance Division and
CHF 1,322 million (2016: CHF 1,219 million) to the Flavour Division.
The recoverable amount of each CGU has been determined based on value in use calculations. These calculations use pre-tax cash
flow projections based on financial business plans and budgets approved by management covering a five year period, as well as aterminal value. The basis of the key assumptions is market growth adjusted for estimated market share gains. The terminal value
assumes no further growth beyond the five year period. The discount rate used to discount the estimated future cash flows has anumber of components which are derived from capital market information where the cost of equity corresponds to the return
expected by the shareholders by benchmarking with comparable companies in the fragrance and flavour industry, and where thecost of debt is based on the conditions on which companies with similar credit rating can obtain financing.
A discount rate of 10.3% (2016: 9.7%) was applied to cash flow projections of the Fragrance Division and to cash flow projections of
the Flavour Division. These discount rates are pre-tax.
No impairment loss in either division resulted from the impairment tests for goodwill. The outcome of the impairment test was
not sensitive to reasonable changes in the cash flows and in the discount rate in the periods presented.

Process-oriented technology and other
This consists mainly of process-oriented technology, formulas, molecules, delivery systems as well as process knowledge andresearch expertise in innovative cosmetic solutions, acquired when the Group purchased Food Ingredients Specialties (FIS),
International Bioflavors (IBF), Quest International, Soliance, Induchem, Spicetec, Activ International and Vika.
In 2016, the Group invested CHF 12 million in bioscience through agreement with outside partner to apply strain technology toactive beauty which represents an intangible asset with indefinite useful life.

Client relationships
As part of the acquisition of Quest International, Induchem, Spicetec, Activ International and Vika, the Group acquired client
relationships in the Flavour and Fragrance Divisions, mainly consisting of client relationships with key customers.
Name and product brands
In connection with the acquisition of Induchem, Spicetec, Activ International and Vika, the Group acquired name and productbrands in active beauty and in natural flavour businesses.
Software/ERP system
This consists of internally generated intangible assets associated with the development of identifiable software products and
ERP systems.
The residual useful lives of the acquired intangible assets carried at cost, being their fair value at acquisition date, are determined inaccordance with the principles set out in Note 2.17. Remaining useful lives of major classes of amortisable intangible assets are as
follows:­– Software			
2.7 years­– Name and product brands 		
2.4 years­– Process-oriented technology and other6.6 years­– Client relationships 			13.7 years

23. Investment Property

In 2017, the Group entered into an agreement to develop real estate at its facility in Kemptthal with a third party. As the agreement
meets the criteria of IAS 40, the value of land and buildings has been transferred to Investment property. No significant costs wereincurred to date.

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements

139

24. Debt
Floating rate debt
2017
in millions of Swiss francs

Bankborrowings

Balance as at 1 January
Cash flows

Bank
overdrafts

Privateplacements

7
(42)

(3)

- Acquisition / Divestment

13

3- Currency effects

30

Balance as at 31 December

1

Straight
bonds

Privateplacements

Total

Total
short-termandlong-term
debt

997

254

1,251

1,258

232

227

298

Fixed rate debt

Total

Bank
borrowings

7
116

71

(5)

16

14

Non-cash changes- Amortisation of debt discount1

Within 1 year
Within 1 to 3 years

7

1

31

117

125

7

7

1

300

2

100

117

117

2

249

117

125

Thereafter
Balance as at 31 December

1

7

998

1

1

Within 3 to 5 years

9

1

1

14

30

(10)

(10)

21

476

1,483

1,608

301

308

39

141

142

251

368

4

349

437

790

790

9

998

476

1,483

1,608

Floating rate debt

Total

Total
short-termandlong-term
debt

Balance as at 1 January

3

3

847

305

1,152

1,155

Cash flows

4

4

149

(54)

95

99

1

1

2016
in millions of Swiss francs

BankborrowingsBank
overdrafts

Fixed rate debt
Privateplacements

Total

Bank
borrowings

Straight
bonds

Privateplacements

Non-cash changes- Amortisation of debt discount1- Acquisition / Divestment- Currency effects
Balance as at 31 December

7

7Within 1 year

7

7

997

3

3

3

254

1,251

1,258

299

299
289

7

Within 1 to 3 years

299

Within 3 to 5 years

248

41

289

Thereafter

450

213

663

663

997

254

1,251

1,258

Balance as at 31 December

7

7

On 16 April 2004, the Group entered into a private placement for a total amount of USD 200 million. The private placement wasmade by Givaudan United States, Inc. It matured at various times in instalments beginning May 2009 through April 2016 with annualinterest rates ranging from 4.16% to 5.49%. There were various covenants contained in the transaction covering conditions on net worth,indebtedness and disposition of assets of Givaudan United States, Inc. Givaudan United States, Inc has been in full compliance with thecovenants set. The outstanding amount of USD 55 million (equivalent to CHF 54 million) has been fully paid in April 2016.
On 15 June 2011, the Group issued a 2.5% seven year public bond with a nominal value of CHF 300 million. The bond was issued by
Givaudan SA.
On 7 December 2011, the Group issued a dual tranche public bond transaction of CHF 150 million each, totalling CHF 300 million,
respectively of 1.250% for five years and of 2.125% for ten years. The bond was issued by Givaudan SA. The first tranche was redeemed in
December 2016.

Givaudan – 2017 Annual Report

140

Financial report Notes to the consolidated financial statements

In November 2012, Givaudan United States, Inc entered into three private placements for a total amount of USD 250 million(CHF 243 million) respectively USD 40 million redeemable in February 2020 with an annual interest rate of 2.74%, USD 150 million
redeemable in February 2023 with an annual interest rate of 3.30% and USD 60 million redeemable in February 2025 with anannual interest rate of 3.45%. The proceeds of these transactions have been received on 6 February 2013. There are various
covenants contained in these transactions covering conditions on net worth, indebtedness and EBITDA ratio to net interest
expense of Givaudan United States, Inc. The company is and has been in full compliance with the covenants set.
On 19 March 2014, the Group issued a 1.00% six and a half year public bond with a nominal value of CHF 100 million and a 1.75% ten year
public bond with a nominal value of CHF 150 million. These bonds were issued by Givaudan SA.
In December 2016, the Group issued a 0.00% six year public bond with a nominal value of CHF 100 million and a 0.625% fifteen year
public bond with a nominal value of CHF 200 million. These bonds were issued by Givaudan SA. The proceeds of CHF 300 million wereused to repay the 1.250% five year public bond with a nominal value of CHF 150 million which was redeemed in December 2016 andto repay the short-term borrowings withdrawn during the year.
In December 2017, the Givaudan S.A. entered into a five year floating rate private placement (Schuldschein) with a nominal valueof EUR 100 million (CHF 117 million) and a seven year 1.331% fixed rate private placement (Schuldschein) with a nominal value of
EUR 200 million (CHF 233 million). The proceeds of EUR 300 million were used mainly to repay the short-term borrowings withdrawn
during the year.
The carrying amounts of the Group’s debt are denominated in the following currencies:in millions of Swiss francs

2017

2016

Swiss Franc

998

997

US Dollar

244

259

Euro

365

2

1

–

1,608

1,258

Other currencies
Total debt as at 31 December

The weighted average effective interest rates at the statement of financial position date were as follows:

Private placements USD

2017

2016

3.2%

3.3%

Private placements EUR

1.1%

Straight bond CHF

1.6%

1.6%

Weighted average effective interest rates on gross debt

1.7%

1.9%

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements

141

25. Changes in liabilities arising from financing activities
Cash impact

2017
in millions of Swiss francs

Total short-term and long-term debt

Balance as
at 1 January

Cash flows
Inflow(Outflow)

1,258

298

Interest on liabilities

8

(24)

Derivative financial instruments

62–

Others, net
Total liabilities from financing activities

12

(7)

1,340

267

Non-cash changes
Amortisation of debt
Fair values
discount / Acquisition / changes andpremium Divestment
Others1–

Total short-term and long-term debt

Balance as
at 1 January

Cash flows
Inflow(Outflow)

24

Balance as
at 31
December

21

1,608

–

(2)

8
60

9

(1)

13

31

20

1,689

Amortisation of debt
Fair values
discount / Acquisition / changes andpremium Divestment
OthersCurrency
effects

Balance as
at 31
December

3

1,258

1

Cash impact

2016
in millions of Swiss francs

30

Currency
effects

30
Non-cash changes

1,155

99

Interest on liabilities

9

(33)

32

8

Derivative financial instruments

62

(8)

8

62

Others, net
Total liabilities from financing activities

5

–

1,231

58

1

1

1

6

–

12

1

46

3

1,340

26. Provisions
2017
in millions of Swiss francs

Restructuring

Claims andlitigation

Environmental

Others

Total

Balance as at 1 January

3

8

26

28

65

Additional provisions

60

3

7

70

Unused amounts reversed

(1)

–

–

(1)
(10)

Utilised during the year

(4)

(1)

(2)

(3)

Currency translation effects

–

–

–

–

–

Balance as at 31 December

58

10

24

32

124

Current liabilities

51

1

3

2

57

Non-current liabilities

7

9

21

30

67

Balance as at 31 December

58

10

24

32

124

Restructuring

Claims andlitigation

Environmental

Others

Total

Balance as at 1 January

3

11

23

26

63

Additional provisions

2

3

5

4

14

Unused amounts reversed

–

(3)

(1)

–

(4)

Utilised during the year

(2)

(3)

(1)

(2)

(8)

Currency translation effects

–

–

–

–

–

Balance as at 31 December

3

8

26

28

65

2016
in millions of Swiss francs

Current liabilities

2

2

2

6

Non-current liabilities

1

8

24

26

59

Balance as at 31 December

3

8

26

28

65

Significant judgment is required in determining the various provisions. A range of possible outcomes is determined to make reliable
estimates of the obligation that is sufficient for the recognition of a provision. Differences between the final obligations andthe amounts that were initially recognised impact the income statement in the period in which such determination is made.

Givaudan – 2017 Annual Report

142

Financial report Notes to the consolidated financial statements

Restructuring provisions
Restructuring provisions arise from reorganisations of the Group’s operations and management structure primarily related toGivaudan Business Solutions (GBS).
Claims and litigation
These provisions are made in respect of legal claims brought against the Group and potential litigations. Related estimated legal
fees are also included in these provisions.
Environmental
Givaudan’s affiliate, Givaudan Fragrances Corporation, is one of approximately 100 companies identified by the US Environmental
Protection Agency (“EPA”) as “Potentially Responsible Parties” (“PRP”) for alleged contamination of the Passaic River. The EPA
released a Focused Feasibility Study (“FFS”) covering only the lower 8 miles of the River in 2014. In March 2016, the EPA issued its
Record of Decision (“ROD”) to confirm the remediation solution related to the FFS. The chosen solution entails a bank-to-bankdredge of the River, and the installation of an engineered cap, with an estimated cost of CHF 1.4 billion. One PRP agreed in 2016 to
conduct the detailed remediation design, which is expected to take up to four years to complete. In March 2017, the EPA offered
twenty PRP’s the opportunity to cash out of their obligations pertaining to the remediation of the lower 8 miles of the River. The
EPA has also selected an expert to work with the remaining PRP’s on the allocation of the remediation costs, which is expected totake approximately two years to conclude.
The Cooperating Parties Group (“CPG”), of which Givaudan had been a member, issued a draft Remedial Investigation/Feasibility
Study (“RI/FS”) in April 2014, which proposed a Sustainable Remedy for the entire lower 17 miles of the River. The CPG is still
responding to EPA comments on the RI/FS, which remains in draft form today.
At this time, there are many uncertainties associated with the final remediation plan and the Company’s share of the costs, if any.
However, in accordance with accounting guidance, the Group has recorded a reserve which it believes can reasonably be expected
to cover the Company’s obligation, if any, given the information currently available.
The other material components of the environmental provisions consist of costs to sufficiently clean and refurbish contaminatedsites and to treat where necessary.

Other provisions
These consist largely of provisions related to long-term deferred compensation plan and to restoring expenses related toleased facilities.

