Governance,
Compensation and
Financial ReportGovernancereportCompensation
report2020 Governance, Compensation
and Financial Report
As part of our reporting suite, this stand-alone document contains thefull details of our governance and compensation policies as well as thedetails of our financial performance.

Statutoryfinancial report

Consolidated
financial report

An overview can be found in the Integrated Annual Report.

Appendix

Table of contents
3

Governance report

22

Compensation report

38

Consolidated financial report

102

Statutory financial report

114

AppendixGovernance
ReportIn this section
4

Group structure and shareholders

5

Capital structure

7

Board of Directors

16

Executive Committee

19

Compensation, shareholdings and loans

19

Shareholders’ participation

20

Change of control and defence measures

20

Auditors

21

Information policy

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

4

Corporate governance
Ensuring proper checks and balances
The Governance report is aligned withinternational standards and has been preparedin accordance with the ‘Swiss Code of Obligations’,
the ‘Directive on Information Relating toCorporate Governance’ issued by the SIX Swiss
Exchange and the ‘Swiss Code of Best Practice for
Corporate Governance’ issued by economiesuisse.
The internal corporate governance framework is based on Givaudan SA’s Articles ofIncorporation. The ‘Board Regulations of Givaudan 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 of Incorporation and Givaudan’s Board
Regulations, all areas of management are fully delegated by the Board of Directors, with thepower to sub-delegate to the Chief Executive Officer, the Executive Committee and its
members. The Board Regulations of Givaudan also specifies the duties and the functioning of its
four Board Committees.

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 la Parfumerie, 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 a global leader in its industry. Givaudan operates around the world and has
two principal businesses: Taste & Wellbeing and Fragrance & Beauty, providing customers
with compounds, ingredients and integrated solutions. Taste & Wellbeing consists of fourbusiness units: Dairy, Sweet goods, Beverages and Savoury. Fragrance & Beauty also has fourbusiness units: Consumer products; Fine fragrances; Fragrance ingredients and Active Beauty.
Both divisions have a sales and marketing presence in all major countries and markets as well as
Research and Development organisations. They share resources and knowledge in the areas ofresearch and consumer understanding, where applicable. Corporate functions include Finance,
Procurement, Science and Technology, Human Resources (HR), Legal, Ethics & Compliance,
Enterprise Risk Management and Communications as well as Givaudan Business Solutions(GBS). GBS provides best-in-class internal processes and services in the areas of Finance,
Controlling, HR, Procurement, Supply Chain, Environment, Health & Safety (EHS), Enterprise
Data Management, Information Management and Technology (IM&T), Sustainability andContinuous Improvement.

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Regulations of Givaudan and other documentation regarding Givaudan’s principles of corporate governance1.1.2 Listed companies within the scope of consolidation
The Company does not have any publicly listed subsidiaries.

Appendix

1.1.3 Unlisted companies within the scope of consolidation
The list of principal consolidated companies, their domiciles and the shareholding is presented
on page 90, in note 32 to the 2020 consolidated financial statements. Note 1 to theconsolidated financial statements as well as page 104 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 4 to the statutory financial

Givaudan – 2020 Governance, Compensation and Financial Report

5

GovernancereportCorporate governancestatements mentioned above. The 2020 Financial report is in English and can be downloadedon the Company website.

Ordinary share capital
As at 31 December 2020, the Company’s ordinary share capital amounted 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.

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Compensation
reportwww.givaudan.com ▸ Investors ▸ Online annual report ▸ Download centre ▸ 2020 Governance, Compensation and
Financial report

The market capitalisation of the Company at 31 December 2020 was CHF 34,441,275,780.

1.2 Significant shareholders

2.2 Authorised and conditional capital in particular

To the knowledge of the Company, the following shareholders were the only shareholders
holding more than 3% of the share capital of Givaudan SA as at 31 December 2020 (or as at thedate of their last notification under article 20 of the Stock Exchange Act):

Consolidated
financial report

Significant shareholders
2020

in %

Beneficial owners
William H. Gates III and Melinda French Gates

13.86

BlackRock, Inc.

5.06

MFS Investment Management

4.99

Nominees

Statutoryfinancial report

Nortrust N ominees Limited ¹

14.98

Chase Nominees Limited ¹

7.71

Banque Pictet & Cie SA ²

4.49

1.	Voting rights for the shares held by Nortrust Nominees Limited and Chase Nominees Limited need to be exercised inaccordance with clients’ instructions.
2. The shares held by Banque Pictet & Cie SA bear no voting rights.

READ THE NOTIFICATIONS
www.ser-ag.com ▸ en ▸ Resources ▸ Notifications market participants ▸ Significant shareholders

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

2. Capital structure
2.1 Capital on the disclosure deadline

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

Authorised share capital
The Company does not have any authorised share capital.

Conditional share capitalAs per article 3b of the Company’s Articles of Incorporation, the Company’s share capital canbe increased by:a. issuing up to 463,215 shares (CHF 4,632,150) through the exercise of option or conversion
rights granted in connection with bond issues of Givaudan SA or a Group company
b. issuing up to 161,820 shares (CHF 1,618,200) through the exercise of option rights granted
to employees and/or the members of the Board of Directors of the Groupc. issuing up to 123,163 shares (CHF 1,231,630) through the exercise of warrants granted to theshareholders of Givaudan SA.
The conditional share capital amounts to a maximum of CHF 7,481,980, which equates to 8.1% of
the existing share capital.
The subscription rights of the shareholders are excluded in cases a) and b) above. The Board of
Directors is authorised to exclude the shareholders’ preferential right to subscribe to bonds if
the purpose is to finance acquisitions or to issue convertible bonds or warrants on theinternational capital market. In that case, the bonds or warrants must be offered to the public atmarket conditions, the deadline for exercising option rights must be not more than six years andthe deadline for exercising conversion rights must be not more than 15 years from the issue ofthe bond or warrants and the exercise or conversion price for new shares must be at a level
corresponding at least to the market conditions at the time of issue.
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Givaudan – 2020 Governance, Compensation and Financial Report

6

GovernancereportCorporate governance

The acquisition of shares through the exercise of option or conversion rights and the transferof such shares are subject to restrictions as described in section 2.4.

Compensation
report2.3 Changes in capital
The information regarding the year 2018 is available in notes 8 and 9 to the statutory financial
statements of the 2018 Financial report. Details of the changes in equity for the years 2019 and2020 are given on page 107 in note 7 to the statutory financial statements included in the 2020
Financial report.
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Based on a regulation of the Board of Directors, nominee shareholders may be entered withvoting rights in the share register 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 thename, address, nationality and number of shares held by the beneficial owners.

2.6.4 Procedure and conditions for cancelling statutory privileges andlimitations on transferability
Limitations on transferability and nominee registrations may be changed by a positive vote of
the absolute majority of the share votes represented at a shareholders’ meeting.

2.7 Convertible bonds and warrants/options

Consolidated
financial report

There are no bonds or warrants outstanding that are convertible into shares of Givaudan SA.

2.4 Shares and participation certificates
The Company has one class of shares only. All shares are registered shares with a par value of
CHF 10.00 each. Subject to the limitations described below, all shares have the same rights inall respects. Every share gives the right to one vote and to an equal dividend.

2.5 Dividend-right certificates

Statutoryfinancial report

Other than the registered shares, dividend-right certificates and participation certificates do
not exist.

2.6 Limitations on transferability and nominee registrations

2.6.1 Limitations on transferability for each share category; indication of
statutory group clauses and rules for granting exceptions
At the Annual General Meeting of shareholders on 20 March 2014, the previously existingregistration and voting rights restrictions were abolished. Today, the Company no longer has
limitations on transferability of shares.

2.6.2 Reasons for granting exceptions in the year under review

Appendix

This is not applicable because the Company has no limitations on transferability of shares.

2.6.3 Permissibility of nominee registrations; indication of any percent clauses
and registration conditions
Subject to the provisions mentioned in the next paragraph, registration with voting rights in
the Company’s share register is conditional on shareholders declaring that they have acquired
the shares in their own name and for their own account.

Givaudan – 2020 Governance, Compensation and Financial Report

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Governancereport

3.1 Members of the Board of Directors

According to Givaudan’s Articles of Incorporation, the Board of Directors may consist of
between seven and nine members.

As of 31 December 2020, the following were members of the Board of Directors:

Membership of the Board is composed in such a way as to ensure it possesses all thecompetencies required to execute its strategic oversight and control over Givaudan. The
Board’s knowledge and diversity of experience are important assets in leading a company ofGivaudan’s size in a complex and fast-changing environment. Each of the current nine Board
members has an in-depth knowledge of his or her relevant areas of expertise. Together, they
ensure that the Company has all the competencies required.

Statutoryfinancial report

Consolidated
financial report

3. Board of Directors

Compensation
reportCorporate governance

Given the Company’s business and its current 2020 strategy of ‘Responsible growth. Sharedsuccess.’, the most relevant and important required competencies include:–– in-depth industry knowledge–– international senior business leadership–– strategy setting and implementation and risk management–– financial expertise–– innovation and technology (including digital)–– sales and marketing–– regulatory affairs.
The Board, with the help of external expert advisors, regularly reviews the list of competencies
and has established a long-term skill matrix for the assessment of existing and requiredcompetencies. This matrix, which is used as a basis for Board succession planning, remains
relevant for the new 2025 strategy. As in the past, knowledge of environmental, social andgovernance (ESG) matters and strong ethical values also remain key characteristics that Board
members must possess.

Appendix

In 2020, the Board added two new Board members in accordance with the new strategy, thelong-term skill matrix and the succession plan to ensure a smooth transition of competencies
upon retirement of current Board members over the next couple of years. Due to the COVID-19
pandemic, the onboarding of these two new Board members was conducted mainly virtually.
At the Annual General Meeting in March 2020, Calvin Grieder was re-elected as Chairman.
Prof. Dr-Ing Werner Bauer was re-appointed Vice-Chairman by the Board.

Calvin Grieder Chairman▸▸Engineer▸▸Swiss national, born in 1955 in the USA▸▸Non-executive▸▸First elected in 2014▸▸Chairman since 2017

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 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 engineering group Bühler from 2001 to 2016.
Calvin Grieder holds the following mandate in a company quoted on an official stock exchange:
Chairman of the Board of SGS SA.
He holds the following mandates in companies that are non-quoted: Chairman of the Board of
Bühler Group, member of the Board of Trustees of Avenir Suisse, owner and member of theBoard of Carivel7 AG, member of the Advisory Board of the ETH Zurich, Department of
Mechanical and Process Engineering.
Calvin Grieder holds a Master of Science from the ETH Zurich and has completed an Advanced
Management Program (AMP) at Harvard University.

Prof. Dr-Ing. Werner Bauer Vice-Chairman▸▸Businessman▸▸German & Swiss national, born in 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 as Professor in Food Bioprocessing
Technology at the Technical University of Munich from 1985 to 1990, he joined Nestlé as Headof the Nestlé Research Centre in Lausanne in 1990. After heading commercially Nestlé Southand East Africa he joined general management as Executive Vice-President in 2002,

Givaudan – 2020 Governance, Compensation and Financial Report

8

Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGovernancereportCorporate governanceresponsible for technical, production, environment and R&D. In 2007 he became Chief
Technology Officer 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 are quoted on an official stock
exchange: member of the Boards of Lonza Group AG and SIG Combibloc AG. He holds thefollowing mandates in companies that are non-quoted: Chairman of the Board of Trustees of
the Bertelsmann Foundation, vice-chairman of the Board of Bertelsmann SE & Co. KGaA.
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 in 1957▸▸Non-executive▸▸First elected in 2016

Victor Balli started his professional career in 1985, working as a 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 finance advisory 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. From 2007
to 2018 Victor Balli was Chief Financial Officer and member of the Executive Committee ofBarry Callebaut AG.

Lilian Biner Director▸▸Businesswoman▸▸Swedish national, born in 1962▸▸Non-executive▸▸First elected 2011

Lilian Biner has senior management experience from retail and consumer 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 for Electrolux Major Appliances
Europe, a company she joined in 2000 as head of HR and Organisational Development.
Lilian Biner holds the following mandates in companies that are quoted on an official stock
exchange: member of the Boards of LE Lundbergföretagen and Carlsberg A/S.
She holds the following mandates in companies that are non-quoted: member of the Boardsof a-connect (group) ag and Scania AB.
Lilian Biner is a graduate of the Stockholm School of Economics.

Michael Carlos Director▸▸Businessman▸▸French national, born in 1950▸▸Non-executive▸▸First elected 2015

Victor Balli holds the following mandates in companies that are quoted on an official stock exchange:
member of the Boards of KWS Saat SE & Co. KGaA, SIKA AG and Medacta International SA.

Michael Carlos started his career with Givaudan in 1984 as General Manager in Hong Kong. He
became Head of the European Creative Centre in Argenteuil in 1992 where he was in charge of
integrating the creative resources from Givaudan and Roure. 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.

He holds the following mandates in companies that are non-quoted: Member of the Boards ofthe Federal Audit Oversight Authority, Hemro AG and the Supervisory Board of Louis Dreyfus
Company Holding B.V.

Michael Carlos holds the following mandates in companies that are non-quoted: Member ofthe Boards of Manus Bio Inc. and Scent Design SA. He is the former Chairman of RIFM (TheResearch Institute of Fragrance Materials) and of IFRA (The International Fragrance Association)

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.

Michael Carlos holds an MBA from the Indian Institute of Management and a degree in chemicalengineering from the Indian Institute of Technology.

Givaudan – 2020 Governance, Compensation and Financial Report

9Compensation
reportGovernancereportCorporate governance

Ingrid Deltenre Director

Sophie Gasperment Director▸▸Businesswoman▸▸Dutch & Swiss national, born in 1960▸▸Non-executive▸▸First elected 2015▸▸Businesswoman▸▸French national, born in 1964▸▸Non-executive▸▸First elected 2020 (as of 1 September 2020)

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 German-speaking
Switzerland, Schweizer Fernsehen, from 2004 to 2009. In 2010, she became Director General of the
Geneva-based European Broadcasting Union (EBU), a position she held until June 2017.

Consolidated
financial report

She holds the following mandates in companies that are quoted 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 member of the board of Akara Funds, member of Agence France Presse, the President of
the Executive Committee of the Executive MBA of the University of Zurich and member of theFoundation Board Schweizer Berghilfe.
Ingrid Deltenre holds a Master of Arts in Journalism, Educational Sciences and biological Anthropology
from the University of Zurich.

Appendix

Statutoryfinancial report

Olivier Filliol Director▸▸Businessman▸▸Swiss national, born in 1967▸▸Non-executive▸▸First elected 2020

Olivier Filliol started his professional career as a strategy consultant with Bain & Company,
working in the Geneva, Paris and Sydney offices. He joined Mettler-Toledo International Inc. in1998 and since then served in various positions including General Manager of the company’s
North American checkweighing operations, Head of Process Analytics and Head of Global Sales,
Service and Marketing. He will step down from his Executive role in April 2021, after which hewill remain member of the Board of Directors of Mettler-Toledo.
In January 2008, he was appointed President and Chief Executive Officer of Mettler-Toledo
and since January 2009, he is also member of its Board of Directors.
Olivier Filliol holds a Master (lic. oec.) and Ph.D. (Dr. oec.) in Business Administration from the
University of St. Gallen, Switzerland. He also completed executive education at the Business
School of Stanford University.

Sophie Gasperment started her professional career in 1986 with L’Oréal, where she held
several operational and development marketing responsibilities up until 2000, when she wasappointed General Manager for L’Oréal in the U.K.
She served in the U.K. for 14 years, notably as Managing Director, L’Oréal UK & Ireland, as well
as Chairman and Chief Executive Officer of The Body Shop International. She then led the
L’Oréal Group’s Strategic Prospective and Financial Communication until 2019, and has since
focused on her activities as board director, senior advisor and angel investor.
Sophie Gasperment holds the following mandates in listed companies: Member of the Board of
Accor, where she chairs the Nomination, Remuneration and CSR Committee, Lead Independent
Director of Cimpress, Member of the Board of Kingfisher plc, where she chairs the Responsible
Business Committee, and Member of the Supervisory Board of D’Ieteren. She also serves as
Senior Advisor at Boston Consulting Group.
Sophie Gasperment is a graduate of ESSEC business school and of INSEAD. She is a Frenchnational, born in 1964.

Thomas Rufer Director▸▸Certified Public Accountant▸▸Swiss national, born in 1952▸▸Non-executive▸▸First elected 2009

Thomas Rufer joined Arthur Andersen in 1976, where he held several positions in audit andbusiness consulting (accounting, organisation, internal control and risk management). He wasCountry Managing Partner for Arthur Andersen Switzerland from 1993 to 2001. Since 2002, hehas been an independent consultant in accounting, corporate governance, risk management
and internal control.
He holds the following mandate in a non-listed company: member of the Swiss Takeover Board.
Thomas Rufer has a degree in business administration (économiste d’entreprise HES) and is a
Swiss Certified Public Accountant.

Givaudan – 2020 Governance, Compensation and Financial Report

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Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGovernancereportCorporate governance

3.2 Other activities and vested interests
Please refer to the biographies of the Board members described in section 3.1 for their otheractivities and vested interests.
Except for those described in section 3.1, no Board member 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. The Board of Directors assesses
the independence of its members.
As at 31 December 2020, all members of the Board of Directors were non-executive andindependent in accordance with article 14 of the Swiss Code of Best Practice for Corporate
Governance. None of the Board members has important business connections with Givaudan
SA or any of its affiliates.

3.3 Rules in the Articles of Incorporation on the number of 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 externalmandates for members of the Board of Directors:–– Members of the Board of Directors may not hold more than four additional mandates incompanies 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, charitable organisations, trusts, employee
welfare foundations and other comparable structures. No member of the Board of
Directors or of the Executive Committee shall hold more than 15 such mandates.

‘Mandates’ mean mandates in the supreme governing body of a legal entity which is required
to be registered in the Swiss commercial register or a corresponding foreign register. Mandates
in different legal entities which are under joint control are deemed one mandate.
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3.4 Elections and terms of office

3.4.1 Principles of the election procedure, rules differing from the statutory
legal provisions with regard to the appointment of the Chairman, the membersof the Compensation Committee and the independent proxy
The Company amended its Articles of Incorporation at the Annual General Meeting 2014 to alignwith the requirements of the OaEC. The rules regarding the appointment of the Chairman, themembers of the Compensation Committee and the independent proxy do not deviate from thestatutory legal provisions. All Board members, the Chairman, the members of the Compensation
Committee and the independent proxy are elected annually and individually for one year, being
the time from one ordinary Annual General Meeting to the next one.

3.4.2 For each Board member: date of first election to Boardand attendance of meetings
For the dates of first election to the Board and attendance of Board and committee meetings,
please refer to the tables on pages 7-9 and table on page 13.

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 andchairs meetings of the shareholders, convenes, prepares and chairs the meetings of the Board of
Directors, coordinates the work of the Board committees, prepares and supervises theimplementation of resolutions of the Board of Directors (to the extent not delegated to acommittee), supervises the course of business and the activities of the Executive Committee,
proposes succession candidates for appointment to the Board of Directors or to the Executive
Committee and proposes the global remuneration of the Chief Executive Officer and othermembers of the Executive Committee to the Compensation Committee.

Givaudan – 2020 Governance, Compensation and Financial Report

11

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGovernancereportCorporate governance

The Chairman receives all invitations and minutes of Committee meetings and is entitled toattend these meetings. The Chairman further decides in cases which fall under the tasks andpowers of the Board of Directors, but in which a timely decision of the Board of Directors
cannot be made because of urgency. In such cases, the Chairman informs the members of theBoard of Directors as quickly as possible and the corresponding resolution is minuted at thenext Board meeting.
If the Chairman is unable to act, the Vice-Chairman exercises his functions, assuming all his
tasks and powers.

BOARD COMMITTEES ¹
Audit Committee

Compensation Committee▸▸ Assists the Board in its oversight
responsibilities with respect tofinancial reporting▸▸ Ensures effectiveness and efficiency
of internal control, risk management
and compliance systems▸▸ Assesses and overviews the internaland external audit processes▸▸ Reviews and recommends thecompensation policies to the Board▸▸ Approves the remuneration for the
Executive Committee▸▸ Prepares the Compensation Report

Nomination and
Governance Committee

Innovation Committee

Thomas Rufer (Chairman) / Lilian Biner /Victor Balli / Olivier Filliol

Appendix

Calvin Grieder (Chairman) / Ingrid Deltenre /Michael Carlos / Sophie Gasperment▸▸ Assists the Board in applying principles
of good corporate governance▸▸ Prepares appointments to the Boardand the Executive Committee

Prof. Dr-Ing. Werner Bauer (Chairman) /Ingrid Deltenre / Victor Balli

Michael Carlos (Chairman) / Calvin Grieder /Prof. Dr-Ing. Werner Bauer / Olivier Filliol▸▸ Assists the Board in scientific mattersrelating to the flavours, fragrances andcosmetics Industry▸▸ Identifies opportunities, proposes andscreens potential innovation partners

1. All committee members were part of their respective committee(s) for the entire year of 2020, except the newmembers: Olivier Filliol from 25 March 2020, and Sophie Gaperment from 1 September 2020.

3.5.2 For each committee of the Board of Directors:
list of members – tasks – areas of responsibility
The Board of Directors has four established Committees: an Audit Committee, a Nomination
and Governance Committee, a Compensation Committee and an Innovation Committee.
Each committee is led by a Committee Chairman whose main responsibilities are to organise,lead and minute the meetings. For the participation of the Board members in the committees,
please refer to the table on this page and on page 13.
Audit Committee
The primary function of the Audit Committee is to assist the Board in fulfilling its oversight
responsibilities by reviewing the financial information, the systems of internal controls andthe audit process. It carries out certain preparatory work for the Board of Directors as awhole. The Audit Committee currently consists of four members of the Board. All of them
have the requisite financial experience.
The Audit Committee ensures that the Company’s risk management systems are efficient andeffective. It promotes effective communication among the Board, management, the internal
audit function and external audit. It reviews and approves the compensation of the external
auditors for the annual audit.
The Audit Committee held four regular meetings in 2020, each lasting approximately three tofour hours. Due to the COVID-19 pandemic, three out of the four meetings were held byvideoconference. The Head of Internal Audit, the Chief Financial Officer, the Corporate Ethics& Compliance Officer and the External Lead Audit Partner attended all meetings, apart fromcertain private sessions.
Compensation Committee
The Compensation Committee reviews and recommends the compensation policies to theBoard of Directors. It approves the remuneration of the Chief Executive Officer and the othermembers of the Executive Committee as well as all performance-related remuneration
instruments and pension fund policies. Since the Swiss Ordinance against Excessive
Compensation came into force, the Committee prepares the Compensation Report to beestablished by the Board.
The Compensation Committee consists of three members of the Board who are electedannually by the Annual General Meeting of shareholders. The Committee takes advice fromexternal independent compensation specialists and consults with the Chairman and the Chief

Givaudan – 2020 Governance, Compensation and Financial Report

12

Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGovernancereportCorporate governance

Executive Officer on specific matters where appropriate. Since the Annual General Meeting
2014, the members of the Compensation Committee are elected by the shareholders from there-elected Board members.
In 2020, the Compensation Committee met five times. The average duration of each meeting
was approximately 1.5 to 2 hours. Due to the COVID-19 pandemic, four of the five meetings
were held by videoconference. During these meetings the Committee reviewed, among otherthings, the short-term and long-term incentive plan parameters as well as the alignment of
Executive Committee and Board of Directors compensation with the Company’s principles
and policy. The Committee also reviewed the design of the long-term incentive plan to ensurealignment with the Givaudan 2025 strategy. The Chairman, the Chief Executive Officer, theHead of Global Human Resources and/or the Head of Compensation and Benefits attended
relevant sections of the meetings.
READ MORE
2020 Governance, Compensation and Financial report ▸ page 23 ▸ Compensation committee

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 four
members of the Board.

The Innovation Committee met three times during 2020. Due to the COVID-19 pandemic, twoof the three meetings were held by videoconference. On average each meeting lasted
approximately four to six hours. The CEO, the Division Heads and the divisional Heads of Scienceand Technology were present. External speakers also attended the meetings. The Committee
reviewed key areas of the Innovation programme, which included the 2025 innovation strategy,
naturals, biotechnology and external innovation collaborations.
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www.givaudan.com ▸ Our company ▸ Corporate governance ▸ Board of directors

3.5.3 Work methods of the Board and its Committees
Board meetings are held periodically and also when matters require a meeting, or on thewritten request of one of the members 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 foreach Board meeting. Decisions may also be taken by circulation (in writing, including by PDF
sent by e-mail) or by telecommunication (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, withadditional meetings scheduled as required. The Board of Directors receives regular reports
from its Committees and the Chairman, as well as from the Executive Committee.

The Nomination and Governance Committee met three times during 2020, to review theindependence of Board members and to review the succession plans of critical leadership positions
as well as the evolution of the board succession. Due to the COVID-19 pandemic, all meetings
were held by videoconference. Each meeting lasted between one and one and a half hours. The
CEO and the Head of Global Human Resources attended relevant sections of the meetings.

Minutes of Committee meetings are prepared by the secretary of the respective Committee andcirculated to all Board members.

Innovation Committee
The Innovation Committee advises the Board on scientific matters relevant to the flavour,
natural ingredients and fragrance and cosmetics industry, or other additional fields the Board
may request. It acts as a sounding board to the Board of Directors and research management,
reviewing activities in different fields of research, looking at new opportunities and possible
partnerships and reviewing projects on a detailed basis as required. It also serves as a platform
for Board dialogue with the relevant members of the Executive Committee and the divisional
Heads of Science and Technology.

In 2020 the Givaudan Board of Directors held six regular meetings including one constitutive
meeting directly following the general meeting of shareholders. In addition, the Board held two
extraordinary meetings. Due to the COVID-19 pandemic, four of the six regular meetings as wellas the two extraordinary meetings were held by videoconference and one was held in a hybridmanner. To ensure the efficiency of the video meetings the Chairman held a number of one-onone calls/meetings with individual Board members throughout the year. No meetings were held
at Givaudan locations outside Switzerland. The ordinary meetings in person lasted for aroundone day each, the ordinary meetings by videoconference for four to six hours each and the two
extraordinary meetings around one hour each.

In preparation for Board and committee meetings, the Board members involved receive
pertinent information for pre-reading via a secure electronic document sharing system.

Givaudan – 2020 Governance, Compensation and Financial Report

13

Consolidated
financial report

Compensation
reportGovernancereportCorporate governance

Apart from the constitutive meeting directly following the general meeting of shareholders andthe extraordinary meetings by 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 all major business development and investment
projects, management succession planning and compensation and other major business items
as well as the findings of Internal Audit and risk management. In 2020, the Board discussed andapproved the Company's new five-year strategy to 2025 and discussed the right structure foroversight of ESG matters. Apart from the first Board meeting, the Board was informed about
and discussed the COVID-19 pandemic, its impact on the Company and management's measures
to counter it at all Board meetings.
The Chief Executive Officer, the Chief Financial Officer and the presidents of the two divisions
were present at all meetings, except for the constitutive meeting and certain closed sessions.
The other members of the Executive Committee attended four ordinary meetings as well as thetwo extraordinary meetings. Selected senior managers were invited to address specific projects
at ordinary Board meetings. The Head of Internal Audit and the Corporate Ethics & Compliance
Officer each reported once to the Board of Directors.

In 2020 the Board conducted one annual self-assessment and had continuous discussions of
its own succession planning, especially during times of increased uncertainty like the current
COVID-19 pandemic.
The attendance of Board members at Board and Committee meetings in 2020 as well as theaverage duration of the meetings can be seen in the table below.

3.6 Definition of areas of responsibility
The Board of Directors is responsible for the ultimate direction, strategic supervision andcontrol of the management of the Company, as well as other matters which, by law, areunder its responsibility. This includes the establishment of medium- and long-term strategies
and of directives defining Company policies and the giving of the necessary instructions inareas such as acquisitions, major investments and long-term financial commitments
exceeding certain thresholds.

Appendix

Statutoryfinancial report

Meetings: attendance 2020
Number of Board meetings /calls attended
Board member

ordinary

extraordinary

Calvin Grieder

62

Victor Balli

6

2

Prof. Dr-Ing. Werner Bauer

6

2

Lilian Biner

6

2

Michael Carlos

62

Ingrid Deltenre

62Olivier Filliol (Board member from 25/03/2020)

42

Sophie Gasperment (Board member from 01/09/2020)2

Thomas Rufer

6

Number of Audit Committee
meetings attended

Number of Compensation
Committee meetings attended

4

5

Number of Nomination and
Governance Committee
meetings attended

Number of Innovation
Committee meetings attended

3

3

5

3

4
3
5

3

3

3

2
1

1

4

Meetings held in the year

8

4

5

3

3

Average length of meetings

6-8 hours (ordinary)

3 to 4 hours

1.5 to 2 hours

1 to 1.5 hour4 – 6 hours

Givaudan – 2020 Governance, Compensation and Financial Report

14

Compensation
reportGovernancereportCorporate governanceIn accordance with Swiss law, the Articles of Incorporation and the Board Regulations ofGivaudan, the duties of the Board of Directors include the following matters:–– the ultimate management of the Company and, in particular, the establishment of
medium- and long-term strategies and of directives defining Company policies and thegiving of the necessary instructions–– the verification of the special professional qualifications of the auditors.

–– the establishment of the organisation

Except as otherwise provided by Swiss law, the Articles of Incorporation and the Board
Regulations, all other areas of management are fully delegated by the Board of Directors to
the Chief Executive Officer, the Executive Committee and its members.

–– the approval of the annual Group budget
READ MORE

Statutoryfinancial report

Consolidated
financial report–– the structuring of the accounting system and of the financial controlling, as well as thefinancial planning

www.givaudan.com ▸ Our company ▸ Corporate governance ▸ Rules and policies ▸ Board regulations of Givaudan–– the assessment of the Company’s risk management

3.7 Information and control instruments vis-à-vis senior management–– the decision on investments in, or divestments of, fixed and tangible assets of a global
amount exceeding the limit set by the corporate investment guidelines established by the
Board of Directors

The Board recognises that in order to be able to carry out its tasks of ultimate direction of theCompany and supervision of the management, it needs to be fully informed about all mattersthat materially impact Givaudan. To ensure this, the Board has at its disposal an informationand control system which comprises the following instruments:–– the appointment and removal of the persons entrusted with the management andrepresentation of the Company, in particular the Chief Executive Officer and the othermembers of the Executive Committee

Management information system
The Board ensures that it has sufficient information for appropriate decision-making through amanagement information system with wide-ranging information rights for the Board members:–– the ultimate supervision of the persons entrusted with the management, in particular withrespect to compliance with the law, the Articles of Incorporation, regulations and instructions
given in any areas relevant to the Company, such as working conditions, environmental
protection, trade practices, competition rules, insider dealing and ad hoc publicity–– the Chairman of the Board receives invitations and minutes of Executive Committee
meetings on a regular basis and the Chief Executive Officer and the Chief Financial Officer
report regularly to the Chairman of the Board of Directors–– the preparation of the annual business report, as well as the preparation of the Annual
General Meeting of shareholders and the implementation of its resolutions–– the notification of the court in case of insolvency
Appendix–– the 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 decisions regarding the subsequent performance of contributions on shares not fully paid in–– the Chief Executive Officer and the Chief Financial Officer are present 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
at regular Board meetings. All members of the Executive Committee have a duty to provide
information at meetings of the Board of Directors on request

Givaudan – 2020 Governance, Compensation and Financial Report

15

Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGovernancereportCorporate governance–– the Head of Internal Audit and the Corporate Ethics & Compliance Officer report to theBoard once a year. The Board also receives annual reports on Environment, Health and
Safety, Sustainability and Risk Management

Risk management
Givaudan has established an internal risk management process that is based on the Givaudan
Enterprise Risk Management Charter. It focuses on identifying and managing/exploiting risks.

–– the Head of Internal Audit and the Corporate Ethics & Compliance Officer are present andreport at each meeting of the Audit Committee. The Chief Financial Officer is also present
at all meetings of the Audit Committee, as are the external auditors

The Board of Directors defines the strategic risk management framework. This process isunder the responsibility of the Executive Committee. The risk management process follows astructured assessment, review and reporting cycle that is coordinated by the Corporate Ethics& Compliance Officer to ensure a harmonised Group-wide approach.

–– the Head of Global Human Resources, the Head of Compensation & Benefits and theChief Executive Officer are present at each Compensation Committee meeting, except
when questions of compensation for Executive Committee members are being deliberated.
The Chairman also attends the meetings of the Compensation Committee regularly–– all Board members have access to the full minutes of all Committee meetings–– the Board of Directors receives summarised monthly reports from the Executive
Committee, which include performance against key performance indicators. All Board
members are immediately informed on extraordinary events. They also have direct accessto the Givaudan intranet where all internal information on key events, presentations andorganisational changes are posted. In addition, the Board members receive relevant
information, including media releases and information 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 a secure
electronic document sharing system and other means of communication–– the Board of Directors visits at least one Givaudan country operation per year, where Board
members meet members of senior local management. Additionally, Board members areencouraged to visit country operations when travelling and to meet local and regional senior
management to allow Board members the opportunity of getting first-hand information on
local and regional developments and interacting directly with management across the globe–– the Board has regular access to the Chief Executive Officer, Chief Financial Officer and theother members of the Executive Committee. Any Board member may request from the
Chief Executive Officer and other members of the Executive Committee information
concerning the course of the business.

