2018 Integrated Annual Report
Delivering with excellenceKey figures

Key figures
Strong business momentum – investing forthe future
Performance review
2018

2017

PercentagechangeGroup Sales

5,527

5,051

9.4%

Like-for-like sales growth

5.6%

4.9%

For the year ended 31 December, in millions of Swiss francs, except for capital markets and employee data

Sales and results

Gross profit

2,329

2,250

as % of sales

42.1%

44.5%

EBITDA 1

1,145

1,089

as % of sales

20.7%

21.6%

Operating income
as % of sales
Income attributable to equity holders of the parent
as % of sales

883

869

16.0%

17.2%

663

720

12.0%

14.2%

3.5%
5.2%
1.7%
(7.9%)

Balance sheet and cash flows
Operating cash flow
as % of sales
Free cash flow

916

861

16.6%

17.0%

6.4%

703

594

as % of sales

12.7%

11.8%

18.4%

Net debt

2,847

1,074

Leverage ratio

41%

21%

Market capitalisation

21,016

20,794

1.1%

Share price as of last trading day of December

2,276

2,252

1.1%

165.1%

Capital Markets

Cash dividend 2
Earnings per share − basic (CHF)

60

58

3.4%

71.92

78.18

(8.0%)

13,598

11,170

21.7%

0.25

0.33

(24.2%)

Employees
Number of employees as at 31 December
Lost time injury rate

1.	EBITDA: Earnings Before Interest (and other financial income (expense), net), Tax, Depreciation and Amortisation. This corresponds to operating income before
depreciation, amortisation and impairment of long-lived assets.
2.	2018 dividend subject to shareholder approval at the AGM on 28 March 2019.
Note: Like-for-like excludes the impact of currency, acquisitions and disposals.

page 40, Performance review
page 119, Financial report

Givaudan – 2018 Integrated Annual ReportGivaudan at a glance

Givaudan at a glance
Global industry leader in flavours and fragrances
5,527 million

477 million

Group sales (in CHF)

R&D spend (in CHF)

Proposed dividend
per share (in CHF)

21,016 million
Market capitalisation(in CHF)

Sales by division

12%

Sweet goods

15%

34% Flavour
13% Division

19%

39%

68%

Beverages
Flavour
Total 54%

Dairy

Savoury

4% 13%

ges

60.00

19%

Fine Fragrances

Fragrance Ingredientsand Active Beauty
Fragrance
Total 46%

9%

68%

ury

Consumer Products

We
make Ingredientslife taste delicious
Fine Fragrances
FragranceWe
dedicated
andareActiveBeauty to expanding the world’s expression throughflavours by bringing momentsof delight with delicious flavour
Fragrance46%
and taste experiences. Our Total
customers– global, international,
regional and local – are in the food and beverage industry andspan key segments including beverages, sweet goods, savoury,
snacks and dairy. We explore the globe for ingredients,
Consumer Products
innovate to bring our customers unique propositions, anddelight millions of consumers around the world.

12%

Fragrance Division
We live to perfume
life
Latin America
The artistry of our perfumers encompasses a myriad of scented
stories for brands everywhere. Our customers – global,
international, regional and local – serve end-consumer markets
with fragrances
personal, home and laundry care brands as
Northfor
Americawell as prestige perfumes, creating memorable scents andfragrances used daily the world over. And for nature-derived
beauty performance, our Active Beauty business offers anextensive portfolio of award-winning active cosmetic
ingredients designed by teams that harness the power ofnature for cutting-edge cosmetics.

27%

Markets

57% of annual sales in mature markets,
43% of sales in high growth markets.
We are a global company with subsidiaries and branches in
50 countries. High growth markets continue to be an
important contributor to our future growth, with sales driven
by the growing population and expanding middle class. In boththese markets, increasing demand for health and well-being
products – examples of which include lower salt and fat infood and anti-ageing effects in cosmetics – is a stimulating
potential for growth.

Givaudan – 2018 Integrated Annual Report

Asi

148

Locations worldwide

64

Production sites

over 74,000
Products sold per year

13,598
Employees

19.5 million
Hours worked safely

Global footprint
North America

Europe, Africa
and Middle East

Sales
CHF 1,441 million
Production sites
13
Employees
2,518

Sales
CHF 1,982 million
Production sites
28
Employees
6,363

Asia Pacific

Latin America

Sales
CHF 1,475 million
Production sites
14
Employees
2,877

Sales
CHF 629 million
Production sites
9
Employees
1,840

Sustainability leadership

A Sense of Tomorrow
Meeting needs today, defining what's next
As a responsible company, we understand the exciting opportunities
that sustainability offers to add value to our business and society atlarge. Our sustainability approach, 'A Sense of Tomorrow', transforms
challenges into new possibilities in sourcing, innovation and theenvironment – for the Company, the surrounding communities, ourcustomers and consumers.

Givaudan has earned CDP
leadership scores with an
A- grade in both climate change
and water security scoring.

www.givaudan.com – Our company – About Givaudan
Disclosure 102 – 6, 102 – 7

Title Subtitle

1

2018 Integrated Annual Report
Delivering with excellenceOur 2018 Annual Report focuses on‘Delivering with Excellence’ andhighlights our continuous efforts toachieve this across our value chain.

Table of contents

We strive for excellence at every
touch point with our customers,
and in today’s competitive and fastmoving market, this demands that
we are agile and efficient.
We focus our investments onareas that bring most value toour customers while seeking
to enhance our operational
excellence and efficiency acrossthe organisation to further
streamline our costs and deliver astrong financial performance.

2

Creating value

4

Chairman’s introduction

6

Chief Executive Officer’s review

11Strategic value creation

12

Value creation at Givaudan

16

Our unique positioning18

Our 2020 strategy

31

Acquisitions

34

A Sense of Tomorrow

36

Megatrends

39

Financial capital

40

Performance review

44

Shareholder value creation47

Our innovative capabilities

48

Driven by a culture of innovation

53

Our people & culture

54

A culture of performance and appreciation

58

Embracing our culture of safety

61

Sourcing & operations

62

From sourcing to supply

65

Excellence in operations

71

Good governance72

Risk management

76

Compliance79

Regulatory

81

Corporate citizenship

85

Compensation report

99

Governance report

119

Financial report

201

Appendix

Givaudan – 2018 Integrated Annual Report

2

Title Subtitle
Creating
value

Creating value
through an integrated approach

Integrated Reporting offers a platform for the concise
presentation of how our financial and non-financial capitals
contribute to the Company’s responsible growth and sharedvalue for internal and external stakeholders.

Gilles Andrier, CEOAs we continue our journey towards Integrated
Reporting, based on the framework of theInternational Integrated Reporting Council (IIRC), we
focus on how our Company creates new opportunities
for responsible growth and shared success bytransforming our financial and non-financial capitals
into value for not only the Company, but our key
stakeholders and the environment. And in this year’s
integrated report, we highlight how we continue todrive excellence across our value chain.

Givaudan – 2018 Integrated Annual ReportCreatingTitle Subtitle
value 3

About this report

Givaudan adheres to legal requirements, good corporate
governance and follows best practices consistent with thoseof leading international companies. This report complies with
Swiss law, IFRS, the SIX Exchange Regulation’s Directive on
Information relating to Corporate Governance, the Swiss Codeof Best Practice for Corporate Governance and addresses themain elements of the Integrated Reporting Framework issued
by the IIRC.
Our sustainability reporting is based on the Global Reporting
Initiative (GRI) Standards.
We select the report’s topics based on an internal strategic
evaluation defining focus areas along the value chain, operational
key achievements, our sustainability context and materiality
matrix, completeness, balance and stakeholder inclusion.

Our reporting suite

Readers are advised to consult our entire reporting suite to get
a complete overview:– The 2018 Integrated Annual Report offers a holistic
explanation of our value creation, financial and non-financial
capitals and performance, including our Governance,
Compensation and Financial reports.
– The 2018 Sustainability Progress Review offers casestudies and progress data for the three focus areas of oursustainability approach as well as eco-efficiency targets versus
progress. The GRI Content Index is included in this report.
–O ur Sustainability Approach offers a strategic overview
of A Sense of Tomorrow, the approach for each of thethree sustainability focus areas, and related issues such as
stakeholder engagement and material topics.
Cross-references help readers navigate through the reports:
a GRI icon signals information related to GRI Disclosures; SDG
icons are used to show which content contributes to the ten
United Nations Sustainable Development Goals (SDG)
we believe we can have the most impact on; and the magnifying
glass icon refers the reader to a specific page in the report or to
the website or to another publication for further information.

References used
References to other pages in thisreport, other reports, documents or
our websites for more information

Indicates GRI Standards
disclosures

Indicates UN Sustainable
Development Goals Givaudan
contributes toGivaudan – 2018 Integrated Annual Report

4

Chairman’s introduction

Chairman’s introduction
Fostering a culture of excellence

In a challenging environment,
we concluded a successful thirdyear of our 2020 strategy withstrong business momentum.
I would like to thank you all foryour commitment and investmentin Givaudan.
In 2018, we delivered solid topline growth and free cash flow
generation in line with our 2020 financial targets. On the basisof Givaudan’s strong performance in 2018, and its continued
solid financial position, the Board of Directors will propose anincrease in the dividend to CHF 60.00 at the Annual General
Meeting on 28 March 2019. This is the eighteenth increase since
our listing on the Swiss stock exchange.
I am proud of the achievements we made in delivering a strong
financial performance as well as continuing to invest into new
businesses to create long term value. Powered by our vision ‘toinspire emotion through our creations every day, everywhere,
as we strive for a better tomorrow’, we made great progress inmany areas. Our strategic focus areas, driven by global
megatrends and rapidly changing consumer desires have seen
us continue to expand our global presence. We joined forces
with companies that strengthen our existing capabilities, andevolved our business to ensure a superior customer experienceand increased agility.
The shift to more natural products continues to present uswith many exciting opportunities to provide solutions to ourcustomers that meet this growing need. Consumers around theworld are increasingly demanding more natural and organic
products from food and beverage companies, and our role isto help our customers develop great tasting solutions that
consumers will also feel good about. We invested in new

Givaudan – 2018 Integrated Annual Reportcommercial and creative centres to evolve our customer
offering and ensure we deliver winning solutions. With thelatest acquisitions we made in 2018, including Naturex, we havenow become the undisputed leader in natural flavours andnatural ingredients.
In 2019, the global economy will continue to face challenges
from rising economic and political uncertainty in many parts of
the world. Despite these challenges, we remain very optimistic
about the outlook for our business. We are well positioned totake advantage of the trends of growing populations, people
living longer and more responsibly, and acceleratingurbanisation. Our broad business and 2020 strategic focus
areas are fully aligned to these opportunities, and we continue
to evolve our business to increase our agility to deliver to ourcustomers, and respond to changing customer and consumer
needs quickly.
Innovation, particularly in the areas of naturals andbiotechnology remains an important focus. In striving fora better tomorrow, we will develop alternative sources of
key natural raw materials, helping to protect these precious
natural sources. We also see a strengthening of the role ofbiotechnology to offer our customers the ingredients paletteof the future through the use of new, innovative processes.
Digitalisation is opening up exciting opportunities to change
the way we do business, either to provide new products
and new engaging experiences or to design simpler, more agile
business services. In January 2019, we opened our Digital
Factory in Paris bringing together experts, partners andcustomers to accelerate digital transformation and innovation.
We also anticipate the impact of a changing workplace.
Changing demographics means millennials and Generation Z
will comprise half the workforce by 2020, as well as a greater
participation of older age groups, with each group bringing
new sets of requirements and expectations. Givaudan seeksa diverse organisation to meet our business goals, to drive
innovation and create an inclusive culture where all its people
can grow and succeed.

Chairman’s introduction

5

I thank you
all for yourcommitment
and investmentin Givaudan.

Calvin Grieder, Chairman

Succession planning for the Board of Directors and the senior
management continues to be important for our future success.
In 2018, Chris Thoen, Head of Global Science & Technology,
retired from the Executive Committee. I would like to extend
my warmest thanks to Chris for his contribution and many
achievements at Givaudan. We have an experienced team inplace at the Board level, and at all levels, we continue to ensure
we have the necessary competencies, and the right blend ofexpertise and experience.
Ethics and integrity are vital values for us, as they inspire thetrust we need to excel. To uphold these values, in 2018 we
updated our Principles of Conduct, which enshrine our wayof doing business in an ethical way and are shared with all
employees worldwide. Ethics and compliance also form thebasis for our successful sustainability efforts, which again
has been recognised by CDP, the non-profit global
environmental disclosure platform, awarding us an A- forclimate change and water security.
As we look forward, I have every confidence that Givaudan
will continue along its successful path, creating further
shareholder value through profitable, responsible growthcomplemented with acquisitions. Drawing on our 250-year
heritage, we will continue to demonstrate our resilience andability to turn challenges into opportunities to deliver solid
business performance.

My thanks and gratitude goes to my fellow members of
the Board of Directors, the Executive Committee and all our
employees worldwide, for their hard work and support.
Their commitment and passion makes Givaudan a uniqueplace to work.
Finally, I would like to express my thanks to our shareholders foryour trust and continuing support. I remain confident Givaudan
is well positioned for the future and long term success, and willcontinue its path of value creation and drive for excellence inthe years to come.

Calvin Grieder
Chairman

Disclosure 102 – 10, pages 4 –5

Givaudan – 2018 Integrated Annual Report

6

Chief Executive Officer’s review

Chief Executive Officer’s review
Delivering with excellence

I am pleased to report we delivereda strong performance in 2018,
demonstrating our continued
ability to deliver on our short-term
objectives whilst also continuing
to invest for the long-term future
success of our business.
The positive results are testament to the strength of thepartnerships we have with our customers, the resilience of ourbusiness and the hard work and dedication of all of ouremployees.

Strong financial performance

In 2018, the third year of our 2020 strategy, we continued tomaintain good business momentum. Our topline growth, withsales of CHF 5,527 million, an increase of 5.6% on a like-for-likebasis, and 9.4% in Swiss francs, as well as our free cash flow of
12.7% of sales, are both in line with our 2020 financial targets.
Our growth was well balanced between our Flavour andFragrance divisions and was fuelled by the strong operational
progress we made across all areas of the strategic pillars ofour 2020 strategy.

Adapting to the external environment

While 2018 was a year of good progress against all our strategicpillars, we also faced some challenges. Raw materials prices
increased significantly in all categories and we continued to
implement price increases in collaboration with our customers
to compensate for the increases in input costs. In addition,
Givaudan and the whole industry were impacted by asignificant supply disruption of a major supplier of fragrance
ingredients. Our strong teamwork and collaboration allowed
Givaudan to avoid customer disruption.
We continue to see the global megatrends, and rapidlychanging consumer behaviours bring much change to ourbusiness and our industry. Consumer demand for more natural

Givaudan – 2018 Integrated Annual Reportand organic products is a key opportunity, and we continued torespond to this shift by joining forces with companies thatallow us to provide a strengthened offering to our customers
and become the market leader in naturals.

Expanding our capabilities

In 2018, we welcomed the addition of Naturex, Centroflora
Nutra and Expressions Parfumées to the Givaudan Group,
and announced our intention to acquire Albert Vieille SAS.
Since 2014, we have made nine acquisitions which represent
an additional CHF 1 billion of annualised sales.
In our Flavour Division we completed the acquisition ofCentroflora Nutra, supporting our commitment to provide
customers with a broader range of flavour and taste solutions
that match consumer demands for clean label, organic andnatural ingredients. This was further enhanced with theacquisition of Naturex, with its strong portfolio of plant
extracts and natural ingredients across the food and beverage,
nutrition and health and personal care sectors. Combining
our joint portfolios makes us the undisputed leader in natural
flavours and natural ingredients, and provides an entry into
natural colours, preservatives and phytoactives.
To expand the capabilities of our fragrance business, we
completed the acquisition of Expressions Parfumées, aFrench fragrance creation house with a strong portfolio of
local and regional customers. We further reinforced ourpresence in Grasse by announcing our intention to acquire
Albert Vieille SAS, a French company specialised in naturalingredients used in the fragrance and aromatherapy
markets. We expect to close this acquisition in the firstquarter of 2019. Finally, we entered into a strategic
partnership with Synthite, a global player in the supplyof high quality botanical extract ingredients. We will jointly
work on research and development of exceptional qualitiesof floral and spicy natural ingredients such as jasmine,tuberose, ginger and cardamom, to enrich our paletteof ingredients.
We are making good progress with the integration ofthese companies to bring our complementary strengths to
our customers. With each of these acquisitions we are not
only combining our expertise and product portfolios,

Chief Executive Officer’s review

7

We constantly
challenge
ourselves todeliver withexcellence acrossour value chain.

Gilles Andrier, CEO

but enriching and evolving our culture. Our integration
approach is to preserve and enhance the strengths ofthese acquired companies, and incorporate their values
into our DNA.

Delivering with excellence

We are constantly challenging ourselves to deliver withexcellence across our value chain, always taking our customers’
needs and perspectives into account. We focus our investmentson the areas that bring most value to our customers, while
continuously looking at the way we can improve the efficiencyof our operational and business processes. Today, our recently
launched Givaudan Business Solutions organisation integrates
a range of core business solutions to improve our agility, reducethe complexity of our internal processes and focus entirely ondelivering a superior customer experience.
Being close to our customers is also an important part ofoffering a ‘superior customer experience’. Our global footprint
offers a key competitive advantage in being able to build closer
partnerships with customers, and provide a faster response to
the needs of the local market. We continued to invest in new
facilities with the opening of a new commercial anddevelopment centre in Jakarta, Indonesia demonstrating ourongoing commitment to the Asia Pacific region. We also madenew strategic investments in our Applied Microbiomics Centreof Excellence in Toulouse, France to support further scientificinnovation in microbiomes. In early 2019, we will open aworld-class flavour manufacturing facility in Pune, India,

cementing our 50-year heritage of investment in India.
We set a target of reducing our global water consumption per
tonne of production by 15% by 2020, and we have reached thistarget three years ahead of schedule. This demonstrates ourability to innovate and implement the most efficient andsustainable processes, as part of our commitment to takeaction for the environment across our operations and beyond.
We have a target of 100% renewable electricity for ouroperations by 2025, and are on track with 20 sites using
renewable electricity at the end of 2018. To further advance ourgoals, we joined a consortium of 16 partners who areparticipating in HyCool, an innovative energy technology
project funded by the European Union which aims to develop
cost-effective solutions using solar heat for industrial purposes.

DELIVERING WITH EXCELLENCE

We constantly challenge ourselves to deliverwith excellence across our value chain andstrive for excellence at every touch point withour customers. We look for ways to improvethe efficiency of our operations and businessprocesses and focus our investments on theareas that bring most value to our customers.

Givaudan – 2018 Integrated Annual Report

8

Chief Executive Officer’s review

Givaudan Business Solutions implementation

GBS is the foundation of our 2020 strategy pillar, ‘Deliveringwith excellence’. It is a large transformation for us, and is uniqueto our industry. It will provide best-in-class business services
and solutions that support the Company to further improve ouroperational efficiency, and increase our agility. Building on theachievements in 2017, the implementation of GBS continues toprogress very well against the plan. The first financial benefitsof CHF 20 million were also delivered in 2018.
Our three regional delivery centres in Budapest, Buenos Aires
and Kuala Lumpur are fully operational. Importantly, theseteams all receive onboarding to ensure they feel part ofGivaudan, our unique culture and DNA, but also so they
understand the role GBS plays to make us more agile andefficient. All global functions have successfully transitioned to
the new ways of working, with many improved internal
efficiencies. Those areas of the business that are beingtransitioned country by country, including some supply chain
activities, are also progressing as planned, having completed
the transformation in Europe. In addition, we’re on track withbuilding our digital capabilities that will help us to deliver new
solutions to support the business.
The success to date of this project has been down to the greatcollaboration of the teams in the centres, working in
partnership with the functions and sites to deliver for ourcustomers. Going forward, the scope of GBS has been
expanded, as we continue to leverage the best practices fromour divisions to define a common way forward for our
engineering activities.

Strength of our partnerships

Being a ‘partner of choice’ is embedded in our 2020 strategy,
and our partnerships are crucial to driving responsible andsustainable growth.
We continue to foster a culture of innovation, looking beyond
our internal capabilities to develop strategic innovation
partnerships with external players such as academia, start-ups,
technology providers and research institutions. We launched
MISTA, a new innovation platform for the food industry,
focused on product innovation and development. Opening inearly 2019, the MISTA Optimisation Center (MOC) will provide
start-ups and companies access to a product development
facility, equipment for pasteurisation and fermentation, experts
providing market and leadership development strategies, aswell as input from world renowned culinary and food scientists.
How we partner with our suppliers is also a key part of our2020 ambition. Our ‘Sourcing for Shared Value’ approach tosustainable procurement practices covers three core areas of
Responsible Sourcing, Sourcing at Origin and Communities at

Givaudan – 2018 Integrated Annual Report

Source. In 2018, we strengthened our sustainable patchouli oil
sourcing in Indonesia. In cooperation with international NGO
Swisscontact, we are supporting patchouli producers todevelop their smallholder businesses in a way that is respectfulof the environment.
One of our most valuable assets is our people. We place greatemphasis on developing their skills, promoting a diverse
workforce and building a pipeline of future leaders. Our ambition
is to create a great place to work where every employee feels
able to contribute to the success of the Company. This year we
also launched a Company-wide programme, the GivaudanAwards, to celebrate and share success and recognise teams andindividuals who go ‘above and beyond’ to deliver outstanding
results and make exceptional contributions to our business.

Our role as a responsible and sustainable business
Being a responsible and sustainable business means we embrace
our role as a corporate leader in the global effort to safeguard
the future of the planet. Companies must be prepared to put
sustainability at the forefront of their strategies, and at Givaudan
we want to secure our business while making a positive impact
on the environment and society as a whole. Meeting today’sneeds without compromising the interests of future generations
is fundamental to our business model.

CLIMATE CHANGE LEADERSHIP

Our leadership on climate change action
continued to be recognised by CDP. We received
an A- grade for reducing greenhouse gas(GHG) emissions and for outstanding water
security. This was the fourth consecutive
year on the leadership level for the Company.
Our guiding framework is ‘A Sense of Tomorrow’, aconsolidation of all our global sustainability activities aroundthree key areas of sourcing, innovation and the environment.
Initiatives within each area look at the way we source
materials, develop products and reduce our environmental
footprint. This allows us to better meet our customers’ needs,
but also anticipate ever-evolving challenges for our industry,
our environment and society as a whole. Importantly, these
initiatives not only support our objectives but address theUnited Nations’ Sustainable Development Goals. Aligning ourown priorities on global aspirations such as dietary shifts,
health and well-being and environmental protection shows ourcommitment to sustainability.

Chief Executive Officer’s review

9

Our leadership on climate change continued to be recognised
by CDP, the non-profit global environmental disclosure
platform. We received an A- grade for both climate change andwater security. This was the fourth consecutive year on theleadership level for the Company, which has been disclosing
GHG emissions through its participation in CDP since 2007.

Key priorities for 2019

For the year ahead, we will continue along the path ofdelivering our 2020 strategy, staying alert to the evolving
market environment and adapting as needed.
We will continue to leverage the acquisitions we have made,maximising the unique set of talents, creativity, products andtechnology that each company brings. Where we see
opportunities, we will continue to acquire companies thatfurther strengthen our capabilities and allow us to bring evengreater value to our customers. Our focus on delivering withexcellence remains, with the continued implementation of GBS
helping us to create the additional financial resources needed
to continue growing with our customers in the years to come.
Critical to our future success will be the areas of innovation,biotechnology, digitalisation and sustainability. We see many
opportunities to leverage these to create differentiatedservices, new ways of working and develop new ingredientsand creations that delight our customers.
In 2018 we marked our 250-year heritage of engaging
people’s senses, and inspiring emotion through our creations
every day, everywhere, as we strive for a better tomorrow.
It was fantastic to share so many inspiring stories with our
employees, partners, customers and shareholders. I am
excited about the year ahead, and the next chapter of ourjourney to deliver our 2020 strategy.

Gilles Andrier
Chief Executive Officer	Disclosure 102 – 10, 102 – 14, pages 6 – 9Givaudan – 2018 Integrated Annual Report

10

Givaudan – 2018 Integrated Annual Report11Strategic
value creation

In this section
12

Value creation at Givaudan

16

Our unique positioning18

Our 2020 strategy

20– Growing with our customers

23– Delivering with excellence27– Partnering for shared success

31

Acquisitions

34

A Sense of Tomorrow

36

Megatrends

Givaudan – 2018 Integrated Annual Report12Strategic value creation

Value creation at Givaudan

Value creation at Givaudan
Introducing our business modelGivaudan’s presentation of its value creation
process, which follows the International Integrated
Reporting Framework, shows how the Company
draws on its various resources called capital inputs,
and translates them into outcomes. These outcomes
are the internal and external consequences of
its business activities that impact the Company
and its stakeholders.
This approach shows that through our value
chain we generate innovative products and solutions
created in a sustainable way for our customers.
It also demonstrates how we seek to deliver withexcellence and share our success with stakeholders
while shaping a better tomorrow for all.

Givaudan – 2018 Integrated Annual ReportStrategic value creation

Value creation at Givaudan 13

Value creation for Givaudan and its stakeholders

Owners and investors

Customers

Suppliers

Local communities

Employees

Public andregulatory agencies

Our Sustainability Approach – Stakeholder engagement
Disclosure 102 – 40

Our value creation process

The goal of our value creation process is to ultimately engage
consumers’ senses. We aim to inspire emotions and craft
memorable experiences through our creations. To do this, wedraw on our unique positioning and our three-pillar strategy‘Responsible Growth. Shared Success.’ with ambitious targets
to create value for our key stakeholders, both internal andexternal. Additional value is created through strategicacquisitions that complement our existing operations. We
have implemented sustainable business practices throughout
our processes, which is founded by our sustainability approach‘A Sense of Tomorrow’. Megatrends set the context within
which we operate and shape the way we do business.

Our capitals

We have identified five kinds of capitals that feed Givaudan’svalue chain: Financial capital, Our innovative capabilities(Intellectual capital), People & culture (Human capital), Sourcing& operations (Natural and manufactured capital) and Good
governance (Social and relationship capital).
Our business model uses these capital inputs for the realisationof our business activities. The corresponding outcomes create
value for the Company and our stakeholders such as customers,
employees, shareholders and local communities.
The following double page spread offers an overview of value
creation at Givaudan. Different elements are subsequently
explained in more detail, and the five chapters following‘Strategic value creation’ are structured along our five capitals,
to show Givaudan’s performance with respect to each of them.

Givaudan – 2018 Integrated Annual Report

14 Strategic value creation

Value creation at Givaudan

Value creation at Givaudan
Through our sustainable business modelEngage your senses

Our unique positioning

Our vision
To inspire emotion through our creations every day,everywhere, as we strive for a better tomorrow.

Diversification across four axes›› Geographic expansion›› Customer diversification›› Scaling up›› Expanding beyond flavours and fragrances

Our mission
Together with our customers, we craft memorable
experiences that bring moments of delight to consumers.
Our culture
We impact the world as we inspire, challenge and act withheart and soul.
Our ethics
We are committed to adhering to high ethical standards inthe way we interact with all our stakeholders: open,transparent and honest.

page 16

Enhancing operations›› Through business optimisation and excellence:from SAP implementation to Givaudan Business Solutions
Our unique capabilities›› Leadership in R&D and innovation›› Broad diversification›› Operational excellence›› Best-in-class customer services›› Unparalleled consumer insight›› Leadership in naturals and sustainability

Capital inputs 2018

rc
Sou

Creat
ion

usiness S
o
l
u
tio
an B
ns
ud
va
Gi
ing

s

Givaudan – 2018 Integrated Annual Report

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Good governance›› Commitment to highest ethical standards›› Compliance Helpline open in all sites and available in the
15 major languages›› 39 Givaudan sites have been audited according to
SMETA standards

rchSourcing & operations›› Over 10,000 different raw materials sourced›› 64 production sites in 26 countries›› Responsible Sourcing Policy driving compliance to highethical standards in our supply chainsRaw

Our value chain
creating sharedvalue for our
key stakeholders

R ese aOur people & culture›› 13,598 employees working in over 50 countries›› Unique global onboarding programme ensuring new
joiners get a strong unified sense of Givaudan›› Leadership development at all levels

Customerorderssal

Our innovative capabilities›› CHF 477 million invested in R&D›› Over 495 employees working in Science & Technology›› Selected partnerships with innovators, accelerators andwith academiagnin
in iefW e brthduc

Financial capital›› CHF 3,723 million equity›› CHF 129 million invested in property, plant and equipmentn
rs s u m
ta
nd er
D
isc
in g
ov
ery

Cash
flows

Su

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ly

Re-invest Returns to Financein innovation shareholders our operations
and growthStrategic value creation

Value creation at Givaudan 15

Megatrends
page 36

page 18
Our strategy
Responsible growth. Shared success.

4 – 5%

12 – 17%

Average organic
sales growth

Average free cash
flow as % of sales

Growingwith ourcustomers

Deliveringwith
excellence

Partnerof choicePartnering
for sharedsuccess

Creating additional value
through acquisitions

Our business divisions
Dairy

Sweet goods

Beverages
Flavour
Division
Savoury

Fine Fragrances

Fragrance Ingredientsand Active Beauty

page 31

Fragrance
Division

Shaping a sustainable future
through A Sense of Tomorrow

Consumer Products

page 34

Capital outcomes 2018
Financial capital›› CHF 5,527 million Group sales›› Free cash flow 12.7% of sales›› CHF 60.00 proposed dividend¹

page 39

Our innovative capabilities›› Over 3,600 active patents›› Over 74,000 products soldpage 47

Our people & culture›› 0.25 Lost Time Injury rate, down 76% since 2009›› 24% of women in senior management positions›› 304 leaders nurtured through theLeadership Senses programme›› 556 employees attended ONE Givaudan
onboarding events

page 53

Good governancepage 71›› Total of CHF 1.8 million directed to charitablespending for local communities›› 85% of all employees completed
up-to-date training on our Principles of Conduct›› Global Data Protection programme in Givaudan
fully deployed in 2018, ensuring that Givaudan collects
and processes data in compliance with all applicablelegislation, in particular with the new EU General Data
Protection Regulation

page 61
Sourcing & operations›› 20 sites working with 100% renewableelectricity›› Active Green Teams on 64 Givaudan sites›› Earned CDP leadership scores with an A- grade in bothclimate change and water security scoring

Disclosure 102-15
1. Subject to shareholder approval at the AGM on 28 March 2019.
Givaudan – 2018 Integrated Annual Report

16 Strategic value creation

Our unique positioning

Our unique positioning
Bringing together our capabilities
We have diversified and grown across four axes:

1Geographic expansion
into high growth markets–– 1990s: expansion from mature to highgrowth markets, matching the growthof our multinational clients–– Entry into India and China in 1993 – 94,
Middle East in 1999

2

Customerdiversification–– Early 2000s: diversifying into the local andregional customer base–– This continues today, and GBS will further
enhance our flexibility in serving all our clients

We have enhanced our operations throughbusiness optimisation and excellence:
SAP implementation

Managing the business more consistently

We have unique capabilities to service our customers:
Leadership in R&D and innovation–– Largest talent pool and investment in R&D in the industry–– Uniquely placed to fill the gap of large FMCG players outsourcing innovationand supporting local and regional champions–– Leading presence with industry bodies and regulators

Broad diversification–– Market leading position in all sub-segments–– Global footprint with scale to service local market needs–– Global capabilities to manage complex regulatory landscapeOperational excellence–– Proximity to customers ensuring rapid speed to market–– Best-in-class technologies to reduce our environmental impact from production–– On-going commitment to improving environmental performance

Givaudan – 2018 Integrated Annual ReportStrategic value creation

3

Scaling up–– Flavour and fragrance market leadershipsecured with Quest acquisition in 2007–– Further growth on geographic andcustomer axes–– Expansion across applications
e.g. oral care, fine fragrances, snacks

4

Our unique positioning

17

Expanding beyond
flavours & fragrances–– Moving more into active cosmetic ingredients,
naturals extracts and integrated solutions–– Executing our focused merger and acquisition
strategy in adjacent areas

Givaudan Business Solutions (GBS)

Optimised processes and enhanced customer experience

Best-in-class customer service–– Mastering complexity in the supply chain–– GBS to enhance the overall customer experience–– Investments in resources and systems to assure innovation and regulatory compliance

Unparalleled customer insight–– Industry-leading preference discovery platforms and consumer insight programmes
for consumer understanding, cultural insights and sensorial decoding–– Leveraging digital capabilities to enhance insights in consumer trends

Leadership in naturals and sustainability–– Broad naturals portfolio strengthened through recent acquisitions–– A holistic approach to naturals grounded in an understanding of sourcing,natural extraction and cooking techniques–– Strategic partnerships in sourcing for shared value–– Sustainability approach embedded in the business

Givaudan – 2018 Integrated Annual Report

18 Strategic value creation Our 2020 strategy

Our 2020 strategy
Responsible growth. Shared success.

4 – 5%

12 – 17%

Partnerof choiceGrowing with our customers

Deliveringwith excellence

Partnering for shared successAverage organic
sales growth 1

High growthmarkets

Average free cash
flow as % of sales 1

Health andwell-being

Innovators

Suppliers

PeopleCommunities

Excellencein execution

Consumerpreferred products

Integrated
solutions

Creating additional value through acquisitions

Shaping a sustainable future through A Sense of Tomorrow
1. Over a five-year period by 2020.

Givaudan – 2018 Integrated Annual ReportStrategic value creation

Our 2020 strategy

19

Our three-pillar strategy – growing with ourcustomers, delivering with excellence,and partnering for shared success – together
with ambitious financial targets, guidethe business in transforming resources intovalue for our stakeholders throughsustainable and responsible growth.
In 2018, we remain on track to achieve ourfinancial targets and continue to makestrong progress in each of the three pillars.

Givaudan – 2018 Integrated Annual Report

20 Strategic value creation Our 2020 strategy

Growing with our customers
With sales of CHF 5,527 million in 2018, an increaseof 5.6% on a like-for-like basis, we are well on trackto achieving our ambitious financial target of 4 – 5%average organic sales growth over the five-year
period by 2020.

PERFORMANCE 2018

5.6%

Organic sales growth
TARGET 2020

4 – 5%	Average organic
sales growth ¹

High growthmarkets
High growth markets represent the largest growth
opportunity and we focus our resources on further building ourpresence where we see high growth opportunities and canaccompany our customers in growing their business.
Key achievements in 2018:–– China fragrance production hub on track for opening in
2020. The new facility in Changzhou, Jiangsu province will
substantially increase Givaudan’s manufacturing capacity in
China while maintaining best-in-class service levels.
–– New Flavour and Fragrance commercial anddevelopment centre opens in Jakarta. The CHF 2.9 million
investment creates a closer partnership with customers
and demonstrates Givaudan’s continued commitment toIndonesia.

1. Over a five-year period by 2020.

Success stories

Expressions Parfumées - Bringing expertise in naturals

The acquisition of Expressions
Parfumées is in line with ourambition to strengthen our reach to
local and regional customers andoffers our customers a wider range ofcustomised solutions. The Frenchfragrance creation house, founded in
Grasse in 1982, is a pioneer of natural
fragrance compounds and offers
its NATCO® range of perfumes
designed to adapt to any production
labelled ‘organic’.
Expressions Parfumées will be
managed as an independent entity
within the Fragrance Division,

Givaudan – 2018 integrated Annual Reportmaintaining the brand while benefitingfrom Givaudan’s unique ingredientsand sourcing network. A few months
after the deal was completed,
Givaudan announced a CHF 20 million
investment in Expressions Parfumées’facilities in Grasse to expand andmodernise the R&D laboratories aswell as the production facilities withnew robotics and digitalisation ofoperations. The investment will
support the strong growth ambitions
with local and regional customers aswell as expanding the NATCO® rangeof fully natural fragrance compounds.
Givaudan’s heritage is deeply rooted
in Grasse with distinguishedperfumery dynasties such as Roureand Chiris, and so the acquisition of
Grasse-based Expressions Parfumées
neatly takes us back to our origins,
250 years on.

India: sustainability
excellence by design
Our new manufacturing facility at Pune in
India, opening in early 2019, is being
constructed with a raft of actions that focus
on the environment with, for example,
innovative water and energy consumption
actions being put in place.
The greenfield site will re-use/recycle alltreated waste water to significantly reduce
consumption of fresh water. To reduceenergy consumption, the entire plant will
be equipped with LED lighting and arooftop solar system that will help reduce
CO2 emissions, and over 1,100 trees arebeing planted at the site.
We have also ensured the highest standardof sustainability during construction. EHS is
the top priority in day-to-day operations
and more than four million working hours
were achieved with no lost time incidents
after 900 calendar days.

Strategic value creation

Our 2020 strategy 21

Health andwell-being
There are many opportunities for us to provide customers withsolutions to help them meet the increased demands ofconsumers around nutrition and healthier lifestyles.

Consumerpreferred products
We put customers at the heart of what we do, making themfeel valued, confident and understood. We are a true partner
at each step of the creation and value chain.

Key achievements in 2018:

Key achievements in 2018:–– Centroflora Nutra and Naturex acquisitions completed.
With increasing demand for more natural and organic
products, these acquisitions enable us to expand our offering
to deliver natural products to our customers.

–– Introduced next generation of VAS technology, providing acompetitive advantage to understand consumer preferences,
speed up the process of flavour and fragrance creation andengage customers by overcoming the sensory language barrier.

–– Vetivyne™ launched by Active Beauty. This new patentpending powerful active ingredient has both anti-ageing
benefits and long-lasting properties to enhance fragrance
wear. Upcycled vetiver roots from fragrance raw materials
were used to create a fully natural and sustainable ingredient.

–– New interactive tool supports plant protein creation. We
launched a new interactive tool Compendium 1.0 which helps
to design cost-competitive and consumer preferred flavours
for meat analogues.

–– Givaudan Active Beauty reverses hair ageing with
Darkenyl™. An advanced hair pigmentation recovery
ingredient that offers an effective solution to regenerate haircolour and is inspired by the latest stem cell research.

–– Innovative protein masking technology increases
authenticity of flavours in meat analogues and enhances
flavour in high protein drinks. Our expertise helps solve
challenges customers face in developing nutritional food anddrink products.

–– A new approach to sugar reduction. Our differentiatedapproach helps customers create less-sweet products: up to
50% sugar reduction with no added sweeteners whileremaining fully satisfying.

–– We completed our acquisition of Expressions Parfumées,a pioneer of natural fragrance compounds and they offer
their NATCO® range of perfumes designed to adapt to any
production labelled ‘organic’.

Microbiomics:
pioneering studies for skin health and well-being

Showing leadershipwith Plant Attitude

Our aim is to delight customers andconsumers with an ever-evolving,state-of-the-art product offering. In
one particular area of scientificresearch, Givaudan Active Beauty
leads the way.

We are the only fragrance company
with in-house microbiome researchcapabilities and remain committed tomaking strategic investments that will
push the boundaries of scientificinnovation in this area.

Avoiding meat and dairy is recognised
as a way of reducing our impact on
the planet – but people will not buy a
product that is not tasty, howeversustainable and healthy it may be.

Active Beauty experts have been
studying the human microbiome andits links with health, beauty andwell-being for over 15 years andcontinue to develop active cosmetic
ingredients designed to activate,
protect or balance the skin microbiota.

In 2018, we underlined this commitment
with new strategic investments at our
Applied Microbiomics Centre of
Excellence in Toulouse, France.
Following the installation of state-ofthe-art automation equipment at thecentre, high throughput screenings arebeing accelerated to offer moredisruptive solutions for customers.
Understanding how microbes caninteract with fragrance molecules isfundamental in crafting formulas todesign new active ingredients and drive
the future of our industry.

Enter Givaudan, the most advanced
company in the industry with such a deep
and profound knowledge of consumer
tastes which can be used to help guidecustomers in the development of
successful products. In 2018, we launched
Plant Attitude, a holistic multi-functionaland cross-category innovation platform
developed in response to the meat-freeprotein market space. Two days ofmultidisciplinary workshops in Kemptthal,
Switzerland brought
together the latest developments
in what is currently the biggest
area of growth in the food andbeverage industry.

Givaudan – 2018 Integrated Annual Report22

Strategic value creation Our 2020 strategy–– PrimalHyal™ Ultrafiller wins gold at in-cosmetics LATAM.
The award was for ‘Best Innovation Ingredients’ and the new
product adds to our range of materials to help customers in
the dynamic anti-ageing market.
–– Creation of strategic partnership with Synthite. Thispartnership will enrich our palette with exclusive innovativefloral and spicy natural fragrance ingredients for ourfragrance business.
–– Enriching our palette with novel in-house naturalingredients. We entered into exclusive negotiations toacquire Albert Vieille SAS, a French company specialised innatural ingredients used in the fragrance and aromatherapy
markets.
–– Launch of 2018 FlavourVision® edition. This novel digitalplatform allows Givaudan to conduct virtual TrendTreks™
with customers so they can find out about the latest trends
in each market.
–– Commercialisation of Mechadry, an innovative Mechacap
format. Revolutionising the laundry detergent market,
Mechadry offers superior performance in all stages of thewashing process.

Integrated
solutions
We look at opportunities to grow our business through waysthat go beyond our core flavour and fragrance capabilities,
enhancing the Company’s value proposition to customers andcreating new avenues for growth.
Key achievements in 2018:–– Expanding beyond flavours. Our Kitchen Ingredients
portfolio now includes ingredients and capabilities from our
newly acquired companies, providing recognisable, great
tasting natural ingredients for our customers.
–– Our delivery systems assure that flavours perform
correctly in foods and beverages. Our new, fully naturaldelivery system provides both great taste and a clean label.
–– Designing the future of cheese and dairy together withVika. We are now equipped with a consolidated, cost efficientand versatile toolbox which allows us to generate dairy andcheese blocks using locally sourced starting materials.
–– Integrated solutions succeeds in Mexico. The creationteam in Mexico developed an integrated solution for abeverage product with savoury, spice components that
helped our customer bring a winner to the market.

Success stories

Delight in a collaborative project, creating value across business divisions
What happens when a flavourist and aperfumer are invited to work together
in the creation of a fragrance?
And what if the dimension of bodylanguage is added to help understandhow consumers respond to new
products?
This is the idea behind Project Delight,
a collaboration that brought together
the talents of our perfumers andflavourists to create a groundbreaking collection of accords. They
incorporated new technical andcreative approaches to their creations
that could enhance the reality andinstinctive pleasure of their fragrance
accords. For the first time in theperfume industry, Givaudan partneredin exclusivity with an expert in bodylanguage whose research guided our
perfumers to craft this collection ofbases inspired by food. “Project Delight

Givaudan – 2018 integrated Annual Report

took a daring approach to fragrance
development. Not only did we use theexpertise of our flavourists, but weturned to non-verbal research to seek
consumer opinions by observing bodylanguage and facial expressions. The
research helped in finalising thisexclusive new fragrance palette ofaccords which are also proven to
trigger observable pleasure in
consumers,” said Arnaud Guggenbuhl,
Givaudan’s Head of Marketing
Europe Fine Fragrances.
The new collection was
introduced to customers
at our creative centres
in Paris, New York, andSão Paulo in early 2018,
when they experienced
for themselves theresults of our focus on
the exploration of tastes

such as hyper-realistic fruitiness, newsweetness frontiers, juiciness, as well
as delicate savoury or mixology notes.
The daring of Project Delight reflects
the spirit of pioneering innovation
characteristic of our 250-year odyssey:
the creation of new flavours andfragrances by exploring questions insensory experiences.

Strategic value creation

Delivering with excellenceWith 12.7% free cash flow, we are well on track to achieving
our financial targets of 12 – 17% average free cash flow as apercentage of sales.

PERFORMANCE 201812.7%

Our 2020 strategy 23

Excellencein execution
Givaudan Business Solutions
The foundation of our commitment to deliver with excellenceis Givaudan Business Solutions (GBS), which is about deliveringvalue to our customers through innovative and efficientsolutions and services.
The following achievements underline our success in improving
internal efficiencies, leveraging best practices from across theorganisation and increasing our agility.