27. Own Equity Instruments

Details of own equity instruments are as follows:

As at 31 December 2017

Settlement

Category

Purchased calls

Gross shares

EquityWritten puts

Gross shares Financial liability

Registered shares

As at 31 December 2016

Maturity

Strike price(CHF)

EquitySettlement

Registered shares

Categoryin equivalentsharesFair value
in millions of Swiss
francs23,838542018 1,786.1 – 1,962.1

50,31218

2018

1,679.5 – 1,959.0

50,312–

Maturity

Strike price(CHF)

in equivalentsharesFair value
in millions of Swiss
francs31,13758

1 Mar 2017

915.0

2,732

3

EquityPurchased calls

Net cash

Derivative

Purchased calls

Gross shares

Equity2017 1,690.0 – 1,930.9

31,750

3

Written puts

Gross shares Financial liability

2017 1,690.0 – 1,930.4

31,7502

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements 143

28. Equity
Share capital
As at 31 December 2017, the share capital amounts to CHF 92,335,860, divided into 9,233,586 fully paid-up registered shares, with anominal value of CHF 10.00 each. Every share gives the right to one vote.
The Board of Directors has at its disposal conditional capital of a maximum aggregate amount of CHF 7,481,980 that may be
issued through a maximum of 748,198 registered shares, of which a maximum of CHF 1,618,200 can be used for executive shareoption plans.
At the Annual General Meeting held on 23 March 2017 the distribution of an ordinary dividend of CHF 56.00 per share(2016: CHF 54.00 per share) was approved. The dividend payment has been paid out of available retained earnings.
Movements in own equity instruments are as follows:
Price in Swiss francs
2017

NumberBalance as at 1 January

31,137Purchases at cost
Sales and transfers

Total inmillions of
Swiss francs

High

AverageLow

25,7501,920.2

1,843.6

1,690.047(33,049)

1,491.2

1,491.2

1,491.2(49)

109(Gains) losses, net recognised in equity
Movement on registered shares, net(2)

Movement on derivatives on own shares, net

50

Income taxes
Balance as 31 December–
23,838157
Price in Swiss francs

2016

NumberBalance as at 1 January

39,706

Purchases at cost
Sales and transfers

Total inmillions of
Swiss francs

High

AverageLow

38,2501,931.0

1,327.8

1,200.051(46,819)

1,402.7

1,402.7

1,402.7(66)

79(Gains) losses, net recognised in equity–

Movement on registered shares, net(15)

Movement on derivatives on own shares, net

42

Income taxes
Balance as 31 December

331,137109

29. Commitments

At 31 December, the Group had operating lease commitments mainly related to buildings. Future minimum payments under
non-cancellable operating leases are as follows:in millions of Swiss francs

2017Within one year36

35

Within two to five years

85

87

2016

Thereafter

32

53

Total minimum payments

153

175

The charge in the 2017 consolidated income statement for all operating leases was CHF 45 million (2016: CHF 38 million).
The Group has capital commitments for the purchase or construction of property, plant and equipment totalling CHF 105 million(2016: CHF 43 million).

Givaudan – 2017 Annual Report144 Financial report Notes to the consolidated financial statements

30. Contingent Liabilities

From time to time and in varying degrees, Group operations and earnings continue to be affected by political, legislative, fiscal andregulatory developments, including those relating to environmental protection, in the countries in which it operates.
The activities in which the Group is engaged are also subject to physical risks of various kinds. The nature and frequency of thesedevelopments and events, not all of which are covered by insurance, as well as their effect on the future operations and earnings are
not predictable.
Givaudan Group companies are involved in various legal and regulatory proceedings of a nature considered typical of its business,
including contractual disputes and employment litigation.
One of the Group’s US affiliates, Givaudan Flavors Corporation was named as a defendant in several lawsuits brought against it andother flavour and raw chemical supply companies. The plaintiffs alleged that they sustained pulmonary injuries due to diacetylcontaining butter flavours manufactured by one or more of the flavour and raw chemical supply company defendants. The majorityof the cases filed against Givaudan Flavors Corporation have been settled. The Group has already recovered or will recover amounts
it is entitled to under the terms of its insurance policies.

31. Related Parties

Transactions between Givaudan SA and its subsidiaries, which are related parties of Givaudan SA, have been eliminated on
consolidation and are not disclosed in this note.

Compensation of key management personnel
The compensation of the Board of Directors and the Executive Committee during the year was as follows:in millions of Swiss francs

2017

2016

Salaries and other short-term benefits

13

13

Post-employment benefits

1

2

Share-based payments

11

12

Total compensation

25

27

No other related party transactions have taken place during 2017 (2016: nil) between the Group and the key management personnel.

Reconciliation table to the Swiss code of obligations
IFRS

Adjustments a

Swiss CO (Art. 663b bis)in millions of Swiss francs

2017

2016

2017

2016

2017

2016

Salaries and other short-term benefits

13

13

(6)

(6)

7

7

Post-employment benefits

1

2

1

–

2

2

Share-based payments

11

12

2

2

13

14

Total compensation

25

27

(3)

(4)

22

23

a)	IFRS information is adjusted mainly to the recognition of the share-based payments, IFRS 2 versus economic value at grant date. IFRS information also includes security costs.

There are no other significant related party transactions including in the jointly controlled entities.

Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements 145

32. Board of Directors and Executive Committee Compensation
Compensation of members of the Board of Directors
Compensation of Board members consists of Director fees, Committee fees and Restricted Share Units (RSUs). Fees are paid at theend of each year in office completed. RSUs give participants the right to receive Givaudan shares (or a cash equivalent in countries
where securities laws prevent the offering of Givaudan securities) at the end of a three-year blocking period.
The Chairman of the Board does not receive any additional Board Membership or Committee fees. Similarly, a Committee
Chairman does not receive any additional Committee Membership fees. Each Board member receives an additional amount of
CHF 10,000 to cover out-of-pocket expenses. This amount is paid for the coming year in office. The RSUs are also granted for thesame period. The compensation paid to the Board members for the reporting period is shown in the table below:
2017
in Swiss francs

CalvinGrieder
Chairman e

Victor
Balli eProf. Dr-Ing.
WernerBauer eLilianBiner eMichaelCarlos e

IngridDeltenre e

ThomasRufer eDr Jürg
Witmer f

Total
2017 a1,025,000

Director fees b

325,000

100,000

100,000

100,000

100,000

100,000

100,000

100,000

Committee fees b61,25043,75065,00031,25058,75050,00055,00010,000375,000

Total fixed (cash)

386,250

143,750

165,000

131,250

158,750

150,000

155,000

110,000

1,400,000

Number of RSUs granted c

360

90

90

90

90

90

90

–

900

Value at grant d583,776

145,944

145,944

145,944

145,944

145,944

145,944–

1,459,440

Total compensation

970,026

289,694

310,944

277,194

304,694

295,944

300,944

110,000 2,859,440a)	Represents total compensation for the Board of Director paid in respect of the reporting year, reported in accordance with the accrual principle.
b)	Represents Director and Committee fees paid in respect of the reporting year, reported in accordance with the accrual principle.
c)	R SUs vest on 15 April 2020.
d)	Economic value at grant according to IFRS methodology, with no discount applied for the vesting period.
e)	T he function of each member of the Board of Directors are indicated on pages 63-65 in the Corporate Governance section of the 2017 Annual Report.
f)	Retired at the Annual General Meeting in March 2017.

Estimated social security charges based on 2017 compensation amounted to CHF 205,000 (2016: CHF 221,000).
In addition to the above, payments to Board members for out-of-pocket expenses amounted to CHF 70,000 (2016: 70,000).
Victor
Balli e,g

Prof. Dr-Ing.
WernerBauer gLilianBiner gMichaelCarlos g

IngridDeltenre g

CalvinGrieder gPeterKappeler f,g

25,00075,000100,000

100,000

100,000

100,000

100,000

25,000100,000 1,125,000

40,00010,00018,75065,00050,00040,00050,00050,0006,250

55,000440,000

35,00093,750165,000

150,000

140,000

150,000

150,000

31,250155,000 1,510,000

2016
in Swiss francs

Dr Jürg
AndréWitmerChairman g Hoffmann f,g

Director fees b

400,000

Committee
fees b
Total fixed(cash)

ThomasRufer gTotal
2016 a385,000

Number of
RSUs granted c

340

–

85

85

85

85

85

85

–

Value at grant d581,196–

145,299

145,299

145,299

145,299

145,299

145,299–

145,299 1,598,289

Total
compensation 1,021,196

35,000239,049

310,299295,299285,299295,299295,299

31,250300,299 3,108,289

85

935

a)	Represents total compensation for the Board of Director paid in respect of the reporting year, reported in accordance with the accrual principle.
b)	Represents Director and Committee fees paid in respect of the reporting year, reported in accordance with the accrual principle.
c)	R SUs vest on 15 April 2019.
d)	Economic value at grant according to IFRS methodology, with no discount applied for the vesting period.
e)	Elected at the Annual General Meeting in March 2016.
f)	Retired at the Annual General Meeting in March 2016.
g)	T he function of each member of the Board of Directors are indicated on pages 80-84 in the Corporate Governance section of the 2016 Annual Report.

Givaudan – 2017 Annual Report146 Financial report Notes to the consolidated financial statements

Other compensation, fees and loans to members or former members of the Board
No additional compensation or fees were paid to any member of the Board.
No Board member or related parties had any loan outstanding as of 31 December 2017.
Special compensation of members of the Board who left the company during the reporting period
No such compensation was incurred during the reporting period.
Compensation of members of the Executive Committee
The compensation of the Executive Committee during the year was as follows:
Executive
Executive
Committee
Committee
members
members
Gilles Andrier (excluding CEO) a (excluding CEO) b
CEO 2016
2017
2016

in Swiss francs

Gilles Andrier
CEO 2017

Base salary

1,045,952

1,035,599

3,970,375

3,819,306

5,016,327

4,854,905

445,076442,705

1,048,011

1,558,506

1,493,087

2,001,211

Pension benefits cOther benefits d
Total fixed compensation
Annual incentive e
Number of performance shares granted f
Value at grant g

Total
2017

Total
2016

114,688

111,061

800,451

792,134

915,139

903,195

1,605,716

1,589,365

5,818,837

6,169,946

7,424,553

7,759,311

977,142944,804

2,513,556

2,342,717

3,490,698

3,287,521

1,777

1,686

5,549

5,441

7,326

7,127

2,881,583

2,882,048

8,998,258

9,300,845

11,879,841

12,182,893

Total variable compensation

3,858,725

3,826,852

11,511,814

11,643,562

15,370,539

15,470,414

Total compensation

5,464,441

5,416,217

17,330,651

17,813,508

22,795,092

23,229,725

442,000

438,000

1,413,000

1,427,000

1,855,000

1,865,000

Employer social security ha)	Represents (a) full year compensation of seven Executive Committee members, (b) partial year compensation of the outgoing Chief Financial Officer, Matthias Währen, who
stepped down from his role on 1 January 2017 and retired on 30 June 2017 and (c) full year compensation for Joe Fabbri who stepped down from his Executive Committee roleon 1 July 2017 and retired on 31 December 2017.
b)	Represents full year compensation of eight Executive Committee members and partial year compensation of one new Executive Committee members who was appointed on
1 August 2016.
c)	Company contributions to broad-based pension and retirement savings plans and annualised expenses accrued for supplementary executive retirement benefit.
d)	Represents annual value of health and welfare plans, international assignment benefits and other benefits in kind.
e)	Annual incentive accrued in reporting period based on performance in the reporting period.
f)	2017 Performance shares vest on 15 April 2020, 2016 Performance shares vest on 15 April 2019.
g)	Value at grant calculated according to IFRS methodology and based on 100% achievement of performance targets.
h)	2017 estimated social security charges based on 2017 compensation; 2016 estimated social security charges based on 2016 compensation.

Other compensation, fees and loans to members or former members of the Executive Committee
No other compensation or fees were accrued for or paid to any member or former member of the Executive Committee during thereporting period. No member or former member of the Executive Committee or related parties had any loan outstanding as of
31 December 2017.
Special compensation of Executive Committee members who left the company during the reporting period
Matthias Währen retired from his role as Chief Financial Officer on 30 June 2017. He did not receive any special compensation as aresult of his retirement. All compensation is included in the compensation table above.
Ownership of shares and unvested share rights
Details on the Givaudan share based payment plans are described in Note 9.
As per 31 December 2017, the Chairman and other Board members including persons closely connected to them held
3,360 Givaudan shares in total. For further details, please refer to the following table on the next page showing:– The shares held individually by each Board member as per 31 December 2017.
– The RSUs that were granted in 2015-2017 and were still owned by members of the Board as per 31 December 2017.
Givaudan – 2017 Annual ReportFinancial report Notes to the consolidated financial statements

2017
in numbers

Calvin Grieder, Chairman

SharesUnvested
RSUs

119

536

1,089

266

Victor Balli
Prof. Dr-Ing. Werner Bauer

147

175

Lilian Biner

496

266

Michael Carlos

921

266

Ingrid Deltenre

26

266

Thomas Rufer

709

266

Total 2017

3,360

2,041

Total 2016

5,546

2,797

The company is not aware of any other ownership of shares, share options/option rights, RSUs or performance shares as per
31 December 2017 by persons closely connected to members of the Board.
The Chief Executive Officer and other members of the Executive Committee, including persons closely connected to them,held 6,423 Givaudan shares. For further details, please refer to the table below showing:– The shares held individually by each member of the Executive Committee as per 31 December 2017.
– The unvested performance shares that were granted in 2015-2017 and were still owned by members of the Executive
Committee as per 31 December 2017.
2017
in numbers

Unvested
performance
SharessharesGilles Andrier, CEO

3,300

4,909

Tom Hallam

220

1,014

Mauricio Graber

750

2,817

Maurizio Volpi

785

2,313

Simon Halle-Smith

105

1,277

Willem Mutsaerts

199

1,361

Anne Tayac

110

917

Chris Thoen

685

1,337

Total 2017

6,154

15,945

Total 2016

4,460

19,278

No member of the Executive Committee held any share options or option rights as at 31 December 2017(31 December 2016: no member of the Executive Committee held any share options or option rights).
One person closely connected to a member of the Executive Committee owned 269 unvested Performance Shares as at
31 December 2017.
The company is not aware of any other ownership of shares, share options/option rights, RSUs or performance shares as
per 31 December 2017 by persons closely connected to members of the Executive Committee.