For each identified strategic top-level Company risk a member of the Executive Committee isdesignated as the risk owner with the responsibility to manage the risk on a Group-widebasis. Once a year the Executive Committee reports to the Board on the risk management
process, the strategic risks and the mitigation actions. Individual risks are also regularly
discussed in Board meetings. Corporate Internal Audit provides assurance on the effectivenessof the risk management process.
READ MORE
2020 Integrated Annual Report ▸ pages 21 – 23 ▸ Managing risks

Internal audit
The Internal Audit function is established as an independent and objective function reporting
directly to the Audit Committee.
The purpose of Internal Audit is to evaluate and contribute to the continuous improvement of
the Company’s risk management and control systems including 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 independent
assurance on the effectiveness and efficiency of processes and controls that support Givaudanin achieving its objectives, identifying and managing its major risks, and ensuring compliancewith applicable policies, laws and regulations. This approach follows a business process audit
methodology that provides value to both, the local entities and the Group’s management.
Givaudan corporate strategy, risk management findings, past audit results, management
input, changes in the organisation and Internal Audit experience are the elements taken into
account to build the annual internal audit plan. Effective reporting, accountability assignment,
and thorough follow-up ensure the implementation of the audit recommendation as well asGivaudan – 2020 Governance, Compensation and Financial Report

16

GovernancereportCorporate governancethe related risk reduction. For the individual audits, the internal audit function is supported bydedicated staff from the third party contractor Ernst & Young. The internal audit activity isreported to the full Board of Directors once a year.

Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
report

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 reserved to
the Board of Directors.
The Chief Executive Officer is appointed by the Board of Directors upon recommendation of theNomination 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,
he leads, supervises and coordinates the other members of the Executive Committee, including
convening, preparing and chairing the meetings of the Executive Committee.
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 the Company’s strategic
as well as long-term business and financial plans. Key areas of responsibility also include themanagement 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 the approval of investments,
leasing agreements and divestments within the corporate investment guidelines. The
Executive Committee approves important business projects, prepares the business plan of theCompany and the budgets of the individual divisions and functions.
In addition, it plays a key role – together with the Human Resources organisation – in the
periodic review of the talent management programme, including succession planning for key
positions. Alliances and partnerships with outside institutions, such as universities, thinktanks and other business partners, are also monitored by the Executive Committee.
The members of the Executive Committee are individually responsible for the business areas
assigned to them.

Sustainability
The Head of Global Procurement and Sustainability, a member of the Executive Committee,
heads the Company’s sustainability programme. He is supported by a cross-functional
corporate sustainability steering committee and a sustainability leadership team made up ofinternal specialists in corporate responsibility and sustainability to implement the programme.
The Head of Global Procurement and Sustainability reports annually to the Board of Directors
on sustainability matters. Individual aspects are discussed regularly at Board meetings.
The Executive Committee meets generally on a monthly basis to discuss general Company
business and strategy. In 2020, the Committee held twelve regular meetings. Due to the
COVID-19 pandemic, ten of the twelve meetings were held by videoconference and the othertwo at Company sites in Switzerland. The meetings lasted on average one to two days.
In addition, in 2020 the Executive Committee held eight two-hour meetings in between theregular monthly meetings to discuss the impact of the COVID-19 pandemic on the Company
and decide on measures to ensure business continuity and employee health and safety.

Givaudan – 2020 Governance, Compensation and Financial Report

17

GovernancereportCorporate governance
4.1 Members of the Executive Committee
At 31 December 2020, the following were members of the Executive Committee:

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGilles Andrier 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 andHead of Consumer Products in Europe. He was appointed Head of Fine Fragrances, Europe in 2001
before becoming Global Head of Fine Fragrances in 2003 and then CEO of Givaudan in 2005.
Other mandates held by Gilles Andrier are: independent non-executive Director of Albea SA.
Gilles Andrier graduated with two Masters in Engineering from ENSEEIH Toulouse.

Tom Hallam Chief Financial Officer▸▸British & 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 to join Serono in Geneva, where he held a number of positions of increasing
responsibility including Financial Director for Manufacturing Operations, and in 2001 he wasappointed Vice President, Corporate Finance. Tom Hallam joined Givaudan in 2008 as Group
Controller, based in Vernier, Switzerland with responsibility for financial reporting andcompliance, strategic planning and management of Givaudan’s business development process.
He was appointed Chief Financial Officer effective 1 January 2017.

Appendix

Tom Hallam graduated from the University of Manchester, UK with a BA (Hons) in Accounting
and Finance and subsequently qualified as a member of the Chartered Institute ofManagement Accountants.

Louie D’Amico President Taste & Wellbeing▸▸US national▸▸Born in 1961▸▸Appointed in 2018

Louie D’Amico began his career with Givaudan in sales as key account manager with Fries andFries. On the merger with Givaudan Roure in 1997, he became the Head of the North America
Sweet Goods business unit and later the North America Savoury business unit. In 2003, herelocated to Europe as Head of International Key Account Management and then Head of the
Global Beverage business unit. In 2006, Louie D’Amico became Commercial Head of EAME. In
2010, he relocated back to the USA as Head of Flavours Americas. Effective 1 April 2018, he wasappointed President of Taste & Wellbeing and a member of the Executive Committee.
Louie D’Amico has a BSc in chemistry from Michigan State University. He has over 30 years ofexperience in the flavour industry.

Maurizio Volpi President Fragrance & Beauty▸▸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 marketing roles. In 2000, he joined Givaudan Italy as Account Manager in
Milan before moving to Argenteuil in 2003 as Head of Marketing 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 Researchfor both 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 Givaudan Fragrance & Beauty.
Other mandates held are: member of the Boards of Directors of International Fragrance
Association and the Research Institute for Fragrance Materials.
Maurizio Volpi holds a degree in Economics from the Bocconi University in Milan, Italy.

Givaudan – 2020 Governance, Compensation and Financial Report

18

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGovernancereportCorporate governance

Simon Halle-Smith Head of Global Human Resources and EHS

Anne Tayac Head of Givaudan Business Solutions▸▸British national▸▸Born in 1966▸▸Appointed in 2015▸▸French national▸▸Born in 1968▸▸Appointed in 2016

Simon Halle-Smith began his career in the pharmaceutical industry 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 HalleSmith 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 in 1998. Anne Tayac relocated to Vernier in2003 where she assumed roles of increasing responsibility in Quality Management, Customer
Care, SAP deployment change management, Fragrance and Flavour Supply Chain Excellence
and was most recently responsible for leading Global Fragrance Operations. She wasappointed as Head of Givaudan Business Solutions in August 2016.

Simon Halle-Smith has a Bachelors in Biology and Chemistry and a PhD in Biochemistry fromthe 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 Head of Global Procurement
and Sustainability▸▸Dutch national▸▸Born in 1962▸▸Appointed in 2015

Willem Mutsaerts joined Givaudan in 1989, initially with responsibility 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 a member of the Executive
Committee in October 2015. As of March 2017, he took on the additional responsibility of headof Givaudan’s Sustainability programme.

Appendix

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

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 and vested interests.
Except for those described in section 4.1, no member of the 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.

4.3 Rules in the Articles of Incorporation on the number of permitted
activities pursuant to Art. 12 para. 1 point 1 OaEC
Article 32 of the Articles of Incorporation of the Company permits the following externalmandates for members of the Executive Committee:–– members of the Executive Committee may, subject to approval 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Givaudan – 2020 Governance, Compensation and Financial Report

19

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGovernancereportCorporate governance›› mandates in associations, foundations, charitable organisations, trusts, employee
welfare foundations and other comparable structures. No member of the Board of
Directors or of the Executive Committee shall hold more than 15 such mandates.
‘Mandates’ mean mandates in the supreme governing body of a legal entity which is required
to be registered in the Swiss commercial register or a corresponding foreign register. Mandates
in different legal entities which are under joint control are deemed one mandate.

Not applicable as the Company does not have any voting rights restrictions for ordinary
shareholders.

6.1.4 Procedure and conditions for abolishing statutory voting rights
restrictions
Any change in the above rules requires a positive vote of the absolute majority of the sharevotes represented at a shareholders’ meeting, as prescribed by Swiss law.

READ MORE
www.givaudan.com ▸ Our company ▸ Corporate governance ▸ Rules and policies ▸ Articles of incorporation

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

5. Compensation, shareholdings and loans

6.1.5 Statutory rules on participation in the general meeting of shareholders ifthey differ from applicable legal 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 ashareholder 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 written proxy, by a legal representative or by the independent voting rights
representative (‘independent proxy’) elected by the Annual General Meeting of shareholders.

In accordance with the Swiss Code of Obligations and the SIX Directive on Corporate
Governance, Givaudan publishes the details of the remuneration of its Board of Directors andits Executive Committee in the Integrated Annual Report as well as the Compensation report
and the Financial report.

6.1.6 Information on any rules which might be laid down in the Articles ofIncorporation on the issue of instructions to the independent proxy, and any
rules in the Articles of Incorporation on the electronic participation in thegeneral meeting of shareholders

6. Shareholders’ participation
6.1 Voting rights and representation restrictions

Article 10 of the Articles of Incorporation of the Company states that the Board of Directors
establishes the rules on shareholder participation and representation in the shareholders’ meeting,including the rules on proxies and voting instructions (by electronic means or otherwise).

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 existingregistration and voting rights restrictions were removed. Today, the Company has nolimitations on voting rights for ordinary shareholders.

Appendix

6.1.3 Reasons for granting exceptions in the year under review

For restrictions on nominee shareholders, see section 2.6.3.

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 sharecapital may demand in writing that a shareholders’ meeting be convened, setting forth theitems to be included on the agenda and the proposals.

Givaudan – 2020 Governance, Compensation and Financial Report

20

Compensation
reportGovernancereportCorporate governance

6.4 Agenda
Shareholders representing shares for a nominal value of at least CHF 1 million may demand inwriting at least 45 days before the meeting 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 share register of Givaudan SA until
the record date set by the Board of Directors for each shareholders’ meeting. The register date
for the ordinary general meeting is specified in the invitation and 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.

Appendix

Statutoryfinancial report

Consolidated
financial report

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 contain any rules on opting out or opting
up under Swiss law.

8. Auditors
8.1 Duration of the mandate and term of office of the lead 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 of shareholders on 25 March 2020,
Deloitte SA was reappointed as statutory auditor for the business year 2020. The rotation of thelead auditor follows the legally required maximum duration of seven years in accordance withthe art. 730a para. 2 of the Swiss Code of Obligations. 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 the audit of the Group’s annual
accounts for the year 2020 were CHF 3.6 million. This amount includes fees for the audit ofGivaudan SA, its subsidiaries, and of the consolidated financial statements.

8.3 Additional fees

General Swiss legal provisions apply, which provide that anyone who acquires more than
33.3% of the voting rights of a listed company is required to make a public offer to acquire alllisted securities of the Company that are listed for trading on the SIX Swiss Exchange.

In addition, for the year 2020, Deloitte rendered tax and compliance related services for a totalof CHF 0.3 million.

7.2 Clauses on changes of control

The external auditor presents the outcome of the audit directly to the Audit Committee after
the end of each reporting year.

In the event of a change of control, restricted share units (RSUs) and performance shares
granted, as the case may be, by the Company to members of the Board of Directors and to a
total of 509 senior management and employees may vest immediately. All other defence
measures against change of control situations previously in effect were deleted by the Boardof Directors in 2007.

8.4 Informational instruments pertaining to the external audit

The Audit Committee conducts an assessment of the audit services provided by Deloitte
during its regular meetings to evaluate the performance of Deloitte as external auditors.
The Audit Committee meets the external auditor at least four times per year, including privatesessions without the presence of management. For each meeting the external auditors
prepare a report in which they comment on their activities and are available for particularquestions raised by the Audit Committee. In addition the Board of Directors meets with theexternal auditor as well at least once per year.

Givaudan – 2020 Governance, Compensation and Financial Report

GovernancereportCorporate governanceFurthermore, the Audit Committee reviews and approves the compensation and evaluates
and approves other services provided by the external auditor.

Compensation
reportThe scope of the audit is defined in an engagement letter signed by the Chairman of the Audit
Committee and the Chief Financial Officer.
During 2020 Deloitte attended all four of the Audit Committee meetings.

9. Information policy
Givaudan’s Principles of Disclosure and Transparency are described in detail at:
www.givaudan.com ▸ Our company ▸ Corporate governance ▸ Rules and policies

Consolidated
financial report

Givaudan’s Articles of Incorporation can be found at:
www.givaudan.com ▸ Our company ▸ Corporate governance ▸ Rules and policies

Hard copies of Company publications such as the Integrated Annual Report are available
on request.
All Corporate publications such as the Integrated Annual Report, the Half Year Report and the
GRI Sustainability report can also be downloaded from Givaudan’s website at:

Statutoryfinancial reportwww.givaudan.com ▸ Investors ▸ Financial results ▸ Results centre

Quarterly sales information and other media releases can be found at:
www.givaudan.com ▸ Investors ▸ Financial results ▸ Results centre

All relevant information can also be found at:www.six-swiss-exchange.com ▸ Market data ▸ Shares ▸ Share explorer

The complete calendar of events is available at:www.givaudan.com ▸ Investors ▸ Investor events ▸ Events calendar

Appendix

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

21Compensation
ReportIn this section
23

Compensation governance

25

Compensation principles

26

Compensation of Givaudan executives

31

Compensation of the Executive Committee

33

Compensation of the Board of Directors

34

Share ownership guidelines

35

Ownership of Givaudan securities

36

Report of the statutory auditor

Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Reflecting business and individual performance
Givaudan owes its success to a diverse pool of highly
engaged and talented people. The Company's
compensation policies are an essential componentof our employee value proposition and a key driverof both individual and business performance.
Our compensation programmes reflect the performance of the business and of individuals and arealigned with our ambition of ensuring that Givaudan is a place where everyone feels welcome,valued and inspired. We have rigorous governance, policies and processes to ensure that ourcompensation practices are aligned with our principles of integrity, fairness and transparency.
This report on compensation, complementing our integrated report, has been prepared incompliance 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 ofObligations and takes into account the recommendations set out in the Swiss Code of Best
Practice for Corporate Governance of Economiesuisse.

1. Compensation governance
1.1 Compensation Committee
The Compensation Committee supports the Board of Directors (Board) in establishing andreviewing compensation policies. It regularly reviews Company-wide programmes in regard tobase salary, pension and benefit plans. The Compensation Committee also annually reviews andapproves the performance targets and related payouts under the annual incentives and sharebased long-term incentives, while the applicable performance criteria are set by the Board.

Appendix

23

The Compensation Committee is also responsible for reviewing and approving individualcompensation 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 iscurrently 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 indiscussions regarding their own compensation.
The Compensation Committee meets four 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 the compensation of senior management and the Board.
Table I, on the next page, summarises the Compensation Committee standing agenda items
and approvals.

1.2 Specific activities in 2020

Performance Share Plan (PSP)In 2019, Givaudan defined its purpose to articulate its sustained contribution to people, natureand communities, and set the foundation for all strategic choices and business decisions. To
ensure alignment with the goals and ambitions derived from our purpose, the Compensation
Committee reviewed the Company compensation plans during 2020. Accordingly, certain
aspects of the Performance Share Plan (PSP) will change with effect from 1 January 2021. Detailsof these changes are explained in section 3.7.
Response to COVID-19
Having reviewed the impact of the pandemic on all aspects of the Givaudan business, theCompensation Committee determined that compensation decisions made at the beginning of2020 would not be modified. In particular:–– the 2020 salary review for employees and executives took place according to the preestablished budgets and no reduction in salary took place; and–– no adjustments to pre-defined short or long term incentive targets or achievements weremade for the performance year 2020.

Givaudan – 2020 Governance, Compensation and Financial Report

24

Appendix

Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportReflecting business and individual performance

I. Compensation Committee standing agenda items and approval
Timing

Agenda items

Proposed ¹

Beginning of year

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).

A special bonus was paid to employees who worked on site during the lockdown period inrecognition of their outstanding commitment and efforts in ensuring the continuity ofGivaudan's operations. An amount was defined for each country according to respective
economic environments. The Company also implemented various measures and protocols to
help employees balance work with home responsibilities and ensure their safety. There wereno temporary or permanent layoffs resulting from the COVID-19 crisis.

1.3 Governance rules
The Articles of Incorporation of Givaudan include rules on the principles applicable toperformance-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 vote on pay at the shareholders’ meeting (Art. 27), loans, credit facilities
and post-employment benefits for the Executive Committee and Board (Arts. 30 and 31) andthe vote on pay at the shareholders’ meeting (Art. 26).
READ MORE
www.givaudan.com ▸ Our company ▸ Corporate governance ▸ Rules and policies ▸ Articles of incorporation

In line with Givaudan’s Articles of Incorporation, at the 2021 Annual General Meeting theBoard will submit the following maximum aggregate amounts for shareholder approval:–– Compensation of the Board for the period until the 2022 ordinary shareholders’ meeting–– Short-term variable compensation of the Executive Committee for the 2020 fiscal year
(Executive Committee retrospective vote)–– Fixed and long-term variable compensation of the Executive Committee for the 2021 fiscal
year (Executive Committee prospective vote)
The calculation approach to be applied for determining the amounts to be approved byshareholders is aligned with the Compensation report valuation methodologies. Full details of theamounts to be submitted for approval will be included in the shareholders’ meeting invitation.
Givaudan will also submit the 2020 Compensation report to a consultative vote at the 2021 Annual
General Meeting.

Givaudan – 2020 Governance, Compensation and Financial Report

25

Compensation
reportGovernancereportReflecting business and individual performance

2. Compensation principles
2.1 Board of Directors–– External competitiveness: overall compensation positioning should enable Givaudan toattract and retain highly talented individuals critical to its success.

In order to reinforce their independence in exercising their supervisory duties, members of theBoard receive fixed compensation only. They are not eligible to any performance-based
compensation and are not insured in the Company pension plans.

–– Internal consistency and fairness: internal pay scales reflect job level, function andgeographic market.

The Board compensation is paid in cash and in the form of Restricted Share Units (RSUs). RSUs
are a right to receive shares of 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.

Consolidated
financial report

2.2 Executives and employees
The ability to attract, motivate and retain the right talented employees globally is key to thecontinued success of Givaudan. Our competitive remuneration policy supports this ambition
and is based on the following principles:–– Pay for performance: through our variable pay plans, employees participate in the
Company’s overall success and are rewarded for their contribution to business results.

Givaudan’s total compensation in 2020 is composed of the following elements:–– Base salary: base salaries are regularly benchmarked in each location and pay scales arereviewed annually according to local market evolution. As a general rule, pay scales arebuilt around market median.
–– Profit Sharing Plan: non-management employees participate in the global Profit Sharing
Plan. Payouts are based on yearly evolution of Group EBITDA.
–– Annual Incentive Plan: this plan covers all managers and executives globally. It rewards
participants for the achievement of financial targets and other organisational andindividual objectives. Depending on the achievement of performance criteria, payouts canvary between 0% and 200% of target payout.

Appendix

Statutory financial
report–– Alignment of interests: Givaudan seeks to align management and shareholders’ interests
by rewarding long-term value creation through share-based programmes.

II. Givaudan compensation
Compensation

Participants (number of participants)

PayoutLink to compensation principles

Alignment with the business strategy

Base salary

All employees (16,000)

Cash

Attract and retain highly talented individuals.
Provides internal consistency and fairness

Nurture a pipeline of industry experts and future
leaders to develop skills for sustained successProfit Sharing Plan

Non-management employees (11,000)

Cash

Contribution to Group financial objectives

Reward our people to share in Group profit

Annual Incentive
Plan ¹

Manager and executives (5,000)

Cash

Contribution to financial objectives

Achieve annual organic sales growth and EBITDA
target and individual performance objectives

Performance SharePlan ¹ (PSP)

Executives and selected
managers (500)Givaudan shares ²

Alignment of management with long-termtargets and shareholders’ interests

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

Benefits

All employees (16,000)

Insurances, pension, fringe benefits

Protection against risk, attract and retain

Same as base salary

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 – 2020 Governance, Compensation and Financial Report

26

Compensation
reportGovernancereportReflecting business and individual performance–– Performance Share Plan (PSP): this plan links executives and selected manager
compensation to the evolution of the Givaudan share price and long-termbusiness 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.
–– Benefits (indirect compensation): benefit plans seek to address current and future
security needs of employees. These generally include retirement, health, death anddisability benefits. Benefits-in-kind such as Company vehicles are offered to certain
employees according to local market practice.

3.2 Compensation mix
The total compensation of Givaudan executives consists of direct and indirect compensation
components.
–– Direct compensation consists of base salary, annual incentive and share-based
components.
–– Indirect compensation includes retirement coverage, health benefits, death and disability
protection as well as certain benefits-in-kind according to local market practice.

Statutory financial
reportConsolidated
financial report

Chart III illustrates the direct compensation mix at target for Givaudan executives in 2020.
As illustrated in table II, every Givaudan employee’s remuneration is linked to Company
performance through cash-based and/or share-based variable pay plans and is aligned with
Givaudan’s compensation principles.

3. Compensation of Givaudan executives
3.1 Compensation benchmarking

45%

The compensation of Givaudan executives, in terms of both structure and level, is regularly
benchmarked against individuals in similar positions within selected listed Swiss companies(members of the Swiss Leader Index, or SLI) as well as European companies that are comparable
in size and international presence. Comparable European companies included in ourbenchmarking may be selected from the following industries (Specific companies used forbenchmarking of Executive Committee positions are disclosed in section 4.1 page 31):–– Flavour and fragrance–– Consumer products–– Food and beverage–– Speciality chemicals–– Biotechnology–– IngredientsTo the extent that the median size of the peer group of companies differs from Givaudan’s size
(taking into account revenue and market capitalisation), regression techniques are applied toadjust raw survey results for strict comparability.

Appendix

III. Direct compensation mix policy guidelines

44%

20%

30%

40%

15%
15%
15%

21%

18%
65%

34%

CEO

38%

Executive
Committee ¹

Fixed pay (incl. benefits)
1. Excluding CEO.

55%

45%

Divisional
Committees

Key Functional
Heads

Annual incentive

Other
Executives

Performance sharesGivaudan – 2020 Governance, Compensation and Financial Report

27

GovernancereportReflecting business and individual performance

Table IV below illustrates the structure and purpose of the two incentive schemes.

Appendix

Statutory financial
reportConsolidated
financial report

Compensation
reportIV. Variable compensation overview
Annual Incentive Plan

Performance Share Plan

Participants

Managers and executives

Key talent and executives

PurposeTo reward managers and executives To link compensation to shareholder
for the achievement of annual
value creation and achievement oforganisational targets and overallbusiness objectives
individual performance

GrantsAnnual grant

Annual grantVesting

End of each year

3 years

Conditions for vesting Achievement of annual EBITDA andsales growth targets

Achievement relative sales growth andFCF/sales targets over 4 years

PayoutShares ¹

Cash

1. Unless local laws prevent allocation of Givaudan shares, in which case payout is in cash.

3.3 Clawback provisions
As part of the Givaudan compensation programme and ensuring appropriate risk management,
all incentive-based compensation (Annual Incentive and PSP) is subject to clawback provisions.
The respective plan rules provide the Compensation Committee with absolute discretion tocancel any payouts that would otherwise be due, including for reasons 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 theCompensation Committee. In 2020, 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 and responsibilities of the function, theexternal value of the role and the profile of the incumbent in terms of skills, experience andindividual performance. To ensure market competitiveness, base salaries are reviewed
annually. Base salary 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.

Performance criteria
In 2020, the Annual Incentive Plan for Executive Committee members was based on thefollowing performance criteria:–– Sales growth targets in local currencies: 50%–– EBITDA margin targets: 50%
For the purpose of the Annual Incentive Plan, EBITDA is expressed as a percentage of sales.
Measurement at Group level is considered, except where divisional level is more appropriate
having regard to the members’ scope of responsibility.
Givaudan’s compensation system has been designed for alignment with the Company’s visionand strategy and enshrines the principles of pay for performance. To provide shareholders theability to assess this performance link and in line with Givaudan’s commitment to transparency,
the Company discloses ex-post the overall payout factor under its variable pay plans. The
disclosure approach protects the Company’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 arepresented in the Compensation report.
Annual incentive payouts for managers and executives below the Executive Committee levelare based on a mix of organisational performance objectives, cascaded from Givaudan Groupobjectives, 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 at target were the following in 2020:–– Chief Executive Officer: 100%–– Chief Financial Officer and Division Presidents: 80%–– Other Executive Committee members: 60%–– Division Management Committee members: 35% – 50%–– Other executives and managers: 10% – 35%
Based on the performance achievements, incentive payouts may vary between 0% and a cap of200% of target incentive. Minimum threshold achievement is required, otherwise no annual
incentive is paid.

Givaudan – 2020 Governance, Compensation and Financial Report

28

Compensation
reportGovernancereportReflecting business and individual performance

In 2020, sales growth was on target and EBITDA was above target. This resulted in 135% oftarget payout for the Chief Executive Officer, and an average of 135% for the other members of
the Executive Committee. Table V summarises historical annual incentive achievement
against target since 2017.

VI. Operation of the 2020 PSP Performance criteria

V. Historical annual incentive achievement
135%
117%

117%

121%
112%

135%

2020

120%

Consolidated
financial report

2017

2021

2022

2023

112%
Target 100%

Statutory financial
reportPerformance 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 thefollowing diagram.

2018

2019

2020

Executive Committee excluding CEO
CEO

3.6 Performance Share Plan
Executives and selected management members are eligible to participate 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.

March
Grant date
Receiveperformance
sharesMarch
Vesting date
Receive 0–2 Givaudan
shares per performance
share, based on theachievement of
performance criteria

Performance target setting
Performance is measured on the vesting date based on the extent performance criteria havebeen met over the previous four years. Measuring performance over an extended four-year
period is consistent with the long-term outlook of the business. The performance criteria that
apply to grants have historically been a combination of:–– Relative average sales growth as compared to the sales growth of selected peer groupcompanies; and–– Cumulative Free Cash Flow (FCF) margin, expressed as a percentage of cumulative sales.

Appendix

The structure of performance criteria calculation has been specifically designed to be challenging.
PSP participants are granted Performance Shares annually. The total number of Performance
Shares granted, and the 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 isapproximately two times annual base salary.

As explained in section 3.7, these performance criteria will continue but from 1 January 2021 will
be complemented by non-financial criteria linked to the Givaudan purpose.
For average sales growth, the peer group includes companies from the flavour and fragrance
industry that publish sales in local currency. These companies represent in total approximately
75% of this market. The peer companies currently included in the group are Firmenich,

29

Givaudan – 2020 Governance, Compensation and Financial Report

Hasegawa, IFF, Robertet, Sensient, Symrise and Takasago. The performance range for relative
sales growth extends from –1.5% to 2.5% annualised sales growth versus peer group over the
four-year performance period (2017 and prior: –2% to 2%).
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 Givaudan’s FCF for eachyear of the performance period is summed, and this cumulative result is divided by the sum ofGivaudan’s sales in each year of the performance period. The assessment over four years ensuresthat the performance targets are stringent and reward sustained Company performance. The
performance range extends from 9% to 17%.
Target setting and testing against targets follows adherence to strict governance policies.
Careful consideration is given to Givaudan’s performance and its projections. In addition, areference test against historical achievements is conducted.
Targets set for the 2020 PSP remain aligned with our 2020 guidance, and within the overall
objectives. In addition to the factors already mentioned, the assessment and target setting take
into consideration the impact of significant investments (in particular, recent acquisitions) andensuring targets are appropriately challenging.

Statutory financial
reportReference test
target setting ¹

An achievement level below the minimum threshold on either measure results in a 0% payout.
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. The outcome of the matrix payout approach is that outperformanceon one performance criteria can be counterbalanced in the event of underperformance on theother. Accordingly, the weighting of impact for each performance criteria differs depending on
the positioning within the matrix shown in table VIII.
VIII. Performance Share Plan payout matrix

2017 PSP

13.6%

2018 PSP

12.4%

2019 PSP

12.5%

14%

14%

1. Cumulative FCF margin of the related previous performance period.
2. Four-year target for corresponding PSP.

12%

12%

200%

100%

0

-1.5
Target ²

Appendix

14.5%

A payout of 200% would require an achievement level above the maximum threshold forboth criteria.

2.5

VII. Historical FCF margin vs set target
2016 PSP

Share payout caps
Based on the extent that performance criteria are met, the actual 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 performanceachievement against both criteria.

Average Sales Growthcompared to peer group

Consolidated
financial report

Compensation
reportGovernancereportReflecting business and individual performance

0%
9

12

17

Cumulative FCF / Sales
Darker region indicative of target achievement zone for 100% payout.
Note that a cap at 100% applies in the event relative sales growth is below zero.

A 100% payout can be obtained where a target combination of the performance criteria is met,such as when relative average sales growth is in line with the peer group and cumulative
FCF margin is 12%. An additional payout cap applies, so that the extent to which outperformanceon FCF may counterbalance lower sales growth achievement is restricted. Accordingly, in theGivaudan – 2020 Governance, Compensation and Financial Report30

GovernancereportReflecting business and individual performance

event relative sales growth is below the peer group and FCF margin targets are achieved or
exceeded, a cap of at 100% applies.

Compensation
reportParticipants 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 suchas death, disability or retirement, Performance Shares may vest subject to satisfaction of theperformance criteria. In case of a change of control, Performance Shares may vest immediately.

Consolidated
financial report

Vesting in 2020
The 2017 PSP vested on 15 April 2020 with a 95% payout. This reflects below target achievement
on FCF and above target achievement on relative sales growth.
For reference, Givaudan tests performance against other benchmark 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 local Swiss indices, global chemical indices andour benchmark peer group.

Within the focus areas, calculation criteria in the new PSP are:–– Creations – sales and free cash flow (FCF)–– Nature – net greenhouse gas (GHG) emissions reduction in scope 1, 2 and 3–– People – gender diversity, nationality mix and employee safety
Stretched targets to be set in the focus areas in the new PSP will pave the way for theachievement of our purpose aspirations, and a clear methodology and sufficient data will
ensure that these targets are appropriate. All the non-financial metrics used in the new PSP
will be rigorously measurable and audited.
The following chart reflects the proportion of contribution from the three focus areas of theGivaudan purpose.
80% Creations Relative sales / Free cash flow
10% Nature

Net GHG emissions reduction (scope 1+2+3)

10% People

Gender diversity / Nationality mix / Employee safety

Statutory financial
reportIX. 2017 PSP achievement
Criteria

Performance

Average sales growthcompared to peer group+0.5%

Cumulative FCF / sales ¹

12.5%

Payout 95%of performance shares
granted1.	Formula = Σ (Free cash flow margin reporting year x sales in reporting currency in year /Σ Sales in reporting currency in year).

Appendix

3.7 Changes to Performance Share Plan (PSP)From 1 January 2021, a new PSP aligned with the Givaudan purpose will operate. This purpose –Creating for happier, healthier lives with love for nature. Let's imagine together – includes four
focus areas: creations, nature, people and communities. The financial metrics traditionally used
to calculate the PSP and detailed in 1.2 will be retained but will be complemented by nonfinancial criteria linked to the focus areas of the Givaudan purpose.

During 2020, as part of the review of the Company compensation plans, the Compensation
Committee considered the appropriateness of the existing flavour and fragrance industry
peer group used in PSP calculations to benchmark organic sales growth. The nature of theCompany’s business has evolved in recent years with the acquisition of other businesses, and
it is expected that a new and broadened peer group will be used in future calculations toreflect this change.

Givaudan – 2020 Governance, Compensation and Financial Report31

3.8 Benefits
Executive Committee members participate in the benefit plans of the Company, consisting
mainly of retirement, insurance and health care plans that are designed to provide a
reasonable level of protection for the employees and their dependents in respect of the risksof retirement, ill-health, disability and death.

Compensation
reportAll benchmarking activity related to Executive Committee positions is performed by independent
consultants. Givaudan’s executive compensation targets base pay at the market median. Executive
Committee members have the opportunity to be rewarded with above-median pay for sustained
outstanding performance from a number of variable compensation components. These variable
elements reflect achievements against quantitative targets established by the Board. Variable
compensation, particularly long-term components, represents a significant portion of an
executive’s total compensation. In general, the weight of variable compensation increases withexecutive’s level of responsibility and the impact of their position on Company results.

Statutory financial
reportExecutive Committee members are also provided with certain executive perquisites andbenefits in kind according to competitive market practice. The aggregate monetary value ofthese benefits is evaluated at fair value and disclosed in the compensation tables.

Appendix

X. Executive compensation benchmark
Below median

Base pay■

Short-term incentive ¹■

4. Compensation of the Executive Committee
4.1 Benchmarking of Executive Committee positions

In 2020, Executive Committee compensation was reviewed against a peer group of other Swiss
multinational companies. This peer group consisted of Swiss Leader Index (SLI) companies ofcomparable market cap (approximately 0.5x to 2x), excluding financial services institutions. The
benchmark included 12 companies: ABB, Alcon, Geberit, Kuehne + Nagel, LafargeHolcim, Lonza,
Richemont, Schindler, SGS, Sika, Swatch and Swisscom. Consistent with prior externalbenchmarks, the review confirmed the positioning against the market remains appropriate. The
findings have been cross-validated against a listed European company comparator group withthe finding that Givaudan compensation positioning appears similar versus the European peergroup than the SLI companies. The European benchmark included 10 companies: Akzo Nobel,
Beiersdorf, Carlsberg, Coca-Cola European Partners, DSM, Kerry Group, Pernod Ricard, Smith &Nephew, Solvay and Symrise. The European peer group consists of companies of a similar size
(approximately 0.5x to 2x market cap and turnover of Givaudan). In addition, the peer groupchosen is a competitor group of Givaudan considering talent acquisition and retention.

MedianLong-term incentive ²
Total compensation

Consolidated
financial report

GovernancereportReflecting business and individual performance

Above median■■

1. Annual Incentive Plan (please refer to section 3.5).
2. Performance Share Plan (please refer to section 3.6).

The results confirm that total compensation of the Executive Committee is overall aligned withthe market. The long-term incentive compensation is positioned above median, which is in linewith Givaudan policy and reflects our continued strong focus on rewarding outstanding
performance over the long term.
In 2020, independent consulting services were contracted with EY regarding Executive
Committee compensation topics, including benchmarking. EY has additionally provided othertax and advisory services to the Company.

4.2 Compensation levels in 2020
Total Executive Committee compensation reported in 2020 remained stable compared to2019, representing full year compensation for seven members (including the CEO).
Total Executive Committee compensation for the reporting period increased by 4%, reflecting:–– the full year impact on base salaries of the compensation mix rebalancing
implemented in 2019–– the higher achievement rates of annual incentive targets in 2020 versus 2019.
Further details are available in section 3.5.
Executive Committee member compensation has been set in accordance with our compensation
principles, including consideration of roles and responsibilities and with reference to ourcompensation benchmarks.