	Free cash flow
as % of sales

Key achievements in 2018:

TARGET 2020

12 – 17%–– GBS implementation progressing according to plan.
GBS is well on track with previously announced transition
timeline, processes enhancement and deliverables. Cost andbenefits outlook fully confirmed.

	Average free cash
flow as % of sales 1–– GBS delivered first financial benefits in 2018 of
CHF 20 million.

1. Over a five-year period by 2020.

Givaudan Business Solutions
Focusing on people for future growth
When we decided to create a platform
for future growth in line with ourstrategic focus to ‘deliver withexcellence’, we were ambitious withthe size and scope of activities we
decided to implement. Today we areproud that we are well on track with
the implementation of GBS in all areas.
The organisation is being purposebuilt to integrate a range of corebusiness solutions to increase agility,
reduce complexity of our internal
processes and focus entirely ondelivering a superior customer
experience.
From the outset of our journey, thefocus has been on the impact on
people as well as the crucial
collaboration with all functions andsites. In our three regional delivery
centres, the teams receive onboarding

to ensure they have a true sense ofbeing part of Givaudan, its uniqueculture and DNA. Furthermore, wehelp them to see the importance ofa customer- and solution-oriented
focus. We want each and every
employee to understand our business,
why we are implementing GBS andthe role they play in making Givaudan
more agile and efficient. We areconvinced that passionate, highperforming teams are the secret tosuccessfully delivering innovative
solutions to customers.
What’s next? Implementation
continues towards 2020 incollaboration with our sites as wetransfer more activities into the handsof our GBS colleagues in the centres.
Our GBS solutions continue to evolveto leverage big data, mobile

technology and robotics process
automation (RPA) with the goal of
simplifying our processes andimproving user experience. GBS is
set to continuously add value witha strong focus on people, bothcustomers and employees, to ensure
future growth.

Givaudan – 2018 Integrated Annual Report

24 Strategic value creation Our 2020 strategy–– GBS regional delivery centres established. The three
centres, in Budapest, Buenos Aires and Kuala Lumpur, haveteams that embrace the Givaudan DNA and work in
partnership with site teams to deliver excellence for ourcustomers.

–– Expanding the scope of GBS. A Centre of Excellence forEngineering within GBS is to be established to leverage bestpractices from both business divisions and to define acommon way forward with respect to capital expenditures,
maintenance, utilities and technical services.

–– Global functions transitioned to GBS. Continuous
Improvement, EHS and Sustainability and Controlling havesuccessfully transitioned, improving internal efficiencies.

–– Bringing innovative solutions to the forefront. Our GBS
solutions continue to leverage continuous improvement (CI),
big data, mobile technology, and robotics process
automation (RPA) to simplify our processes and improveuser experience.

–– GBS implementation complete in Europe. In addition to
the global functions, GBS Demand to Cash, Source to Pay andHR have been fully implemented and stabilised in Europe.
–– First wave of GBS complete in APAC. Transition of financeand indirect materials and services completed and activities
centralised in our newly opened GBS Kuala Lumpur centre.

Success stories

Naturex acquisition fits all dimensions of our strategy
Consumers around the world areincreasingly demanding morenatural and organic products fromfood and beverage companies,
and so our acquisition of Naturex
in 2018 fully fits with our 2020
strategy to expand our offering todeliver natural products to ourcustomers.
Naturex further complements ourcapabilities with its strong portfolioof plant extracts and naturalingredients across the food andbeverage, nutrition and health andpersonal care sectors. As well as
its strong strategic rationale, theacquisition of Naturex creates aleading position for Givaudan innatural ingredients.
With its headquarters in Avignon,
France, Naturex is an international

Givaudan – 2018 integrated Annual Reportleader in plant extraction andthe development of naturalingredients and solutions for thefood, health and beauty sectors.
As the acquisition reached completionin September 2018, Naturex operated
its business through three business
units: food and beverage, healthand nutrition, and personal care.
The company had 16 production
locations around the world andemployed 1,700 people. It was
created in 1992 and was listed on
the Paris stock exchange in 1996.
Naturex contributes to all dimensionsof our 2020 strategy and complements
acquisitions in recent years suchas Spicetec, Activ International,
Vika and Centroflora Nutra.
A dedicated team is in place toensure a seamless integration tobring value to our customers.

Strategic value creation

Excellence in operations
As the cornerstone of our commitment to our customers,
we are committed to excellence at all our production sites
and to take action for the environment across our operations
and beyond.
Key achievements in 2018:–– LEAN Silver-Gold certification at Japan plant. Operationsin Japan continue to deliver excellence at its Fukuroi plant,
which has celebrated the achievement of its LEAN SilverGold certification.
–– GPS and LEAN Silver certification at Indonesia’s
Cimanggis sites. The site benchmarked itself against key
global standards and successfully attained both Global
Productivity Solutions (GPS) and LEAN Silver certifications, atestament to strong teamwork and a passion for continuous
improvement.

Our 2020 strategy 25–– ISO accreditation. The quality department at Cuernavacasite in Mexico received the ISO 17025 accreditation for
its microbiology laboratory, becoming the first site in Latin
America to achieve this important goal.
–– 20 sites are working with renewable electricity.
We are well on track to achieve our target of 100% of
our operations in 2025.
–– HyCool consortium of 16 partners. We have joined thispartnership, giving us a unique opportunity to work withleading innovation and technology experts to develop
cost-effective solutions using solar heat for industrial
purposes. Our site in Sant Celoni, Spain was selected as
the HyCool project test site for the chemical industry.

Playing our part in the global search for renewable energy solutions
Environmental challenges cannot
be solved by companies or otherorganisations operating in isolation.
Collaborations are central to finding
solutions and while we can beeffective in addressing a range ofinternal issues, we know we must
go beyond our own boundaries in
helping make an impact in mitigatingclimate change.
Renewable energy is one area
where collaboration can be fruitful.
We are proud to be a member ofRE100, a collaborative, global initiativethat unites more than 100 influential
businesses committed to 100%
renewable electricity. RE100 isorganised by the Climate Group in
partnership with CDP.
At Climate Week NYC 2018, RE100
members, including Givaudan,

took part in an exclusive forum to
discuss collectively how actions cango further and faster on renewables.
The New York forum aimed to
update RE100 members on the
campaign’s activities and successes
to date, share future plans, gather
member feedback and ideas tocontribute to the campaign strategy,
and provide a key networking
opportunity.
Over 40 participants attended froma variety of different sectors andcountries, providing a global insightfrom companies leading the transition
to clean energy. Discussions focusedon how to show leadership on thecorporate sourcing of renewables
through peer collaboration, policy
influencing and growing the RE100
movement.
Givaudan’s involvement in RE100 andClimate Week NYC 2018 demonstrated
its ambition to help mitigate climatechange and its desire to work in a
broad global partnership of proactive
companies dedicated to making a
positive difference.

Givaudan – 2018 Integrated Annual Report26

Strategic value creation Our 2020 strategy

Information Management & Technology (IM&T)
By optimally leveraging digital trends and technology,
our IM&T teams develop differentiating services and new ways
of working with our customers, partners and employees.
This is achieved by delivering state-of-the-art solutions inprocesses such as flavour and fragrance creation, supply chain
and procurement to make them faster and smarter.
Key achievements in 2018:–– Upscaling critical IT infrastructure, including the moveto a new data centre, bringing resilience and performance toaccompany our business growth.
–– Building an ecosystem of digital partners andexperimenting with digital opportunities. We continued
our search for innovation partners, including from academia
and start-ups, as we look to a digital future.
–– Continuously improving our flavours and fragrances
creation and evaluation apps with new, differentiating andmobile features.

–– Enabling GBS transformation through the delivery ofprocess automations in areas such as customer care,advanced planning, EHS, reporting and HR.
–– Completing the migration of Active Beauty to our global
SAP platform, leveraging our integrated supply chain andmanufacturing processes and tools to this business.

Superior customer experience (SCE)
Becoming a truly customer-centric organisation means driving
initiatives hand-in-hand with our customers, creating value
and responding to market demands faster and better to help
them succeed.
Key achievements in 2018:–– SCE initiatives throughout the regions. While constantly
improving end-to-end agility and reliability we have beenable to create experiences at all touchpoints of the customer
journey. We are in the process of general adoption acrossthe Flavour Division to generate great experiences and build
differentiation in a consistent and systematic way.

Success stories

Towards a digital future of exciting possibilities
Givaudan’s new academic chair at CentraleSupélec
Givaudan has 250 years of richheritage, but its eyes are very muchon the future – a future in which thetools of data science and artificial
intelligence will play a central role.

We could, for example, measure
the olfactory distance between
two fragrances and predict which
one will be the most effective ina given market.

Imagine what such a world mighthold for us: one in which we canunderstand what is going on in
perfumer’s head during the creative
process, perhaps; a world where,
thanks to Artificial Intelligence, wemight emulate and in a way inspire
perfumers and give them the keys to
new olfactory spaces.

The possibilities of this exciting future
led to the creation in early 2018 ofa Givaudan-supported academic chairat CentraleSupélec, one of France’s
top higher education institutions.
Our experts had been collaboratingwith researchers at the Paris
institution for more than a year,

It may be a world in which we areable to better understand therelationship between ingredients,
their combination, and olfaction;
where we can predict the smell of acomposition, and describe it.

Givaudan – 2018 integrated Annual Report

and the success of that process
has now been extended with thecreation of a chair that will involve
several PhD students focusing on
flavours and fragrances in the worldof data science.
The digital arena is increasingly
important to our business and to ourcustomers around the world. In adigital age, we will be better able
to discover new business insights
and understand customers andconsumers. We are at the beginningof a new chapter in our industry, adigital future that will see us
increasingly embrace data scienceand Artificial Intelligence to push theboundaries of our industry to thebenefit of our customers andultimately consumers.

Strategic value creation

Partnering for shared success

Our strong partnerships enable value creation for theCompany and our key stakeholders. We have forged new
partnerships with innovators, employees and suppliers,
and with communities in which we operate, positioning
ourselves as partner of choice.

Our 2020 strategy 27

Innovators
Driven by a culture of innovation we seek to go beyond ourinternal capabilities, increasing strategic innovation
partnerships with external players such as academia, start-ups,
technology providers and research institutions.
Key partnerships in 2018:

PERFORMANCE 2018

 New innovative partnerships
 Increased strategic networks
TARGET 2020

Partner of Choice–– MassChallenge Partnering initiative. We developed an
inspiring programme including external speakers on
disruptive innovation.
–– Collaboration with Bits x Bites, the first food techaccelerator based in China. Bits x Bites will accompany us
on our journey to discover new disruptive technologies infood processing, digitalisation and artificial intelligence.
–– Collaboration agreement with Mixfit. We have signed anagreement with this personalised nutrition start-up toprovide taste and flavour solutions for its innovative
Intelligent Nutrition Assistant drinks system.
–– Launch of MISTA, a new innovation platform for the foodindustry. More encompassing than an incubator or
accelerator, MISTA is an optimiser, enabling start-ups andestablished corporations to optimise ideas, products, people
and investments.

Creating new horizons for our business and customers:
innovating for tomorrow’s businessA strong innovation culture iscentral to a sustainable competitive
advantage and to guarantee
differentiated solutions for ourcustomers.
In every innovation journey, fromconcept to market success, we
continuously strive to strengthen ourlearning, challenge our thoughtprocesses and enrich the outcome.
Being surrounded by a global strategic
community, from corporate peers toacademia, start-ups, and technology
and solution providers, is afundamental pillar of such a journey.
In this context, one partnership has
been with MassChallenge.
Headquartered in the US withlocations also in Boston, Israel, andMexico. MassChallenge accelerates

high-potential start-ups anywhere in
the world that can have an impact oneither of our business divisions andacross disciplines.
At our MassChallenge Partnering
initiative in 2018, we developed an
inspiring programme that included
external speakers on disruptive
innovation and testimonials fromsuccessful mature businesses thatwere once start-ups. The day was also
dedicated to giving start-ups theopportunity to pitch ideas that wereclose to our business needs.
A further feature of the event was theparticipation of some of our Executive
Committee members who together
with a diverse group of employees fromacross disciplines continue shaping
Givaudan’s entrepreneurial spirit.

In a similar atmosphere, but this time
at FoodTech in Israel, and for thecontinuous strengthening of ourcommunity, one of our senior
executives spoke to a large audience ofentrepreneurs: “Working with
Givaudan is a way to ensure that great
new ideas don’t just remain as ideas
but have a real impact on the world.
Partnering for shared success is a key
part of our 2020 strategy. We live forinnovation and are keen to work withthe brightest and the best to create
solutions for our customers that meetthe changing desires of theirconsumers.”
We will continue our strong innovation
journey with such a spirit, alwaysaligned with our strategy and reaching
beyond our ambition.

Givaudan – 2018 Integrated Annual Report

28 Strategic value creation Our 2020 strategy

Suppliers
Generating maximum value with suppliers is achieved throughlong-term and sustainable partnerships. These collaborations
aim to create mutual value in supply continuity, quality,
cost, innovation, responsibility and our ability to deliver thebest ingredients. As a result, they enable us to differentiate
our product offering to customers.
Key achievements in 2018:–– Strengthening sustainable patchouli supply chain.
A multi-year project in cooperation with international
NGO Swisscontact is improving patchouli oil sourcing andconditions for smallholder producers in our collection
network on the Indonesian island of Sulawesi.
–– Safeguarding our supply of high quality citrus raw
materials. In our continued efforts to safeguard best quality
and stability in supply, we have increased the numberof long-term partnerships in our portfolio of lemon andlime oils.

–– Supplier-enabled innovation. Enhanced collaboration
between procurement teams and our business divisions has
led to solid and open partnerships with suppliers to address
our current and future business challenges.
–– Raw material procurement supported through upgraded
contract management tool. Providing a central point for
information with better usability, this tool improves the links
between our procurement category managers of raw
materials, the local requesters and GBS operational buyers.
–– Collaboration with packaging suppliers for improved
quality and cost reduction. Through this collaboration we
have reduced the number of different specifications used forIntermediate Bulk Containers within Europe, resulting in a
reduction of 45% in the number of Stock Keeping Units.
While opting for lighter packaging, we also improved quality
and reduced our own costs as well as those of the supplier.
–– Innovative collaboration drives down costs. After morethan 10 years of successful collaboration, Givaudan has
confirmed its partner of choice for Global Network Services.
The fruitful collaboration brings innovative technologies todrive down network costs while responding to the increasing
bandwidth and security needs of our growing organisation.

Success stories

Strengthening sustainable patchouli oil sourcing
For one kilogram of patchouli oil,
200 times that amount of fresh
leaves from patchouli plants need tobe collected in the fields of the islandof Sulawesi in Indonesia. This
precious ingredient is hard won, but
the resulting essential oil is prized by
perfumers for its powerful, earthy
and long-lasting character.
To secure its supply, Givaudan has
invested in a collection network of
hundreds of individual smallholder
producers on Sulawesi since 2013.
Our approach focuses on being
present at the origin of the raw
material, building strong
relationships withsmallholder producers
and supporting them indeveloping their businessin a sustainable way.

Givaudan – 2018 integrated Annual Report

In 2018, we started a collaboration
with NGO Swisscontact to further
strengthen the collection network.
With funding from the Givaudan
Foundation, and in partnership withthe producers and local government,
the project aims to improve thelivelihoods of producer families while
protecting Sulawesi’s natural
resources. Training programmes arealso offered to promote
environmentally friendly production
methods, along with education on
nutrition and household income
management.

Growing success for
Madagascar partnership
Our NATEMA (Natural Extracts
Madagascar) joint venture processes
raw materials in the country of origin
and this in turn supports the wider
local economy.
Rather than export clove leaf oil from
Madagascar for processing, we foster
local value creation by transforming
clove leaf oil at the NATEMA facility.
Production at the facility has grownsince sales started in 2017: the output of
this key ingredient for our creations has
increased from less than 50 tons to
300 tons, which means NATEMA is now
Givaudan’s main supplier of clove leaf oil
derivatives.
Our NATEMA joint venture is an
excellent example of a successful andgrowing partnership.

Strategic value creation

PeopleWe are committed to fostering a great place to work where
our people are motivated to perform at their best, impact theirworld and contribute to the Company’s success. This successis achieved by developing the skills of our people and nurturing
a pipeline of industry experts and future leaders. It is also
necessary to promote a diverse workforce that performs inan agile and collaborative way, bringing our values to life andachieving the full potential for Givaudan.
Key achievements in 2018:–– Continued success of global onboarding programme.
556 people attended the ONE Givaudan onboarding events;
eight were conducted in the regions and 13 were organisedin the GBS hubs.
–– Equipping our people with leadership skills for today andthe future. 304 participants followed our Leadership Senses
programmes across all regions in 2018, bringing the total
number of leaders trained to 1,001 since the launch of the
programme. In addition, we further evolved our Leadership
Senses programmes by piloting ‘Discover’, a new programme
targeting our first-line managers and supervisors.

Our 2020 strategy 29–– Hiring initiatives to support business growth. To further
develop the skills of our recruiting managers, more than
700 managers to date have been trained in ‘Selecting thebest’, a one-day training session to familiarise them with theCompany’s recruiting process and develop their interview
skills to help them make better hiring decisions.
–– Talent acquisition teams meet the challenges of an
unprecedented year. Our talent acquisition teams not only
managed to hire a large number of people in 2018, but also
maintained and even increased some of the key measures oftalent acquisition performance, notably candidate
satisfaction, hiring on time and manager satisfaction.
–– Continued focus on strengthening positive and authentic
conversations. 222 managers have undertaken our ‘Quality
Conversations’ training to help them build trusting andproductive relationships with their teams, and two new
training ‘toolkits’ were introduced, focusing on feedback anddevelopmental discussions.
–– Better Balance roadmap. We have started to implement
this programme, which is aimed at aligning all of our seniorleadership teams on the case for change.

Celebrating and sharing success for ‘going above and beyond’
The individual efforts of ouremployees, on a daily basis, make an
impact on their world and contributeto the success of our Company.
To celebrate and share this success andrecognise teams and individuals whogo ‘above and beyond’ to deliver
outstanding results and makeexceptional contributions to ourbusiness, we launched a Companywide programme in 2018, theGivaudan Awards.
The awards, sponsored by the
Executive Committee, are made upof three categories aligned to our2020 strategy: Growing withcustomers, Excellence in execution,
and Partnering for shared success.
More than 100 nominations werereceived in total, and three winners
were chosen for each category.

One of the winners in the Growing
with customers section was fromour fragrance team in Japan, who
made great efforts in driving
exceptional growth in what
is a mature fragrance
market.
A significant effort
by Givaudan
Business Solutions(GBS) to hire over
300 people wasamong the winners
in the Excellence in
execution category.
The successful
implementation of GBS
very much depended on
hiring the right talent
to the organisation.
And a ‘thinking outside thebox’ approach was one of

the winners in the Partnering
for shared success category. Our
Sant Celoni site in Spain was selected
as a pilot site for a funding initiative by
the European Commission aspart of its HyCool project,
an innovative renewableenergy project topromote the use ofsolar heat in industrial
processes. For
Givaudan, the projectwill lead to better
utilities consumption
and cost reductions in asustainable way.
The nine winners and all thenominations were a great
start to the Givaudan Awards
programme, which will beheld again in 2019.

Givaudan – 2018 Integrated Annual Report

30

Strategic value creation Our 2020 strategy

Communities
We believe that each and every employee has the potential to
make a change for the future of our planet and the well-being of
the communities in which we work and live. The opportunity tomake such contributions is available through our site Green
Teams, which organise voluntary sustainability projects, and theGivaudan Foundation, which funds new projects around the world.

–– China shuttle buses go electric. Givaudan’s diesel shuttle
buses are being replaced by electric vehicles in Shanghai,
where air quality is a problem. The replacement programme
has already resulted in significant cost savings and benefited
the environment.

Key achievements in 2018:–– Rainwater harvesting in Mexico. With the target of using
less water from municipal sources, our manufacturing site at
Cuernavaca has installed a 1,000 sq m rooftop system toharvest rainfall for various uses at the site.

–– Marathon run to raise malnutrition awareness.
Employees took part in the Mumbai Marathon to raise funds
for a hunger charity and to increase awareness ofmalnutrition and hunger. Money raised by the employees
was matched by Givaudan India.

–– Replacing metal drums with cardboard fibre containers.
Metal drums have been replaced by cardboard fibre
containers for the packaging of certain products at our
Vernier site in Switzerland. They are more environmentallyfriendly, reliable, easier to use, and also have cost benefits.

–– East Hanover Green Team helps Volunteers of America’s
Operation Backpack. Much-needed school supplies andextra Givaudan goodies were donated and packed in 40
bookbags for students aged 10-13 years as part of the annual
school supply drive.

–– Givaudan hosted a 3-day fragrance training programme
for women at the Zaatari refugee camp in Jordan. As partof a joint project with the London College of Fashion, UNHCR,
UN Women, the ICRC and other NGOs, this soap andfragrance workshop was the first in a series of initiatives thathas provided women with the technical expertise to begin
small-scale manufacturing, a voice in their community andthe confidence to train others.

–– Healthy eye programmes. Employees at our Jigani site inIndia continued their support for healthy eye programmes,
in partnership with the Vittala International Institute ofOphthalmology (VIIO) of Bangalore.

Disclosure 413 – 1

Providing water and sanitation for Haiti villages

We want to make a positive impact in the communities
where we operate, and the range of our activities
includes tackling global challenges such asenvironmental issues with local actions. Plastic, forexample, has become an epidemic. We throw awayeach year enough plastic to circle the earth four times,
with much of this waste ending up in our oceans,according to UN Environment. India was the host nation
for World Environment Day 2018, and with its themeof ‘Beat Plastic Pollution – if you can’t reuse it, refuse it’,our employees in India embraced the awareness-raising
event with particular enthusiasm.

Access to drinking water and sanitation installations isstill one of the main challenges in many parts of the world.
This is particularly true in Haiti, where the Givaudan
Foundation has helped local communities. Givaudan has
collaborated for some years with a cooperative of vetiverroot farmers in three villages in South Haiti to source
organic and fair trade vetiver essential oil. With the supportof the Givaudan Foundation, a water and sanitation facility
has now been built for villagers. The initiative, led by a groupof village women, improves access to drinking water andprovides access to sanitation facilities, contributing to the
reduction of waterborne diseases within the community.

They have been marking World Environment Day forsome years and this time, with India committing toabolishing single-use plastic by 2022, our Green Team at
Jigani focused on engaging their colleagues and theirfamilies in making contributions through drawings andessays on how to beat plastic pollution. In global terms,
Jigani’s pledge to reduce the use of plastic disposables ismodest, but raising awareness of the consequences ofplastic among employees and a wider community must
be a good start.

Women from a cooperative in the region of Les Cayes, South Haiti.

Success stories

Plastic: global challenge, local action

Givaudan – 2018 integrated Annual ReportStrategic value creation

Acquisitions 31

Acquisitions
Expanding our capabilities,
creating additional value
Acquisitions have always been apart of Givaudan’s strategy tocreate value. Our 250-year heritageof growth and expansion is rooted
in a drive to innovate products andsolutions that ‘engage your senses’.
Today, an increasing emphasis on more natural products that
promote health and well-being shapes our approach toexpansion through acquisitions, strategic partnerships andinvestments.

Tom Hallam, Chief Financial Officer: “Key to our strategy
of value creation is a particular focus on areas where
we can deliver winning solutions for our customers. In the last
four years and fully aligned with our 2020 strategy, Givaudan
has announced the acquisition of nine companies, eachof which supports our strategic priorities of expanding ouroffer in Naturals, Active Beauty and Integrated Solutions.”
Givaudan’s recent acquisitions support the 2020 strategy inmultiple ways: expanding upon existing capabilities, adding toour ability to offer more natural and integrated solutions,
opening access to new channels and technologies, and bringing
us closer to local and regional customers.

Acquisition update: 2020 Strategy in motion

2014

2016

Soliance
Active Beauty

Spicetec
Naturals
Integrated Solutions

2015

Induchem
Active Beauty

1. Not yet completed.
2. Proforma 2018, including Naturex.

2017

Activ International
Natural flavours
Vika B.V.
Natural flavours

2018

Centroflora Nutra
Naturals

Approx.

CHF

Expressions Parfumées
L&R Fragrances

Naturex
Naturals
H&W
Active Beauty

1 billionof incremental
revenues²
CHF

2.5 billion

invested inacquisitions

Albert Vieille¹
Naturals
Aromatherapy

In both divisions, our acquisitions are fully aligned with our 2020 strategic priorities:
Naturals, Health and well-being, Active Beauty, Integrated solutions, local & regional customers

Givaudan – 2018 Integrated Annual Report

32 Strategic value creation Acquisitions

Building Active Beauty to become akey player in cosmetics ingredients

Beauty business is well on track to achieve the sales targetof CHF 100 million announced in our 2020 strategy.

In 2014, we began our strategic growth journey by acquiring
Soliance to enter the active cosmetics ingredients business.
The acquisition gave us access to two sites in France providing
innovative cosmetic solutions and developing high added-value
ingredients derived from vegetable sources, microorganisms
and microalgae. Soliance also boosted our broader processdevelopment and research capabilities with a centre of
excellence in ‘white biotechnology’, the branch of biotechnologythat combines living cells from yeast, moulds, bacteria andplants with enzymes to synthesise products that are more easily
biodegraded, require less energy and create less waste.
The following year Givaudan went a step further by acquiring
the Swiss-based Induchem, adding complementary capabilities
including a range of innovative and highly functional active
ingredients with proven efficacy results, as well as researchexpertise in biocatalysis, metagenomics and biochemical
synthesis. Induchem helped Givaudan build a science-based
portfolio of active cosmetics ingredients backed by professional
expertise and access to the latest technologies.
In September, with the acquisition of Naturex, the international
leader in plant extraction and the development of naturalingredients and solutions for the food, health and beauty
sectors, we are enhancing our portfolio of active cosmetic
ingredients with the Naturex’s botanical extracts andoils. Today, our customers appreciate the fusing of scienceand nature for innovative cosmetic solutions and our Active

Strengthening integrated solutions
and natural flavours

2016 saw Givaudan take a major step forward in offering
customers integrated savoury solutions with the acquisition
of Spicetec Flavours & Seasonings. With Spicetec’s strong
portfolio of spices, seasoning blends and natural solutions, we
can now offer a tailored combination of flavour and functional
ingredients that provide optimal performance to meet ourcustomers’ needs. By combining the synergies of flavours andtaste with herbs and spices and other functional ingredients, weensure differentiating performance in finished food applications.
Activ International, acquired early in 2017, further strengthened
our capabilities for natural flavour solutions. Activ built its
business on cutting-edge ingredient technology, delivering
optimal natural extract, flavour and culinary solutions, serving themost discernible customers worldwide. In North America it was a
key leader manufacturing organic certified natural flavours,
culinary flavours and enhanced savoury flavours designed todeliver the authentic flavour profile of their characteristic raw
material: meat, poultry, seafood, vegetable or vegetarian.
Later that same year, Givaudan expanded its flavour and taste
solutions with the acquisition of Netherlands-based Vika B.V.
Their complementary portfolio of natural dairy ingredients,
fonds and stocks as well as meat and plant-based extracts
helps us to meet consumer demands for clean label, organic

Broadening our naturals portfolio in Flavours through acquisitions

Spicetec

Activ International

Vika

Centroflora Nutra

Naturex

Extends ourportfolio of
spices, seasoning
blends, natural
solutionsand organic
ingredients.

Broadens our
extract offering,particularly
with a portfolioof marine
extracts andnatural seafood
solutions.

Strengthens ourcapabilities inculinary fonds
and stocks, madefrom naturalingredients.
Expands ourcheese natural
capabilities witha new range ofcheese powders.

Expands ourbotanical
extract anddehydrated fruit
juice offering
under themanagement of
a comprehensive
sustainability
programme.

Significantly
enhances ourcapabilities
and portfolio
in botanicalextracts
and natural
solutions, andprovides access tonatural colours,preservatives andphyto actives.

Givaudan – 2018 Integrated Annual ReportStrategic value creationand natural ingredients while strengthening our creation
capabilities in natural solutions for dairy and savoury.

Accelerating growth to gain leadership in Naturals
Givaudan accelerated its growth journey in 2018 with key
acquisitions to add agility, strengthen our global offerings, andsecure market leadership in the naturals space.

Our acquisition of the nutrition division of Centroflora Group,
initiated in 2017, strengthens our global offering of natural
extracts and further develops our presence in Brazil. Centroflora
Nutra manufactures botanical extracts and dehydrated fruits
from around the world with a particular focus on the great
biodiversity of Brazil. While strengthening Givaudan’s naturals
sourcing platform for our flavours, fragrances and cosmetics
businesses, the acquisition also reinforces our contribution topreserving the environment and safeguarding resources for the
long-term through Centroflora’s sustainability leadership.
Naturex, also acquired this year, is a significant step forward
in creating a position of clear market leadership in natural
extracts and ingredients. With its strong portfolio of plant
extracts and natural ingredients for taste further
complementing our capabilities, Naturex enables our entry into
the adjacent spaces of natural colours, natural preservatives
and natural phytoactives, hence further expanding Givaudan’saccess to the nutrition, health and personal care sectors.
The combination of our industry leadership and scale with theexpertise of the leading player in natural ingredients will createeven greater value for our customers and stakeholders.
page 24, Our 2020 Strategy

Marking our presence in Grasse

In 2018, Givaudan announced the acquisition of two renowned
fragrance houses in Grasse, France.
With Expressions Parfumées, we are adding highly
complementary capabilities in naturals and expanding our reachto local and regional customers. A pioneer in natural fragrancecompounds, the company offers a range of perfumes designed toadapt to any production labelled ‘organic’. In December Givaudan
announced our intention to acquire Albert Vieille, a French

Acquisitions 33

company specialising in natural ingredients for both fragrance
and aromatherapy applications. With origins in Grasse datingback to 1920, Albert Vieille will bring unique know-how in thearea of aromatic plants, pure essential oils and speciality naturalingredients. Both acquisitions will significantly enrich ourfragrance palette of natural ingredients to satisfy growing
consumer demand. They also mark our presence in Grasse, aregion famous for its ‘savoir-faire’ in perfume making, and thehome of our historic roots, where two of the most distinguisheddynasties of perfumers started to shape the foundation fortoday’s industry: the Chiris and the Roure families.
pages 20 & 22, Our 2020 Strategy

UNESCO CULTURAL HERITAGE

On 28 November 2018, UNESCO, the United
Nation’s cultural agency, declared the skills
related to perfume making in Grasse, including
the cultivation of fragrant plants, theknowledge and processing of natural raw
materials, and the art of perfume composition,
to be inscribed on its protected list, ‘Intangible
Cultural Heritage of Humanity’.
Evolving and enriching our unique culture

Givaudan views each acquisition as an opportunity to grow inmany different ways. Above and beyond the business case for
expanding our existing capabilities and customer base,acquisitions bring a strong, synergistic cultural dimension:
new ways of working, an increased sense of entrepreneurship,
greater agility and customer focus. We are equally committed
to ensuring that all new employees quickly understandGivaudan’s unique culture and DNA while enriching it in new
ways that nurture our success.
As we continue our journey towards 2020, acquisitions
and investments will quite naturally continue to play a rolein our strategy of value creation for customers, employees
and shareholders.

Givaudan today: shaped by historic acquisitions
Our historic buyout of Esrolko in 1948
created the two main pillars of flavours
and fragrances upon which Givaudan
continues to thrive today. Our own
acquisition by the Swiss multinational
Hoffmann La Roche in the 1960s led to

the 1992 merger combining Roure’s
legendary success in luxury perfumes
and naturals with Givaudan’s expertisein functional fragrances, synthetics
and flavours. Our journey then led
us to acquire TasteMaker in 1997,

securing our US expansion, and to
our transformative acquisition of
Quest International in 2007, bringing
Givaudan to the fore of the flavour
and fragrance industry by adding
expertise, scale and global reach.

Givaudan – 2018 Integrated Annual Report

34

Strategic value creation A Sense of Tomorrow

A Sense of Tomorrow
Building a sustainable future

Our approach engages customers
on sustainability and helps themmeet their goals.
Meeting today’s needs without compromising theinterests of future generations has long been key to ourbusiness model. Mounting challenges, particularly interms of climate change, have driven us to intensify ourefforts. We are working hard to identify longer-term risks,
opportunities and ways to measure and quantify thedifference we’re making.
Consumers are increasingly aware of the unprecedentedsocial and environmental challenges created by climate change,

Sourcing for Shared Value
Givaudan depends on natural resources and the people
who grow them, and producing raw materials should
promote stability for both humans and the environment.
Our approach to meeting our goal of sourcing all natural
raw ingredients responsibly brings new value to those
involved and is based on three practices:
Responsible Sourcing means working with and auditing
suppliers and assessing supply chains to drive complianceand continuous improvements in health and safety, social,environmental and business integrity practices as definedin our Responsible Sourcing Policy.
Sourcing at Origin focuses on direct collection networks
and partnerships with farmers, distillers and producergroups to secure the long-term supply of ingredients
while boosting the local economy with stable incomes.
Social and environmental projects help build moresecure futures for the Communities at Source andtheir environments.

Givaudan – 2018 Integrated Annual Report

population growth, resource scarcity and poverty. They areconcerned about the future of the planet and their own
well-being, and demand that companies be more transparent
about how they operate. Business performance is now
inextricably linked to sustainability. Our approach helps
customers create products that set them apart, addressing
consumer demand.
‘A Sense of Tomorrow’ is a framework that extends our vision
to 2030 and beyond. It sets new performance targets andprovides structures for designing innovative products that
contribute to a sustainable world. Its initiatives will help us
secure the longevity of our business while supporting the ruralcommunities that grow the over 10,000 raw materials essential
to our work. We strive to go beyond responsible growth andbenefits for our shareholders: we target long-term success forour customers, consumers, society and the planet.

Innovating Responsibly
Givaudan has always pursued a culture of innovation,
exploring timely questions in sensory experience. Today’s
most pertinent questions surround sustainability: thecuriosity that has always driven us is helping us to findanswers. We look to make sustainability part of every
breakthrough and add value by enhancing researchand developing products that benefit both society andthe environment.
With Naturals, we develop alternative sources of key raw
materials, helping protect fragile natural resources. Enabling
dietary shifts towards plant-based foods and promoting
odour’s positive impact can help promote Health andwell-being. Efforts in Sustainable Processes evaluate andimprove the sustainability of our production methods.
Innovating Responsibly means considering the impactof our products and services on society and theenvironment and leading change for the better by working
to benefit both.

Strategic value creation

Valu e
red
rS
ha

fo

ns

po

A ‘Sense of Tomorrow’ is another step in our long history ofhigh ethical standards in our interaction with all stakeholders.
The approach helps make Givaudan the most trusted partner intaste and scent, ensuring that our 250-year journey of passion
and performance continues, delighting people with uniquesensory experiences they can feel good about.

esgRThis drive supports our own objectives, but also addresses theUnited Nations Sustainable Development Goals. In focusing ourown priorities on global aspirations such as dietary shifts,
health and well-being and environmental protection, we show
our commitment to sustainability and our creativity andinnovation in achieving it. Customers can be confident that our
products are produced responsibly.

35

ople and Partn
r Pe
ers
Ou
ur Enviro
O
r
o
nm
gf
en
tin
t
Ac

I n n o v ati n‘A Sense of Tomorrow’ rests on the three pillars of
Sourcing for Shared Value, Innovating Responsibly and Acting
for Our Environment. Initiatives target our supply chains,
investment in innovative new products, a reduction of
our carbon footprint and climate change mitigation. But wecannot do this alone. It would not be possible without a focus
on our people and partners, both internal and external toGivaudan: managing the talent of those who are passionate
about their work and committed to creating a sustainable
society is key to meeting our goals. Choosing like-minded
partners is essential.

A Sense of Tomorrow

ib

ly

Sou

rc

in

g

Meeting needs today. Defining what’s next.

Our Sustainability Approach2018 Sustainability Progress Review

Acting for Our Environment
We are improving operational processes to reduce ourenvironmental footprint and contribute to climate change
mitigation: our targets support the drive to limit anincrease in temperature.
We will reduce absolute Scope 1 and 2 greenhousegas emissions by 30% and target a 20% drop in Scope 3
emissions 2015 – 2030. We aim for 100% renewableelectricity by 2025 and a 4% year-on-year average
reduction in waste. We are reviewing water reduction
targets after reaching one of them three years early.
Since a product’s real footprint includes every step in the
supply chain, we also help suppliers reduce their impact,
minimising the overall environmental effect. This has
a direct, positive impact on local producer communities
and the supply of the natural ingredients we rely on.
All these efforts help cut our GHG emissions, waste
production, water consumption and support our shift torenewable electricity.

Our People and Partners
Our goals can only be met with the help of employees
and partners who are dedicated to sustainability.
That is why we support people of all backgrounds, genderand origin, making sure our staff reflects the world inwhich we operate. We target a gradual shift in the mix ofnationalities and genders in our management teams, thus
leading to steady, sustainable change, reinforcing our
inclusivity and supporting our business goals.
Safety, health and well-being are targeted throughawareness campaigns and training, while talent is developed
through an approach embedded in a culture of continuous
learning and curiosity.
Meeting sustainability goals is complicated by diverse
challenges and effective solutions can only be found byworking with partners. Cooperation with suppliers,
associations and non-profit organisations helps us moveahead in an efficient, mutually beneficial way.

Givaudan – 2018 Integrated Annual Report36

Strategic value creation

Megatrends

Megatrends
Positioned well in a fast-changing environment

Global megatrends express
society shifts and rapidlychanging consumer behaviours.
Givaudan is embracing these
global shifts as opportunities
to ensure business resilienceand create additional value
for our customers.

Global trends

A growing
customer base …

–– Growing population and wealth inhigh growth markets–– Shift from rural to urban areas–– Increased disposable incomes… living longer andmore responsible lives …

–– Ageing population–– Overweight and obesity morewidespread–– Consumers demanding transparency… in an increasinglyinterconnected world–– Rising interconnectivity and fasterexchange of information–– Social media transports new trends
faster and wider

Disclosure 102 – 15, pages 36 – 37

Givaudan – 2018 Integrated Annual ReportStrategic value creation

Impact on Flavours

Impact on Fragrances–– Rise in spending on processed
and ready-made foods withincrease in disposable incomes–– Expanding middle class driving
demand for premium andexclusive products–– Local and regional brands
gaining relevance–– Increased spending in personalcare and household products–– Development of speciality
retailers–– Demand for good tastingproducts with reduced content
of fat, sugar and salt–– Increased focus on organic,
natural ingredients, natural
flavours–– Consumer demand for clean andclear labels

Megatrends

37

Givaudan’s positioning–– Focus on key targeted areas
with highest growth–– Local strategy adapted to highgrowth markets–– Targeted talent and capital
expenditure investments–– Increasing demand for unique,sensorial and visual experiences–– Innovative resources dedicatedto research in naturals–– Growing demand for cosmetics
in high growth markets–– Targeted acquisitions in
Naturals, Health and well-being
and Integrated solutions 1–– Higher demand for natural andsustainably sourced raw
materials–– Increased consumer
empowerment–– Bloggers play important role inshaping opinions–– Digitalisation to identify andexploit consumer insights–– Reduced time-to-market for
new products–– Rising power of consumers who
are dictating trends–– Product innovation to capture
freshness, e.g. FreezeFrame�–– Increased demand forconvenience food–– Increased demand for new
products, quicker–– Innovation and research iningredients and encapsulation

1.	Relevant acquisitions comprise Spicetec, Activ International, Vika B.V., Centroflora Nutra, and Naturex.

Givaudan – 2018 Integrated Annual Report

38

Givaudan – 2018 Integrated Annual Report

39

Financial
capitalIn this section
40

Performance review

40– Business performance – Group42– Business performance – Flavour Division42– Business performance – Fragrance Division

44

Shareholder value creation

44– Shares44– Investor Relations

Givaudan – 2018 Integrated Annual Report

40

Financial capital Performance review

Performance review
Strong business momentum –investing for the future
Business performance – Group

Givaudan completed the year with good business momentum
and with the project pipeline and win rates being sustained athigh levels. This good growth was achieved across all productsegments and geographies, with our key strategic focus areasof Naturals, Health and well-being, Active Beauty, Integrated
solutions and local and regional customers delivering strong
growth, complemented by the recent acquisitions.
The Company continues to implement price increases incollaboration with its customers to fully compensate for theincrease in input costs.
Group sales
Givaudan Group full year sales were CHF 5,527 million, an
increase of 5.6% on a like-for-like basis and 9.4% in Swiss francs
when compared to 2017.
Gross margin
The Gross profit increased by 3.5% from CHF 2,250 million
in 2017 to CHF 2,329 million in 2018. Despite continued
productivity gains and cost discipline, the Gross Margin
declined to 42.1% in 2018 compared to 44.5% in 2017, as aresult of the lower gross margin in the Fragrance Division,
which was impacted by a sharp and broad based increasein raw material costs.
Earnings Before Interest, Tax, Depreciation
and Amortisation (EBITDA)
The EBITDA was CHF 1,145 million in 2018 compared to
CHF 1,089 million in 2017, an increase of 5.2% in Swiss francs
and 4.3% in local currency. The EBITDA margin was 20.7% in2018 compared to 21.6% in 2017. On a comparable basis, the
EBITDA margin was 21.0% in 2018 compared to 23.3% in 2017.
Operating income
The operating income was CHF 883 million compared to
CHF 869 million, an increase of 1.7% versus 2017. Whenmeasured in local currency terms, the operating income
increased by 0.1%. The operating margin was 16.0% in 2018
compared to 17.2% in 2017.

Givaudan – 2018 Integrated Annual Report

Financial performance
Financing costs in 2018 were CHF 55 million versus
CHF 42 million in 2017, largely related to the increase in the
net debt of the Group in connection with the Naturex
acquisition. Other financial expense, net of income, was
CHF 56 million in 2018 compared with CHF 32 million
in 2017, mainly as a result of increased foreign currency
losses in markets where currencies could not be hedged,
most notably in Argentina.
The income tax expense as a percentage of income before
taxes was 14%, compared to 9% in 2017, which was impacted
by lower tax expenses in the United States. Excluding items ofa non-recurring nature, the income tax expense as apercentage of income before taxes for 2017 was 15%.
Net income
The net income decreased to CHF 663 million in 2018 from
CHF 720 million in 2017. This results in a net profit margin of
12.0%, versus 14.2% in 2017. Basic earnings per share were
CHF 71.92 compared to CHF 78.18 for the same period in 2017.
Cash flow
Givaudan delivered an operating cash flow of CHF 916 million in
2018, compared to CHF 861 million in 2017.
Working capital was 26.3% of sales compared to 24.5% in 2017,
mainly as a result of the higher inventory levels in Naturex.
Total net investments in property, plant and equipment were
CHF 129 million, compared to CHF 189 million in 2017. During 2018
the Group continued its investment programme to support
growth in high growth markets, most notably with investments
in India, Singapore and China. The Group completed anagreement to sell and leaseback the Zurich Innovation Centre fora total consideration of CHF 173 million, of which CHF 100 million
has been received in 2018, with the balance to be received in 2019.
Intangible asset additions were CHF 55 million in 2018, comparedto CHF 53 million in 2017 as the Company continued to invest in
its IT platform capabilities, including those to support the
introduction of the Givaudan Business Solutions organisation.