Givaudan – 2017 Annual Report148 Financial report Notes to the consolidated financial statements

33. List of Principal Group Companies

The following are the principal companies fully owned by the Group. Share capital is shown in thousands of currency units:

Switzerland

Argentina
Australia
Austria
BermudaBrazilCanada
Chile

China

Colombia
Czech Republic
Egypt
FranceGermany
Hungary
India
Indonesia
Italy
Japan
Korea
Malaysia
MexicoNetherlands
New ZealandNigeria
Peru
PolandRussiaSingapore
South Africa
Spain
SwedenThailandTurkeyUnited Kingdom
United Arab Emirates

United States of America

Venezuela

Disclosure 102-45

Givaudan – 2017 Annual Report

Givaudan SA
Givaudan Suisse SA
Givaudan Finance SA
Givaudan International SA
Induchem AG
Vamara Holding SA
Givaudan Treasury International SA
Fondation Givaudan
Givaudan Argentina SA
Givaudan Argentina Servicios SA
Givaudan Australia Pty Ltd
Givaudan Austria GmbHFF Holdings (Bermuda) Ltd
Givaudan International Ltd
FF Insurance Ltd
Givaudan do Brasil Ltda
Givaudan Canada Co
Givaudan Chile Ltda
Givaudan Fragrances (Shanghai) Ltd
Givaudan Flavors (Shanghai) Ltd
Givaudan Specialty Products (Shanghai) Ltd
Givaudan Hong Kong Ltd
Givaudan Flavors (Nantong) Ltd
Givaudan Colombia SA
Givaudan CR, s.r.o.
Givaudan Egypt SAE
Givaudan Egypt Fragrances LLC
Givaudan France SAS
Activ International SAS
Givaudan Deutschland GmbH
Givaudan Hungary Kft
Givaudan Business Solutions Kft
Givaudan (India) Private Ltd
P.T. Givaudan Indonesia
Givaudan Italia SpA
Givaudan Japan K.K.
Givaudan Korea Ltd
Givaudan Business Solutions Asia Pacific Sdn.Bhd
Givaudan Flavours & Fragrances Malaysia Sdn.Bhd
Givaudan de Mexico SA de CV
Givaudan Nederland B.V.
Vika B.V.
Virgula B.V.
Givaudan NZ Ltd
Givaudan (Nigeria) Ltd
Givaudan Peru SAC
Activ International SAC
Givaudan Polska Sp. Z.o.o.
Givaudan Rus LLC
Givaudan Singapore Pte Ltd
Givaudan South Africa (Pty) Ltd
Givaudan Iberica, SA
Givaudan North Europe AB
Givaudan (Thailand) Ltd
Givaudan Aroma Ve Esans Sanayi Ve Ticaret Limited Sirketi
Givaudan UK Ltd
Major International Ltd
Givaudan Holdings UK Ltd
Givaudan Middle East & Africa FZEGivaudan United States, Inc.
Givaudan Flavors Corporation
Givaudan Fragrances Corporation
Givaudan Flavors and Fragrances, Inc.
Activ International, Inc.
Givaudan Venezuela SA

CHF
CHF
CHF
CHF
CHF
CHF
CHF
ARS
ARS
AUD
EUR
USD
USD
CHF
BRL
CAD
CLP
USD
USD
USD
HKD
USD
COP
CZK
USD
EGP
EUR
EUR
EUR
EUR
EUR
INR
IDR
EUR
JPY
KRW
MYR
MYR
MXN
EUR
EUR
EUR
NZD
NGN
PEN
PEN
PLN
RUB
SGD
ZAR
EUR
SEK
THB
TRY
GBP
GBP
GBP
AED
USD
USD
USD
USD
USD
VEF

92,3364,000
100,000
100
500
100
1,000
9,000
7,000
35,81240
12
12
170
133,512
12,901
5,000
7,750
10,783
12,0007,374
35,5006,965,925
200
11,360
50
5,006
1,925
4,100
15
12
87,3302,608,000
520
1,000,000
550,020
2,000
3,981
53,611402
18
18
71
10,00025
14,04350
9,000
24,000360,0028,020
120
100,000
34
70
50
317,348
1,000
0.05
0.1
0.1
0.1
15,938
4.5

Financial report Notes to the consolidated financial statements 149

34. Disclosure of the Process of Risk Assessment

Risk management in Givaudan is an integral part of the business. It is a structured and continuous process of identifying, assessing
and deciding on responses to risks. The reporting of the opportunities and threats that these risks create and how they might
hinder the business in achieving its objectives is also part of managing risks.
Risk management is the responsibility of the Board of Directors, which delegates to the Executive Committee the management of
the overall company risk management process. The Group actively promotes the continuous monitoring and management of risks
at the operational management level.
The Givaudan Enterprise Risk Management Charter describes the principles, framework and process of the Givaudan Enterprise
Risk Management, which ensure that material risks are identified, managed and reported. It defines the associated roles andresponsibilities which are reflected in the delegated authorities. Enterprise Risk Management encompasses both the Fragranceand Flavour businesses, as well as Givaudan Group functions. It includes all types of risks in terms of their nature, their source or
their consequences.
The process aims to be comprehensive, organised and documented in order to improve compliance with corporate governanceregulations, guidelines and good practices; better understand the risk profile of the business; and provide additional risk-based
management information for decision making.
The objectives of the Risk Management process are to continuously ensure and improve compliance with good corporate
governance guidelines and practices as well as laws and regulations, where applicable; facilitate disclosure to key stakeholders ofpotential risks and the company’s philosophy for dealing with them. At the same time, the process creates the awareness of all key
executives of the magnitude of risks; provides risk-based management information for effective decision-making; and safeguard
the values of the company and its assets, and protect the interests of shareholders.
Givaudan’s management, at all levels, is accountable for ensuring the appropriateness, timeliness and adequacy of the risk analysis.
Mitigation decisions are taken at individual and combined levels. This management is also responsible for implementing, tracking
and reporting the risk mitigation directives of the Executive Committee, including periodic reporting to the Board.
The assessment is performed in collaboration between the Executive Committee, divisional and functional management teams
and the Corporate Compliance Officer.
The Board of Directors’ Audit Committee also promotes the effective communication between the Board, Givaudan’s Executive
Committee, other senior corporate functions and Corporate Internal Audit in order to foster openness and accountability.
Givaudan has carried out its annual review of internal controls over accounting and financial reporting. A risk assessment isperformed throughout the Internal Control System for those identified risks which may arise from the accounting and financial
reporting. Then, relevant financial reporting controls are defined for each risk.

35. Other information

On September 2017, as part of its 2020 strategy to strength capabilities in naturals and presence in Brazil, Givaudan announced theacquisition of Centroflora’s Nutrition Division (i.e.Centroflora Nutra). With headquarters and a manufacturing facility in Botucatu(Brazil), Centroflora Nutra employs about 116 people and exports products globally.
On December 2017, as part of its 2020 strategy to expand the capabilities of its fragrance business, Givaudan announced that it hasentered into exclusive negotiations to acquire Expressions Parfumées, a French fragrance creation house. Expressions Parfumées isbased in Grasse (France), and also operates throughout Europe, Africa and the Middle East. The Company employs about 200
people globally.
As the closing of the acquisitions is expected for 2018, the proposal of those has no impact on the financial statements to
December 2017.

Givaudan – 2017 Annual Report

150

Financial report Statutory auditor’s report on the consolidated financial statements

Deloitte SA
Rue du Pré-de-la-Bichette 1
1202 Geneva
Switzerland
Phone: +41 (0)58 279 8000
Fax: +41 (0)58 279 8800
www.deloitte.ch

Statutory Auditor’s Report
To the General Meeting of
GIVAUDAN SA, Vernier
Report on the Audit of the Consolidated Financial Statements
OpinionWe have audited the consolidated financial statements of Givaudan SA and its subsidiaries (the Group), which comprise theconsolidated income statement, consolidated statement of comprehensive income, consolidated statement of financial position,
consolidated statement of changes in equity, consolidated statement of cash flows for the year ended 31 December 2017, and notes
to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion the accompanying consolidated financial statements, presented on pages 94 to 149, give a true and fair view of theconsolidated financial position of the Group as at 31 December 2017, and its consolidated financial performance and its consolidated
cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.

Basis for Opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Auditing Standards.
Our responsibilities under those provisions and standards are further described in the Auditor’s Responsibilities for the Audit of theConsolidated Financial Statements section of our report. We are independent of the Group in accordance with the provisions of
Swiss law and the requirements of the Swiss audit profession, as well as the IESBA Code of Ethics for Professional Accountants, andwe have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our Audit Approach
Summary
Key audit matters

Based on our audit scoping, we identified the following key audit matters:– Taxation;– Pension; and– Acquisition accounting.

Materiality

Based on our professional judgment we determined materiality for the Group as a whole to be
CHF 57 million.

Scoping

Based on our understanding of Givaudan’s operations, we have defined 11 countries that are in scopefor group reporting purposes. We have requested these countries to perform audit procedures toaddress the risks identified in our risk assessment phase. Coverage on Group sales, operating income
and total assets are disclosed below.

Givaudan – 2017 Annual ReportFinancial report Statutory auditor’s report on the consolidated financial statements

151

Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Taxation

Key Audit Matter

How the scope of our audit responded
to the Key Audit Matter

The Group operates in a large number of different jurisdictions
and is therefore subject to many tax regimes with differingrules and regulations. As described in the Summary of
Significant Accounting Policies in Note 2 and in Note 3 on
Critical Accounting Estimates and Judgments, significant
judgment is required in determining provision for income
taxes, both current and deferred, as well as the assessment ofprovisions for uncertain tax positions including estimates ofinterest and penalties where appropriate.

We discussed with management the adequate
implementation of Group policies and controls regarding
current and deferred tax, as well as the reporting of uncertain
tax positions.

The effective tax rate of the group decreased from 18% in 2016
to 9% in 2017. The Consolidated Statement of Financial
Position includes current tax assets of CHF 32 million, current
tax liabilities of CHF 49 million, together with deferred tax
assets of CHF 207 million and deferred tax liabilities of
CHF 99 million. The tax expense recognised in theConsolidated Income Statement amounts to CHF 75 million.
Details of all current and deferred tax balances are disclosed in
Note 16 to the consolidated financial statements.
Due to their significance to the financial statements as awhole, combined with the judgment and estimation required
to determine their values, the evaluation of current anddeferred tax balances is considered to be a key audit matter.

We evaluated the design and implementation of controls in
respect of provisions for current tax and the recognition andrecoverability of deferred tax assets. We examined theprocedures in place for the current and deferred tax
calculations for completeness and valuation and audited therelated tax computations and estimates in the light of ourknowledge of the tax circumstances. Our work was
conducted with the support of our tax specialists.
We performed an assessment of the material components
impacting the Group’s tax expense, balances and exposures,
including the impact of the United States of America tax
reform. We reviewed and challenged the information reported
by components with the support of our own local tax
specialists, where appropriate. With the support of our tax
specialists at group level, we verified the consolidation andanalysis of tax balances. We considered management’s
assessment of the validity and adequacy of provisions for
uncertain tax positions, evaluating the basis of assessment
and reviewing relevant correspondence and legal advice
where available including any information regarding similarcases with the relevant tax authorities. In respect of deferred
tax assets and liabilities, we assessed the appropriateness ofmanagement’s assumptions and estimates, including the
likelihood of generating sufficient future taxable income tosupport deferred tax assets for tax losses carried forward as
disclosed in Note 16 of CHF 6 million.
We validated the appropriateness and completeness of therelated disclosures in Note 16 to the consolidated financial
statements. Based on the procedures performed above, we
obtained sufficient audit evidence to corroborate
management’s estimates regarding current and deferred tax
balances and provisions for uncertain tax positions.

Givaudan – 2017 Annual Report

152

Financial report Statutory auditor’s report on the consolidated financial statements

PensionKey Audit Matter

How the scope of our audit responded
to the Key Audit Matter

As described in the Summary of Significant Accounting
Policies in Note 2 and in Note 3 on Critical Accounting
Estimates and Judgments, significant judgment is required indetermining the calculation of the present value of defined
benefit obligations requiring financial and demographic
assumptions. In addition, changes to the post-employment
benefit liability may be accounted through the income
statement or through other comprehensive income whichadds to the complexity.

We evaluated the design and implementation of controls in
respect of pension accounting.

The Group operates a number of defined benefit and defined
contribution plans throughout the world. As disclosed in Note
8 to the consolidated financial statements, total plan assets
amount to CHF 1’640 million, total post-employment funded
obligations to CHF 2’184 million and post-employment
unfunded obligations to CHF 85 million.
The defined benefit obligations recognised in the Consolidated
Statement of Financial Position represent the present value of
defined benefit obligations calculated annually byindependent actuaries. These actuarial valuations are
sensitive to key assumptions such as discount rates. Changes
in a number of the key assumptions can have a material
impact on the position as disclosed in the Note 8 to theconsolidated financial statements.
During 2017, the Group has reviewed financial assumptionsof certain pension plans in order to align them with market
trends. These transactions led to a one-off non cash gainof CHF 16 million in the United States of America and
CHF 4 million in Switzerland.
In addition, any pension plan amendment, such as a
curtailment, requires careful consideration of the accounting
treatment to ensure compliance with IAS 19 Employee
Benefits.
We focused on this area because of the complexity ofaccounting treatment of each plan amendment, the level ofjudgment required to determine the valuation of both pension
assets and pension obligations and the significance of thebalances to the consolidated financial statements as a whole.