4.2.1 Highest total compensation
The Chief Executive Officer, Gilles Andrier, received the highest total compensation in 2020.
For compensation details, please refer to table XI.

Givaudan – 2020 Governance, Compensation and Financial Report

32

Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportReflecting business and individual performance

XI. Executive Committee compensation summary

in Swiss francs

Gilles Andrier
CEO 2020

Gilles Andrier
CEO 2019

Executive Committee
members (excluding CEO) ¹
2020- Base salary

1,211,084

1,167,910

574,237

577,527- Pension benefits ²- Other benefits ³

Total
2020

3,336,973

3,191,433

4,548,057

4,359,343

1,036,769

1,005,412

1,611,006

1,582,939

Total
2019

145,344

141,730

433,184

562,795

578,528

704,525

Total fixed compensation

1,930,665

1,887,167

4,806,926

4,759,640

6,737,591

6,646,807- Annual incentive ⁴

1,636,536

1,438,925

3,176,247

2,830,707

4,812,783

4,269,632

895

1,092

2,077

2,448

2,972

3,540

- Value at grant ⁶2,501,078

2,500,243

5,804,177

5,604,941

8,305,255

8,105,184

Total variable compensation

4,137,614

3,939,168

8,980,424

8,435,648

13,118,038

12,374,816

Total compensation

6,068,279

5,826,335

13,787,350

13,195,288

19,855,629

19,021,623

504,728

471,214

1,029,178

989,482

1,533,906

1,460,696- Number of performance shares granted ⁵

Employer social security ⁷

1.	Represents full year compensation of six Executive Committee members.
2.	Company contributions to broad-based pension and retirement savings plans and annualised expenses accrued for supplementary executive retirement benefit.
3.	Represents annual value of health and welfare plans, international assignment benefits and other benefits in kind.
4.	Annual incentive accrued in reporting period based on performance in the reporting period.
5.	2020 Performance shares vest on 15 April 2023, 2019 Performance Shares vest on 15 April 2022.
6.	Value at grant calculated according to IFRS methodology and based on 100% achievement of performance targets.
7.	2020 estimated social security charges based on 2020 compensation; 2019 estimated social security charges based on 2019 compensation.

4.2.2 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 ofthe 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 2020.

4.2.3 Special compensation of Executive Committee members who left theCompany during the reporting period
No such compensation was incurred during the reporting period.
Appendix

Executive Committee
members (excluding CEO) ¹
2019

4.2.4 Employment contract termination clauses of Executive Committee
members
Employment contracts of Executive Committee members comply with the OaEC and our Articles
of Incorporation. Accordingly, contractual entitlements are within the specified thresholds, inparticular the maximum contractual notice period is six months and any non-compete clausedoes not exceed 12 months. No additional compensation or benefits are provided in the case ofchange in control, except for long-term incentive awards that may vest immediately.
All contractual arrangements of Executive Committee members are approved by theCompensation Committee of the Board.

4.2.5 Compensation voting for Executive Committee members
The compensation paid is within the amounts approved by shareholders in the respective
Annual General Meeting.
The fixed and long term variable compensation approved for 2020 was CHF 15,300,000 (2019:
CHF 15,000,000).

Givaudan – 2020 Governance, Compensation and Financial Report

33

GovernancereportReflecting business and individual performance

The annual incentive, short term variable compensation amount for 2020 was CHF 4,812,783
and will be submitted for approval at the 2020 Annual General Meeting (2019: CHF 4,269,632).

Consolidated
financial report

Compensation
report5. Compensation of the Board of Directors
Compensation of Board members consists of Director fees, Committee fees and Restricted
Share Units (RSUs). Fees are paid at the end of each year in office completed. RSUs give
participants the right to receive Givaudan shares (or a cash equivalent in countries wheresecurities laws prevent the offering of Givaudan securities) at the end of a three-year blocking
period. During this period Board members must hold RSUs (accordingly are restricted fromtrading RSUs or the underlying Givaudan shares), thereby aligning with shareholder interests
over the longer term. Board members are entitled to receive Givaudan shares regardless ofmembership status so that, 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 line with best practice in support of Givaudan’s commitment to ensuring
Board independence.
The annual fees for Board membership and additional functions are summarised in the table
XII. The fee structure remained unchanged versus prior year levels.

Statutory financial
reportXII. Board of Directors fees – Summary
Annual fees (CHF)

Restricted Shares Compensation (CHF) ³

Chairman of the Board ¹

400,000

580,000

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
Membership – All Committees

40,00025,0001. Incl. Board membership fees.
2. Incl. Committee membership fees.
3. Number of RSUs granted represents the closest match to the values displayed.

Appendix

The Chairman of the Board does not receive any additional board membership 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.

Board fees are aligned with the total Board compensation approved by shareholders at the2020 Annual General Meeting and with market practice. Board member compensation was
benchmarked against a peer group of other Swiss multinational companies. This peer groupconsisted of Swiss Leader Index (SLI) companies with comparable market cap (approximately
0.5x to 2x), excluding financial services institutions. The benchmark included 12 companies:
ABB, Alcon, Geberit, Kuehne + Nagel, LafargeHolcim, Lonza, Richemont, Schindler, SGS, Sika,
Swatch and Swisscom. Consistent with prior external benchmarks, the review confirmed thepositioning against the market remains appropriate.
The compensation paid to the Board members for the reporting period is shown in table XIII.

5.1 Compensation of the Board member with the highest compensation
The Board member with the highest compensation in 2020 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 or former membersof the Board
No additional compensation or fees were paid to any member of the Board. No Board memberor related parties had any loan outstanding as of 31 December 2020.

5.3 Special compensation of members of the Board who left theCompany during the reporting period
No such compensation was incurred during the reporting period.

5.4 Compensation voting for members of the Board
The compensation paid to the Board members for the period between the 2019 and 2020
Annual General Meetings (CHF 2,817,450) is again within the amount approved by shareholders
at the 2019 Annual General Meeting (CHF 2,950,000). Amounts approved at the 2020 Annual
General Meeting (CHF 3,400,000) will be paid by the end of the year in office and validated in
the 2021 Compensation report. Such approved and paid amounts may differ from those shownin the Board compensation summary table which, according to the OaEC, must include
compensation paid in the reporting year.

Givaudan – 2020 Governance, Compensation and Financial Report

34

GovernancereportReflecting business and individual performance

XIII. Board of Directors compensation summary

Consolidated
financial report

Compensation
report2020
in Swiss francs

Calvin Grieder
Chairman ⁵

Victor Balli ⁵

Prof. Dr-Ing.
Werner Bauer ⁵

Lilian Biner ⁵

Michael Carlos ⁵

Ingrid Deltenre ⁵

Thomas Rufer ⁵

Olivier Filliol ⁵,⁶

Sophie Gasperment ⁵,⁷

Total 2020 ¹

Director fees ²400,000

100,000

100,000

100,000

100,000

100,000

100,000

75,00033,333

1,108,333

Committee fees ²

65,00050,00065,00025,00065,00050,00055,00037,5008,333

420,833

Total fixed (cash)

465,000

150,000

165,000

125,000

165,000

150,000

155,000

112,500

41,666

1,529,166

Number of RSUs granted ³
Value at grant ⁴
Total compensation

208

52

52

52

52

52

52

39

17

576

581,256

145,314145,314145,314145,314145,314145,314108,986

47,507

1,609,633

1,046,256

295,314

310,314

270,314

310,314295,314300,314

221,486

89,173

3,138,799

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.	RSUs blocking period ends on 15 April 2023.
4.	Economic value at grant according to IFRS methodology, with no discount applied for the blocking period.
5.	The function of each member of the Board of Directors is indicated on pages 7–9 in the 2020 Governance report.
6.	Represents compensation from April to December 2020.
7.	Represents compensation from September to December 2020.
2019
in Swiss francs

Director fees ²

Victor Balli ⁵

Prof. Dr-Ing.
Werner Bauer ⁵

Lilian Biner ⁵

Michael Carlos ⁵

Ingrid Deltenre ⁵

Thomas Rufer ⁵

Total 2019 ¹

400,000

100,000

100,000

100,000

100,000

100,000

100,000

1,000,000

Committee fees ²

65,00050,00065,00025,00065,00050,00055,000375,000

Total fixed (cash)

465,000

150,000

165,000

125,000

165,000

150,000

155,000

1,375,000

Number of RSUs granted ³
Value at grant ⁴
Statutory financial
reportCalvin Grieder
Chairman ⁵

Total compensation

252

63

63

63

63

63

63

630

576,980

144,245

144,245

144,245

144,245

144,245

144,245

1,442,450

1,041,980

294,245309,245

269,245309,245294,245299,2452,817,450

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.	RSUs blocking period ends on 15 April 2022.
4.	Economic value at grant according to IFRS methodology, with no discount applied for the blocking period.
5.	The function of each member of the Board of Directors is indicated on pages 5–6 in the 2019 Governance report.

Estimated social security charges based on 2020 compensation amounted to CHF 259,320 (2019: CHF 233,000).

Appendix

6. Share ownership guidelines
Under the share ownership guidelines (Guidelines), Executive Committee members must holdapproximately two times annual base salary in Givaudan shares. In general, the Guidelines
should be met within five years from the beginning of the calendar year after joining the
Executive Committee.

As the current Guidelines were implemented in September 2017, transitional arrangements to
the Guidelines are in place for Executive Committee members appointed before 2016, suchthat all such members should reach the new Guideline holding requirement latest 2020.
Ownership of Givaudan shares by Executive Committee members as per 31 December 2020 isshown in table XIV.

Givaudan – 2020 Governance, Compensation and Financial Report

35

GovernancereportReflecting business and individual performance

7. Ownership of Givaudan securities
7.1 Executive Committee

7.2 Board of Directors

Appendix

Statutory financial
reportConsolidated
financial report

Compensation
report

The Chief Executive Officer and other members of the Executive Committee, including
persons closely connected to them, held 6,312 Givaudan shares. For further details, pleaserefer to table XIV showing:–– The shares held individually by each member of the Executive Committee as per
31 December 2020.
–– The unvested Performance Shares that were granted in 2018–2020 and were still owned bymembers of the Executive Committee as per 31 December 2020.

As per 31 December 2020, the Chairman and other Board members, including persons closely
connected to them held 6,501 Givaudan shares in total. For further details, please refer totable XV showing:–– The shares held individually by each Board member as per 31 December 2020.
–– The RSUs that were granted in 2018–2020 and were still owned by members of the Board
as per 31 December 2020.
The Company is not aware of any other ownership of shares, share options/option rights,
RSUs or Performance Shares as per 31 December 2020 by persons closely connected tomembers of the Board.

No member of the Executive Committee held any share options or option rights as at
31 December 2020 (31 December 2019: no member of the Executive Committee held any shareoptions or option rights).

XV. Board of Directors: ownership of Givaudan securities

Calvin Grieder, Chairman

655

752

One person closely connected to a member of the Executive Committee owned 217 unvested
Performance Shares as at 31 December 2020.

Victor Balli

175

188

2020
in numbers

Prof. Dr-Ing. Werner Bauer
Lilian Biner

SharesBlocked RSUs

1,355

188

662

188

The Company is not aware of any other ownership of shares, share options/option rights,
RSUs or Performance Shares as per 31 December 2020 by persons closely connected tomembers of the Executive Committee.

Michael Carlos

1,187

188

Ingrid Deltenre

292

188

Thomas Rufer

975

188

Olivier Filliol

1,200

XIV. Executive Committee: ownership of Givaudan securities

Sophie Gasperment

2020
in numbers

SharesUnvested
Performance Shares

Gilles Andrier, CEO

3,900

3,433

Tom Hallam

584

1,362

Louie D'Amico

431

1,358

Maurizio Volpi

350

1,715

Simon Halle-Smith

452

1,023

Willem Mutsaerts

269

1,023

Anne Tayac

326

1,023

Total 2020

6,312

10,937

Total 2019

5,265

13,07352
30

Total 2020

6,501

1,962

Total 2019

4,501

2,260

Givaudan – 2020 Governance, Compensation and Financial Report

GovernancereportDeloitte SA
Rue du Pré-de-la-Bichette 1
1202 Geneva
Switzerland

Report of the statutory auditor

Compensation
reportTo the General Meeting of GIVAUDAN SA, Vernier
Report of the Statutory Auditor in relation to sections 4 and 5 of the compensation report inaccordance with the Ordinance against Excessive compensation in Stock Exchange Listed
Companies (Ordinance)

Consolidated
financial report

We have audited the accompanying compensation report of Givaudan SA for the year ended 31 December 2020. Our audit
is limited to the information provided in sections 4 and 5 on page 31 to 34 in accordance with the articles 14 – 16 of theOrdinance against 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 inaccordance with 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.

Statutory financial
reportAuditor’s Responsibility
Our responsibility is to express an opinion on the compensation report. We conducted our audit in accordance with Swiss
Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether the compensation report complies with Swiss law and articles 14 – 16 of theOrdinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the compensation report withregard to compensation, loans and credits in accordance with articles 14 – 16 of the Ordinance. The procedures selected
depend on the auditor’s judgment, including the assessment of the risks of material misstatements in the compensation
report, whether due to fraud or error. This audit also includes evaluating the reasonableness of the methods applied tovalue components of remuneration, 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.
Appendix

36

Phone: +41 (0)58 279 8000
Fax: +41 (0)58 279 8800
www.deloitte.chGovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

OpinionConsolidated
financial report

Compensation
reportIn our opinion, sections 4 and 5 of the compensation report of Givaudan SA for the year ended 31 December 2020 comply
with Swiss law and articles 14 – 16 of the Ordinance.

Deloitte SA

Karine Szegedi Pingoud 		Licensed Audit Expert			
Auditor in Charge

Appendix

Statutory financial
reportGeneva, 28 January 2021

Laetitia Cejudo Petit
Licensed Audit Expert

37Consolidated
Financial Report
In this section
39

Consolidated financial statements

39

Consolidated Income Statement

3975

16. Income Taxes

Consolidated Statement of Comprehensive Income

4076

17. Earnings per Share

Consolidated Statement of Financial Position

41

77

18. Cash and Cash Equivalents

Consolidated Statement of Changes in Equity

4277

19. Accounts Receivable – Trade

Consolidated Statement of Cash Flows

43

Notes to the consolidated financial statements

77

20. Inventories

43

78

21. Property, Plant and Equipment

1. Group Organisation

43

79

22. Intangible Assets

2. Summary of Significant Accounting Policies

53

81

23. Debt

3. C
 ritical Accounting Estimates and Judgments

54

83

24. Changes in Liabilities Arising from Financing Activities

4. Foreign Exchange Rates

54

84

25. Provisions

5. Financial Risk Management63

85

26. Own Equity Instruments

6. Acquisitions

85

27. Equity

65

7. Segment Information

6885

28. Commitments

8. Employee Benefits

73

86

29. Contingent Liabilities

9. Share-Based Payments

73

86

30. Related Parties

10. I nvestments in Joint Ventures and Associates

74

87

31. Board of Directors and Executive Committee Compensation

11. Other Operating Income

74

90

32. L
 ist of Principal Group Companies

12. Other Operating Expense

74

92

33. Disclosure of the Process of Risk Assessment

13. Expenses by Nature

74

93

Report of the Statutory Auditor

14. Financing Costs

74

93

15. Other Financial (Income) Expense, Net

Statutory Auditor’s Report on the Consolidated
Financial Statements

GovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Consolidated financial statements
Consolidated Income Statement
For the year ended 31 December

Consolidated Statement of Comprehensive Income
For the year ended 31 December

Note

2020

2019

in millions of Swiss francs

7

6,322

6,203

Income for the period

Cost of sales(3,663)(3,673)

Items that may be reclassified to the income statement

Gross profit

2,659

2,530

Cash flow hedges

as % of sales

42.1%

40.8%

Movement in fair value, net

Selling, marketing and distribution expenses

(848)

(791)

Gains (losses) removed from equity and recognised in the
consolidated income statementin millions of Swiss francs, except for earnings per share data

Compensation
reportSales

Research and product development expenses

(536)

(528)

Administration expenses

(218)

(221)

3

4

Consolidated
financial report

Share of results of joint ventures and associates

10

Other operating income

11

45

41

Other operating expense

12

(109)

(115)

996

920

Operating income
as % of sales

15.8%

14.8%

Financing costs

14

(86)

(79)

Other financial income (expense), net

15

(34)

(33)

876

808

(133)

(106)

743

702

Income before taxes
Income taxes

16

Income for the period
Statutory financial
reportAttribution
Income attributable to non-controlling interests––

Income attributable to equity holders of the parent

743

702

11.8%

Movement on income tax

Movement in fair value arising on hedging instruments of the
net assets in foreign operations
Currency translation differences
Movement on income tax

2019

743

702

(51)

(56)

6

6

4

4

16

58

51

(385)

(99)

5

(6)

(91)

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

8

46

Movement on income tax

16

(5)

(3)

Other comprehensive income for the period

(322)

(194)

Total comprehensive income for the period

421

508

–

–

421

508

11.3%

Earnings per share − basic (CHF)

17

80.59

76.17

Earnings per share − diluted (CHF)

17

79.96

75.59

Total comprehensive income attributable tonon-controlling interests

The notes on pages 43 to 92 form an integral part of these financial statements.

16

2020

Exchange differences arising on translation of foreign
operations

Attribution

as % of sales

Note

Total comprehensive income attributable to equity
holders of the parent
The notes on pages 43 to 92 form an integral part of these financial statements.

Appendix39

Givaudan – 2020 Governance, Compensation and Financial Report

40

GovernancereportConsolidated financial statements

Consolidated Statement of Financial PositionNote

31 December
2020

31 December
2019

5, 18

411

452

Short-term debt

Derivative financial instruments

5

54

24

Derivative financial instruments

Financial assets at fair value through income statement

5

4

4

Accounts payable - trade and othersin millions of Swiss francs

AssetsCompensation
reportCash and cash equivalents

Accounts receivable - trade

31 December
2020

31 December
2019

5, 23

206

335

5

49

29

5

809

833

211

189

Liabilities and equity

5, 19

1,359

1,365

Accrued payroll and payroll taxes

20

1,201

1,149

Current tax liabilities

16

157

111

Current tax assets

16

66

50

Financial liability - own equity instruments

26

108

108

50

35

Provisions

25

5

154

163

Other current liabilities

Prepayments
Current assets

Consolidated
financial report

Note

Inventories

Other current assets

18
207

1,796

1,830

3,299

3,242

5

65

1

Property, plant and equipment

21

2,222

2,326

Long-term debt

Intangible assets

22

4,543

4,286

Provisions

25

71

69

Deferred tax assets

16

218

211

Post-employment benefit plan liabilities

8

545

601

16

310

280

Current liabilities
Derivative financial instruments

Post-employment benefit plan assets

8

20

32

Deferred tax liabilities

Financial assets at fair value through income statement

5

180

177

Other non-current liabilities

Interests in joint ventures and investments in associates

10

35

34

Non-current liabilities

Non-current assets
Total assets

5

103

79

5, 23

4,245

3,796

Total liabilities

80

82

5,354

4,907

7,150

6,737

76

87

7,359

7,154

Share capital

27

92

92

10,658

10,396

Retained earnings and reserves

27

6,133

5,961

Own equity instruments

(168)

(168)

Other components of equity

26, 27(2,567)(2,245)Equity attributable to equity holders of the parent

3,490

3,640

Non-controlling interests

18

19

Total equity

3,508

3,659

Total liabilities and equity

10,658

10,396

The notes on pages 43 to 92 form an integral part of these financial statements.

Appendix

23233

Derivative financial instruments

Other long-term assets
Statutory financial
reportin millions of Swiss francs

Givaudan – 2020 Governance, Compensation and Financial Report

41

GovernancereportConsolidated financial statements

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

Compensation
report2020
in millions of Swiss francs

Share
CapitalRetainedearnings
and reserves

Own equity
instruments

Note

27

27

26, 27

Balance as at 1 January

92

5,961

(168)

Income for the period

Cash flow
hedgesCurrencytranslationdifferences

Remeasurementof postemployment
benefitobligations(107)(1,613)(525)

Total comprehensive income for the period

743

Dividends paid

(571)

Movement on own equity instruments, net

Noncontrollinginterests

Total
equity

3,640

19

3,659

743

–

8

743

Other comprehensive income for the period

Equityattributable toequity holders of
the parents

(41)

(322)

41

(41)

(322)

41

(322)
421

Consolidated
financial report
Statutory financial
report

(571)
92

Share
Capital(168)

Retainedearnings
and reserves

Own equity
instruments

Note

27

27

26, 27

92

5,811

(142)

Income for the period(148)

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

702

Dividends paid

(552)

Movement on own equity instruments, net

(1)

(1)

(571)

(1)

(572)

(1,935)

(484)

3,490

18

3,508

Cash flow
hedgesCurrencytranslationdifferences

Remeasurementof postemployment
benefitobligations

Equityattributable toequity holders of
the parents

Noncontrollinginterests

Total
equity(61)(1,559)

(431)

3,710

22

3,732

702

–

8

702
(46)

(54)

(94)

(46)

(54)

(94)

(194)
508

(26)

Balance as at 31 December

92

(552)

(26)

5,961

(168)

–

(1,613)

(525)

508
(552)

(26)

(107)

702
(194)

(552)

Non-controlling interests
Net change in other equity items

Appendix

6,133

Balance as at 1 January

The notes on pages 43 to 92 form an integral part of these financial statements.

421
(571)

–

Net change in other equity items

2019
in millions of Swiss francs

–

(571)

Non-controlling interests
Balance as at 31 December

743
(322)

(26)
(3)

(3)

(578)

(3)

(581)

3,640

19

3,659

Givaudan – 2020 Governance, Compensation and Financial Report

42

GovernancereportConsolidated financial statements

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

Note

Compensation
reportIncome for the period

2020

2019

in millions of Swiss francs

Note

2020

2019

743

702

Increase in long-term debt

24

1,405

660

Income tax expense

16

133

106

(Decrease) in long-term debt

24

(784)

(184)

Interest expense

14

80

68

Increase in short-term debt

24

3,044

2,904

24

(3,300)(2,919)

365

461
(51)

Non-operating income and expense

14, 15

Operating income

40

44(Decrease) in short-term debt

996

920

Cash flows from debt, net

Depreciation of property, plant and equipment

21

201

193

Interest paid

24

(53)

Amortisation of intangible assets

22

187

161

Purchase and sale of derivative financial instruments, net

24

(19)

–

21, 22

13

1

Lease payments

24

(52)

(52)

56

41

Other, net

Impairment of long-lived assets
Other non-cash items

Transactions of non-controlling interest

Statutory financial
reportConsolidated
financial report- share-based payments- pension expense

8

49

38

Cash flows from financial liabilities- additional and unused provisions, net

25

20

12

Distribution to the shareholders paid

(7)

(3)

24

(9)

(7)

225

348

27

(571)

(552)

- other non-cash items

(18)

–

Cash flows from (for) financing activities

(346)

(204)

Adjustments for non-cash items

508

446

Acquisition of property, plant and equipment

21

(188)

(275)

(Increase) decrease in inventories

(68)

(28)

Acquisition of intangible assets

22

(39)

(45)

(Increase) decrease in accounts receivable

(76)

(101)

Acquisition of subsidiaries, net of cash acquired

6

(629)

(478)

(Increase) decrease in other current assets

(19)

25

Increase (decrease) in accounts payable

27

108

Proceeds from the disposal of property, plant andequipment

21

8

74

Increase (decrease) in other current liabilities

2

(19)

Proceeds from sales of intangible assets

22

2

–

(134)

(15)

(Increase) decrease in working capital
Income taxes paid

(125)

(106)

Pension contributions paid

8

(40)

(37)

Provisions used

25

(16)

(21)

(56)

(51)

1,133

1,136

Purchase and sale of own equity instruments, net
Cash flows from (for) operating activities

Proceeds from disposal of investment property

2Interest received

3

6

Dividend received from joint ventures and associates

1

2

Purchase and sale of financial assets at fair value throughincome statement, net

(3)

(105)

Impact of financial transactions on investing, net

25

(29)

Other, net

1

(43)

Cash flows from (for) investing activities

(819)

(891)

Net increase (decrease) in cash and cash equivalents

(32)

41

(9)

(12)

Appendix

Net effect of currency translation on cash and cash
equivalents
Cash and cash equivalents at the beginning of the period

18

452

423

Cash and cash equivalents at the end of the period

18

411

452

The notes on pages 43 to 92 form an integral part of these financial statements.

Compensation
reportGovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

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 creativefragrance, beauty, flavour and wellbeing 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 15,852 people. A list of the principal Group companies is shown in Note 32 to theconsolidated financial statements.
The Group is listed on the SIX Swiss Exchange (GIVN).

Statutory financial
reportConsolidated
financial report

2. Summary of Significant Accounting Policies

Appendix

43

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 offinancial assets and financial liabilities at fair value through the income statement, and of own
equity instruments classified as derivatives. Historical cost is generally based on the fair valueof the consideration given in exchange for goods and services. Fair value is the price thatwould be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price isdirectly observable or estimated using another valuation technique.
The preparation of the consolidated financial statements requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent liabilities at the date of the financial statements, and reported
amounts of revenues and expenses during the reporting period. It also requires management
to exercise its judgment in the process of applying the Group’s accounting policies. Criticalaccounting estimates and judgments are disclosed in Note 3.

The COVID-19 pandemic has not materially affected the business activities of the Group; thus
the operating results as well as the consolidated financial statements for the year ended
31 December 2020 have not been materially impacted.
Givaudan SA’s Board of Directors approved these consolidated financial statements on
28 January 2021.

2.1.1 Changes in Accounting Policies and Disclosures Standards, amendments
and interpretations effective in 2020
The accounting policies adopted are consistent with those of the annual financial statements
for the year ended 31 December 2019, as described in the 2019 consolidated financial statements,
with the exception of the adoption as of 1 January 2020 of the standards and interpretations
described below:
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 the assets 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.
Definition of Material: Amendments to IAS 1 and IAS 8 align the definition used in theConceptual Framework and the standards themselves. The clarification does not impact thecurrent practice of the Group.
Definition of a Business: Amendments to IFRS 3 narrow and clarify the definition of abusiness. They also permit a simplified assessment of whether an acquired set of activities andassets are a group of assets rather than a business. The amendments do not impact thecurrent practice of the Group.
Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform provide
certain reliefs in connection with interest rate benchmark reform. The reliefs relate to hedge
accounting and have the effect that IBOR reform should not generally cause hedge accounting
to terminate. The amendments do not impact the current practice of the Group, as thepractical expedient has been applied.

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Appendix

Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

2.1.2 IFRSs and IFRICs issued but not yet effective
New and revised standards and interpretations, issued but not yet effective, have beenreviewed to identify the nature of the future changes in accounting policy and to estimate theeffect of any necessary changes in the consolidated financial statements and supporting
notes upon their adoption.

a) Issued and effective for 2021.
Amendments to IFRS 16: Covid-19-related rent concessions provide lessees with an
exemption from assessing whether a COVID-19-related rent concession is a lease modification.
The Group is not exposed to lessee relief for which the exemption election impacts theconsolidated financial statements significantly.
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark
Reform – Phase 2 address issues that might affect financial reporting when an existing
interest rate benchmark is replaced with an alternative benchmark interest rate. The
amendments relate to the modification of financial assets, financial liabilities and leaseliabilities, specific hedge accounting requirements and disclosure requirements applying IFRS
7 to accompany the amendments regarding modifications and hedge accounting. The
amendments permit continuation of hedge accounting, therefore the Group will retain the
cumulative gain or loss in the cash flow hedge reserve for designated cash flow hedges thatare subject to interest rate benchmark reforms even though there is uncertainty arising fromthe reform with respect to the timing and amount of the cash flows of the hedged items.

b) Issued and effective for 2022 and after.
Annual Improvements to IFRS® Standards 2018–2020 provides a streamlined process for
dealing efficiently with a collection of amendments to IFRS 1 First-time Adoption ofInternational Financial Reporting Standards, IFRS 9 Financial Instruments, IFRS 16 Leases and
IAS 41 Agriculture. The amendments do not impact the current practice of the Group.
Amendments to IAS 16: Property, Plant and Equipment: Proceeds before Intended Use
prohibit the deduction of proceeds from selling items produced before an item of property,
plant and equipment (PP&E) is available for use from the cost of that PP&E. The amendments
do not impact the current practice of the Group.

Amendments to IAS 37: Onerous Contracts – Cost of Fulfilling a Contract specify that the‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that
relate directly to a contract can either be incremental costs of fulfilling that contract or an
allocation of other costs that relate directly to fulfilling contracts. The amendments do not
impact the current practice of the Group.
Amendments to IAS 1: Classification of Liabilities as Current or Non-current affect only
the presentation of liabilities in the statement of financial position by clarifying that theclassification (a) should be based on rights that are in existence at the end of the reporting
period, and (b) is unaffected by expectations about whether an entity will exercise its right todefer settlement of a liability. The amendments do not impact the current practice of the Group.
IFRS 17 Insurance Contracts establishes the principles for the recognition, measurement,
presentation and disclosure of insurance contracts. The standard has no impact for the Group.

2.2 Consolidation
The subsidiaries that are consolidated are those companies controlled, directly or indirectly, by
Givaudan SA. The Group controls an entity when the Group is exposed to, or has rights to,variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. The Group reassesses whether or not it controls an investee
if there are indications 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, and subsidiaries to be divested are included up to the dateon 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 costof acquisition over the fair value of the Group’s share of net assets of the subsidiary acquired isrecognised as goodwill.
Where necessary, changes are made to the accounting policies of subsidiaries to bring andensure consistency with the policies adopted by the Group.

Givaudan – 2020 Governance, Compensation and Financial Report

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Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

Assets and liabilities, equity, income, expenses and cash flows resulting from inter-company
transactions are eliminated in full on consolidation.

period-end rates of monetary assets and liabilities denominated in foreign currencies arerecognised in other financial income (expense), net, except for:2.3 Investments in Joint Ventures and Associates–– Exchange differences deferred in equity as qualifying cash flow hedges on certain foreign
currency risks and qualifying net investment hedges;

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.
An associate is an entity over which the Group has significant influence and that is neither asubsidiary nor an interest in a joint venture. Significant influence is the power to participate in
the financial and operating policy decisions of the investee but is not control or joint control
over those policies.
The results and assets and liabilities of joint ventures and associates are incorporated in the
consolidated financial statements using the equity method of accounting. Under the equity
method, an investment in a joint venture or an associate is initially recognised at cost andadjusted thereafter to recognise the Group’s share of the income statement and the othercomprehensive income of the joint venture or associate. Adjustments are made where necessary
to bring the accounting policies in line with those adopted by the Group. Unrealised gains andlosses on transactions between the Group and a jointly controlled entity or an associate are
eliminated to the extent of the Group’s interest in the joint arrangement or associate.

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 thefunctional 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 inmillions of Swiss francs (CHF), the Swiss franc being the Group’s presentation currency.

Appendix

2.4.2 Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing on the dates of the transactions, or using a rate that approximates theexchange 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–– Exchange differences on monetary items to a foreign operation for which settlement isneither planned nor likely to occur, therefore forming part of the net investment in theforeign operation, which are recognised initially in other comprehensive income andreclassified 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; and–– 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 tointerest 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 ofGroup companies reporting in currencies other than Swiss francs (foreign operations) aretranslated into Swiss francs using exchange rates prevailing at the end of 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 reasonableapproximation of the underlying transaction rate. All resulting exchange differences arerecognised in other comprehensive income and accumulated in equity.

2.4.4 Hyperinflationary economies
Restatement of financial statements is required for subsidiaries whose functional currencies
have experienced a cumulative inflation rate of more than 100% over the past three years. The
gain or loss on the net monetary position as well as the gain or loss incurred upon adjusting
the carrying amounts of non-monetary assets and liabilities for inflation are recognised in the
consolidated income statement and then translated into Swiss francs. Restatement to current
units of currency is made using the change in a general price index.

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Appendix

Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

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 thechief 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: Fragrance & Beauty and Taste & Wellbeing.

reversal will not occur. No element of financing is deemed present as the sales are made withcredit terms that are consistent with market practice.
A receivable is recognised when the goods are delivered as this is the point in time that theconsideration is unconditional because only the passage of time is required before thepayment is due.

The business units of each division, respectively Fine Fragrances, Consumer Products,
Fragrance Ingredients and Active Beauty for the Fragrance & Beauty Division and Beverages,
Dairy, Savoury, Sweet Goods and Natural Ingredients for the Taste & Wellbeing Division, arenot considered as separately reportable operating segments as decision making about theallocation of resources and the assessment of performance are not made at this level.

2.7 Research and Product Development

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 and by segment.

Internal developments or developments obtained through agreements on formula,technology and product costs 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. When the conditions for recognition of an intangible asset are not met, development
expenditure is recognised in the income statement in the period in which it is incurred.

2.6 Revenue from Contracts with Customers

2.8 Employee Benefit Costs

The Group manufactures and sells manufactured fragrance, beauty, flavour and wellbeing
products, specialty ingredients and molecules of fragrance and flavour to the agreed upon
specifications and may contain additional performance obligations 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 the delivery of manufactured products and molecules.

Wages, salaries, social security contributions, annual leave and paid sick leave, bonuses andnon-monetary benefits are expensed in the year in which the associated services are renderedby the Group’s employees.

Sales are recognised when control of the goods has transferred, being when the goods aredelivered to the customer, the customer has full discretion over the channel and price to sell the
goods, and there is no unfulfilled obligation that could affect the customer’s acceptance of thegoods. Delivery occurs when the customer has accepted the goods in accordance with the sales
contract, the acceptance provisions have lapsed, or the Group has objective evidence that all
criteria for acceptance have been satisfied.
The goods are often sold with volume discounts based on aggregate sales over a 12 months
period. Revenue from these sales is recognised based on the price specified in the contract,
net of the estimated volume discounts provided that it is highly probable that a significant

The Group is active in research and in formulas, technologies and product developments. In
addition to its internal scientific efforts, the Group collaborates with outside partners.
Expenditure on research activities is recognised as an expense in the period in which it is incurred.