Financial capital Performance review 41

Total net investments in tangible and intangible assets were 3.3%of sales in 2018, compared to 4.8% in 2017. Excluding the impactof the ZIC transaction, total net investments in tangible andintangible assets would have been 4.2% of sales.
Operating cash flow after net investments was
CHF 732 million in 2018, versus the CHF 619 million recorded
in 2017. Free cash flow, defined as operating cash flow afterinvestments and interest paid, was CHF 703 million in 2018,
versus CHF 594 million for the comparable period in 2017.
As a percentage of sales, free cash flow in 2018 was 12.7%,
compared to 11.8% in 2017.
Financial position
Givaudan’s financial position remained solid at the end of
the year. Net debt at December 2018 was CHF 2,847 million,
compared to CHF 1,074 million at December 2017, with theincrease driven by the Group’s acquisitions and investment
programme, including Naturex. At the end of December 2018the leverage ratio was 41%, compared to 21% at the end of 2017.
During 2018, Givaudan received strong investment grade credit
ratings from S&P Global Ratings (A- with stable outlook) andfrom Moody’s Investors Service (Baa1 with stable outlook).
Givaudan Business Solutions
The Company is now in the implementation phase of Givaudan
Business Solutions (GBS), a global organisation providing
best-in-class processes and services.
The progressive implementation of Givaudan Business
Solutions is fully in line with the plan and has delivered the first
financial benefits of CHF 20 million in 2018.
In 2018 the Group incurred costs of CHF 32 million (Cashimpact: CHF 64 million) in relation to the implementation of
the Givaudan Business Solutions organisation, compared with
CHF 107 million in 2017 (Cash impact: CHF 47 million).
Naturex
Givaudan completed the acquisition of Naturex in September
2018 and has consolidated the financial results of Naturex from
1 September 2018. Naturex is an international leader in plant
extraction and the development of natural ingredients andsolutions for the food, health and beauty sectors.

Dividend proposal
At the Annual General Meeting on 28 March 2019, Givaudan’s
Board of Directors will propose a cash dividend of CHF 60.00 per
share for the financial year 2018, an increase of 3.4% versus 2017.
This is the eighteenth consecutive dividend increase following
Givaudan’s listing at the Swiss stock exchange in 2000.
Value added statement
The value added is defined as the value created by the activitiesof our business and its employees. Givaudan’s economic value
retained of CHF 173 million is the sum of the elements disclosed
in the table below:
Direct economic value generated and distributed
For the year ended 31 December,in millions of Swiss francs

2018

2017

PercentagechangeRevenues

5,590

5,093

9.8%

Operating costs(3,408)(3,073)

10.9%
65.8%

Payments to governments

(131)

(79)

Payments to providers of capital

(589)

(557)

5.7%

Employee wages and benefits(1,289)(1,141)

13.0%

173

243

(28.8%)

Economic value retained
Disclosure 201 – 1

2020 Guidance – Responsible growth. Shared success.
The Company’s 2020 ambition is to create further value
through profitable, responsible growth. Building on the firsttwo years of this strategic cycle in 2016 and 2017, Givaudan’s2020 ambition is built on the three strategic pillars of ‘growing
with our customers’, ‘delivering with excellence’, and‘partnering for shared success’.
As part of the Company’s 2020 strategy, Givaudan also seeks tocreate value through targeted acquisitions, which complement
existing capabilities in providing winning solutions for its
customers. Since 2014 Givaudan has announced nine
acquisitions, which are fully in line with the growth pillars
within the Company’s 2020 strategy.
Ambitious financial targets are a fundamental part ofGivaudan’s strategy. We aim to outpace the market with 4-5%
sales growth and a free cash flow of 12-17% of sales, bothmeasured as an average over the five-year period of ourstrategy cycle. It is Givaudan’s intention to maintain its current
dividend practice as part of this ambition.

In 2018, Naturex contributed CHF 150 million of sales,
CHF 146 million in the Flavour division and CHF 4 million
in the Fragrance division. Givaudan aims to achieve sales
growth of the Naturex portfolio of 10% per annum from2021 and at the same time return the profitability and otherkey financial indicators of the combined business to preacquisition levels by 2021 for the Flavour Division.

Givaudan – 2018 Integrated Annual Report

42

Financial capital Performance review

Business performance – Flavour Division
Sales
Flavour Division sales were CHF 3,002 million, an increase of
4.6% on a like-for-like basis and 10.8% in Swiss francs. The salesof the Flavour Division include CHF 9 million from Centroflora
Nutra, acquired in May 2018, and CHF 146 million from Naturex,
acquired in September 2018.
The sales performance was driven by new wins and strong
business momentum across all regions. The key strategic focus
areas of the 2020 strategy, namely Health and well-being andNaturals grew at double-digit and high single-digit levels
respectively.
From a segment perspective, Beverages, Dairy, Sweet Goods
and Snacks were the main contributors to the division growth.
The EBITDA increased to CHF 637 million from CHF 603 million
in 2017, an increase of 5.7%, with continuing productivity gains
and cost discipline contributing to the increase. The EBITDA
margin was 21.2% in 2018, down from 22.3% in 2017, largely due
to the impact of the lower margin on the acquired Naturex
business. On a comparable basis the EBITDA margin of the
Flavour Division was 21.2% in 2018 compared to 22.2% in 2017.
The operating income decreased to CHF 470 million in 2018from CHF 473 million in 2017, a decrease of 0.6%. The operating
margin was 15.7% in 2018 compared to 17.5% in 2017.
Asia Pacific
Sales in Asia Pacific grew by 6.2% on a like-for-like basis.
In the high growth markets, India delivered double-digit
performance, whilst China, Indonesia and Thailand delivereda strong single-digit increase.

Local and regional customers continued to grow strongly
across the region, whilst from a segment perspective,
Beverages, Dairy, Snacks and Sweet goods all contributed
significantly to the growth.
Europe, Africa and Middle East
Sales in Europe, Africa and Middle East increased by 3.0% on a
like-for-like basis. In the high growth markets of Africa and the
Middle East, strong double-digit growth was achieved in Egypt
and South Africa, which was offset by the challenging market
conditions in Central & Eastern Africa, Maghreb and the Middle
East. Growth in Central and Eastern Europe was led bydouble-digit growth in the Ukraine and high single-digit
performance in Turkey and Russia.
In the mature markets of Western Europe, double-digit growth
was achieved in Sweden and high single-digit growth
performance in the UK and Spain.
Within the segments there was good growth in Beverages,
Snacks, Dairy and Sweet Goods.
North America
On a like-for-like basis, sales in North America grew by 1.8%
against a strong comparable growth of 8.5% in 2017. The
performance was a result of new wins and growth of existing
business in the area of Beverages and Sweet Goods.
Latin America
Sales in Latin America increased by 14.7% on a like-for-like basis
across all markets and segments in the region. There wasstrong double-digit growth led by Brazil and Colombia
supported by the improved economic situation, as well as
continued good sales momentum in Argentina.

Flavour Division – Division sales
in millions of Swiss francs

2018

3,002

2017

2,708

2016

2,433

Flavour Division – EBITDA
in millions of Swiss francs

2018

637

2017

603

2016

523

Flavour Division – Operating income
in millions of Swiss francs

2018

470

2017

473

2016

382

Givaudan – 2018 Integrated Annual Report

In the mature markets, growth was driven by strong doubledigit growth in Singapore and positive momentum in Japan.

Business performance – Fragrance Division
Sales
Fragrance Division sales were CHF 2,525 million, an increase of
6.6% on a like-for-like basis and 7.8% in Swiss francs. The salesof the Fragrance Division include CHF 46 million fromExpressions Parfumées, acquired in June 2018 and CHF 4 million
from Naturex, acquired in September 2018.
Total sales for Fragrance Compounds (Fine Fragrances andConsumer Products combined) increased by 7.0% on a like-forlike basis. In Swiss francs, sales of compounds increased to
CHF 2,199 million from CHF 2,036 million in 2017.
Fine Fragrances sales grew by 10.7% on a like-for-like basis
against a strong prior year comparable of 7.2% in 2017, withgrowth achieved across all geographies and customer groups.

Financial capital Performance review 43

Consumer Products sales increased by 6.1% on a like-for-likebasis, with good growth across all customer groups andgeographies, with particularly strong performance in Asia andthe Middle East.
Sales of Fragrance Ingredients and Active Beauty increased by
4.0% on a like-for-like basis, with high single-digit growth in
Active Beauty, against a high comparable from 2017 and positive
growth in Fragrance Ingredients, supported by price increases.
The EBITDA of the Fragrance Division was CHF 508 million in2018 compared to CHF 486 million in 2017. Key drivers of thisincrease are the reduction of the costs of the Givaudan
Business Solutions (GBS) program which were CHF 32 million in2018 versus CHF 107 million in 2017, as well as insurance
proceeds of CHF 20 million in relation to environmental
expenses. These positive impacts more than compensated theimpact of a single significant supply disruption of a major
supplier of fragrance ingredients, which has impacted thefragrance industry during the year as well as a sharp and broad
based increase in raw material costs.

Fragrance Division – Division sales
in millions of Swiss francs

2,525

2018
2017

2,343

2016

2,230

Fragrance Division – EBITDA
in millions of Swiss francs

2018

508

2017

486

2016

603

Fragrance Division – Operating income
in millions of Swiss francs

2018

413

2017

396

2016

493

As a result, the EBITDA margin was 20.1% in 2018 compared to
20.7% in 2017. On a comparable basis the EBITDA margin of the
Fragrance Division was 20.7% in 2018 compared to 24.5% in 2017,
driven by the elements mentioned above.

Consumer Products
Consumer Products sales increased by 6.1% on a like-for-likebasis with growth across all customer groups andgeographies.

The operating income was CHF 413 million in 2018, versus
CHF 396 million for the same period in 2017. The operating
margin was 16.4% in 2018 compared to 16.9% in 2017.

In Latin America all customer groups contributed to thegrowth against a strong prior year comparable, with local
and regional customers recording double-digit growth. Asia
recorded a strong increase with balanced growth across all
customer groups and double-digit growth in the South Asia
sub-region.

As part of the Group’s 2020 strategy to expand the capabilities
of its fragrance business, Givaudan completed the acquisition ofExpressions Parfumées, a French fragrance creation house, inJune 2018 and announced in December 2018 that it has enteredinto exclusive negotiations to acquire Albert Vieille SAS, a
French natural ingredients company specialised in naturalingredients used in the fragrance and aromatherapy markets.
Fine Fragrances
Fine Fragrances sales grew 10.7% on a like-for-like basis against
a strong prior year comparable of 7.2%, with growth achieved
across all geographies and customer groups. These results
were driven by sustained high levels of new business wins,
market performance of recent launches and volume growth on
established business at key customers.
Based on strong market share gains over the past three
years, acquisitions and continued growth in high growthmarkets, Givaudan is now the global market leader in the Fine
Fragrance segment.
Givaudan’s perfumes continued to be recognised at major
award ceremonies in Latin America, the USA and Europe acrossmen and women’s categories, recognising the excellence of ourteams in crafting products that consumers love.

In Europe, Africa and Middle East, the sales increase was
spread across all customer groups and sub-regions, withstrong double-digit growth achieved in the African andMiddle East sub-region. Sales in North America increasedslightly, against a strong prior year comparable as a result of
the performance of local and regional customers.
On a product segment basis, all segments contributed to thesales growth, led by Homecare, Oral Care, Personal Care andFabric Care.
Fragrance Ingredients and Active Beauty
Sales of Fragrance Ingredients and Active Beauty increased by
4.0% on a like-for-like basis. Sales of Active Beauty increased
at high single-digit levels, against a strong double-digit
comparable, driven by local and regional customers and Active
Ingredient products. Sales of Fragrance ingredients recorded
positive growth in 2018, supported by price increases.

Management Approach (103 – 2, 103 – 3):
Topic 201, pages 40 – 43

Givaudan – 2018 Integrated Annual Report

44 Financial capital Shareholder value creation

Shareholder value creation
Strong share price development combinedwith sustained dividend increase
Givaudan’s history of deliveringwith excellence is supported bystrong financial performance andthe creation of significant value
for shareholders.
We have a long track record of delivering on our financial
ambition which has created shareholder value through a
year-on-year increase in the dividend paid to shareholders, aswell as through positive share price development and share
repurchase programmes.
We are proud of the value we have created for our shareholders
since our Company was listed on the Swiss stock exchange in
2000. By delivering our 2020 strategy and through investing in
our future long-term growth, we can go on creating value andbuilding on this heritage of success.

Shares

Our strong financial performance since 2000 has resulted insignificant value creation for shareholders in terms of ‘Total
Shareholder Return’. Over CHF 20 billion in value has beencreated for shareholders in the form of dividend payments,
share repurchase programmes and share price appreciation
since the Company’s spin-off in 2000.
At the end of 2018, Givaudan had approximately 29,611
registered shareholders owning 62% of the capital. The top 20
registered and non-registered shareholders owned 60% of thecapital. Swiss and US shareholders held approximately 58% of
all shares.
Market capitalisation
Givaudan’s market capitalisation amounted to
CHF 21,015,641,736 on 28 December 2018 which was thelast trading day of the year.

Givaudan – 2018 Integrated Annual Report

Dividend policy and dividend proposal
Givaudan is strongly committed to return surplus cash toshareholders. The dividend has risen year on year since 2000,
when the Company was listed on the Swiss stock exchange.
In 2018, Givaudan’s free cash flow was CHF 703 million.
At the Annual General Meeting on 28 March 2019, Givaudan’s
Board of Directors will propose a cash dividend of CHF 60.00
per share for the financial year 2018, an increase of 3.4%
compared to 2017. If approved, this will be the 18th consecutive
dividend increase following Givaudan’s listing on the Swissstock exchange.

Investor Relations

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

CREDIT RATING

Givaudan has received the first credit ratings in
2018: A- credit rating, with a stable outlook,from S&P Global Ratings and Baa1 rating, withstable outlook, from Moody’s Investors Service.

Financial capital Shareholder value creation

45

Key share figures
2018

2017

2016

2015

2014

21,016

20,794

17,23016,437

15,730For the year ended 31 December. In Swiss francs except for number of shares

Market capitalisation (in millions)

9,233,586

9,233,586

9,233,586

9,233,586

9,233,586

Share price as at last trading day

Number of issued shares

2,276

2,252

1,866

1,780

1,704

Share price, highest

2,478

2,289

2,106

1,829

1,716

Share price, lowest

2,087

1,716

1,674

1,511

1,141

Earnings per share – basic

71.92

78.18

69.95

67.89

61.18

Total shareholder return (in %)

3.64

23.69

7.86

7.42

49.80

Share price development
in %
700
600
500
400
300
200
100
0
2000

2001

2002

Givaudan

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

SMI

Dividend per share and free cash flowin Swiss francs | in millions of Swiss francs
47

50

54

56

58

601

36

15.4
6.5

7
340

16.3

17.6

2001

19.5

20

20.6

2002

Free cash flow

22

549

295

2003

289

2004

720
604

703

597

594

2016

2017

512
437

390
273

21.5

662

8.1

203

2000

18.8

2005

262

2006

157

145

2007

2008

117

2009

2010

2011

2012

2013

2014

2015

2018

Dividend

1. Subject to shareholder approval at the AGM on 28 March 2019.

Givaudan – 2018 Integrated Annual Report

46

Givaudan – 2018 Integrated Annual Report

47

Our
innovative
capabilities
In this section
48

Driven by a culture of innovation48– A culture of innovation49– Technologies and products

50– Innovating responsibly

51– Leading the industry’s digital innovation

Givaudan – 2018 Integrated Annual Report

48 Our innovative capabilities Driven by a culture of innovation

Driven by a culture of innovation
To create differentiated solutions for our customers

A strong culture of innovation
is vital in driving the long-term
development of cost-effective
and long-lasting differentiating
solutions.
By being at the forefront of the innovation stage we can be
the partner of choice in creating cutting-edge, sustainable
solutions for our customers. Value creation comes by spreadinga culture of innovation beyond our walls and, within the
Company, across our functions and business divisions.

A culture of innovation

In every innovation journey, from concept to market success,we continuously strive to strengthen our learning, challenge
our thought processes and enrich the outcome. To be openly
engaged with a global strategic community – from corporate
peers to academia, start-ups, and technology and solution
providers – is a fundamental pillar of such a journey.
In this context, one key partnership has been with
MassChallenge, of which we became a founding member in
2016. MassChallenge accelerates high-potential start-ups fromanywhere in the world that can have an impact on either of ourdivisions and across disciplines. Our MassChallenge Partnering
initiative was held in 2018 with an inspiring programme that
included external speakers on disruptive innovation andtestimonials from successful mature businesses that werealso once start-ups. It also allowed start-ups close to ourbusiness needs with the opportunity to pitch their ideas.
One of the finalists in the 2017 MassChallenge Switzerland
accelerator programme was Mixfit, a US-based personalised
health company that designs nutritional experiences toencourage lasting, positive changes in health behaviour. In
2018, we established a partnership with Mixfit and set up a
cross-functional flavours team to develop taste and flavour
solutions to create delicious, customisable nutritional drinks incollaboration with DSM.

To extend our geographical coverage, we formed a partnershipwith Bits x Bites, the first food tech accelerator to be based in
China. Its mission is to shape the future of good food andinvest in people and technology to create more sustainable
food systems. Our collaboration with Bits x Bites will help us
discover new disruptive technologies in food processing,digitalisation and artificial intelligence.
Similarly in the US in 2017, Givaudan piloted MISTA, which is an
optimiser – enabling start-ups and established corporations to
optimise ideas, products, people and investments. The official
go-live was in 2018 and the MISTA Optimisation Center will
open in 2019 in San Francisco.
We know that our suppliers offer significant potential to foster
innovation. Through collaboration we can meet our current
and future business challenges and accelerate the creation ofmutual value. With selected suppliers from our base of 3,000
raw material suppliers and over 12,000 suppliers of indirectmaterials and services, the Procurement Innovation team seeks
to accelerate the creation of mutual value. This team sets out
to drive supplier engagement in innovation, leverage solutions,
support to open new commercial lines and tap into our
suppliers’ resources to accelerate our own project pipeline.
One example of work with external collaborators is
our continued partnership with the industrial bioscience
company Amyris in the research, development and productionof active cosmetic ingredients. This partnership, which wasestablished some years ago, has been strengthened more
recently: Givaudan and Amyris anticipate that the launchof target products in the coming years will demonstratesignificant performance, cost and sustainability advantages
over existing ingredients.
With Synthite, a global supplier of quality botanical and spices
extract ingredients for flavours and fragrances, we establisheda strategic partnership in 2018 for the development of exclusive
innovative natural ingredients for our business. Joint R&D
on unique natural ingredients will enrich Givaudan’s palette
for its perfumers and contribute to our olfactive vision for
naturals in perfumery.
	page 27, Our 2020 strategy

Givaudan – 2018 Integrated Annual ReportOur innovative capabilities Driven by a culture of innovation 49

2018 Innovation by numbers

Spend
Analysis477

CHF
millioninvested in R&D.

Patents

PeopleWe have over

over
employees working
in Science &Technology.

495

3,600

active patents.
We filed46

new patentfilings.

Five-year average R&D as % of sales (2014-2018)20188.63 %

477

2017

8.39 %

424

2016

8.58 %

400

2015

8.33 %

366

9.20 %

2014

R&D expenses (in million CHF)

405

As a % of sales

Technologies and products

The surprises that delight consumers in new and different
ways originate from the inspirations of our Science &Technology teams, whose research and development is thestarting point for our flavour and fragrance creations. Ourscientists, technologists, flavourists and perfumers are central
in the process of creating the engaging tastes or smells that
consumers love.
In exploring ways of offering customers these new products
and solutions, our strategy of growth through mergers andacquisitions enables us to innovate beyond our core expertisein flavours and fragrances in the areas of active cosmetic
ingredients, integrated solutions and naturals. These new areasof innovation build on our existing capabilities and are

Innovation
Ecosystems

Selected partnerships
in innovators,
accelerators and withacademia.
Plugged into
disruptive and digitaltrends.

supported by our commitment to invest a significant amountof our sales back into R&D – each year, this is approximately
between 8-9%. The investment allows us to maintain andextend our offering of breakthrough science and technology
and the best palette of ingredients.
Strategic investments were announced in 2018 in R&D andtechnology at our Applied Microbiomics Centre of Excellence inToulouse, France. The investments will boost the work of our
Active Beauty teams to lead the way in skin microbiome
research. The teams’ innovation and leadership in microbiomics
was recognised during the year when Revivyl™ was voted bestskin care ingredient at the Beauty Industry Awards.
We also introduced a new product development assistantcalled EVE, an app that handles a product brief clearly andeffectively from the moment it arrives. EVE rapidly identifies
the perfect match between a brief and a wide range of active
cosmetic ingredients, and gives our developers and marketing
teams a simpler way to follow and track projects.
For two decades our VAS technology has provided a uniquecompetitive advantage in understanding consumer
preferences, speeding the process of flavour and fragrance
creation and engaging customers by overcoming the sensory
language barrier. In 2018, we introduced the next generation of
MiniVAS – the VAS-Air, which uses the latest technologies, issignificantly lighter and has an all-new design.

Givaudan – 2018 Integrated Annual Report50

Our innovative capabilities Driven by a culture of innovation

Selected innovation initiatives

Consumer Sensory
Insights

Innovation
Centres–– Consumer insights
throughout thecreation cycle–– From molecularresearch toapplication expertise–– Agile consumer testing
network - survey,
panels, big data, etc–– Global team experts in
category understanding,cultural insights andsensorial decoding.

Supplier Enabled
Innovation–– Extended innovation
ecosystem globally–– Strategic partnerships
with key suppliers–– New technologies indelivery systems(e.g. encapsulation)–– Selected partnerships
with innovators,
accelerators andwith academia–– Focus on
bio-technology /bio-transformation–– Market-specificcapabilities aroundthe globe.

–– Plugged into
disruptive anddigital trends.

The vision of a global team of beverage flavour emulsion experts
became a reality with the launch of our new emulsion creation
tool during the year. This novel tool helps flavourists with limited
experience become confident in creating flavour emulsions
providing stable and cost effective solutions to customer briefs.
In Fragrances, our latest technology to combat malodour isable to enhance the well-being of millions of people in thegrowing adult urinary incontinence market. A range of scented
NeutraZap™ solutions for this common problem has beendeveloped, providing an odour-neutralising effect which can beused across a range of incontinence products.

Innovating responsibly

Sustainability is central in developing our new products. We ask
if they improve access to safe, nutritious and sufficient food,promote health and well-being, and are sourced in a
responsible way, making efficient use of resources and reducing
the generation of waste. We also explore how we can best
meet demand for natural products and improve processes tomake them more sustainable.
In the area of health and well-being, for example, more andmore people are reducing their consumption of meat andadopting vegetarian, vegan or flexitarian diets. As part of thistrend, more consumers are seeking meat substitutes, and weare well placed to make the most of this opportunity. We areinvesting in new technologies to address some of the mostdifficult textural and flavour challenges involved. Our
pioneering processes and technologies allow customers to
introduce exciting, great-tasting plant-based foods and meat
analogues, enabling the dietary shifts that will help promote
consumer health and protect the environment.

Givaudan – 2018 Integrated Annual ReportInnovators andPartnerships–– Sustainable sourcing
philosophy.

We are involved with the Plant Meat Matters project and are ina partnership with the Sutardja Center for Entrepreneurship &Technology (SCET) at the University of California, Berkeley,through which we are providing help and support to students
working on plant-based meat substitutes. We also launched
Plant Attitude, a holistic multi-functional and cross-category
innovation platform developed in response to the meat-freeprotein market space. Our multidisciplinary workshops in
Kemptthal, Switzerland showcased the latest developments inthe biggest growth area in the food and beverage industry.
Another new and interactive tool to support plant protein
creation was launched by Flavours in Europe during the year.
Compendium 1.0 was two years in development, work which
included over 150 experiments aimed at understanding how todesign cost-competitive and consumer preferred flavours formeat analogues. Compendium 1.0 compiles a list of the most
relevant ingredients from the savoury creation toolbox,
mapped for their effect, performance and cost impact into areal analogue matrix. It will enable creators to explore different
scenarios, accelerate development work and improve speed tothe customer.
As part of our focus on health and well-being we areresponding to the global drive towards sugar reduction. We
launched a new unique approach in 2018 that delivers fully
satisfying, reduced-sugar products without added sweeteners.
The approach combines the use of a new proprietary
sensory language, novel ingredients, and deep understandingof sweetness and satisfaction to deliver up to 50% reduction
in sugar while maintaining consumer preference.

Our innovative capabilities Driven by a culture of innovation 51

In Flavours, we seek to use as few resources as possible so
as to reduce the impact on the environment. We incorporate
circular thinking while using our scientific knowledge toreplicate traditional natural processes on a large scale toproduce desirable flavour ingredients. We continue toinnovate in this area, using natural technologies such as
bio-fermentation to produce natural complex flavour blocks
that satisfy requirements for clean labels.
An example was the launch of our fully natural delivery
systems inspired by how nature encapsulates flavours tomeet these clean label needs. The new holistic capabilities inKitchen Ingredients – a toolbox that helps customers provide
consumers with great tastes from natural ingredients theyrecognise from their own kitchens – reflect the changing
consumer demands for more natural ingredients andtransparent food labelling. Our initiatives were highlighted
in a video that won a Silver Dolphin award at the 2018 Cannes
Corporate Media and TV Awards.
In Fragrances, consumers seek and trust products fromrecognised natural sources. We look to respond to thesedemands by maximising the value from nature and increasing
the use of biotechnology. This will allow us to offer fragrance
ingredients and design solutions that meet this consumer
demand and which are constantly sought by our S&T experts
in the Fragrance Division and Active Beauty business.
For example, pioneering, sustainable products have beendeveloped by Active Beauty through processes including
upcycling or through cutting-edge innovation. For example,
Vetivyne™, our patent-pending active ingredient with active
anti-ageing benefits, meets our commitment to offer naturaland sustainable products. It was developed by using watersoluble extract from exhausted Haitian vetiver roots, aby-product of the extraction procedure used to produce
vetiver oil for fragrances. At In-cosmetics, Vetivyne™ received
the first European BSB Innovation Prize for its natural andsustainable quality.
We have also developed PrimalHyal™ Ultrafiller, a new topicalhyaluronic acid that acts like an aesthetic filler by penetrating
deeply into the skin and filling wrinkles while stimulating theskin’s anti-pollution defences. The patent-pending active
ingredient was obtained by combining our white biotechnology
capabilities. This is the production of a specific hyaluronic acidthrough a fermentation process, followed by its full acetylationachieved by experts at our site in Dübendorf, Switzerland.
PrimalHyal™ Ultrafiller is 100% safe, worldwide compliant, andproduced from renewable raw materials.

PIONEERING TEAMSOver 495 people work directly in Science& Technology. Joining them are over
165 perfumers and flavourists. All help increating innovative and engaging tastes
and smells consumers love.
supporting their validation and the new global standards havenow been adopted. We began exploring alternatives to animal
testing in 2006, which led to the development of the
KeratinoSens® assay for skin sensitisation. We made thisin-vitro assay openly available, working with the Organisation
for Economic Co-operation and Development (OECD), to adopt
and promote the solution.

Leading the industry’s digital innovation

Our industry, along with our customers and suppliers, ismoving to digital transformation as core processes as well as
customer services are challenged by new opportunities offeredby technology.
To anticipate this disruption and lead our industry’s digitaltransformation, a dedicated digital innovation team works withthe business divisions and functions, exploring transformative
opportunities to enable and inspire our strategy.
This work is organised around three pillars: inspiring theorganisation by stimulating new ideas and giving a space forthese ideas; Executive Committee-level governance to set thepriority on topics; and a ‘digital factory’, an internal incubatorfor fast-paced experimentation of the most promising ideas.
Some of the strategic areas we are exploring include how
Artificial Intelligence and Big Data can transform our flavour
and fragrance creations, what new value-added services canbe provided to our customers through digital platforms, andhow to push the boundaries of our current industry and explore
new, digital-enabled business models.
	Our Sustainability Approach – Innovating Responsibly2018 Sustainability Progress Review – Innovating Responsibly

New alternatives to animal testing have been developed
through our Safe by Design™ fragrance molecule research
approach. New test regimes measuring the metabolism ofmolecules have been invented by a team of academics toreplace testing in living fish. Givaudan has been deeply involved

Givaudan – 2018 Integrated Annual Report

52

Givaudan – 2018 Integrated Annual Report

53

Our people &cultureIn this section
54

A culture of performance and appreciation

55– Talent, performance and culture56– Towards a Better Balance

57– Employee relations

58

Embracing our culture of safety

Givaudan – 2018 Integrated Annual Report

54

Our people & culture

A culture of performance and appreciation

A culture of performance and appreciation
Delivering with excellence across the regions

Our business is about our people
and their talent. It is their passionthat continues the Company’slong history of delivering withexcellence and ensures the best
possible customer experience.
Givaudan is the leading employer in the flavour and fragrance
industry with a global workforce of around 13,600. It is ourpeople, working in a wide variety of roles, who help transformthe original creations of Givaudan’s talented perfumers andflavourists into products that are designed to satisfy the mostdemanding requirements. These innovative, creative
professionals are fundamental to our success.
The number of our employees increased significantly in 2018
due to new hires required for the implementation of Givaudan
Business Solutions (GBS) and our recent acquisitions of Naturex
and Expressions Parfumées. This additional talent pool enriches
our Givaudan culture and joins an already global and diversified
workforce. Our strength and success comes from this diversity,
giving us the Better Balance in the workforce needed to meet
future business imperatives.
Our new employees have been welcomed into the Company
and our unique culture through our ‘ONE Givaudan’ global
onboarding programme, launched in 2017. This programme
ensures that new joiners acquire a fundamental knowledge

BETTER BALANCE

A diversified workforce across the regionswith 13,598 employees working in 148 sites
in 50 countries.

Givaudan – 2018 Integrated Annual Reportabout our Company and its rich heritage, our business and our
culture. In 2018, 556 people attended ONE Givaudan onboarding
events: eight were conducted in the regions and thirteen wereorganised specifically in the GBS centres. In addition, theonboarding events were complemented by new interactive
e-learning sessions, followed by 114 participants, which will befurther developed and extended during 2019.
This global workforce is spread across geographical locations,
yet is closely connected with colleagues and the business aroundthe world through a strong digital platform. The introductionof a ‘self-service’ digital platform enables employees to obtainsingle-source and consistent Human Resources (HR) information
accessible at all hours. This facilitates an interconnectivity
that creates an environment where our multinational, global
workforce can work more closely together without geographicalboundaries. In addition, the introduction of GBS has further
enabled improvements such as speed and accuracy relating to
HR information and services.

Full time employees¹ by region

1,840

Employees in LATAM

2,518

Employees in NOAM

6,363

Employees in EAME

2,877

Employees in APAC

1.	This is defined as the equivalent full time employees and includes aquisitions.
In 2018 the number includes employees from Activ International, Vika B.V.,
Centroflora Nutra, Expressions Parfumées and Naturex.

Our people & culture

2018

2017

Total number of full time employees 1

13,598

11,170Total headcount²

11,725

11,313

Total number of employees (headcount) 2

11,725

11,313

Women

4,474

4,313

Men

7,251

7,000

1,815

1,553

745

634

Women
Men

55

Our key achievements in this area were:

Givaudan employees

New Employee hires

A culture of performance and appreciation

1,070

919

Turnover rate

12%

10%

Women

13%

10%

Men

11%

10%

1.	This is defined as the equivalent full time employees and includes aquisitions. In
2017 employees from Activ International and Vika B.V. are included. In 2018 thenumber includes employees from Activ International, Vika B.V., Centroflora Nutra,
Expressions Parfumées and Naturex.
2.	This is defined as the head count: Givaudan employees, internal temporary
employees, and employees from Activ International, all other acquisitions excluded.

	Management Approach (103 – 2, 103 – 3):
Topic 401, pages 54 – 55

Talent, performance and culture

Our approach to value creation for our employees and a key
driver of growth is in creating an environment where people
impact their world and contribute to the Company’s success.
This is supported by an HR strategy which focuses on threeareas: Talent – developing leadership capabilities and ensuring
we have the talent that can deliver on the needs of tomorrow;
Performance – including strengthening the way we have
conversations in the organisation, and reinforcing the link
between pay and performance; and Culture – including
establishing our unique offering as an employer, what we standfor and how to make Givaudan a great place to work. GBS is afundamental enabler of our HR strategy allowing all our HR
people to focus on where they can bring the most value relating
to Talent, Performance and Culture.
Our suite of internal programmes focuses on proactive talentdevelopment and nurturing a well-balanced workforce oftalented professionals. All programmes offer both a challenging
and inspiring learning environment. We encourage our
employees to explore and experience new ways of thinking andworking. This often means a blend of digital tools, selfreflection, coaching, classroom sessions and virtual team work,
providing a safe environment to apply and test what employees
learn with a strong focus on transferring learning back into thework environment.

–– In continuing to build our leadership capabilities and inpromoting a culture of continuous learning and curiosity, we
undertook a further round of our Leadership Senses
programmes in all regions during the year. 304 participants
followed our customised programmes that aim to equip themwith the necessary leadership skills for today and for the
future. In addition to the existing programmes of Begin,Grow, Evolve and Enhance, we have piloted a newprogramme called Discover. This programme targets our
first-line managers and supervisors with a special focus on
the qualities expected of a leader, coaching and feedback.
Discover includes an interactive, practical section that
focuses on safety and quality.
–– More than 700 managers to date have been trained in‘Selecting the best’, a one-day training session to familiarise
our recruiting managers with the Company’s recruiting
process and develop their interview skills to help them makebetter hiring decisions.
–– We have rolled out our ‘Quality Conversations’ training,which helps managers build trusting and productive
relationships with their team members that result in stronger
employee engagement and transforms individual andbusiness performance. 222 managers have now been trainedin Quality Conversations.
–– In the 2018 performance cycle, we introduced two new
training ‘toolkits’ (including interactive virtual ‘books’)focusing on feedback and developmental discussions. All
managers were offered training and toolkit materials to
prepare for their developmental discussions and share with
their teams. We plan to roll out additional toolkits in 2019.
Our mentoring programmes aim at matching employees withmentors who have the expertise relevant to their individual
development areas. The aim of the mentoring programme isto help employees develop their leadership or technical skills,
support them to navigate across the organisation and provide
them with greater visibility while promoting knowledge
sharing. In 2018, there were 34 participants across all theregions in the Flavour Division’s programme. The Fragrance
Division prepared its next launch which will occur early 2019,and is planning to add a ‘reversed mentoring’ segment to theprogramme. This means the ‘junior’ will have the opportunity tocoach their ‘senior’ mentor in one specific topic such as social
media. The first mentoring programme in the Fragrance
Division began in 2016 and ended in 2017. This first phase was
implemented in five regions with 130 participants.

Givaudan – 2018 Integrated Annual Report

56

Our people & culture

A culture of performance and appreciation

Employees receiving regular performanceand career development reviews 1

Women
Men

2018

2017

93%
67%

91%
63%

1.	Refering to actual head count: Givaudan employees, internal temporary
employees, and employees from Activ International, all other acquisitions excluded.
The discrepancy between ratios for male and female employees is due to the fact that
more men are under collective agreements.

	Disclosure 404 – 3

Employee engagement is also related to compensation. Ourcompensation packages are competitive and enable us toattract, retain and motivate qualified employees. Benchmarking
studies are conducted annually and salaries are reviewed,
taking into account macroeconomic data such as cost of living
and market evolution. In high inflation countries, salaries may
be reviewed more frequently than once a year. In 2018, this was
the case in Argentina, Turkey and Iran. In addition, our profit
sharing scheme allows non-management employees to share in
Company profits.
	page 88, 2018 Compensation report

Related to this topic is the ratio of remuneration of women tomen, a priority topic at Givaudan. Studies are conducted every
year on a global basis and in each of the key markets where we
operate to monitor gender pay equity, identify any outstanding
pay gaps and ensure they are promptly addressed. The studies
are conducted according to the methodology developed by the
Swiss Federal Office for Gender Equality with a view to ensuring
equal pay for equal responsibilities. For the Givaudan Group
globally, our results show that the average base salary difference
between men and women is 1.2% for equivalent roles and skills
sets. For total cash compensation (fixed and variable pay) the
difference is 1.3%. The results for our headquarters in Switzerland
are similar, showing differences in the order of 1% for base salaryand total cash compensation. The inclusion of Givaudan in
Equileap’s 1 2018 Top 200 companies for gender equality, basedon comprehensive research of 3,206 listed companies, illustrates
the Company’s continuing efforts in this area.
1.	
Equileap is a Netherlands- and UK-based organisation that aims to accelerate
progress in gender equality in the workplace.

	Disclosure 405 – 2

Engaging the voice of employees is important at Givaudan tomake sure we are on the right path in creating a great place towork. Our Engagement Survey of employees’ views was last
carried out in 2016 and we continue to track the results of thesesurveys and have implemented many initiatives that arise fromthe survey findings at a local level.

Givaudan – 2018 Integrated Annual Report

In Brazil, for example, lunchtime interest groups among
employees are being created for people to exchange ideas andexperiences, learn from others, and get to know each otherbeyond business and work. Each group, created by employees
themselves, has an ‘owner’ who is responsible for connecting
people from different departments with similar interests. A
group to exchange recipes via WhatsApp, a women’s network
for career development, and an English class centred on movies,
music and literature are included.
An initiative in Australia offers employees the opportunity
to improve their health and well-being in areas such as
mental health, energy levels, weight management, bloodpressure, sleep patterns and nutrition. A baseline measure has
been developed which can be used against annual checks. The
programme, which benefits the business as well as individual
employees, is being extended to include topics such as physicalvitality, mental and emotional agility, and positive relationships.
	Management Approach (103 – 2, 103 – 3): Topic 202, 404,
pages 55 – 56

Towards a Better Balance

We are committed to a balanced and inclusive workforce. In
reflecting the societies and cultures in which we operate,
we aim to strengthen our teams by providing opportunities
for people of all backgrounds, gender and locations without
discrimination. A diverse organisation is essential to meet ourbusiness goals, to reflect better the customers and consumers
we serve, to drive innovation and to create an inclusive
culture where all our people grow and succeed. Our Diversity
Position Statement outlines our commitment to ensuring a
representative workforce that reflects the diverse communities
in which we operate.
As an international business, we need the right people in theright geographies. We particularly aim to increase ourrepresentation of nationalities in high growth markets andwomen in managerial positions.
In 2018, we started to implement our Better Balance roadmap,
the aligning of all our senior leadership teams on the case forchange. We reviewed our talent management processes andintroduced more transparency into senior leader appointments.
In addition, we have created guidelines to ensure we interview
a wider range of profiles for senior leader roles,	w ww.givaudan.com – our company – corporate governance –position statements – diversity
	Management Approach (103 – 2, 103 – 3): Topic 405, 406

Our people & culture

Employee relations

Our global workforce operates in an international market andmust be capable of adapting to a rapidly changing market. We
try to cultivate an environment where the employer and theemployee can better understand each other’s challenges andfind ways of resolving them. This is done by establishinggenuine dialogue with freely chosen workers’ representatives.
We strive for harmony in our labour and management
relations and follow commonly recognised best practices.
We pride ourselves on our history of constructive dialogue
with employee representatives and we support the freedomof individuals to join trade unions or other employee
representative bodies.
Regular European Works Council consultations are held witha group of employees representing Works Council members
from all European Union member states where we operate. The
purpose is to inform and consult employees about significant
changes in the organisation, ensure the right to freedom of
association and collective bargaining is not put at risk, and toreport any feedback to the Executive Committee. The last
European Works Council was held on 27 September 2018.
We respect legal local notice periods prior to theimplementation of changes that could substantially affect ouremployees, either through direct communication to these
employees or through their elected representatives, works
councils or other groups. In countries where there are collective
agreements and where it is mandatory, minimum notice
periods regarding operational changes are specified. These
range from no notice to three months, depending on the
country and based on local laws and practices.

A culture of performance and appreciation

57

BARGAINING AGREEMENTS

29% of employees are covered by collective
bargaining agreements.
	Disclosure 102 – 41

Composition of governance(Executive Committee and Board of Directors)

Headcount– in %

Total

Women

Men

<30

30–50

>50

3

11

0

2

12

14

21%

79%

–

14%

86%

100%

Employees ¹ categories and composition of governance bodies
Women

Seniormanagement

Men

<30

30–50

>50

Total

190

45

145

–

108

82

– in %

24%

76%

0%

57%

43%

Middlemanagement

1,532 1,733

126 2,435

704

4%

22%

53%

– in %

47%

Associates

2,897 5,373

1,972 4,732 1,566– in %

35%

24%

Total

4,474 7,251

2,098 7,275 2,352 11,725– in %

38%

18%

65%
62%

75%

3,265

57%

8,270

19%

62% 20%100%

1. I ncluding the Executive Committee, and excluding acquisitions except Activ
International and Vika B.V.

	Disclosure 405 – 1

In all our locations worldwide, there are no sites where theright to freedom of association and collective bargaining has
been violated or is at risk.
	Management Approach (103 – 2, 103 – 3): 402, 407
Disclosure 402 – 1, 407 – 1Givaudan – 2018 Integrated Annual Report

58 Our people & culture

Embracing our culture of safety

Embracing our culture of safety
Ensuring ‘Everyone gets Home Safe everyday’.

We are committed to ensuring thesafety of our employees and haveset ambitious targets and clear
strategies aimed at eliminating
accidents in the workplace.
Our Lost Time Injury Rate (LTIR), the measure of the number ofoccupational incidents with at least one day of work lost relative
to 200,000 hours of work, has fallen from 1.03 in 2009 to 0.25 in2018, with no fatal injuries. Since 2009 we have achieved a 76%
reduction and, looking at the performance from 2017, we have
reduced the rate of injuries by 24%.
This good performance is possible only through continued
nurturing, attention and leadership. However, we know thata past safety record does not guarantee future excellence.
To ensure we maintain and further improve our safety
performance towards such excellence, we focus on a rangeof activities and programmes that encourage a mindset andculture of safety. For example, investing in technical safety
aspects is fundamental to prevent industrial accidents, but
injuries are not exclusive to dangerous environments andso awareness and training is key. Almost all incidents that
result in lost time at work are the result of unsafe behaviours,
and it is through our culture of safety that incidents can be
avoided and employees protected.
Another example of our initiatives is our Safety Ground Rules,
which address common situations that are encounteredby most of us on a daily basis when at work. In our analysis
of incidents on our sites, the link between accidents andbehaviours became clear. By following these 12 ground rules,
the number of accidents could be decreased to almost zero. We
have concentrated in the past on our manufacturing sites, butfrom 2019 the scope will extend to non-manufacturing sites.

Focusing on building the skill set in our people, our facilitator
programme is an approach that departs from the traditional‘centre outwards’ approach: EHS facilitators train theirpeers in day-to-day hazard identification and risk avoidance.
In 2018, six sites in three regions were involved.
In addition, to raise the visibility and impact of our safety culture,
our EHS Excellence model, introduced in 2018, uses a workshop
approach and enables leadership teams to assess their siteagainst a set standard of desired behaviours/results and define
actions for improvements. Excluding recent acquisitions, theEHS Excellence model was completed on 90% of our sites by theend of 2018.
Reducing injury is also achieved through risk management.
Working with site management we have obtained
comprehensive risk profiles per production site, identified
corrective actions to reduce risks and implemented controls.
In 2018, 90% of our sites, excluding recent acquisitions, wereassessed. In 2018 we also completed our first five-year audit
cycle since we introduced our renewed management system.

2018 Safety performance –‘Everyone Home Safe everyday’

19.5 M

Hours worked
safely

1.0
0.8
0.6
0.4
0.2
0.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
LTI Rate

LTI Target

Lost Time Injury Rate (LTIR) = the number of lost time injuries per
100 employees, per year.

Givaudan – 2018 Integrated Annual Report

24
LTIs

1.2

Our people & culture

Everyone
Home Safe
everydayOur strategic initiatives for injury reduction

Reduce risk–– Risk analysis–– Workplace assessment–– Fire safety–– Material handling–– Ergonomics

Embracing our culture of safety 59

Embedding EHS

Agile EHS organisation–– Leadership EHS Excellence
workshops–– Engage employees–– Safety contacts–– Report of near misses andunsafe situations–– Learn from events

We have a wide range of programmes to help employees takeresponsibility for their own safe behaviour in their daily
activities, at work and at home. For example, Givaudan EHS
Events engage employees through site activities that help themfeel proud to be part of an organisation that cares for theirhealth & safety and that of their colleagues. These activities are
publicised globally through regular EHS ‘Postcards’. We makeparticular efforts to involve those who join the Company
through acquisitions. In addition to these events, dedicatedawareness campaigns are taking place, as in our Fragrance
Division in Asia Pacific. These were particularly successful withmeasurable improvements.