Givaudan – 2017 Annual Report

We discussed with management the adequate
implementation of Group policies and controls regarding theasset valuation and the pension obligation valuation.
With support from our own pension specialists, we havediscussed with Group’s actuary and challenged key
assumptions underpinning the valuation of the pension plansat the end of 2017.
Specifically we challenged the discount rate, inflation andmortality assumptions applied in the calculation andbenchmarked the assumptions applied against comparable
third party data and assessed the appropriateness of theassumptions in the context of the Group’s own position. We
found them to be within an acceptable range. We tested thedata used in the valuation of the pension plans, such as
employee data and we obtained confirmations to verify thecompleteness and accuracy of the pension plan assets.
We validated the compliance of the accounting treatment ofpension plan amendments and other transactions impacting
pension plans with IAS 19 Employee Benefits.
We validated the appropriateness and completeness of therelated disclosures in Note 8 to the consolidated financial
statements.
Based on our audit procedures performed, we obtained
sufficient audit evidence to corroborate management’s
estimates regarding valuation of both pension assets andpension obligations. We consider accounting treatment ofeach plan amendment to be appropriate and disclosures in the
consolidated financial statements to be compliant with IAS 19
Employee Benefits.

Financial report Statutory auditor’s report on the consolidated financial statements

153

Acquisition accounting

Key Audit Matter

How the scope of our audit responded
to the Key Audit Matter

As described in Note 6 to the consolidated financial
statements, the Group completed the following acquisitions
during 2017:

We reviewed the sale and purchase agreement to understandthe key terms and conditions, and confirming ourunderstanding of the transaction with management.

– Acquisition of 100% of the share capital of Activ
International on 16 January 2017 for a total purchase price of
CHF 114 million. The Group acquired cash for CHF 3 million,
working capital valued at CHF 8 million, fixed assets valued
at CHF 16 million, intangibles valued at CHF 32 million andother liabilities valued at CHF 20 million. The acquisition
resulted in the recognition of a goodwill of CHF 75 million.

We challenged management on the identification andvaluation of tangible and intangible assets acquired andliabilities identified in the acquisition accounting against
the terms of the sale and purchase agreement.

– Acquisition of 100% of the share capital of Vika B.V. on
1 September 2017 for a total purchase price of CHF 116
million. The Group acquired cash for CHF 3 million, working
capital valued at CHF 14 million, fixed assets valued at
CHF 24 million, intangibles valued at CHF 73 million andother liabilities valued at CHF 38 million. The acquisition
resulted in the recognition of a goodwill of CHF 40 million.
These transactions are considered as business combinations
as defined by IFRS 3 Business Combinations which requires
management to perform a purchase price allocation exercise
to fair value the assets and liabilities of the acquired business.
This requires exercise of judgments over the accounting anddisclosure for the transactions.
The accounting for the acquisition of assets and liabilities ofthese entities required a number of complex accounting
judgments sensitive to key assumptions such as the weighted
average cost of capital, growth rate and other assumptions
used in the business plan, internal rate of return, attrition rate.
In addition, the amortisation period retained for intangibles
acquired also requires judgment and constitutes a significant
estimate that will affect current and future financial periods.
We focused on this area because of the complexity ofacquisition accounting and the level of judgments related tothe identification of intangible assets and the purchase priceallocation to the assets and liabilities acquired.

We reviewed and assessed the work performed bymanagement’s valuation expert including valuation
methodology for each category of asset and liability, alongwith the key judgments made in determining the fair values
including any fair value adjustments.
We determined that the methods used by the management’s
valuation expert were appropriate and in compliance withIFRS 3 Business Combinations.
We considered and challenged the reasonableness of theassumptions, finding them to be within an acceptable range.
The fair values appeared reasonable based on the judgments
made. In particular, we challenged sales forecasts withhistorical data and market trends, we benchmarked
assumptions used in determining the discount rate andthe attrition rate.
We also challenged the duration estimated by management
for amortisation of the intangibles acquired, comparing withcurrent Group accounting policies and other recent
acquisitions.
We validated the appropriateness and completeness of therelated disclosures in Note 6 to the consolidated financial
statements.
Based on the procedures performed above, we consider theassumptions and estimates used in the measurement of theacquired assets and liabilities to be appropriate.

Givaudan – 2017 Annual Report154 Financial report Statutory auditor’s report on the consolidated financial statements

Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of
our audit work and in evaluating the results of our work.
Based on our professional judgment we determined materiality for the Group as a whole to be CHF 57 million, based on a
calculation of 7% of Group income before taxes, adjusted for non-recurring transactions. We selected Group income before taxes
as the basis for determining our materiality because, in our view, this measure represents the performance of the Group and is oneof the indicators against which Givaudan is commonly assessed and is a generally accepted benchmark. The materiality applied by
the component auditors ranged from CHF 14.4 million to CHF 36.0 million depending on the scale of the component’s operations,the component’s contribution to Group sales, Group income before taxes, Group total assets and our assessment of risks specificto each location.
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of CHF 2.8 million,
as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the
Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

An overview of the scope of our audit
We designed our audit by obtaining an understanding of the Group and its environment, including Group-wide controls,
determining materiality and assessing the risks of material misstatement in the consolidated financial statements.
Based on our understanding of Givaudan’s operations, we have defined 11 countries that are in scope for the group reporting
purposes. We have requested these countries to perform audit procedures to address the risks identified in our risk assessment
phase.
These countries are spread across all regions, reflecting Givaudan’s operations. We obtain assurance over these countries througha combination of audit procedures performed locally within the Givaudan shared service centres and cetrally at the Head office.
In aggregate, these components represented scope coverage of:
Revenues

Gross profit

Net assets

81%

89%

85%

19%

Audits for group reporting purposes

Review at group level

11%

15%

All other wholly owned and joint venture businesses were subject to analytical review procedures for the purpose of the Groupaudit. Annual statutory audits are conducted by Deloitte at the majority of the Group’s affiliates, although these are predominantly
completed subsequent to our audit report on the consolidated financial statements.
At the parent entity level we tested the consolidation process and carried out analytical procedures to confirm our conclusion that
there were no significant risks of material misstatement of the aggregated financial information of the remaining components not
subject to a full scope audit.
The group audit team visited some countries in scope as defined at planning stage. We are defining our visits based on significanceof the affiliates and main events occurred during the year. All component audit partners were included in our team briefing, we
discussed their risk assessment and reviewed documentation of the findings from their work.

Givaudan – 2017 Annual ReportFinancial report Statutory auditor’s report on the consolidated financial statements

155

Other Information in the Annual Report
The Board of Directors is responsible for the other information in the annual report. The other information comprises all
information included in the annual report, but does not include the consolidated financial statements, the stand-alone financial
statements of the Company and our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information in the annual report and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information in theannual report and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work wehave performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.

Responsibility of the Board of Directors for the Consolidated Financial Statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fair viewin accordance with IFRS and the provisions of Swiss law, and for such internal control as the Board of Directors determines isnecessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative
but to do so.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonableassurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law, ISAs and Swiss
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the website of EXPERTsuisse:
http://expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our auditor’s report.

Report on Other Legal and Regulatory Requirements
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control
system exists, which has been designed for the preparation of consolidated financial statements according to the instructionsof the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.

Deloitte SA

Karine Szegedi PingoudJoëlle Herbette

Licensed Audit Expert
Auditor in Charge

Licensed Audit Expert

Geneva, 24 January 2018
Givaudan – 2017 Annual Report156 Financial report Statutory financial statements of Givaudan SA

Statutory financial statements of Givaudan SA(Group Holding Company)
Income Statement

For the year ended 31 Decemberin millions of Swiss francs

Income from investments in Group companies

Note

2017

2016

3

145

224

1,002

916

Royalties from Group companies
Other operating income

1

1

Total Operating income

1,148

1,141

Research and development expenses to Group companies

(305)

(278)

Other operating expenses

(46)

(44)

Amortisation and impairment of intangible assets

(64)

(98)

Share of (loss) profit of jointly controlled entities
Total Operating expenses

5

–

(1)

(415)

(421)

Operating income

733

720

Financial expenses

(155)

(204)

Financial income

107

85

Non-operating expenses

(84)

(105)

Income before taxes

601

496

Income taxes

(10)

4

Net income

591

500

Givaudan SA – 2017 Annual ReportFinancial report Statutory financial statements of Givaudan SA

157

Statement of Financial Positionin millions of Swiss francs

Note

31 December
2017

31 December
2016

Cash and cash equivalents

250

112

Accounts receivable from Group companies

186

140

Other current assets

24

7

Accrued income and prepaid expenses

13

10

Current assets

473

269

Loans to Group companies

150

159

Other long-term assets

1

–
2,583

Investments in Group companies

3

2,849

Jointly controlled entities

5

32

35

10

10

Other financial assets
Intangible assets
Non-current assets
Total assets
Short-term debt

6

241

257

3,283

3,044

3,756

3,313

300

Accounts payable to Group companies

96

82

Other current liabilities

19

18

Deferred income and accrued expenses

2

1

417

101

1,049

998

Current liabilities
Long-term debt

6

Other non-current liabilities
Non-current liabilities
Total liabilities

60

62

1,109

1,060

1,526

1,161

Share capital

8

92

92

Statutory retained earnings

8

18

18

Statutory capital reserves from capital contributions - additional paid-in capital

8

3

3

Voluntary retained earnings

8

1,542

1,542

8, 9

(43)

(45)

Own shares
Available retained earnings- Balance brought forward from previous year

27

42

- Net (loss) income for the year

591

500

Equity

2,230

2,152

Total liabilities and equity

3,756

3,313

Givaudan SA – 2017 Annual Report158 Financial report Notes to the statutory financial statements

Notes to the statutory financial statements
1. General Information
1.1. Structure and description of the activity
Givaudan SA is a holding company based in Vernier, near Geneva, whose main goal is to manage its investments in subsidiaries.
More specifically Givaudan SA invests in companies whose aim is to manufacture and commercialise natural and synthetic
aromatic or fragrance raw materials as well as other related products. In addition, Givaudan SA invests in research anddevelopment and supplies services for the use of these products. Givaudan SA develops, registers and makes use of all trademarks,
patents, licenses, manufacturing processes and formulas.

1.2. Employees
The average number of employees during the year was less than ten (2016: less than ten).

2. Summary of accounting principles adopted

The financial statements at 31 December 2017 are prepared in accordance with Swiss law.
The company is classified as a large entity as it meets the criteria to present group accounts under the definition of art. 961d al. 1of the Swiss Code of Obligations. As Givaudan prepares and reports comprehensive consolidated financial statements underInternational Financial Reporting Standards (IFRS) including a cash flow statement, accompanying notes and a management
report, Givaudan SA is exempt from preparing this information.
Valuation Methods and Translation of Foreign Currencies
Investments in, and loans to, Group companies are stated at cost less appropriate write-downs. Marketable securities are shownat the lower of cost and market value. Derivatives are recorded at fair value.
The currency in which Givaudan SA operates is Swiss francs (CHF) and the accounts are presented in Swiss francs. In the statementof financial position, foreign currency assets and liabilities are remeasured at year-end exchange rates with the exception of
investments in Group companies which are valued at historical exchange rates. In the income statement, expenses and income inforeign currencies are converted in Swiss francs using the daily exchange rate of the transaction date. Foreign currency gains andlosses are recognised in the income statement as they occur with the exception of unrealised gains which are deferred.