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 payments from the Group andemployees to financially independent trusts. The liability recognised in the statement offinancial position is the aggregate of the present value of the defined benefit obligation at thestatement of financial position date less the fair value of plan assets. Where a plan is unfunded,
only a liability representing the present value of the defined benefit obligation is recognised in
the statement of financial position. The present value of the defined benefit obligation is
calculated by independent actuaries using the projected unit credit method twice a year, atinterim 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
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47

Consolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

rates of remuneration growth, and long-term indexation rates. Discount rates, used todetermine the present value of the defined benefit obligation, are based on the market yieldsof high quality corporate bonds in the country concerned. Actuarial gains and losses arisingfrom experience adjustments and changes in actuarial assumptions are charged or credited toequity in other comprehensive income in the period in which they arise. Past service costs arerecognised immediately in the income statement. Pension assets and liabilities in different
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 another 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 are charged to the income
statement in the year to which they relate.

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 inservice up to retirement age and completing a minimum service period. The expected costs ofthese benefits are accrued over the periods in which employees render service to the Group.

Statutory financial
report2.9 Share-Based Payments
The Group has established a performance share plan to align the long-term interests of key
executives and members of the Board of Directors with the interests of the shareholders.
Key executives are awarded a portion of their performance-related compensation in equitysettled share-based payment transactions. The costs are recorded in each relevant functions
part of the employees’ remuneration as personnel expenses with a corresponding entry inequity 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

Appendix

Key executives are awarded a portion of their performance-related compensation in equitysettled share-based payment transactions in the form of a performance share plan.
The performance share plan is established with Givaudan registered shares and a vesting periodof 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 thevesting period, together with a corresponding 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 thenumber of shares varies. No market conditions are involved.
The fair value is determined as the market price at grant date reduced by the present value ofdividends expected or any other expected 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 ofshares that are expected to be delivered. Where an equity-settled award is cancelled, it istreated as if it had vested on the date of cancellation.

2.9.2 Restricted Share Plan he members of the Board of Directors receive a portion of their compensation in equityT
settled share-based payment transactions in the form of restricted share units.
Restricted shares are set generally with a vesting period of three years, during which therestricted shares cannot be settled or transferred. 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 therestricted shares granted at the date of the grant. Service conditions are included in theassumptions 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 ofdividends expected or any other expected 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 ofrestricted shares that are expected to be delivered. Where an equity-settled award iscancelled, it is treated as if it had vested on the date of cancellation.

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Appendix

Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

2.10 Taxation

2.11 Cash and Cash Equivalents

Income taxes include all taxes based upon the taxable profits of the Group, including
withholding taxes payable on the distribution of retained earnings within the Group. Other
taxes not based on income, such as property and capital taxes, are included either in operating
expenses or in financial expenses according to their nature. The Group’s liability for current
income tax is calculated using tax rates that have been enacted or substantively enacted by
the end of the reporting period.

Cash and cash equivalents comprise cash on hand and demand deposits with banks andsimilar institutions. Cash equivalents are held for the purpose of meeting short-term cash
commitments (maturity of three months or less from the date of acquisition) and are subject
to an insignificant risk of changes in value.

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 isprobable 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 businessprojections on the relevant entities.
Such deferred tax assets and liabilities are not recognised if the temporary difference arises frominitial recognition of an asset or liability in a transaction other than a business combination thatat 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 toapply to the year when the asset is realised or the liability is settled, based on tax rates thathave 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 reversalof the temporary difference is controlled by the Group and it is probable that the temporary
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 that are recognised outside the income statement, in whichcase the tax is also recognised outside the income statement.

2.12 Financial Assets
Financial assets are classified as financial assets at fair value through the income statement
except for trade receivables which are classified at amortised cost. The classification depends on
the nature and purpose of the financial assets and is determined at the time of initial recognition.
Regular way purchases or sales of financial assets require delivery of assets within the timeframe established by regulation or convention in the marketplace. All regular way purchases
or sales of financial assets are recognised and derecognised at the settlement date (i.e. thedate that the asset is delivered to or by the Group). Financial assets are classified as current
assets, unless they are expected to be realised beyond twelve months of the statement offinancial position date.
The Group derecognises a financial asset when the contractual rights to the cash flows fromthe asset expire, or when it transfers the financial asset and substantially all the risks andrewards of ownership of the asset to another party. On derecognition of a financial 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 andreceivable; (ii) the cumulative gain or loss that had been recognised in other comprehensive
income and accumulated in equity.
Dividend income from investments is recognised in 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 other financial income (expense), net.

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 theircontractual cash flows and selling them at market price when needed. The main purpose ofsuch instruments is to fund obligations related to employees. They are designated as financial

Givaudan – 2020 Governance, Compensation and Financial Report49

Appendix

Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

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.

of the debtor (delinquency in or default on payments occurs, probability of bankruptcy or needfor financial reorganisation).

Other financial assets which are not debt instruments are held with the main objectives toparticipate in long-term partnerships, to hedge certain financial risks, and to fund obligations
related to employees. Their designation as financial assets measured at fair value through theincome statement is in line with management intentions to hold such assets.

Trade receivables are non-derivative financial assets with fixed or determinable paymentsthat are not quoted in an active market.

2.13 Derivative Financial Instruments and Hedging Activities

These financial assets are initially measured at fair value whereas directly attributabletransaction costs are expensed in the income statement. At the end of each period, thecarrying value is adjusted to the fair value with a corresponding entry in the income statement
until the investment is derecognised.

Most derivative instruments are entered into to provide economic hedges. They are initiallyrecognised at fair value on the date a derivative contract is entered into and are subsequently
measured at their fair value. The method to recognise the resulting gain or loss depends onwhether the derivative is designated as a hedging instrument and, if so, the nature of the item
being hedged.

The subsidiaries in the United States of America entered over the years into various life
insurance contracts called corporate owned life insurance (COLI) to fund long-term obligations
related to employees. For both the COLI contracts and the associated long-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 the latest transaction.

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 forundertaking various hedging transactions. The Group also documents its assessment, both athedge 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 ofhedged items.
Movements on the hedging reserve in shareholders’ equity are shown in the statement ofchanges in equity. These derivatives are presented as current or non-current on the basis of
their settlement dates.

2.12.2 Financial assets at amortised cost

2.13.1 Cash flow hedge

Trade receivables are the only financial assets that are recognised at fair value andsubsequently measured at amortised cost. They reach the objective of collecting contractual
cash flows over their life. Trade receivables are carried at amortised cost less allowances forloss. They generally do not contain a significant financing component. The allowance loss
measurement is then determined by applying a simplified approach equalling the lifetime
expected credit 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 isestimated using a provision matrix that takes into account both the outstanding amounts andthe risk category of the debtor, which is based on past default experience, specific factors to
debtors and reasonable and supportable information about future economic conditions. 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

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 isimmediately 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 the income statement, in the same line as the recognised
hedged item. However, when the hedged forecast transaction results in the recognition of anon-financial asset or liability, the amounts are transferred from equity and included in theinitial measurement of the cost of the non-financial asset or liability.

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Appendix

Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

When forward contracts are used to hedge forecast transactions such as future debt issuance,
management assumes that the sources of hedge effectiveness in regards of the characteristics ofthe 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 nolonger 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 Hedges of net investments in foreign operations
Hedges of net investments in foreign operations are accounted for similarly to cash flow
hedges. Any gain or loss on the foreign currency forward contracts relating to the effective
portion of the hedge is recognised in other comprehensive income and accumulated in theforeign currency translation reserve. The gain or loss relating to the ineffective portion isrecognised immediately in other financial income and expense in the income statement.

2.13.3 Derivatives at fair value through the income statement
Certain derivative instruments do not qualify for hedge accounting and are accounted for atfair value through the income statement. At each statement of financial position date thesederivative instruments are valued at fair value based on quoted market prices, with theunrealised gain or loss recognised in the income statement. They are derecognised when theGroup has lost control of the contractual 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 aweighted 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 realisablevalue 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 andsubsequently at cost less accumulated depreciation and accumulated impairment losses. The

cost of an item of property, plant and equipment includes expenditure that is attributable to thepurchase or construction. It includes, for qualifying assets, borrowing costs in accordance with
the Group’s accounting policy (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 classes of depreciable assets are as follows:–– Buildings and land improvements 40 years–– Machinery and equipment		
5 – 15 years–– Office equipment		
3 years–– Motor vehicles			
5 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at eachstatement of financial position date.
The carrying values of plant and equipment are written down to their recoverable amountwhen the carrying value is greater than their estimated recoverable amount (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 is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can be measured reliably. Subsequentcosts such as repairs and maintenance are recognised as expenses as incurred.

2.16 Leases
For all agreements containing a lease, a right-of-use asset and a corresponding lease liability
are recognised, except for low-value assets and short-term leases, defined as leases with alease term of 12 months or less. Those are recognised as an expense on a straight-line basis in
the consolidated income statement. The Group accounts for contracts containing both leaseand non-lease components as a single lease component.
The lease liability is initially measured at the present value of the future lease payments, asfrom commencement date of the lease until the expected termination date. In determining
the lease term, management considers all facts and circumstances that create an economicGivaudan – 2020 Governance, Compensation and Financial Report

51

Appendix

Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

incentive to exercise an extension option, or not exercise a termination option. Extension
options are only included in the lease term if the lease is reasonably certain to be extended.
The lease term is reassessed if an option is, or not, actually exercised or the Group becomes
obliged, or not, to exercise it. The assessment of reasonable certainty is only revised if asignificant event or a significant change in circumstances occurs, which affects thisassessment, and that is within the control of the lessee. The lease payments are discounted byusing the interest rate implicit in the contract or, if not available, the incremental borrowing
rate, which is defined as the interest rate that the Group would have to pay to borrow, over asimilar term and with a similar security, the funds necessary to obtain an asset of a similarvalue to the right-of-use asset in a similar economic environment. The lease liability issubsequently measured to reflect interest, lease payments and any lease modifications. The
lease liability is presented under the lines short-term debt and long-term debt in the
consolidated statement of financial position. The interest expense is presented in the line
financing costs in the consolidated income statement.

which itself includes two lower levels of cash-generating units related to Expressions Parfuméesand Fragrance Oils.

The right-of-use assets comprise the initial measurement of the corresponding lease liability,
lease payments made at or before the commencement date, initial direct costs and estimates ofcost to put the underlying asset in the appropriate condition. Right-of-use assets aresubsequently measured at cost less accumulated depreciation and impairment losses, adjusted
for any remeasurement of the lease liability. They are depreciated over the shorter period of thelease term and the useful life of the underlying asset. Right-of-use-assets are presented in the
consolidated statement of financial position under the line property, plant and equipment.

Intangible assets are carried at cost less accumulated amortisation and accumulated
impairment losses. Amortisation is on a straight-line basis over the estimated economic usefullife of the asset. Useful life is determined based on the character of the asset and may beindefinite. In that case, the asset is not amortised but annually tested for impairment.
Estimated definite useful life of major classes of amortisable assets are as follows:–– Name and product brands		
2 – 10 years–– Software/ERP system		
3 – 7 years–– Process-oriented technology
5 – 20 years–– Client relationships		
15 – 23 years–– Supplier relationships		
3 years

All lease payments on leases are presented as part of cash flows from financing activities, except
for the short-term and low-value leases cash flows which are booked under operating activities.

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 the acquired subsidiary at the date of acquisition. Goodwill on
acquisitions is recognised in the statement of financial position as an intangible asset. Goodwill
is tested annually for impairment or more frequently when there are indications of impairment,
and carried 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 andliabilities arising on the acquisition of a foreign operation are recognised in the local currency atthe effective date of the transaction and translated at year-end exchange rates. For the purposeof impairment testing, goodwill is allocated to the cash-generating units being the Group’sreportable operating segments: Taste & Wellbeing Division and Fragrance & Beauty Division,

Intangible assets acquired in a business combination are identified and recognised separatelyfrom goodwill when they satisfy the definition of an intangible asset and their fair values canbe 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 and when its cost can be measured reliably.

Gains or losses arising on the disposal of intangible assets are measured as the difference
between the net disposal proceeds and the 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 in circumstances indicate that the carrying amount
may not be recoverable. When the recoverable amount of a non-financial asset, being thehigher of its fair value less cost to sell and its value in use, is less than its carrying amount, thenthe carrying amount is reduced to the asset’s recoverable value. This reduction is recognisedGivaudan – 2020 Governance, Compensation and Financial Report

52

Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

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 aterminal value. These are discounted using a pre-tax discount rate that reflects current
market conditions of the time value of money and the 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 todetermine 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 thatwould have been determined, net of depreciation or amortisation, if no impairment loss had
been recognised.

2.19 Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production ofqualifying assets, which are assets that necessarily take a substantial period of time to prepare
for their intended use, are added to the cost of those assets, until such time as the assets aresubstantially ready for their intended use.
Investment income earned on the temporary investment of specific borrowings pending theirexpenditure on qualifying assets is deducted from the borrowing costs eligible forcapitalisation. 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 theordinary course of business from suppliers and are carried at amortised cost.

Appendix

2.21 Debt
The proceeds of straight bonds, of private placements and of debt issued are recognised as theproceeds received, net of transaction costs incurred. Any discount arising from the coupon
rate, represented by the difference between the net proceeds and the redemption value, isamortised using the effective interest rate method and charged to interest expense over thelife of the bonds 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 aresult of past events, for which it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation, and for which a reliable 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.

2.23 Own Equity Instruments
Own equity instruments are own shares and derivatives on own shares. Purchases and sales areaccounted for at the settlement date.
Purchases of own shares are recognised at acquisition cost including transaction costs as adeduction 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 execution of own
equity derivatives are recognised at the execution date market price.
The settlement and the contract for derivatives on own shares determine the categorisationof each instrument. When the contract assumes the settlement is made by exchanging a fixedamount of cash for a fixed number of treasury shares, the contract is recognised in 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 ofthe strike price of the derivative on own shares with the interest charge recognised over thelife 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 theline 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.

Givaudan – 2020 Governance, Compensation and Financial Report

53

GovernancereportNotes to the consolidated financial statements

2.24 Share Capital

3.1 Critical Accounting Estimates and Assumptions

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

The key assumptions concerning the future, and other key sources of estimation uncertainty
at the statement of financial position date that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year, arefor the most part related to:Appendix

Statutory financial
reportConsolidated
financial report

Compensation
report2.25 Statement of Cash Flows
Cash flows from operating activities arise from the principal activities of the Group in the
Fragrance & Beauty and Taste & Wellbeing 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 repaymentof the debt instruments, the dividend payment to shareholders and interest paid. Cash flows
from long-term and short-term borrowings are reported separately of gross cash receipts andgross cash payments.
Cash flows from investing activities arise principally from the investments in property, plantand equipment and intangible assets, from the acquisition of subsidiaries, and from thetransactions with jointly controlled entities.

–– In a business combination, the determination of the fair value of the identifiable assets
acquired, particularly intangibles, and the liability requiring estimations which are based on all
available information and in some cases on assumptions with respect to the timing andamount of future revenues and expenses associated with an asset. The purchase price isallocated to the underlying acquired assets and liabilities based on their estimated fair value
at the time of acquisition. The excess is reported as goodwill. As a result, the purchase priceallocation impacts reported assets and liabilities, future net earnings due to the impact on
future depreciation and amortisation expense and impairment charges (Note 6);–– The impairment of goodwill requiring estimates of the value in use of the cash-generating
units to which goodwill is allocated (Note 22);

2.26 Distribution to the Shareholders–– The impairment of long-lived assets requiring estimates to measure the recoverable
amount of an asset or group of assets (Note 21 and 22);

Dividend distributions or distributions out of statutory capital reserves from ‘capital
contributions – additional paid-in capital’ are recognised in the period in which they areapproved by the Group’s shareholders.

–– The calculation of the present value of defined benefit obligations requiring financial anddemographic assumptions (Note 8);

3. Critical Accounting Estimates and Judgments
The estimates and underlying assumptions are reviewed on an ongoing basis and are basedon historical experience and other factors, including expectation of future events that are
believed to be reasonable under the circumstances. During 2020 management included in it's
assessment the potential impact of the coronavirus pandemic on the carrying value of theGroup's carrying amounts of assets and liabilities.

–– The determination and provision for income taxes requiring estimated calculations forwhich the ultimate tax determination is uncertain (Note 16);–– The provisions requiring assumptions to determine reliable best estimates (Note 25); and–– The contingent liabilities assessment (Note 29).
If, in the future, estimates and assumptions, which are based on management’s best judgment
at the date of the financial statements, deviate from the actual circumstances, the original
estimates and assumptions will be modified as appropriate in the year in which thecircumstances change.

Givaudan – 2020 Governance, Compensation and Financial Report

54

Appendix

Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

3.2 Critical Judgments in Applying the Entity’s Accounting Policies
In the process of applying the Group’s accounting policies, management has made thefollowing 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 internallydeveloped programmes or modifications that result in new or in substantial improvementsof existing IT systems and applications. Enterprise Resource Planning relates to theimplementation of an ERP system that is changing the way the business is done in theareas of Finance, Supply Chain and Compliance. The Group has determined that thedevelopment phase of internally developed software and the ERP business transformations
will provide future economic benefits to the Group and meet the criterion of intangible
assets (Note 22); and–– Internal developments on formulas, technologies and products: The outcome of thesedevelopments depends on their final assemblage and application, which varies to meetcustomer needs, and consequently the future economic benefits of these developments 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.

4. Foreign Exchange Rates
Foreign currency to
Swiss francs
exchange rates

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 issue or reimburse debt,
propose to adjust the amounts distributed to the shareholders, return capital to shareholders,issue new shares and cancel shares through share buyback programmes.
The Group monitors its capital structure using a number of classic measures, mainly Leverage
and Net Debt to EBITDA. The Group is committed to maintaining an investment grade credit
profile, as defined by external ratings agencies.
The Leverage ratio is defined as net debt divided by the sum of net debt and equity (as defined
for leverage ratio in the table below).
Note

2020

2019

Short-term debt

23

206

335

Long-term debt

23

4,245

3,796

Less: cash and cash equivalents

18

(411)

(452)

4,040

3,679

3,490

3,640

in millions of Swiss francs

Net debt
Total equity attributable to equity holders of the parent
Remeasurement of post-employment benefit obligations

ISO code

Units

31 Dec2020

Average2020

31 Dec2019

Average2019

31 Dec2018

Average
2018

Dollar

USD

1

0.88

0.94

0.97

0.99

0.98

0.98

Euro

EUR

1

1.08

1.07

1.09

1.11

1.13

1.15

Pound

GBP

1

1.21

1.21

1.28

1.27

1.25

1.30

Yen

JPY

100

0.86

0.88

0.89

0.91

0.90

0.88

Singapore dollar

SGD

1

0.67

0.68

0.72

0.73

0.72

0.72

Real

BRL

1

0.17

0.18

0.24

0.25

0.25

0.27

Renminbi

CNY

1

0.14

0.14

0.14

0.14

0.14

0.15

Mexican peso

MXN

100

4.44

4.37

5.13

5.13

5.01

5.08

RupiahIDR 10,000

0.63

0.64

0.70

0.70

0.68

0.69

8

484

525

Equity

3,974

4,165

Net debt and equity

8,014

7,844

Leverage ratio

50%

47%

The Net Debt to EBITDA ratio is defined as follows:–– Net debt is calculated as the total of the consolidated short-term and long-term debt, lesscash and cash equivalents.
–– EBITDA is defined as Earnings Before Interest (and other financial income (expense), net),
Tax, Depreciation and Amortisation, corresponds to operating income before depreciation,amortisation and impairment of long-lived assets.

Givaudan – 2020 Governance, Compensation and Financial Report

55

GovernancereportNotes to the consolidated financial statements

The Group has entered into several private placements which contain various covenants withexternally imposed capital requirements. The Group was in compliance with these requirements
as at 31 December 2020 and 2019.

Statutory financial
reportConsolidated
financial report

Compensation
report

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 tominimise 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 Groupthrough internal risk reports which analyse exposures by degree and magnitude of risk. To
manage the interest rate and currency risk arising from the Group’s operations and its sourcesof finance, the Group enters into derivative transactions, primarily interest rate swaps,
forward currency contracts and options. Compliance with policies and exposure limits isreviewed by the treasury controlling on 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 items in the table:

2020
in millions of Swiss francs

Note

At
amortised
cost

411

Derivatives
used forhedge
accounting

Otherfinancialliabilities

Total

Current financial assets
Cash and cash equivalents

18

Derivative financial
instruments

5.3

Financial assets at fair value
through income statement

5.3

Accounts receivable – trade19

Other current assets a

411
54

54

4

4

1,359

1,359

154

154

Non-current financial assets
Derivative financial instruments

5.3

Financial assets at fair value
through income statement

5.3

Total financial assets
as at 31 December

65

65

180
1,924

180

238

65

19

30

2,227

Current financial liabilities
Short-term debt

23

Derivative financial instruments

5.3

45 b

Accounts payable

161

206

809

809

3,876

4,245

4,846

5,412

49

Non-current financial
liabilities
Derivative financial
instruments

5.3

Long-term debt

23

Total financial liabilities
as at 31 December

103
369b
414

a)	Other current assets consist of other receivables non trade.
b)	Lease liabilities.

Appendix

At fair value
through theincomestatement

19

133

103

Givaudan – 2020 Governance, Compensation and Financial Report

56

GovernancereportNotes to the consolidated financial statements

2019
in millions of Swiss francs

Note

At amortised
cost

452

At fair value
through theincomestatement

Derivatives
used forhedge
accounting

Otherfinancialliabilities

5.2.1 Market Risk
Total

Compensation
reportCurrent financial assets
Cash and cash equivalents

18

Derivative financial
instruments

5.3

Financial assets at fair value
through income statement

5.3

Accounts receivable – trade19

Other current assets a

452
24

24

4

4

1,365

1,365

163

163

Consolidated
financial reportNon-current financial assets
Derivative financial instruments

5.3

Financial assets at fair value
through income statement

5.3

Total financial assets
as at 31 December

1
177
1,980

205

177
1

2,186

Current financial liabilities
Short-term debt

23

Derivative financial
instruments

5.3

42 b
10

293

335

833

833

19

Accounts payable
Statutory financial
report1

29

Non-current financial
liabilities
Derivative financial
instruments

5.3

Long-term debt

23

Total financial liabilities
as at 31 December

79
399b
441

10

98

79
3,397

3,796

4,523

5,072

Appendixa)	Other current assets consist of other receivables non trade.
b)	Lease liabilities.

The carrying amount of each class of financial assets and liabilities disclosed in the previous
tables approximates the fair value. The fair value of each class of financial assets and liabilities,
except financial assets and liabilities at amortised cost, is determined by reference to publishedprice quotations 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 isconsidered as equivalent to the fair value.

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 ofderivative financial instruments to manage its exposure to foreign currency risk and interest
rate risk, including:–– Currency derivatives, mainly forward foreign exchange contracts, to hedge the exchange
rate risk arising from recorded transactions; and–– 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 rateenvironment.
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 inwhich 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. Foreign exchange 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.
In 2018 the Group applied hedge accounting on the net investment in foreign currency in
Naturex SA with the aim of being protected from the foreign currency risk on the translation of
the investment in Naturex (i.e. EUR) into the Group’s presentation currency (i.e. CHF). In total
EUR 1,292 million of Euro straight bonds were designated as hedging instruments, corresponding
to the net investment in Naturex. This resulted in a gain of CHF 7 million (2019: CHF 51 million),recognised in currency translation differences in equity in 2020.
In 2019 and 2020 the Group applied hedge accounting on the foreign currency risk related to
the Euro straight bonds coupons, and to the acquisitions of Albert Vieille SAS, drom, and thecosmetic business of Indena.

Givaudan – 2020 Governance, Compensation and Financial Report

57

Compensation
reportGovernancereportNotes to the consolidated financial statements

In 2020 the Group also applied hedge accounting on the net investment in foreign currency inUngerer with the aim of being protected from the foreign currency risk on the translation of
the investment in Ungerer (i.e. USD) into the Group’s presentation currency (i.e. CHF). The
combination of a Eurobond and several cross-currency swaps as one single item aredesignated as hedging instrument for an amount of USD 544 million corresponding to theforeign currency principal cash flow of the cross-currency swap. In 2020, it resulted in a gainof CHF 51 million recognised in currency translation differences in equity.
The cross-currency swaps designated in the above mentioned hedging relationship have thefollowing characteristics:

Appendix

Statutory financial
reportConsolidated
financial report

EntityIssue
dateType ofinstrument

CrossGivaudan SA 2020 currency
swaps

Notional
amountin millions
of EUR

Notional
amountin millions
of USD80

87.3

2.218%

100

108.8

2.166%

80

86.9

2.167%

Annual
USD fixed
interest rate
(payment)

80

87.0

2.166%

90

97.9

2.133%

70

76.2

2.126%

AnnualEUR fixed
interest rate Starting(receipt)
date

Maturitydate

22 Apr
2020

22 Apr2027

1%

Furthermore Group Treasury centrally manages foreign exchange risk management activities
against the functional currency of each subsidiary, and is required to hedge, whenever costeffective, their largest exposures.
The measurement of the foreign currency risk expresses the total exposure by currency, whichis in the opinion of Group Treasury a representative manner to monitor the risk. It measuresthe cumulative foreign exchange risk of all subsidiaries of recognised assets and liabilities thatare 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 thedate of the consolidated statement of financial position:
Currency exposure 2020in millions of Swiss francs

USD

EUR

CHF

GBP

SGD

Currency exposure without hedge a

424

(774)

113

(200)

109

Hedged amount

(440)

754

(108)

195

(111)

Currency exposure including hedge

(16)b

(20)

5

(5)

(2)

Currency exposure 2019in millions of Swiss francs

USD

EUR

CHF

GBP

SGD

Currency exposure without hedge a

477

(159)

43

(149)

148

Hedged amount

(468)

83

(38)

156

(162)

9b

(76)

5

7

(14)

Currency exposure including hedgea)	+ 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 in Naturex and Ungerer, are included. The Euro straight bonds for theamounts of EUR 1,292 million and USD 544 million, which are both designated as hedging
instruments have been excluded respectively from the EUR and USD exposures to align theforeign exchange risk through natural hedging.

Givaudan – 2020 Governance, Compensation and Financial Report58

Appendix

Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

The following table summarises the sensitivity to transactional currency exposures of themain currencies as at 31 December: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 or protecting interest
expense through different interest cycles. Hedging activities are regularly evaluated to aligninterest rate views and define risk limits. Group Treasury manages interest rate risk mainly by
the use of interest rate swap contracts.

Currency risks 2020in millions of Swiss francs

USD

EUR

CHF

GBP

SGD

Reasonable shift

9%

5%

6%

12%

6%

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

(1)

(1)

–

(1)

–

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

1

1

–

1

–

Currency risks 2019in millions of Swiss francs

USD

EUR

CHF

GBP

SGD

Reasonable shift

13%

6%

6%

8%

6%

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

1

(4)

1

1

(1)

In response to the announcements made by LIBOR regulators in regard of the transition to
new benchmark interest rates to replace LIBOR, the Group has set up an IBOR transition
project comprising the following work streams: risk management, tax, treasury, legal,
accounting and systems. The aim of the programme is to understand where the businesscould be impacted by IBOR exposures and prepare and deliver on an action plan to enable asmooth transition to alternative benchmark rates. The Group aims to have its transition andfall back plans in place in 2021.

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

(1)

4

(1)

(1)

1

The following table shows the sensitivity to interest rate changes:

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 the significant currencies
contributing to the exposure to determine the reasonable change.
Argentina became hyperinflationary effective 1 July 2018, requiring retroactive implementationof hyperinflation accounting as of 1 January 2018. The impact of the restatement of the nonmonetary assets and liabilities of the subsidiaries in Argentina with the general price index at
the beginning of the period is recorded in the opening equity. In the current year thesubsequent loss resulting from the restatement of non-monetary assets of CHF 2 million(2019: CHF 8 million loss) is recorded in other financial income (expense), net.
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 invest in debt financial instruments. Borrowings issued atvariable rates expose the Group to cash flow interest rate risk which is partiallycounterbalanced by cash held at variable rates. Borrowings issued at fixed rates expose theGroup to fair value interest rate risk.

As at 31 December 2020in millions of Swiss francs

Impact on income statement
Impact on equity
As at 31 December 2019in millions of Swiss francs

Impact on income statement
Impact on equity

150 basis points increase

25 basis points decrease

–

–

152

(31)

150 basis points increase

25 basis points decrease

–

–

126

(25)

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

Givaudan – 2020 Governance, Compensation and Financial Report59

Compensation
reportGovernancereportNotes to the consolidated financial statements

Cash flow hedges
The Group entered into several forward starting interest rate swaps, in order to protect
against future increases in interest rates, while also fixing the interest rate on future debt
issuance. The transactions have the following characteristics:

Entity

Issue
date

Hedge
instrument

2018
Givaudan SA

2019
2020

Notional amountin millions

125

2014
2015

100
CHF

2016
2017
Consolidated
financial report

Currency of
instrument

100
25

Forwardstarting interest
rate swaps

100
250
EUR

Appendix

Statutory financial
report

350
2020

50

Annual fixed interest
rate (payment)

2.052%
2.345%
0.921%
1.275%

Floating rate
(receipt)The
3 months
CHF Liborrate
The
6 months
CHF Liborrate

0.967%
1.302%
1.200%

The
6 months
EUR Liborrate

0.282%

The carrying amount of the total cash flow hedges at 31 December 2020 is CHF 133 million(2019: CHF 97 million). The amount of fair value recognised in other comprehensive income is
CHF 58 million (2019: CHF 56 million).
Hedge positions closed
The Group closed several financial instruments which had been entered to protect against
future increases in interest rate, while also fixing the interest rate on future debt issuance. The
corresponding losses which have been recorded in equity will be recycled in the income

Starting date

Maturity date

Hedge item

07 Dec 2021

07 Dec 2031

Highly probable debt issuance in 2021 replacing the public bondof CHF 150 million, issued in Dec 2011 with a 10 year maturity

15 Feb 2024
19 Mar 2024

15 Feb 2034 Highly probable debt issuance in 2024 replacing the public bond
19 Mar 2034 of CHF 150 million, issued in Mar 2014 with a 10 year maturity

05 Dec 2031

05 Dec 2041

Highly probable debt issuance in 2031 replacing the public bondof CHF 200 million, issued in Dec 2016 with a 15 year maturity

09 Apr 2025

09 Apr 2030

Highly probable debt issuance in 2025 replacing the public bondof CHF 200 million, issued in Apr 2018 with a 7 year maturity

20 Dec 2024

22 Dec 2031

Highly probable debt issuance in 2024 replacing the private placementof EUR 200 million, issued in Dec 2017 with a 7 year maturity

17 Sep 2025

17 Sep 2032

Highly probable debt issuance in 2025 replacing the public bondof EUR 500 million, issued in Sep 2018 with a 7 year maturity

17 Sep 2030

17 Sep 2040

Highly probable debt issuance in 2030 replacing the public bondof EUR 800 million, issued in Sep 2018 with a 12 year maturity

22 Apr 2032

22 Apr 2042

Highly probable debt issuance in 2032 replacing the public bondof EUR 500 million, issued in Apr 2020 with a 12 year maturity

Givaudan – 2020 Governance, Compensation and Financial Report60

Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

statement (Financing costs) over the period of the cash flow initially hedged, although theperiod of cash flows of the new debts is sometimes different. The transactions have thefollowing characteristics:

EntityInception
date

Notional
amount in
millions

Averagerate

Fair value of financial
instrument at thedate of settlement inmillions of Swiss francs

Amount recycled in
the income statement
over the period in
millions of Swiss francs

Maturity
Assigned
Date Tranche to debt

USD

100

1.80%

(1)

-

Feb 2013 Feb 2023

2012

CHF

75

1.63%

(8)

(2)

Dec 2016 Dec 2021

5Y

Public bond for a total of CHF 300 million, respectively
CHF 100 million at a rate of 0.000% with 6 year
maturity and CHF 200 million at a rate of 0.625%
with 15 year maturity.

2012
2014

CHF

150

1.90%

(15)

(3)

Apr 2018

Apr 2023

5Y

Public bond for a total of CHF 350 million,
respectively CHF 150 million at a floating ratewith 2 year maturity and CHF 200 million at a
rate of 0.375% with 7 year maturity.

EUR

400

1.05%

(1)
(5)

(1)

Sep 2018

Sep 2025
Sep 2028

Dual tranche placement of Euro bond totalling
7Y EUR 1,300 million, respectively of EUR 500 million
10Y at a rate of 1.125% for 7 years and EUR 800 million
at a rate of 2.000% for 12 years.

CHF

125

1.40%

(2)
(20)

-

Nov 2020

Nov 2025
Nov 2028

Treasurylocks

Forwardstarting
interest rate
swaps
June
2018
2014
2015
2018
2019

Total for the year ended 31 December 2020

5.2.1.3 Price Risk
The Group is exposed to equity price risk arising from equity investments held classified at fairvalue through income statement. The Group manages its price risk through a diversificationof portfolios within the limits approved by the Board of Directors.
Appendix

Starting dateof recycling
through income
statement

Private Placements for a total of USD 250 million,
respectively USD 40 million redeemable in February2020 with an annual interest rate of 2.74%,
10Y USD 150 million redeemable in February 2023 withan annual interest rate of 3.30% and USD 60 million
redeemable in February 2025 with an annual interest
rate of 3.45%.

2012

Givaudan SA

Currency
Type ofof
Instrument Instrument

The Group holds its own shares to meet future expected obligations under the various sharebased payment schemes.

(6)

5Y
8Y Public bond of CHF 150 million at a rate of 0.150%
with 8 year maturity.

Givaudan – 2020 Governance, Compensation and Financial Report

61

Compensation
reportGovernancereportNotes to the consolidated financial statements

Sensitivity analysis
The Group’s equity portfolio is composed of US and EUR shares. The benchmark for thereasonable change is an average of historical volatility of US indexes (16% for the last three
years) and of CAC PME index (24% for the last three years).