–– EHS Facilitators–– EHS Academy–– GBS EHS Solutions Team

Another initiative is our EHS Academy, which trains EHS
employees to be more effective in their roles, building on theirbusiness knowledge and strengthening collaboration within
the EHS team. The last EHS Academy, conducted in 2018,brought together field EHS managers and EHS Centre ofExpertise representatives to help further improve business
partnering and continue embedding an EHS culture in
employees’ day-to-day work.
Our ambitious 2020 target is to be below 0.1 LTIR, whichcorresponds to a 90% reduction versus 2009. This is challenging
as the demand for EHS support grows with acquisitions,
yet we believe it is possible to achieve it by continuing ourapproach of going beyond rules and processes and working
with leaders and employees to ensure a safety mindset andculture in the workplace.
	Management Approach (103 – 2, 103 – 3): Topic 403,
pages 58 – 59

Givaudan – 2018 Integrated Annual Report

60

Givaudan – 2018 Integrated Annual Report

61

Sourcing &operations

In this section
62

From sourcing to supply

62– Raw Materials

63– Indirect materials and services

63– Procurement innovation

63– Sourcing for Shared Value

65

Excellence in operations

65– Our commitment to customers

65– Quality and continuous improvement indelivering with excellence66–  Guaranteeing continuity of supply to ourcustomers

66– Driving excellence across the supply chain

67– Acting for our environment

Givaudan – 2018 Integrated Annual Report

62

Sourcing & operations

From sourcing to supply

From sourcing to supply
Driving excellence throughprocurement and sourcing practices
Value creation comes fromstrong internal and external
collaboration. We seek tomaximise value with our suppliersof materials and services tocreate a differentiating andprofitable business.
With an annual spend of around CHF 3.0 billion in raw
materials and indirect materials and services, procurement is
a strategic value creator that impacts Givaudan’s responsible
and shared growth.
Procurement’s role is to ensure the continuous supply ofpurchased materials and services at the most competitiveand predictable cost, while ensuring optimal quality. The
teams aim to be trusted advisors, involved in the Company’smarkets and capable of adapting to rapidly changing
environments. A procurement business partner liaises witheach division to optimise the sourcing processes in line withbusiness requirements and within given constraints.

Raw Materials (RM)

Our RM team is responsible for purchasing all our raw materials
globally – whether synthetics or naturals – to produce ourflavours and fragrances. In order to increase our geographicalfootprint and spend control over time, we have integrated the
locally sourced raw material activities into the global RM
procurement function. This integration, in line with the GBS
roll-out schedule, has been fully executed in Europe, the Middle
East and Africa, and in North America Flavours.
Further changes are the expansion of our global RM category
management team to increase our sourcing coverage to theentire raw material portfolio, and the transfer of ‘purchase to

Procurement by numbers

Spend
Analysis

Raw
Materials

Supplier
Management

Contract
Management

We manage

We source

3,000

We manage

3.0

CHF
billionspend per year

10,000>different raw
materials in100>
countries

Givaudan – 2018 Integrated Annual Report

raw material
suppliers

12,000Indirect
Materials and Services>

25,000contracts

Sourcing & operations

Materials used by weight52%

Non-renewable
raw materials

48%

Weightof purchased
raw materials

Renewable
raw materials

	
Disclosure 301 – 1

pay’ transactional activities to the GBS centres. The GBS
organisation delivers enhanced support and market insight to
the global procurement team.
Events that could threaten the supply of raw materials are risks
we must manage daily. If we do not receive the goods we needfor our manufacturing processes, we cannot supply ourcustomers, so risk management is as important as buying at
the right price. We are limiting our exposure to raw material
supply risks by adopting different approaches, which include
reducing our dependency on single-source suppliers andstrengthening our risk management governance, reassessing
certain geographical risks.
We believe that our raw materials should be produced in a waythat respects people and the environment. We work in
partnership with local producers and suppliers to transform theway we source and create new value to be shared by all. This is
the essence of the Givaudan ‘Sourcing for Shared Value’.

From sourcing to supply 63

North America, all vendor-related transactional activities are
now processed within GBS for all regions. These moves allow our
procurement organisation to focus on value creation throughmore efficient and strategic sourcing activities.
In addition to the focus on the right materials and services at
the right cost, the IM&S team delivers benefits beyond cost andcash. Our IM&S organisation is embracing a continuous
improvement mindset and methodology in its daily business inall regions. With an ever-changing environment, managing
supply risks has also become a focus area.

Procurement innovation

We have a well-established innovation team in procurementthat works closely with category managers to foster supplierenabled innovation and generate new business opportunities.
Together with the Science & Technology organisation, we havebuilt a project pipeline of supplier-enabled innovation
opportunities, presenting a busy agenda with a high potential
for differentiation. The team responsible for this pipeline ofinnovation keeps abreast of new technologies and works toalign the needs of the business with the capabilities of the
supplier base.
Our suppliers have many innovative ideas and we are keen tocapitalise on the opportunities they may have for mutual
benefit. To read more about accelerating the creation of mutual
value through supplier-enabled innovation, see the chapter on
our innovative capabilities.
	page 48, A culture of innovation

	Management Approach (103 – 2, 103 – 3): Topic 301,

pages 62 – 63

Indirect materials and services (IM&S)

The IM&S team engages with internal customers at all sites tounderstand their business needs. This is a key element tosuccess. Close collaboration at the early stage is fundamental indetermining the right focus on strategic initiatives, negotiations
and supplier management.
The allocation of resources between global, regional and local
teams has been optimised in response to the latest
developments in our supply markets as well as within the
Company. As a result, we have introduced regional category
management in all regions. These changes bring an increased
focus on strategic procurement activities at a regional andglobal level while still having site proximity. With this approach,
we will strengthen our internal business connections whileproviding the best geographical distribution of buying power.
The latest purchasing support unit has been established in Kuala
Lumpur, Malaysia, at the new Givaudan Business Centre for the
Asia Pacific region, which opened in late 2017. By bringing
in-house our outsourced support centres in Europe as well as

Sourcing for Shared Value

Sourcing for Shared Value covers all the different sustainability
practices in procurement. We embed a sustainability purpose in
all our sourcing activities and have a comprehensive approachthat builds on and further strengthens the long-term
commitment to sustainable procurement practices based on
the principles of Responsible Sourcing, Sourcing at Origin andCommunities at Source:
Our Responsible Sourcing programme drives compliance andcontinuous improvements in the way that products areproduced. It encourages suppliers to achieve high standards inhealth and safety, and in social, environmental and businessintegrity as included in our Responsible Sourcing policy.
The programme is the blueprint for how we work with ourpartners and suppliers and drives compliance to high ethicalstandards in our supply chains. We audit our key first-tiersuppliers against sustainability criteria and assess entire supply
chains of our key raw materials of natural origin. We then work
hand-in-hand with our suppliers to ensure that improvementsin their supply chains are made where necessary.

Givaudan – 2018 Integrated Annual Report

64

Sourcing & operations

From sourcing to supply

We are committed to sourcing raw materials in a way that
respects people and the environment. We work together
with our partners and suppliers, to increase transparency inour supply chains and to improve their sustainability practices.
We have created supply chain transparency for 32 of
our raw material categories and 24 are being sourced in a
responsible way.

precious natural ingredient, Givaudan has invested since 2013in a collection network comprising hundreds of individual
smallholder producers on the island of Sulawesi. The holistic
approach to sourcing focuses on being present at the origin of
the raw material, building strong relationships with smallholder
producers and supporting them in developing their business ina sustainable way.

Ultimately, we strive to be our customers’ partner ofchoice and to meet Givaudan’s values by building a portfolioof materials and services that are part of our Responsible
Sourcing programme.

To further strengthen this collection network, Givaudan iscollaborating with the international non-governmentalorganisation Swisscontact. With funding from the Givaudan
Foundation, and in partnership with the producers, their families
and local government, the team is working on a multi-year
project. The goal is to improve the livelihoods of individual
producer families while protecting precious natural resources.
Training programmes are offered to patchouli producers andtheir families to promote environmentally friendly production
methods, along with education on nutrition and householdincome management. To date, 927 households have received
training on good agricultural practices and 276 operators on
good distillation practices. The project will also involve therenovation of smallholder patchouli distillation units to improveenergy efficiency and reduce firewood consumption.

Sourcing at Origin initiatives secure the traceability, supply
and quality of key natural ingredients in countries of origin byworking directly with producers and suppliers while fostering
local value creation. We have invested in direct collection
networks and exclusive farming partnerships in China,
Indonesia, and Madagascar, strengthening the local economic
fabric in countries of origin and contributing to more stable
incomes for thousands of smallholder producer families.
In Madagascar, for example, NATEMA (Natural Extracts
Madagascar) is our processing plant that transforms clove leaf
oil directly into derivatives used for our flavour and fragrance
creations. Rather than export clove leaf oil for processing from
Madagascar, the clove leaf is collected through a network of
farmers supported by Givaudan. The joint venture is between
Givaudan and Henri Fraise Fils, a longstanding business partner
and well-established local company.
Our Communities at Source approach shows how we support
smallholder producers and their communities in our raw
material supply chains. We work together with local
communities on projects and causes that benefit thecommunities where we work. We build partnerships with
non-profit organisations and support local communities.
Many of our most precious natural ingredients come fromplaces that are vulnerable to political, economic and natural
upheavals. So we recognise that we have a role to play inhelping producer communities build stable and secure lives.
We run a range of projects, from building schools and healthcentres to providing training and advice; we partner with local
communities in this way to work for a better tomorrow. We
further support local producer communities through a variety
of social and environmental projects, from working with
farmers on reforestation in Indonesia to supporting schoolsin Madagascar, Laos, the Comoros islands and Haiti.
Many of these initiatives receive funding from the Givaudan
Foundation, a not-for-profit organisation working incollaboration with NGOs, other local partners and thecommunities themselves. For example, patchouli is a key
natural ingredient prized by perfumers for its powerful,earthy and long-lasting character. To secure the supply of thisGivaudan – 2018 Integrated Annual Report	www.givaudan.com – sustainability –sourcing for shared value
Our Sustainability Approach
Management Approach (103 – 2): Topic 204,
Disclosure 102 – 9, pages 62 – 64

Sourcing & operations

Excellence in operations

65

Excellence in operations
Driving customer successExcellence in operations is thecornerstone of Givaudan’scommitment to its customers.
Our commitment to customers

It is a commitment that drives a culture of agility, innovationand continuous improvement across all our 64 production sitesaround the world. Each day, our dedicated teams transform theoriginal creations of our talented perfumers and flavourists into
products that meet customer demands and changing consumer
preferences along with increasingly stringent standards for
quality, speed and agility.
Our expanding global footprint ensures that we are close to
our customers and their markets, no matter where they arein the world. It enables us to source our precious naturalingredients in remote areas with a focus on quality andtraceability, to bring value-added flavour solutions to market
faster and to deliver our custom-designed perfume productswith ever-shorter lead times.

Givaudan Business Solutions (GBS) is the latest pioneering
initiative in a continually evolving global operations performance.
While integrating a range of core business solutions to bringagility, reduce complexity of our internal processes and focus
entirely on delivering a superior customer experience, GBS alsoenables Givaudan to explore future-forward initiatives including
robotics, digitalisation and the use of big data. The platform goesbeyond transactional activities to streamline processes andintegrate shared solutions serving operations in key crossfunctional areas such as supply chain, EHS and sustainability, andContinuous Improvement (CI) and engineering.
Since early 2018, GBS has centralised continuous improvement
expertise across Givaudan’s divisions and regions with a new
CI Centre of Excellence (CoE). Its mission is to leverageknowledge and best practices across Flavours and Fragrances
operations to optimally support management teams andsites with improvement programmes, deliver training andharmonise ways of working across Givaudan globally.
Ultimately, the CI CoE will serve all of Givaudan and its
customers in operations and beyond by continually improving
performance, efficiency, product quality, with all thesefactors contributing to higher customer satisfaction.

John Vernieri, Head of Global Fragrance Operations at
Givaudan, says the Company has always had a culture ofcontinuous improvement: “We constantly aspire to do betterfor our customers. And history proves that we’re pretty goodat it – Givaudan has flourished for 250 years by constantly
adapting. Today our global footprint offers a key competitive
advantage by allowing us to be close to our customers andmarkets. It enables us to custom design our perfume productswith increasingly short lead times.”

Quality and continuous improvement indelivering with excellence

Rudy Niquille, Head of Global Flavour Operations, has witnessed
first-hand the sweeping transformations of technology andinnovations such as SAP on operations. And regardless of thetechnology, he considers excellence in execution as critical tosupporting customer demand for speed, agility and quality –along with consumers’ changing preferences. No matter what
the process or technology, our focus is on satisfying ourcustomers’ requirements along with the increasingly demanding
standards of our industry and our own commitments to safety,
quality, service, cost and sustainability.

To ensure the highest quality and food safety of our products,
we have further strengthened our capabilities by increasing
training in enhanced food safety and visibility of our foodsafety performance globally. We further progressed theintegration of our recent acquisitions into Givaudan’s quality
and food safety systems.

Our Flavour Division is focused on further evolving its strong
quality foundation by engraining a culture of quality andcontinuous improvement. Visible progress has been made in
our quality excellence development programmes through the
deployment of structured assessments determining both thedegree of maturity of our implemented processes and ourcollaborative, problem-solving capabilities.

Givaudan – 2018 Integrated Annual Report

66

Sourcing & operations

Excellence in operations

We have also invested and applied latest hygienic design andfood safety standards in our new facilities in India and China.
Evidence of our efforts in continuous improvement can be seenin the good results of our own risk-based quality metrics acrossthe value chain.
In partnering with customers, we have worked on ways offurther improving our processes of exactly addressing customer
requirements. We have refined our end to end productintroduction processes with features that demonstrate acustomer-centric mindset and agility.
Firstly, we assess the complexity of the formula before
industrialisation, lowering supply and quality defects. Secondly,
we assess the supply risk at an early stage, improving the
preparedness for the first production at a site.
At Givaudan, we continue to reduce the number of supplierdefects and quality risks through our global vendor audit
programme, for which we have commissioned a new ingredientand vendor approval system. In enhancing our quality control
capabilities to protect customers’ brands, our sensory andanalytical capabilities have been further standardised andstrengthened.

Guaranteeing continuity of supply to ourcustomers

Our Fragrance Division supplies about 23,000 exclusive
fragrance references on a make-to-order basis with customer
forecast accuracy that can vary from 25-50%. The ability todeliver on time and at 99% service and quality levels is oneof our greatest strengths. Put simply, managing complexity atworld-class levels is a core competency and a competitive
advantage at Givaudan.
In the second half of 2017 and into 2018, the global fragrance
industry faced an unforeseeable adverse event that createdsignificant supply shortages on key strategic raw materials used
to produce fragrances.
To help meet the challenges of these sorts of events,
Givaudan has built a unique capability to manage a diverse
portfolio of fragrances sold to customers around the world.
This was achieved through a continued focus on systemarchitecture, resulting in a platform that enables Procurement,
Fragrance Ingredients management and Operations to
see where ingredients are used in real time and provides theability to make mass substitutions without endangering
supply or product quality.

Givaudan – 2018 Integrated Annual Report

TESTIMONIAL“ Through one of the most disruptive supply
environments we have seen in three decades,
Givaudan did not have any meaningful supply
disruption or consumer complaint about
product quality. You were the only supplierin the industry for which this was the case andyou should be uniquely proud of the people who
manage your supply chain.”
One of our customers, a large multinational,
commenting on Givaudan’s performance

As customers push the industry for more versatile ingredientsourcing alternatives and robust business continuity plans,
our differentiating value as a partner was made clear by theconfidence placed in us to help our customers through themost difficult times.

Driving excellence across the supply chain

In 2018, we continued the implementation of our 2020
operational plan, aimed at bringing more agility to meetfast-changing customer needs while continuing to reduce our
supply chain costs. The divisional supply chain functions
worked closely together in the design and implementation ofGivaudan Business Solution (GBS), the new organisational
entity that works in partnership with the divisions to ensure
end to end supply chain solutions.
In a context of strong sales and an adverse event with raw
materials, both divisions continued to serve our customers bycoping with challenging requirements and to work on further
improving cost ratios while integrating recent acquisitions.
The fully deployed SAP platform and the tools and processes
developed by the supply chain excellence programme continue
to provide a solid foundation for more advanced supply chain
improvement opportunities.
The strong collaboration between the divisional supply chainorganisations and procurement is resulting in valuable
synergies in risk management, supplier inbound optimisationand transport costs transparency. Collaboration with sales
teams and customers is vital in collecting reliable forecast
information as part of the sales and operations process that is
now a key pillar.

Sourcing & operations

Agility and a customer-centric mindset are central themes toour supply chain journey. Our shared mission is to deliver
superior value to our customers through agile, reliable service
and continuity of supply at optimised cost and with minimal
environmental impact.

Acting for our environment

We believe business has an important role to play in leadingclimate action as their operations have a direct effect on a
global ecosystem that underpins human prosperity and qualityof life. At Givaudan, we are determined to continue playing ourpart in leading the flavour and fragrance industry with actions
that contribute to safeguarding the environment, and we aremaking good progress in our environmental performance.
To this end, we are committed to an ambitious climate action
agenda across our operations and those of our suppliers. We
assess every aspect of our activities and those of our suppliers
to find opportunities to limit our environmental impact,from purchasing 100% renewable electricity to encouraging
zero deforestation.

Targets

Green house gas emissions
Reduce absolute Scope 1 and 2 GHG
emissions by 30% between 2015 and 2030.
Reduce Scope 3 GHG emissions by 20%
over the same time period.
Renewable electricity
100% renewable electricity by 2025.

Water
15% reduction, per tonne of product, by
2020 (use of municipal and groundwater;baseline 2009).

Waste
4% reduction in weight of incinerated andland-filled waste per tonne of product,
year on year on average (baseline 2015).

Excellence in operations

67

Greenhouse gas emissions
Our targets to reduce greenhouse gas (GHG) emissions areapproved by the Science Based Targets initiative and are alignedwith the global effort to limit climate change.
The international Science Based Targets initiative works tosupport and promote corporate best practice in setting targets
in alignment with the 2015 Paris Climate Change conferenceagreement. We have publicly committed to the initiative andbelieve this is a way of demonstrating our industry leadership inclimate action and transition to a low-carbon economy.
As GHG emissions come from our own operations and from ourvalue chain, we have set a 2030 target of reducing by 30%
emissions generated by our production processes (Scope 1) andemissions produced from the electricity and steam we purchase(Scope 2) compared to 2015 levels. We also aim to reduce indirectemissions (Scope 3) by 20% compared to 2015 levels. Scope 3
emissions are all indirect upstream and downstream emissions(not included in Scope 2) that occur in the value chain, hence, weare engaging with our suppliers, for example, to reduce thecarbon footprint of our purchased goods and services.
Our actions concerning Scope 1 focus on reducing emissions
from the combustion of fossil fuels consumed to produce heatand steam at our facilities as well as in the operation of ourvehicles. We have in place a range of actions through which we
can ensure that our targets are met, including site-specificgoals, dedicated employee teams, and educational workshops.
All production sites have site eco-efficiency plans (SEEP), which
set individual eco-efficiency targets to be achieved over a
period of two to three years. This work is supported by Green
Teams, cross-functional groups of volunteer employees at eachsite who identify additional eco-efficiency projects or seek toimprove existing ones. The most successful of these projects
are recognised by the Executive Committee each year and given
an award. In addition, we organise energy saving workshops,
which heighten employee awareness on ways to saveelectricity and on how we can improve performance in termsof emissions, water and waste, and have also had a significant
impact on site performance and efficiency.
We have also implemented the ‘Green Chapter’ for capital
expenditure project proposals. The Green Chapter must include
an outline of the eco-efficiency aspects, a cost/benefit analysis
and elements related to a ‘price on carbon’ concept of the
proposed investment. The implementation of a Green Chapter
is part of every major capital expenditure project. For example,
our new Fragrance Creative Centre and compounding site inSingapore was designed to meet the highest environmental,
health and safety standards and the Singapore Gold standard
for Greenmark.

Givaudan – 2018 Integrated Annual Report

68 Sourcing & operations

Excellence in operations

In our efforts to reduce Scope 2 emissions, we are committed
to ensure that all of the electricity we buy will come fromrenewable sources by 2025. The RE100 initiative to convert our
entire electricity supply to fully renewable sources by this time
is a fundamental element of our comprehensive plan for our
Science Based Target.
As part of this plan, we are investigating various means ofachieving this goal, including the possibility of investing directly
into self-generation of renewable power, power purchaseagreements or purchase of certificates. We are also introducing
significant energy consumption reduction projects across ouroperations and making improvements through the investment
and effort that goes into energy saving workshops and site
eco-efficiency plans.
A specific innovative partnership was created in 2018 aiming
at finding new sources of energy. Givaudan joined theconsortium participating in HyCool, an innovative energy
technology project funded by the European Union with the aimof developing cost-effective solutions using solar heat forindustrial purposes. Our site in Sant Celoni, Spain, which isequipped with sophisticated technology for the productionof fragrance ingredients with a strong focus on sustainability,
was selected as the HyCool project test site for the chemicalindustry. For Givaudan, the project is a unique opportunity towork with leading innovation and technology experts tofurther advance its goal of 100% renewable electricity for its
operations by 2025.

ENVIRONMENTAL STEWARDSHIP

Givaudan is a signatory to the International
Council of Chemical Associations Responsible
Care Global Charter. As a signatory, Givaudan
commits to drive continuous improvement
and achieve excellence in environmental, healthand safety performance.

Givaudan – 2018 Integrated Annual Report

Scope 3 GHG emissions are the biggest source of ourCompany’s overall emissions and represent more than
80% of our whole footprint, with the category ‘Purchased
goods and services’ being the most important one. It is clearthat we need to address this and we are engaging with
our suppliers to reduce the carbon footprint of our purchased
goods and services.
In 2018, we participated for the second year in the CDP Supply
Chain Programme, an effective supplier engagement initiativethat asks our key suppliers to provide data on climate change.
It is a platform that facilitates the data collection andengagement of suppliers. CDP’s Climate Change Questionnaireasks suppliers to identify risks and opportunities associated withclimate change, what their emissions are, details on theiremissions management strategy such as targets, and actions to
reduce emissions. All the data collected will help us create
partnership with our suppliers to put in place collaborative
measures to reduce our emissions, aligned and contributing to
our Scope 3 Science Based Target. An example of action proposal
by a supplier is GHG emissions reduction by changing the delivery
volume and packing type for delivery to larger volumes.
Water and effluents
We strive to be an industry leader in the conservation andstewardship of water, an essential part of our manufacturing
activities as well as in our entire value chain. We seek toconsume and discharge this increasingly precious natural
resource in a socially equitable, environmentally sustainable
and economically beneficial manner.
Our Water Stewardship Programme ensures water risks aremanaged and monitored, and we are placing priority onplaces where challenges concerning water are expected. In
these areas we carry out risk assessments to develop water
mitigation action plans, including efficiency improvements andwater reuse opportunities.
Water is a global challenge but a local issue. At the site level,
we strive to achieve environmental protection that translates
to environmental sustainability on a global basis. Effective
water reduction programmes implemented at our production
sites have enabled us to achieve our 2020 water reduction
target three years in advance, and we are currently assessing
a new target.

Sourcing & operations

Excellence in operations

69

Givaudan also carries out corporate water risk assessments
periodically that allow detailed identification of the water
risks and a specific analysis related to the context at watershed
level. This process applies for operations as well as the supply
chain as they are the most material stages of our value chain interms of water consumption. All Givaudan manufacturing
facilities are included in the water risk assessment and ourmost important suppliers are annually evaluated through the
SEDEX platform and SMETA audits to assess water risks in our
supply chain.
In addition, a corporate water footprint based on ISO 14046
and using a metric-based methodology, has been undertaken
to identify hot spots in terms of country and product, and a
mitigation plan is under development. The project aimed toquantify the total water consumption of Givaudan’s activities;
consider the whole value chain from raw materials growth
to a product’s use and end-of-life; quantify the water scarcity
footprint to highlight water consumption located in water
stressed areas along the value chain; provide a detailed
breakdown of the water footprint to identify main contributors;
and identify water hotspots and physical water risks along thevalue chain to set priorities.
Materials and waste
We work to limit the impact of waste we produce throughfour approaches: reduce, reuse, recycle and recover. We
are reducing the amount we create as a by-product of ourprocesses. We then reuse where possible and recycle to moveaway from disposal in landfill or by incineration. Where waste
is incinerated, we recapture the energy. Our target is to
reduce incinerated and landfilled waste production per tonneof product by an average of 4% year on year against the2015 baseline figure. We are working to meet this objective,
and have made good progress as more than 70% of ourwaste is recycled.
	Our Sustainability Approach	2018 Sustainability Progress Review
	Management Approach (103 – 2): Topic 301, 302, 303, 305, 306,

pages 67 – 69.

Givaudan – 2018 Integrated Annual Report

70

Givaudan – 2018 Integrated Annual Report

71

Good
governanceIn this section
72

Risk management

72– Enterprise Risk Management72– Principles and responsibilities

74– Risk categories

76

Compliance76– Principles of Conduct

77– Organisation and process77– Anti-bribery management78– Training and monitoring

79

Regulatory

79– Regulatory within our Flavour Division79– Regulatory within our Fragrance Division80– Product labelling80– Product safety80– Public policy

81

Corporate citizenship81– Guiding principles on human rights andchild labour82– Community engagement82– Charitable giving

Givaudan – 2018 Integrated Annual Report72 Good governanceRisk management

Risk management
Taking the right risks knowingly

We have robust structures andprocesses in place to ensure theeffective management of risks toour business, and are committed
to the highest ethical standards
in the conduct of our business.
The pace of change has increased markedly in our industry inrecent years, and it is critical that our efforts in risk
management and compliance keep up with and even anticipate
these changes. However, efficiency and effectiveness in theseareas also allows us to identify business opportunities to thebenefit of all stakeholders.

Enterprise Risk Management

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

Givaudan – 2018 Integrated Annual Report

Principles and responsibilities

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

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

Good governance

Givaudan’s ERM contributes to:

Risk management 73–– formulation of the appropriate measures to exploit anopportunity and/or respond to a threat and–– safeguarding Company value and assets and a protectionof shareholder interests–– exploiting strategic opportunities to further create
Company value–– improving awareness amongst all key internal stakeholders of
the nature and magnitude of the Company’s risks–– providing risk-based management information for effective
decision making–– improving compliance with good corporate governanceguidelines and practices as well as applicable laws andregulations.
The annual ERM process includes the following steps:–– a structured and comprehensive identification andcompilation of essential threats and opportunities on thebasis of an overall risk universe, which includes internal andexternal benchmarks–– analysis and assessment of the threats and opportunities
so identified and determination of their likelihood of
occurrence and corresponding impact to understand theunderlying risk drivers–– tracking and reporting of risks and risk response actions.
Givaudan’s management is accountable for ensuring risks areappropriately and adequately identified and analysed in a timely
manner. Risk response actions are taken at individual andcombined levels. Management reports annually on the status of
the risks and risk response actions to the Board of Directors.
The annual assessment and management process iscoordinated by the Corporate Compliance Officer. Corporate
Internal Audit provides assurance on the effectiveness of therisk management process.
At the strategic level, a member of the Executive Committee isdesignated as the risk owner for each top Company risk. He or
she has the responsibility for managing the risk on a Group-widebasis. Risks below the level of top risk are clustered by risk area.
Each cluster also has an Executive Committee member as its
owner, though the actual risks are owned at the appropriate
level of management.
	page 111, 2018 Governance reportEnterprise Risk Management Framework

Board /Audit Committee
Executive Committee

External
assuranceand otherrequirements

1st Line:
Risk ownership

2nd Line:
Functional risk
management support

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

Responsible for identifying,assessing, exploiting/mitigating, monitoring andreporting risk in own area
Implements processes andprocedures in own area–– Regulators–– Sustainability
Expertise in analysing specificrisk categories–– Mandatory
external
financial audit–– Other external
stakeholders

Independent reviews andassurance

Guidance and support for
managing specific risk
categories

Givaudan – 2018 Integrated Annual Report

74Good governance Risk management

Risk categories

In 2018, Givaudan continued monitoring and mitigation of therisks identified in the in-depth risk review process in 2017.

high in purity and yield, using less energy and fewer
hazardous materials. We will continue to develop ourcapabilities in this area and seek to apply them at every
opportunity in the future.

The current major risk areas continue to include the following:
Strategic risks
Business model risk
Our business model might become obsolete, specificallythrough the advent of digitalisation.
Risk of changes in consumer preferences
Consumers may change their preferences for products withfragrances and/or flavours they want to consume and how theyacquire them.
Customer risk
Changes at our customers may change their way of working
with us and may negatively impact our own strategy.
Competition risk
Changes in behaviour of existing competitors or new entrants
may change the competitive landscape, in particular in relation
to new business models. This may impact negatively on
Givaudan’s competitive position in one or more markets.
Givaudan addresses these strategic risks by monitoring thecompetitive landscape, regularly reviewing its own businessmodel and strategy, managing relationships with its customers,
and gathering consumer intelligence.
Sustainability risks
Risk of climate change / water scarcity
Climate change may lead to a number of effects which in turnimpact our ability to operate. These may include water scarcity
at one or more of our manufacturing sites or issues with our
supply, in particular the availability of our key natural resources.
As such, climate change poses a significant risk for Givaudan,
but it also presents an opportunity to adapt its processes andact to mitigate the effects.
We address climate change risk through a comprehensive
programme designed to minimise our impact on climatechange and move to a low carbon economy:–– We are fully committed to excellence in climate action andare implementing an ambitious agenda to take action for theenvironment across our operations and beyond. We havebuilt our climate action agenda on ambitious GHG emission
reduction targets. Givaudan’s targets have been approved by
the independent Science Based Targets initiative in alignment
with the global effort to limit climate change.
–– We continue to work to reduce the environmental impact of
our activities. Our expertise in green chemistry andtechniques such as biocatalysis enables us to make products

Givaudan – 2018 Integrated Annual Report–– Outside Givaudan, we involve our supply chain, from the raw
material suppliers to indirect materials and service providers,in efforts to reduce their GHG emissions.
–– Our innovation teams are also working on ‘side-stream
valuation’, enabling us to use a larger part of the existing raw
materials or re-use ‘food waste’ from our partners’ facilities.
This saves on energy to create raw materials and reduces therisk of sufficient supply, as Givaudan can ‘do more with less’.
–– Our Water Stewardship Programme ensures water risks aremanaged and monitored, and we are placing priority onplaces where water challenges are expected. In these areas
we carry out risk assessments to develop water mitigation
action plans, including efficiency improvements and waterreuse opportunities.
	page 67, Acting for our environment
Disclosure 201 – 2

Operational risks
Disruption / breakdown of operations
A breakdown of our operations may threaten our ability to
produce and deliver quality products/services to competitive
prices on a timely basis. Such breakdown may be caused
by internal or external factors. Givaudan addresses this risk
through a number of processes including structural
architectural measures, behavioural measures and business
continuity planning.
Disruption of supply chains / suppliers
A disruption in the supply of the raw materials we require for our
production or volatility of raw material prices may negatively
impact our ability to produce at competitive prices and in atimely manner. Such disruption may be caused by external
factors such as climate change or a breakdown at one or more of
our suppliers. Givaudan’s procurement function has a process to

POLITICAL RISKS

While political as well as economic
uncertainties are challenging in many parts of
the world, we believe our business model andagility will enable us to continue to evolve andgrow our business, and we remain optimistic
about the outlook.

Good governancemonitor and manage supply chain risks arising from raw
materials. Moreover, supply and price volatility are monitored
through a cross-functional risk management process which is
integrated with global supply chain management and enables us
to mitigate raw materials sourcing risks.
Environment, Health and Safety and operationalrisk management
If Givaudan should operate in a way that is harmful to theenvironment and/or causes community nuisance (odour
emissions, waste water), this could result in fines, reputational
impact or even losing the Company’s licence to operate.
Our Environment, Health and Safety (EHS) function regularly
carries out comprehensive risk assessments at our production
and major commercial sites. In 2018, the EHS Centre ofExpertise continued to refine our process risk analysis
methodology and capabilities in line with leading industry
standards in order to identify actions and manage theminternally using a proprietary EHS Management System withformally documented solutions and closure records. Its main
focus is the chemical and powder handling processes. Also, tofacilitate the management of specific EHS risks, the team hasdeveloped visual risk portfolios that show mitigation measuresand progress on improvement actions.
Givaudan’s growth path of organic expansion and acquisitions
inevitably involves some essential large-scale projects. EHS, asa full team member, is involved from the beginning of eachproject to assess and minimise risks. Our EHS teams support
the design of all new building activities so that, in EHS terms,
the plants we build today use learnings from the past and are fit
for the future. In 2018, a number of new technologies forenvironmental protection in the area of odour emissions
control were successfully tested on our sites.
Information technology risk
In a fast moving digital world, information and communication
technologies are critical for Givaudan to address new consumer
behaviours and to collaborate with its customers to give them
the best experience. However, digitalisation also creates new
threats and requires a permanent monitoring of information
security risks and an extension of the risk assessment scope.
In addition to continuously adapting its information andnetwork systems, Givaudan focuses on extensive awarenessprogrammes for all employees as critical stakeholders in theprotection of the digital space.

Risk management 75

Financial risks
Please consult the Financial report regarding our financial risk
management.
page 139, 2018 Financial report

Legal and regulatory risks
Product quality / product safety risk
A faulty product or one that is not compliant with regulations
or is non-performing could expose Givaudan to consumer
health issues, customer complaints, warranty claims, returns
and re-runs, product liability claims or litigation and lead to lossof revenues, market share and business reputation. Our flavour
and fragrance product safety and quality programmes aredesigned to ensure that all products are safe for consumer use.
At the core of the programmes is a systematic evaluation of all
ingredients for both human and environmental safety, as
required, prior to their inclusion in our raw material palette.
Products are created to comply with all appropriate end
consumer product safety regulations in the markets in which
they will be sold. Our global IT systems control productformulations in order to ensure that raw materials are used asintended when products are manufactured in our production
facilities, which are certified to internationally recognised
quality standards.
In addition, Givaudan supports, and in many cases leads,
industry-wide programmes of the respective industry
associations (the International Fragrance Association and theInternational Organization of the Flavor Industry) for ensuring
the safe use of flavours and fragrances in consumer products.
Legal and compliance risks
Should our employees, especially key individuals within theorganisation (Board members, Executive Committee members,senior management) display or tolerate behaviour that is illegal
or unethical, this could lead to reputational as well as financial
damage to Givaudan. The Corporate Compliance function
undertakes regular assessments of Givaudan’s legal andcompliance risks at local and global levels and addresses any
issues with the Executive Committee and the Audit Committee.
Non-compliant behaviour is investigated and sanctioned inaccordance with comprehensive procedures.
Disclosure 102 – 11, pages 72 – 75

Givaudan – 2018 Integrated Annual Report

76Good governanceCompliance

ComplianceProtecting our reputation

Givaudan’s good reputationand name has been built overa long and rich history.

Principles of Conduct

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

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

Prevent

The basis for Givaudan’s ethical standards is laid out in the
Company’s ‘Principles of Conduct’, last reviewed and updated in
2018. The Principles of Conduct consist of three pillars: Legal &Ethical Business Dealings, Responsible Corporate Citizenshipand Protecting Givaudan’s Assets.

DetectRespondAppropriateorganisationand leadership

Ongoing
assessment ofcompliance risksDuediligence
process

Investigationof compliancecases

Reportingto seniormanagement

Documents,
processes
and systems

People andtraining

CompliancereportingDisciplinary
actions

Process
improvement

Monitoring
and audit

Givaudan – 2018 Integrated Annual Report

Continuous
improvement

Good governanceby Givaudan’s Responsible Sourcing Policy, a code of conduct forour suppliers to ensure that our partners abide by the same highstandards we do. The Responsible Sourcing Policy includes amechanism to report grievances.

Compliance77

Givaudan’s Principles of Conduct

Legal & ethicalbusiness dealings

Compliance with the law andGivaudan policies
Bribery and corruption
Gifts and entertainment	www.givaudan.com – our company – corporate governance –rules and policies www.givaudan.com – our company –corporate governance – compliance

Competition law
Insider dealing
Conflicts of interests
Ethical conduct

Organisation and process

The Compliance and Ethics Programme is based on thecompliance and fraud prevention concept of ‘prevent – detect– respond’. The Corporate Compliance Officer oversees theadministration of the Compliance and Ethics Programme andcoordinates with dedicated functions for effective compliancemanagement.
The Corporate Compliance Officer is assisted by a global
compliance team and a network of local compliance officers
and regional compliance coordinators to further enhance thefunction. The Group Data Protection Officer, reporting to the
Corporate Compliance Officer, oversees the implementationof the Group Data Protection programme. In 2018, we passed
and published a number of policies in the data protection area,
including the Global Privacy and Data Protection Policy.
The Corporate Compliance Officer carries out regularcompliance risk assessments with the local compliance officers
and corporate functions.
The Company has a Group-wide Compliance Helpline
system which allows employees to report suspected or actual
misconduct or violations of the Company’s policies on aconfidential basis and without fear of retaliation. It also hasa grievance mechanism as part of its Responsible Sourcing
Policy to allow suppliers to bring grievances to the attentionof Givaudan.
The Company has a compliance incident investigation
procedure and process in place for investigations of complianceallegations received through any channel. Depending on thenature of the allegations, these cases are handled either locallyor centrally. Where required, outside forensic support is sought.
Other compliance processes include the process for selection andengagement of third-party agents and distributors and the global
supplier selection process of the Procurement organisation.
The Corporate Compliance Officer reports regularly to theBoard of Directors, the Audit Committee of the Board, theExecutive Committee and the CEO.

Responsible
corporate citizenship

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

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

Management of compliance with specific areas of operational
compliance risk such as product safety/regulatory, trade affairs,
environment, and occupational health and safety (EHS) is
ensured by specific dedicated corporate functions.
	Management Approach (103 – 2, 103 – 3): Topic 205, 408, 409,

412, pages 76 – 77

Anti-bribery management

The Principles of Conduct state that Givaudan has zerotolerance towards bribery and corruption, and does not makefacilitation payments.
Most countries where Givaudan operates have strict antibribery laws, including the UK Bribery Act, the US Foreign
Corrupt Practices Act, the French Loi Sapin 2 and anti-bribery
laws and regulations of other countries where Givaudan either
already does business or intends to do so.
Anti-corruption compliance is managed as part of the Givaudan
compliance management system through the following
instruments:–– Corruption is one of the risk areas regularly reviewed
by the Corporate Compliance Officer as part of a compliancerisk assessment.

Givaudan – 2018 Integrated Annual Report

78 Good governanceCompliance–– Corruption and inappropriate gifts and entertainments areprohibited in Givaudan’s Principles of Conduct and they are
addressed in more detail in the Global Anti-Bribery, Gifts,
Entertainment and Hospitality policy, including the reportingof gifts and entertainment. Both documents are available toemployees in all major Company languages.
–– Givaudan has included corruption and gifts/entertainment in
its basic compliance training for all permanent employees andissues specific anti-bribery training to selected employees.
–– Givaudan discloses charitable contributions and sponsorship.
–– As part of monitoring activities, the Compliance Helpline
allows employees to report compliance issues in confidence.
The helpline is open in all sites, and available in all major
Company languages.
–– Givaudan has a procedure for the selection and engagementof agents and distributors, which includes a formal due
diligence review and minimum requirements for agent
contracts and payments. In 2018, the Company worked on
the automation of this process.

Training and monitoring

New mandatory compliance training on the updated Principles
of Conduct was launched in 2017 to all employees worldwide.
The training material is available as online training in all major
Company languages and includes material on anti-bribery,corruption and corporate social responsibility. The completion
rate currently stands at 85%.
Specific anti-bribery training also continued in 2018. Since 2013
5,395 senior managers have completed this training (out of
5,904 invited to take it). This group includes all members of the
Executive Committee and other employees whose work
involves regular and direct contact with external stakeholders.
In 2018 the Company continued to maintain and review its
policies and processes to ensure compliance with changing
applicable law. A focus area for 2018 was the implementation of
the Company’s data protection programme to ensurecompliance with applicable data protection legislation.
Disclosure 205 – 2
	www.givaudan.com – our company –corporate governance – rules and policies	www.givaudan.com – our company –corporate governance – compliance

DATA PROTECTION

Transparency, Compliance and Accountability –these are the pillars on which our Global Data
Protection programme is built. The programmeis designed to ensure that Givaudan collects
and processes data in compliance with allapplicable legislation, in particular with the
new EU General Data Protection Regulation.
To ensure awareness throughout the Company,
all employees are required to complete specificdata protection training.

Givaudan – 2018 Integrated Annual Report

Disclosure 102 – 16, pages 76 – 78
Management Approach (103 – 2, 103 – 3):
Topic 205, pages 77 – 78

Good governanceRegulatory

79

Regulatory
Leading efforts to help shape
the industry landscape
Health and safety is essential forall stakeholders and we ensure
our products are safe for people
and the environment when used
as intended.
We are committed to the full regulatory compliance of all
products and engage with customers in developing newtechnologies for healthier and more sustainable products.
We work hand in hand with our customers to help themunderstand changes in the regulatory environment as well as
the impact these changes will have on their consumer products.

Regulatory within our Flavour Division

As we widen our interest from traditional flavours to areas suchas food stuff and organics, our regulatory teams have beenstrengthened to enable value adding activities for our customers.
These closer partnerships are, for example, helping them in
regulatory interpretations and shaping labelling declarations.
Our offerings in these new areas have been strengthened
through the knowledge and products gained from the Activ,
Vika, Centroflora and Naturex portfolios, increasing ourcapabilities in the domains of naturals and functional
ingredients. We also continued our work during the year tomeet increasing customer demand for flavours that provide
transparent and consumer friendly labels.

200 EMPLOYEESServing customers from over 25 locations, wehave more than 200 employees working inflavour and fragrance regulatory, from scientists
and toxicologists to experts in regulatory affairs.

Significant resources are committed to our advocacy efforts
and we pride ourselves in leading the flavour industry in this.
We know that customers would benefit from a global,
harmonised list of approved ingredients and our advocacy workin 2018 continued towards this goal through the International
Organization of the Flavor Industry (IOFI). In total we work
together actively with over 30 local and regional tradeassociations worldwide and representations in all regions.
The increased testing requirements behind the European Union
regulation concerning the Registration, Evaluation, Authorisation
and restriction of Chemicals (REACH) as well as other regulatory
bodies are resulting in stricter label needs. We have worked toensure minimal disruption to our customers’ businesses by
providing them with timely and supportive communications
which helped them adapt to the required changes.

Regulatory within our Fragrance Division

After ten years of work and an investment totalling
CHF 50 million, Givaudan completed the REACH registration
phase on schedule in 2018. The Company is now fully REACH
compliant and has registered over 300 substances. Workis now focused on defending materials in the evaluation
phase of REACH.
Givaudan has taken an industry-leading position to ensure wework closely with our customers to enable the transparency of
information of our products to consumers. We have, forexample, led fragrance industry external advocacy efforts to
support transparency legislation to be consistent with
California SB 258, working with the Household & Commercial
Products Association to engage stakeholders across the US.
In New York State, we made similar representations regarding
proposals on detergents, and we led the industry in California
with the Personal Care Product Council to support thedevelopment of the Cosmetics Bill banning animal testing.
We also led the industry during the year to help define criteria
for the Brazilian Biodiversity Regulation on the use of fragrance
materials considered of Brazilian origin. Our Regulatory andFragrance Ingredient management teams developedand implemented appropriate processes and controls torespect the use of materials of Brazilian biodiversity in ourcustomers’ products.