Givaudan SA – 2017 Annual ReportFinancial report Notes to the statutory financial statements

159

3. Subsidiaries

List of the direct subsidiaries of the company, which are wholly-owned unless otherwise indicated (percentage of voting rights):

Switzerland

Argentina
Australia
Austria
BermudaBrazilCanada
Chile

China

Colombia
Czech Republic
Egypt
FranceGermany
Guatemala
Hungary
India
Indonesia
Italy
Japan
Korea
Malaysia
MexicoNetherlands
Nigeria
Peru
PolandRussiaSingapore
South Africa
Spain
SwedenThailandTurkeyUnited Kingdom
United Arab Emirates
United States of America
Venezuela

Givaudan Suisse SA
Givaudan Finance SA
Prodiga AG
Givaudan International SA
Vamara Holding SA
Kemptthal Immobilien Nord AG
Activ International SA
Select-Ingrédient SA
Givaudan Treasury International SA
Givaudan Argentina SA
Givaudan Argentina Servicios SA
Givaudan Australia Pty Ltd
Givaudan Austria GmbH
Givaudan Capital Transactions Ltd
Givaudan do Brasil Ltda
Givaudan Canada Co
Givaudan Chile Ltda
Givaudan Fragrances (Shanghai) Ltd
Givaudan Flavors (Shanghai) Ltd
Givaudan Specialty Products (Shanghai) Ltd
Givaudan Hong Kong Ltd
Givaudan Flavors (Nantong) Ltd
Givaudan Management Consulting (Shanghai) Ltd
Givaudan Fragrances (Changzhou) Ltd
Givaudan Colombia SA
Givaudan CR, s.r.o.
Givaudan Egypt SAE
Givaudan Egypt Fragrances LLC
Givaudan France SAS
Activ International SAS
Givaudan Deutschland GmbH
Givaudan Guatemala SA
Givaudan Hungary Kft
Givaudan Finance Services Kft
Givaudan (India) Private Ltd
P.T. Givaudan Indonesia
P.T. Givaudan Flavours and Fragrances Indonesia
Givaudan Italia SpA
Givaudan Japan K.K.
Givaudan Korea Ltd
Givaudan Malaysia Sdn.Bhd
Givaudan de Mexico SA de CV
Grupo Givaudan SA de CV
Givaudan Nederland B.V.
Virgula B.V.
Givaudan (Nigeria) Ltd
Givaudan Peru SAC
Givaudan Polska Sp. Z.o.o.
Givaudan Rus LLC
Givaudan Singapore Pte Ltd
Givaudan South Africa (Pty) Ltd
Givaudan Iberica, SA
Givaudan North Europe AB
Givaudan (Thailand) Ltd
Givaudan Aroma Ve Esans Sanayi Ve Ticaret Limited Sirketi
Givaudan Holdings UK Ltd
Givaudan Middle East & Africa FZEGivaudan United States, Inc.
Givaudan Venezuela SA

Givaudan SA – 2017 Annual Report

160

Financial report Notes to the statutory financial statements

In 2017 Givaudan SA increased its investments in Givaudan Flavors (Nantong) Ltd, Givaudan Fragrances (Changzhou) Ltd, Givaudan
Argentina Servicios SA and Givaudan Malaysia Sdn.Bhd, incorporated Vamara Holding SA, Activ International SA, Select-IngrédientSA, Activ International SAS, Virgula B.V., and created Kemptthal Immobilien Nord AG and Givaudan Treasury International SA
which now owns Givaudan Treasury International B.V.
Givaudan SA also wholly owns indirectly the following substantial companies, FF Holdings (Bermuda) Ltd in Bermuda, Givaudan
Flavors Corporation and Givaudan Fragrances Corporation in the United States of America.

4. Cash and cash equivalents

As at 31 December 2017, cash and cash equivalents include an amount of CHF 236 million related to the cash pooling agreementswith a Group company.
As at 31 December 2016, an amount of CHF 111 million related to the cash pooling agreements with a Group company was includedin the cash and cash equivalents.

5. Jointly Controlled Entities
Name of joint ventures

Principal activity

Country of incorporation

Ownership interest

Production of fragrance ingredients

China

49%

Innovative natural ingredients

USA

49%

Natural Extracts International Ltd

Natural ingredient derivatives production

Mauritius

49%

Vanilla International Ltd

Natural ingredient collection and extract

Mauritius

49%

Jiangsu Xinrui Aromatics Ltd
BGN Tech LLC

6. Debt

On 15 June 2011, Givaudan SA issued a 2.5% seven year public bond with a nominal value of CHF 300 million.
On 7 December 2011, Givaudan SA issued a dual tranche public bond transaction of CHF 150 million each, totalling CHF 300 million,
respectively of 1.250% for five years and of 2.125% for ten years. The first tranche was redeemed in December 2016.
On 19 March 2014, Givaudan SA issued a 1.00% six and a half year public bond with a nominal value of CHF 100 million and a 1.75%
ten year public bond with a nominal value of CHF 150 million.
On 7 December 2016, Givaudan SA issued a 0.00% six year public bond with a nominal value of CHF 100 million and a 0.625%
fifteen year public bond with a nominal value of CHF 200 million. The proceeds of CHF 300 million were used to repay the 1.250%
five year public bond with a nominal value of CHF 150 million which was redeemed in December 2016 and to repay the short-termborrowings withdrawn during the year.
On 20 December 2017, Givaudan SA entered into a five year floating rate private placement (Schuldschein) with a nominal valueof EUR 100 million (CHF 117 million) and a seven year 1.331% fixed rate private placement (Schuldschein) with a nominal value of
EUR 200 million (CHF 233 million). The proceeds of EUR 300 million were used mainly to repay the short-term borrowings
withdrawn during the year.

7. Indirect Taxes

The company is part of a Group for VAT purposes with two other affiliates of the Group in Switzerland. The company is jointly andseverally liable towards the tax authorities for current and future VAT payables of the VAT Group to which it belongs.

Givaudan SA – 2017 Annual ReportFinancial report Notes to the statutory financial statements

161

8. Equity

As at 31 December 2017, the share capital amounts to CHF 92,335,860, divided into 9,233,586 fully paid-up registered shares,
with a nominal value of CHF 10.00 each. Every share gives the right to one vote.
The Board of Directors has at its disposal conditional capital of a maximum aggregate amount of CHF 7,481,980 that may be
issued through a maximum of 748,198 registered shares, of which a maximum of CHF 1,618,200 can be used for executive shareoption plans.
At the Annual General Meeting held on 23 March 2017 the distribution of an ordinary dividend of CHF 56.00 per share(2016: CHF 54.00 per share) was approved. The dividend payment has been made out of available retained earnings.
The movements in equity are as follows:2017
in millions of Swiss francs

Balance as at 1 January

Share
CapitalStatutoryretainedearnings

Additional
paid-in
capitalVoluntary
retainedearnings

Available
retainedearnings

Own
shares

Total

92

18

3

1,542

542

(45)

2,152

2

2

Registered shares
Issuance of shares
Movement of shares
Appropriation of available earnings
Transfer to the free reserve
Transfer to the general legal reserve
Distribution to the shareholders paid relating to 2016

(515)

Net profit for the year

591

Balance as at 31 December

2016
in millions of Swiss francs

Balance as at 1 January

92

18

3

1,542

Share
CapitalStatutoryretainedearnings

Additional
paid-in
capitalVoluntary
retainedearnings

92

18

402

2,042

618

(515)
591
(43)

Available
retainedearnings Own shares

(362)

2,230

Total

(60)

2,132

15

15

Registered shares
Issuance of shares
Movement of shares
Appropriation of available earnings
Transfer to the free reserve

(500)

500

Transfer to the general legal reserve
Distribution to the shareholders paid relating to 2015

(399)

(96)

Net profit for the year
Balance as at 31 December

(495)

500
92

18

3

1,542

542

500
(45)

2,152

Statutory capital reserves from capital contributions – additional paid-in capital are presented separately in equity. Any payments
made out of these reserves are not subject to Swiss withholding tax, nor subject to income tax on individual shareholders who areresident in Switzerland.

Givaudan SA – 2017 Annual Report162 Financial report Notes to the statutory financial statements

9. Own Shares

The movements in own shares are as follows:
Price in Swiss francs
2017

NumberBalance as at 1 January

31,137Purchases at cost

Total inmillions of
Swiss francs

High

AverageLow

25,7501,920.2

1,843.6

1,690.0

47

Sales and transfers at cost

(33,049)

1,488.6

1,488.6

1,488.6(49)

Balance as at 31 December

23,8382016

Number45

43
Price in Swiss francs
High

Average

Low

Total inmillions of
Swiss francs

Balance as at 1 January

39,706

Purchases at cost

38,2501,931.0

1,320.2

1,200.0

60
50

Sales and transfers at cost

(46,819)

1,396.0

1,396.0

1,396.0(65)

Balance as at 31 December

31,13745

As at 31 December 2016 and 2017, there were no other companies controlled by Givaudan SA that held Givaudan SA shares.
As at 31 December 2017, William H. Gates III (13.86%), BlackRock Inc. (5.18%), MFS Investment Management (5.04%), Nortrust
Nominees Ltd (nominee; 14.9%), Chase Nominees Ltd (nominee; 5.21%) and Messieurs Pictet & Cie (nominee; 4.4%) were the only
shareholders holding more than 3% of total voting rights.

10. Board of Directors and Executive Committee Compensation

Information required by Swiss law, as per art. 663b bis CO, on the Board of Directors and Executive Committee compensation aredisclosed in the Givaudan consolidated financial statements, Note 32.

11. Exceptional Events

As a result of an internal restructuring, a subsidiary of Givaudan SA was liquidated during 2015 which generated a loss of
CHF 1,240 million. This item had no effect on the consolidated financial statements of the Group, aside the tax impact.
Net losses can be carried forward over seven years, as at December 2017 all losses were utilized.

12. Other information

On December 2017, as part of its 2020 strategy to expand the capabilities of its fragrance business, Givaudan announced that it
has entered into exclusive negotiations to acquire Expressions Parfumées, a French fragrance creation house. Expressions
Parfumées is based in Grasse (France), and also operates throughout Europe, Africa and the Middle East. The Company employs
about 200 people globally.
As the closing is expected for 2018, the proposed acquisition has no impact on the financial statements to December 2017.

Givaudan SA – 2017 Annual ReportFinancial report Notes to the statutory financial statements

163

Appropriation of available earnings anddistribution from the statutory capital reserves
from contributions – additional paid-in capitalof Givaudan SA
Proposal of the Board of Directors to the General Meeting of Shareholders

Available earnings
in Swiss francs

Net income for the year
Balance brought forward from previous year
Total available earnings

2017

2016

590,763,886

500,446,384

27,149,322

41,648,082

617,913,208

542,094,466

2016 distribution proposal of CHF 56.00 gross per share

517,080,816

2017 distribution proposal of CHF 58.00 gross per share

535,547,988

Total appropriation of available earnings

535,547,988

517,080,816

82,365,220

27,149,322

Distribution not paid on Treasury shares held by the Group
Amount to be carried forward

2,135,672

Statutory capital reserves from capital contributions – additional paid-in capital
2017

2016

Balance brought forward from previous year

3,322,955

3,322,955

Total additional paid-in capital

3,322,955

3,322,955

Amount to be carried forward

3,322,955

3,322,955

in Swiss francs

Givaudan SA – 2017 Annual Report164 Financial report Statutory auditor’s report on the financial statements

Deloitte SA
Rue du Pré-de-la-Bichette 1
1202 Geneva
Switzerland
Phone: +41 (0)58 279 8000
Fax: +41 (0)58 279 8800
www.deloitte.ch

Statutory Auditor’s Report
To the General Meeting of
GIVAUDAN SA, Vernier
Report on the Audit of the Financial Statements
OpinionWe have audited the financial statements of Givaudan SA, which comprise the income statement, the statement of financial
position for the year ended 31 December 2017, and notes, including a summary of significant accounting policies.
In our opinion the accompanying financial statements as at 31 December 2017, presented on pages 156 to 163, comply with Swisslaw and the company’s articles of incorporation.

Basis for Opinion
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those provisions
and standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We are independent of the entity in accordance with the provisions of Swiss law and the requirements of the Swiss audit
profession and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Report on Key Audit Matters based on the circular 1/2015 of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole,and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Givaudan SA – 2017 Annual ReportFinancial report Statutory auditor’s report on the financial statements 165

Valuation of Investments in Group companies

Key Audit Matter

How the scope of our audit responded
to the Key Audit Matter

As described in Note 3 to the financial statements, theCompany holds investments in Givaudan Group companies
with a carrying value of CHF 2’849 million as of 31 December
2017, representing 76% of total assets.

We discussed with management the adequate
implementation of accounting policies and controls regarding
the valuation of investments in Group companies.

In accordance with Article 960 CO, each investment held isvalued individually and reviewed annually for impairment
indicators. Each investment showing impairment indicators
must be tested for impairment and an impairment would
need to be recorded if the recoverable amount is lower thanthe carrying amount.
The impairment test performed by Givaudan management
is subject to judgment around the valuation method, key
assumptions used and ability of the Group companies togenerate positive cash flows in the future.
Accordingly, for the purposes of our audit, we identified
the impairment assessment and judgement applied by
Management on the valuation of these investments asrepresenting a key audit matter.

We tested the design and implementation of controls aroundthe valuation of investments to determine whether
appropriate controls are in place.
We challenged the assessment of impairment indicators
by the Company.
We tested the valuations by critically assessing themethodology applied and the reasonableness of theunderlying assumptions and judgments. We assessed
the impairment testing models and calculations by:– checking the mechanical accuracy of the impairment models
and the extraction of inputs from source documents; and– challenging the significant inputs and assumptions used in
impairment for investments in Givaudan Group companies,
such as the ability of the Group companies to generate
positive cash flows in the future.
We validated the appropriateness and completeness of therelated disclosures in Note 3 to the financial statements.
Based on the procedures performed, we obtained sufficient
audit evidence to address the risk over management’s
estimates and consider management’s key assumptions to
be within a reasonable range.

Givaudan SA – 2017 Annual Report166 Financial report Statutory auditor’s report on the financial statements

Responsibility of the Board of Directors for the Financial Statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisions of Swiss law
and the company’s articles of incorporation, and for such internal control as the Board of Directors determines is necessary toenable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless theBoard of Directors either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is ahigh level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and Swiss Auditing Standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users takenon the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the website of EXPERTsuisse:
http://expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our auditor’s report.

Report on Other Legal and Regulatory Requirements
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control
system exists, which has been designed for the preparation of financial statements according to the instructions of the Boardof Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company’s articles
of incorporation. We recommend that the financial statements submitted to you be approved.