Consolidated
financial report

Numberof banks

2019
Max. with any
individual
Total
bank
in Mio CHF
in Mio CHF

Numberof banks

AAA − range

30

30

1

6

6

1

AA − range

16

14

4

6

4

4

2020
in millions of Swiss francs

A − range

104

50

12

136

95

10

BBB − range

275

155

7

271

132

7

Impact on income statement

Impact on income statement

Statutory financial
report2020
Max. with any
individual
Total
bank
in Mio CHF
in Mio CHF

The sensitivity analysis has been determined based on the exposure to equity price risks at theend of the reporting period:

2019 - 16% USD & 18% EUR
in millions of Swiss francs

Equity priceincrease

Equity pricedecrease32(32)

Equity priceincrease

Equity pricedecrease

26(26)

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 to financial
institutions is centrally managed within the Group Treasury function.
Trade receivables are subject to a policy of active risk management which focuses on theassessment of country risk, credit limits, ongoing credit evaluation and account monitoringprocedures. Generally, there is no significant concentration of trade receivables orcommercial counterparty credit risk, due to the large number of customers that the Groupdeals with and their wide geographical spread with the exception of one single externalcustomer that generates revenues, mainly attributable to the Fragrance & Beauty Division,of approximately CHF 566 million (2019: CHF 581 million). Countries, credit limits andexposures are continuously 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.

Appendix

The following table presents the credit risk exposure to individual financial institutions:

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.

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 anduncommitted 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 ofcash is generally invested in interest bearing current accounts, time deposits, money market
deposits and funds. When necessary, 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Givaudan – 2020 Governance, Compensation and Financial Report

62

GovernancereportNotes to the consolidated financial statements

cash flows of financial liabilities based on the earliest date on which the Group is obliged to pay.
The table includes both interest and principal cash flows:2020
in millions of Swiss francs

Compensation
reportShort-term debt (excluding bank overdrafts)
Accounts payable

Consolidated
financial report
Statutory financial
report6 − 12months(5)(164)

Gross settled derivative financial
instruments − outflows
Gross settled derivative financial
instruments − inflows

1−5
years

Over 5
years

(809)
(18)

(1,860)

Total

(169)

(809)

Net settled derivative financial instruments

(113)

(700)

(131)
(2,560)

1,889

706

(24)

(28)

(1,787)(2,477)(4,316)

Balance as at 31 December

(809)

(186)

(1,805)(2,590)(5,390)2019
in millions of Swiss francs

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

Total

Short-term debt (excluding bank overdrafts)

(192)

(101)

Accounts payable(833)

Long-term debt

Appendix

Up to 6months

Net settled derivative financial instruments

–

2,595

(293)
(19)

(79)

(99)

Gross settled derivative financial
instruments − outflows(2,143)Gross settled derivative financial
instruments − inflows

2,155

431

(15)

(33)

(1,709)(1,993)(3,750)(1,028)(133)(1,728)(2,072)(4,961)Long-term debt
Balance as at 31 December(429)–– Level 3 inputs to measure fair value are those derived from valuation techniques that
include inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
2020
in millions of Swiss francs(2,572)
2,586

Level 1

Level 2

Level 3

Total

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

54

Swaps (hedge accounting)

65

65

Corporate owned life insurance

37

37

Equity securities

(833)
(1)

–– 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); and109

Debt securities
Total assets

17

54

4

130

4

303

17
109

190

17

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

19

19

Swaps (hedge accounting)

133

133

Total liabilities

152

152

2019
in millions of Swiss francs

Level 1

Level 2

Level 3

Total

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

24

Swaps (hedge accounting)1

1

Corporate owned life insurance

36

36

16

128

The undiscounted cash flows related to lease liabilities are CHF 52 million (2019: CHF 47 million)
within 1 year, CHF 146 million (2019: CHF 92 million) within 1 to 5 years and CHF 261 million(2019: CHF 357 million) thereafter.

Equity securities

5.3 Fair Value Measurements

Total assets

112

Debt securities

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 thefair value is measured:Financial liabilities at fair value through income statement–– Level 1 inputs to measure fair value are those derived from quoted prices (unadjusted) in
active markets for identical assets or liabilities;

Total liabilities

112

24

17

17

94

206

Forward foreign exchange contracts

10

10

Swaps (hedge accounting)98

98

Swaps (no hedge accounting)

–

–

108

108

Givaudan – 2020 Governance, Compensation and Financial Report63

Appendix

Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

Financial assets and liabilities at fair value through income statement are measured with
Level 1, Level 2 and Level 3 inputs. Level 1 financial assets consist of marketable securities
quoted on financial market. Level 2 financial assets and liabilities consist of cross-currency
swaps and forward foreign exchange contracts that are measured using quoted forward
exchange rates and yield curves derived from quoted interest rates matching maturities of thecontracts, 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 and equity funds managed byunrelated fund managers. Level 3 financial assets consist of investment funds in venture
capital that are measured quarterly by an independent third parties using proprietaryvaluation models which are audited by qualified authorities.
The carrying amount of each class of financial assets and liabilities disclosed above approximates
their fair value. There was no transfer between the level categories in the period.

6. Acquisitions
Acquisitions 2020
During the year 2020 Givaudan made three acquisitions, Ungerer, the cosmetics business ofIndena and Alderys.

Ungerer
On 20 February 2020 Givaudan acquired 100% of the share capital of Ungerer and its affiliates
for a purchase price of CHF 676 million (USD 688 million). Headquartered in New Jersey, USA,
Ungerer is a leading independent company in the flavour and fragrance specialty ingredientsbusiness, most notably in essential oils, which provides a rich palette of predominantly naturalingredients for flavour and fragrance creation, as well as for end customers of such specialties.
Ungerer also has an impressive local and regional customer presence for both flavours andfragrances in North America. Founded more than 125 years ago, Ungerer has developed astrong market position in all segments and a high quality reputation with its customer base.
With a presence in more than 60 countries, a total of eight manufacturing facilities and six
R&D centres, Ungerer’s capabilities and its 650 employees will further extend Givaudan’smarket leadership in its core flavour and fragrance activities. As from 1 February 2020 theacquisition contributed CHF 190 million of sales and a net profit of CHF 10 million to theGroup’s consolidated results.

The identifiable assets and liabilities of Ungerer acquired are recorded at fair value at the dateof acquisition and are as follows:in millions of Swiss francs

Fair value

Cash and Cash equivalents

94

Accounts receivable

36

Inventories

78

Other current assets

10

Property, plant and equipment

36- Client relationships

213- Process-oriented technology and other73- Name and product brands

10- Software / ERP system

1

Total identified intangible assets

297

Accounts payable(4)

Other payables(67)

Provisions

(7)

Debt

(7)

Deferred tax liabilities(63)

Net assets acquired403

Cash consideration

676

Goodwill273

The goodwill of CHF 273 million arising on the acquisition relates mainly to the value of thequalified workforce and expected synergies that do not meet the criteria for recognition as
separable intangible assets. The goodwill is allocated partly to the Taste & Wellbeing divisionand partly to the Fragrance & Beauty division for the amounts of CHF 191 million and
CHF 82 million respectively. The total amount of goodwill that is expected to be deductible fortax purposes is nil.
The acquired receivables are fair valued at CHF 36 million. The gross contractual amounts of thereceivables acquired are CHF 37 million. The best estimation at the acquisition date of thecontractual cash flows not to be collected amounts to CHF 1 million.

Givaudan – 2020 Governance, Compensation and Financial Report

64

GovernancereportNotes to the consolidated financial statements

In compliance with IFRS 3, the fair values determined are provisional and the Group has twelve
months from the date of acquisition to finalise the allocation of the acquisition price.

On 29 May 2020 Givaudan acquired the cosmetics business of Indena for a purchase price of
CHF 32 million (EUR 30 million). Headquartered in Milan, Italy, Indena is a world leading
company dedicated to the identification, development and production of high quality active
ingredients derived from plants, for use in the pharmaceutical, health-food and personal careindustries. With almost a century of botanical experience, Indena has developed an extensive
breadth of expertise in this field, while ensuring bio-diversity and protecting the ecosystemfrom uncontrolled harvesting. From 29 May 2020, the acquisition has contributed CHF 3 millionof sales to the Group’s consolidated results.

AMSilkCompensation
reportDuring the year 2019 Givaudan made five acquisitions, AMSilk, Albert Vieille, Fragrance Oils,
Golden Frog and drom.

Consolidated
financial report

IndenaAcquisitions 2019

The identifiable assets and liabilities of the cosmetics business of Indena acquired are recorded
at fair value at the date of acquisition and CHF 21 million goodwill has been recognised. The
goodwill arising on the acquisition relates mainly to the value of the qualified workforce andexpected synergies that do not meet the criteria 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.

The identifiable assets and liabilities of the cosmetics business of AMSilk acquired are recorded
at fair value at the date of acquisition and no goodwill has been recognised. The allocation of theacquisition price has been finalised and no adjustments were made to the acquisition values.

Appendix

Statutory financial
reportAlderys
On 3 August 2020 Givaudan acquired 80% of the share capital of Alderys SAS for a purchaseprice of CHF 23 million (EUR 21 million). Founded in 2009, Alderys is an innovative Frenchbiotechnology company headquartered in Orsay, France, employing 30 employees. Alderys
develops innovative approaches to the biological engineering of valuable compounds fromrenewable feedstock. The projects developed by Alderys are aimed at the chemical and cosmetic
industry sectors as well as nutrition. They are recognised for offering innovative technologicalindustrial solutions with high sustainability standards. From 3 August 2020, the acquisition has
generated CHF 0.8 million other operating income to the Group’s consolidated results.
The identifiable assets and liabilities of the cosmetics business of Alderys acquired arerecorded at fair value at the date of acquisition and CHF 10 million goodwill has beenrecognised. The goodwill arising 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. In compliance with IFRS 3, these values determined are provisional and theGroup has twelve months from the date of acquisition to finalise the allocation of theacquisition price.

On 25 April 2019 Givaudan acquired the cosmetics business of AMSilk GmbH for a purchaseprice of CHF 7 million. AMSilk is the world’s first industrial supplier of vegan silk biopolymers
and has its headquarters near Munich, Germany. AMSilk offers a range of high-performancebiosourced polypeptides with unique functional properties in the field of cosmetics. Thesevegan biopolymers offer a broad range of applications across categories such as hair care andskin care with benefits like silk touch, anti-pollution or colour protection of the hair. Over thelast 9 years, they have filed 10 patents for the use of biopolymers in cosmetic applications.

Albert VieilleOn 3 May 2019 Givaudan acquired 100% of the share capital of Albert Vieille SAS and its affiliates
for a purchase price of CHF 54 million. Albert Vieille has unique know-how in the realm ofaromatic plants and specialises in 100% pure essential oils and speciality natural ingredients. The
natural ingredients are used for the formulation of perfumes and aromatherapy products. With
its origins dating back to 1920, and with more than 60 employees, Albert Vieille is based close to
Grasse, in France, and has a manufacturing facility in Spain, with its products sold globally
through a network of distributors. They source their raw materials across the world, wherefragrant crops are harvested and have developed over many years strong capabilities in naturalingredients sourcing and processing.
The goodwill of CHF 27 million arising on the acquisition relates mainly to the value of thequalified workforce and expected synergies that do not meet the criteria for recognition as
separable intangible assets. The identifiable assets and liabilities of Albert Vieille acquired arerecorded at fair value at the date of acquisition. The allocation of the acquisition price has
been finalised and no adjustments were made to the acquisition values.

Givaudan – 2020 Governance, Compensation and Financial Report

65

Appendix

Statutory financial
reportConsolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

Fragrance Oilsdrom

On 21 August 2019 Givaudan acquired 100% of the share capital of Fragrance Oils Limited andits affiliates for a purchase price of CHF 244 million. Founded in 1967, Fragrance Oils is a leading
British-based manufacturer and marketer of innovative speciality fragrances for finefragrances, personal and home care applications. Their state-of-the-art manufacturing facilityin Radcliffe, UK, employs over 250 employees and sells its products in more than 90 countries,
in particular in high growth markets.

On 6 September 2019 Givaudan acquired 100% of the share capital of drom fragrances GmbH& Co. KG and its affiliates for a purchase price of CHF 180 million. Founded in 1911, drom is a
global perfume house creating fragrances for consumer products and fine fragrance
customers across the world. Headquartered near Munich, in Germany, drom has
manufacturing facilities in Germany, China, the USA and Brazil. The company employs
489 people globally.

The identifiable assets and liabilities of Fragrance Oils acquired are recorded at fair value atthe date of acquisition. Total net assets acquired of CHF 139 million consist of cash
(CHF 25 million), working capital (CHF 21 million), fixed assets (CHF 24 million), intangible
assets which are comprised of process knowledge, client relationships and brand name
(CHF 91 million), deferred tax liabilities (CHF 17 million) and other liabilities (CHF 5 million). The
total purchase price of CHF 244 million was settled in cash, resulting in goodwill of
CHF 105 million which relates mainly to the value of the qualified workforce and expectedsynergies that do not meet the criteria for recognition as separable intangible assets.

The identifiable assets and liabilities of drom acquired are recorded at fair value at the date ofacquisition. Total net assets acquired of CHF 98 million consist of cash (CHF 11 million), working
capital (CHF 40 million), fixed assets (CHF 28 million), intangible assets which are comprisedof process knowledge, client relationships and brand name (CHF 98 million), deferred tax
liabilities (CHF 27 million), short-term loans (CHF 25 million) and other liabilities (CHF 27 million).
The total purchase price of CHF 180 million was settled in cash, resulting in goodwill of
CHF 82 million which relates mainly to the value of the qualified workforce and expectedsynergies that do not meet the criteria for recognition as separable intangible assets.

The allocation of the acquisition price has been finalised and no adjustments were made to
the acquisition values.

The allocation of the acquisition price has been finalised and no adjustments were made to
the acquisition values.

Golden Frog

7. Segment Information

On 30 August 2019 Givaudan acquired 100% of the share capital of Golden Frog FlavorFragrance Manufacture Corporation, a Vietnamese flavour company, for a purchase price of
CHF 30 million. Golden Frog manufactures natural flavours, extracts and essential oils for the
food and beverage industry. It offers a wide range of natural ingredients including herbs,
spices, fruit and vegetable extracts and essential oils from the great biodiversity of Vietnam.
With headquarters and manufacturing facilities in the Ho Chi Minh area, Golden Frog employs
156 people and caters to the needs of the South East Asian markets.

Management has determined the operating segments based on the reports reviewed by the
Executive Committee that are used to allocate resources to the segments and to assess theirperformance. The Executive Committee considers the business from a divisional perspective:

The goodwill of CHF 11 million arising on the acquisition relates mainly to the value of thequalified workforce and expected synergies that do not meet the criteria for recognition as
separable intangible assets. The identifiable assets and liabilities of Golden Frog acquired arerecorded at fair value at the date of acquisition. The allocation of the acquisition price has
been finalised and no adjustments were made to the acquisition values.

Fragrance & Beauty	
Manufacture and sale of fragrance and beauty products into
three global business units: Fine Fragrances, Consumer Products
and, Fragrance Ingredients and Active Beauty. Expressions
Parfumées and Fragrance Oils are both included in Fine
Fragrances and Consumer Products; andTaste & Wellbeing		Manufacture and sale of flavour and wellbeing products into fivebusiness units: Beverages, Dairy, Savoury, Sweet Goods andNatural Ingredients. The information of these business units arereviewed by the Executive Committee primarily by region.

Givaudan – 2020 Governance, Compensation and Financial Report

66

GovernancereportNotes to the consolidated financial statements

Reconciliation table to Group’s operating income

The performance of the operating segments is based on EBITDA as a percentage of sales.

Fragrance & Beauty

Business segments

Compensation
reportFragrance & Beauty
in millions of Swiss francs

Note

Segment sales
Less inter segment sales a
Segment sales tothird parties
EBITDA

Appendix

Statutory financial
reportConsolidated
financial report

as % of sales

Taste & Wellbeing

Group

2019

2020

2019

2020

2019

EBITDA

677

555

720

720

1,397

1,275

2020

2019

2020

2019

2020

2019

Depreciation

(77)

(73)

(124)

(120)

(201)

(193)

2,799

3,398

3,410

6,322

6,209

Amortisation

(64)

(49)

(123)

(112)

(187)

(161)

–

–

–

(6)

–

(6)

2,924

2,799

3,398

3,404

6,322

6,203

677

555

720

720

1,397

1,275

23.2%

19.8%

21.2%

21.1%

22.1%

20.6%

21

(77)

(73)

(124)

(120)

(201)

(193)

Amortisation

22

(64)

(49)

(123)

(112)

(187)

(161)

–

(13)

(1)

(13)

(1)

21, 22

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

(13)

(1)

(13)

(1)

460

487

996

920

18.4%

15.5%

13.5%

14.3%

14.8%

(86)

(79)

Other financial income (expense), net

(34)

(33)

Income before taxes

876

808

13.9%

13.0%

as % of sales

Entity-wide disclosures

89

160

104

330

193

490

Acquisitions of Property,
plant and equipment

6, 21

16

59

24

5

40

64

Additions to Intangible assets

22

22

27

23

26

45

53

Fragrance & Beauty

Acquisitions of Intangible
assets (excluding goodwill)

6, 22

50

210

272

13

322

223

177

456

423

374

600

830

Ingredients and Active Beauty

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

–
433

15.8%

21

a)	Transfer prices for inter-divisional sales are set on an arm's length basis.

–
536

Financing costs

Additions to Property,
plant and equipment

Total gross investments

Group

2020

2,924

Depreciation
Impairment of long-lived
assetsTaste & Wellbeingin millions of Swiss francs

The breakdown of sales from the major group of similar products is as follows:in millions of Swiss francs

Compounds

2020

2019

2,529

2,427

395

372

Taste & Wellbeing
Compounds

3,398

3,404

Total sales

6,322

6,203

Givaudan – 2020 Governance, Compensation and Financial Report

GovernancereportNotes to the consolidated financial statements

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

Compensation
reportConsolidated
financial report

Group Non-current
assets b

2020

2019

2020

2019

2020

2019

2020

2019

35

34

33

26

68

60

1,496

1,546
2,470

Europe

882

859

833

841

1,715

1,700

2,453

Africa and Middle-East

255

226

240

247

495

473

81

92

North America

618

559

1,150

1,082

1,768

1,641

1,720

1,409

Latin America

359

346

315

353

674

699

211

251

Asia Pacific

775

775

827

855

1,602

1,630

839

878

2,924

2,799

3,398

3,404

6,322

6,203

6,800

6,646

Total geographicalsegments

Statutory financial
reportGroup Segment
sales aSwitzerland

in millions of Swiss francs

Appendix

Taste & Wellbeing
Segment sales aa)	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 566 million (2019: CHF 581 million) are derived from a single
external customer. These revenues are mainly attributable to the Fragrance & Beauty Division.

67

Givaudan – 2020 Governance, Compensation and Financial Report

68

Compensation
reportGovernancereportNotes to the consolidated financial statements

8. Employee Benefits

2019

in millions of Swiss francs

2020

2019

in millions of Swiss francs

Pension
Plans

Wages and salaries

1,085

1,019

Current service cost

45

1Social security costs

164

156

Loss (gain) arising from settlement

3

Post-employment benefits: defined benefit plans

49

38

Post-employment benefits: defined contribution plans

37

37

Total included in employees'
remuneration

48

1

49

37

1

38

Net interest cost included infinancing costs

4

2

6

7

2

9

Total components ofdefined benefit cost

52

3

55

44

3

47

Equity-settled instruments

54

41

104

112

1,493

1,405

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

Consolidated
financial report

2020
Nonpension
Plans

Other employee benefits

Statutoryfinancial report

The amounts recognised in the consolidated income statement are as follows:

The following amounts related to employee remuneration and benefits are included indetermining operating income:2

Retirement Benefit Plans
The Group operates a number of defined benefit and defined contribution plans throughout theworld, the assets of which are generally held in separate trustee-administered funds. The
pension plans are generally funded by payments from employees and by 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 end of this note).
Non-pension plans consist primarily of post-retirement healthcare and life insurance schemes,
principally in the United States of America.

Total

46

Pension
Plans

Nonpension
Plans

Total

37

1

38

3

Of which arising from:
Funded obligations

48

3

51

40

3

43

Unfunded obligations

4

–

4

4

–

4

Total

Pension
Plans

Nonpension
Plans

Total

(11)

(7)

3

(4)

The amounts recognised in other comprehensive income are as follows:2020

in millions of Swiss francs

Pension
Plans

Nonpension
Plans

2019

(Gains) losses from change indemographic assumptions(11)(Gains) losses from change infinancial assumptions

128

5

133

262

5

267

Experience (gains) losses

23

(2)

21

–

(5)

(5)

Return on plan assets lessinterest on plan assets

(189)

(189)

(167)

Remeasurement (gains)losses of post-employment
benefit obligations

(49)

3

(46)

88

3

91

Funded obligations

(54)

3

(51)

78

2

80

Unfunded obligations

5

5

10

1

11

(167)

Appendix

Of which arising from:Givaudan – 2020 Governance, Compensation and Financial Report

69

GovernancereportNotes to the consolidated financial statements

Changes in the present value of the defined benefit obligations are as follows:

The amounts recognised in the statement of financial position are as follows:
2020

Consolidated
financial report

Compensation
reportin millions of Swiss francs

Statutoryfinancial report

Total

Present value of funded obligations(2,301)

Fair value of plan assets

1,917

Recognised asset (liability) for
funded obligations, net

(384)

(63)

(63)

2020

2019
Pension
Plans

Nonpension
Plans

Total

Funded obligations

in millions of Swiss francs

Pension
Plans

Nonpension
Plans

Balance as at 1 January

2,290

69

2,359

Total

2019
Pension
Plans

Nonpension
Plans

Total

2,029

64

2,093

(2,364)(2,206)(61)(2,267)

1,917

1,783

–

1,783

Amounts recognised in the income statement
Current service cost

45

1

46

37

1

38

(447)

(423)

(61)

(484)

Interest cost

25

2

27

39

2

41

(11)

(7)

3

(4)

262

5

267

(5)

(5)

Unfunded obligations

Amounts recognised in the othercomprehensive income

Present value of unfunded
obligations

(80)

(3)

(83)

(84)

(8)

(92)

Recognised asset (liability) for
unfunded obligations(Gains) losses from change indemographic assumptions

(11)

(80)

(3)

(83)

(84)

(8)

(92)

Total defined benefit asset(liability)(Gains) losses from change infinancial assumptions

128

5

133

(464)

(66)

(530)

(507)

(69)

(576)

Experience (gains) losses

23

(2)

21

Employee contributions

14

Deficit recognised as liabilities forpost-employment benefits(484)

Surplus recognised as assets forpost-employment benefits

20

Total net asset (liability)
recognised

AppendixPension
Plans

Nonpension
Plans

(464)

(66)

(66)

(550)

(539)

20

32

(530)

(507)

(69)

(608)
32

(69)

(576)

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

Benefit payments(77)

Settlements(9)Acquisitions

3

(3)

14

14

–

14

(80)

(82)

(3)

(85)

(9)
3

8

Currency translation effects

(50)

(6)

(56)

(10)

2

(8)

8

Balance as at 31 December

2,381

66

2,447

2,290

69

2,359

Givaudan – 2020 Governance, Compensation and Financial Report

70

GovernancereportNotes to the consolidated financial statements

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

Consolidated
financial report

Compensation
report2020

in millions of Swiss francs

Pension
Plans

Balance as at 1 January

1,783

Nonpension
Plans

2019

Total

Pension
Plans

1,783

1,618

Nonpension
Plans

Total

1,618

Amounts recognised in
the income statement
Interest income

21

21

32

32

Amounts recognised in theother comprehensive income
Return on plan assets lessinterest on plan assets

189

Employer contributions

37

Employee contributions

189

167

3

40

34

14

14

–

14

(3)

(80)

(82)

(3)

(85)

14

Benefit payments(77)

Settlements

(12)

(12)

Acquisitions

2

2

167
3

1

Currency translation effects

(40)

–

(40)

(1)

Balance as at 31 December

1,917

–

1,917

1,783

37

1
–

(1)

The Group operates defined benefit plans in many countries for which the actuarial
assumptions vary based on local economic and social conditions. The assumptions used in theactuarial valuations of the most significant defined benefit plans, in countries with stablecurrencies and interest rates, are as follows:
Weighted percentage

2020

2019

Discount rates

0.9%

1.2%

Projected rates of remuneration growth

1.1%

1.2%

Future pension increases

0.5%

0.5%

Healthcare cost trend rate

0.1%

1.1%

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 anddemographic assumptions. The below information quantifies the consequences of a change
in some key assumptions.

1,783

The effects ((gain)/loss) of the change in assumptions are as follows:

Statutoryfinancial report

Plan assets are comprised as follows:in millions of Swiss francs
2020

in millions of Swiss francs

2019

Debt

568

30%

560

31%

Equity

326

17%

309

17%

Property

335

17%

245

14%

Insurances policies and other

688

36%

669

38%

1,917

100%

1,783

100%

Total

Appendix

The investment strategies are diversified within the respective statutory requirements ofeach country providing long-term returns with an acceptable level of risk. The plan assets areprimarily quoted in an active market with exception of the property and insurance policies.
The plan assets do not include Givaudan registered shares. They do not include any property
occupied by, or other assets used by, the Group.

Change inassumption

Discount rate a

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

(6)

8

on the defined benefit obligation

(196)

219

on the current service cost2

(2)

on the defined benefit obligation

13

(13)

on the current service cost5–on the defined benefit obligation

156

(41)

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

3(3)

on the current service cost1

(1)

on the defined benefit obligation

79

(80)

a)	The pension plan fiduciaries or trustees, as each situation dictates, may use various strategies which employ financial
instruments to mitigate the impact of changes in the discount rate assumptions on the actual pension plan liabilities
through corresponding changes in the plan assets. For the year end 2020, and considering the illustrative impact ofchanges in discount rates on the defined benefit obligation shown above, the use of these strategies is estimated toresult in offsetting changes in the value of the assets between minus CHF 84 million and plus CHF 91 million for a plus
and minus 50 basis point change in interest rates respectively.

Givaudan – 2020 Governance, Compensation and Financial Report71

Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

Information by country
Switzerland

According to the Swiss Federal Law on Occupational Retirement, Survivors and Disability(LPP/BVG), the pension plan is managed by an 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 intoa pension and by increasing savings contributions from both the employee and employer.
The Board of Trustees of the foundation is composed of equal numbers of employee andemployer 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 is also responsible
for the investment of the assets defining the investment strategy for long-term returns withan acceptable level of risk. The foundation provides benefits on a defined contribution basis.
The majority of the employees are participants to the plan and are insured against thefinancial 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 apercentage of salary. The amount of the retirement account can be taken by the employee atretirement in the form of pension or capital.
Under IAS 19 employee benefits, the pension plan is classified as defined benefit plan due tothe promises and underlying benefits guarantees. Consequently the pension obligation is
calculated by using the projected unit credit method.
The Group expects to contribute CHF 27 million to these plans during 2021.

United States of America
The main US pension plan is qualified under and is managed in accordance with therequirements of US federal law. In accordance with federal law the assets of the plan arelegally separate from the employer and are held in a pension trust. The plan was frozen in 2016
and consequently no further accrual of benefits will continue as at the date of enforcement of
the plan change.
The law requires minimum and maximum amounts that can be contributed to the trust,
together with limitations on the amount of benefits that may be provided under the plan.
There are named fiduciaries that are responsible for ensuring the plan is managed inaccordance with the law. The fiduciaries are responsible for the investment of the assets

defining the investment strategy for long-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 theplan, the benefits are paid out as annuities.
Under IAS 19 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 2021.

United Kingdom
The two occupational pension schemes (Quest UK Pension Scheme and Givaudan UK PensionPlan) are arranged under the applicable UK Pension Schemes and Pensions Acts and managed
as legally autonomous pension trusts by the Boards of Trustees. The plans were frozen during
2016 and consequently no further accrual benefits will continue as at the date of enforcementof 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 theinvestment strategy for long-term returns with an acceptable level of risk. In their respective
sections, both trusts provide benefits on a defined 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 for trivial amounts, transfer values, lump sum death benefits
and tax free lump sums, the benefits are paid out as annuities.
Under IAS 19 employee benefits, the pension obligations in the defined benefit sections ofboth the Quest UK Pension Scheme and 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 2021.

Givaudan – 2020 Governance, Compensation and Financial Report72

Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

Key assumptions

Rest of the world
The Group operates other retirement plans classified either as defined benefit or defined
contribution plans in some other countries. No individual plan other than those describedabove is considered material to the Group.

2020
in percentage

Switzerland

UnitedStates ofAmerica

UnitedKingdom

1.40

Discount rate

0.00

2.55

The Group expects to contribute CHF 3 million to these plans in 2021.

Future salary increases

1.75

n/a

n/a

Future pension increases

0.00

0.00

2.83

The funding position of the funded defined benefit plans are as follows:

Future average life expectancy for a pensioner retiring at age 65

22.9

21.9

22.7

Switzerland

UnitedStates ofAmerica

UnitedKingdom

2.00

As at
31 December 2020in millions of
Swiss francs

Switzerland

UnitedStates ofAmerica

UnitedKingdom

Other
countries

Total

Present value of
defined benefit
obligation

1,376

458

369

98

2,301

Fair value of plan
asset

1,089

398

388

42

1,917

Deficit / (surplus)
Funding ratio
As at
31 December 2019in millions of
Swiss francs

Present value of
defined benefit
obligation

287

60

(19)

56

384

79.1%

86.9%

105.1%

42.9%

83.3%

Switzerland

UnitedStatesof America

UnitedKingdom

Other
countries

Total

361

89

2,206
1,783

1,306

450

Fair value of plan
asset

957

393

392

41

Deficit / (surplus)

349

57

(31)

48

423

73.3%

87.3%

108.6%

46.1%

80.8%

Funding ratio

2019
in percentage

Discount rate

0.15

3.22

Future salary increases

1.99

n/a

n/a

Future pension increases

0.00

0.00

2.74

Future average life expectancy for a pensioner retiring at age 65

22.8

21.2

23.3

Assumptions regarding future mortality experience are set based on actuarial advice inaccordance with published statistics and experience in each territory. Mortality assumptions
for the most important countries at year-end 2020 are based on the following tables:–– Switzerland: BVG2015–– United States of America: Pri-2012–– United Kingdom: S3PA
Allowance for future improvements in mortality have been allowed for as appropriate in eachcountry. In Switzerland the generational rates have been used adopting the CMI (2016)
approach and a 1.50% long term rate of improvement. In the United States of America the
published rates have been adjusted and projected in accordance with the MP2020 scale. In the
United Kingdom the rates reflect the latest (2019) CMI projections with a 1.25% long term rateof improvement.

Givaudan – 2020 Governance, Compensation and Financial Report

73

Consolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

9. Share-Based Payments
Performance share plan

Movements in the number of restricted shares outstanding are as follows:

Performance shares are granted on a yearly basis. The performance shares are converted into
tradable and transferable shares of Givaudan SA after the vesting period, subject toperformance conditions. The performance metric is a combination of the average sales
growth of selected peer companies and the cumulative free cash flow margin. There is nomarket vesting condition involved and participation in this plan is mandatory.
Yearof grant

Commencing
date

Vesting
date

Number of shares
expected to be deliveredat vesting date

As at 1 January

602

630

Delivered/sold

(900)

(935)

As at 31 December

1,962

2,260

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

10. Investments in Joint Ventures and Associates

2018

31 Mar 201815 Apr 2021

25,325

1,993.3

31 Mar 201915 Apr 2022

19,8232,289.6

2020

31 Mar 2020

15 Apr 2023

15,054

2,794.5

The cost of the equity-settled instruments of CHF 52 million (2019: CHF 40 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 a physical delivery is
not permitted.

2019

2,565

GrantedFair value
at grant
date (CHF)

2019

2020

2,260

Number of restricted sharesYear ofincorporation Name of Joint ventures

Principal activity

Country ofincorporation

2014

BGN Tech LLC

Innovative naturalingredients

USA

49%

2015

Natural Extracts
International Ltd

Natural ingredientderivatives production

Mauritius

49%

Vanilla International Ltd

Natural ingredientcollection and extract

Mauritius

49%

2016

Ownership
interest

Appendix

Statutoryfinancial report

Equity-settled instruments related to restricted shares
Restricted shares shown in the table below have been granted on a yearly basis. These sharesare tradable and transferable after the vesting period. Participation in these plans is mandatory.

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:

Restricted shares outstanding at the end of the year have the following terms:

As at 31 Decemberin millions of Swiss francs

Number of
restricted
shares 2020

Yearof grant

Commencing
date

Blocking periodof restricted
shares ends on

Restricted shareat grant
date (CHF)2017

31 Mar 201715 Apr 2020

1,621.6

2018

31 Mar 201815 Apr 2021

1,993.3

730

730

2019

31 Mar 201915 Apr 2022

2,289.6

630

630

2020

31 Mar 2020

15 Apr 2023

2,794.5602

Number of
restricted
shares 2019900

Of the 1,962 outstanding restricted shares (2019: 2,260), no share (2019: none) was deliverable.
The cost of these equity-settled instruments of CHF 2 million (2019: CHF 1 million) has been
expensed in the consolidated income statement.

2020

2019

Current assets

3570

Non-current assets

28

31

Current liabilities

(7)

(37)

Non-current liabilities

(7)

(12)

Total net assets of joint ventures

49

52

2020

2019

As at 31 Decemberin millions of Swiss francs

Income11

17

Expenses

(10)

(16)

Givaudan – 2020 Governance, Compensation and Financial Report

74

Compensation
reportGovernancereportNotes to the consolidated financial statements

Jiangsu Xinrui Aromatics Ltd, manufacturing fragrance ingredients in China, became an
associate in 2019 in accordance with the new terms and conditions set in the arrangement.
The Group’s ownership interest is 49%. As at 31 December 2020, the total assets were
CHF 60 million (2019: CHF 55 million) with a total liabilities of CHF 36 million (2019:
CHF 36 million) resulting in a total net assets of CHF 24 million (2019: CHF 19 million).