Givaudan – 2018 Integrated Annual Report80Good governance Regulatory and public policy

Product labelling

Customers need to manage any environmental, health andsafety (EHS) risks associated with the use of our ingredients andso it is vital we supply the necessary information for the proper
handling of our products.
All the ingredients used in our formulas are evaluated for any
EHS impact and this information is disclosed and filed with therelevant regulatory bodies whenever necessary. Quality andenvironmental data about our products, including safety
information, are available through product labels and safety
data sheets. The safety data sheets are available in more than
45 languages and are attached to every consignment andreadily available to customers on request. For flavour products,
information related to allergen, GMO, organic, nutritional andreligious criteria can be provided.
	Management Approach (103 – 2, 103 – 3): Topic 416, 417

Disclosure 416 – 1

Product information requirements
The following product and service information is required by theorganisation’s procedures for product and service information andlabelling
Topic

Yes

Sourcing

X

Content

X

Safe use

X

DisposalX

No

100% of sold products delivered to our customers are subject toproduct information requirements and regulations.
	
Disclosure 417 – 1Givaudan – 2018 Integrated Annual Report

Product safety

Product safety is of prime importance to Givaudan in ensuring
the safety of employees, customers and consumers, as well as
the environment.
This commitment was recognised with exceptional results infood safety audits at our site in Japan, which received thehighest score in Givaudan so far during audits of the Food
Safety System Certification (FSSC) 22000 and Food Safety
Inspection (FSI). There were no non-conformities in the FSSC
22000 audit and only one minor finding was noted against the
global standard during the FSI audit.
Sophisticated toxicological science is used in the Fragrance
Division to ensure the safety of its materials, deployed forexample in the REACH programme (see page 79). We do not
use animal testing for safety assessments unless required
to do so by law – REACH, for example, required certain
products to be tested in this way. Givaudan is also committed
to further developing non-animal test methods such as our
KeratinoSens™ assay and the development of a fish gill assay fortoxicity assessment in aquatic species. We continue to invest
in this important area.

Public policy

To help ensure the safe use of flavours and fragrances in
consumer products, we support and in many cases lead thedevelopment of public policies that impact the flavour andfragrance industry and work with industry associations suchas the International Fragrance Association (IFRA) and theInternational Organization of the Flavor Industry (IOFI).
We do not fund any political party in any country, and have aninternal policy on charitable giving and community support that
excludes any direct or indirect political donations or support.

Good governance Regulatory and public policy 81

Corporate citizenship
Pursuing socially responsible growth

We are aware of our obligations
in making a difference where we
can within our own operations,with our suppliers and in thecommunities in which we work.
In pursuing socially responsible growth, we are mindful ofour duties and are committed to adhering to the highest
ethical standards in interactions with our stakeholders.
We are committed to respect for human rights wherever
we do business and to provide safe and healthy working
conditions for our employees, contractors and visitors.
We strive to make a positive impact on the communities inwhich we are present.

Guiding principles on human rights
and child labour

Our actions and approach are aligned with international
standards, and we fully support the UN Guiding Principles on
Business and Human Rights.
The basis of our ethical standards, specifically Responsible
Corporate Citizenship, can be found in our Principles of Conduct,
which is supported by policies and guidelines. We expect every
employee to take personal accountability for upholding our
Principles in daily actions within their own sphere of influence
and with business partners and stakeholders.
The initial phase of our three-step Human Rights Impact
Assessment was completed in 2018. An initial high-level impact
assessment conducted by a well-established human rights
consultancy concluded that Givaudan already has a strong
corporate culture and robust systems in place. It also showedthat we are already addressing human rights impacts thatare most salient to our industry, in particular the ones relating

to health, safety or child labour. In addition, the responsible
sourcing projects have a very positive impact on communities
located in sourcing countries. We are currently assessing
the findings of the high-level assessment and in the second
phase, we will consult with stakeholders to be able to takethe steps necessary to further consolidate good practices
throughout our value chain.
Furthermore, Givaudan is an active member of Sedex, aglobal platform which incorporates human rights risks in its
assessments. Since 2010, all manufacturing sites have beenregistered on Sedex and completed Sedex self-assessment
questionnaires, which we review each year. At the end of
2018, 39 of our production sites have been audited and 37 arecompliant with the standards set by the Sedex Members Ethical
Trade Audit (SMETA).1
All forms of child or forced labour are against our principles.
This applies to employment within Givaudan and to thepartners and suppliers with which we work. Our Principles ofConduct stipulate that we do not practice or tolerate any formof child exploitation or forced labour and that we do notprovide employment to children before they have completed
their compulsory education. This applies to employment within
Givaudan and to the partners and suppliers with whom wework. In 2018, we were in compliance with these principles.
For business partners and suppliers, our Responsible Sourcing
Policy specifies that suppliers must not use child labour (orforced labour) and are expected to comply with all reporting
obligations regarding the abolition of child labour and humantrafficking. Significant suppliers are assessed for risk and in
2018, 318 key raw material suppliers were registered with Sedex.
These suppliers represent over 50% of our volume. We areworking to ensure that all audited suppliers have closed any
open non-conformities. At the end of 2018, our supplier audit
compliance rate was 78%.
1. Our recently acquired production sites are not in scope.

	www.givaudan.com – our company – corporate governance –principles of conduct	Management Approach (103 – 2, 103 – 3): Topic 408, 409, 412

Disclosure 408 – 1, 409 – 1, 412 – 1Givaudan – 2018 Integrated Annual Report82 Good governanceCorporate citizenshipCommunity engagement

Communities and neighbourhoods where we operate are
critical to our long-term success. Our business can affectcommunities and these local stakeholders may in turn impact
our activities. We actively develop and sustain relationships
with communities and listen to community representatives
to take their point of view into account, and integrate their
feedback into our sustainability activities.
We promote the evolution of value chain systems into
harmonised multi-stakeholder frameworks that bring benefit
to all and encourage investment in sustainable development
and innovation.
Every precaution is taken to operate safely in thesecommunities while providing social and economic value
and reducing our environmental footprint. As part of thiscommitment we develop and install effective technologies
for odour abatement.
We also believe that each and every employee has thepotential to make a change for the future of our planet andthe well-being of the communities in which we work and live.
The opportunity to make such contributions is available
through our Green Teams which are active in the majority of
our sites. Members of these teams are involved in voluntarysustainability projects in local communities as well as ininternal programmes.
	page 30, Our 2020 Strategy – Communities

Alongside these efforts is the Givaudan Foundation, an
independent non-profit organisation that initiates and supports
projects, as well as grants donations, with a focus on threemain areas in which Givaudan is already engaged and where
the Company’s expertise and experience can be leveraged
to make a difference: communities at source, blindness andfamily nutrition. The Givaudan Foundation works closelywith and relies on resources provided by Givaudan to conductand monitor its projects.
We also contribute positive action to the communities inwhich we source. Further information can be found in ourchapter on sourcing.
	page 64, Communities at Source	Management Approach (103 – 2, 103 – 3): Topic 203, 413
Disclosure 203 – 1, 413 – 1Givaudan – 2018 Integrated Annual Report

GIVAUDAN FOUNDATIONThe Givaudan Foundation is a non-profit
organisation created in 2013 as a result ofGivaudan’s desire to reinforce its commitment
to the communities in which it operates. The
foundation’s purpose is to initiate and support
projects as well as to grant donations in theareas defined by its vision and mission. It works
closely with, and relies on, resources provided by
Givaudan to conduct and monitor its projects.
Charitable giving

Local communities also benefit from our charitable giving.
We monitor this spend at every site and have had anannual budget allocation process for charitable giving for
all our sites since 2012.
This spend is controlled and consolidated by a sustainability
controller. Every site manager is responsible for how thesite budget is spent, and each of these managers has some
freedom to allocate funding to local organisations providing
they comply with Givaudan guidelines and local laws on
non-profit organisations.
In 2018, the total spend on charitable giving for local
communities was CHF 1.8 million.
Disclosure 102 – 16, pages 81 – 82

Good governance Corporate citizenship

83

Givaudan – 2018 Integrated Annual Report

84

Givaudan – 2018 Integrated Annual Report85Compensation
reportIn this section
86 Compensation governance
87

Compensation principles

88 Compensation of Givaudan executives
93

Compensation of the Executive
Committee

94 Compensation of the Board of Directors
96 Share ownership guidelines
96 Ownership of Givaudan securities
97

Report of the statutory auditor

Givaudan – 2018 Integrated Annual Report86Compensation report

Compensation report
Attract, motivate and retain

Givaudan aims to attract,
motivate and retain a diverse
pool of highly talented people tosustain its leadership position
within the flavour and fragrance
industry. The Company’scompensation policies are an
essential component of thisstrategy, and as such a key driverof organisational performance.
Our compensation programmes are aligned to our strategy andreflect the performance of the business and of individuals. We
have rigorous governance, policies and processes to ensure that
our compensation practices are aligned with our principles ofintegrity, fairness and transparency.
This report on compensation, complementing our businessand financial reports, has been prepared in compliance with
the Ordinance against Excessive Compensation at Listed Stock
Companies (OaEC) and with the Directive on Information
relating to Corporate Governance, issued by the SIX Swiss
Exchange. The report also comprises information required
under the Swiss Code of Obligations and takes into accountthe 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 and reviewing compensation policies.
It regularly reviews Company-wide programmes in regard
to base salary, pension and benefit plans. The Compensation
Committee also annually reviews and approves theGivaudan – 2018 Integrated Annual Report

performance targets and related payouts under the annual
incentives and share-based long-term incentives, while theapplicable performance criteria are set by the Board.
The Compensation Committee is also responsible forreviewing and approving individual compensation andbenefits of each Executive Committee member as well asrecommending compensation for the Board.
The Compensation Committee consists of three independent
members of the Board and is currently chaired by Prof. Dr-Ing.
Werner Bauer. The Chief Executive Officer is regularly invited toCompensation Committee meetings. The Head of Global Human
Resources acts as secretary of the Compensation Committee.
The Chairman of the Compensation Committee may invite otherexecutives as appropriate. However, executives do notparticipate in discussions regarding their own compensation.
The Compensation Committee meets three to five times a year
and informs the Board of its deliberations, recommendations andresolutions after each meeting. The minutes of the meetings areavailable to the full Board. The Committee utilises independent
external consultants to benchmark the compensation of senior
management and the Board.
Table I summarises the Compensation Committee standing
agenda items and approvals.
1.2 Specific activities in 2018
As previously reported, the Compensation Committee undertook
a comprehensive review of the Performance Share Plan in 2017.
Accordingly, changes to the PSP payout matrix were introduced
in 2018. Further details are provided in section 3.7.
In 2018 as part of the regular annual process outlined above,
the Compensation Committee reviewed the compensation levels
and decided to implement some changes to the compensation
mix from 2019. The changes have been decided upon withdue consideration of our compensation principles outlined in
section 2. Further information on the rationale for the changes
is detailed in section 3.3.

Compensation report 87

I. Compensation Committee standing agenda items and approval
Timing

Agenda items

Proposed 1

Beginningof yearCompensation 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
Maximum amounts for shareholder voting on
Executive Committee and Board compensation
Long-term incentive achievement
against targets
Compensation of the Executive Committee

CEO 2
Compensation Committee
CEO 2

Compensation Committee
Board of Directors(preliminary) 3
Compensation Committee

CEO 2

Compensation Committee

Mid-year /end of year

Compensation of the Board of Directors

Compensation Committee

Changes to compensation system (if any)
Preview of key items for next year

Compensation Committee
CEO / Compensation Committee

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).

Finally and as indicated in section 3.8, in 2018 Givaudan benefit
plans for all employees were reviewed and changes
implemented to reflect market practice and better ensure
future pension entitlements.
1.3 Governance rules
The Articles of Incorporation of Givaudan include rules on theprinciples applicable to performance-related pay and to theallocation of equity securities, convertible rights and options(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 andpost-employment benefits for the Executive Committee and
Board (Arts. 30 and 31) and the vote on pay at the shareholders’meeting (Art. 26).
Full details on these rules are available on Givaudan’s website:	www.givaudan.com – our company –corporate governance – rules and policies

In line with Givaudan’s Articles of Incorporation, at the 2019
Annual General Meeting the Board will submit the following
maximum aggregate amounts for shareholder approval:–– Compensation of the Board for the period until the 2020
ordinary shareholders’ meeting–– Short-term variable compensation of the Executive
Committee for the 2018 fiscal year (Executive Committee
retrospective vote)–– Fixed and long-term variable compensation of the Executive
Committee for the 2019 fiscal year (Executive Committee
prospective vote)

The calculation approach to be applied for determining theamounts to be approved by shareholders is aligned with theCompensation Report valuation methodologies. Full details of
the amounts to be submitted for approval will be included in
the shareholders’ meeting invitation.
Givaudan will also submit the 2018 Compensation Report to a
consultative vote at the 2019 Annual General Meeting.

2. Compensation principles
2.1 Board of Directors
In order to reinforce their independence in exercising theirsupervisory duties, members of the Board receive fixedcompensation only. They are not eligible to any performance-based
compensation and are not insured in the Company pension plans.
The Board compensation is paid in cash and in the form ofRestricted Share Units (RSUs). RSUs are a right to receive sharesof Givaudan after a three-year blocking period. They link thecompensation with the share price evolution of the Company
and strengthen the alignment with shareholders’ interests.
2.2 Executives and employees
The ability to attract, motivate and retain the right talented
employees globally is key to the continued success of Givaudan.
Our competitive remuneration policy supports this ambition
and is based on the following principles:–– Pay for performance: through our variable pay plans,
employees participate in the Company’s overall success andare rewarded for their contribution to business results.
–– Alignment of interests: Givaudan seeks to align management
and shareholders’ interests by rewarding long-term value
creation through share-based programmes.

Givaudan – 2018 Integrated Annual Report

88 Compensation report–– External competitiveness: overall compensation positioning
should enable Givaudan to attract and retain highly talented
individuals critical to its success.
–– Internal consistency and fairness: internal pay scales reflect
job level, function and geographic market.
Givaudan’s total compensation in 2018 is composed of thefollowing elements:–– Base salary: base salaries are regularly benchmarked in eachlocation and pay scales are reviewed annually according tolocal market evolution. As a general rule, pay scales are built
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 andexecutives globally. It rewards participants for theachievement of financial targets and other organisational
and individual objectives. Depending on the achievement of
performance criteria, payouts can vary between 0% and200% of target payout.
–– Performance Share Plan (PSP): this plan links executives
and selected manager compensation to the evolution of theGivaudan share price and long-term business objectives
through the award of Performance Shares. Depending on theachievement of performance criteria, participants may receive
between zero and two Givaudan shares per performance shareat 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 and disability benefits.
Benefits-in-kind such as Company vehicles are offered tocertain employees according to local market practice.
As illustrated in table II, every Givaudan employee’s
remuneration is linked to Company performance throughcash-based and/or share-based variable pay plans and isaligned with Givaudan’s compensation principles.

3. Compensation of Givaudan executives
3.1 Compensation benchmarking
The compensation of Givaudan executives, in terms of both
structure and level, is regularly benchmarked against individuals
in similar positions within listed European companies that arecomparable in size and international presence. Comparable
companies included in our compensation surveys may consist of:–– Flavour and fragrance companies–– European companies in related industries:›› consumer products›› food and beverage›› speciality chemicals–– Swiss multinational companies of a size similar to Givaudan(excluding the financial services sector).
To the extent that the median size of the peer group ofcompanies differs from Givaudan’s size (taking into accountrevenue, market capitalisation and number of employees),
regression techniques are applied to adjust raw survey results
for strict comparability.

II. Givaudan compensation
Compensation

Participants ³ (number of participants) Payout

Link to compensation principles

Alignment with the business strategy

Base salary

All employees (11,700)

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
success

Profit Sharing Plan

Non-management
employees (7,400)

Cash

Contribution to Groupfinancial objectives

Reward our people toshare in Group profit

Annual Incentive
Plan 1

Manager andexecutives (4,300)

Cash

Contribution tofinancial objectives

Achieve annual organic sales
growth and EBITDA target andindividual performance objectives

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

Alignment of managementwith long-term targets andshareholders’ interests

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

Benefits

Insurances, pension, Protection against risk, attract
fringe benefits
and retain

All employees (11,700)

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.
3. Excluding Naturex employees.

Givaudan – 2018 Integrated Annual Report

Same as base salaryCompensation report 89

All benchmarking activity related to Executive Committee
positions is performed by independent consultants.
Benchmarking for other executive positions is performedinternally by the Compensation unit, using survey data provided
by external consultants. Givaudan’s executive compensation
targets base pay at the market median. Executives havethe opportunity to be rewarded with above-median pay forsustained outstanding performance from a number of variable
compensation components. These variable elements reflectachievements against quantitative targets established by the
Board, as well as the contribution and leadership qualities ofindividual executives. Variable compensation, particularly
long-term components, represents a significant portion ofan executive’s total compensation. The weight of variable
compensation increases with executives’ level of responsibility
and the impact of their position on Company results.
In 2018, Executive Committee compensation was reviewed against
a peer group of other Swiss multinational companies of a size
similar to Givaudan. This peer group consisted of Swiss Leader
Index (SLI) companies, excluding the five largest companies andfinancial services institutions. The benchmark included
19 companies: Adecco, AMX, Aryzta, Clariant, Dufry, Geberit,
Kuehne + Nagel, LafargeHolcim, Logitech, Lonza, Richemont,
Schindler, SGS, Sika, Sonova, Swatch, Swisscom, Temenos andVifor. Consistent with prior external benchmarks, the review
confirmed the positioning against the market remains appropriate.
The findings were cross-validated against its listed European
company comparator group with the finding that Givaudan
compensation positioning appears slightly lower versus theEuropean peer group than the SLI peer group.

Base pay 1■

Short-term incentive 2■MedianLong-term incentive 3
Total compensation–– Direct compensation consists of base salary, annual incentive
and share-based components.
–– Indirect compensation includes retirement coverage, healthbenefits, death and disability protection as well as certain
benefits-in-kind according to local market practice.
Chart IV illustrates the direct compensation mix at target for
Givaudan executives in 2018.
IV. Direct compensation mix policy guidelines
32%

15%

53%

Executive Committee* 34%

15%

51%

CEO

Divisional Committees 43%
Key Functional Heads

55%

Other Executives

65%

15%

42%
15%

30%
15%

20%

* Excluding CEO
Fixed pay

Annual incentive

Performance shares

Table V below illustrates the structure and purpose of the two
incentive schemes.
V. Variable compensation overview

III. Executive compensation benchmark
Below
median3.2 Compensation mix
The total compensation of Givaudan executives consists ofdirect and indirect compensation components.

Above
median■AnnualIncentive Plan

Performance
Share Plan

Participants

Managers
and executives

Key talentand executives

PurposeTo reward managers andexecutives for theachievement of annualorganisationaltargets and overall
individual performance

To link compensation
to shareholder value
creation andachievement of businessobjectives

GrantsAnnual grant

Annual grantVesting

End of each year

3 years

Conditions forvesting

Achievement of annual
EBITDA and sales growthtargets

Achievement relative
sales growth and FCF/
sales targets over 4 years

PayoutCashShares 1■

1. Fixed pay (including pension and other benefits) around median.
2. Annual Incentive Plan (please refer to section 3.6).
3. Performance Share Plan (please refer to section 3.7).

The results confirm that total compensation of the Executive
Committee is overall aligned with the market. The long-term
incentive compensation is positioned above median, which is inline with Givaudan policy and reflects our continued strong
focus on rewarding outstanding performance over the long term.
In 2019, adjustments to compensation mix will be implemented
and, as a result, the respective compensation elements will
generally draw closer to median (see section 3.3).

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

In 2018, independent consulting services have been contractedwith EY regarding Executive Committee compensation topics.

Givaudan – 2018 Integrated Annual Report90Compensation report

3.3 Changes to compensation mix in 2019
As part of the Compensation Committee regular review of
Executive Committee compensation, certain adjustments
to the compensation mix will be introduced in 2019. Thechanges result in a slight rebalancing of long-term variable
compensation into fixed and short-term variable compensation.
The Compensation Committee considered a number of factors,
in particular application of our overriding compensation
principles outlined in section 2.2 and additional factors relevant
to ensuring the overall governance of our compensation
system. Several key factors are as follows:–– External competitiveness: Overall Executive Committee
compensation packages have been identified as being market
aligned, knowing that certain elements are above/below
market. Accordingly, any changes should not result in overall
increases in total target compensation.
–– Pay for performance: Retaining a significant majority of pay
mix in performance-based compensation remains a priority.
Long-term variable compensation should continue to carrysignificant weight. Rebalancing to increase reward potential
for annual performance is strategically aligned.
–– Shareholder voting: The Executive Committee prospective
vote on fixed and long-term variable compensation should
not be increased. Accordingly, any reduction in allocationof Performance Shares will only partially be reallocated intobase salary. In parallel, shareholders directly approve thepayout amounts in the Executive Committee retrospective
vote on short-term variable compensation, such that any
changes to the compensation mix that could result in higher
annual incentive on achievement of annual targets willcontinue to be submitted for approval by shareholders.
The final compensation mix for the Executive Committee will
be disclosed in our 2019 Compensation Report. Indicatively,
fixed pay for the full Executive Committee will increase toapproximately 35% of the total pay mix, annual incentive to 20%
and Performance Shares will be reduced to 45%. Precise changes
to annual incentive at target are detailed in section 3.6 below.
3.4 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 Committeewith absolute discretion to cancel any payouts that would
otherwise be due, including for reasons linked to an individual’s
performance or behaviour. With regard to the PSP, this meansthat any right to receive Givaudan shares at the end of thevesting period will lapse if such a determination is made by theCompensation Committee. In 2018, the Compensation
Committee did not exercise clawback for any current or former
Executive Committee members.

Givaudan – 2018 Integrated Annual Report

3.5 Base salary
Base salaries are established on the basis of the scope andresponsibilities of the function, the external value of the roleand the profile of the incumbent in terms of skills, experienceand individual performance. To ensure market competitiveness,base salaries are reviewed annually. Base salary adjustments(if any) are based primarily on market evolution, taking into
consideration the executive’s performance and contribution toCompany results.
3.6 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 2018, the Annual Incentive Plan for Executive Committee
members was based on the following performance criteria:–– Sales Growth targets in local currencies: 50%–– EBITDA margin targets: 50%
For the purpose of the Annual Incentive Plan, EBITDA isexpressed as a percentage of sales. Measurement at Group levelis considered, except where divisional level is more appropriate
having regard to the members’ scope of responsibility.
Givaudan’s compensation system has been designed foralignment with our Company’s vision and strategy and enshrines
the principles of pay for performance. To provide shareholders
the ability 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’scommercially sensitive, forward-looking information. Provisionof such information, such as relating to Annual Incentive Plan
performance targets, could otherwise put the Company andits shareholders at a competitive disadvantage. Details of
the Performance Share Plan threshold, targets and maximum
are presented in the Compensation Report.
Annual incentive payouts for managers and executives
below the Executive Committee level are based on a mix oforganisational performance objectives, cascaded from
Givaudan Group objectives, and individual performance, taking
into consideration achievement of personal objectives,
day-to-day job responsibilities and the demonstration of
behaviours in line with the Givaudan core values.
Incentive targets, caps and payouts
Expressed as a percentage of base salary, annual incentives
at target were the following in 2018:–– Chief Executive Officer: 80%–– Chief Financial Officer and Division Presidents: 60%–– Other Executive Committee members: 50%

Compensation report 91

are approved each year by the Compensation Committee.
Givaudan applies a policy to cap the maximum value of PSP
allocations. For Executive Committee members the annual total
grant value per member is 2 to 3 times annual base salary.
Performance Shares vest three years from grant date based on
the achievement of performance criteria measured over the
performance period. The operation of the PSP is summarised in
the following diagram.

–– Division Management Committee members: 35% – 50%–– Other executives and managers: 10% – 35%
As indicated above, in 2019 annual incentive targets will
increase for the Executive Committee, being 100% for the
Chief Executive Officer, and ranging from 60% to 80% forother members of the Executive Committee.
Based on the performance achievements, incentive payouts
may vary between 0% and a cap of 200% of target incentive.
Minimum threshold achievement is required, otherwise noannual incentive is paid.
In 2018, sales growth was above target and the EBITDA
was below target. This resulted in an average of 112% oftarget payout for the Chief Executive Officer as well as theother members of the Executive Committee. Table VIsummarises historical annual incentive achievement against
target since 2015.
VI. Historical annual incentive achievement
2018

112%
112%

2017

117%
117%

2016

114%
113%

2015

104%
104%
Executive Committee excluding CEO

Target 100%

CEOVII. Operation of the PSP
Performance criteria

2018

2019

2020

2021

March
Grant date

March
Vesting date

Receiveperformance
shares

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

Performance target setting
Performance is measured on the vesting date based on theextent performance criteria have been met over the previous
four years. Measuring performance over an extended fouryear period is consistent with the long-term outlook of thebusiness. The performance criteria that apply to grants are a
combination of:–– Relative average sales growth as compared to the sales
growth of selected peer group companies; and3.7 Performance Share Plan
Executives and selected management members are eligible toparticipate in the Performance Share Plan (PSP). The PSP is
designed to reward executives and key talent who significantly
influence the long-term success of the business.

–– Cumulative Free Cash Flow (FCF) margin, expressed as apercentage of cumulative sales.

As previously disclosed in the 2017 Compensation Report, in2017 Givaudan undertook a comprehensive review of the PSP in
regards to feedback from shareholders, suitability of the plansince inception and the future direction of the Company. Basedon the review, including consideration of adapting/replacing the
PSP and evolving market practice, Givaudan concluded that theoverall current LTIP design should be retained. It was confirmedthat the PSP is ideally tailored to Givaudan, adhering to ourcompensation principles in particular delivering on the pay for
performance principle. Within the overall design and based on
the above considerations, some adjustments to the performancematrix have been applied and are detailed within this section of
the Compensation Report. Within the PSP, participants are
granted Performance Shares annually. The total number of
Performance Shares granted, and the plan parameters generally,

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, 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%).

The structure of performance criteria calculation has been
specifically designed to be challenging.

In the case of FCF margin, final achievement is calculated as theaverage of the reported FCF margin for each of the four
performance years. This means that the Givaudan’s FCF foreach year of the performance period is summed, and thiscumulative result is divided by the sum of Givaudan’s sales in

Givaudan – 2018 Integrated Annual Report

92Compensation report

each year of the performance period. The assessment overfour years ensures that 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 2018 PSP remain aligned with our 2020
guidance, and within the overall objectives, includes for the
PSP a downward adjustment of FCF margin target to 12%(2017: 14%). In addition to the factors already mentioned, theassessment and target setting take into consideration theimpact of significant investments (Givaudan Business Solutions
implementation and the acquisition of Naturex) and ensuring
targets are appropriately challenging.

FCF margin is 12%. From 2018, an additional payout cap was
introduced, so that the extent to which outperformance on FCF
may counterbalance lower sales growth achievement has been
restricted. Accordingly, in the event relative sales growth isbelow the peer group and FCF margin targets are achieved or
exceed, a cap of at 100% applies.
Participants do not receive any dividends or have any
voting rights in respect of Performance Shares during thevesting period.
In general, Performance Shares lapse on cessation of
employment. In specific circumstances such as death, disabilityor retirement, Performance Shares may vest subject tosatisfaction of the performance criteria. In case of a change ofcontrol, Performance Shares may vest immediately.
IX. Performance Share Plan payout matrix
2.5

Reference test
target setting ¹

Target ²

2014 PSP

2015 PSP

2016 PSP

2017 PSP

10.3%

11.2%

14.5%

13.6%

13%

14%

14%

14%

Average Sales Growthcompared to peer group

VIII. Historical FCF margin vs set target

A payout of 200% would require an achievement level above
the maximum threshold for both criteria.
An achievement level below the minimum threshold on either
measure results in a 0% payout.

100%

0

-1.5

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 sales growth is below zero.

1. Cumulative FCF margin of the related previous 4 years.
2. Four-year target for corresponding PSP.

Share payout caps
Based on the extent that performance criteria are met, theactual number of shares vesting at the end of the performance
period may vary between 0% and 200% of the Performance
Shares initially granted. The level of vesting is dependent on the
combination of performance achievement against both criteria.

200%

Vesting in 2018
The 2015 PSP vested on 31 March 2018 with a 98% payout(2017: 105% payout). This reflects slightly below target
achievement on FCF and slightly above target achievement
on relative sales growth.
For reference, Givaudan tests performance against otherbenchmark metrics, including relative total shareholder return(TSR), and we continue to outperform the market in many
regards. For instance, Givaudan’s TSR measured over recent
four year periods has generally been at or above third quartile
compared to our benchmark peer group.
X. 2015 PSP achievement

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

Criteria

Performance Payout

Average sales growthcompared to peer group+0.1%

Cumulative
FCF / sales *13.6%

A 100% payout can be obtained where a target combination of
the performance criteria is met, such as when relative averagesales growth is in line with the peer group and cumulative*	Formula = Σ (Free cash flow margin reporting year x sales in reporting
currency in year / Σ Sales in reporting currency in year).
** 2014 PSP achievement: 105% of performance shares granted.

Givaudan – 2018 Integrated Annual Report

Payout 98%of performance
shares granted **Compensation report 93

3.8 Benefits
The Executive Committee members participate in the benefits
plans of the Company, consisting mainly of retirement, insurance
and health care plans that are designed to provide a reasonablelevel of protection for the employees and their dependants in
respect of the risks of retirement, ill-health, disability and death.
In 2018, the Givaudan benefit plans were reviewed and changes
implemented to reflect market practice and better ensure future
pension entitlements for our employees, in view of the significant
reductions in pension annuity rates over the last five years.
These general changes will impact the pension accruals reported
for Executive Committee members.
Executive Committee members are also provided with certain
executive perquisites and benefits in kind according tocompetitive market practice. The aggregate monetary value ofthese benefits is evaluated at fair value and disclosed in thecompensation tables.

4. Compensation of the Executive Committee
4.1 Compensation levels in 2018
In 2018, total compensation reported remained stablecompared to 2017 on a per Executive Committee member basis.
In 2018, the overall total Executive Committee compensation
reduced due to the smaller Executive Committee size, i.e. 9.5
full time equivalent members in 2017 versus 7.9 full timeequivalent members in 2018 (including the CEO and taking into

consideration partial year compensation for those members
who left and joined the Executive Committee).
Further details are provided in section 4.6.
Executive Committee member compensation has been set inaccordance with our compensation principles, including
consideration of roles and responsibilities and with reference
to our compensation benchmarks.
4.2 Highest total compensation
The Chief Executive Officer, Gilles Andrier, received the highest
total compensation in 2018. For compensation details, pleaserefer to table XI.
4.3 Other compensation, fees and loans to members
or former members of the Executive Committee
No other compensation or fees were accrued for or paid to
any member or former member of the Executive Committee
during the reporting period. No member or former memberof the Executive Committee or related parties had any loan
outstanding as of 31 December 2018.
4.4 Special compensation of Executive Committee members
who left the Company during the reporting period
Members of the Executive Committee that stepped down
during 2018 did not receive any special compensation as a resultof their departure from the Company. All compensation is
included in the compensation table XI.

XI. Executive Committee compensation summary

in Swiss francs

Gilles Andrier
CEO 2018

Base salary

Executive
Executive
Committee members Committee members
1
Gilles Andrier(excluding CEO)(excluding CEO) 2
CEO 2017
2018
2017

Total
2018

Total
2017

1,058,023

1,045,952

3,194,282

3,970,375

4,252,305

5,016,327

Pension benefits 3

571,766

445,076

947,880

1,048,011

1,519,646

1,493,087

Other benefits 4

139,048

114,688819,837

800,451

958,885

915,139

1,768,837

1,605,716

4,961,999

5,818,837

6,730,836

7,424,553

954,070

977,142

1,824,033

2,513,556

2,778,103

3,490,698

Total fixed compensation
Annual incentive 5
Number of performance shares
granted 6
Value at grant 7

1,446

1,777

3,263

5,549

4,709

7,326

2,882,312

2,881,583

6,504,138

8,998,258

9,386,450

11,879,841

Total variable compensation

3,836,382

3,858,725

8,328,171

11,511,814

12,164,553

15,370,539

Total compensation

5,605,219

5,464,441

13,290,170

17,330,651

18,895,389

22,795,092

Employer social security 8453,000

442,000

988,000

1,413,000

1,441,000

1,855,000

1.	Represents (a) full year compensation of five Executive Committee members, (b) partial year compensation of two outgoing members and c) partial year compensation of the new
Flavour Division President.
2.	Represents full year compensation of eight Executive Committee members and partial year compensation of one outgoing Executive Committee member.
3.	Company contributions to broad-based pension and retirement savings plans and annualised expenses accrued for supplementary executive retirement benefit.
4.	Represents annual value of health and welfare plans, international assignment benefits and other benefits in kind.
5.	Annual incentive accrued in reporting period based on performance in the reporting period.
6.	2018 Performance shares vest on 15 April 2021, 2017 Performance shares vest on 15 April 2020.
7.	Value at grant calculated according to IFRS methodology and based on 100% achievement of performance targets.
8.	2018 estimated social security charges based on 2018 compensation; 2017 estimated social security charges based on 2017 compensation.

Givaudan – 2018 Integrated Annual Report94 Compensation report

4.5 Employment contract termination clauses of Executive
Committee members
Employment contracts of Executive Committee members
have been amended for compliance with the OaEC and ourArticles of Incorporation. Accordingly, contractual entitlements
are within the specified thresholds, in particular the maximum
contractual notice period is six months and any non-competeclause does not exceed 12 months. No additional compensation
or benefits are provided in the case of change in control, except
for long-term incentive awards that may vest immediately.
All contractual arrangements of Executive Committee members
are approved by the Compensation Committee of the Board.
4.6 Compensation voting for Executive Committee members
The compensation paid is within the amounts approved byshareholders in the respective Annual General Meeting.
The fixed and long term variable compensation approved for2018 was CHF 17,000,000 (2017: CHF 19,800,000).
The annual incentive, short term variable compensation
amount for 2018 was CHF 2,778,103 and will be submitted
for approval at the 2019 Annual General Meeting (2017:
CHF 3,490,698).

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

Givaudan – 2018 Integrated Annual Report

XII. 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.

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 amountis paid for the coming year in office. The RSUs are also
granted for the same period.
Board fees are aligned with the total Board compensation
approved by shareholders at the 2018 Annual General Meeting
and with market practice. In 2018 Board member compensation
was benchmarked against a peer group of other Swiss
multinational companies of a size similar to Givaudan. This peergroup consisted of Swiss Leader Index (SLI) companies that
disclose board fee policy information, excluding the five largest
companies and financial services institutions. The benchmark
included 19 companies: Adecco, AMX, Aryzta, Clariant, Dufry,
Geberit, Kuehne + Nagel, LafargeHolcim, Logitech, Lonza,
Richemont, Schindler, SGS, Sika, Sonova, Swatch, Swisscom,
Temenos and Vifor. Consistent with prior external benchmarks,
the review confirmed the positioning 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 withthe highest compensation
The Board member with the highest compensation in 2018
was Calvin Grieder, Chairman of the Board since 22 March 2018.
For compensation details please refer to table XIII.

Compensation report 95

XIII. Board of Directors compensation summary
2018
in Swiss francs

CalvinGrieder
Chairman 5

Victor
Balli 5

Prof. Dr-Ing.
WernerBauer 5

LilianBiner 5

MichaelCarlos 5

IngridDeltenre 5

ThomasRufer 5

Total
20181

Director fees 2400,000

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

292

73

73

73

73

73

73

730

582,044

145,511

145,511

145,511

145,511

145,511

145,511

1,455,110

1,047,044

295,511

310,511

270,511

310,511295,511

300,511 2,830,110

Number of RSUs granted 3
Value at grant 4
Total compensation

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 2021.
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 are indicated on pages 104 – 105 in the Corporate Governance section of the 2018 Integrated Annual Report.

Estimated social security charges based on 2018 compensation amounted to CHF 203,000 (2017: CHF 205,000).

Calvin Grieder
Chairman 5

Victor
Balli 5

Prof. Dr-Ing.
WernerBauer 5

LilianBiner 5

MichaelCarlos 5

IngridDeltenre 5

ThomasRufer 5Dr Jürg
Witmer 6

Total
20171

Director fees 2

325,000

100,000

100,000

100,000

100,000

100,000

100,000

100,000

1,025,000

Committee fees 2

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

Total fixed (cash)

386,250

143,750

165,000

131,250

158,750

150,000

155,000

110,000

1,400,000

2017
in Swiss francs

360

90

90

90

90

90

90

900

Value at grant 4583,776

145,944

145,944

145,944

145,944

145,944

145,944

1,459,440

Total compensation

970,026

289,694

310,944

277,194

304,694

295,944

300,944

Number of RSUs granted 3

110,000

2,859,440

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

5.2 Other compensation, fees and loans to members
or former members of the Board
No additional compensation or fees were paid to any memberof the Board. No Board member or related parties had any loan
outstanding as of 31 December 2018.
5.3 Special compensation of members of the Board who
left the Company during the reporting period
No such compensation was incurred during the reporting period.

5.4 Compensation voting for members of the Board
The compensation paid to the Board members for the period
between the 2017 and 2018 Annual General Meetings(CHF 2,834,440) is again within the amount approved byshareholders at the 2017 Annual General Meeting(CHF 2,950,000). Amounts approved at the 2018 Annual General
Meeting (CHF 2,950,000) will be paid by the end of the year in
office and validated in the 2019 Compensation Report. Suchapproved and paid amounts will differ from those shown in the
Board compensation summary table which, according to the
OaEC, must include compensation paid in the reporting year.

Givaudan – 2018 Integrated Annual Report96Compensation report

6. Share ownership guidelines
Under the share ownership guidelines (Guidelines), Executive
Committee members must hold approximately two times
annual base salary in Givaudan shares (2017 and prior: onetimes annual base salary). In general, the Guidelines should be
met within five years from the beginning of the calendar year
after joining the Executive Committee (2017 and prior: threeyear period applied). As the current Guidelines were updated in
September 2017, transitional arrangements to the Guidelines
are in place for Executive Committee members appointed
before 2016, such that all such members should reach the new
Guideline holding requirement latest 2020.
Ownership of Givaudan shares by Executive Committee
members as per 31 December 2018 is shown in table XIV.

7. Ownership of Givaudan securities

XIV. Executive Committee: ownership of Givaudan securities
2018
in numbers

SharesUnvested
performance shares

Gilles Andrier, CEO

2,400

4,909

Tom Hallam

438

1,304

Louie D'Amico

193

1,131

Maurizio Volpi

1,257

2,350

Simon Halle-Smith

260

1,403

Willem Mutsaerts

440

1,418

Anne Tayac

109

1,261

Total 2018

5,097

13,776

Total 2017

6,154

15,945

7.2 Board of Directors
As per 31 December 2018, the Chairman and other Board
members, including persons closely connected to them held
3,906 Givaudan shares in total. For further details, please referto table XV showing:

7.1 Executive Committee
The Chief Executive Officer and other members of the
Executive Committee, including persons closely connected tothem, held 5,097 Givaudan shares. For further details, pleaserefer to table XIV showing:–– The shares held individually by each Board member as per
31 December 2018.

–– The shares held individually by each member of the Executive
Committee as per 31 December 2018.

The Company is not aware of any other ownership of shares,
share options/option rights, RSUs or Performance Sharesas per 31 December 2018 by persons closely connected tomembers of the Board.

–– The unvested Performance Shares that were granted in
2016–2018 and were still owned by members of the Executive
Committee as per 31 December 2018.
No member of the Executive Committee held any share options
or option rights as at 31 December 2018 (31 December 2017: nomember of the Executive Committee held any share options or
option rights).
One person closely connected to a member of the Executive
Committee owned 279 unvested Performance Shares as at
31 December 2018.
The Company is not aware of any other ownership of shares,
share options/option rights, RSUs or Performance Shares as per
31 December 2018 by persons closely connected to members of
the Executive Committee.

Givaudan – 2018 Integrated Annual Report–– The RSUs that were granted in 2016 – 2018 and were still
owned by members of the Board as per 31 December 2018.

XV. Board of Directors: ownership of Givaudan securities
2018
in numbers

Calvin Grieder, Chairman

SharesUnvested RSUs

210

737

Victor Balli
Prof. Dr-Ing. Werner Bauer

248
1,180

248

587

248

Michael Carlos

1,012

248

Ingrid Deltenre

117

248

Thomas Rufer

800

248

Total 2018

3,906

2,225

Total 2017

3,360

2,041

Lilian Biner

Compensation report 97

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

Report of the statutory auditor
To the General Meeting of GIVAUDAN SA, Vernier
Report of the Statutory Auditor in relation to sections 4 and 5 of the remuneration report in accordancewith the Ordinance against Excessive compensation in Stock Exchange Listed Companies (Ordinance)
We have audited the accompanying compensation report of Givaudan SA for the year ended 31 December 2018. Our audit is limited
to the information provided in sections 4 and 5 on page 93 to 95 in accordance with the articles 14 to 16 of the Ordinance 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 in accordancewith Swiss law and the Ordinance against Excessive compensation in Stock Exchange Listed Companies (Ordinance). The Board of
Directors is also responsible for designing the remuneration system and defining individual remuneration packages.
Auditor’s Responsibility
Our responsibility is to express an opinion on the compensation report. We conducted our audit in accordance with Swiss AuditingStandards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the compensation report complies with Swiss law and articles 14 – 16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the compensation report with regard
to compensation, loans and credits in accordance with articles 14 – 16 of the Ordinance. The procedures selected depend on theauditor’s judgment, including the assessment of the risks of material misstatements in the compensation report, whether due tofraud or error. This audit also includes evaluating the reasonableness of the methods applied to value components ofremuneration, as well as assessing the overall presentation of the compensation report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
OpinionIn our opinion, sections 4 and 5 of the compensation report of Givaudan SA for the year ended 31 December 2018 comply with
Swiss law and articles 14 – 16 of the Ordinance.

Deloitte SA

Karine Szegedi Pingoud 		

Laetitia Cejudo

Licensed Audit Expert
Auditor in Charge

Licensed Audit Expert

Geneva, 23 January 2019

Givaudan – 2018 Integrated Annual Report

98

Givaudan – 2018 Integrated Annual Report

99

GovernancereportIn this section
100

Group structure and shareholders

101

Capital structure

103

Board of Directors

112

Executive Committee

115

Compensation, shareholdings and loans

115

Shareholders’ participation

116

Change of control and defence measures

117

Auditors

117

Information policy

Givaudan – 2018 Integrated Annual Report

100

Governance report

Corporate governance
Ensuring proper checks and balances

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

Givaudan – 2018 Integrated Annual Report

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

Governance report 101

1.1.3 Unlisted companies within the scope of consolidation
The list of principal consolidated companies, their domiciles andthe shareholding is presented in appendix page 208 to theconsolidated financial statements of the 2018 Financial Report.
Note 1 to the consolidated financial statements as well as note
3 to the statutory financial statements offer more details
regarding the structure of the Group. All unlisted subsidiaries
are wholly-owned, unless otherwise indicated in notes 3 and 5
to the statutory financial statements mentioned above. The
2018 Financial Report is printed in English as part of the 2018
Annual Report or can be downloaded on the Company website:	www.givaudan.com – investors –online annual report – download centre
Disclosure 102 – 1, 102 – 2, 102 – 3, 102 – 5, 102 – 45,
pages 100 – 101

2. Capital structure
2.1 Capital on the disclosure deadline
Ordinary share capital
As at 31 December 2018, the Company’s ordinary share capitalamounted to CHF 92,335,860 fully paid in and divided into
9,233,586 registered shares with a par value of CHF 10.00 each.
The market capitalisation of the Company at 31 December 2018
was CHF 21,015,641,736.
2.2 Authorised and conditional capital in particular
Authorised share capital
The Company does not have any authorised share capital.