Deloitte SA

Karine Szegedi PingoudJoëlle Herbette

Licensed Audit Expert
Auditor in Charge

Licensed Audit Expert

Geneva, 24 January 2018

Givaudan SA – 2017 Annual Report

167

Givaudan SA – 2017 Annual Report

168

Appendix

In this section:

Givaudan SA – 2017 Annual Report

Location of GRI disclosures

170

Givaudan registered offices

172

Givaudan sites worldwide

175

Overview of annual publications

180

170

Appendix

Location of GRI disclosures

Location of GRI disclosures
This table provides an overview of the locations of GRI Disclosures in Givaudan’s 2017 Annual Report and 2017 Sustainability
Report. We publish our 2017 Sustainability Report on 20 March 2018.
The 2017 Sustainability Report includes the explanation of material topics and their boundaries for all Topic Specific Disclosuresthat are applicable to Givaudan.
The GRI disclosures covering Freedom of association and collective bargaining (Disclosure 407), Child labour (Disclosure 408),
and Forced or compulsory labour (Disclosure 409) are covered in the Annual Report to the extent they apply to our own internal
processes. Our approach to addressing these topics within our supply chain is described in the Sustainability Report.
The disclosure of the ratios of standard entry level wage by gender compared to local minimum wage (Disclosure 202 – 1) andthe disclosure regarding incidents of discrimination and corrective actions taken (Disclosure 406 – 1) are omitted, because theinformation is unavailable. Since these disclosures are new to Givaudan’s materiality matrix, we will evaluate how to gain therelevant data on a consolidated basis in the future.

GRI General Disclosures 2017

Location

Organisational profile
GRI 102 – 1: Name of the organization

Annual Report: page 61

GRI 102 – 2: Activities, brands, products, and services

Annual Report: page 61

GRI 102 – 3: Location of headquarters
GRI 102 – 4: Location of operations
GRI 102 – 5: Ownership and legal form
GRI 102 – 6: Markets served
GRI 102 – 7: Scale of the organization
GRI 102 – 8: Information on employees and other workers
GRI 102 – 9: Supply chain
GRI 102 – 10: S ignificant changes to the organization and its supply chain
GRI 102 – 11: Precautionary principle or approach

Annual Report: page 61
Annual Report: pages 175 – 179
Annual Report: page 61
Annual Report: Cover flap
Annual Report: Cover flap; page 32
Annual Report: page 45
Annual Report: page 43
Annual Report: page 5, 43
Annual Report: pages 49 – 52

GRI 102 – 12: External initiatives

Sustainability Report

GRI 102 – 13: Membership of associations

Sustainability Report

Strategy
GRI 102 – 14: Statement from senior decision-maker

Sustainability Report

GRI 102 – 15: Key impacts, risks and opportunities

Sustainability Report

Ethics and integrity
GRI 102 – 16: Values, principles, standards, and norms of behavior

Annual Report: pages 53 – 55

Governance
GRI 102 – 18: Governance structure

Annual Report: pages 63 – 71; 71 – 75

Stakeholder engagement
GRI 102 – 40: List of stakeholder groups
GRI 102 – 41: Collective bargaining agreements

Sustainability Report
Annual Report: page 44

GRI 102 – 42: Identifying and selecting stakeholders

Sustainability Report

GRI 102 – 43: Approach to stakeholder engagement

Sustainability Report

GRI 102 – 44: Key topics and concerns raised

Sustainability Report

Givaudan – 2017 Annual ReportAppendix

GRI General Disclosures 2017

Location of GRI disclosures

171

Location

Reporting practiceGRI 102 – 45: Entities included in the consolidated financial statements

Annual Report: page 61, 101, 148

GRI 102 – 46: Defining report content and topic Boundaries

Sustainability Report

GRI 102 – 47: List of material topics

Sustainability Report

GRI 102 – 48: Restatements of information

Sustainability Report

GRI 102 – 49: Changes in reporting

Sustainability Report

GRI 102 – 50: Reporting period

Sustainability Report

GRI 102 – 51: Date of most recent report

Sustainability Report

GRI 102 – 52: Reporting cycle

Sustainability Report

GRI 102 – 53: Contact point for questions regarding the report

Sustainability Report

GRI 102 – 54: Claims of reporting in accordance with the GRI Standards

Sustainability Report

GRI 102 – 55: GRI content index

Sustainability Report

GRI 102 – 56: External assurance

Sustainability Report

GRI Topic Specific Disclosures 2017

Location

GRI 200: Economic
GRI 201: Economic performanceGRI 202: Market presenceGRI 203: Indirect economic impacts
GRI 204: Procurement practices
GRI 205: Anti-corruption

Annual Report: pages 14 – 15; 32 – 35; 123 – 128
Annual Report: page 46
Sustainability Report
Sustainability Report
Annual Report: pages 53 – 54; 55

GRI 300: Environmental
GRI 301: Materials

Sustainability Report

GRI 302: Energy

Sustainability Report

GRI 303: Water

Sustainability Report

GRI 304: Biodiversity

Sustainability Report

GRI 305: Emissions

Sustainability Report

GRI 306: Effluents and waste

Sustainability Report

GRI 308: Supplier environmental assessment

Sustainability Report

GRI 400: Social
GRI 401: Employment
GRI 402: Labour/management relations
GRI 403: Occupational health & safety
GRI 404: Training and education
GRI 405: Diversity and equal opportunity
GRI 406: Non-discrimination
GRI 407: Freedom of association and collective bargaining

Annual Report: pages 44 – 45
Annual Report: page 44
Annual Report: page 48
Annual Report: page 44; 46
Annual Report: page 46
Annual Report: page 46
Annual Report: page 44; Sustainability report

GRI 408: Child labour

Annual Report: pages 53 – 55; Sustainability report

GRI 409: Forced or compulsory labour

Annual Report: pages 53 – 55; Sustainability report

GRI 412: Human rights assessment
GRI 413: Local communities

Annual Report: pages 53 – 55
Annual Report: pages 15; 29; 55

GRI 414: Supplier social assessment

Sustainability Report

GRI 416: Customer health and safety

Annual Report: page 57

GRI 417: Marketing and labelling

Annual Report: page 57

Givaudan – 2017- Annual Report172 Appendix

Givaudan registered offices

Givaudan registered offices
Country

Legal Entity name

Address

Algeria

Givaudan International SA (Suisse)
Bureau de Liaison Algérie

Tour A - 4eme Etage, Business Centre Dar El Madina, Micro Zoned’activité Hydra Lot No. 20, 16035 Algers

Givaudan Argentina SA

Nicolàs Rodriguez Peña 1568, 5 ° B, 1021, C.A.B.A.

Givaudan Argentina Servicios SA

Rodriguez Peña 1568, piso 5, oficina B, Ciudad Autónoma de
Buenos Aires

Australia

Givaudan Australia Pty Ltd

12-14 Britton Street, Smithfield, Sydney NSW 2164

Austria

Givaudan Austria GmbH

Twin Tower Vienna, Wienerbergstrasse 11, 1109 Vienna

Givaudan International Ltd

Hamilton

FF Holdings (Bermuda) Ltd

Hamilton

FF Insurance Ltd

Hamilton

Belgium

Naska Ingredients NV

Lausbedstraat 4, 3630 Maasmechelen

BrazilGivaudan do Brasil Ltda

Avenida Engenheiro Billings 2185, Jaguaré, São PauloSP - 05321-010

CanadaGivaudan Canada Co.

2400 Matheson Blvd. East, Mississauga, Ontario L4W 5G9

Chile

Givaudan Chile Ltda

Avda Del Valle 869, oficina 203, Ciudad Empresarial, Comuna deHuechuraba, Santiago de Chile

Givaudan Flavors (Shanghai) Ltd Beijing Branch

15F Tower 2, Kun Sha Center, No. 16 Xin Yuan Li Road,
Chao Yang District, Beijing 100027

Givaudan Fragrances (Shanghai) Ltd Beijing Branch

15F Tower 2, Kun Sha Center, No. 16 Xin Yuan Li Road,
Chao Yang District, Beijing 100027

Givaudan Flavors (Shanghai) Ltd

668 Jing Ye Road, Jin Qiao Export Area, Pu Dong New Area,
Shanghai 201201

Givaudan Fragrances (Shanghai) Ltd

298 Li Shi Zhen Road, pilote Free Trade Zone, Shanghai 201303

Givaudan Flavors (Shanghai) Ltd Guangzhou Branch

15F The Centrepoint, No 374-2 Beijing Road, Yue Xiu District,
Guangzhou 510030

Givaudan Fragrances (Shanghai) Ltd Guangzhou Branch

15F The Centrepoint, No 374-2 Beijing Road, Yue Xiu District,
Guangzhou 510030

Givaudan Flavors (Shanghai) Ltd Chengdu Branch

Room 2001, 2 Fu Nian Plaza, Ji Tai Road, Gao Xin District, Chengdu
610041, Sichuan Province

Givaudan Flavors (Nantong) Ltd

No. 7 Jiang Hai Road, Nantong Economnic and Technology
Development Area, Nantong, Jiangsu Province 226017

Givaudan Flavors (Shanghai) Ltd Zhengzhou Branch

Room A1301, Bldg 2, No. 80 Jin Shui Road (East), New Green City,
Zhengzhou, He Nan Province

Givaudan Fragrances (Changzhou) Ltd

Room 232, nbr 238 Chunjiang Zhongyang, Huayuan, Xinbei
District, Changzhou 213034, Jiangsu Province

Givaudan Specialty Products(Shanghai) Ltd

222, Jiangtian East Road, Songjiang District, 201600 Shanghai

Givaudan Management Consulting (Shanghai) Ltd

3rd floor, no. 5 building, 298 Lishizhen Road, Zhangjiang
High-Tech Park, Pudong New Area, 201203 Shanghai

Givaudan Hong Kong Ltd

6th Floor Alexandra House, 18 Chater Road, Central

Givaudan Colombia SAS

Carrera 98 No. 25 G - 40, 151196 Bogotá D.C.

Argentina

BermudaChina

Colombia

Czech Republic Givaudan CR, s.r.o.
Egypt

Klimentská 10, Praha 110 00

Givaudan Egypt SAE

Piece 37, Industriel Zone 3, 6th of October City

Givaudan Egypt Fragrances LLC

46 El Thawra st., 3rd floor, Appt 304, Heliopolis

Givaudan – 2017 Annual ReportAppendix

Givaudan registered offices 173

Country

Legal Entity name

Address

Finland

Givaudan International SA, Branch in Finland

Niemenkatu 73, 15140 Lahti

FranceGivaudan France SAS

55 Rue de la Voie des Bans, CS500024, 95102 Argenteuil Cedex

Germany

Givaudan Deutschland GmbH

Giselherstrasse 11, 44319 Dortmund

GuatemalaGivaudan Guatemala SA

Boulevar Los Proceres 18, Calle 24-69 Zona 10, Empresarial Zona Pradera,
Torre 1, Oficiana 1201-01010

Givaudan Hungary Kft

Királyhegyesi út 3, 6900 Makó

Givaudan Business Solutions Kft

Bence utca 1. , Váci Greens B, 1138 Budapest

India

Givaudan (India) Pvt Ltd

Plot No. 26, 2nd Cross Jigani Industrial Area, Anekal Taluk, Jigani,
Bangalore, Karnataka 560 105

Indonesia

PT. Givaudan Indonesia

Jl. Raya Jakarta-Bogor Km 35, Cimanggis Depok, 16951
West Java

Iran

Givaudan International SA, Iran Branch

P.O. Box 15175/534 - No.202 - 204, Gol Bld., Gol Alley, After Park Saei, ValiAsr, Tehran

Italy

Givaudan Italia SpA

Via Borgogne 5, 20121 Milano

Ivory Coast

Givaudan International SA (Bureau dereprésentation en Côte d’Ivoire)

Centre D’affaire Regus - Plateau Imm. BSIC, 5th fl., 7 Avenue Nogues,
01BP 5754 Abijan

Japan

Givaudan Japan K.K.

6-6 Osaki 3-chome, Shinagawa-ku, Tokyo 141-0032

Givaudan Flavours & Fragrances Malaysia Sdn. Bhd

48 Jalan Kota Laksamana 2/15, Taman Kota Laksamana, Seksyen 2,
75200 Melaka

Givaudan Business Solutions Asia Pacific Sdn. Bhd

1 First Avenue, Banda Utama, level 12, Bandar Utama, PJU 6, 47800
Petaling Jaya, Selangor

Givaudan de México SA de CV

Av. Eje Norte-Sur No. 11 Civac, 62578 Jiutepec Morelos

Grupo Givaudan S.A. de C.V.

Av. Eje Norte-Sur No. 11 Civac, 62578 Jiutepec Morelos

Givaudan Singapore Pte Ltd (Myanmar Branch)

46A - 2C Excellent Condo, Pantra Street, Dagon Township, Yangon

Givaudan Nederland B.V.

Huizerstraatweg 28, 1411 GP Naarden

Givaudan Treasury International B.V.

Huizerstraatweg 28, 1411 GP Naarden

Vika B.V.

Nizolaan 4, 6718 ZC Ede

Virgula B.V.

Nizolaan 4, 6718 ZC Ede

Vika Nutrition B.V.

Nizolaan 4, 6718 ZC Ede

G.A.L.M International B.V.