11. Other Operating Income

13. Expenses by Nature
2020

2019

2,668

2,714

8

1,493

1,405

21, 22

401

355

in millions of Swiss francs

Note

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

17

61

Freight expenses

153

131

2020

2019

Consulting and service expenses

126

146

Gains on disposal of fixed assets

4

1

Energies

73

78

Other income

4140

IT related costs

71

63

Total other operating income

45

41

Other expenses

324

330

5,326

5,283

2020

2019

80

68

6

9
1

in millions of Swiss francs

Statutoryfinancial report

Consolidated
financial report

Total operating expenses by nature

The other income in 2019 includes CHF 10 million of insurance income recoverable in relation to
the provision that the Group has recorded for the Passaic river environmental matter (Note 25).

in millions of Swiss francs

12. Other Operating Expense

NoteInterest expensea
2020

2019

Net interest related to defined benefit pension plans

Project related expenses

15

34

Derivative interest (gains) losses(2)

Amortisation of intangible assets

16

12

Amortisation of debt discounts

2

1

Impairment of long-lived assets

13

1

Total financing costs

86

79

Loss on divestment

8

Losses on disposal of fixed assets

2

in millions of Swiss francs

58a)	Out of which CHF 8 million (2019: CHF 9 million) are interest expense on lease liabilities.

Environmental provisions

1–

Business taxes

20

20

Acquisition and integration related expenses

25

29

in millions of Swiss francs

2020

2019

Other expenses

9

14

109

115

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

(37)

20

Exchange (gains) losses, net

52

5

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

(4)

(12)

Interest (income)

(3)

(5)

Capital taxes and other non-business taxes

10

11

Other (income) expense, net

16

14

Total other financial (income) expense, net

34

33

Total other operating expense

During 2020 the Group continued to review its business portfolio and divested a small part ofits business, which resulted in a loss on divestment of CHF 8 million.
Appendix

14. Financing Costs

Furthermore, as part of the manufacturing footprint optimisation program, the Group restructured
some of its operations and as a consequence recorded impairment charges of CHF 13 million.

15. Other Financial (Income) Expense, NetGivaudan – 2020 Governance, Compensation and Financial Report

75

GovernancereportNotes to the consolidated financial statements

16. Income Taxes

The Group’s average applicable tax rate differs from the Group’s effective tax rate as follows:

Amounts charged to (credited in) the consolidated statement of comprehensive income areas follows:

Compensation
report2020

in millions of Swiss francs

Incomestatement

Other
comprehensive
incomeOwn
equityinstruments

Total

2019
Incomestatement

Other
comprehensive
incomeOwn
equityinstruments

Total

Current taxes- in respect of current year

176

- in respect of prior years

(6)

(3)

173

140

(6)

(9)

(5)

135

(1)

(37)

(21)

(11)

(1)

(4)

21

17

(4)

129

106

5

111

(9)

Deferred taxes

Appendix

Statutoryfinancial report

Consolidated
financial report- in respect of current year

(36)

(32)

- reclassified from equity to
income statement- in respect of prior years(1)

Total income tax expense

133

2020

2019

16%

14%

Income not taxable

(3%)

(4%)

Expenses not deductible

2%

4%

Change in tax rate

1%–

Other adjustments of income taxes of prior years

(1%)

(2%)

Group's average applicable tax rate
Tax effect ofOther differences
Group's effective tax rate

–

1%

15%

13%

The variation in the Group’s average applicable tax rate arises due to changes in thecomposition 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 and customer
portfolio, as well as external factors related to changes in local statutory tax rates.

Since the Group operates globally, it is subject to income taxes in many different tax
jurisdictions. As such, in determining the provision for income taxes, judgment is required as
there are transactions for which the ultimate tax determination is uncertain at the time 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.

In the prior year the Group assessed the impact of the Swiss Tax Reform that is effective as
from 1 January 2020 and revalued the deferred tax balances applicable in Switzerland.

The Group calculates on the basis of the income statement its average applicable tax rate as aweighted 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.

Current income tax assets

66

50

Current income tax liabilities

(157)

(111)

Total net current income tax asset (liability)

(91)

(61)

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

2020

2019

Givaudan – 2020 Governance, Compensation and Financial Report76

GovernancereportNotes to the consolidated financial statements

2020
in millions of Swiss francs

Compensation
reportNet deferred tax asset(liability) as at 1 January

Consolidated
financial report

Pension
plans

113

(128)

(207)

(2)

(68)

(Credited) debited to consolidated
income statement

19

18(Credited) debited to othercomprehensive income

1

Tax loss
carry
Other
forward differences

Total

29

124

(69)

1

5

(64)

(5)

4

37

6

1

(5)

(Credited) debited to own
equity instruments
Currency translation effects

6

8

(4)

(1)

(6)

3

(105)

(249)

105

24

133

(92)

Deferred tax assets

218

Deferred tax liabilities(310)

Net deferred tax asset(liability) as at 31 December

(92)

2019
in millions of Swiss francs

Net deferred tax asset(liability) as at 1 January
Statutoryfinancial report

Intangible
assetsAcquisition

Net deferred tax asset(liability) as at 31 December

Property,plant &
equipment

Intangible
assetsPensionplans

Tax loss
carry
Other
forward differences

Total

(140)

(178)

112

17

159

(30)

Acquisition

(7)

(47)

1

–

1

(52)

(Credited) debited to consolidated
income statement

18

15

5

12

(25)

25

(7)

(10)

(Credited) debited to othercomprehensive income(3)(Credited) debited to own
equity instruments
Currency translation effects
Net deferred tax asset(liability) as at 31 December

Appendix

Property,plant &
equipment

–

–

1

3

(2)

–

(4)

(2)

(128)

(207)

113

29

124

(69)

Deferred tax assets

211

Deferred tax liabilities(280)

Net deferred tax asset(liability) as at 31 December(69)

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 2021.
Deferred tax assets on loss carry forwards of CHF 24 million (2019: CHF 29 million) have beenrecognised principally in the subsidiaries in France and China, the majority of which expires
after 2022. The management considers that there will be future taxable profit available
against which these tax losses can be recovered. Deferred tax assets on unused tax losses of
CHF 16 million (2019: CHF 17 million) which have not been recognised are mainly located insubsidiaries in Spain.
Deferred tax assets on tax credits of CHF 92 million (2019: CHF 71 million) have been recognised.
A deferred tax liability of CHF 24 million has been recognised in 2020 (2019: CHF 26 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 timing of
distributions expected in the foreseeable future, whereas no deferred tax liability could berecognised for undistributed earnings of CHF 627 million (2019: CHF 534 million).

17. Earnings per Share
Basic earnings per share
Basic earnings per share is calculated by dividing the income for the period attributable toshareholders by the weighted average number of shares outstanding:
2020

2019

743

702

Ordinary shares

9,233,586

9,233,586

Treasury shares(14,369)(17,354)

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)

9,219,217 9,216,232
80.59

76.17

Givaudan – 2020 Governance, Compensation and Financial Report77

Compensation
reportGovernancereportNotes to the consolidated financial statements

Diluted earnings per share

Movement in the allowance for doubtful accounts:

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:

in millions of Swiss francs

2020

2019

Balance as at 1 January

(20)

(21)
(4)

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 72,588 (2019: 70,619)
Diluted earnings per share (CHF)

2020

2019

Increase in allowance for doubtful accounts recognised in consolidated income
statement

(5)

743

702

Amounts written off as uncollectible

2

1

Reversal of allowance for doubtful accounts

2

3

9,291,805 9,286,851
79.96

75.59

Consolidated
financial report

18. Cash and Cash Equivalents
in millions of Swiss francs

2020

2019

Cash on hand and balances with banks

339

379

Short-term investments

72

73

Balance as at 31 December

411

452

19. Accounts Receivable – Tradein millions of Swiss francs

2020

2019

Accounts receivable

1,377

1,384

Statutoryfinancial report

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

1
(20)

1,359

1,365

Ageing list:
2020

2019

1,280

1,269

Less than 30 days

59

78

30 − 60 days

16

17

60 − 90 days

5

7

Above 90 days

18

14

in millions of Swiss francs

Neither past due nor impaired

Appendix1(19)

Less: allowance for doubtful accounts
Balance as at 31 December

(19)

(20)

1,359

1,365

Currency translation effects

2

1

Balance as at 31 December

(19)

(20)

No significant impairment charge has been recognised in the consolidated income statementin 2020 or in 2019. Past due and impaired receivables are still considered recoverable. The
carrying amount of accounts receivable – trade is considered to correspond to the fair value.

20. Inventories
in millions of Swiss francs

2020

2019

Raw materials and supplies

460

438

Work in process2826Intermediate and finished goods

787

747

Less: allowance for slow moving and obsolete inventories
Balance as at 31 December

(74)

(62)

1,201

1,149

In 2020 the amount of write-down of inventories was CHF 45 million (2019: CHF 40 million).
At 31 December 2020 and 2019 no significant inventory was valued at net realisable value.

Givaudan – 2020 Governance, Compensation and Financial Report

78

GovernancereportNotes to the consolidated financial statements

21. Property, Plant and Equipment

Statutoryfinancial report

Consolidated
financial report

Compensation
reportAcquired Property, Plant & Equipment2020
in millions of Swiss
francsAcquired Property, Plant & Equipment

Right-of-Use Assets

MachiBuildings,
MachiTotal
Buildings
nery,
Conlandnery,
Total Property,
and landequip- struction
Total
and
equip- Right-ofPlant &improve- ment andin Acquired improve- ment andUse
EquipLandments vehicles progress
PP&E
ments vehicles
Assetsment

Net book value

Net book value
Balance as
at 1 January

131

Additions

205

1,749

246

17

263

2,012

7

270

278

198

14

212

490

29

10

2

44

19

1

20

64

Disposals

(3)

(3)

(3)

(3)

(9)

Transfers

116

134

Impairment

(1)

–

(1)

(46)

(101)

(147)

(7)

(46)

(193)

1,885

419

22

441

2,326

1

4

151

156

28

9

37

193

Additions

–

36

3

1

4

40

Acquisitions

(10)

(4)

–

(4)

(14)

–

–
–
(201)

Depreciation

11

Disposals

(1)

(2)

(7)

Transfers

133

118

Impairment

–

–

–

Depreciation

(50)

(100)

(150)

(5)

592

1

222

16

Currencytranslation effects

821

631

9

(5)

Balance as
at 1 January

901

Acquisitions

Reclassified asassets held for sale2019
in millions of Swiss
francs

(251)

–
(50)

(41)

(10)

(51)

(5)
(34)

(10)

(99)

(17)

(1)

(18)

(1)

(2)

(117)

Currencytranslation effects

(2)

(14)

131

901

131

1,449

129

949

623

112

1,813

388

21

409

2,222

Cost

129

1,523

1,888

112

3,652

463

37

500

4,152

Cost

(561) (1,257)

Accumulated
impairment

(13)
129

949

(1,818)

(8)
623

(75)

(16)

1,813

388

21

(8)

–

(5)

(34)

631

222

1,885

419

22

441

2,326

1,855

222

3,657

457

29

486

4,143

(1,749)(38)(7)(45) (1,794)

(21)

(13)

(10)

901

631

131

(3)
(5)

(535) (1,214)

2,222

(1)
(39)

(29)

Accumulated
impairment

409

(250)

(5)

(91) (1,909)

Balance as
at 31 December

(6)

(3)

Accumulated
depreciation

(21)
112

3

Reclassified asassets held for sale

Balance as
at 31 December

Accumulated
depreciation

131

(5)

Balance as
at 31 December

Balance as
at 31 December

Right-of-Use Assets

MachiBuildings,
MachiTotal
Buildings
nery,
Conlandnery,
Total Property,
and landequip- struction
Total
and
equip- Right-ofPlant &improve- ment andin Acquired improve- ment andUse
EquipLandments vehicles progress
PP&E
ments vehicles
Assets
ment

(23)
222

1,885

(23)
419

22

441

2,326

Appendix

The expense related to the low-value and short-term leases amounts to CHF 2 million (2019:
CHF 1 million) and CHF 2 million (2019: CHF 6 million) respectively.
The Group leases various offices, warehouses, machinery and equipment. Rental contracts
are typically made for fixed periods of 1 to 30 years, but may have extension and termination
options, used to maximise operational flexibility in terms of managing the assets used in theGroup’s operations. The majority of extension and termination options held are exercisable
only by the Group and not by the respective lessor. During the current financial year, nosignificant financial effect was triggered by revision of lease terms (2019: nil).

Givaudan – 2020 Governance, Compensation and Financial Report

79

Compensation
reportGovernancereportNotes to the consolidated financial statements

Lease terms are negotiated on an individual basis and contain a wide range of different terms
and conditions. The lease agreements do not impose any covenants other than the security
interests in the leased assets that are held by the lessor. Leased assets may not be used as
security for borrowing purposes.

Taste &
Wellbeing

Cost of sales

10

14

At 31 December 2020 and 2019 no significant capitalised borrowing costs were accounted for.

Selling, marketing and distribution
expenses33

22. Intangible Assets

Research and product development
expenses
Administration expenses

2020
in millions of Swiss francs

Balance as at 1 January

Process-oriented
Client Supplier Name and Software/technology and relation- relationproduct
ERP
Goodwill
other
ships
ships
brandssystem

3,146

290

604

25

57

304

86

224

12

(2)

(7)

–

Consolidated
financial report

Additions
Acquisitions
Disposals
Impairment–(4)

Amortisation

(61)

(64)

Total

164
45

45

–

626
(9)
(4)

(13)

(12)

(37)

(187)

Currency translation effects

(156)

(10)

(47)

–

(1)

–

(214)

3,294

303

706

12

56

172

4,543

Cost

3,294

1,129

1,095

44

80

819

6,461

(820)

(385)

(32)

(24)

(647) (1,908)

12

56

172

4,543

Process-oriented
Client Supplier Name and Software/technology and relation- relationproduct
ERP
other
ships
ships
brandssystemTotal

Accumulated impairment
Balance as at 31 December

2019
in millions of Swiss francs

3,294

Goodwill

(6)

(4)

303

706

(10)

Net book value
Balance as at 1 January

2,968

287

511

37

57

Additions
Acquisitions

225

Amortisation

61

152

2

148

4,008

53

53

7

1

448
(161)

(52)

(52)

(14)

(5)

(38)

Currency translation effects

(47)

(6)

(7)

–

(2)

–

(62)

Balance as at 31 December

3,146

290

604

25

57

164

4,286

Cost

3,146

1,059

931

44

69

774

6,023

Accumulated amortisation

(763)

(327)

(19)

(12)

(610) (1,731)

Accumulated impairment

(6)
604

25

57

164

Balance as at 31 December

3,146

290

2019

Total

Fragrance& Beauty

Taste &
Wellbeing

Total

24

8

10

18

37

70

21

24

45

10

52

62

11

58

69

3

12

15

4

13

17

Other operating expenses

8

8

16

5

7

12

Total

64

123

187

49

112

161

in millions of Swiss francs

4,286

Balance as at 31 December
Accumulated amortisation

Statutoryfinancial report

2020
Fragrance& Beauty

Net book value

Appendix

Classification of amortisation expenses is as follows:

(6)
4,286

Impairment test for goodwill
Goodwill is allocated to the Group’s cash-generating units (CGUs), which are defined as the
Taste & Wellbeing Division and the Fragrance & Beauty Division, which itself includes twolower levels of cash-generating units related to Expressions Parfumées and Fragrance Oils.
Goodwill allocated to these CGUs was CHF 2,298 million (2019: CHF 2,214 million) to the Taste& Wellbeing Division, CHF 756 million (2019: CHF 685 million) to the Fragrance & Beauty
Division, CHF 135 million (2019: CHF 135 million) to Expressions Parfumées, and CHF 105 million(2019: CHF 112 million) to Fragrance Oils.
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 andbudgets approved by management covering a five year period, as well as a terminal value. The
basis of the key assumptions is market growth adjusted for estimated market share gains. The
terminal value assumes the long-term inflation rate for growth beyond the five year period.
The discount rate used to discount the estimated future cash flows has a number ofcomponents 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 the cost of debt is based on theconditions on which companies with similar credit rating can obtain financing.
A discount rate of 9.1% (2019: 8.9%) was applied to cash flow projections of the Fragrance &Beauty Division, 9.2% (2019: 8.9%) was applied to cash flow projections of the Taste &Wellbeing Division, 9.1% (2019: 8.5%) was applied to cash flow projections of Expressions
Parfumées and 10.6% (2019: 10.8%) was applied to cash flow projections of Fragrance Oils.
These discount rates are pre-tax.

Givaudan – 2020 Governance, Compensation and Financial Report

80

Consolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

No impairment loss in any of the CGUs resulted from the impairment tests for goodwill. The
Group has conducted an analysis of the sensitivity of the impairment test to changes in the
cash flows and in the discount rate in the periods presented. Management believes that any
reasonable change in the assumptions would not cause the carrying amount to exceed therecoverable amount of each CGU.

Process-oriented technology and other
This consists mainly of process-oriented technology, formulas, molecules, delivery systems aswell as process knowledge and research expertise in innovative cosmetic solutions, acquired
when the Group purchased Food Ingredients Specialties (FIS), International Bioflavors (IBF),
Quest International, Soliance, Induchem, Spicetec, Activ International, Vika, Centroflora Nutra,
Expressions Parfumées, Naturex, Albert Vieille, AMSilk, Golden Frog, drom, Fragrance Oils,
Ungerer, Indena and Alderys.

Client relationships
As part of the acquisition of Quest International, Induchem, Spicetec, Activ International, Vika,
Centroflora Nutra, Expressions Parfumées, Naturex, Albert Vieille, Golden Frog, drom, Fragrance
Oils, Ungerer and Indena the Group acquired client relationships in the Taste & Wellbeing and
Fragrance & Beauty Divisions, mainly consisting of client relationships with key customers.

Statutoryfinancial report

Supplier relationships
As part of the acquisition of Naturex and Albert Vieille, the Group acquired supplier relationships
in the Taste & Wellbeing and Fragrance & Beauty Divisions, mainly consisting of relationships
with key suppliers.

Name and product brands
In connection with the acquisition of Induchem, Spicetec, Activ International, Vika, Centroflora
Nutra, Expressions Parfumées, Naturex, Albert Vieille, Golden Frog, drom, Fragrance Oils,
Ungerer and Indena, the Group acquired name and product brands in active beauty and innatural flavour businesses.

Appendix

Software/ERP system
This consists of internally generated intangible assets associated with the development ofidentifiable 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 in accordance 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 		
12.7 years–– Process-oriented technology and other6.8 years–– Client relationships 			15.3 years–– Supplier relationships			
0.7 years

Givaudan – 2020 Governance, Compensation and Financial Report

81

GovernancereportNotes to the consolidated financial statements

23. Debt

Compensation
report2020
in millions of Swiss francs

Bank borrowings

Bank facility

Bank overdrafts

Public bonds

Private placements

Total short-term andlong-term debt

Total lease liabilities

Total debt

Balance as at 1 January

68

600

2

2,453

567

3,690

441

4,131

Cash flows

60

(600)

(1)

945

(39)

365

(52)

313
10

Non-cash changes- Amortisation of debt discount- Acquisition / Divestment- Currency effects

2

8

1

4

1

(28)

5

24

(20)

(24)

(21)

(45)

37

37

3,424

509

4,037

414

4,451
206

- Lease liabilities
Balance as at 31 December

Consolidated
financial report

2
3

103

1

Within 1 year

10

1

161

45

Within 1 to 3 years

36

100

240

376

74

450

Within 3 to 5 years

44

888

269

1,201

53

1,254

Thereafter

13

Balance as at 31 December

103

2019
in millions of Swiss francs

150

2,299

242

2,541

1

3,424

2,286
509

4,037

414

4,451

Bank borrowings

Bank facility

Bank overdrafts

Public bonds

Private placements

Total short-term andlong-term debt

Total lease liabilities

Total debt

Balance as at 1 January

11

169

3

2,505

582

3,270

260

3,530

Cash flows

31

431

(1)

461

(52)

409

Non-cash changes

Appendix

Statutoryfinancial report- Amortisation of debt discount1- Acquisition / Divestment31

1- Currency effects

(5)

(1)

(53)

(15)

1

9

10

32

20

52

(2)

(76)

(74)

- Lease liabilities
Balance as at 31 December

68

Within 1 year2

Within 1 to 3 years

18

Within 3 to 5 years

40

Thereafter

8

Balance as at 31 December

68

600

600

206
4,131
335

2,453

2

250

39

293

42

249

108

375

49

424

150

362

1,152

35

1,187

2

3,690

441

2

600

567

206

1,804

58

1,870

315

2,185

2,453

567

3,690

441

4,131

Givaudan – 2020 Governance, Compensation and Financial Report82

Compensation
reportGovernancereportNotes to the consolidated financial statements

The Group entered into the following debt transactions:IssuerIssue date

Type of debt

Givaudan SA

2011

Public bonds

Givaudan United States, Inc.

2012

Privateplacements a

2014
Public bonds
2016

Consolidated
financial report

2017
Givaudan SA
2018

Public bonds

Givaudan Finance Europe BV

2020Group bankcredit facility

Redeemable

Interest rate

CHF

150

07 Dec 2021

2.125%

150

USD

40

06 Feb 2020

2.740%

Reimbursed

39

USD

150

06 Feb 2023

3.300%

132

145

USD

60

06 Feb 2025

3.450%

CHF

100

18 Sep 2020

1.000%

2019
Other entities

2020
2019
2020

149

53

58

Reimbursed

100

150

19 Mar 2024

1.750%

150

150

100

07 Dec 2022

0.000%

100

100

0.625%CHF

200

05 Dec 2031

EUR

100

20 Dec 2022

EUR

200

20 Dec 2024

CHF

150

09 Apr 2020

CHF

200

09 Apr 2025

0.375%

EUR

500

17 Sep 2025

1.125%

800

17 Sep 2030

2.000%

600
CHF

EUR

CNY
other

Total short-term and long-term debt as at 31 December b

Appendix

Fixed

in millions of Swiss francs

CHF

EUR
Other local
borrowings

Type of interest

CHF

Public bonds
Public bonds

2019

Principal amountin millions

EUR
2019
2020

Statutoryfinancial report

Privateplacements

2020

Currency ofprincipala)	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 compliancewith the covenants set.
b)	The fair value of the short-term and long-term debt exceeds its carrying value by approximately 9% as at
31 December 2020.
c)	The floating interest rate is based on a Libor rate.

180

1.331%

26 Jun 2023

150

10 Nov 2028

0.150%

22 Avr 2027

1.000%

500

22 Avr 2032

1.625%

7426
714

1.180%
Variousmaturities

200

108

108

Fixed

216

217

Floating

Reimbursed

150

Fixed

200

200

538

540

861
Floating c

500

6

200
Floating c

Fixed
Fixed
Fixed

Floating

Reimbursed

864
600

150
537
538
6

8

97

59

1

3

4,037

3,690

Givaudan – 2020 Governance, Compensation and Financial Report

83

Consolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

24. Changes in Liabilities Arising from Financing Activities

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

Cash impact

2020

2019

Private placements (USD)

3.3%

3.2%

Private placements (EUR)

1.1%

1.1%

Straight bond (EUR)

1.5%

1.7%

Straight bond (CHF)

0.8%

0.8%

Bank facility

5.0%

0.9%

Weighted average effective interest rate on gross debt

1.5%

1.3%

2020
in millions of Swiss
francsTotal short-termand long-term debt

3,690

365

Interest on liabilities

13

(53)

Derivative financial
instruments

98

(19)

Lease liabilities

441

(52)

Others, net

19

(9)

4,261

232

Total liabilities
from financing
activities

Statutoryfinancial report

2

Balance as
at 1January

8

10

4,037

–

22

54

–

133

37

(21)

414

9

–

19

162

(45)

4,625

1

5

3,270

461

Interest on liabilities

13

(51)

Derivative financial
instruments

43

Lease liabilities

260

(52)

Others, net

17

(7)

3,603

351

Currency Balance as ateffects 31 December(24)

Non-cash changes

Amortisation of debt
discount /Cash flows
premium
Fair values
Inflow and interest Acquisition / changes and(Outflow)
expense Divestment
OthersTotal short-termand long-term debt

Total liabilities
from financing
activities

462

Cash impact

2019
in millions of Swiss
francsAppendix

Balance as
at 1January

Non-cash changes

Amortisation of debt
discount /Cash flows
premium
Fair values
Inflow and interest Acquisition / changes and(Outflow)
expense Divestment
Others

1

32
51

9

10

20

52

Currency Balance as ateffects 31 December

(74)

3,690

–

13

55

–

98

206

(2)

441

9

–

19

321

(76)

4,261

Givaudan – 2020 Governance, Compensation and Financial Report84

GovernancereportNotes to the consolidated financial statements

25. Provisions
2020
in millions of Swiss francs

Balance as at 1 January

Claims and litigation
Restruc- Claims andturinglitigation

14

10

Environmental

Others

Total

27

36

87
7

Environmental

Additional provisions

16

2

3

6

27

Unused amounts reversed

(2)

–

(3)

(2)

(7)

Utilised during the year

(8)

(1)

(4)

(3)

(16)

Currency translation effects

–

–

(2)

(2)

(4)

Balance as at 31 December

20

11

21

42

94
23

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 Lower 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-bank dredge of the lower 8 miles of theRiver (‘Operable Unit 2’), and the installation of an engineered cap, with an estimated cost of
CHF 1.3 billion. One PRP agreed in 2016 to conduct the detailed remediation design for
Operable Unit 2, which is underway and expected to be completed in 2021. The EPA has also
selected an allocator to work with the PRP’s on an allocation of the remediation costs forOperable Unit 2, the first phase of which was concluded at the end of 2020. The EPA
anticipates the implementation of the ROD remediation for Operable Unit 2 will take at least
6 years and may begin in 2022 and continue through at least 2028.

Statutoryfinancial report

Consolidated
financial report

Compensation
reportAcquisitions

7

Current liabilities

13

3

1

6

Non-current liabilities

7

8

20

36

71

Balance as at 31 December

20

11

21

42

94

Restruc- Claims andturinglitigation

Environmental

Others

Total

12

26

34

97

3

3

9

15

(1)

(3)

2019
in millions of Swiss francs

Balance as at 1 January

25

Additional provisions
Unused amounts reversed

(2)

–

–

Utilised during the year

(9)

(5)

(2)

(5)

(21)

Currency translation effects

–

–

–

(1)

(1)

Balance as at 31 December

14

10

27

36

87

Current liabilities

10

2

3

3

18

Non-current liabilities

4

8

24

33

69

Balance as at 31 December

14

10

27

36

87

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 therecognition of a provision. Differences between the final obligations and the amounts thatwere initially recognised impact the income statement in the period in which suchdetermination is made.

Restructuring provisions
Appendix

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.

Restructuring provisions arise from reorganisations of the Group’s operations andmanagement structure primarily related to integration of acquired businesses and fromreorganisations in the Taste & Wellbeing Division.

The Cooperating Parties Group (‘CPG’), of which Givaudan had been a member, completed its
Remedial Investigation (‘RI’) in 2019 and submitted its final Feasibility Study (‘FS’) in September
2020, which proposed an Interim Remedial Measure (‘IRM’) for certain areas of sediment in
the upper 9 miles of the Lower Passaic River. The CPG is waiting for final approval of the FS
and IRM, which remains under review by the EPA and the New Jersey Department ofEnvironmental Protection.
At this time, there are many uncertainties associated with the final remediation plans for theRiver 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 tocover 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 contaminated sites and to treat where necessary.

Givaudan – 2020 Governance, Compensation and Financial Report85

GovernancereportNotes to the consolidated financial statements

Other provisions

Movements in own equity instruments are as follows:

These consist largely of provisions related to long-term deferred compensation plan and torestoring expenses related to leased facilities.

Compensation
report26. Own Equity Instruments
Details of own equity instruments are as follows:
As at
31 December
2020

Consolidated
financial report

NumberBalance as at 1 January

15,541

Purchases at cost
Sales and transfers

Fair value
in millions of
Swiss francs

Equity16,57062

Movement on derivatives on
own shares, net

Gross shares

Equity 2021 - 2022 1,680.0 - 3,475.3

42,00046

Income taxes

Written puts Gross shares

Financialliability 2021 - 2022 1,680.0 - 3,369.3

42,0001

in equivalentsharesFair value
in millions of
Swiss francs

15,541

47

Settlement

RegisteredsharesCategory

Maturity

Strike price(CHF)

Settlement

RegisteredsharesCategory

Maturity

Strike price(CHF)

EquityGross shares

Equity 2020 - 2021 1,704.0 - 2,884.0

Written puts Gross shares

Financialliability 2020 - 2021 1,704.0 - 2,794.0

49,00049,00037
127. Equity
Share capital

Total inmillions of
SwissfrancsHigh

AverageLow

25,0002,595.0

2,250.0

1,799.056(23,971)3,634.8

2,180.6

2,141.6(52)

168(Gains) losses, net recognised in equity–

Movement on registered shares, net

4Balance as 31 December(4)
16,570168
Price in Swiss francs

As at
31 December
2019

Purchased
calls

Statutoryfinancial report

2020

in equivalentsharesPurchasedcalls

Appendix

Price in Swiss francs

2019

NumberBalance as at 1 January

11,906

Purchases at cost
Sales and transfers

Total inmillions of
SwissfrancsHigh

AverageLow

26,0002,154.0

1,968.3

1,800.051(22,365)

1,858.0

1,858.0

1,858.0(42)

142(Gains) losses, net recognised in equity–

Movement on registered shares, net

9Movement on derivatives on
own shares, net

17

Income taxes
Balance as 31 December

15,541168

As at 31 December 2020 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 theright to one vote.

28. Commitments

The Board of Directors has at its disposal conditional capital of a maximum aggregate amountof CHF 7,481,980 that may be issued through a maximum of 748,198 registered shares, of whicha maximum of CHF 1,618,200 can be used for executive share option plans.

From 1 January 2019, as in accordance with IFRS 16, the Group has recognised right-of-use
assets and lease liabilities for lease commitments in the scope of IFRS 16, except for shortterm and low-value leases (Note 2.1.1). The charge in the consolidated income statement for
all operating leases was CHF 17 million (2019: CHF 14 million).

At the Annual General Meeting held on 25 March 2020 the distribution of an ordinary dividendof CHF 62.00 per share (2019: CHF 60.00 per share) was approved. The dividend payment has
been paid out of available retained earnings.

The Group has capital commitments for the purchase or construction of property, plant andequipment totalling CHF 13 million (2019: CHF 28 million).

86

Givaudan – 2020 Governance, Compensation and Financial Report

Consolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

29. Contingent Liabilities
From time to time and in varying degrees, Group operations and earnings continue to beaffected by political, legislative, fiscal and regulatory 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 these developments and events, not all of which are covered byinsurance, 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.
Two of the Group’s US affiliates, Givaudan Flavors Corporation and Ungerer & Company havebeen named as defendants in numerous lawsuits brought against them and other flavour andraw chemical supply companies. The plaintiffs allege that they sustained pulmonary injuries
due to flavours that contain diacetyl, 2,3 pentanedione and other flavouring chemicals. To
date, many of the cases filed against the Group's affiliates have been settled or dismissed;
however, numerous new cases have been filed. The Group has already recovered a portion of
the prior defence and settlement costs from its insurance policies, and will continue to recovera portion of any such future costs.

Statutoryfinancial report

30. Related Parties
Transactions between Givaudan SA and its subsidiaries, which are related parties of GivaudanSA, 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:
2020

2019

Salaries and other short-term benefits

14

12

Post-employment benefits

11

Share-based payments

1211

Total compensation

27

24

Appendix

in millions of Swiss francs

No other related party transactions have taken place during 2020 (2019: nil) between the Groupand the key management personnel.

Reconciliation table to the Swiss code of obligations
IFRS

Adjustments a

Swiss CO (Art. 663bbis)

2020

2019

2020

2019

Salaries and other short-term
benefits

14

12

(6)

(4)

8

8

Post-employment benefits

1

1

1

1

2

2

Share-based payments

12

11

(2)

(1)

10

10

Total compensation

27

24

(7)

(4)

20

20

in millions of Swiss francs

2020

2019

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 – 2020 Governance, Compensation and Financial Report87

Compensation
reportGovernancereportNotes to the consolidated financial statements

31. 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 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 the offering of Givaudan securities) at the end of a three-year blocking period.
2020
in Swiss francs

Consolidated
financial report

Victor Balli eProf. Dr-Ing.
Werner Bauer e

Lilian Biner e

Michael Carlos e

Ingrid Deltenre e

Thomas Rufer e

Olivier Filliole,fSophieGasperment e,g

Total
2020 a1,108,333

Director fees b

400,000

100,000

100,000

100,000

100,000

100,000

100,000

75,00033,33365,00050,00065,00025,00065,00050,00055,00037,5008,333

420,833

Total fixed (cash)

465,000

150,000

165,000

125,000

165,000

150,000

155,000

112,500

41,666

1,529,166

Value at grant d
Total compensation

208

52

52

52

52

52

52

39

17

576

581,256

145,314145,314145,314145,314145,314145,314108,986

47,507

1,609,633

1,046,256

295,314

310,314

270,314

310,314295,314300,314

221,486

89,173

3,138,799a)	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)	RSUs blocking period ends on 15 April 2023.
d)	Economic value at grant according to IFRS methodology, with no discount applied for the blocking period.
e)	The function of each member of the Board of Directors is indicated on pages 7-9 in the 2020 Governance report.
f)	Represents compensation from April to December 2020.
g)	Represents compensation from September to December 2020.
2019
in Swiss francs

Statutoryfinancial report

Calvin Grieder
Chairman e

Committee fees b
Number of RSUs granted c

Calvin Grieder
Chairman e

Victor Balli eProf. Dr-Ing.
Werner Bauer e

Lilian Biner e

Michael Carlos e

Ingrid Deltenre e

Thomas Rufer e

Total
2019 a1,000,000

Director fees b

400,000

100,000

100,000

100,000

100,000

100,000

100,000

Committee fees b

65,00050,00065,00025,00065,00050,00055,000375,000

Total fixed (cash)

465,000

150,000

165,000

125,000

165,000

150,000

155,000

1,375,000

Number of RSUs granted c
Value at grant d
Total compensation

252

63

63

63

63

63

63

630

576,980

144,245

144,245

144,245

144,245

144,245

144,245

1,442,450

1,041,980

294,245309,245

269,245309,245294,245299,2452,817,450a)	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)	RSUs blocking period ends on 15 April 2022.
d)	Economic value at grant according to IFRS methodology, with no discount applied for the blocking period.
e)	The function of each member of the Board of Directors is indicated on pages 5-6 in the 2019 Governance report.