	

Conditional share capital
The Company’s share capital can be increased by:

1.2 Significant shareholders
To the knowledge of the Company, the following were the only
shareholders holding more than 3% of the share capital ofGivaudan SA as at 31 December 2018 (or as at the date of theirlast notification under article 20 of the Stock Exchange Act):The notifications can be viewed on the following site:	www.six-swiss-exchange.com – market data – shares –givaudan – overview – significant shareholders

The Company has not entered into any shareholder agreementswith any of its significant shareholders.
Significant shareholders
2018

in %

Beneficial owners
William H. Gates III – Cascade Investment

13.86

MFS Investment Management

5.04

BlackRock Inc

5.02

Nominees
Nortrust N ominees Ltd.

15.04

Chase Nominees Ltd.

6.36

Messieurs Pictet & Cie.

4.54

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

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

Givaudan – 2018 Integrated Annual Report102 Governance report

2.3 Changes in capital
The information regarding the year 2016 is available in notes
8 and 9 to the statutory financial statements of the 2016
Financial Report. Details of the changes in equity for the years
2017 and 2018 are given in notes 8 and 9 to the statutoryfinancial statements of the 2018 Financial Report.
2.4 Shares and participation certificates
The Company has one class of shares only. All shares areregistered shares with a par value of CHF 10.00 each. Subject tothe limitations described below, all shares have the same rights
in all respects. Every share gives the right to one vote and to an
equal dividend.
2.5 Dividend-right certificates
Other than the registered shares, dividend-right certificatesand participation certificates do not exist.
2.6 Limitations on transferability and nominee
registrations
2.6.1 Limitations on transferability for each sharecategory; indication of statutory group clauses and rules
for granting exceptions
At the Annual General Meeting of shareholders on
20 March 2014, the previously existing registration and voting
rights restrictions were abolished. Today, the Company nolonger has limitations on transferability of shares.
2.6.2 Reasons for granting exceptions in the year
under review
This is not applicable because the Company has no limitations
on transferability of shares.
2.6.3 Permissibility of nominee registrations; indicationof any percent clauses and registration conditions
Subject to the provisions mentioned in the next paragraph,registration with voting rights in the Company’s shareregister is conditional on shareholders declaring that they
have acquired the shares in their own name and for theirown account.
Based on a regulation of the Board of Directors, nominee
shareholders may be entered with voting rights in the shareregister of the Company for up to 2% of the share capital
without further condition, and for more than 2% if they
undertake to disclose to the Company the name, address,
nationality and number of shares held by the beneficial owners.

Givaudan – 2018 Integrated Annual Report

2.6.4 Procedure and conditions for cancelling statutory
privileges and limitations on transferability
Limitations on transferability and nominee registrations may bechanged by a positive vote of the absolute majority of the sharevotes represented at a shareholders’ meeting.
2.7 Convertible bonds and warrants/options
There are no bonds or warrants outstanding that areconvertible into shares of Givaudan SA.

Governance report 103

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

3. Board of Directors
According to Givaudan’s Articles of Incorporation, the Boardof Directors may consist of between seven and nine members.
Membership of the Board is composed in such a way as toensure it possesses all the competencies required to execute
its strategic oversight and control over Givaudan. Given the
Company’s business and its current strategy of ‘Responsible
growth. Shared success.’, the most relevant and importantcompetencies for the Board include:- in-depth knowledge of the flavour and fragrance industry- international senior business leadership- strategy setting and implementation- financial expertise- innovation and technology (including digital)- sales and marketing- regulatory affairs.

Each of the seven Board members has an in-depth
knowledge of his or her relevant areas of expertise andcontributes to the Board competencies. In addition, theBoard’s knowledge and diversity of experience areimportant assets in leading a company of Givaudan’s sizein a complex and fast-changing environment.
The Board regularly reviews the list of competencies,
including with the help of external expert advisors, and uses
the competencies as a basis for its succession planning.
At the Annual General meeting in March 2018, Calvin Grieder
was re-elected as Chairman. Prof. Dr-Ing Werner Bauer was
re-appointed Vice-Chairman by the Board.

Givaudan – 2018 Integrated Annual Report104 Governance report

3.1 Members of the Board of Directors
As of 31 December 2018, the following were members of theBoard of Directors:

Calvin Grieder
ChairmanEngineer
Swiss national, born 1955 in the USA
Non-executive
First elected in 2014

Prof. Bauer holds the following mandates in companies that arequoted on an official stock exchange: member of the Boards of
Lonza Group AG, GEA Group AG (until November 2018) and SIG
Combibloc AG (since September 2018). He holds the following
mandates in companies that are non-quoted: Chairman of theBoard of Trustees of the Bertelsmann Foundation, vicechairman 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.

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 businessand Member of the Executive Board. He was CEO of theinternational engineering group Bühler from 2001 to 2016.

Victor BalliCalvin Grieder holds the following mandates in companies thatare non-quoted: Chairman of the Board of Bühler Group,
member of the Board of Trustees of Avenir Suisse, owner andmember of the Board of Carivel7 AG, member of the Advisory
Board of the ETH Zurich, Department of Mechanical andProcess Engineering and member of the Foundation Board of
the Swiss Future Fund.

Victor Balli started his professional career in 1985, working asa Financial Analyst & Business Development Manager with
EniChem International SA in Zurich and Milan. From 1991 to 1995,
he worked as a Principal with Adinvest AG, a corporate financeadvisory company with offices in Zurich, San Francisco, New
York, and London. Victor Balli held various positions at Minibar
between 1996 and 2005, most recently as Chief Executive Officer
EMEA as of 2005. From 2007 to 2018 Victor Balli was Chief
Financial Officer and member of the Executive Committee ofBarry Callebaut AG.

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 and Swiss national, born 1950
Non-executive
First elected 2014

Prof. Dr-Ing. Werner Bauer started his career as a university
professor in chemical engineering at the Technical University
in Hamburg, Germany. After serving as the Director of the
Fraunhofer Institute for Food Technology & Packaging and asProfessor in Food Bioprocessing Technology at the Technical
University of Munich from 1985 to 1990, he joined Nestlé as
Head of the Nestlé Research Centre in Lausanne in 1990. After
heading commercially Nestlé South and East Africa he joined
general management as Executive Vice-President in 2002,
responsible for technical, production, environment and R&D.
In 2007 he became Chief Technology Officer and Head of
Innovation, Technology, Research and Development, a position
from which he retired in September 2013.

Givaudan – 2018 Integrated Annual Report

Director

Businessman
Swiss national, born 1957
Non-executive
First elected in 2016

Victor Balli holds the following mandates in companies thatare quoted on an official stock exchange: Member of the Board
of KWS Saat SE, Member of the Board of Ceva Logistics AG(as of May 2018).
He holds the following mandates in companies that are
non-quoted: Member of the Board of the Federal Audit
Oversight Authority (as of January 2018), Member of theSupervisory Board of Louis Dreyfus Company Holding B.V.
(as of May 2018) and Member of the Board of Hemro AG(as of August 2018).
Victor Balli has a Masters in Economics from the Universityof St. Gallen and a Masters in Chemical Engineering from the
Swiss Federal Institute of Technology in Zurich.

Governance report 105

Lilian Biner

Ingrid Deltenre

Businesswoman

Businesswoman

Swedish national, born 1962

Dutch and Swiss national, born 1960

Non-executive

Non-executive

First elected 2011

First elected 2015

Lilian Biner has senior management experience from retail andconsumer goods companies. These posts have most recently
included Chief Financial Officer and Executive Vice President
with Axel Johnson AB in 2007 and Head of Strategic Pricing forElectrolux Major Appliances Europe, a company she joined in2000 as head of HR and Organisational Development.

Ingrid Deltenre has held several executive positions in the press
and media including Director of Publisuisse from 1999 to 2004,
and Director of the leading public TV broadcaster in Germanspeaking Switzerland, Schweizer Fernsehen, from 2004 to
2009. In 2010, she became Director General of the Genevabased European Broadcasting Union (EBU), a position she held
until June 2017.

Director

Lilian Biner holds the following mandates in companies that arequoted on an official stock exchange: Chairman of the Boardof Cloetta AB, member of the Boards of LE Lundbergföretagen
and Nobia AB.
She holds the following mandates in companies that are
non-quoted: member of the Board of a-connect (group) ag.
Lilian Biner is a graduate of the Stockholm School of Economics.

Michael Carlos
Director

Businessman
French national, born 1950
Non-executive
First elected 2015

Michael Carlos started his career with Givaudan in 1984 as
General Manager in Hong Kong. He became Head of theEuropean Creative Centre in Argenteuil in 1992 where he was incharge of integrating the creative resources from Givaudan andRoure. In 1999, he was appointed Global Head of Consumer
Products and then President of the Fragrance Division in 2004,
a position from which he retired in 2014.
Michael Carlos holds the following mandates in companies thatare quoted on an official stock exchange: member of the Boardof Deinove SA. He also holds the following mandates: Chairmanof the International Fragrance Association (IFRA), Chairman of
the Research Institute of Fragrance Materials (until November2018), member of the Board of Manus Bio Inc. and Chairman of
the Board of Scent Design SA.
Michael Carlos holds an MBA from the Indian Institute ofManagement and a degree in chemical engineering from theIndian Institute of Technology.

Director

She holds the following mandates in companies that arequoted on an official stock exchange: member of the Board of
Banque Cantonale Vaudoise, member of the Supervisory Boardof Deutsche Post/DHL, and member of the Board of Sunrise(since April 2018).
She also is a member of the board of Agence France Presse andis a member and chairs the supervisory body of the Executive
MBA of the University of Zurich.
Ingrid Deltenre holds a Master of Arts and a Bachelor ofArts in Journalism and Educational Sciences from the Universityof Zurich.

Thomas Rufer
Director

Certified Public Accountant
Swiss national, born 1952
Non-executive
First elected 2009

Thomas Rufer joined Arthur Andersen in 1976, where he held
several positions in audit and business consulting (accounting,organisation, internal control and risk management). He wasCountry Managing Partner for Arthur Andersen Switzerlandfrom 1993 to 2001. Since 2002, he has been an independent
consultant in accounting, corporate governance, risk
management and internal control.
He holds the following mandates in non-listed companies:
Member of the Swiss Takeover Board. Until 31 December 2017
Chairman of the Board of Directors of the Federal Audit
Oversight Authority.
Thomas Rufer has a degree in business administration(économiste d’entreprise HES) and is a Swiss Certified
Public Accountant.

Givaudan – 2018 Integrated Annual Report106 Governance report

Board of Directors, its committees and election dates 2018

Board of Directors
Calvin Grieder
ChairmanSwissborn 1955
Member since 2014

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

Victor BalliSwissborn 1957
Member since 2016

Lilian Biner
Swedishborn 1962
Member since 2011

Michael Carlos
Frenchborn 1950
Member since 2015

Ingrid Deltenre
Dutch and Swissborn 1960
Member since 2015

Thomas Rufer
Swissborn 1952
Member since 2009

Audit Committee

Compensation Committee

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

Prof. Dr-Ing. Werner Bauer (Chairman), entire year
Ingrid Deltenre, entire year
Victor Balli, entire year

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

Nomination and Governance Committee

Innovation Committee

Calvin Grieder (Chairman), entire year
Ingrid Deltenre, entire year
Michael Carlos, entire year

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

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

Givaudan – 2018 Integrated Annual ReportGovernance report 107

3.2 Other activities and vested interests
Please refer to the biographies of the Board members describedin section 3.1 for their other activities and vested interests.
Except for those described in section 3.1, no Board member ofGivaudan SA holds any material permanent management or
consultancy functions for significant domestic or foreign interest
groups nor any significant official functions or political posts. The
Board of Directors assesses the independence of its members.
As at 31 December 2018, all members of the Board of Directors
were non-executive and, apart from Michael Carlos, all of theBoard members were independent in accordance with article 14of the Swiss Code of Best Practice for Corporate Governance.
None of the Board members has important businessconnections with Givaudan SA or any of its affiliates. Michael
Carlos was President of the Fragrance Division of the Company
until the end of 2014.
3.3 Rules in the Articles of Incorporation on the numberof permitted activities pursuant to Art. 12 para. 1 point 1 of
the Ordinance against Excessive Compensation (OaEC)
Article 32 of the Articles of Incorporation of the Company
permits the following external mandates for members of theBoard of Directors:–– Members of the Board of Directors may not hold more thanfour additional mandates in companies that are quoted on an
official stock exchange and seven additional mandates in
non-quoted companies.
–– The following mandates are not subject to these limitations:›› mandates in companies which are controlled by the
corporation›› mandates held by order and on behalf of the corporation or
any controlled company. No member of the Board of
Directors or of the Executive Committee shall hold morethan ten such mandates›› mandates in associations, foundations, charitableorganisations, trusts, employee welfare foundations andother comparable structures. No member of the Board of
Directors or of the Executive Committee shall hold morethan 15 such mandates.
‘Mandates’ mean mandates in the supreme governing bodyof a legal entity which is required to be registered in the Swisscommercial register or a corresponding foreign register.
Mandates in different legal entities which are under joint
control are deemed one mandate.

3.4 Elections and terms of office
3.4.1 Principles of the election procedure, rules differingfrom the statutory legal provisions with regard to
the appointment of the Chairman, the members of theCompensation Committee and the independent proxy
The Company amended its Articles of Incorporation at theAnnual General Meeting 2014 to align with the new requirementsof the OaEC. The rules regarding the appointment of the
Chairman, the members of the Compensation Committee andthe independent proxy do not deviate from the statutory legal
provisions. All Board members, the Chairman, the members of
the Compensation Committee and the independent proxy areelected annually and individually for one year, being the timefrom one ordinary Annual General Meeting to the next one.
3.4.2 For each Board member: date of first election
to Board and attendance of meetings
For the dates of first election to the Board and attendance ofBoard and committee meetings, please refer to the tables on
pages 106 and 108.
3.5 Internal organisational structure
3.5.1 Allocation of tasks among the Board members
The Chairman is elected annually at the Annual General Meeting.
He prepares the agenda and chairs meetings of the shareholders,convenes, prepares and chairs the meetings of the Board of
Directors, coordinates the work of the Board committees,
prepares and supervises the implementation of resolutions of
the Board of Directors (to the extent not delegated to acommittee), supervises the course of business and the activitiesof 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 other members of the Executive
Committee to the Compensation Committee.
The Chairman receives all invitations and minutes of Committee
meetings and is entitled to attend these meetings. The Chairman
further decides in cases which fall under the tasks and powers of
the Board of Directors, but in which a timely decision of theBoard of Directors cannot be made because of urgency. In suchcases, the Chairman informs the members of the Board of
Directors as quickly as possible and the corresponding resolution
is minuted at the next Board meeting.
If the Chairman is unable to act, the Vice-Chairman exercises
his functions, assuming all his tasks and powers.

Givaudan – 2018 Integrated Annual Report108 Governance report

Meetings: attendance 2018

Number of
Board meetings / calls
attendedNumber of
Audit Committee
meetings attended

Board member

regularregularCalvin Grieder

62

Victor Balli

6

2

Prof. Dr-Ing. Werner Bauer

6

2

Lilian Biner

6

1

Michael Carlos

62

Ingrid Deltenre

62Thomas Rufer

6

extraord.

2

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

2

3extraord.

4

1

4
4

4

3

1
2
4

4

3

2

1

Meetings held in the year

8

5

4

2

3

Average length of meetings

1 – 2 days (regular)

3 to 4 hours

1.5 to 2 hours

1 to 1.5 hour

4 – 8 hours

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 GovernanceCommittee, a Compensation Committee and an Innovation
Committee. Each committee is led by a Committee Chairman
whose main responsibilities are to organise, lead and minutethe meetings. For the participation of the Board members in
the committees, please refer to the table above.

Compensation Committee
The Compensation Committee reviews and recommends thecompensation policies to the Board of Directors. It approves the
remuneration of the Chief Executive Officer and the othermembers of the Executive Committee as well as all performancerelated remuneration instruments and pension fund policies.
Since the Swiss Ordinace against Excessive Compensation cameinto force, the Committee prepares the Compensation Report tobe established by the Board.

Audit Committee
The primary function of the Audit Committee is to assist theBoard in fulfilling its oversight responsibilities by reviewing thefinancial information, the systems of internal controls and theaudit process. It carries out certain preparatory work for the
Board of Directors as a whole. The Audit Committee currently
consists of three members of the Board. All of them have therequisite financial experience.

The Compensation Committee consists of three members of
the Board. The Committee takes advice from external
independent compensation specialists and consults with the
Chairman and the Chief Executive Officer on specific matterswhere appropriate. Since the Annual General Meeting 2014, themembers of the Compensation Committee are elected by theshareholders from the re-elected Board members.

The Audit Committee ensures that the Company’s risk
management systems are efficient and effective. It promotes
effective communication among the Board, management, theinternal audit function and external audit. It reviews andapproves the compensation of the external auditors for theannual audit.
The Audit Committee held four regular meetings in 2018, eachlasting approximately three to four hours. The Head of Internal
Audit, the Chief Financial Officer, the Corporate Compliance
Officer and the External Lead Audit Partner attended all
meetings, apart from certain private sessions. In addition, theAudit committee held one extraordinary meeting to designatea new Head of Corporate Internal Audit.

Givaudan – 2018 Integrated Annual Report

In 2018, the Compensation Committee met four times.
The average duration of each meeting was approximately
1.5 to 2 hours. During these meetings the Committee reviewed,
among other things, the short and long term incentive plan
parameters as well as the alignment of Executive Committee
and Board of Directors compensation with the Company’s
principles and policy. Where appropriate, the Chairman, theChief Executive Officer, the Chief Financial Officer, the Head of
Global Human Resources and/or the Head of Compensation
and Benefits attended the meetings.
	page 86, 2018 Compensation reportGovernance report 109

Nomination and Governance Committee
The Nomination and Governance Committee assists the Board inapplying the principles of good corporate governance. It prepares
appointments to the Board of Directors and the Executive
Committee and advises on the succession planning process of
the Company. It consists of three members of the Board.
The Nomination and Governance Committee met twice during
2018 to prepare changes in the composition of the Board andthe Board committees as well as senior management
succession. It also reviewed the independence of the Board
members. Each meeting lasted between one and one and ahalf hours. Where appropriate, the CEO and the Global Head of
Human Resources attended the meetings.
Innovation Committee
The Innovation Committee advises the Board on scientificmatters relevant to the flavour and fragrance and cosmetics
industry, or other additional fields the Board may request. It
acts as a sounding board to the Board of Directors and research
management, reviewing activities in different fields of research,looking at new opportunities and possible partnerships andreviewing 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 Scienceand Technology.
The Innovation Committee met three times during 2018.
Each meeting lasted approximately four to eight hours on
average. The CEO, the Division Heads and the divisional Heads
of Science and Technology were present. External speakers also
attended the meetings.
More information on the Board of Directors and the roles of
the Committees are described in the following sections ofGivaudan’s website:	w ww.givaudan.com – our company  – management  –
board of directors
	
www.givaudan.com– our company – management  –
board of directors – committees of the board

3.5.3 Work methods of the Board and its Committees
Board meetings are held periodically and also when mattersrequire a meeting, or on the written request of one of themembers of the Board. Ordinary Board meetings are held on
average once a quarter plus one additional ordinary Board
meeting to approve the Annual Report. The Chairman, after
consultation with the Chief Executive Officer, sets the agenda
for each Board meeting. Decisions may also be taken by
circulation (in writing, including by PDF sent by e-mail) or
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, with additional 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 minutes of all Committee meetings are prepared by the
Board secretary and circulated to all Board members.
In preparation for Board and committee meetings, the Board
members involved receive pertinent information for prereading via a secure electronic document sharing system.
In 2018 the Givaudan Board of Directors held six regularmeetings including one constitutive meeting directly following
the general meeting of shareholders. In addition, the Board held
two extraordinary meetings by telephone and passed two
written resolutions by circulation. Regular meetings in
Switzerland usually last for one to one and a half days, while
Board meetings at Givaudan locations outside Switzerland lastfor two to three days, including visits to sites and strategic
locations and discussion with the management of the visited
region. Extraordinary meetings are usually shorter.
In October 2018 the Board visited the newly acquired sites ofExpressions Parfumées and Naturex in France.
Apart from the constitutive meeting directly following thegeneral meeting of shareholders and the extraordinary
meetings by telephone, the Company’s operational andfinancial performance was presented by management andreviewed by the Board during each Board meeting. The Board
was also informed about, and discussed, various aspects of theCompany’s future strategy, all major business development andinvestment projects, management succession planning andcompensation and other major business items as well as thefindings of Internal Audit and risk management. Except for theconstitutive meeting and certain closed sessions, the Chief
Executive Officer, the Chief Financial Officer and the presidentsof the two divisions were present at all meetings. The othermembers of the Executive Committee attended four meetings.
Selected senior managers were invited to address specificprojects at regular Board meetings. The Head of Corporate
Internal Audit and the Corporate Compliance Officer eachreported once to the Board of Directors.
In 2018 the Board conducted one annual self-assessment andhad continuous discussions of its own succession planning.
The attendance of Board members at Board and Committee
meetings in 2018 as well as the average duration of themeetings can be seen in the table on page 108.

Givaudan – 2018 Integrated Annual Report110 Governance report

3.6 Definition of areas of responsibility
The Board of Directors is responsible for the ultimate direction,
strategic supervision and control of the management of theCompany, as well as other matters which, by law, are under its
responsibility. This includes the establishment of medium- andlong-term strategies and of directives defining Company
policies and the giving of the necessary instructions in areas
such as acquisitions, major investments and long-term financial
commitments exceeding certain thresholds.
In accordance with Swiss law, the Articles of Incorporation and
the Board Regulations of Givaudan, the duties of the Board of
Directors include the following matters:–– the ultimate management of the Company and, in particular,
the establishment of medium- and long-term strategies andof directives defining Company policies and the giving of thenecessary instructions–– the establishment of the organisation–– the approval of the annual Group budget–– the structuring of the accounting system and of the financial
controlling, as well as the financial planning–– the assessment of the Company’s risk management–– the decision on investments in, or divestments of, fixed andtangible assets of a global amount exceeding the limit set by
the corporate investment guidelines established by the Boardof Directors–– the appointment and removal of the persons entrusted withthe management and representation of the Company, inparticular the Chief Executive Officer and the other membersof the Executive Committee–– the ultimate supervision of the persons entrusted with the
management, in particular with respect to compliance withthe law, the Articles of Incorporation, regulations andinstructions given in any areas relevant to the Company,
such as working conditions, environmental protection,
trade practices, competition rules, insider dealing and ad
hoc publicity–– 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–– the decisions regarding the subsequent performance ofcontributions on shares not fully paid in

Givaudan – 2018 Integrated Annual Report–– 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 verification of the special professional qualifications of
the auditors.
Except as otherwise provided by Swiss law, the Articles ofIncorporation and the Board Regulations, all other areasof management are fully delegated by the Board of Directors
to the Chief Executive Officer, the Executive Committee andits members.
The Board Regulations can be found at:	www.givaudan.com – our company –corporate governance – rules and policies

3.7 Information and control instruments vis-à-vis
senior management
The Board recognises that in order to be able to carry out its
tasks of ultimate direction of the Company and supervision of
the management, it needs to be fully informed about all
matters that materially impact Givaudan. To ensure this, theBoard has at its disposal an information and control system
which comprises the following instruments:
Management information system
The Board ensures that it has sufficient information for
appropriate decision-making through a management
information system with wide-ranging information rights for
the Board members:–– the Chairman of the Board receives invitations and minutesof Executive Committee meetings on a regular basis and theChief Executive Officer and the Chief Financial Officer report
regularly to the Chairman of the Board of Directors–– the Chief Executive Officer and the Chief Financial Officer arepresent and report at all regular Board meetings and answer
all requests for information by the Board members about any
matter concerning Givaudan that is transacted. Other
members of the Executive Committee and selected senior
managers are regularly invited to address specific projects atregular Board meetings. All members of the Executive
Committee have a duty to provide information at meetings ofthe Board of Directors on request–– the Head of Internal Audit and the Corporate Compliance
Officer report to the Board once a year. The Board also
receives annual reports on Environment, Health and Safety,
Sustainability and Risk Management

Governance report 111–– the Head of Internal Audit and the Corporate Compliance
Officer are present and report 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

Executive Committee. The risk management process follows
a structured assessment, review and reporting cycle that iscoordinated by the Corporate Compliance Officer to ensurea harmonised Group-wide approach.

–– the Head of Human Resources, the Head of Compensation &Benefits and the Chief Executive Officer are present at each
Compensation Committee meeting, except when questionsof compensation for Executive Committee members arebeing deliberated. The Chairman also attends regularly themeetings of the Compensation Committee

For each identified strategic top-level Company risk a member ofthe Executive Committee is designated as the risk owner withthe responsibility to manage the risk on a Group-wide basis.
Once a year the Executive Committee reports to the Board on
the risk management process, the strategic risks and themitigation actions. Corporate Internal Audit provides assurance
on the effectiveness of the risk management process.

–– all Board members have access to all Committee
meeting minutes–– the Board of Directors receives summarised monthly reports
from the Executive Committee, which include performanceagainst key performance indicators. All Board members are
immediately informed on extraordinary events. They also
have direct access to the Givaudan intranet where all internal
information on key events, presentations and organisationalchanges are posted. In addition, the Board members receive
relevant information, including media releases andinformation to investors and financial analysts–– in preparation for each Board meeting, the Board members
receive information and reports from the Executive
Committee and other members of senior management via asecure electronic document sharing system and other meansof communication–– the Board of Directors visits at least one Givaudan country
operation per year, where Board members meet members ofsenior local management. Additionally, Board members areencouraged to visit country operations when travelling andto meet local and regional senior management to allow
Board members the opportunity of getting first-handinformation on local and regional developments andinteracting directly with management across the globe–– the Board has regular access to the Chief Executive Officer,
Chief Financial Officer and the other members of the
Executive Committee. Any Board member may request fromthe Chief Executive Officer and other members of the
Executive Committee information concerning the course of
the business.
Risk management
Givaudan has established an internal risk management processthat is based on the Givaudan Enterprise Risk Management
Charter. It focuses on identifying and managing/exploiting risks.

	pages 72 – 75 , Risk management

Internal audit
The Corporate Internal Audit function is established as anindependent and objective corporate function reporting
directly to the Audit Committee.
Its role is to evaluate and contribute to the continuous
improvement of the Company’s risk management and control
systems. This specifically includes the analysis and evaluation of
the effectiveness of business processes and recommendations
for adjustments where necessary.
Corporate Internal Audit uses a risk-based audit approach
aimed at providing assurance on all relevant business processes
across Givaudan entities. This approach follows a businessprocess audit methodology that provides value to the local
entities and to the Group’s management.
Givaudan corporate strategy, risk management findings, past
audit results, management input, changes in organisation andCorporate Internal Audit experience are the elements taken
into account to build the annual internal audit plan. Effective
communication and reporting ensure an efficient
implementation of the audit recommendations. For specificaudits of affiliates, the internal audit function is supported bydedicated staff from EY. The internal audit activity is reported
to the full Board of Directors once a year.
At the end of 2018, the current Head of Internal Audit retired.
He will be replaced as of January 2019 by an internal successor
following a thorough recruitment process including the
involvement of the Audit Committee.
Disclosure 102 – 18, pages 103 – 111

The Board of Directors defines the strategic risk management
framework. This process is under the responsibility of theGivaudan – 2018 Integrated Annual Report112 Governance report

LtR: Willem Mutsaerts, Louie D’Amico, Tom Hallam, Gilles Andrier, Maurizio Volpi, Simon Halle-Smith, Anne Tayac

4. Executive Committee
The Executive Committee, under the leadership of the Chief
Executive Officer, is responsible for all areas of operational
management of the Company that are not specifically reservedto the Board of Directors.
The Chief Executive Officer is appointed by the Board of
Directors upon recommendation of the Nomination
Committee. Subject to the powers attributed to him, he has thetask of achieving the strategic objectives of the Company anddetermining the operational priorities. In addition, he leads,
supervises and coordinates the other members of the Executive
Committee, including convening, preparing and chairing themeetings 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 theCompany’s strategic as well as long-term business and financial
plans. Key areas of responsibility also include the management
and supervision of all areas of the business development on an
operational basis, and approving investment decisions.

Givaudan – 2018 Integrated Annual Report

The tasks and powers of the Executive Committee include theapproval of investments, leasing agreements and divestments
within the corporate investment guidelines. The Executive
Committee approves important business projects, prepares thebusiness plan of the Company 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 talentmanagement programme, including succession planning for key
positions. Alliances and partnerships with outside institutions,such as universities, think tanks 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, amember of the Executive Committee, heads the Company’ssustainability programme. He is supported by a cross-functional
corporate sustainability steering committee and a sustainability
leadership team made up of internal specialists in corporate
responsibility and sustainability to implement the programme.

Governance report 113

The Head of Global Procurement and Sustainability reports
annually to the Board of Directors on sustainability matters.
The Executive Committee meets generally on a monthly basis
to discuss general Company business and strategy. In 2018, theCommittee held twelve meetings at Company sites around theworld, each meeting lasting between one and two days.
These meetings are an opportunity to interact with local
management and to visit Givaudan locations across the globe.
Each major region is visited at least once a year to ensure aclose interaction with all the different business areas.
4.1 Members of the Executive Committee
At 31 December 2018, the following were members of the
Executive Committee

Gilles 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 Headof Fragrance Operations in the USA and Head of Consumer
Products in Europe. He was appointed Head of Fine Fragrances,
Europe in 2001 before becoming Global Head of Fine Fragrancesin 2003 and then CEO of Givaudan in 2005.
Other mandates held by Gilles Andrier are: independent
non-executive Director of Albea SA and Co-Chairman of theBoard of the Natural Resources Stewardship Circle.
Gilles Andrier graduated with two Masters in Engineering fromENSEEIH Toulouse.

Tom Hallam

Chief Financial Officer

British and Swiss national
Born in 1966
Appointed in 2017

Tom Hallam began his career in the UK working in various
industries and positions. He moved to Switzerland in 1996
to join Serono in Geneva, where he held a number of positionsof increasing responsibility including Financial Director for
Manufacturing Operations, and in 2001 he was appointed
Vice President, Corporate Finance. Tom joined Givaudan in2008 as Group Controller, based in Vernier, Switzerland withresponsibility for financial reporting and compliance, strategicplanning and management of Givaudan’s business development
process. He was appointed Chief Financial Officer effective
1 January 2017.
Tom Hallam graduated from the University of Manchester, UKwith a BA (Hons) in Accounting and Finance and subsequently
qualified as a member of the Chartered Institute ofManagement Accountants.

Louie D’Amico

President Flavour Division

US national
Born in 1961
Appointed in 2018

Louie D’Amico began his career with Givaudan in sales as key
account manager with Tastemaker. On the merger with
Givaudan Roure in 1997, Louie became the Head of the North
America Sweet Goods business unit and later the North
America Savoury business unit. In 2003, he relocated to Europe
as Head of International Key Account Management and thenHead of the Global Beverage business unit. In 2006, Louie
became Commercial Head of EAME. In 2010, he relocated backto the USA as Head of Flavours Americas. Effective 1 April 2018,he was appointed President of the Flavour Division and amember of the Executive Committee.
Louie D’Amico has a BSc in chemistry from Michigan
State University. He has over 28 years of experience in theflavour industry.

Givaudan – 2018 Integrated Annual Report114 Governance report

Maurizio Volpi

Willem Mutsaerts

Italian national

Dutch national

Born in 1969

Born in 1962

Appointed in 2015

Appointed in 2015

Maurizio Volpi began his career in consumer goods with P&G andReckitt 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 Research for 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 the Givaudan Fragrance Division.

Willem Mutsaerts joined Givaudan in 1989, initially withresponsibility for sales in Benelux. He moved on to become
Regional Account Manager for the APAC region in Singapore
before being appointed Head of Global Purchasing for
Fragrances. In 2001, he took commercial responsibility for
Fragrance consumer products in the EAME region, and in2007 was appointed Head of Global Operations Fragrances.
Willem Mutsaerts became Head of Global Procurement and amember of the Executive Committee in October 2015. As of
March 2017, he took on the additional responsibility of head ofGivaudan’s Sustainability programme.

President Fragrance Division

Head of Global Procurement and Sustainability

Maurizio Volpi holds a degree in Economics from the Bocconi
University in Milan, Italy.

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

Simon Halle-Smith

Anne Tayac

British national

French national

Born in 1966

Born in 1968

Appointed in 2015

Appointed in 2016

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

Anne Tayac began her career as a Quality Assurance coordinatorwith 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 relocatedto Vernier in 2003 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 forleading Global Fragrance Operations. She was appointed as
Head of Givaudan Business Solutions (GBS) in August 2016.

Head of Global Human Resources and EHS

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

Givaudan – 2018 Integrated Annual Report

Head of Givaudan Business Solutions

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.

Governance report 115

Changes to the Executive Committee
At the end of March 2018 Mauricio Graber retired from the
Executive Committee and left Givaudan at the end of June 2018.
As of 1 April 2018, Louie D’Amico, until then Head of Flavours
Americas, was appointed President Flavour Division.
4.2 Other activities and vested interests
Please refer to the biographies of the members of the Executive
Committee described in section 4.1 for their other activities andvested interests.
Except for those described in section 4.1, no member ofthe Executive Committee of Givaudan SA holds any material
permanent management or consultancy functions for
significant domestic or foreign interest groups nor any
significant official functions or political posts.
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 external mandates for members of the
Executive Committee:–– members of the Executive Committee may, subject toapproval by the Board of Directors, hold up to two mandates
in quoted or non-quoted companies.
–– the following mandates are not subject to these limitations:›› mandates in companies which are controlled by the
corporation›› mandates held by order and on behalf of the corporationor any controlled company. No member of the Board of
Directors or of the Executive Committee shall hold morethan ten such mandates›› mandates in associations, foundations, charitableorganisations, trusts, employee welfare foundations andother comparable structures. No member of the Board of
Directors or of the Executive Committee shall hold morethan 15 such mandates.
‘Mandates’ mean mandates in the supreme governing bodyof a legal entity which is required to be registered in the Swisscommercial register or a corresponding foreign register.
Mandates in different legal entities which are under joint
control are deemed one mandate.
4.4 Key elements of all management contracts
between the issuer and companies (or natural persons)not belonging to the GroupThe Company has not entered into any management
contracts with third parties that fall within the scope of
Subsection 4.4 of the SIX Directive on Information Relating
to Corporate Governance.

5. Compensation, shareholdings and loans
In accordance with the Swiss Code of Obligations and the SIX
Directive on Corporate Governance, Givaudan publishes thedetails of the remuneration of its Board of Directors and its
Executive Committee in the separate ‘Compensation Report’ inthis Annual Report as well as in the 2018 Financial Report.

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

Disclosure 102 – 18, pages 112 – 115

Givaudan – 2018 Integrated Annual Report116 Governance report

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

Givaudan – 2018 Integrated Annual Report

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.
General Swiss legal provisions apply, which provide that anyone
who acquires more than 33.3% of the voting rights of a listedcompany is required to make a public offer to acquire all listed
securities of the Company that are listed for trading on the SIX
Swiss Exchange.
7.2 Clauses on changes of control
In the event of a change of control, restricted share units(RSU) and performance shares granted, as the case may be,by the Company to members of the Board of Directors and toa total of 457 senior management and employees may vest
immediately. All other defence measures against changeof control situations previously in effect were deleted by the
Board of Directors in 2007.

Governance report 117

8. Auditors

9. Information policy

8.1 Duration of the mandate and term of office of thelead auditor
At the Annual General Meeting of shareholders on 26 March
2009, Deloitte SA was first appointed as Group and statutory
auditor of Givaudan SA and its affiliates and has held the audit
mandate since that time. At the Annual General Meeting ofshareholders on 22 March 2018, Deloitte SA was reappointed as
statutory auditor for the business year 2018. Since March 2016,
the responsible lead auditor for the Givaudan audit at Deloitte
has been Ms Karine Szegedi Pingoud, Partner.

Givaudan’s Principles of Disclosure and Transparency aredescribed in detail at:

The Audit Committee and the Board reconsider on an annual
basis whether the statutory auditors should be proposed for
re-election to the shareholders’ meeting.
8.2 Auditing fees
The fees of Deloitte for professional services related to theaudit of the Group’s annual accounts for the year 2018 were
CHF 3.2 million. This amount includes fees for the audit ofGivaudan SA, its subsidiaries, and of the consolidated financial
statements.
8.3 Additional fees
In addition, for the year 2018, Deloitte rendered tax andcompliance related services for a total of CHF 0.2 million.
8.4 Informational instruments pertaining to theexternal audit
The external auditor presents the outcome of the audit directly
to the Audit Committee after the end of each reporting year.
The Audit Committee is also responsible for evaluating theperformance of Deloitte as external auditors pursuant to a setof defined criteria. In addition, the Committee reviews andapproves the compensation and evaluates and approves otherservices provided by the external auditor. During 2018 Deloitte
attended all four of the Audit Committee meetings.
The scope of the audit is defined in an engagement letter
signed by the Chairman of the Audit Committee and theChief Financial Officer.

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

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

Quarterly sales information and other media releases canbe found at:	www.givaudan.com – media – media releases

All relevant information can also be found at:	www.six-swiss-exchange.com – market data – shares –Givaudan – company details

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

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

Givaudan – 2018 Integrated Annual Report

118

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 119

Financial report

Detailed contents
120

Consolidated financial statements

173

29. Commitments

120

Consolidated Income Statement

173

30. Contingent Liabilities

121

Consolidated Statement of Comprehensive Income

174

31. Related Parties

122

Consolidated Statement of Financial Position

175

32. Board of Directors and Executive

123

Consolidated Statement of Changes in Equity

124

Consolidated Statement of Cash Flows

178

33. List of Principal Group Companies

125

Notes to the consolidated financial statements

180

34. Disclosure of the Process of Risk Assessment

125

1. Group Organisation

180

35. Other information

125

2. Summary of Significant Accounting Policies

181

Report of the Statutory Auditor

138

3. Critical Accounting Estimates and Judgments

181

Statutory Auditor’s Report on the139

4. Foreign Exchange Rates

139

5. Financial Risk Management148

6. Acquisitions

150

7. Segment Information

188

Income Statement152

8. Employee Benefits

189

Statement of Financial Position

158

9. Share-Based Payments

190

Notes to the statutory financial statements

159

10. Jointly Controlled Entities

190

1. General Information

159

11. Other Operating Income

190

2. Summary of accounting principles adopted

159

12. Other Operating Expense

191

3. Subsidiaries

160

13. Expenses by Nature

192

4. Cash and cash equivalents

160

14. Financing Costs

192

5. Jointly Controlled Entities

160

15. Other Financial (Income) Expense, Net

192

6. Debt

161

16. Income Taxes

193

7. Indirect Taxes

163

17. Earnings per Share

193

8. Equity

163

18. Cash and Cash Equivalents

194

9. Own Shares

164

19. Accounts Receivable – Trade194

10. Board of Directors and Executive

164

20. Inventories

165

21. Property, Plant and Equipment

194

11. Other information

166

22. Intangible Assets

195

Appropriation of available earnings

168

23. Investment Property

195

Proposal of the Board of Directors to168

24. Debt

170

25. Changes in liabilities arising

196

Report of the Statutory Auditor

from financing activities

196

Statutory Auditor’s Report on the170

26. Provisions

172

27. Own Equity Instruments

172

28. Equity

Committee Compensation

Consolidated Financial Statements
188

Statutory financial statementsof Givaudan SA (Group Holding Company)

Committee Compensation

the General Meeting of Shareholders

Financial Statements

Givaudan – 2018 Integrated Annual Report

120

Financial report Consolidated financial statements

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

Note

2018

2017

7

5,527

5,051

Cost of sales(3,198)(2,801)Gross profit

2,329

2,250

as % of sales

42.1%

44.5%
(669)

in millions of Swiss francs, except for earnings per share data

Sales

Selling, marketing and distribution expenses(716)

Research and product development expenses

(477)

(424)

Administration expenses

(208)

(178)

Share of (loss) profit of jointly controlled entities

10

5

–

Other operating income

11

63

42

Other operating expense

12

(113)

(152)

Operating income
as % of sales

883

869

16.0%

17.2%

Financing costs

14

(55)

(42)

Other financial income (expense), net

15

(56)

(32)

772

795

16

(109)

(75)

663

720

Income before taxes
Income taxes
Income for the period
Attribution
Income attributable to non-controlling interests–

Income attributable to equity holders of the parent

663

720

12.0%

14.2%

as % of sales
Earnings per share − basic (CHF)

17

71.92

78.18

Earnings per share − diluted (CHF)

17

71.36

77.54

The notes on pages 125 to 180 form an integral part of these financial statements.

Givaudan – 2018 Integrated Annual ReportFinancial report Consolidated financial statements

121

Consolidated Statement of Comprehensive Income
For the year ended 31 December

2018

2017

663

720

Movement in fair value, net(4)3

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

8

5

–

–

in millions of Swiss francs

Note

Income for the period
Items that may be reclassified to the income statement
Cash flow hedges

Movement on income tax

16

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

37

Change in currency translation
Movement on income tax

16

(140)

63

–

–

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

8

162

55

Movement on income tax

16

(35)

(38)

Other comprehensive income for the period

28

88

Total comprehensive income for the period

691

808

Attribution
Total comprehensive income attributable to non-controlling interests–

Total comprehensive income attributable to equity holders of the parent

691

808

The notes on pages 125 to 180 form an integral part of these financial statements.

Givaudan – 2018 Integrated Annual Report

122

Financial report Consolidated financial statements

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

Note

2018

2017

Cash and cash equivalents
Derivative financial instruments
Financial assets at fair value through income statement
Accounts receivable - trade
Inventories
Current tax assets
Prepayments
Other current assets
Current assets
Derivative financial instruments
Property, plant and equipment
Intangible assets
Deferred tax assets
Post-employment benefit plan assets
Financial assets at fair value through income statement
Jointly controlled entities
Investment property
Other long-term assets
Non-current assets
Total assets
Short-term debt
Derivative financial instruments
Accounts payable - trade and others
Accrued payroll and payroll taxes
Current tax liabilities
Financial liability - own equity instruments
Provisions
Other current liabilities
Current liabilities
Derivative financial instruments
Long-term debt
Provisions
Post-employment benefit plan liabilities
Deferred tax liabilities
Other non-current liabilities
Non-current liabilities
Total liabilities
Share capital
Retained earnings and reserves
Own equity instruments
Other components of equity
Equity attributable to equity holders of the parent
Non-controlling interests
Total equity
Total liabilities and equity

5, 18
5
5
5, 19
20
16

423
11
4
1,253
1,098
41
53
238
3,121
2
1,759
3,999
208
22
61
33
2
61
6,147
9,268
4
12
719
178
95
93
24
225
1,350
43
3,266
73
490
238
85
4,195
5,545
92
5,811
(142)
(2,051)
3,710
13
3,723
9,268

534
16
2
1,147
902
32
123
98
2,854
1
1,579
2,482
207
21
63
33
16
53
4,455
7,309
308
12
662
149
49
93
57
195
1,525
60
1,300
67
644
99
76
2,246
3,771
92
5,682
(157)
(2,079)3,538

The notes on pages 125 to 180 form an integral part of these financial statements.