Nizolaan 4, 6718 ZC Ede

Givaudan NZ Ltd

Level 1 The Lane, Botany Town Center, Te Irirangi Drive, Botany 2010

Cuisine Resources NZ limited

15 Crosbie Rd, Pukekohe 2120

Nigeria

Givaudan (Nigeria) Limited

Plot 2 and 4, Block D, Amuwo Odofin Industrial scheme, Apapa/Oshodi
Expressway, Lagos

Pakistan

Givaudan International SA Pakistan

25 th Floor. The Ocean Tower, Block - 9. Clifton,
Karachi - 75600

Givaudan Peru SAC

Av. Victor Andrés Belaúnde 147, Centro Empresarial Real,
Torre Real 1 Piso 11, San Isidro 27 Lima

Active International SAC

Ambrosio Vucetich, 200 Parque Industrial Mz K - Lt 3 Arequipa

Philippines

Givaudan Singapore Pte Ltd,Regional Operating Headquarter

37/F Robinsons Equitable Tower, ADB Avenue corner Poveda Street,
Ortigas Center, Pasig City 1605

PolandGivaudan Polska Sp. z o.o.

ul. Puławska 182, IO-1 Building, 02-670 Warszawa

Hungary

Malaysia

MexicoMyanmar

Netherlands

New Zealand

Peru

Givaudan – 2017 Annual Report174 Appendix

Country

Givaudan registered offices

Legal Entity name

Address

RussianFederation

Givaudan Rus LLC

Riverside Towers Business Centre, Floor 7-8,
Kosmodamianskaya Naberezhnaya 52/1, 115054 Moscow

Singapore

Givaudan Singapore Pte Ltd

1 Woodland Avenue 8, Singapore 738972

South
AfricaGivaudan South Africa (Pty) Ltd

9-11 Brunei Road, Tulisa Park, Johannesburg 2197

South Korea

Givaudan Korea Ltd

11-12/F Trus Tower Building, 60 Mabang-Ro, Seocho.Ku

Spain

Givaudan Ibérica, SA

Pla d’en Batllé s/n, 8470 Sant Celoni, Barcelona

SwedenGivaudan North Europe AB

Glimmervägen 6, 224 78 Lund

Givaudan SA

Chemin de la Parfumerie 5, 1214 Vernier

Givaudan Finance SA

Chemin de la Parfumerie 5, 1214 Vernier

Givaudan Suisse SA

Chemin de la Parfumerie 5, 1214 Vernier

Givaudan International SA

Chemin de la Parfumerie 5, 1214 Vernier

Induchem AG

Industriestrasse 8A, 8604 Volketswil

Activ International SA

Mettlenweg 17, 2504 Bienne

Vamara Holding SA

Mettlenweg 17, 2504 Bienne

Switzerland

Select Ingrédient SA

Mettlenweg 17, 2504 Bienne

Taiwan,Republic of
China

Givaudan Singapore Pte Ltd,
Taiwan Branch

7/F No 303, Hsin Yi Road, Sec 4, Taipei City Taiwan 106

ThailandGivaudan (Thailand) Ltd

719 KPN Tower, 16 & 25 Floor, Rama 9 Road, Bangkapi
Huaykwang, Bangkok 10310

TurkeyGivaudan Aroma ve Esans Sanayi ve Ticaret Ltd. Sirketi

Akat mahallesi, Bilge sokak, Park Maya Sitesi Barclay 19 No 1
daire 6/7 Besiktas, Istanbul

Givaudan Gulf Trading LLC

Concord Tower, Floor 20 & 36 , Media City, Dubai

Givaudan Middle East & Africa FZEFree Zone Establishment, Jafza View 19, First floor, office nbr
129, Jebel Ali Free Zone, Dubai

Givaudan UK Ltd

Kennington Road, Ashford, Kent TN24 0LT

Givaudan Holdings UK Ltd

Kennington Road, Ashford, Kent TN24 0LT

Major International Limited

Higham Business Park, Bury Close, Higham Ferrers,
Rushden NN10 8HQ

Givaudan International SA,
Representative OfficePimonenko Str. 13 6B/18, 04050 Kiev

Givaudan Flavors Corporation

1199 Edison Drive, Cincinnati, OH 45216

Givaudan Fragrances Corporation

1199 Edison Drive, Cincinnati, OH 45216

Givaudan Flavors and Fragrances Inc.

1199 Edison Drive, Cincinnati, OH 45216

Givaudan United States Inc.

15 East North Street, Dover, Delaware 19901

Venezuela

Givaudan Venezuela SA

Calle Veracruz con calle Cali Torre, ABA Piso 8, Ofic 8A,
Las Mercedes, Caracas CP 1060

VietnamGivaudan Singapore Pte Ltd,
Vietnam Representative Office

Giay Viet Plaza 5th Fl., 180-182 Ly Chinh Thang Street,
District 3, Ho Chi Minh City

UAE

UnitedKingdomUkraineUnitedStates ofAmerica

Givaudan – 2017 Annual ReportAppendix

Givaudan sites worldwide

175

P

San Lorenzo 4759, Esquina Ave Mitre, Munro, Prov. Buenos Aires
Givaudan Argentina SA
B 1605 EIO

P
PPPPP

Ruta 9 Panamericana Km 36.5, Partido Malvinas Argentinas,
Buenos Aires B1667KOV

Givaudan Argentina SA

Tronador 4890, 8° piso, Buenos Aires C 1430 DNN CABA

Givaudan Argentina Servicios SA

12-14 Britton Street, Smithfield, Sydney NSW 2164

Givaudan Australia Pty Ltd

Unit 36, 5 Inglewood Place, Baulkham Hills, Sydney NSW 2153

Givaudan Australia Pty Ltd

Suite West 11A Ground fl., 215 Bell Street, Preston VIC 3072

Givaudan Australia Pty Ltd

Twin Tower Vienna, Wienerbergstrasse 11, 1109 Vienna

Givaudan Austria GmbH

P
PP
PPPP
PP
PPP

Avenida Engenheiro Billings 2185, Jaguaré, São PauloSP - 05321-010

Givaudan do Brasil Ltda

PPPPPP

Avenida Engenheiro Billings 1653 & 1729, Jaguaré, São Paulo SP- 05321-010

Givaudan do Brasil Ltda

P

Belgium

Lausbedstraat 4, 3630 Maasmechelen

Naska Ingredients NV

Canada2400 Matheson Blvd. East, Mississauga, Ontario L4W 5G9

Givaudan Canada Co.

Chile

Avda Del Valle 869, oficina 202, Ciudad Empresarial, Comuna deGivaudan Chile Ltda
Huechuraba, Santiago de Chile

PPP

15F, Tower 2, Kun Sha Center, No. 16 Xin Yuan Li Road,
Chao Yang District, 100027 Beijing

Givaudan Flavors (Shanghai) Ltd
Beijing Branch

PP 

15F, Tower 2, Kun Sha Center, No. 16 Xin Yuan Li Road,
Chao Yang District, 100027 Beijing

Givaudan Fragrances (Shanghai)
Ltd Beijing Branch

668 Jing Ye Road, Jin Qiao Export Area, Pu Dong New Area,
201201 Shanghai

Givaudan Flavors (Shanghai) Ltd

298 Li Shi Zhen Road, Zhangjiang High-Tech Park, Pudong
New Area, 201203 Shanghai

Givaudan Fragrances (Shanghai)LtdNo. 7 Jianghai Road, Nantong Economic and Technological
Development Area, 226017 Nantong, Jiangsu Province

Givaudan Flavours (Nantong) Ltd

P

Unit 5, 15F Shuion Center, No 374-2 Beijing Road, Yue Xiu
District, 510030 Guangzhou

Givaudan Flavors (Shanghai) Ltd
Guangzhou Branch

PP 

Unit 6-7, 15F Shuion Center, No 374-2 Beijing Road, Yue Xiu
District, 510030 Guangzhou

Givaudan Fragrances (Shanghai)
Ltd Guangzhou BranchP

222, Jiang Tian East Road, Songjiang Development Zone,
201600 Shanghai

Givaudan Specialty Products(Shanghai) LtdPPRoom 2001, 20F Funian Plaza-2, No. 666 Jitai Road, Gaoxin
District, 610041 Chengdu, Sichuan Province

Givaudan Flavors (Shanghai) Ltd
Chengdu Branch

PP 

Room A1301, Bldg 2, No. 80 Jin Shui Road (East), New Green
City, Zhengzhou, He Nan Province

Givaudan Flavors (Shanghai) Ltd
Zhengzhou Branch

PP

Unit 1001, 10 F Miramar Tower, 132 Nathan Road,
Tsim Sha Tsui

Givaudan Hong Kong Ltd

Argentina

Australia

Austria

BrazilChina

GBS Centre

Tour A - 4eme Etage, Business Centre Dar El Madina, Micro Zone Givaudan International SA (Suisse)d’activité Hydra Lot No. 20, 16035 Algers
Bureau de Liaison Algérie

GRI Scope 1

Algeria

Production

Legal Entity nameSales/Rep
officeCreation/
Application

Address

Flavours

Country

Fragrances

Givaudan sites worldwide

P  PP

P

P

PP
P
PP

P

P
P

P
PPPPP

P

PPPP
PP

P
PP

PPP

Givaudan – 2017- Annual ReportColombia

Carrera 98 No. 25 G - 40, 151196 Bogotá D.C.

Givaudan Colombia SAS

PPPP

Czech
Republic

Klimentská 10, Praha 110 00

Givaudan CR, s.r.o.

Piece 37, Industriel Zone 3, 6th of October City

Givaudan Egypt SAE

46 El Thawra st., 3rd floor, Appt 304, Heliopolis

Givaudan Egypt Fragrances LLC

Niemenkatu 73, 15140 Lahti

Givaudan International SA, Branch
in Finland

46, avenue Kléber, 75116 Paris

Givaudan France SAS

55 Rue de la Voie des Bans, 95102 Argenteuil Cedex

Givaudan France SAS

19-23 Rue de la Voie des Bans, 95102 Argenteuil Cedex

Givaudan France SAS

Route de Bazancourt, 51110 Pomacle

Givaudan France SAS

Anse du Pors Gelin, 22560 Pleumeur Bodou

Givaudan France SAS

3 Rue des Satellites, 31400 Toulouse

Givaudan France SAS

16 rue Henri Becquerel, BP 525 - ZI Mitry Compans,
77295 Mitry Mory

Activ International SAS

Giselherstrasse 11, 44319 Dortmund

Givaudan Deutschland GmbH

Lehmweg 17, 20251 Hamburg

Givaudan Deutschland GmbH

Egypt
FinlandFranceGermany

PP
PPPPP
P P
PP
P
P

PP
PP P
PPP P
P P PP
P
PP

P
P

P

PPPPP
P P

Guatemala

Boulevar Los Proceres 18, Calle 24-69 Zona 10, Empresarial Zona
Givaudan Guatemala SA
Pradera, Torre 1, Oficiana 1201-01010

Hungary

Királyhegyesi út 3, 6900 Makó

Givaudan Hungary Kft

Bence utca 1. , Váci Greens B, 1138 Budapest

Givaudan Business Solutions Kft

Plot No. 30, Survey No. 168, Dabhel Industrial Estate,
Daman 396210

Givaudan (India) Pvt LtdP

PPSurvey No. 57/3 (2) & 3, Village Dunetha, Daman 396 210

Givaudan (India) Pvt Ltd

P

PP

India

Indonesia

Iran

PPP
PP

PP
P

Plot No. 26, 2nd Cross Jigani Industrial Area, Anekal Taluk, Jigani,
Givaudan (India) Pvt Ltd
Bangalore, Karnataka 560 105

P

13th Floor Prestige Meridian 1, 29 MG Road, Bangalore, 560001 Givaudan (India) Pvt Ltd

PPP

401 Akruti Centre Point, 4th Floor, MIDC Central Road,
MIDC, Andheri (East), Mumbai 400093

Givaudan (India) Pvt Ltd

PPPP

406-410, 4th Floor, JMD Pacific Square, Sector 15, Part II,
Gurgaon 122001, Haryana

Givaudan (India) Pvt Ltd

PPP

H-2 Ranjangaon Industrial Area Phase II, Pune 412209

Givaudan (India) Pvt Ltd

PPP

Jl. Raya Jakarta-Bogor Km 35, Cimanggis Depok, 16951
West Java

PT. Givaudan Indonesia

PP

PP

Menara Anugrah 7th - 9th Floor, Kantor Taman E3.3,
Jl. Mega Kuningan Lot 8.6 - 8.7, Kawasan Mega Kuningan,
12950 Jakarta

PT. Givaudan Indonesia

PPPP

P.O. Box 15175/534 - No.202 - 204, Gol Bld., Gol Alley,
After Park Saei, Vali Asr, Tehran

Givaudan International SA, Iran
BranchPPP

Givaudan – 2017 Annual Report

GBS Centre

Legal Entity name

GRI Scope 1

Address

Flavours

Country

Production

Givaudan sites worldwide

Sales/ Rep
officeCreation/
Application

Appendix

Fragrances

176

PP

ItalyVia XI Febbraio 99, 20090 Vimodrone (MI)Givaudan Italia SpA

PPP 

Ivory Coast

Centre D’affaire Regus - Plateau Imm. BSIC, 5th fl.,7 Avenue Nogues, 01BP 5754 Abijan

Givaudan International SA (Bureaude représentation en Côte d’Ivoire)

PPP

3014-1 Shinohara-cho, Yokohama-shi, Kanagawa 222-0026

Givaudan Japan K.K.