Appendix

The Chairman of the Board does not receive any additional Board Membership 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 the same
period. The compensation paid to the Board members for the reporting period is shown in thetable below:

Estimated social security charges based on 2020 compensation amounted to CHF 259,320(2019: CHF 233,000).

Givaudan – 2020 Governance, Compensation and Financial Report88

GovernancereportNotes to the consolidated financial statements

Other compensation, fees and loans to members or former
members of the Board

Compensation
reportNo additional compensation or fees were paid to any member of the Board. No Board memberor related parties had any loan outstanding as of 31 December 2020.

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

Appendix

Statutoryfinancial report

Consolidated
financial report

The compensation of the Executive Committee during the year was as follows:in Swiss francs

Gilles Andrier
CEO 2020

Gilles Andrier
CEO 2019

Executive Committee members(excluding CEO) a 2020

- Base salary

1,211,084

1,167,910

574,237

577,527- Pension benefits b- Other benefits c

Executive Committee members(excluding CEO) a 2019

Total
2020

Total
2019

3,336,973

3,191,433

4,548,057

4,359,343

1,036,769

1,005,412

1,611,006

1,582,939

145,344

141,730

433,184

562,795

578,528

704,525

Total fixed compensation

1,930,665

1,887,167

4,806,926

4,759,640

6,737,591

6,646,807- Annual incentive d

1,636,536

1,438,925

3,176,247

2,830,707

4,812,783

4,269,632- Number of performance shares
granted e

895

1,092

2,077

2,448

2,972

3,540

- Value at grant f

2,501,078

2,500,243

5,804,177

5,604,941

8,305,255

8,105,184

Total variable compensation

4,137,614

3,939,168

8,980,424

8,435,648

13,118,038

12,374,816

Total compensation

6,068,279

5,826,335

13,787,350

13,195,288

19,855,629

19,021,623

504,728

471,214

1,029,178

989,482

1,533,906

1,460,696

Employer social security ga)	Represents full year compensation of six Executive Committee members.
b)	Company contributions to broad-based pension and retirement savings plans and annualised expenses accrued forsupplementary executive retirement benefit.
c)	Represents annual value of health and welfare plans, international assignment benefits and other benefits in kind.
d)	Annual incentive accrued in reporting period based on performance in the reporting period.
e)	2020 Performance shares vest on 15 April 2023, 2019 Performance Shares vest on 15 April 2022.
f)	Value at grant calculated according to IFRS methodology and based on 100% achievement of performance targets.
g)	2020 estimated social security charges based on 2020 compensation; 2019 estimated social security charges based on
2019 compensation.

Givaudan – 2020 Governance, Compensation and Financial Report89

GovernancereportNotes to the consolidated financial statements

Other compensation, fees and loans to members or former members of
the Executive Committee

Compensation
reportNo other compensation or fees were accrued for or paid to any member or former member ofthe 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 2020.

Special compensation of Executive Committee members who left thecompany during the reporting period–– The shares held individually by each member of the Executive Committee as per
31 December 2020.

Ownership of shares and unvested share rights–– The unvested performance shares that were granted in 2018 – 2020 and were still owned
by members of the Executive Committee as per 31 December 2020.

Consolidated
financial report

As per 31 December 2020, the Chairman and other Board members including persons closely
connected to them held 6,501 Givaudan shares in total. For further details, please refer to thefollowing table showing:–– The shares held individually by each Board member as per 31 December 2020.

2020
in numbers

Calvin Grieder, Chairman
Victor Balli
Prof. Dr-Ing. Werner Bauer
Lilian Biner

SharesBlocked RSUs

655

752

175

188

1,355

188

662

188

Michael Carlos

1,187

188

Ingrid Deltenre

292

188

Thomas Rufer

975

188

Olivier Filliol

1,200

52

–

30

Total 2020

6,501

1,962

Total 2019

4,501

2,260

Sophie Gasperment

Unvested
Performance
Shares2020
in numbers

SharesGilles Andrier, CEO

3,900

3,433

584

1,362

Louie D'Amico

431

1,358

Maurizio Volpi

350

1,715

Simon Halle-Smith

452

1,023

Tom Hallam–– The RSUs that were granted in 2018 – 2020 and were still owned by members of the Board
as per 31 December 2020.
Statutoryfinancial report

As per 31 December 2020, the Chief Executive Officer and other members of the Executive
Committee, including persons closely connected to them, held 6,312 Givaudan shares in total.
For further details, please refer to the below table showing:

Members of the Executive Committee that stepped down during 2020 did not receive any
special compensation as a result of their departure from the Company.

Details on the Givaudan share based payment plans are described in Note 9.

Appendix

The company is not aware of any other ownership of shares, share options/option rights,
RSUs or performance shares as per 31 December 2020 by persons closely connected tomembers of the Board.

Willem Mutsaerts

269

1,023

Anne Tayac

326

1,023

Total 2020

6,312

10,937

Total 2019

5,265

13,073

No member of the Executive Committee held any share options or option rights as at
31 December 2020 (2019: none).
One person closely connected to a member of the Executive Committee owned 217 unvested
Performance Shares as at 31 December 2020.
The company is not aware of any other ownership of shares, share options/option rights,
RSUs or performance shares as per 31 December 2020 by persons closely connected tomembers of the Executive Committee.

Givaudan – 2020 Governance, Compensation and Financial Report

GovernancereportNotes to the consolidated financial statements

32. List of Principal Group Companies
The following are the principal companies fully owned by the Group. Share capital is shown inthousands of currency units:
Switzerland

92,336

Givaudan Fragrances (Shanghai) Ltd

USD

7,750

CHF

4,000

Givaudan Flavors (Shanghai) Ltd

USD

10,783

Givaudan Finance SA

CHF

100,000

Givaudan Specialty Products (Shanghai) Ltd

USD

12,000Givaudan International SA

CHF

100

Givaudan Hong Kong Ltd

HKD

7,374

Vamara Holding SA

CHF

100

Givaudan Flavors (Nantong) Ltd

USD

39,000Givaudan Treasury International SA

CHF

1,000

Naturex Trading Shanghai Co Ltd

CNY

5,608

Naturex AG

CHF

15,288drom Fragrances International (Guangzhou) Co Ltd

CNY

14,058Agthemis RE AG

CHF

3,300

Ungerer Fragrance & Flavor (Shanghai) Co Ltd

CNY

7,677

Fondation Givaudan--

Givaudan Colombia SA

COP

6,965,925

Givaudan Argentina SA

ARS

30,000

Ungerer de Colombia SAS

COP

39,600Givaudan Argentina Servicios SA

ARS

8,000

Czech Republic

Givaudan CR, s.r.o.

CZK

200

Givaudan Australia Pty Ltd

AUD

93,703

Egypt

Givaudan Egypt SAE

USD

21,360Naturex Australia Pty Ltd

AUD

0.003

Givaudan Egypt Fragrances LLC

EGP

50

drom International Pty Ltd

AUD

50

Givaudan France SAS

EUR

5,006

Ungerer Australia Pty Ltd

AUD

1,311

Expressions Parfumées SAS

EUR

3,548

Austria

Givaudan Austria GmbH

EUR

40

Naturex SA

EUR

14,551

BelgiumNaturex SPRL

EUR

1,000

SCI Les Broquetons

EUR

495

BermudaFF Holdings (Bermuda) Ltd

USD

12

Albert Vieille SAS

EUR

908

Givaudan International Ltd

USD

12

drom International SARL

EUR

1,011

FF Insurance Ltd

CHF

170

Alderys SAS (ownership of 80%)

EUR

13

Givaudan do Brasil Ltda

BRL

345,381

Givaudan Deutschland GmbH

EUR

164,402

G Nutra Ind Com Prod Alim e Nutricionais Ltda

BRL

31,219Naturex GmbH

EUR

150

Naturex Ingredientes Naturais Ltda

BRL

7,035

drom fragrances GmbH & Co. KG

EUR

48,063drom Internacional Fragrâncias Indústria e Comércio Ltda.

BRL

14,388drom Holding GmbH

EUR

4,747

Givaudan Canada Co

CAD

12,901drom Verwaltungsgesellschaft mbH

EUR

25

Naturex Inc (Canada)

CAD

500

Dr.rer.nat.Storp Vermögensverwaltungs-GmbH

EUR

2,773

Givaudan Chile Ltda

CLP

5,000

drom Perfume Trade GmbH

EUR

44,276

Chile Botanics SA

CLP

1,837,205

Hong Kongdrom Asia Pacific Ltd.

HKD

10

Naturex Chile SA

CLP

1,731,600

Hungary

Givaudan Hungary Kft

EUR

15

Givaudan Business Solutions Kft

EUR

12

Givaudan (India) Private Ltd

INR

87,330Naturex India Private Ltd

INR

64,416

Valentine Foods Private Ltd

INR

100

Ungerer Flavours India PVT Ltd

INR

100

Compensation
reportCHF

Givaudan Suisse SA

Statutoryfinancial report

Consolidated
financial report

Argentina
Australia

BrazilCanadaChile

Appendix

China

Givaudan SA

Colombia

FranceGermany

India

90Givaudan – 2020 Governance, Compensation and Financial Report

GovernancereportNotes to the consolidated financial statements

Indonesia

P.T. Givaudan Indonesia

IDR

2,608,000

South Africa

Givaudan South Africa (Pty) Ltd

ZAR

360,002

P.T. drom Fragrances Indonesia

IDR

3,462,600

Spain

Givaudan Iberica, SA

EUR

8,020

P.T. Fragrance Oils Indonesia

USD

30

Naturex Iberian Partners, SL

EUR

13,497

Givaudan Italia SpA

EUR

521

Aromasur S.L.U.

EUR

1,320

Expressions Parfumées SRLA

EUR

10

Tierra Aromatical del Sur SL

EUR

3Naturex SpA

EUR

1,200

drom Spain SL

EUR

10

drom International Italia S.r.l.

EUR

26

Givaudan North Europe AB

SEK

120

Ivory CoastNaturex Ivory Coast Abidjan Purchasing

XOF

6,000

Swedish Oat Fiber AB

SEK

1,000

Japan

Givaudan Japan K.K.

JPY

1,000,000

ThailandGivaudan (Thailand) Ltd

THB

100,000

Naturex K.K.

JPY

5,000

TurkeyGivaudan Aroma Ve Esans Sanayi Ve Ticaret Limited Sirketi

TRY

34

Givaudan Korea Ltd

KRW

550,020

United Kingdom

Givaudan UK Ltd

GBP

70

Naturex Korea Seoul sales officeKRW

284,000

Major International Ltd

GBP

50

Givaudan Business Solutions Asia Pacific Sdn.Bhd

MYR

2,000

Givaudan Holdings UK Ltd

GBP

317,348

Givaudan Flavours & Fragrances Malaysia Sdn.Bhd

MYR

3,981

Naturex Ltd

GBP

1,006

Fragrance Oils (Malaysia) Sdn.Bhd

MYR-

drom International UK Limited

GBP

30

MoroccoNaturex Morocco Casablanca

MAD

24,640Fragrance Oils Limited

GBP

80

MexicoGivaudan de Mexico SA de CV

MXN

53,611

Fragrance Oils (International) Limited

GBP

16

Naturex Ingredientes Naturales SA de CV

MXN

62,768Fragrance Oils (Purchasing) Limited

GBP

1

Oxiquimica S.A.P.I de CV

MXN

500

Ungerer Limited

GBP

5

Ungerer Servicios AS de CV

MXN

50

Givaudan Middle East & Africa FZE

AED

1,000

Ungerer Mexico S. de R.L. de CV

MXN

92,556

United ArabEmiratesExpression Parfumées LLC

AED

300

Givaudan Nederland B.V.

EUR

402

Givaudan United States, Inc.

USD

0.05

Vika B.V.

EUR

20

United States ofAmerica

Givaudan Flavors Corporation

USD

0.1

Virgula B.V.

EUR

20

Givaudan Fragrances Corporation

USD

0.1

Naturex Coöperatief UA

EUR

1

Givaudan Flavors and Fragrances, Inc.

USD

0.1

Givaudan Finance Europe BV

EUR

5,000

Naturex Holdings, Inc.

USD

0.1

New ZealandGivaudan NZ Ltd

NZD

71

Naturex, Inc.

USD

1

Nigeria

Givaudan (Nigeria) Ltd

NGN

10,000Vegetable Juices, Inc.

USD-

Fragrance Oils (West Africa) Ltd

NGN

15,000drom International, Inc.

USD

20

Givaudan Peru SAC

PEN

1,303

Ungerer Industries, Inc

USD

1,807

Activ International SAC

PEN

14,043

Ungerer and Company, Inc.

USD

650

PolandGivaudan Polska Sp. Z.o.o.

PLN

50

Uruguay

Ungerer Uruguay SA

UYU

360

RussiaGivaudan Rus LLC

RUB

9,000

Venezuela

Givaudan Venezuela SA

VES

4.5

Naturex LLC

RUB

1,500

VietnamGolden Frog Flavor-Fragrance Manufacture Corporation

USD

3,279

Givaudan Singapore Pte Ltd

SGD

24,000Naturex Holdings Singapore Private Ltd

SGD

500

Fragrance Oils (Far East) Pte Ltd

GBP

5

Ungerer Singapore Pte Ltd

USD

100

Compensation
report

Italy

Korea

Consolidated
financial report

Malaysia

Statutoryfinancial report

Netherlands

Appendix

Peru

Singapore

Sweden91

Givaudan – 2020 Governance, Compensation and Financial Report92

Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGovernancereportNotes to the consolidated financial statements

33. Disclosure of the Process of Risk Assessment
Risk management in Givaudan is an integral part of the business. It is a structured andcontinuous process of identifying, assessing and deciding on responses to risks. The reportingof the opportunities and threats that these risks create and how they might hinder thebusiness 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 theoperational management level.
The Givaudan Enterprise Risk Management Charter describes the principles, framework andprocess of the Givaudan Enterprise Risk Management, which ensure that material risks are
identified, managed and reported. It defines the associated roles and responsibilities which
are reflected in the delegated authorities. Enterprise Risk Management encompasses both
the Fragrance and 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 governance regulations, 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 andregulations, where applicable; facilitate disclosure to key stakeholders of potential risks andthe company’s philosophy for dealing with them. At the same time, the process creates theawareness 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, timelinessand adequacy of the risk analysis. Mitigation decisions are taken at individual and combinedlevels. This management is also responsible for implementing, tracking and reporting the risk
mitigation directives of the Executive Committee, including periodic reporting to the Board.  Theassessment is performed in collaboration between the Executive Committee, divisional andfunctional 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 andCorporate 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 is performed 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.

Givaudan – 2020 Governance, Compensation and Financial Report

GovernancereportDeloitte SA
Rue du Pré-de-la-Bichette 1
1202 Geneva
Switzerland

Statutory Auditor’s Report

Statutoryfinancial report

Consolidated
financial report

Compensation
reportTo the General Meeting of GIVAUDAN SA, VernierAppendix

93

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
2020, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion the consolidated financial statements, presented on pages 39 to 92, give a true and fair view of the consolidated
financial position of the Group as at 31 December 2020, 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 AuditingStandards. Our responsibilities under those provisions and standards are further described in the Auditor’s Responsibilities forthe audit of the consolidated financial statements section of our report. We are independent of the Group in accordance withthe provisions of Swiss law and the requirements of the Swiss audit profession, as well as the International Code of Ethics forProfessional Accountants, (including International Independence Standards) of the International Ethics Standards Board for
Accountants (IESBA Code) 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.

Phone: +41 (0)58 279 8000
Fax: +41 (0)58 279 8800
www.deloitte.chGovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Our Audit Approach

Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
reportSummary
Key audit matters

Based on our audit scoping, we identified the following key audit matters:–– Acquisition accounting related to Ungerer and its affiliates;–– Carrying value of intangible assets; and–– Taxation.

Materiality

Based on our professional judgment we determined materiality for the Group as a whole to be CHF 60 million.

Scoping

Based on our understanding of Givaudan’s operations, we have defined 17 component operations in 11 countries thatare in scope for group reporting purposes. We have requested from the auditors in these countries to perform audit
procedures to address the risks identified in our risk assessment phase. Coverage ratio on group sales, group
operating income and group total assets are disclosed below.

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

94

95

GovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Compensation
reportAcquisition accounting related to Ungerer and its affiliates
Key audit matter

How the scope of our audit responded to the key audit matter

As described in the Critical Accounting Estimates and Judgments in Note 3, significant judgment is required indetermining the fair value of the identifiable assets acquired, particularly intangibles, and the liabilities
assumed. Such judgments require estimates that are not only based on available information but as well on
assumptions with respect to the timing and amount of future revenues and expenses associated with anasset and a liability. In addition, judgment is required to allocate the purchase price to the underlying acquired
assets and liabilities based on their estimated fair value.

We have tested the design & implementation of Givaudan internal controls in relation to acquisition accounting.

Consolidated
financial report

As described in Note 6 to the consolidated financial statements, the Group completed the acquisition ofUngerer on 20 February 2020 for a total consideration of CHF 676 million.
This transaction is considered as a business combination as defined by IFRS 3 Business Combinations which
requires management to perform a purchase price allocation. The purchase price allocation apportions theconsideration paid against the net assets acquired and fair valued and against goodwill.
For the acquisition of Ungerer and its affiliates, the consideration paid was allocated against the fair value ofidentified intangible assets for CHF 297 million, the fair value of other identifiable assets for CHF 254 million,
the fair value of liabilities assumed of CHF 148 million and goodwill of CHF 273 million.

Statutoryfinancial report

The accounting for the acquisition of assets and liabilities of Ungerer and its affiliates, including the valuationof intangible assets identified, requires a number of complex accounting judgments sensitive to key
assumptions such as discount rate, growth rate and other assumptions used in the business plan, internal rateof return, attrition rate and royalty rate.
In addition, the amortisation period retained for intangibles acquired also requires judgment and constitutes asignificant estimate that affects current and future financial periods.
We focused on this transaction because of the complexity of applying acquisition accounting, the level ofjudgment relating to the identification and valuation of intangible assets, valuation of tangible assets acquired
and the liabilities assumed and the significance of consideration paid on that particular transaction in 2020.

We obtained legal documents such as the sale and purchase agreement and its relevant appendices toevaluate the key terms and conditions. We confirmed our understanding of the transaction by conducting
inquiries with management.
We obtained various reports from management’s advisors that supported our understanding of the rationaleof the acquisition as well as the completeness of the assets acquired and liabilities assumed. We also obtained
report from management’s external valuation experts providing the valuation of intangible and tangible
assets in the acquisition accounting.
We assessed whether the transaction constitutes a business combination in accordance with IFRS 3 "Business
Combinations". We also appraised the acquisition date selected by management.
We tested the payments of consideration by tracing them to the bank statements evidencing the paymentsof the funds.
We challenged management on the identification and valuation of intangible assets and valuation of tangible
assets acquired and liabilities assumed in the acquisition accounting against the terms of the sale andpurchase agreement, management’s experts reports and comparable transactions.
We reviewed and assessed the work performed by management’s external valuation experts including thevaluation methodology for each category of intangible assets, along with the key judgments made in
determining the fair values including any fair value adjustments to tangible assets. We have involved our own
valuation specialists to test the reasonableness of the methodology and assumptions used as well as thecomputation of tangible and intangible assets value.
We evaluated the reasonableness of the business plan used in the valuation model. In particular, we
challenged sales forecasts with historical data from the business acquired and market trends from Givaudan.
Using previous acquisitions and available market data, we benchmarked the assumptions used in determining
the attrition and royalty rate as well as the contributory asset charges (‘CAC’) used in the valuation.

Appendix

We also challenged the duration estimated by management for the amortisation of the intangible assets
acquired, comparing them to current Group accounting policies and other recent acquisitions.
We validated the appropriateness and completeness of the related disclosures in Note 3 and Note 6 to theconsolidated financial statements.
Based on the procedures performed above, we obtained sufficient audit evidences to corroborate
management’s judgments and assumptions regarding the acquisition accounting of Ungerer and its affiliates.

96

GovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
reportCarrying value of intangible assets
Key audit matter

How the scope of our audit responded to the key audit matter

As of 31 December 2020, Givaudan carries intangible assets of CHF 4,543 million of which goodwill of
CHF 3,294 million and other intangible assets of CHF 1,249 million.

We assessed internal controls in relation to the identification of impairment indicators and challenged
independently the results.

The goodwill has been allocated to the following four Cash Generating Units (“CGUs”):

We assessed the design and implementation of the internal controls relating to the projected financial
information process and approval, the preparation and review of the weighted average cost of capital andpreparation and review of the asset impairment models for Goodwill and intangible assets with indefinite
useful life.

–– Taste & Wellbeing: CHF 2,298 million,–– Fragrance & Beauty: CHF 756 million,–– Expressions Parfumées: CHF 135 million,–– Fragrance Oils: CHF 105 million.
Furthermore, Givaudan holds intangible assets that were recognised from previous business combinations
amounting to CHF 1,077 million. These assets are mainly technology-related assets, customer and suppliers’
relationships and brand names. These assets have been recognised during the initial purchase priceallocations in accordance with IFRS 3 "Business Combination". The valuation of software is not part of our Key
Audit Matter consideration as Software and ERP system assets (carrying value 172 million as of 31 December2020) have not been recognised from acquisition accounting.
As stated in Note 2.17 to the consolidated financial statements, the carrying value of goodwill and intangible
assets with infinite useful economic life is tested for impairment annually or more frequently if impairment
indicators are present. Management has not identified any indicators of impairment in the period. For
Goodwill, Management has proceeded to an evaluation of the recoverable amount of the CGUs by comparing
the recoverable value of the assets with their carrying values. Management performed its annual impairment
test of goodwill in the fourth quarter of 2020 and has calculated the value-in-use in order to estimate therecoverable value of the assets. In order to derive the value in use of the assets attributable to the CGUs,
Management has prepared discounted cash flows models.

We have inquired with management about the presence of impairment indicators for the intangible assetsthat have been recognized from current and past business combinations. We have corroborated the results of
our inquiries with a review of the financial performance of the underlying markets and legal entities as well as
inquiries with personnel outside the finance function.
We evaluated and challenged the key assumptions and inputs to the impairment models by independently
estimating a range of acceptable outcome and performing sensitivity analyses in order to evaluate the impactof selecting alternative assumptions.

Management concluded that in all cases, value-in-use formed the basis of the impairment conclusions andthat no impairment should be recognised on that basis. A sensitivity analysis considering changes inassumptions in the cash flows and in the discount rates does not give rise to any material impairment.

In challenging the assumptions, we have:–– Considered the appropriateness of the judgment that Expressions Parfumées and Fragrance Oils constituteseparate CGUs and that the 2020 acquisitions are integrated to the Fragrance & Beauty and Taste &Wellbeing CGUs;–– Assessed the discount rates used. In doing so, we involved our internal valuation specialists to assess theappropriateness of management’s key inputs and methodology used in deriving the discount rates. This
included benchmarking these inputs against available market data;–– Evaluated the appropriateness of the long term growth rates applied to derive the terminal value by tracing
them back to a prominent source of macroeconomic projections;–– Tested the extent to which projected financial information can be reliably prepared by management byperforming retrospective review to compare prior period forecasts with actual results and reviewed any
budget revision;–– Confirmed that forecasted cash flows were consistent with Board approved forecasts and analysedreasonably possible downside sensitivities;–– Evaluated the reasonableness of cash flow projections by considering the potential effects related to the
COVID-19 pandemic;–– Evaluated the sensitivity in the valuation resulting from changes to the key assumptions applied.

Further details in relation to management impairment considerations have been provided in Note 22, withdetails regarding the discount rates used for each of the CGUs.

We audited the integrity of the impairment models and cash flow forecasts. We considered the compliance ofmanagement’s impairment models with the requirements of IAS 36 "Impairment of Assets".

The key inputs that require judgment are:–– The identification of the relevant CGUs;–– The estimate of the future cash flows the entity expects to derive from each of the CGUs;–– The discount rates; and–– The long-term growth rate used to derive the terminal value.

We have compared management estimates of economic useful life with the actual usage of the assets.
We also reviewed the appropriateness of the amortisation method and related charges for intangible assets
with a definite useful economic life.

97

GovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Compensation
reportCarrying value of intangible assets
Key audit matter

How the scope of our audit responded to the key audit matter

Intangible assets with a definite useful economic life are carried at cost less accumulated amortisation andaccumulated impairment losses. In addition to the amortisation booked on a straight-line basis over theestimated economic useful life of the asset, management assessed impairment indicators on a regular basis.

We have validated the appropriateness and completeness of the related disclosures in Note 22 to theconsolidated financial statements.

Due to the significance of the carrying value for goodwill and acquisition-related intangible assets and thejudgments involved in performing the impairment test, this matter was considered as a key audit matter.

Based on the procedures performed, we obtained sufficient appropriate audit evidence to corroborate
management’s judgments and estimates regarding the carrying value for intangibles assets.

Statutoryfinancial report

Consolidated
financial report

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 differing rules 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 indetermining provision for income taxes, both current and deferred, as well as the assessment of provisions for
uncertain tax positions including estimates of interest and penalties where appropriate.

We assessed the design and implementation of internal controls in respect to provisions for current tax andthe recognition and recoverability of deferred tax assets.

The effective tax rate of the group increased from 13% in 2019 to 15% in 2020. The consolidated statement offinancial position includes current tax assets of CHF 66 million, current tax liabilities of CHF 157 million,
together with deferred tax assets of CHF 218 million and deferred tax liabilities of CHF 310 million. The tax
expense recognised in the consolidated income statement amounts to CHF 133 million. Details of all current
and deferred tax balances are disclosed in Note 16 to the consolidated financial statements.

We examined the procedures in place for the current and deferred tax calculations for completeness andvaluation and audited the related tax computations and estimates in the light of our knowledge of the tax
circumstances. Our work was conducted with the support of our internal tax specialists.

Due to their significance to the financial statements as a whole, combined with the level of judgment andestimation required to determine their values and the geographical spread with different jurisdictions, theevaluation of current and deferred tax balances including the assessment of provisions for uncertain tax
positions is considered a key audit matter.

We evaluated management’s implementation of Group policies and controls regarding current and deferredtax, as well as the reporting of uncertain tax positions.

We performed an assessment of the material components affecting the Group’s tax expense, balances andexposures. With the support of tax specialists, we reviewed and challenged the information reported by themain contributing subsidiaries including the information related to deferred tax assets on loss carry forwards
and we verified the consolidation and analysis 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 whereavailable including any information regarding similar cases with the relevant tax authorities.

Appendix

For the deferred tax assets and liabilities, we assessed the appropriateness of management’s assumptions andestimates such as the expected future tax rate, expected dividend distribution from subsidiaries and timing of
the temporary differences.
We validated the appropriateness and completeness of the related disclosures in Note 16 to the consolidated
financial statements.
Based on the procedures performed, we obtained sufficient appropriate audit evidence to corroborate
management’s judgments and estimates regarding current and deferred tax balances including provisions for
uncertain tax positions.

GovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
reportOur application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that theeconomic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both inplanning 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 60 million, based on a
calculation of 7% of normalised 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 theperformance of the Group and is one of the indicators against which Givaudan is commonly assessed and is a generally
accepted benchmark.
The materiality applied by the component auditors ranged from CHF 45 million to CHF 18 million depending on the scale ofthe component’s operations, the component’s contribution to Group sales, Group income before taxes, Group total assets
and our assessment of risks specific to each location.
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of
CHF 3 million, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We also reported to the Audit Committee on disclosure matters that we identified when assessing the overall presentationof the financial statements.

An overview of the scope of our audit
Our group audit was scoped by obtaining an understanding of the group and its environment, including group-wide
controls, and assessing the risks of material misstatement at the group level. Based on that assessment, we focused ourgroup audit scope primarily on the audit work at 17 component operations in 11 countries. 11 of these were subject to a fullaudit, whilst the remaining six were subject to specified audit procedures where the extent of our testing was based on ourassessment of the risks of material misstatement and of the materiality of the group’s operations at those locations.

98

Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

These locations are geographically spread across all regions, reflecting Givaudan’s global operations. We obtain assurance
over these countries through a combination of audit procedures performed locally, within the Givaudan shared service
centres and centrally at the Head office.
In aggregate, these components represented scope coverage of:
Revenue

73%

Profit before tax

27%

Audits for group reporting purposes

96%

Total assets

4%

75%

25%

Review at group level

All other wholly owned and joint venture businesses were subject to analytical review procedures for the purpose of theGroup audit. 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 also tested the consolidation controls and carried out analytical procedures to confirm ourconclusion that there were no significant risks of material misstatement of the aggregated financial information of theremaining components not subject to audit or audit of specified account balances.
The group audit team virtually visited some key locations as defined at planning stage. We are defining our visits
based on significance of the affiliates and main events occurred during the year. All component audit partners were
included in planning briefings, we discussed their risk assessment and we reviewed the documentation of the resultsfrom their procedures.

99

GovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
reportOther 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
the annual 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 we have 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 freefrom material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swisslaw, ISAs and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.

100GovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Compensation
reportA 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’sreport.

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
instructions of the Board of Directors.

Appendix

Statutoryfinancial report

Consolidated
financial report

We recommend that the consolidated financial statements submitted to you be approved.

Deloitte SA

Karine Szegedi Pingoud

Laetitia Cejudo Petit

Licensed Audit Expert		
Auditor in Charge

Licensed Audit Expert

Geneva, 28 January 2021

101

Statutory
Financial Report
In this section
103

Statutory financial statements of Givaudan SA(Group Holding Company)

103

106

6. Indirect Taxes

Income Statement

103

106

7. Equity

Statement of Financial Position

104 Notes to the statutory financial statements
104 1. General Information
104 2. S ummary of Accounting Principles Adopted
104 3. Subsidiaries

108

8. Own Shares

108

9. B
 oard of Directors and Executive Committee Compensation

109

Appropriation of available earnings

109

Proposal of the Board of Directors to the General Meetingof Shareholders

105

4. I nvestments in Joint Ventures and Associates

110

Report of the Statutory Auditor

106

5. Debt

110

Statutory Auditor’s Report on the Financial Statements

Consolidated
financial report

Compensation
reportGovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Statutory financial
statementsof Givaudan SA(Group Holding
Company)
Income from investments in Group companies

Statutory financial
reportin millions of Swiss francs

Note

10

10

106

108

Accounts receivable from Group companies

180

186

Other current assets

52

41

Accrued income and prepaid expenses22

Current assets

350

347

Loans to Group companies

150

150

Other long-term assets

75

11

5,991

5,253

Investments in Group companies

3

Interests in joint ventures and investments in associates

4

31

32

Other financial assets

13

15

Property, plant and equipment

2

Short-term debt

3

2020

2019

232

286

1,040

997

1

1

1

2

Total Operating income

1,274

1,286

Research and development expenses to Group companies

(325)

(331)

Other operating income
Share of results of joint ventures and associates

4

Personnel expenses(2)

Other operating expenses(66)

Depreciation of property, plant and equipment
Amortisation and impairment of intangible assets

(60)

–

31 December
2019

Marketable securities

Total assets

Note

31 December
2020

Cash and cash equivalents

Intangible assets

Income Statement
For the year ended 31 December

Royalties from Group companies

5

210

222

6,472

5,683

6,822

6,030

468

290

Accounts payable to Group companies

106

78

Other current liabilities

133

89

Deferred income and accrued expenses

85

79

Current liabilities

792

536

2,524

3,128

Long-term debt

5Loans from Group companies

1,092

Other non-current liabilities
Non-current liabilities
Total liabilities

103

79

3,719

3,207

4,511

3,743

Share capital

7

92

92

Statutory retained earnings

7

18

18

(61)

(61)

(454)

(452)

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

7

3

3

Operating income

820

834

Voluntary retained earnings

7

1,542

1,542

Financial expenses

(385)

(294)

Own shares

7, 8

(35)

(31)

Financial income

290

165

Available retained earnings

Non-operating expenses

(88)

(93)

- Balance brought forward from previous year

92

78

Income before taxes

637

612

- Net income for the year

599

585

Income taxes

(38)

(27)

Equity

2,311

2,287

Net income

599

585

Total liabilities and equity

6,822

6,030

Total Operating expenses

Appendix

Statement of Financial PositionNon-current assets

in millions of Swiss francs

103

GovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Notes to the statutory financial statements
1. General Information
1.1 Structure and Description of the Activity

Compensation
reportGivaudan SA is a holding company based in Vernier, near Geneva, whose main goal is to
manage its investments in subsidiaries.

3. Subsidiaries

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

Consolidated
financial report

In March 2020 a branch in Zug (Switzerland) has been created. It's goal is to manage theintellectual property of the company.

1.2 Employees
The average number of employees during the year was less than ten (2019: less than ten).

2. Summary of Accounting Principles Adopted
The financial statements at 31 December 2020 are prepared in accordance with Swiss law.

Givaudan Suisse SA
Givaudan Finance SA

More specifically Givaudan SA invests in companies whose aim is to manufacture andcommercialise natural and synthetic aromatic or fragrance raw materials as well as otherrelated products. In addition, Givaudan SA invests in research and development 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.