Disclosure 102 – 7Givaudan – 2018 Integrated Annual Report

5
5
21
22
16
8
5
10
23

5, 24
5
5
16
27
26

5
5, 24
26
8
16

28
28
27

3,538
7,309

Financial report Consolidated financial statements

123

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

2018
in millions of Swiss francs

Retainedearnings
Share Capital and reserves

Own equity
instruments

Note

28

28

27, 28

Balance as at 1 January

92

5,682

(157)

Income for the period

Cash flow
hedgesRemeasurement of post
Currency employmenttranslation
benefitdifferences
obligations(65)(1,456)

(558)

663

Dividends paid

(534)

Movement on own equity
instruments, net

3,538
663

Other comprehensive income
for the period

4

(103)

127

4

(103)

127

691

2017
in millions of Swiss francs

(534)

15

5,811

(142)

Retainedearnings
Share Capital and reserves

Own equity
instruments

Note

28

28

27, 28

Balance as at 1 January

92

5,477

(109)

Income for the period(61)

Cash flow
hedgesTotal comprehensive income
for the period

720

Dividends paid

(515)

Movement on own equity
instruments, net

15

92

(515)

(48)

5,682

(157)

13

(519)

13

(506)

(431)

3,710

13

3,723

Remeasurement of post
Currency employmenttranslation
benefitdifferences
obligations

Equityattributable
to equity
holders of
the parents

Noncontrollinginterests

Total equity(1,559)8(73)(1,519)

(575)

8

63

17

8

63

17

(48)

Net change in other equity
items

691
(534)

15

720

Other comprehensive income
for the period

Balance as at 31 December

–

13

92

663
28

(534)
15

Net change in other equity
items

Total equity

3,538
–

28

Non-controlling interests

Balance as at 31 December

Noncontrollinginterests

8

663

Total comprehensive income
for the period

Equityattributable
to equity
holders of
the parents(65)(1,456)

(558)

3,293

3,293

720

720

88

88

808

808

(515)

(515)

(48)

(48)

(563)

(563)

3,538

3,538

The notes on pages 125 to 180 form an integral part of these financial statements.

Givaudan – 2018 Integrated Annual Report

124

Financial report Consolidated financial statements

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

Income for the period
Income tax expense
Interest expense
Non-operating income and expense
Operating income
Depreciation of property, plant and equipment
Amortisation of intangible assets
Impairment of long-lived assets
Other non-cash items- share-based payments- pension expense- additional and unused provisions, net- other non-cash items
Adjustments for non-cash items(Increase) decrease in inventories(Increase) decrease in accounts receivable(Increase) decrease in other current assets
Increase (decrease) in accounts payable
Increase (decrease) in other current liabilities(Increase) decrease in working capital
Income taxes paid
Pension contributions paid
Provisions used
Purchase and sale of own equity instruments, net
Cash flows from (for) operating activities
Increase in long-term debt
(Decrease) in long-term debt
Increase in short-term debt
(Decrease) in short-term debt
Cash flows from debt, net
Interest paid
Purchase and sale of derivative financial instruments, net
Other, net
Cash flows from financial liabilities
Distribution to the shareholders paid
Cash flows from (for) financing activities
Acquisition of property, plant and equipment
Acquisition of intangible assets
Payments for investment property
Acquisition of subsidiaries, net of cash acquired
Proceeds from the disposal of property, plant and equipment
Proceeds from disposal of investment property
Interest received
Dividends received from jointly controlled entities
Purchase and sale of financial assets at fair value through income statement, net
Impact of financial transactions on investing, net
Other, net
Cash flows from (for) investing activities
Net increase (decrease) in cash and cash equivalents
Net effect of currency translation on cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
The notes on pages 125 to 180 form an integral part of these financial statements.
Givaudan – 2018 Integrated Annual Report

Note

16
14
14, 1521
22
21, 22

8
26

8
26

25
25
25
25
25
25
25
28
21
22
23
6
21
23

18
18

2018

2017

663
109
42
69
883
127
125
10

720
75
29
45
869
114
104
2

38
39
(7)
(43)
289
(9)
(72)
(35)
(11)
38
(89)
(73)
(46)
(25)
(23)
916
1,971
(258)
2,345
(2,620)
1,438
(29)
(22)
(5)
1,382
(534)
848
(239)
(55)

35
14
69
(52)
286
(107)
(125)
(29)
136
12
(113)
(73)
(53)
(10)
(45)
861
350
(17)
670
(705)
298
(24)
–
(7)
267
(515)
(248)
(191)
(53)
(1)
(224)
2

(1,694)
110
14
2
4
5
(3)
(3)
(1,859)
(95)
(16)
534
423

3
2
–
35
(2)
(429)
184
22
328
534

Financial report Notes to the consolidated financial statements 125

Notes to the consolidated financial statements
1. Group Organisation

Givaudan SA and its subsidiaries (hereafter ‘the Group’) operate under the name Givaudan. Givaudan SA is a limited liability
company incorporated and domiciled in Switzerland. The Group is headquartered in Vernier, near Geneva, Switzerland.
Givaudan is a leading supplier of creative fragrance and flavour products to the consumer goods industry. It operates in over
100 countries and has subsidiaries and branches in more than 40 countries. Worldwide, it employs 13,598 people. A list of theprincipal Group companies is shown in Note 33 to the consolidated financial statements.
The Group is listed on the SIX Swiss Exchange (GIVN).

2. Summary of Significant Accounting Policies

The significant accounting policies applied in the preparation of these consolidated financial statements are set out below.
These policies have been consistently applied to all years presented, unless otherwise stated.
2.1 Basis of Preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS)
as issued by the IASB and Swiss law.
They are prepared under the historical cost convention as modified by the revaluation of financial assets and financial liabilities atfair value through the income statement, and of own equity instruments classified as derivatives. Historical cost is generally basedon the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sellan asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardlessof whether that price is directly observable or estimated using another valuation technique.
The preparation of the consolidated financial statements requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, andreported amounts of revenues and expenses during the reporting period. It also requires management to exercise its judgmentin the process of applying the Group’s accounting policies. Critical accounting estimates and judgments are disclosed in Note 3.
Givaudan SA’s Board of Directors approved these consolidated financial statements on 23 January 2019.
2.1.1 Changes in Accounting Policies and Disclosures Standards, amendments and interpretations effective in 2018
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2017,
as described in the 2017 consolidated financial statements, with the exception of the adoption as of 1 January 2018 of the standards
described below:
IFRS 9 Financial Instruments (as revised in 2014). The Group has early adopted this standard in 2016.
IFRS 15 Revenue from Contracts with Customers. IFRS 15 deals with revenue recognition and establishes principles for reporting
useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows
arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service
and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces existing revenue
recognition guidance including IAS 18 Revenues, IAS 11 Construction Contracts and IFRIC 13 Customers Loyalty Programme.
The Group has evaluated the impact of this standard. Contracts with customers relate primarily to the delivery of manufactured
products and molecules of fragrance and flavour to the agreed upon specifications and may contain additional performanceobligations for certain clients such as the assignment of specific application technologies, joint market research and particular
stock conditions. Most of these additional performance obligations are not distinct because they are highly dependent on thedelivery of manufactured products and molecules of fragrance and flavour. Generally, the transaction price includes estimating
variable consideration such as rebates granted to customers.
The adoption of this standard and interpretation did not impact the consolidated financial statements, and it did not require
retrospective adjustments.

Givaudan – 2018 Integrated Annual Report126 Financial report Notes to the consolidated financial statements

Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions clarify the accounting forcash-settled share-based payment transactions that include a performance condition, the classification of share-based paymenttransactions with net settlement features, and the accounting for modifications of share-based payment transactions fromcash-settled to equity-settled. The adoption of these amendments has no impact on the current share-based payments
programmes held within the Group.
Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts do not change the impact of
the earlier adoption of IFRS 9 as the Group is not affected by IFRS 4.
Amendments to IAS 40: Transfers of Investment Property reinforce the principle for transfers into, or out of, investment
property under IAS 40. These amendments are not relevant for the Group.
Annual Improvements to IFRS Standards 2014 – 2016 Cycle set out amendments across three different standards, related basis
for conclusions and guidance, out of which two are effective in 2018, namely amendments to IFRS 1 First-time Adoption ofInternational Financial Reporting Standards and amendments to IAS 28 Investments in Associates and Joint Ventures. These
amendments are not relevant for the Group.
IFRIC 22: Foreign Currency Transactions and Advance Consideration sets out requirements about which exchange rate touse when recording a foreign currency transaction on initial recognition in an entity’s functional currency. The adoption of thisinterpretation does not change the current practice applied by the Group.
2.1.2. IFRSs and IFRICs issued but not yet effective
New and revised standards and interpretations, issued but not yet effective, have been reviewed to identify the nature of the
future changes in accounting policy and to estimate the effect of any necessary changes in the consolidated financial statements
and supporting notes upon their adoption.
a) Issued and effective for 2019
IFRIC 23 Uncertainty over Income Tax Treatments clarifies the accounting for uncertainties in income taxes. The clarification
confirms the current practices of the Group.
Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures clarify that an entity must apply IFRS 9 Financial
Instruments to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint
venture but to which the equity method is not applied. The adoption of these amendments has no impact on the joint
arrangements currently held by the Group.
Amendments to IFRS 9: Prepayment Features with Negative Compensation address the concerns about how IFRS 9 Financial
Instruments classifies particular prepayable financial assets. These amendments are not relevant as the Group does not enter insuch particular instruments.
Annual Improvements to IFRS Standards Cycle 2015 – 2017 set out amendments across four different standards, related basis forconclusions and guidance, namely amendments to IFRS 3 Business Combinations and IFRS 11 Joint Arrangements , IAS 12 Income
Tax and IAS 23 Borrowing Costs. These amendments are not relevant for the Group.
Plan Amendment, Curtailment or Settlement: Amendments to IAS 19 state that if a plan amendment, curtailment or settlement
occurs, it is now mandatory that the current service cost and the net interest for the period after the remeasurement are
determined using the assumptions used for the remeasurement. It also clarifies the effect of a plan amendment, curtailment or
settlement on the requirements regarding the asset ceiling. The clarification confirms the current practice of the Group.

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 127

IFRS 16 Leases provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases, andlessors to confirm the continuation of classifying leases as operating or finance. The Group is not a lessor and is impacted by thestandard only for the lessee accounting.
At inception of a contract, the Group assesses whether it is or contains a lease. The Group recognises a right-of-use asset and acorresponding lease liability with respect to all lease agreements, except for short-term leases, defined as leases with a lease termof 12 months or less, which are recognised on a straight-line basis as expense in profit or loss.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,discounted by using the implicit borrowing rate and if not available the incremental borrowing rate, which is defined as theinterest rate that the Group would have to pay to borrow, over a similar term and with a similar security, the funds necessary toobtain an asset of a similar value to the right-of-use asset in a similar economic environment.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability, by reducing
the amount to reflect lease payments made, and by 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 right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before
the commencement day and initial direct costs. They are subsequently measured at cost less accumulated depreciation andimpairment losses, and adjusted for any remeasurement of the lease liability. They are depreciated over the shorter period of leaseterm and useful life of underlying asset. The right-of-use-assets are presented on the consolidated statement of financial positionin the line property, plant and equipment.
All lease payments on leases are presented as part of cash flows from financing activities.
The Group will apply the standard from its mandatory adoption date of 1 January 2019. The Group will apply the simplified
transition approach and will not restate comparative amounts for the year prior to first adoption.
During 2018, the Group performed a detailed impact assessment of the implementation of IFRS 16. As at 31 December 2018, theGroup has non-cancellable operating lease commitments of CHF 377 million (Note 29) and finance leases of CHF 11 million with acorresponding lease liability of CHF 7 million. Based on the impact assessment, the Group estimates to recognise right-of-use
assets of CHF 226 million and a lease liability of CHF 226 million on 1 January 2019.
b) Issued and effective for 2020 and after
IFRS 17 Insurance Contracts establishes the principles for the recognition, measurement, presentation and disclosure of insurance
contracts. The standard is not relevant for the Group as it does not operate in the insurance business.
Amendments to IFRS 10 and IAS 28: Sales or Contribution of Assets between an Investor and its Associate or Joint Venture
clarify that in a transaction involving an associate or joint venture the extent of gain or loss recognition depends on whether theassets sold or contributed constitute a business. The adoption of these amendments has no impact on the accounting of the joint
arrangements currently held by the Group.
Definition of Material: Amendments to IAS 1 and IAS 8 align the definition used in the Conceptual Framework and the standards
themselves. The clarification does not impact the current practice of the Group.
Definition of Business: Amendments to IFRS 3 narrow and clarify the definition of a business. They also permit a simplified
assessment of whether an acquired set of activities and assets is a group of assets rather than a business. The amendments do not
impact the current practice of the Group.

Givaudan – 2018 Integrated Annual Report

128

Financial report Notes to the consolidated financial statements

2.2 Consolidation
The subsidiaries that are consolidated are those companies controlled, directly or indirectly, by Givaudan SA. The Group controls anentity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability toaffect those returns through its power over the entity. The Group reassesses whether or not it controls an investee if there areindications of a change in facts and circumstances.
Companies acquired during the year are consolidated from the date on which operating control is transferred to the Group, andsubsidiaries to be divested are included up to the date on which control passes to the acquirer.
The acquisition method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured
as the fair value of the assets acquired, shares issued and liabilities undertaken or assumed at the date of acquisition. Identifiable
assets acquired and liabilities and contingent liabilities assumed are measured initially at their fair values at the acquisition date.
Acquisition related costs are expensed as incurred. The excess of the cost of acquisition over the fair value of the Group’s share of
net assets of the subsidiary acquired is recognised as goodwill.
Where necessary, changes are made to the accounting policies of subsidiaries to bring and ensure consistency with the policies
adopted by the Group.
Assets and liabilities, equity, income, expenses and cash flows resulting from inter-company transactions are eliminated in fullon consolidation.
2.3 Interest in a Joint Venture
A joint venture is a joint arrangement whereby the Group and other parties that have joint control of the arrangement have rights
to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which
exists when the strategic, financial and operating decisions relating to the activities of the joint venture require the unanimous
consent of the parties sharing control.
The results and assets and liabilities of joint ventures are incorporated in the consolidated financial statements using the equity
method of accounting until the date on which the Group ceases to have joint control over the joint venture. Under the equity
method, an investment in a joint venture is initially recognised at cost and adjusted thereafter to recognise the Group’s share of
the income statement and the other comprehensive income of the joint venture. Adjustments are made where necessary tobring the accounting policies in line with those adopted by the Group. Unrealised gains and losses on transactions between theGroup and a jointly controlled entity are eliminated to the extent of the Group’s interest in the joint venture.
2.4 Foreign Currency Valuation
2.4.1 Functional and presentation currency
Items included in the financial statements of each entity in the Group are measured using the functional currency of that entity.
The functional currency is normally the one in which the entity primarily generates and expends cash. The consolidated financial
statements are presented in millions of Swiss francs (CHF), the Swiss franc being the Group’s presentation currency.
2.4.2 Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of thetransactions, or using a rate that approximates the exchange rates on the dates of the transactions. Foreign exchange gains andlosses resulting from the settlement of such transactions and from the translation at the reporting period-end rates of monetary
assets and liabilities denominated in foreign currencies are recognised in other financial income (expense), net, except for:–– Exchange differences deferred in equity as qualifying cash flow hedges on certain foreign currency risks and qualifying net
investment hedges;

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 129–– Exchange differences on monetary items to a foreign operation for which settlement is neither planned nor likely to occur,
therefore forming part of the net investment in the foreign operation, which are recognised initially in other comprehensive
income and reclassified from equity to the income statement on disposal of the net investment or on partial disposal when
there is a loss of control of subsidiary or a loss of joint control over a jointly controlled entity; 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 to interest costs on those foreign currency borrowings.
Non-monetary items that are measured in terms of historical cost in foreign currencies are not retranslated.
2.4.3 Translation of the financial statements of foreign subsidiaries
For the purpose of presenting consolidated financial statements, the assets and liabilities of Group companies reporting incurrencies other than Swiss francs (foreign operations) are translated into Swiss francs using exchange rates prevailing at the endof the reporting period. Cash flows, income and expenses items of Group companies are translated each month independently at
the average exchange rates for the period when it is considered a reasonable approximation of the underlying transaction rate.
All resulting exchange differences are recognised in other comprehensive income and accumulated in equity.
2.4.4 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 thechange in a general price index.
2.5 Segment Reporting
The operating segments are identified on the basis of internal reports that are regularly reviewed by the Executive Committee,
the members of the Executive Committee being the chief operating decision makers, in order to allocate resources to thesegments and to assess their performance. The internal financial reporting is consistently prepared along the lines of the two
operating divisions: Fragrances and Flavours.
The business units of each division, respectively Fine Fragrances, Consumer Products, and Fragrance Ingredients and Active Beauty
for the Fragrance Division and Beverages, Dairy, Savoury, Sweet Goods and Natural Ingredients for the Flavour Division, are notconsidered as separately reportable operating segments as decision making about the allocation of resources and the assessmentof performance are not made at this level.
Inter-segment transfers or transactions are set on an arm’s length basis.
Information about geographical areas is determined based on the Group’s operations; Switzerland, Europe, Africa and Middle East;
North America; Latin America and Asia Pacific. Revenues from external customers are shown by destination and by segment.
2.6 Revenue from Contracts with Customers
The Group manufactures and sells manufactured products 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 notdistinct because they are highly dependent on the delivery of manufactured products and molecules of fragrance and flavour.
Sales are recognised when control of the goods has transferred, being when the goods are delivered 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 the goods. Delivery occurs when the customer has accepted the goods in accordance with the sales contract, theacceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

Givaudan – 2018 Integrated Annual Report

130

Financial report Notes to the consolidated financial statements

The goods are often sold with volume discounts based on aggregate sales over a 12 months period. Revenue from these sales isrecognised based on the price specified in the contract, net of the estimated volume discounts provided that it is highly probablethat a significant reversal will not occur. No element of financing is deemed present as the sales are made with credit terms thatare consistent with market practice.
A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because
only the passage of time is required before the payment is due.
2.7 Research and Product Development
The Group is active in research and in formulas, technologies and product developments. In addition to its internal scientificefforts, the Group collaborates with outside partners.
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Internal developments or developments obtained through agreements on 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 bemeasured reliably. When the conditions for recognition of an intangible asset are not met, development expenditureis recognised in the income statement in the period in which it is incurred.
2.8 Employee Benefit Costs
Wages, salaries, social security contributions, annual leave and paid sick leave, bonuses and non-monetary benefits are expensed
in the year in which the associated services are rendered by the Group’s employees.
2.8.1 Pension obligations
A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement,
principally dependent on an employee’s years of service and remuneration at retirement. Plans are usually funded by paymentsfrom the Group and employees to financially independent trusts. The liability recognised in the statement of financial positionis the aggregate of the present value of the defined benefit obligation at the statement of financial position date less the fairvalue of plan assets. Where a plan is unfunded, only a liability representing the present value of the defined benefit obligation isrecognised in the statement of financial position. The present value of the defined benefit obligation is calculated by independentactuaries using the projected unit credit method twice a year, at interim and annual publication. This reflects the discounted
expected future payment required to settle the obligation resulting from employee service in the current and prior periods. The
future cash outflows incorporate actuarial assumptions primarily regarding the projected rates of remuneration growth, andlong-term indexation rates. Discount rates, used to determine the present value of the defined benefit obligation, are based on
the market yields of high quality corporate bonds in the country concerned. Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period
in which they arise. Past service costs are recognised immediately in the income statement. Pension assets and liabilities indifferent defined benefit schemes are not offset unless the Group has a legally enforceable right to use the surplus in one plan
to settle obligations in 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 arecharged 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 in service up to retirement age and completing a minimum service period.
The expected costs of these benefits are accrued over the periods in which employees render service to the Group.

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 131

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

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Financial report Notes to the consolidated financial statements

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

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 133

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

Givaudan – 2018 Integrated Annual Report134 Financial report Notes to the consolidated financial statements

2.13.1 Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in
the cash flow hedge reserve within other comprehensive income, limited to the cumulative change in fair value of the hedged item
on a present value basis from the inception of the hedge. The gain or loss relating to the ineffective portion is immediately
recognised in financing costs in the income statement.
Amounts accumulated in equity are reclassified to the income statement in the periods when the hedged transaction affects theincome statement, in the same line as the recognised hedged item. However, when the hedged forecast transaction results in therecognition of a non-financial asset or liability, the amounts are transferred from equity and included in the initial measurement of
the cost of the non-financial asset or liability.
When forward contracts are used to hedge forecast transactions such as future debt issuance, management assumes that thesources of hedge effectiveness in regards of the characteristics of the hedging relationship is sufficiently immaterial to exclusively
perform a qualitative assessment.
When the hedging instrument expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the ultimate
forecast transaction occurs. If the forecast transaction is no longer expected to occur, any cumulative gain or loss existing in equity
is immediately taken to the income statement.
2.13.2 Derivatives at fair value through the income statement
Certain derivative instruments do not qualify for hedge accounting and are accounted for at fair value through the income
statement. At each statement of financial position date these derivative instruments are valued at fair value based on quoted
market prices, with the unrealised gain or loss recognised in the income statement. They are derecognised when the Group has
lost control of 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 a weighted average cost formula.
The cost of finished goods and work in process comprises raw materials, direct labour, other direct costs and related production
overheads but excludes borrowing costs. Cost of sales includes the corresponding direct production costs of goods manufactured
and services rendered as well as related production overheads. Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs necessary to make the sale.
2.15 Property, Plant and Equipment
Property, plant and equipment are initially recognised at cost of purchase or construction and subsequently at cost lessaccumulated depreciation and accumulated impairment losses. The cost of an item of property, plant and equipment includes
expenditure that is attributable to the purchase or construction. It includes, for qualifying assets, borrowing costs in accordancewith the Group’s accounting policy (Note 2.19), and cost of its dismantlement, removal or restoration, related to the obligation forwhich an entity incurs as a consequence of installing the asset.
The assets are depreciated on a straight-line basis, except for land, which is not depreciated. Estimated useful lives of major classesof depreciable assets are as follows:–– Buildings and land improvements–– Machinery and equipment–– Office equipment–– Motor vehicles		40 years5 – 15 years
3 years
5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date.
The carrying values of plant and equipment are written down to their recoverable amount when the carrying value is greater thantheir estimated recoverable amount (Note 2.18).

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 135

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

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

Gains or losses arising on the disposal of intangible assets are measured as the difference between the net disposal proceeds andthe carrying amount with gains being recognised within other operating income and losses being recognised in other operating
expense within the income statement.

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Financial report Notes to the consolidated financial statements

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

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 137

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

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Financial report Notes to the consolidated financial statements

3. Critical Accounting Estimates and Judgments

The estimates and underlying assumptions are reviewed on an ongoing basis and are based on historical experience and otherfactors, including expectation of future events that are believed to be reasonable under the circumstances.
3.1 Critical Accounting Estimates and Assumptions
The key assumptions concerning the future, and other key sources of estimation uncertainty at the statement of financial positiondate, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year, are for the most part related to:–– In a business combination, the determination of the fair value of the identifiable assets acquired, particularly intangibles, andthe liability requiring estimations which are based on all available information and in some cases on assumptions with respect
to the timing and amount of future revenues and expenses associated with an asset. The purchase price is allocated to theunderlying 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 price allocation 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);–– The impairment of long-lived assets requiring estimates to measure the recoverable amount of an asset or group of assets(Note 21 and 22);–– The calculation of the present value of defined benefit obligations requiring financial and demographic assumptions(Note 8);–– The determination and provision for income taxes requiring estimated calculations for which the ultimate tax determination is
uncertain (Note 16);–– The provisions requiring assumptions to determine reliable best estimates (Note 26); and–– The contingent liabilities assessment (Note 30).
If, in the future, estimates and assumptions, which are based on management’s best judgement at the date of the financial
statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in theyear in which the circumstances change.
3.2 Critical Judgments in Applying the Entity’s Accounting Policies
In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those
involving estimates, which have the most significant effect on the amounts recognised in the consolidated financial statements:–– Computer software and Enterprise Resource Planning: Computer software is internally developed programmes ormodifications that result in new or in substantial improvements of existing IT systems and applications (Note 22); and–– Internal developments on formulas, technologies and products: The outcome of these developments depends on their final
assemblage and application, which varies to meet customer needs, and consequently the future economic benefits of thesedevelopments are not certain. Thus the criteria for the recognition as an asset of the internal developments on formulas,technologies and products are generally not met. The expenditures on these activities are recognised as expense in the period
in which they are incurred.

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 139

4. Foreign Exchange Rates
ISO code

Units

31 Dec 2018

Average 2018

US Dollar

USD

1

0.98

0.98

0.97

0.98

1.02

0.99

Euro

EUR

1

1.13

1.15

1.17

1.11

1.07

1.09

Pound

GBP

1

1.25

1.30

1.32

1.27

1.25

1.34

Yen

JPY

100

0.90

0.88

0.86

0.88

0.87

0.91

Singapore dollar

SGD

1

0.72

0.72

0.73

0.71

0.70

0.71

Foreign currency to Swiss francs exchange rates

31 Dec 2017 Average 201731 Dec 2016 Average 2016

Real

BRL

1

0.25

0.27

0.30

0.31

0.31

0.29

Renminbi

CNY

1

0.14

0.15

0.15

0.15

0.15

0.15

Mexican peso

MXN

100

5.01

5.08

4.96

5.20

4.93

5.33

RupiahIDR

10,000

0.68

0.69

0.72

0.73

0.75

0.74

5. Financial Risk Management
5.1 Capital Management
The objective of the Group when managing capital is to maintain the ability to continue as a going concern whilst maximising
shareholder value through an optimal balance of debt and equity.
In order to maintain or adjust the capital structure, management may increase or decrease leverage by issuing or reimbursing
debt, and may propose to adjust the amounts distributed to the shareholders, return capital to shareholders, issue new shares andcancel shares through share buyback programmes.
The Group monitors its capital structure on the basis of a leverage ratio, defined as net debt divided by the equity plus net debt.
Net debt is calculated as the total of the consolidated short-term and long-term debt, less cash and cash equivalents.
Equity is calculated as the total equity attributable to equity holders of the parent excluding the defined benefit pension plans
remeasurement elements.
The Group has entered into several private placements which contain various covenants with externally imposed capitalrequirements. The Group was in compliance with these requirements as at 31 December 2018 and 2017.
The leverage ratio as at 31 December was as follows:
Note

2018

2017

24

4

308

Long-term debt

24

3,266

1,300

Less: cash and cash equivalents

18

(423)

(534)

2,847

1,074

3,710

3,538

in millions of Swiss francs

Short-term debt

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

8

431

558

Equity

4,141

4,096

Net debt and equity

6,988

5,170

Leverage ratio

41%

21%

The Group intends to maintain its medium term leverage ratio below 25%.
As at 31 December 2018, the leverage ratio increased to 41% compared to 21% as at 31 December 2017. The net debt was
CHF 2,847 million at December 2018 up from CHF 1,074 million as at December 2017, following the acquisitions during the year.

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Financial report Notes to the consolidated financial statements

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

2018
in millions of Swiss francs

At amortised
Note
cost

At fair value
through theincomestatement

Derivatives
used forhedge
accounting

Otherfinancialliabilities

Total

Current financial assets
Cash and cash equivalents

18

Derivative financial instruments

5.3

11

Financial assets at fair value through income statement

5.3

4

Accounts receivable – trade19

Other current assets a

423

423
11
4

1,253

1,253

238

238

Non-current financial assets
Derivative financial instruments b

5.3

Financial assets at fair value through income statement

5.3

Total financial assets as at 31 December

2

2

61
1,914

76

61
2

1,992

Current financial liabilities
Short-term debt

24

Derivative financial instruments

5.3

4
12

4
12

Accounts payable

719

719

3,266

3,266

3,989

4,044

Non-current financial liabilities
Derivative financial instruments b

5.3

Long-term debt

24

Total financial liabilities as at 31 December

43
12

43

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

Givaudan – 2018 Integrated Annual Report43Financial report Notes to the consolidated financial statements 141

2017
in millions of Swiss francs

At amortised
Note
cost

At fair value
through theincomestatement

Derivatives
used forhedge
accounting

Otherfinancialliabilities

Total

Current financial assets
Cash and cash equivalents

18

Derivative financial instruments

5.3

16

Financial assets at fair value through income statement

5.3

2

Accounts receivable – trade19

Other current assets a

534

534
16
2

1,147

1,147

98

98

Non-current financial assets
Derivative financial instruments b

5.3

Financial assets at fair value through income statement

5.3

Total financial assets as at 31 December

1

1

63
1,779

63

81

1

1,861

Current financial liabilities
Short-term debt

24

Derivative financial instruments

5.3

308

308

662

662

1,300

1,300

2,270

2,342

12

12

Accounts payableNon-current financial liabilities
Derivative financial instruments b

5.3

Long-term debt

24

Total financial liabilities as at 31 December

60
12

60

60

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

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 at amortised cost, is determined by reference
to published price 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 is considered as equivalent to the fair value.
5.2.1 Market Risk
The Group’s activities primarily expose it to the financial risks of changes in foreign currency exchange rates, interest rates andcommodity prices. The Group enters into a number of derivative 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 recordedtransactions; 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 rate environment.
Market risk exposures are measured using sensitivity analysis. There has been no change during the year in the structure of theGroup’s exposure to market risks or the manner in which these risks are managed.

Givaudan – 2018 Integrated Annual Report

142

Financial report Notes to the consolidated financial statements

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, andtranslation 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 the holding of Naturex with the aimof being protected from the foreign currency risk on the translation of the investment in Naturex (e.g. EUR) into the Group’s
presentation currency (e.g. CHF). The Euro straight bonds are designated as hedge instrument for an amount of EUR 1,292 million
corresponding to the net investment in Naturex. It results in a gain of CHF 37 million recognised in the currency translationdifferences in equity.
The Group applied hedge accounting on the foreign currency risk related to the foreseen acquisition of Albert Vieille SAS (Note 35).
In 2017 the Group applied hedge accounting on the foreign currency risk related to the acquisition of Vika B.V. and the foreseenacquisitions of Centroflora Nutra and Expressions Parfumées that occurred in 2018.
Group Treasury centrally manages foreign exchange risk management activities against the functional currency of each subsidiary,and is required to hedge, whenever cost-effective, their largest exposures.
The measurement of the foreign currency risk expresses the total exposure by currency, which is in the opinion of Group Treasury arepresentative manner to monitor the risk. It measures the cumulative foreign exchange risk of all subsidiaries of recognised assets
and liabilities that are denominated in a currency (e.g. USD) that is not the subsidiary’s functional currency (e.g. other than USD).
The following table summarises the significant exposures to the foreign currency risk at the date of the consolidated statement offinancial position:
Currency exposure 2018
in millions of Swiss francs

USD

EUR

CHF

GBP

SGD

Currency exposure without hedge a

484

(334)

12

(152)

155

Hedged amount

(458)

327

9

151

(162)

26b

(7)

21

(1)

(7)

Currency exposure including hedgea) + long position; - short position.
b) Mainly due to unhedged positions in countries where hedging is not cost-effective.
Currency exposure 2017
in millions of Swiss francs

USD

EUR

CHF

GBP

SGD

Currency exposure without hedge a

337

(415)

(75)

(155)

144

Hedged amount

(332)

411

38

152

(160)

5b

(4)

(37)

(3)

(16)

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

In the exposure calculations the intra-Group positions, except those related to net investments in foreign operations, are included.
The Euro straight bonds designated as hedge instrument for an amount of EUR 1,292 million corresponding to the net investmentin the holding of Naturex has been excluded from the EUR exposure to align the currency risk.

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 143

The following table summarises the sensitivity to transactional currency exposures of the main currencies as at 31 December.
The sensitivity analysis is disclosed for each currency representing significant exposure:
Currency risks 2018
in millions of Swiss francs

USD

EUR

CHF

GBP

SGD

Reasonable shift

9%

14%

7%

8%

7%

Impact on income statement if the currency strengthens against all othercurrencies

2

(6)

1

–

(1)

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

(2)

6

(1)

–

1

Currency risks 2017
in millions of Swiss francs

USD

EUR

CHF

GBP

SGD

Reasonable shift

11%

6%

6%

10%

7%

Impact on income statement if the currency strengthens against all othercurrencies

(1)

–

(2)

–

(1)

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

1

–

2

–

1

The sensitivity is based on the exposure at the date of the consolidated statement of financial position and based on assumptions
deemed reasonable by management, showing the impact on income before tax. Management uses historical volatilities of thesignificant currencies contributing to the exposure to determine the reasonable change.
Argentina became hyperinflationary effective 1 July 2018, requiring retroactive implementation of hyperinflation accounting as of
1 January 2018. The impact of the restatement of the non-monetary assets and liabilities of the subsidiaries in Argentina with thegeneral price index at the beginning of the period is recorded in retained earnings in equity. The subsequent gain resulting from therestatement of non-monetary assets of CHF 1 million 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 invests in debt financial instruments. Borrowings issued at variable rates expose the Group to cash flow interest rate risk
which is partially counterbalanced by cash held at variable rates. Borrowings issued at fixed rates expose the Group to fair valueinterest rate risk.
Group Treasury manages interest rate risk centrally by simulating various scenarios on liabilities taking into consideration
refinancing, renewal of existing positions and hedging. Hedging strategies are applied by either positioning the liabilities orprotecting interest expense through different interest cycles. Hedging activities are regularly evaluated to align interest rateviews and define risk limits. Group Treasury manages interest rate risk mainly by the use of interest rate swap contracts.
The following table shows the sensitivity to interest rate changes:
As at 31 December 2018
in millions of Swiss francs

150 basis points increase

25 basis points decrease

Impact on income statement––

Impact on equity

57

(11)

150 basis points increase

25 basis points decrease

As at 31 December 2017
in millions of Swiss francs

Impact on income statement––

Impact on equity

65

(13)

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

Givaudan – 2018 Integrated Annual Report144 Financial report Notes to the consolidated financial statements

Cash flow hedges
Inception
date

Hedged items

Hedge instruments

Objectives

Comments

2011/
2012

Highly probable future
debt issuances in 2014.

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

Protection against
future increases in
CHF interest rates andto fix the interest rates.

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

2012

Highly probable future
debt issuances in 2016.

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

Protection against
future increases in
CHF interest rates andto fix the interest rates.

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

2012

Highly probablefuture private
placements issuancein the USA in 2013.

Several derivatives instruments fixing
the interest rate at 1.80% on average fora total amount of USD 100 million.

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

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

2012/
2014

Highly probable future
debt issuances in 2018.

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

Protection against
future increases in
CHF interest rates andto fix the interest rates.

In April 2018, the Group issued a 2 year
floating rate public bond with a nominal valueof CHF 150 million; and a 7 year 0.375% fixed
rate public bond with a nominal value of
CHF 200 million. Correspondingly, hedge
positions assigned to this bond issuance havebeen closed. The amortisation of the realised
loss of CHF 15 million is recognised in Financing
costs over 5 years until April 2023.

2014/
2015

Highly probable future
debt issuances in 2020.

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

Protection against
future increases in
CHF interest rates andto fix the interest rates.

The cash flow hedges were effective
during the year.

2014/
2015

Highly probable future
debt issuances in 2021.

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

Protection against
future increases in
CHF interest rates andto fix the interest rates.

The cash flow hedges were effective
during the year.

2014/
2015

Highly probable future
debt issuances in 2024.

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

Protection against
future increases in
CHF interest rates andto fix the interest rates.

The cash flow hedges were effective
during the year.

2016/
2017

Highly probable future
debt issuances in 2031.

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

Protection against
future increases in
CHF interest rates andto fix the interest rates.

The cash flow hedges were effective
during the year.

2018

Highly probable future
debt issuance in 2020.

One forward starting interest rate
swap commencing in 2020, totalling
CHF 25 million with an average rateof 0.52% and a 5 year maturity.

Protection against
future increases in
CHF interest rates andto fix the interest rates.

The cash flow hedges were effective
during the year.

2018

Highly probable future
debt issuance in 2025.

One forward starting interest rate swap
commencing in 2025, totalling CHF 25 million
with an average rate of 1.28% and a 5 year
maturity.

Protection against
future increases in
CHF interest rates andto fix the interest rates.

The cash flow hedges were effective
during the year.

June 2018

Highly probable future
debt issuance inDecember 2018.

Several forward starting interest rate
swaps commencing in December 2018
totalling EUR 400 million with an averagerate of 1.05% and respectively 7 and10 year maturities.

Protection against
future increase in
EUR interest rates andto fix the interest rates.

In September 2018, the Group issued a dual
tranche placement of Euro bond, totalling
EUR 1,300 million, respectively of EUR 500 million
at a rate of 1.125% for 7 years and EUR 800 million
at the rate of 2.000% for 12 years. Correspondingly, hedge positions assigned to this bond issuance
have been closed. The amortisation of therealised loss is recognised in Financing costs for
CHF 1 million over 7 years until September 2025,
and CHF 5 million over 10 years until
September 2028.

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 145

5.2.1.3 Price Risk
The Group is exposed to equity price risk arising from equity investments held classified at fair value through income statement.
The Group manages its price risk through a diversification of portfolios within the limits approved by the Board of Directors.
The Group holds its own shares to meet future expected obligations under the various share-based payment schemes.
Sensitivity analysis
The Group’s equity portfolio is composed exclusively of US shares. The benchmark for the reasonable change is an average ofhistorical volatility of US indexes (16% for the last three years).
The sensitivity analysis has been determined based on the exposure to equity price risks at the end of the reporting period:
2018
in millions of Swiss francs

Equity priceincrease

Equity pricedecrease5(5)Equity priceincrease

Equity pricedecrease

6(6)Impact on income statement
2017 − reasonable shifts: 16%US
in millions of Swiss francs

Impact on income statement

5.2.2 Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group.
Commercial credit risk is managed by the Group’s subsidiaries and monitored on a Group basis whilst counterparty risk related tofinancial institutions is centrally managed within the Group Treasury function.
Trade receivables are subject to a policy of active risk management which focuses on the assessment of country risk, credit
limits, ongoing credit evaluation and account monitoring procedures. Generally, there is no significant concentration of tradereceivables or commercial counterparty credit risk, due to the large number of customers that the Group deals with and theirwide geographical spread with the exception of one single external customer that generates revenues, mainly attributable to the
Fragrance Division, of approximately CHF 573 million (2017: CHF 583 million). Countries, credit limits and exposures arecontinuously monitored.
The credit risk on liquid funds, derivatives and other monetary financial assets is limited because the counterparties are financial
institutions with investment grade ratings.
The following table presents the credit risk exposure to individual financial institutions:
2018
Total
in Mio CHF

Max. with any
individual bankin Mio CHF

Numberof banks

2017
Total
in Mio CHF

Max. with any
individual bankin Mio CHF

Numberof banks

AAA − range

2

2

1

7

7

1

AA − range

75

74

2

147

147

1

A − range

102

72

11

225

121

7

BBB − range

232

128

7

155

91

6

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

Givaudan – 2018 Integrated Annual Report146 Financial report Notes to the consolidated financial statements

5.2.3 Liquidity Risk
The Group manages liquidity risk by maintaining sufficient cash, marketable securities, availability of funds through an adequate
amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying
businesses, Group Treasury maintains flexibility in funding by maintaining availability under committed and uncommitted credit lines.
Group Treasury monitors and manages cash at the Group level and defines the maximum cash level at subsidiary level. Cashsurpluses held by subsidiaries over and above amounts required for working capital management are transferred to the central
treasury centre. The surplus of cash is generally invested in interest bearing current accounts, time deposits, money market
deposits and funds. 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 cash flows of financial liabilities based on the earliest dateon which the Group is obliged to pay. The table includes both interest and principal cash flows:2018
in millions of Swiss francs

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

(11)

(30)

Total

Short-term debt (excluding bank overdrafts)
Accounts payable

(719)

(719)

Net settled derivative financial instruments(1,435)Gross settled derivative financial instruments − inflows

1,435

419

(14)

(32)

(1,137)(2,459)(3,642)

Balance as at 31 December

(733)

(33)

(1,148)(2,489)(4,403)2017
in millions of Swiss francs

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

Short-term debt (excluding bank overdrafts)(308)

Accounts payable(662)

Long-term debt

Net settled derivative financial instruments

(420)

(41)

Gross settled derivative financial instruments − outflows(1,855)
1,854

Total

(308)
(662)
(2)

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

Gross settled derivative financial instruments − inflows

(18)

(41)

(61)
(1,918)

1,396

526

Long-term debt

(20)

(8)

(588)

(823)

(1,439)1,922

Balance as at 31 December

(988)

(8)

(606)

(864)

(2,466)

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

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 147

2018
in millions of Swiss francs

Level 1

Level 2

Level 3

Total

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

11

Swaps (hedge accounting)2

2

Corporate owned life insurance

31

31

13

15

Equity securities

2

Debt securities

11

19

19

76

78

Forward foreign exchange contracts

12

12

Swaps (hedge accounting)

43

43

55

55

Total assets

2

Financial liabilities at fair value through income statement

Swaps (no hedge accounting)Total liabilities
2017
in millions of Swiss francs

Level 1

Level 2

Level 3

Total

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

16

Swaps (hedge accounting)1

1

Corporate owned life insurance

32

32

Equity securities

2

Debt securities
Total assets

2

16

15

17

16

16

80

82

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

12

12

Swaps (hedge accounting)60

60

Swaps (no hedge accounting)––Total liabilities

72

72

Financial assets and liabilities at fair value through income statement are measured with Level 1 and Level 2 inputs.
They mainly consist of forward foreign exchange contracts that are measured using quoted forward exchange rates and yield
curves derived from quoted interest rates matching maturities of the contracts, of interest swaps that are measured using
quoted interest rates and yield curves derived from quoted interest rates matching maturities of the contracts, and of corporate
owned life insurance (COLI) that are measured on quoted instruments with similar credit ratings and terms in a mix of money
market, fixed income and equity funds managed by unrelated fund managers.
There was no transfer between the level categories in the period.

Givaudan – 2018 Integrated Annual Report148 Financial report Notes to the consolidated financial statements

6. Acquisitions
Acquisitions 2018
During the year 2018 Givaudan made three acquisitions, Naturex, Expressions Parfumées and Centroflora Nutra.
Naturex
On 5 June 2018 Givaudan acquired 40.5% of the shares of Naturex for a price of EUR 135 per share and a total consideration of
EUR 523 million, equivalent to CHF 606 million, and subsequently launched a mandatory public cash tender offer for the remaining
shares on 28 June 2018. On 9 August 2018, following the primary tender offer period, Givaudan held 97.24% of the shares of Naturex
and has taken effective control of the company. Following the completion of a second tender offer period on 13 September 2018,
Givaudan held 98.06% of the shares of Naturex and achieved 100% share ownership on 18 September 2018, following completion ofthe ‘squeeze out’ process of the remaining shares. The total consideration paid for the completed acquisition amounts to
EUR 1,292 million, equivalent to CHF 1,489 million.
Naturex is an international leader in plant extraction and the development of natural ingredients and solutions for the food, healthand beauty sectors. Naturex is headquartered in Avignon, France and reported sales of EUR 405 million in 2017. It operates from16 production sites around the world and employs 1,700 people.
Givaudan classified its initial investment in Naturex as a financial instrument, as it did not control or exert significant influence
over Naturex, demonstrated by the absence of Givaudan representatives in the Board of Directors or Executive Management of
Naturex. As of the acquisition date Naturex has been fully consolidated into the Givaudan Group. Immediately prior to theacquisition date the fair value of the initial investment remained unchanged at EUR 523 million (CHF 606 million), therefore no gainor loss has been recognised in the statement of comprehensive income. From the date of acquisition, the acquisition contributed
CHF 150 million of sales and a loss of CHF 12 million to the Group’s consolidated results.
The identifiable assets and liabilities of Naturex acquired are recorded at fair value at the date of acquisition and are as follows:in millions of Swiss francs

Fair value

Cash and Cash equivalents

20

Accounts receivable

85

Inventories

186

Other current assets

28

Property, plant and equipment203- Client relationships

285- Supplier relationships

42- Process-oriented technology and other111- Name and product brands

57- Software / ERP system

3

Total identified intangible assets

498

Other non-current assets

28

Accounts payable(52)

Other payables(32)

Provisions

(13)

Debt

(248)

Deferred tax liabilities(117)

Net assets acquired

586

Cash consideration

1,448

Non-controlling interest

54

Goodwill

916

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 149

The goodwill of CHF 916 million (EUR 794 million) 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. The total amount of goodwillthat is expected to be deductible for tax purposes is nil.
The acquired receivables are fair valued at CHF 85 million. The gross contractual amounts of the receivables acquired are
CHF 86 million. The best estimation at the acquisition date of the contractual cash flows not to be collected amounts to CHF 1 million.
The non-controlling interest at the date of acquisition consists of a non-controlling interest of 2.76% of the shares of Naturex
valued at EUR 135 per share for a total amount of CHF 41 million (EUR 35 million). The non-controlling interest also includes
81,710 vested equity-settled share based instruments valued at a price of EUR 135 per instrument for an amount of CHF 13 million(EUR 11 million). At the point in time in the future when the vested equity-settled shared based instruments will be exercised,
Givaudan has the right to purchase the shares back at a price of EUR 135 per share.
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.
Expressions Parfumées
On 4 June 2018 Givaudan acquired 100% of the share capital of Expressions Parfumées and its affiliates for a purchase price of
CHF 199 million. Expressions Parfumées, a French fragrance creation house, strengthens the access to local and regional customers
and expands naturals capabilities in the fragrance business. With headquarters in Grasse, France, the historic area of perfumery,
Expressions Parfumées operates throughout Europe, Africa and the Middle East from locations in Grasse (France), Milan (Italy) andDubai (United Arab Emirates), employing globally 200 people. From 4 June 2018, the acquisition contributed CHF 46 million of sales
to the Group’s consolidated results.
The goodwill of CHF 145 million arising on the acquisition 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 Expressions Parfumées acquired are recorded at fair value at the date of acquisition. Total
net assets acquired of CHF 54 million consist of cash (CHF 7 million), working capital (CHF 18 million), fixed assets (CHF 26 million),
intangible assets which are comprised of process knowledge, client relationships, name brand (CHF 46 million), deferred tax
liabilities (CHF 16 million) and other liabilities (CHF 27 million). The total purchase price of CHF 199 million was settled in cash,
resulting in a goodwill of CHF 145 million.
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.
Centroflora Nutra
On 14 May 2018 Givaudan acquired 100% of the share capital of Centroflora Nutra, the Nutrition Division of Centroflora Group,
for a purchase price of CHF 55 million. The company manufactures botanical extracts and dehydrated fruits for the food, beverageand consumer goods sectors and offers a wide variety of plant extracts from various regions of the world, with a particular focus
on those from the great biodiversity of Brazil. With headquarters and a manufacturing facility in Botucatu, Brazil, Centroflora
Nutra employs 116 people and exports products globally. From 14 May 2018, the acquisition contributed CHF 9 million of sales to
the Group’s consolidated results.
The goodwill of CHF 39 million arising on the acquisition 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 Centroflora Nutra acquired are recorded at fair value at the date of acquisition.
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. Since the date of the acquisition the allocation of the acquisition price has been
updated and an additional CHF 2 million has been allocated to the goodwill.