P

3056 Kuno, Fukuroi-shi, Shizuoka 437-0061

Givaudan Japan K.K.

3-6-6 Tokiwa New Building, Osaki, Sinagawa-Ku, Tokyo
141-0032

Givaudan Japan K.K.

Japan

11/F Trust Tower Bldg, 60 Mabang-ro, Seocho-Gu,
Seoul 06775
Korea(Republic of) 12/F Trust Tower Bldg, 60 Mabang-ro, Seocho-Gu,
Seoul 06775

Givaudan Korea Ltd

PP
P PP
PPP

P

P 
PP 

Givaudan Korea Ltd

A-901 Menara 1, Kelana Brem Towers, Jalan SS 7/15 (Jalan
Stadium), 47301 Petaling Jaya Selangor Darul Ehsan

Givaudan Flavours & Fragrances
Malaysia Sdn. Bhd

No. 121, Jalan Usaha 10, Kawasan Perindustrian Ayer Keroh,
75450 Malacca

Givaudan Flavours & Fragrances
Malaysia Sdn. Bhd

1 First Avenue, Banda Utama, level 12, Bandar Utama, PJU 6,
47800 Petaling Jaya, Selangor

Givaudan Business Solutions Asia
Pacific Sdn Bhd

Camino a Quintanares Km. 1.5, Pedro Escobedo,
76700 Queretaro

Givaudan de México SA de CV

Av. Eje Norte-Sur No. 11 Civac, 62578 Jiutepec Morelos

Givaudan de México SA de CV

PPPPP

Av. Paseo de la Reforma #2620, piso 12 Edificio Reforma Plus,
Col. Lomas Altas, 11950 Mexico, D.F

Givaudan de México SA de CV

PP

Av. Paseo de la Reforma #2620, piso 9 Edificio Reforma Plus,
Col. Lomas Altas, 11950 Mexico, D.F

Givaudan de México SA de CVP

46A - 2C Excellent Condo, Pantra Street, Dagon Township,
YangonGivaudan Singapore Pte Ltd(Myanmar Branch)

PPP 

Huizerstraatweg 28, 1411 GP Naarden

Givaudan Nederland B.V.

Netherlands Nijverheidsweg 60, 3771 ME Barneveld

Givaudan Nederland B.V.

Malaysia

MexicoMyanmar

New
Zealand

P
P

P

PP

PP

Vika B.V.

Level 1, The Lane, Botany Town Center, Te Irirangi Drive,
Botany 2010

Givaudan NZ Ltd

PP

15 Crosbie Rd, Pukekohe 2120

Cuisine Resources NZ limited

P

Pakistan

25 th Floor. Ocean Tower, Block - 9. Clifton,
Karachi - 75600

Givaudan International SA Pakistan

Av. Victor Andrés Belaúnde 147, Centro Empresarial Real,
Torre Real 1 Piso 11, San Isidro 27 Lima

Givaudan Peru SAC

Ambrosio Vucetich, 200 Parque Industrial Mz K - Lt 3
Arequipa

Active International SAC

37/F Robinsons Equitable Tower, ADB Avenue corner Poveda
Street, Ortigas Center, Pasig City 1605

Givaudan Singapore Pte Ltd,Regional Operating Headquarter

Philippines

P

Nizolaan 4, 6718 ZC Ede

Nigeria

Peru

PPPP

PPPPP
P
PP
P PP

Plot 2 and 4, Block D, Amuwo Odofin Industrial scheme, Apapa/
Givaudan (Nigeria) Limited
Oshodi Expressway, Lagos

177

GBS Centre

Legal Entity name

GRI Scope 1

Address

Flavours

Country

Production

Sales/Rep
officeCreation/
Application

Givaudan sites worldwide

Fragrances

Appendix

P

PPP 
PP 
PPP 
P

P

PPP 
Givaudan – 2017- Annual Reportul. Puławska 182, IO-1 Building, 02-670 Warszawa

Givaudan Polska Sp. z o.o.

PPRiverside Towers Business Centre, Floor 7-8,
Kosmodamianskaya Naberezhnaya 52/1, 115054 Moscow

Givaudan Rus LLC

PPPDelovoy dom B-5, floor 9, Botanicheskiy pereulok 5,
129090 Moscow

Givaudan Rus LLC

P

1 Woodlands Avenue 8, Singapore 738972

Givaudan Singapore Pte Ltd

1 Pioneer Turn, Singapore 627576

Givaudan Singapore Pte Ltd

19 Chin Bee Road, Singapore 619833

Givaudan Singapore Pte Ltd

9-11 Brunel Road, Tulisa Park, Johannesburg 2197

Givaudan South Africa (Pty) Ltd

PPPPPPP PPPPPPP
PPPPP

51A Galaxy Avenue, Linbro Business Park,Frankenwald,
Sandton 2065

Givaudan South Africa (Pty) LtdP

Pla d’en Batllé s/n, 8470 Sant Celoni, Barcelona

Givaudan Ibérica, SA

PPP r PP

Edificio Géminis, Bloque B 1° 2a, Parque de Negocios Mas
Blau, 8820 El Prat de Llobregat, Barcelona

Givaudan Ibérica, SA

P

Hedvig Möllers gata 17, 22355 Lund

Givaudan North Europe ABÜberlandstrasse 138, 8600 Dübendorf

Givaudan Schweiz AGÜberlandstrasse 138, 8600 Dübendorf

Givaudan International AG

8310 Kemptthal

Givaudan Schweiz AG

8310 Kemptthal

Givaudan International AG

Chemin de la Parfumerie 5, 1214 Vernier

Givaudan Suisse SA

Chemin de la Parfumerie 5, 1214 Vernier

Givaudan International SA

Industriestrasse 8A, 8604 Volketswil

Induchem AG

Mettlenweg 17, 2504 Bienne

Activ International SA

PP
P
PP
PPP P
 P P
P
r
P
P
P
PP
P P
P
P
PPP
PP

Taiwan, PR
China

7/F, No 303, Hsin Yi Road, Sec 4, Taipei City, Taiwan 106

Givaudan Singapore Pte Ltd,
Taiwan Branch

PPP 

Thailand719 KPN Tower, 16 & 25 Floor, Rama 9 Road, Bangkapi
Huaykwang, Bangkok 10310

Givaudan (Thailand) Ltd

PPP 

Ebulula Cad. Lale Sok., Park Maya Sitesi Barclay 19A Daire 6-7,
Akatlar, Besiktas / Istanbul 34335

Givaudan Aroma ve Esans Sanayi ve
Ticaret Ltd. SirketiP

Büyükdere Cad. Telpa Plaza., No 195 K.3, Levent,
Istanbul 34394

Givaudan Aroma ve Esans Sanayi ve
Ticaret Ltd. Sirketi

Concord Tower, Floor 20 & 36 , Media City, Dubai

Givaudan Gulf Trading LLC

PPPP

Free Zone Establishment, Jafza View 19, First floor,
office nbr 129, Jebel Ali Free Zone, Dubai

Givaudan Middle East & Africa FZE

PPP

RussianFederation

SingaporeSouth
AfricaSpain

SwedenSwitzerland

TurkeyUAE

Givaudan – 2017 Annual Report

PP

P 
P

P
PPP

GBS Centre

PolandGRI Scope 1

Legal Entity nameProduction

Address

Sales/Rep
officeCreation/
Application

Country

Flavours

Givaudan sites worldwide

Fragrances

178 Appendix

United
KingdomUkraineUnitedStates ofAmerica

GBS Centre

GRI Scope 1

Sales/Rep
officeCreation/
Application

Production

179

Address

Legal Entity name

Magna House, 76-80 Church Street, Staines, Middx.
TW18 4XR

Givaudan UK Ltd

PChippenham Drive, Kingston, Milton Keynes MK10 OAEGivaudan UK Ltd

Kennington Road, Ashford, Kent TN24 0LT

Givaudan UK Ltd

PPPP PPPP

Higham Business Park, Bury Close, Higham Ferrers,
Rushden NN10 8HQ

Major International LimitedP

Pimonenko Str. 13 6B/18, 04050 Kiev

Givaudan International SA,
Representative OfficePP

880 West Thorndale Avenue, Itasca, IL 60143

Givaudan Flavors Corporation

580 Tollgate Road, Suite A, Elgin, IL 60123

Givaudan Flavors Corporation

1199 Edison Drive 1-2, Cincinnati, OH 45216

Givaudan Flavors Corporation

245 Merry Lane, East Hanover, NJ 07936

Givaudan Flavors Corporation

9500 Sam Neace Drive, Florence, KY 41042

Givaudan Flavors Corporation

4705 U.S. Highway 92 East, Lakeland, FL 33801-3255

Givaudan Flavors Corporation

100 East 69th Street, Cincinnati, OH 45216

Givaudan Flavors Corporation

International Trade Center, 300 Waterloo Valley Road,
Mount Olive, NJ 07828

Givaudan Fragrances Corporation

40 West 57th St. 11th floor, New York, NY 10019

Givaudan Fragrances Corporation

717 Ridgedale Avenue, East Hanover, NJ 07936

Givaudan Fragrances Corporation

Flavours

Country

Givaudan sites worldwide

Fragrances

Appendix

P

P

P
PP
PPP
PPP P
PPPPP
P
PP
PP PP
P
PP
P

PP

535 Fifth AVenue, Floor 23, New-York, NJ 10017

P
P
Givaudan Fragrances Corporation P

195 Alexandra Way, Carol Stream, IL 60188

Givaudan Flavors Corporation

6 Santa Fe Way, Cranbury, NJ 08512

Givaudan Flavors Corporation

21 Worlds Fair Drive, Sommerset, NJ 08846

Activ International Inc.

PP
PP
PP
PP PP
PP PP
P
P

Venezuela

Calle Veracruz con calle Cali Torre, ABA Piso 8, Ofic 8A,
Las Mercedes, Caracas CP 1060

Givaudan Venezuela SA

PPP 

VietnamGiay Viet Plaza 5th Fl., 180-182 Ly Chinh Thang Street,
District 3, Ho Chi Minh City

Givaudan Singapore Pte Ltd,
Vietnam Representative Office

PPP 

1.	Locations taken into account for the environment, health and safety performance indicators.

Icons within the category Creation/Application indicate the following:   Application onlyr  Creation only

Disclosure 102 – 4, pages 175 – 179  

Givaudan – 2017- Annual Report

180

Appendix

Overview of annual publications

Overview of annual publications
Online 2017 Annual Report

ContentOnline overview of our financial and businessperformance, Governance and Compensation,
as well as our business enablers, stories and afull download centre.

Available in English– From 26 January 2018– w ww.givaudan.com – investors –online annual report2017 Annual Report
Available in English– PDF from 26 January 2018
– Print from 22 March 2018
– www.givaudan.com – media – publications

2017 Highlights
Available in English, French and German– PDF and print from 22 March 2018
– www.givaudan.com – media – publications

2017 Sustainability Report

Content
Full Annual Report: Strategic value creation,
Performance review, Governance andCompensation, and the Financial Report.

Content
Business and financial highlights in addition to
the Chairman and CEO reviews and the highlightsof the Governance and Compensation reports.

Content
Management and performance information on
our environmental, social and economic impacts.

Available in English– PDF from 20 March 2018– w ww.givaudan.com – sustainability –publications
To order publications:www.givaudan.com – media – publications

Givaudan Foundation2017 Annual Report

Available in English
PDF from 22 March 2018www.givaudan-foundation.org

The Givaudan Foundation is a non-profit organisation created in2013 as a result of Givaudan’s desire to reinforce its commitment
towards the communities in which it operates. The foundation’s
purpose is to initiate and support projects as well as to grant
donations in the areas defined by its vision and mission.

Givaudan – 2017 Annual Report

One of the causes supported by the foundation is to safeguard
the future of communities and their fragile environment. There isa specific focus on three areas in which Givaudan as a company
is already engaged and where its expertise and experience canbe leveraged to make a difference: communities at source,
blindness and nutrition. The Givaudan Foundation works closelywith and relies on resources provided by Givaudan to conductand monitor its projects. The Foundation also operates withlocal partners to ensure the efficient deployment of projects andtheir relevance to those who are intended to benefit from them.

Givaudan SA
Chemin de la Parfumerie 51214 Vernier, Switzerland

General information
T + 41 22 780 91 11

Media and investor relations
T + 41 22 780 90 53

Share registry

Computershare Schweiz AG
Postfach
4601 Olten, Switzerland
T + 41 62 205 77 00

Share information

Symbol: GIVN
Security number: 1064593
ISIN: CH0010645932

Concept and design: PETRANIX Corporate and Financial Communications AG,
www.PETRANIX.com
Printing: Neidhart + Schön AG, www.nsgroup.ch
The Givaudan 2017 Annual Report is published in English.
All trademarks mentioned enjoy legal protection.
Printed in Switzerland.
This Annual and Financial Report may contain forward-looking information.
Such information is subject to a variety of significant uncertainties, including
scientific, business, economic and financial factors. Therefore actual results
may differ significantly from those presented in such forward looking statements.
Investors must not rely on this information for investment decisions.
© Givaudan SA, 2018www.givaudan.com
Givaudan – 2016 Annual Report