Prodiga AG
Givaudan International SA
Vamara Holding SA
Kemptthal Immobilien Nord AG
Givaudan Treasury International SA
Argentina

Givaudan Argentina SA
Givaudan Argentina Servicios SA

Australia

Givaudan Australia Pty Ltd

Austria

Givaudan Austria GmbH

BermudaGivaudan Capital Transactions Ltd

BrazilGivaudan do Brasil Ltda
Naturex Ingredientes Naturais Ltda

CanadaGivaudan Canada Co

Chile

Givaudan Chile Ltda

China

Givaudan Fragrances (Shanghai) Ltd

Statutory financial
reportGivaudan Flavors (Shanghai) Ltd

The company is classified as a large entity as it meets the criteria to present group accounts
under the definition of art. 961d al. 1 of the Swiss Code of Obligations. As Givaudan preparesand reports comprehensive consolidated financial statements under International Financial
Reporting Standards (IFRS) including a cash flow statement, accompanying notes and amanagement 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 writedowns. Marketable securities are shown at the lower of cost and market value. Derivatives
are recorded at fair value.

Givaudan Specialty Products (Shanghai) Ltd
Givaudan Hong Kong Ltd
Givaudan Flavors (Nantong) Ltd
Givaudan Management Consulting (Shanghai) Ltd
Givaudan Fragrances (Changzhou) Ltd
Colombia

Givaudan Colombia SA

Czech Republic

Givaudan CR, s.r.o.

Egypt

Givaudan Egypt SAE
Givaudan Egypt Fragrances LLC

FranceGivaudan France SAS
Activ International SAS
Expressions Parfumées SAS

Appendix104

The currency in which Givaudan SA operates is Swiss francs (CHF) and the accounts arepresented in Swiss francs. In the statement of financial position, foreign currency assets andliabilities are remeasured at year-end exchange rates with the exception of investments inGroup companies which are valued at historical exchange rates. In the income statement,
expenses and income in foreign currencies are converted in Swiss francs using the daily
exchange rate of the transaction date. Foreign currency gains and losses are recognised in theincome statement as they occur with the exception of unrealised gains which are deferred.

Naturex SA
Albert Vieille SAS
Alderys SAS (ownership of 80%)
Germany

Givaudan Deutschland GmbHdrom Verwaltungsgesellschaft mbH
Dr. rer.nat. Storp Vermögensverwaltungs-GmbHGivaudan – 2020 Governance, Compensation and Financial Report

105

GovernancereportNotes to the statutory financial statements

GuatemalaGivaudan Guatemala SA

Hungary

Givaudan Hungary Kft

Compensation
reportGivaudan Finance Services Kft
India

Givaudan (India) Private Ltd

Indonesia

P.T. Givaudan Indonesia
P.T. Givaudan Flavours and Fragrances Indonesia

Italy

Givaudan Italia SpA

Japan

Givaudan Japan K.K.

Korea

Givaudan Korea Ltd

Malaysia

Givaudan Malaysia Sdn.Bhd
Givaudan Flavours & Fragrances Malaysia Sdn.Bhd

MexicoGivaudan de Mexico SA de CV
Grupo Givaudan SA de CV

Netherlands

Givaudan Nederland B.V.

Appendix

Statutory financial
reportConsolidated
financial report

Virgula B.V.
Nigeria

Givaudan (Nigeria) Ltd

Peru

Givaudan Peru SAC

PolandGivaudan Polska Sp. Z.o.o.

RussiaGivaudan Rus LLC

Singapore

Givaudan Singapore Pte Ltd

South Africa

Givaudan South Africa (Pty) Ltd

Spain

Givaudan Iberica, SA

SwedenGivaudan North Europe AB

ThailandGivaudan (Thailand) Ltd

TurkeyGivaudan Aroma Ve Esans Sanayi Ve Ticaret Limited Sirketi

United Kingdom

Givaudan Holdings UK Ltd
Fragrance Oils Limited

United Arab Emirates

Givaudan Middle East & Africa FZE

United States of America

Givaudan United States, Inc.
Ungerer Industries, Inc.

VietnamGolden Frog Flavor-Fragrance Manufacture Corporation

In 2020 Givaudan SA increased its investments in Givaudan Fragrances (Changzhou) Ltd andNaturex SA and Givaudan SA also increased its investment in Givaudan Italy SpA, as aconsequence of the acquisition of the cosmetics business of Indena. Furthermore Givaudan SA
has increased its contribution in Givaudan Deutschland GmbH in the form of ownership of theshares of drom fragrances GmbH & Co.KG. Finally, Givaudan SA acquired Ungerer Industries,
Inc. and Alderys SAS during the year 2020.

4. Investments in Joint Ventures and Associates
Name of joint ventures

Principal activity

Country of Ownership interest /incorporation
Voting rights

BGN Tech LLC

Innovative natural ingredients

USA

49%

Natural Extracts
International Ltd

Natural ingredient derivatives
production

Mauritius

49%

Natural ingredient collection andextract

Mauritius

49%

Vanilla International Ltd

Jiangsu Xinrui Aromatics Ltd, manufacturing fragrance ingredients in China, became in 2019an associate in accordance with the new terms and conditions set in the arrangement. The
Givaudan SA’s ownership interest is 49%.

Givaudan – 2020 Governance, Compensation and Financial Report

106

GovernancereportNotes to the statutory financial statements

5. Debt

6. Indirect Taxes

Givaudan SA entered into the following debt transactions:

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

Compensation
report

Issue
date
2011
2014

2018

Currencyofprincipal
CHF

Public
bonds

2016
2017

Consolidated
financial report

Type ofdebt

Privateplacements

Public
bonds

CHF

2020

Group bankcredit facility

Statutory financial
report150

07 Dec 2021

2.125%

150

149

7. Equity

1.000%

Reimbursed

100

As at 31 December 2020 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 theright to one vote.

100

18 Sep 2020

150

19 Mar 2024

1.750%CHF

100

07 Dec 2022

0.000%
0.625%CHF

200

05 Dec 2031

EUR

100

20 Dec 2022

EUR

200

20 Dec 2024

CHF

150

09 Apr 2020

CHF

200

09 Apr 2025

0.375%

EUR

500

17 Sep 2025

1.125%

800

17 Sep 2030

2.000%

600
CHF

Public bonds

Total debt as at 31 December

Appendix

Redeemable

Interest
rate

CHF

EUR
2019

Principal
amount in
millions

180
150

1.331%

Fixed

150
100

200

200

108

108

Fixed

216

217

Reimbursed

150

200

200

538

540

861

864

Reimbursed

600

Fixed

Floating
0.150%

150
100

Floating

Floating

26 Jun 2023
10 Nov 2028

2020
2019
Type ofinterest in millions of Swiss francs

Fixed

150
2,673

3,378

As at 31 December 2020, short term debt includes an overdraft of CHF 319 million (2019:
CHF 40 million) related to the cash pooling agreements with a Group company.

The Board of Directors has at its disposal conditional capital of a maximum aggregate amountof CHF 7,481,980 that may be issued through a maximum of 748,198 registered shares, of whicha maximum of CHF 1,618,200 can be used for executive share option plans.
At the Annual General Meeting held on 25 March 2020 the distribution of an ordinary dividendof CHF 62.00 per share (2019: CHF 60.00 per share) was approved. The dividend payment has
been made out of available retained earnings.

Givaudan – 2020 Governance, Compensation and Financial Report

107

GovernancereportNotes to the statutory financial statements

The movements in equity are as follows:2020
in millions of Swiss francs

Balance as at 1 January

Share
CapitalStatutory retained
earnings

Additional paid-in
capitalVoluntary retained
earnings

Available retained
earnings

Own shares

Total

92

18

3

1,542

663

(31)

2,287

(4)

(4)

Compensation
reportRegistered shares
Issuance of shares
Movement of shares
Appropriation of available earnings
Distribution to the shareholders paid relating to 2019(571)

Net profit for the year

599

Balance as at 31 December

Consolidated
financial report2019
in millions of Swiss francs

Balance as at 1 January

Statutory financial
report

599

92

18

3

1,542

691

(35)

2,311

Share
CapitalStatutory retained
earnings

Additional paid-in
capitalVoluntary retained
earnings

Available retained
earnings

Own shares

Total

92

18

3

1,542

630

(22)

2,263

(9)

(9)

Registered shares
Issuance of shares
Movement of shares
Appropriation of available earnings
Distribution to the shareholders paid relating to 2018

(552)

Net profit for the year

585

Balance as at 31 December

Appendix

(571)

92

18

3

1,542

663

(552)
585
(31)

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 are resident in Switzerland.

2,287Givaudan – 2020 Governance, Compensation and Financial Report

GovernancereportNotes to the statutory financial statements

8. Own Shares
The movements in own shares are as follows:High

Average

Low

Total inmillions of
Swiss francs

25,0002,595.0

2,250.0

1,799.0

56

Sales and transfers at cost

(23,971)3,634.8

2,170.2

2,141.6(52)

Balance as at 31 December

16,5702019

NumberAppendix

Statutory financial
reportConsolidated
financial report

Compensation
reportPrice in Swiss francs
2020

NumberBalance as at 1 January

15,541

Purchases at cost

31

35
Price in Swiss francs
High

Average

Low

Total inmillions of
Swiss francs

Balance as at 1 January

11,906

Purchases at cost

26,0002,154.0

1,968.3

1,800.0

22
51

Sales and transfers at cost

(22,365)

1,857.9

1,857.9

1,857.9(42)

Balance as at 31 December

15,54131

As at 31 December 2020 and 2019, there were no other companies controlled by Givaudan SA
that held Givaudan SA shares.
As at 31 December 2020, William H. Gates III (13.86%), BlackRock Inc. (5.06%), MFS Investment
Management (4.99%), Nortrust Nominees Ltd (nominee; 14.98%), Chase Nominees Ltd (nominee;
7.71%) and Banque Pictet & Cie SA (nominee; 4.49%) were the only shareholders holding morethan 3% of total voting rights.

9. Board of Directors and Executive Committee Compensation
Information required by Swiss law, as per art. 663b bis CO, on the Board of Directors andExecutive Committee compensation are disclosed in the Givaudan consolidated financial
statements, Note 31.

108Compensation
reportGovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

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

Consolidated
financial reportin Swiss francs

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

2020

2019

599,056,995

584,670,019

91,607,602

77,650,373

690,664,597

662,320,392

2019 distribution proposal of CHF 62.00 gross per share572,482,332

2020 distribution proposal of CHF 64.00 gross per share

590,949,504

Total appropriation of available earnings

590,949,504

572,482,332

99,715,093

91,607,602

Distribution not paid on Treasury shares held by the Group
Statutory financial
reportAmount to be carried forward

Appendix

109

1,769,542

Statutory capital reserves from capital contributions – additional paid-in capital
2020

2019

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 – 2020 Governance, Compensation and Financial Report

Compensation
reportGovernancereportDeloitte 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

Statutory financial
reportConsolidated
financial report

Report on the Audit of the Financial Statements
OpinionWe have audited the financial statements of Givaudan SA, which comprise the income statement, the statement offinancial position for the year ended 31 December 2020, and notes to the financial statements, including a summary ofsignificant accounting policies.
In our opinion, the accompanying financial statements as at 31 December 2020, presented on pages 103 to 109, comply
with Swiss law 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 therequirements of the Swiss audit profession and we have fulfilled our other ethical responsibilities in accordance withthese 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
Appendix110

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of thefinancial 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.

111

GovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Compensation
reportCarrying value 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, the Company holds investments in Givaudan Group
companies with a carrying value of CHF 5,991 million as of 31 December 2020, representing 88% of total assets.

We evaluated management’s implementation of accounting policies regarding the valuation of
investments in Group companies.

Each investment held is valued individually and reviewed annually for impairment. Each investment showing
another than temporary impairment indicator must be tested for impairment and an impairment would need
to be recorded if the recoverable amount is lower than the carrying value.

We evaluated the design and implementation of controls around the valuation of investments in Group
companies to determine whether appropriate controls are in place.

Appendix

Statutory financial
reportConsolidated
financial report

The impairment test performed by Givaudan management is subject to judgement around the valuation
method, key assumptions used and the susceptibility to the expected future market developments that could
affect the profitability and positive cash flows of these entities.
Accordingly, for the purposes of our audit, we identified judgements and estimates applied by management on
the valuation of these investments as representing a key audit matter.

We challenged the assessment of the existence of impairment indicators done by the Company.
We tested the valuations by critically assessing the methodology applied and the reasonablenessof the underlying assumptions and judgements. We assessed the impairment testing models andcalculations by:–– checking the arithmetical accuracy of the impairment models and the extraction of inputs fromsource documents; and–– challenging the significant inputs and assumptions used in impairment testing 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 the related disclosures in Note 3 to thefinancial statements.
Based on the procedures performed, we consider judgements and estimates applied by management on
the valuation of investments in Group companies to be reasonable.

GovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Compensation
reportResponsibility 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 isnecessary to enable the preparation of financial statements that are free from material misstatement, whether due tofraud 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.

Appendix

Statutory financial
reportConsolidated
financial report

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 frommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high 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 canarise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on 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.

112

GovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Appendix

Statutory financial
reportConsolidated
financial report

Compensation
reportReport 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 instructionsof the Board of 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 Pingoud

Laetitia Cejudo Petit

Licensed Audit Expert		
Auditor in Charge

Licensed Audit Expert

Geneva, 28 January 2021

113

Appendix

In this section
115

Alternative performance measures

117

Givaudan registered offices123

Our reporting suite

Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

115

Alternative performance measures
Appendix to the 2020 Full Year Results
Introduction

EBITDAOn 1 January 2019 the Directive Alternative Performance Measures (DAPM), issued by the SIX
Exchange Regulation, came into force with the purpose to promote the clear and transparent
use of alternative performance measures.

EBITDA defined as Earnings Before Interest (and other financial income (expense), net), Tax,
Depreciation and Amortisation, corresponds to operating income before depreciation,amortisation and impairment of long-lived assets.

The Directive prescribes that clear and comprehensible definitions must be disclosed for all
alternative performance measures used. Also, for alternative performance measures that are
based on a measure included in the financial statements prepared in accordance withrecognised accounting standards and which have been adjusted by adding or omitting specificitems, a reconciliation statement must be disclosed to a comparable measure in the financial
statement according to the recognised accounting standard. Significant reconciliation items
must be explained.

Givaudan’s Alternative Performance Measures
In the 2020 Full Year Results Media Release and on pages 31 to 35 of the 2020 Integrated
Annual Report, the Group uses a number of Alternative Performance Measures that are listed
and defined below.

In millions of Swiss francs

2020

2019

Income for the period

743

702

Interest and other financial (income) expense, net

120

112

Income taxes

133

106

Operating income

996

920

Depreciation

201

193

Amortisation

187

161

Impairment
EBITDA

13

1

1,397

1,275

Comparable EBITDA

Like-for-Like (LFL)

Comparable EBITDA is the reported EBITDA, as adjusted for significant items of a nonrecurring nature which have an impact on the understanding of the underlying normal
operating activities.

LFL is defined as: (a) sales calculated using the invoicing exchange rates of the prior year, (b)excluding sales of businesses acquired from the acquisition date until the period end date, up
to 12 months from the acquisition date, and (c) excluding sales of the businesses disposed offrom the disposal date until the period end date of the comparable prior period.

A reconciliation table of the published EBITDA to the Comparable EBITDA (EBITDA as definedin the section EBITDA above) has been included in the 2020 Full Year Results Media Release. Inthat reconciliation table, all significant one-off items have been explained.

Reconciliation tables of the LFL sales to the reported sales in accordance with IFRS have been
included in the 2020 Full Year Results Media Release.

Givaudan – 2020 Governance, Compensation and Financial Report

116

GovernancereportAlternative performance measures

Free Cash Flow (FCF)

Net debt to EBITDA Ratio

FCF refers to operating cash flow after net investments, interest paid and lease payments.

The Net debt to EBITDA ratio is calculated as follows:

2020

2019

Cash flows from (for) operating activities

1,133

1,136

Acquisition of property, plant and equipment

(188)

(275)

Compensation
reportIn millions of Swiss francs

Proceeds from the disposal of property, plant and equipment
Acquisition of intangible assets
Proceeds from the disposal of intangible assets

2

–

(53)

(51)

Lease payments

(52)

(52)

Consolidated
financial report

811

787

Sales

6,322

6,203

Free cash flow (FCF) as a % of sales

12.8%

12.7%

Leverage Ratio
Leverage ratio is defined as net debt divided by the sum of net debt and equity (as defined forleverage ratio in the table below).
In millions of Swiss francs

Statutoryfinancial report

74
(45)

Interest paid
Free cash flow (FCF)

Appendix

8(39)

31 December
2020

31 December
2019

Short-term debt

206

335

Long-term debt

4,245

3,796

Less: cash and cash equivalents

(411)

(452)

Net debt

4,040

3,679

Total equity attributable to equity holders of the parent

3,490

3,640

Remeasurement of post-employment benefit obligations

484

525

Equity (as defined for leverage ratio)

3,974

4,165

Net debt and equity (as defined for leverage ratio)

8,014

7,844

Leverage ratio

50%

47%

In millions of Swiss francs

31 December
2020

31 December
2019

Short-term debt

206

335

Long-term debt

4,245

3,796

Less: cash and cash equivalents

(411)

(452)

Net debt

4,040

3,679

EBITDA

1,397

1,275

Net debt to EBITDA ratio

2.89

2.88

Comparable EBITDA

1,442

1,331

Net debt to Comparable EBITDA ratio

2.80

2.76

Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Givaudan registered offices
Country

Legal Entity name

Address

Algeria

Givaudan International SA (Suisse) Bureau de Liaison Algérie

Tour A – 4ème Etage, Business Centre Dar El Madina, Micro Zone d’activité Hydra Lot No. 20, 16035 Algers

Argentina

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

Givaudan Australia Pty Ltd

12 – 14 Britton Street, Smithfield, Sydney NSW 2164

drom International Pty. Ltd.

Parkview Business Centre, suite 2/1, 1 Maitland Place, Baulkham HIlls, Sydney, NSW 2153

Naturex Australia Pty Ltd

9 Garling Road, Kings Park NSW 2148

Ungerer Australia Pty. Ltd.

P.O. Box 2143, Taren Point NSW 22229

Austria

Givaudan Austria GmbH

Twin Tower Vienna, Wienerbergstrasse 11, 1109 Vienna

Belgium

Naska Ingredients NV

Lausbedstraat 4, 3630 Maasmechelen

BermudaGivaudan International Ltd

Hamilton

FF Holdings (Bermuda) Ltd

Hamilton

FF Insurance Ltd

Hamilton

Naturex SPRL

Val d’Or, Gulledelle, 96 – 5th Floor, 1200 Brussels

Givaudan do Brasil Ltda

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

G. Nutra Industria e Comércio de Produtos. Alimenticios
e Nutricionais Ltda

Rodovia Eduardo Zucari, Km 21,5 - Zona Rural - CEP 18603-970, Botucatu/ São Paulodrom Internacional Fragrâncias Ind. e Com. Ltda.

Via Natalino Verdi 120, 120 Bairro Bela Vista, 13515-000 Charqueada, São PauloNaturex Ingredients Naturais Ltda

Avenida Buriti no. 5.391, Distrito Industrial, city of Manaus, state of Amazonas, Zip Code: 69075-000

Givaudan Canada Co.

2400 Matheson Blvd. East, Mississauga, Ontario L4W 5G9Naturex Inc (Canada)

44 Chipman Hill, Suite 1000 – Saint John, New Brunswick E2L 2A9

Givaudan Chile Ltda

Avda Del Valle 869, oficina 203, Ciudad Empresarial, Comuna de Huechuraba, Santiago de Chile

Naturex CHILE SPA

Avenida Apoquindo 3001, piso 9, Las Condes, Santiago de Chile

Chile Botanics SPA

Panamericana Sur, Kilómetro 297, Comuna de Linares

Australia

BrazilCanadaChile

117

Givaudan – 2020 Governance, Compensation and Financial ReportCountry

Legal Entity name

Address

China

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 Economic 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, no. 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 , Hong Kongdrom Fragrances International (Guangzhou) Co., Ltd.

no. 66, Hongjing Road East Section of GETDD, 510760 Guangzhou

drom Asia Pacific Ltd.

8 Sham Shing Road, Cheung Sha Wan, new Kowloon, Hong Kong

Naturex Trading Shanghai Co. Ltd

6th Floor, Building 4, no. 333 Gui Ping Rd, Xuhui DST, Shanghai, 200233

Appendix

Statutoryfinancial report

Consolidated
financial report

Compensation
reportGovernancereportGivaudan registered offices

Ungerer Fragrance & Flavor (Shanghai) Co. Ltd.

#1-2 Building No. 508, Lane 2655 Fengzhe Road, Fengxian, Shanghai 201407

Colombia

Givaudan Colombia SAS

Carrera 98 no. 25 G – 40, 151196 Bogotá D.C.

Czech Republic

Givaudan CR, s.r.o.

Klimentská 10, Praha 110 00

Egypt

Givaudan Egypt SAE

Piece 37, Industrial Zone 3, 6th of October City

Givaudan Egypt Fragrances LLC

46 El Thawra st., 3rd floor, Appt 304, Heliopolis

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

Expressions Parfumées

136 Chemin de Saint-Marc, 06130 Grasse

Albert Vieille SAS

629 Route de Grasse, 6220 Vallauris

drom International S.A.R.L.

4 et 6 rue Curie, 92150 Suresnes, Paris

Naturex SA

250 rue Pierre Bayle – BP 81218, 84911 Avignon Cedex 9

AlderysBátiment Mélèze, 86 rue de Paris, 91400 Orsay

118

Givaudan – 2020 Governance, Compensation and Financial Report

Compensation
reportGovernancereportGivaudan registered offices

Country

Legal Entity name

Address

Germany

Givaudan Deutschland GmbH

Giselherstrasse 11, 44319 Dortmund

drom fragrances GmbH & Co. KG

Oberdiller str. 18, 82065 Baierbrunn

drom Holding GmbH

Oberdiller str. 18, 82065 Baierbrunn

drom perfume trade GmbH

Oberdiller str. 18, 82065 Baierbrunn

drom Verwaltungsgesellschaft mbH

Oberdiller str. 18, 82065 Baierbrunn

Naturex GmbHIm Zollhafen 24, Kranhaus Süd, 50678 Köln

GuatemalaGivaudan Guatemala SA

Boulevar Los Proceres 18 Calle, Zona 10 Empresarial Zona Pradera, Torre 1 Of 1803 - 01010

Hungary

Givaudan Hungary Kft

Királyhegyesi út 3, 6900 Makó

Givaudan Business Solutions Kft

Bence utca 1. , Váci Greens B, 1138 Budapest

Givaudan (India) Pvt Ltd

Plot no. 26, 2nd Cross Jigani Industrial Area, Anekal Taluk, Jigani, Bangalore, Karnataka 560 105

Naturex India Pty Ltd (ex. Valentine Agro Private Ltd)302, Bldge no. 2, Star Hub. Next to ITC Grand Maratha Hotel, Sahar Road, Andheri (East) Mumbai – 400 059

Ungerer Flavours India Private Limited

Plot No. F-366, Phase - Viii-B, Ind. Focal Point, Mohali, Punjab

PT. Givaudan Indonesia

Jl. Raya Jakarta-Bogor Km 35, Cimanggis Depok, 16951 West JavaPT drom fragrances Indonesia

German Center Building, 6th floor, suites 6120-6130, Jl. Kapt. Subijanto Dj., 15321 South Tangerang City, Banten

Statutoryfinancial report

Consolidated
financial report

India

Indonesia

PT Fragrance Oils Indonesia

Rukan Permata Senayan blok B-22. Jalan Tentara Pelajar, Senayan, 12210 Jakarta

Iran

Givaudan International SA, Iran Branch

P.O. Box 15175/534 – No.202 – 204, Gol Bld., Gol Alley, After Park Saei, Vali Asr, Tehran

Italy

Givaudan Italia SpA

Via Borgogne 5, 20121 Milano

drom International Italia Srl

Via Valassina 24, 20159 Milano

Expressions Parfumées Srl

Via Varesina 162, 20156 Milano

Indena S.p.A.

Via Ortles 12, 20139 Milan

Naturex SPA

Caronno Pertusella, Via Galileo Ferraris, 44, 21042 Caronno Pertusella (VA)

Givaudan International. SA Côte d’Ivoire

Immeuble RMO, 5ème étage, Rue du Docteur Blanchard Zone 4C, Abidjan

ITRAD

Abidjan Yopougon, Chaumière du Banco, 04 BP 1682 Abidjan

Givaudan Japan K.K.

6-6 Osaki 3-chome, Shinagawa-ku, Tokyo 141-0032

Naturex K.K

6-6 Osaki 3-chome, Shinagawa-ku, Tokyo 141-0032

Kenya

Givaudan MEA FZE - Kenya Branch

Vienna Court, Ground floor, West Wing Building, State House Crescent Road (P.O. Box 44168-00100) Nairobi

Malaysia

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

Fragrance Oils (Malaysia) Sdn Bhd

Suite 733, Block B2, Level 7, Leisure Commerce Square, 9, Jalan PJS 8/9, 46150 Petaling Jaya, Selangor

Ivory Coast

Appendix

Japan

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reportGovernancereportGivaudan registered offices

Country

Legal Entity name

Address

MexicoGivaudan de México SA de CV

Av. Eje Norte-Sur no. 11 Civac, 62578 Jiutepec Morelos

Grupo Givaudan SA de CV

Av. Eje Norte-Sur no. 11 Civac, 62578 Jiutepec Morelos

Naturex Ingredientes Naturales SA de CV

Av. Paseo de la Reforma 483, Piso 21 Col. Cuauhtémoc , Ciudad de México - 06500

Ungerer Mexico S. de R. L. de C.V.

Carr. Costera del Pacifico Km. 63, Villa de Tututepec de Melchor Ocampo, Tututepec, Oaxaca 71803

Givaudan MEA FZE Morocco Branch

8 Rue Ibnou Binna Aladdadi, Bourgogne, 20053 Casablanca

MoroccoNaturex Maroc SA

Technopole ONDA – BP 42 20240 Nouasser, Casablanca

MyanmarGivaudan Singapore Pte Ltd (Myanmar Branch)

46A – 2C Excellent Condo, Pantra Street, Dagon Township, Yangon

Netherlands

Givaudan Nederland B.V.

Huizerstraatweg 28, 1411 GP Naarden

Givaudan Finance Europe BV

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

Naturex Coöperatief U.A

Strawinskylaan 3127, 1077 ZX Amsterdam

Givaudan NZ Ltd

Level 1 The Lane, Botany Town Center, Te Irirangi Drive, Botany 2010

Cuisine Resources NZ limited

15 Crosbie Road, Pukekohe 2120

Givaudan (Nigeria) Limited

Plot 2 and 4, Block D, Amuwo Odofin Industrial scheme, Apapa/Oshodi Expressway, Lagos

Fragrance Oils (West Africa) Limited

A2 Billings Way, Oregun, Lagos

Pakistan

Givaudan International SA Pakistan

25th Floor, The Ocean Tower, Block – 9, Clifton, Karachi – 75600

Peru

Givaudan Peru SAC

Av. Victor Andrés Belaúnde 147, Centro Empresarial Real, Torre Real 1, Piso 11, San Isidro 27, Lima

New Zealand

Appendix

Statutoryfinancial report

Nigeria

Activ 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

Naturex Polska Sp. z.o.o.

Ul. K.K. Baczyńskiego 29, 38-200 Jaslo

RussianFederation

Givaudan Rus LLC

Riverside Towers Business Centre, Kosmodamianskaya Naberezhnaya 52/5, 115054 Moscow

Naturex LLC (Russia)

Shuhova Str, 14, building 9, Office 201, 115162 Moscow

Singapore

Givaudan Singapore Pte Ltd

1 Woodland Avenue 8, Singapore 738972

Fragrance Oils (Far East) Pte. Ltd

510 Thomson Rd, #04-01 SLF Building, 298135 Singapore

Naturex Holdings Singapore Private Ldt

20 Changi Business Park Central 2, #05-04A, Singapore 486031

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Givaudan – 2020 Governance, Compensation and Financial Report

GovernancereportGivaudan registered offices

Country

Legal Entity name

Address

South Africa

Givaudan South Africa (Pty) Ltd

9 – 11 Brunei Road, Tulisa Park, Johannesburg 2197

Naturex (Pty) Ltd

Granger Bay Court Building, Block B-Ground Floor, V&A, Waterfront, Cape Town, 8002

Givaudan Korea Ltd

11 – 12/F Trus Tower Building, 60 Mabang-Ro, Seocho-Gu, Seoul

Naturex (Korea)

Room 503, Leaders Bldg, 14, Hwangsaeul-Ro 311 beon-gil, Bundang-gu, SeongNam-si, GyeongGi-do, 13590

Givaudan Ibérica, SA

Pla d’en Batllé s/n, 8470 Sant Celoni, Barcelona

Aromasur SL

Carretera De Santa Olalla, S/n, 41240 Almaden de la Plata, Sevilladrom spain S.L.

Sant Cugat Business Park, Edificio B2, Planta 5a, Of. Núm. 15, av. via Augusta 15-25, 8174 Sant Cugat Del Vallès,Barcelona

Naturex Iberian Partners S.L.U

Autovía A3, salida 343. Camino de Torrent s/n 46930 Quart de Poblet

Tierras Aromaticas del Sur SL

Carretera De Santa Olalla, Km 1, 41240 Almaden de la Plata, Sevilla

Givaudan North Europe AB

Hyllie Vattenparksgata 12, 215 32 Malmö

Swedish Oat Fiber ABBåtafjordsvägen 12, 432 63 BUAGivaudan 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

Givaudan Treasury International SA

Chemin de la Parfumerie 5, 1214 Vernier

Vamara Holding SA

Mettlenweg 17, 2504 Bienne

Naturex AG

Industriestrasse 8, 9220 Bischofszell

Statutoryfinancial report

Consolidated
financial report

Compensation
reportSouth Korea
Spain

SwedenSwitzerland

Taiwan, Republic Givaudan Singapore Pte Ltd, Taiwan Branchof China

7/F No 303, Hsin Yi Road, Sec 4, Taipei City Taiwan 106

ThailandGivaudan (Thailand) Ltd

719 KPN Tower, Floor 16 & 25, 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

Expressions Parfumées, Turkey Liason Office

Edin&Suner Plaza, Meydan sok n°14/2B, 34335 Akatlar 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 no. 129, Jebel Ali Free Zone, Dubai

Expressions Parfumées LLC

Hamsah-A Bldg, Office 210, Khalid Bin Al Waleed St., Dubai

Naturex S.A (Middle East)

Building P6 Office #132, Sharjah Airport International Free Zone (SAIF Zone), P.O. Box 121873, SHARJAH

Appendix

UAE

121Givaudan – 2020 Governance, Compensation and Financial ReportCountry

Legal Entity name

Address

United Kingdom

Givaudan UK Ltd

Kennington Road, Ashford, Kent TN24 0LT

Givaudan Holdings UK Ltd

Kennington Road, Ashford, Kent TN24 0LT

drom International UK Ltd.

Northline Business Consultants Ltd, 3-4 Wharfside, The Boatyard, M28 2WN Worseley, Manchester

Major International Limited

Higham Business Park, Bury Close, Higham Ferrers, Rushden NN10 8HQ

Naturex Ltd

Park Road, Overseal, Swadlincote, Derbyshire DE12 6JX

Fragrance Oils Limited

Eton Hill Industrial Estate, Eton Hill road, Radcliffe, Manchester, M26 2FR

Fragrance Oils (International) Limited

Eton Hill Industrial Estate, Eton Hill road, Radcliffe, Manchester, M26 2FR

Fragrance Oils (Purchasing) Limited

Eton Hill Industrial Estate, Eton Hill road, Radcliffe, Manchester, M26 2FR

Northern Aromatics (Sales) LImited

Eton Hill Industrial Estate, Eton Hill road, Radcliffe, Manchester, M26 2FR

Odouraze LImited

Eton Hill Industrial Estate, Eton Hill road, Radcliffe, Manchester, M26 2FR

Ungerer Ltd

Sealand Road, Sealand Industrial Estate, Chester, England CH1 4LP

UkraineGivaudan International SA, Representative OfficePimonenko Str. 13 6B/18, 04050 Kiev

United States ofAmerica

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, DE 19901

drom International Inc.

5 Jacksonville Road, Towaco, NJ 7082

Naturex Inc

251 Little Falls Drive, Wilmington, DE 19808

Naturex Holdings Inc

c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808

Naturex Cooperative LLC

801 Adlai Stevenson Drive – Springfield, IL 62703

Ungerer & Company

110 North Commerce Way, Bethlehem, PA 18017

Vegetable Juices Inc

c/o Illinois Corporation Service Company , 801 Adlai Stevenson Drive – Springfield, IL 62703

Givaudan Singapore Pte Ltd, Vietnam Representative Office

Giay Viet Plaza 5th Fl., 180 – 182 Ly Chinh Thang Street, District 3, Ho Chi Minh City

Golden Frog Flavour-Fragrance Manufacture Company Ltd

31 Road No.8, Vietnam-Singapore Industrial Park , Binh Dang Quarter, Binh Hoa Ward , Thuan An Town, Binh
Duong Province

Golden Frog Flavor-Fragrance Manufacture Corporation Branch 3

VSIP II-A, Road no 31, Vietnam-Singapore II-A Industrial Zone, Vinh Tan Commune, Tan U yenTown, Binh Duong
Province

Branch of Golden Frog Flavor- Fragrance Manufacture Corporation

Tan Hoa Hamlet , Tan Hoi Dong Commune Chau Thanh District , Tien Giang Province

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reportGovernancereportGivaudan registered offices

AppendixVietnam122

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Compensation
reportGovernancereportGivaudan – 2020 Governance, Compensation and Financial Report

Our reporting suite
The 2020 Integrated Annual
Report offers a holistic
explanation of our value
creation, financial and nonfinancial capitals andperformance.

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Annual Report

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Print from 25 March 2021

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Report. Readers are advised to consult our entire reporting
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Statutoryfinancial report

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Appendix

2020 GRI Sustainability
ReportAVAILABLE IN ENGLISH

2020 Integrated
Annual Report
Highlights

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AVAILABLE IN ENGLISH,

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2020 Governance,
Compensation and
Financial Report123Givaudan SA
Chemin de la Parfumerie 51214 Vernier, Switzerland

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