Givaudan – 2018 Integrated Annual Report

150

Financial report Notes to the consolidated financial statements

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

7. Segment Information

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

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 151

Business segments
Fragrancesin millions of Swiss francs

Note

Segment sales
Less inter segment sales a
Segment sales to third parties
EBITDA
as % of sales

Flavours

Group

2018

2017

2018

2017

2018

2017

2,525

2,343

3,009

2,717

5,534

5,060

–

–

(7)

(9)

(7)

(9)

2,525

2,343

3,002

2,708

5,527

5,051

508

486

637

603

1,145

1,089

20.1%

20.7%

21.2%

22.3%

20.7%

21.6%

Depreciation

21

(51)

(48)

(76)

(66)

(127)

(114)

Amortisation

22

(44)

(42)

(81)

(62)

(125)

(104)

(10)

(2)

(10)

(2)

174

123

258

213

201

40

231

40

29

22

55

47

513

105

560

105

917

290

1,104

405

21, 22–

Additions to Property, plant and equipment

Impairment of long-lived assets

21

84

Acquisitions of Property, plant and equipment

6, 21

30

22

26

6, 22

47

Additions to Intangible assets
Acquisitions of Intangible assets (excluding goodwill)
Total gross investments

90
25

187

115

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

The amounts by division provided to the Executive Committee are measured in a consistent manner in terms of accounting policies
with the consolidated financial statements.
Reconciliation table to Group’s operating income
Fragrances

FlavoursGroupin millions of Swiss francs

2018

2017

2018

2017

2018

2017

EBITDA

508

486

637

603

1,145

1,089

Depreciation

(51)

(48)

(76)

(66)

(127)

(114)

Amortisation

(44)

(42)

(81)

(62)

(125)

(104)

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

(10)

(2)

(10)

(2)

413

–
396

470

473

883

869

16.4%

16.9%

15.7%

17.5%

16.0%

17.2%

Financing costs

(55)

(42)

Other financial income (expense), net

(56)

(32)

Income before taxes
as % of sales

772

795

14.0%

15.7%

2018

2017

2,199

2,036

326

307

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

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

3,002

2,708

Total sales

5,527

5,051

Givaudan – 2018 Integrated Annual Report

152

Financial report Notes to the consolidated financial statements

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

Switzerland

Flavours Segment sales aGroup Segment sales aGroup Non-current assets b

2018

2017

2018

2017

2018

2017

2018

2017

37

30

22

19

59

49

1,408

1,490
625

Europe

773

690

750

622

1,523

1,312

2,042

Africa and Middle-East

184

152

216

210

400

362

72

54

North America

491

478

950

874

1,441

1,352

1,365

1,182

Latin America

332

344

297

274

629

618

216

151

Asia Pacific

708

649

767

709

1,475

1,358

688

592

2,525

2,343

3,002

2,708

5,527

5,051

5,791

4,094

Total geographical segmentsa) 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 573 million (2017: CHF 583 million) are derived from a single external customer. These revenues aremainly attributable to the Fragrance Division.

8. Employee Benefits

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

2018

2017

Wages and salaries

934

841
121

Social security costs

140

Post-employment benefits: defined benefit plans

39

14

Post-employment benefits: defined contribution plans

35

33

Equity-settled instruments

38

35

Other employee benefits

103

97

1,289

1,141

Total employees' remuneration

Retirement Benefit Plans
The Group operates a number of defined benefit and defined contribution plans throughout the world, the assets of which are
generally held in separate trustee-administered funds. The pension plans are generally funded by payments from employees andby the relevant Group companies, taking account of the recommendations of independent qualified actuaries. The most significant
plans are held in Switzerland, United States of America and United Kingdom (further information by country is disclosed at the endof this note).
In December 2018 the benefits of the UK pension schemes were equalised for the inequality of Guaranteed Minimum Pensions
between men and women. The change resulted in past service cost of CHF 1 million recognised in other operating income/(expense)in the consolidated income statement.
During 2017 the defined benefit plan held in Switzerland was amended principally by reducing the conversion rate used to convert
the retirement savings capital into a pension and by increasing savings contributions from both the employees and employer.
These plan amendments resulted in a one-off non-cash gain of CHF 4 million recognised net in other operating income in the
consolidated income statement.
During 2017 the supplemental medical coverage of the US post-retirement medical plan was changed. The plan amendment resulted
in a one-time past service gain of CHF 16 million recognised in other operating income in the consolidated income statement.

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 153

Non-pension plans consist primarily of post-retirement healthcare and life insurance schemes, principally in the United Statesof America.
The amounts recognised in the consolidated income statement are as follows:2018
in millions of Swiss francs

Pension Non-pension
Plans
Plans

Current service cost

37

Loss (gain) arising from settlement

1

Total included in employees' remuneration

38

Net interest cost included in financing costs

8

Total components of defined benefit cost

46

1

Total

2017
Pension Non-pension
Plans
Plans

Total

38

30

4

34

1

(4)

(16)

(20)

1

39

26

(12)

14

2

10

10

2

12

3

49

36

(10)

26

Of which arising from:
Funded obligations

42

3

45

32

(13)

19

Unfunded obligations

4

–

4

4

3

7

The amounts recognised in other comprehensive income are as follows:2018
in millions of Swiss francs

Pension Non-pension
Plans
Plans

Total

2017
Pension Non-pension
Plans
Plans

Total

(Gains) losses from change in demographic assumptions

(61)

–

(61)

(10)

1

(9)

(Gains) losses from change in financial assumptions

(104)

(2)

(106)

30

3

33

Experience (gains) losses

(12)

(1)

(13)

9

–

9

Return on plan assets less interest on plan assets

18

–

18

(88)

–

(88)

(159)

(3)

(162)

(59)

4

(55)

Funded obligations

(155)

(3)

(158)

(60)

4

(56)

Unfunded obligations

(4)

–

(4)

1

Remeasurement (gains) losses of post employment benefit
obligations
Of which arising from:1

The amounts recognised in the statement of financial position are as follows:2018
in millions of Swiss francs

Pension Non-pension
Plans
Plans

Total

2017
Pension Non-pension
Plans
Plans

Total

Funded obligations
Present value of funded obligations(1,958)(53)(2,011)(2,128)(56)(2,184)

Fair value of plan assets

1,618

–

1,618

1,640

–

1,640

Recognised asset (liability) for funded obligations, net

(340)

(53)

(393)

(488)

(56)

(544)

Unfunded obligations
Present value of unfunded obligations

(71)

(11)

(82)

(74)

(11)

(85)

Recognised asset (liability) for unfunded obligations

(71)

(11)

(82)

(74)

(11)

(85)

Total defined benefit asset (liability)

(411)

(64)

(475)

(562)

(67)

(629)

Deficit recognised as liabilities for post employment benefits

(433)

(64)

(497)

(583)

(67)

(650)

22

21

(475)

(562)

(67)

(629)

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

22
(411)

(64)

21

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

Givaudan – 2018 Integrated Annual Report154 Financial report Notes to the consolidated financial statements

Changes in the present value of the defined benefit obligations are as follows:2018
in millions of Swiss francs

Pension Non-pension
Plans
Plans

Balance as at 1 January

2,202

67

Total

2017
Pension Non-pension
Plans
Plans

2,269

2,174

Total

81

2,255

Amounts recognised in the income statement
Current service cost

37

1

38

30

4

34

Interest cost

38

2

40

39

2

41

Amounts recognised in the other comprehensive income(Gains) losses from change in demographic assumptions

(61)

–

(61)

(10)

1

(9)

(Gains) losses from change in financial assumptions

(104)

(2)

(106)

30

3

33

Experience (gains) losses

(12)

(1)

(13)

9

–

9

Employee contributions

14

14

11

1

12

(82)

(79)

(4)

(83)

(21)

(4)

(16)

(20)

Benefit payments(79)

Settlements

(21)

(3)

Acquisitions

33

33

Currency translation effects

(18)

(18)

2

(5)

(3)

Balance as at 31 December

2,029

2,093

2,202

67

2,269

64

Changes in the fair value of the plan assets are as follows:
2018

2017

in millions of Swiss francs

Pension Non-pension
Plans
Plans

Balance as at 1 January

1,640

1,640

1,538

1

1,539

30

30

29

–

29

(18)

88

–

88

46

50

3

53

14

11

1

12

(82)

(79)

(4)

(83)

(1)

Total

Pension Non-pension
Plans
Plans

Total

Amounts recognised in the income statement
Interest income
Amounts recognised in the other comprehensive income
Return on plan assets less interest on plan assets(18)

Employer contributions

43

Employee contributions14

Benefit payments(79)

Settlements

(22)

3
(3)

(22)

Acquisitions

26

26

Currency translation effects

(16)

(16)

3

Balance as at 31 December

1,618

1,618

1,640

518

32%

386

Equity

511

32%

590

36%

Property

222

13%

214

13%

2
1,640

Plan assets are comprised as follows:2018

in millions of Swiss francs

Debt

Insurances policies and other
Total

2017

24%

367

23%

450

27%

1,618

100%

1,640

100%

The investment strategies are diversified within the respective statutory requirements of each country providing long-term
returns with an acceptable level of risk. The plan assets are primarily quoted in an active market with exception of the property
and insurance policies.

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 155

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

2018

2017

Discount rates

2.1%

1.8%

Projected rates of remuneration growth

1.2%

1.8%

Future pension increases

0.5%

0.8%

Healthcare cost trend rate

1.2%

4.9%

The overall discount rate and the overall projected rates of remuneration growth are calculated by weighting the individual rates
in accordance with the defined benefit obligation of the plans.
Sensitivity analysis
The defined benefit obligations are calculated on the basis of various financial and demographic assumptions. The below
information quantifies the consequences of a change in some key assumptions.
The effects ((gain)/loss) of the change in assumptions are as follows:in millions of Swiss francs

Change inassumption

Discount rate

0.5%

Salary increases

0.5%

Pension increases

0.5%

Medical cost trend

1.0%Life expectancy

1 yearEffects of the change

Increase inassumption

Decrease inassumption

on the current service cost

(5)

6

on the defined benefit obligation

(156)

174

on the current service cost1

(1)

on the defined benefit obligation

10

(10)

on the current service cost3–

on the defined benefit obligation

105

(34)

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

3(3)

on the current service cost1

(1)

on the defined benefit obligation

66

(67)

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 thesecond half of 2017 principally by reducing the conversion rate used to convert the retirement savings capital into a pension and byincreasing savings contributions from both the employee and employer.
The Board of Trustees of the foundation is composed of equal numbers of employee and employer representatives. Each year the
Board of Trustees decides the level of interest, if any, to apply to the retirement accounts in accordance with the pension policy. It
is also responsible for the investment of the assets defining the investment strategy for long-term returns with an acceptable levelof risk. The foundation provides benefits on a defined contribution basis.
The majority of the employees are participants to the plan and are insured against the financial consequences of old age,disability and death. The employer and employees pay contributions to the pension plan at rates set out in the foundation rules
based on a percentage of salary. The amount of the retirement account can be taken by the employee at retirement in theform of pension or capital.

Givaudan – 2018 Integrated Annual Report156 Financial report Notes to the consolidated financial statements

Under IAS 19 employee benefits, the pension plan is classified as defined benefit plan due to the promises and underlying benefits
guarantees. Consequently the pension obligation is calculated by using the projected unit credit method.
The Group expects to contribute CHF 24 million to these plans during 2019.
United States of America
The main US pension plan is qualified under and is managed in accordance with the requirements of US federal law. In accordancewith federal law the assets of the plan are legally separate from the employer and are held in a pension trust. The plan was frozen
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 amountof benefits that may be provided under the plan. There are named fiduciaries that are responsible for ensuring the plan is managedin accordance with the law. The fiduciaries are responsible for the investment of the assets defining the investment strategy forlong-term returns with an acceptable level of risk. The plan provides benefits on a defined benefit basis.
The accrued benefits based on service to the plan freeze are payable at retirement and on death in service. With exceptions for
optional lump sum amounts for certain sections of the plan, the benefits are paid out as annuities.
Under 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 2019.
United Kingdom
The two occupational pension schemes (Quest UK Pension Scheme and Givaudan UK Pension Plan) are arranged under theapplicable UK Pension Schemes and Pensions Acts and managed as legally autonomous pension trusts by the Boards of Trustees.
The plans were frozen during 2016 and consequently no further accrual benefits will continue as at the date of enforcement of theplan change.
The Boards of Trustees are composed of two employee representatives and four employer representatives, for the Quest UK
Pension Scheme, and three employee representatives, three employer representatives plus two pensioner representatives for
the Givaudan UK Pension Plan. The Boards of Trustees are responsible for the investment of the assets defining the investment
strategy for long-term returns with an acceptable level of risk. In their respective sections, both trusts provide benefits on adefined benefit basis and are now frozen to future accruals and members.
The accrued benefits based on service to the plan freeze are payable at retirement and on death in service. With exceptions fortrivial amounts, transfer values, lump sum death benefits and tax free lump sums, the benefits are paid out as annuities.
Under IAS 19 employee benefits, the pension obligations in the defined benefit sections of both the Quest UK Pension Schemeand the Givaudan UK Pension Plan are calculated by using the projected unit credit method.
The Group expects to contribute CHF 7 million to these plans during 2019.
Rest of the world
The Group operates other retirement plans classified either as defined benefit or defined contribution plans in some othercountries. No individual plan other than those described above is considered material to the Group.
The Group expects to contribute CHF 3 million to these plans in 2019.

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 157

The funding position of the funded defined benefit plans are as follows:
As at 31 December 2018
in millions of Swiss francs

Switzerland

United States ofAmerica

United Kingdom

Other countries

Total

1,161

404

317

76

1,958

Fair value of plan assets

894

348

337

39

1,618

Deficit / (surplus)

267

56

(20)

37

340

77.0%

86.1%

106.3%

51.3%

82.6%

Switzerland

United States ofAmerica

United Kingdom

Other countries

Total

1,202

453

390

83

2,128

Fair value of plan assets

823

403

370

44

1,640

Deficit / (surplus)

379

50

20

39

488

68.5%

89.0%

94.9%

53.0%

77.1%

Present value of defined benefit obligations

Funding ratio
As at 31 December 2017
in millions of Swiss francs

Present value of defined benefit obligations

Funding ratio

Key assumptions
2018
in percentage

Switzerland

United Statesof America

UnitedKingdom

2.90

Discount rate

0.80

4.28

Future salary increases

1.99

n/a

n/a

Future pension increases

0.00

0.00

3.03

Future average life expectancy for a pensioner retiring at age 65

22.8

21.7

23.9

Switzerland

United Statesof America

UnitedKingdom

Discount rate

0.70

3.70

2.40

Future salary increases

2.00

n/a

n/a

Future pension increases

0.00

n/a

2.25

Future average life expectancy for a pensioner retiring at age 65

23.4

21.8

23.0

2017
in percentage

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics andexperience in each territory. Mortality assumptions for the most important countries are based on the following tables:–– Switzerland: BVG2015–– United States of America: RP2014–– United Kingdom: S2PA
Allowance for future improvements in mortality have been allowed for as appropriate in each country. In Switzerland thegenerational rates have been used adopting the CMI (2016) approach with a 1.50% long term rate of improvement. In the UnitedStates of America the published rates have been adjusted and projected in accordance with the MP2018 scale. In the United
Kingdom the rates reflect the latest (2017) CMI projections with a 1.25% long term rate of improvement.
Disclosure 201 – 3, pages 152 – 157

Givaudan – 2018 Integrated Annual Report158 Financial report Notes to the consolidated financial statements

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

Vesting date

Number of shares expected
to be delivered at vesting date

Fair value
at grant date (CHF)2016

31 Mar 201615 Apr 2019

22,044

1,709.4

2017

31 Mar 201715 Apr 2020

21,161

1,621.6

2018

31 Mar 201815 Apr 2021

19,7581,993.3

The cost of the equity-settled instruments of CHF 36 million (2017: CHF 33 million) has been expensed in the consolidated income
statement. A marginal portion of the number of shares expected to be delivered can be settled in cash in the jurisdictions where aphysical delivery is not permitted.
Equity-settled instruments related to restricted shares
Restricted shares shown in the table below have been granted on a yearly basis. These shares are tradable and transferable after
the vesting period. Participation in these plans is mandatory.
Restricted shares outstanding at the end of the year have the following terms:

Year of grant

Restricted shareat grant date
(CHF)

Number of
restricted
share 2018

Number of
restricted
share 2017

Commencing date

Vesting date2015

31 Mar 2015

31 Mar 2018

1,595.92016

31 Mar 201615 Apr 2019

1,709.4

935

935

2017

31 Mar 201715 Apr 2020

1,621.6

900

900

2018

31 Mar 201815 Apr 2021

1,993.3

730

1,092

Of the 2,565 outstanding restricted shares (2017: 2,927), no share (2017: none) was deliverable. The cost of these equity-settled
instruments of CHF 2 million (2017: CHF 2 million) has been expensed in the consolidated income statement.
Movements in the number of restricted shares outstanding are as follows:
Number of restricted shares

As at 1 January
Granted

2018

2017

2,927

3,217

730

900

Delivered/sold(1,092)(1,190)As at 31 December

2,565

2,927

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

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 159

10. Jointly Controlled Entities
Year ofincorporation

Name of Joint ventures

Principal activity

Country ofincorporation

Ownership
interest

Production of fragrance ingredients

China

49%

Innovative natural ingredients

USA

49%

2014

Jiangsu Xinrui Aromatics Ltd

2014

BGN Tech LLC

2015

Natural Extracts International Ltd

Natural ingredient derivatives production

Mauritius

49%

2016

Vanilla International Ltd

Natural ingredient collection and extract

Mauritius

49%

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

2018

2017

Current assets

118

113

Non-current assets

40

67

Current liabilities

(49)

(99)

Non-current liabilities

(37)

(14)

Total net assets of joint ventures

72

67

2018

2017

As at 31 Decemberin millions of Swiss francs

Income29

36

Expenses

(28)

(35)

2018

2017

11. Other Operating Income
in millions of Swiss francs

Gains on disposal of fixed assets

26

1

Other income

37

41

Total other operating income

6342

Included in the gains on disposal of fixed assets, is a gain of CHF 25 million realised on the sale of the Zurich Innovation Centre (ZIC)(Note 21). For the year ended 31 December 2018 the Group received CHF 20 million of insurance proceeds in relation to prior year
environmental litigation costs. For the year ended 31 December 2017 the Group recognised one-off non-cash gains of CHF 16 million
in the United States of America and CHF 4 million in Switzerland related to defined benefit plans.

12. Other Operating Expense
2018

2017

Project related expenses a

41

107

Amortisation of intangible assets

1012

Impairment of long-lived assets

102

Losses on disposal of fixed assets

5

4

Environmental provisions

2

1

Business taxes

14

15

in millions of Swiss francs

Acquisition and integration related expenses

19

1

Other expenses

12

10

Total other operating expense

113

152

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

Givaudan – 2018 Integrated Annual Report

160

Financial report Notes to the consolidated financial statements

13. Expenses by Nature
2018

2017

2,374

1,980

8

1,289

1,141

21, 22262

220

Transportation expenses

53

48

Freight expenses

112

96

Consulting and service expenses

151

140

Energies

64

56

IT related costs

53

50

in millions of Swiss francs

Note

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

Other expenses
Total operating expenses by nature

286

451

4,644

4,182

2018

2017

14. Financing Costs
in millions of Swiss francs

NoteInterest expense
Net interest related to defined benefit pension plans

8

42

29

10

12

Amortisation of debt discounts

3

1

Total financing costs

55

42

15. Other Financial (Income) Expense, Net
2018

2017

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

23

(79)

Exchange (gains) losses, net

16

103

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

4(8)Interest (income) expense

(3)

(3)

Capital taxes and other non business taxes

10

10

Other (income) expense, net

69

Total other financial (income) expense, net

56

32

in millions of Swiss francs

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 161

16. Income Taxes

Amounts charged to (credited in) the consolidated statement of comprehensive income are as follows:2018

in millions of Swiss francs

Other
Income comprehensive
statement
incomeOwn equity
instruments

Total

2017
Other
Income comprehensive
statement
incomeOwn equity
instruments

Total

Current taxes- in respect of current year

129

- in respect of prior years

–

2

131

100

–

(17)

(3)

(1)

96
(17)

Deferred taxes
(17)

33

16

(6)

40

- reclassified from equity to income statement- in respect of current year

–

–

–

–

–

–

- in respect of prior years

(3)

(3)

(2)

1

(1)

Total income tax expense

109

144

75

38

35

–

34

(1)

112

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

Group's average applicable tax rate

2018

2017

15%

16%
(2%)

Tax effect ofIncome not taxable(2%)

Expenses not deductible

1%

1%

Change in tax rate

–

(2%)

Other adjustments of income taxes of prior years

(1%)

(3%)

Other differences

1%

(1%)

14%

9%

Group's effective tax rate

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

Givaudan – 2018 Integrated Annual Report162 Financial report Notes to the consolidated financial statements

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

2018

2017

Current income tax assets

41

32

Current income tax liabilities

(95)

(49)

Total net current income tax asset (liability)

(54)

(17)

Other
differences

Total

Property,plant &
equipment

Intangible
assetsNet deferred tax asset (liability) as at 1 January

(87)

(59)

144

6

104

108

Acquisition

(13)

(120)

1

12

3

(117)

8

3

3

(1)

7

20

2

(33)

2018
in millions of Swiss francs(Credited) debited to consolidated income statement(Credited) debited to other comprehensive income

Pension Tax loss carryplans
forward(35)(Credited) debited to own equity instruments
Currency translation effects
Net deferred tax asset (liability) as at 31 December

–

–

(3)

(2)

(1)

–

(2)

(8)

(95)

(178)

112

17

114

(30)

Deferred tax assets

208

Deferred tax liabilities(238)

Net deferred tax asset (liability) as at 31 December(30)
Property,plant &
equipment

Intangible
assets(94)(58)

Acquisition

(3)

(25)

(Credited) debited to consolidated income statement

11

24

2017
in millions of Swiss francs

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

Pension Tax loss carryplans
forward

190
(7)

32
(26)

(38)

(Credited) debited to own equity instruments

Other
differences

Total

96

166

1

(27)

6

8

(3)

(41)

–

–

Currency translation effects

(1)

–

(1)

–

4

2

Net deferred tax asset (liability) as at 31 December

(87)

(59)

144

6

104

108

Deferred tax assets

207

Deferred tax liabilities(99)

Net deferred tax asset (liability) as at 31 December

108

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 2019.
Deferred tax assets on loss carry forwards of CHF 21 million (2017: CHF 6 million) have been recognised principally in thesubsidiaries in France and in the USA, 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 (2017: nil) which have not been recognised are mainly located in subsidiaries in Spain and India.
Deferred tax assets on tax credits of CHF 74 million (2017: CHF 69 million) have been recognised.
A deferred tax liability of CHF 28 million has been recognised in 2018 (2017: CHF 25 million) for certain foreign subsidiaries whichhave 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 be recognised for
undistributed earnings of CHF 492 million (2017: CHF 467 million).

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 163

17. Earnings per Share
Basic earnings per share
Basic earnings per share is calculated by dividing the net income attributable to shareholders by the weighted average number ofshares outstanding:
2018

2017

663

720

Ordinary shares

9,233,586

9,233,586

Treasury shares(14,812)(24,120)

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

9,218,774 9,209,466

Basic earnings per share (CHF)

71.92

78.18

Diluted earnings per share
For the calculation of diluted earnings per share, the weighted average number of shares outstanding is adjusted to assume
conversion of all potentially dilutive shares:

Income attributable to equity holder of the parent (in millions of Swiss francs)
Weighted average number of shares outstanding for diluted earnings per share of 72,781 (2017: 76,464)
Diluted earnings per share (CHF)

2018

2017

663

720

9,291,555 9,285,930
71.36

77.54

18. Cash and Cash Equivalents
in millions of Swiss francs

2018

2017

Cash on hand and balances with banks

267

273

Short-term investments

156

261

Balance as at 31 December

423

534

Givaudan – 2018 Integrated Annual Report164 Financial report Notes to the consolidated financial statements

19. Accounts Receivable – Tradein millions of Swiss francs

2018

2017

Accounts receivable

1,271

1,162

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

3

1

(21)

(16)

1,253

1,147

Ageing list:
2018

2017

1,154

1,062

Less than 30 days

77

71

30 − 60 days

17

14

60 − 90 days

6

4

Above 90 days

20

12

in millions of Swiss francs

Neither past due nor impaired

Less: allowance for doubtful accounts
Balance as at 31 December

(21)

(16)

1,253

1,147

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

2018

2017

Balance as at 1 January

(16)

(14)

Increase in allowance for doubtful accounts recognised in consolidated income statement

(7)

(5)

Amounts written off as uncollectible––

Reversal of allowance for doubtful accounts

1

3

Currency translation effects

1

Balance as at 31 December

(21)

(16)

No significant impairment charge has been recognised in the consolidated income statement in 2018 or in 2017. Past due andimpaired receivables are still considered recoverable. The carrying amount of accounts receivable – trade is considered tocorrespond to the fair value.

20. Inventories
in millions of Swiss francs

2018

2017

Raw materials and supplies

425

359

Work in process

3034Intermediate and finished goods

706

549

(63)

(40)

1,098

902

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

In 2018 the amount of write-down of inventories was CHF 36 million (2017: CHF 35 million). At 31 December 2018 and 2017 no
significant inventory was valued at net realisable value.

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 165

21. Property, Plant and Equipment
2018
in millions of Swiss francs

Land

Buildings
and land
improvements

Machinery,equipment andvehiclesConstruction inprogress

Total

Net book value
109

738

535

197

1,579

Additions

Balance as at 1 January

–

4

10

244

258

Acquisitions

24

112

73

22

Disposals

(7)

(135)

(3)

Transfers

10

155

84

Impairment
Depreciation

231
(145)

(249)

(8)

(8)

(38)

(89)

(127)

Reclassified as investment property
Currency translation effects

(2)

(8)

(10)

(9)

(29)

Balance as at 31 December

134

828

592

205

1,759

Cost

134

1,334

1,750

205

(491)

(1,146)

Accumulated depreciation
Accumulated impairment

3,423(1,637)

(15)

(12)

Balance as at 31 December

134

828

592

205

1,759

(27)

2017
in millions of Swiss francs

Land

Buildings
and land
improvements

Machinery,equipment andvehiclesConstruction inprogress

Total

Net book value
Balance as at 1 January

95

722

531

94

1,442

Additions

–

1

4

208

213

Acquisitions

13

14

12

1

Disposals

–

(2)

(3)

Transfers

–

40
(5)

41

67

Impairment

(2)

–

(108)
(2)

Depreciation

(33)

(81)

(114)

Reclassified as investment property

(2)

(13)

–

Currency translation effects

3

10

5

2

20

Balance as at 31 December

109

738

535

197

1,579

Cost

109

1,218

1,627

197

(465)

(1,088)

Accumulated depreciation
Accumulated impairment
Balance as at 31 December

109

(15)

(4)

738

535

(15)

3,151
(1,553)
(19)

197

1,579

At 31 December 2018 and 2017 no significant capitalised borrowing costs were accounted for.
In 2018 the Group sold and leased back its Zurich Innovation Centre (ZIC) for an amount of CHF 173 million. CHF 100 million has
been received in 2018 and the remainder will be received at completion of the centre in 2019, for which the Group still has a liabilityof CHF 29 million for construction costs during 2019. The gain realised on the sale of CHF 25 million has been recognised in otheroperating income in 2018.

Givaudan – 2018 Integrated Annual Report166 Financial report Notes to the consolidated financial statements

22. Intangible Assets
2018
in millions of Swiss francs

Process-oriented
technology
Goodwilland other

Clientrelationships

Supplier
relationships

Name andproduct brands

Software/ERP
system

Total

4

133

2,482

Net book value
Balance as at 1 January

1,912

190

Additions
Acquisitions

243

7
1,100

142

Disposals(2)

Impairment(2)

Amortisation

(42)

313

42

58

48

55

5

1,660
(2)
(2)

(36)

(5)

(4)

(38)

(125)

Currency translation effects

(53)

(6)

(9)

Balance as at 31 December

2,959

287

511

Cost

2,959

1,004

787

42

64

720

5,576

(711)

(276)

(5)

(7)

(572)

(1,571)

Accumulated amortisation
Accumulated impairment
Balance as at 31 December

2017
in millions of Swiss francs

37

(1)

–

(69)

57

148

3,999

(6)

(6)

2,959

287

511

37

57

148

3,999

Goodwill

Process-oriented
technology
and other

Clientrelationships

Supplier
relationships

Name andproduct brands

Software/ERP
system

Total

1,791

184

203

3

130

2,311

Net book value
Balance as at 1 January
Additions
Acquisitions

4
115

43

47

34

68

3

–

220

(104)

Disposals
Impairment
Amortisation

(34)

(28)

(2)

(40)

Currency translation effects

6

2

–

–

–

8

Balance as at 31 December

1,912

190

243

4

133

2,482

Cost

1,912

Accumulated amortisation
Accumulated impairment
Balance as at 31 December

863

483

7

667

3,932

(669)

(240)

(3)

(534)

(1,446)

243

4

133

2,482

Fragrances

Flavours

Total

(4)
1,912

190

(4)

Classification of amortisation expenses is as follows:2018
in millions of Swiss francs

Fragrances

Flavours

Total

2017

Cost of sales

5

10

15

9

9

18

Selling, marketing and distribution expenses

16

24

40

15

23

38
30

Research and product development expenses

15

33

48

9

21

Administration expenses

4

8

12

3

3

6

Other operating expenses

4

6

10

6

6

12

Total

44

81

125

42

62

104

Impairment test for goodwill
Goodwill is allocated to the Group’s cash-generating units (CGUs), which are defined as the Flavour Division and the Fragrance
Division, which itself includes a lower level of cash-generating unit related to Expressions Parfumées. Goodwill allocated to these
CGUs was CHF 2,245 million (2017: CHF 1,322 million) to the Flavour Division, CHF 574 million (2017: CHF 590 million) to the
Fragrance Division and CHF 140 million (2017: none) to Expressions Parfumées.

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 167

The recoverable amount of each CGU has been determined based on value in use calculations. These calculations use pre-tax cash
flow projections based on financial business plans and budgets approved by management covering a five year period, as well asa 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 estimatedfuture cash flows has a number of components which are derived from capital market information where the cost of equity
corresponds to the return expected by the shareholders by benchmarking with comparable companies in the fragrance and flavour
industry, and where the cost of debt is based on the conditions on which companies with similar credit rating can obtain financing.
A discount rate of 10.9% (2017: 10.3%) was applied to cash flow projections of the Fragrance Division, 10.7% (2017: 10.3%) wasapplied to cash flow projections of the Flavour Division and 11.8% (2017: none) was applied to cash flow projections of Expressions
Parfumées. These discount rates are pre-tax.
No impairment loss in any of the CGUs resulted from the impairment tests for goodwill. The outcome of the impairment test was
not sensitive to reasonable changes in the cash flows and in the discount rate in the periods presented.
Process-oriented technology and other
This consists mainly of process-oriented technology, formulas, molecules, delivery systems as well as process knowledge andresearch expertise in innovative cosmetic solutions, acquired when the Group purchased Food Ingredients Specialties (FIS),
International Bioflavors (IBF), Quest International, Soliance, Induchem, Spicetec, Activ International, Vika, Centroflora Nutra,
Expressions Parfumées and Naturex.
The Group invested CHF 12 million in bioscience through an agreement with outside partner to apply strain technology to active
beauty which represents an intangible asset with indefinite useful life.
Client relationships
As part of the acquisition of Quest International, Induchem, Spicetec, Activ International, Vika, Centroflora Nutra, Expressions
Parfumées and Naturex the Group acquired client relationships in the Flavour and Fragrance Divisions, mainly consisting of client
relationships with key customers.
Supplier relationships
As part of the acquisition of Naturex the Group acquired supplier relationships in the Flavour Division, mainly consisting of supplier
relationships with key suppliers.
Name and product brands
In connection with the acquisition of Induchem, Spicetec, Activ International, Vika, Centroflora Nutra, Expressions Parfumées andNaturex the Group acquired name and product brands in active beauty and in natural flavour businesses.
Software/ERP system
This consists of internally generated intangible assets associated with the development of identifiable software products and
ERP systems.
The residual useful lives of the acquired intangible assets carried at cost, being their fair value at acquisition date, aredetermined 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		–– Name and product brands 		
–– Process-oriented technology and other–– Client relationships 		
–– Supplier relationships		

2.6 years
17.4 years
6.7 years
17.8 years
2.7 years

Givaudan – 2018 Integrated Annual Report

168

Financial report Notes to the consolidated financial statements

23. Investment Property

In 2017 the Group entered into an agreement to develop real estate at its facility in Kemptthal with a third party. As theagreement meets the criteria of IAS 40, the value of land and buildings has been transferred to Investment property. During
the year 2018 most of the asset was sold at cost price. The remaining asset of CHF 2 million will be sold in 2019.

24. Debt
Floating rate debt
2018
in millions of Swiss francs

Fixed rate debt

Bankborrowings

Bank
Bank
facility overdrafts

Straight
Privatebonds placements

Balance as at 1 January

1

7

117

Cash flows

30

169

(5)

151

Bank
Total borrowings

Straight
Privatebonds placements

125

9

998

345

(259)

1,352

–

2

1

1

259

476

Total

Total
short-termandlong-term
debt

1,483

1,608

1,093

1,438

Non-cash changes- Amortisation of debt
discount–- Acquisition / Divestment–

1- Currency effects(31)

Balance as at 31 December–
169

Within 1 year

3

151

(5)

(36)

112

435

3

Within 1 to 3 years

151

Within 3 to 5 years

169

112

169

3

151

112

Bank
borrowings

Balance as at 1 January
Cash flows

Bank
Bank
facility overdrafts(3)- Acquisition / Divestment

13

3- Currency effects

30

Balance as at 31 December

1

3

(6)

(3)

(39)

2,354

470

2,835

3,270

1

4

249

39

293

444

1
5

281

4

100

147

251

532

1

2,005

284

2,290

2,290

11

2,354

470

2,835

3,270

435

Fixed rate debt

Straight
Privatebonds placements

7
(42)

3
260

3

Floating rate debt
2017
in millions of Swiss francs

3
259

151

Thereafter
Balance as at 31 December

11

–

Bank
Total borrowings

7
116

(5)

16

14

254

1,251

1,258

232

227

298

Straight
Privatebonds placements

997

71

Total

Total
short-termandlong-term
debt

Non-cash changes- Amortisation of debt
discount

1

Within 1 year
Within 1 to 3 years

7

1

31

117

125

7

7

1

300

2

100

117

117

2

249

117

125

Thereafter
Balance as at 31 December

1

7

998

1

1

Within 3 to 5 years

9

1

1

14

30

(10)

(10)

21

476

1,483

1,608

301

308

39

141

142

251

368

4

349

437

790

790

9

998

476

1,483

1,608

On 7 December 2011 the Group issued a dual tranche public bond transaction of CHF 150 million each, totalling CHF 300 million,
respectively of 1.250% for five years and of 2.125% for ten years. The bond was issued by Givaudan SA. The first tranche wasredeemed in December 2016.

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 169

In November 2012 Givaudan United States, Inc. entered into three private placements for a total amount of USD 250 million(CHF 245 million) respectively USD 40 million redeemable in February 2020 with an annual interest rate of 2.74%, USD 150 million
redeemable in February 2023 with an annual interest rate of 3.30% and USD 60 million redeemable in February 2025 with anannual interest rate of 3.45%. The proceeds of these transactions have been received on 6 February 2013. There are various
covenants contained in these transactions covering conditions on net worth, indebtedness and EBITDA ratio to net interest
expense of Givaudan United States, Inc. The company is and has been in full compliance with the covenants set.
On 19 March 2014 the Group issued a 1.00% six and a half year public bond with a nominal value of CHF 100 million and a 1.75% ten
year public bond with a nominal value of CHF 150 million. These bonds were issued by Givaudan SA.
In December 2016 the Group issued a 0.00% six year public bond with a nominal value of CHF 100 million and a 0.625% fifteen year
public bond with a nominal value of CHF 200 million. These bonds were issued by Givaudan SA.
In December 2017 the Group entered into a five year floating rate private placement (Schuldschein) with a nominal value of
EUR 100 million (CHF 112 million) and a seven year 1.331% fixed rate private placement (Schuldschein) with a nominal value of
EUR 200 million (CHF 225 million). The proceeds of EUR 300 million were used mainly to repay the short-term borrowings
withdrawn during the year 2017.
The Group issued a two year floating rate public bond with a nominal value of CHF 150 million and a seven year 0.375% fixed rate
public bond with a nominal value of CHF 200 million. These bonds were issued by Givaudan SA on 9 April 2018. The proceeds of
CHF 350 million were used mainly to repay the 2.5% seven year public bond with a nominal value of CHF 300 million which wasredeemed on 15 June 2018.
In September 2018 the Group issued a dual tranche placement of senior debt notes (the ‘Notes’) totalling EUR 1,300 million(CHF 1,455 million), respectively of EUR 500 million (CHF 559 million) at a fixed rate of 1.125% for seven years and EUR 800 million(CHF 896 million) at the fixed rate of 2.000% for twelve years. These Euro bonds were issued by Givaudan SA.
As at 31 December 2018 the Group had borrowings of EUR 150 million (CHF 169 million) under the Group bank credit facility.
in millions of Swiss francs

Swiss franc
US Dollar
Euro
Other currencies
Total debt as at 31 December

2018

2017

1,050

998

247

244

1,972

365

1

1

3,270

1,608

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

Private placements USD

2018

2017

3.2%

3.2%
1.1%

Private placements EUR

1.1%

Straight bond EUR

1.7%

Straight bond CHF

0.8%

Bank facility EUR

0.5%

Weighted average effective interest rates on gross debt

1.4%

1.6%
1.7%

Givaudan – 2018 Integrated Annual Report

170

Financial report Notes to the consolidated financial statements

25. Changes in liabilities arising from financing activities
Cash impact

2018
in millions of Swiss francs

Total short-term and long-term debt

Balance as
at 1 January

Cash flows
Inflow(Outflow)

1,608

1,438

Interest on liabilities

8

(29)

Derivative financial instruments

60

(22)

Total liabilities from financing activities

3

Total short-term and long-term debt

3,270

–

13

2

3

–

43

–

7

–

–

7

13

(5)

1

8

–

17

1,689

1,382

270

45

(39)

3,350

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

Balance as
at 31
December

21

1,608

Balance as
at 1 January

Cash flows
Inflow(Outflow)

1,258

298

Interest on liabilities

8

(24)

Derivative financial instruments

62–

Others, net
Total liabilities from financing activities

Balance as
at 31
December(39)

3

Cash impact

2017
in millions of Swiss francs

12

(7)

1,340

267

260

Currency
effects

34

Capitalised lease liabilities
Others, net

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

1

30
–

24

–

(2)
1

30

8
60

9

(1)

13

31

20

1,689

26. Provisions
2018
in millions of Swiss francs

Balance as at 1 January

Restructuring

Claims andlitigation

Environmental

Others

Total

58

10

24

32

124

Acquisitions
Additional provisions

4
9

2

Unused amounts reversed

(24)

(1)

Utilised during the year

(18)

(3)

3
(1)

1

5

5

19

(1)

(26)

(3)

(25)

Currency translation effects

–

–

–

–

–

Balance as at 31 December

25

12

26

34

97

Current liabilities

17

2

4

1

24

Non-current liabilities

8

10

22

33

73

Balance as at 31 December

25

12

26

34

97

Restructuring

Claims andlitigation

Environmental

Others

Total

3

8

26

28

65

2017
in millions of Swiss francs

Balance as at 1 January
Acquisitions
Additional provisions

60

3

7

70

Unused amounts reversed

(1)

–

–

(1)
(10)

Utilised during the year

(4)

(1)

(2)

(3)

Currency translation effects

–

–

–

–

–

Balance as at 31 December

58

10

24

32

124

Current liabilities

51

1

3

2

57

Non-current liabilities

7

9

21

30

67

Balance as at 31 December

58

10

24

32

124

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 171

Significant judgment is required in determining the various provisions. A range of possible outcomes is determined to make reliable
estimates of the obligation that is sufficient for the recognition of a provision. Differences between the final obligations andthe amounts that were initially recognised impact the income statement in the period in which such determination is made.
Restructuring provisions
Restructuring provisions arise from reorganisations of the Group’s operations and management structure primarily related toGivaudan Business Solutions (GBS) and from reorganisations in the Flavour division. During the year, CHF 24 million, that was
initially related to the provision for GBS, was reversed due to the fact that a number of personnel that was supposed to leave havebeen rehired in the Group in different positions, or have left the Group of their own accord.
Claims and litigation
These provisions are made in respect of legal claims brought against the Group and potential litigations. Related estimated legal
fees are also included in these provisions.
Environmental
Givaudan’s affiliate, Givaudan Fragrances Corporation, is one of approximately 100 companies identified by the US Environmental
Protection Agency (‘EPA’) as ‘Potentially Responsible Parties’ (‘PRP’) for alleged contamination of the Passaic River. The EPA released a
Focused Feasibility Study (‘FFS’) covering only the lower 8 miles of the River in 2014. In March 2016, the EPA issued its Record ofDecision (‘ROD’) to confirm the remediation solution related to the FFS. The chosen solution entails a bank-to-bank dredge of theRiver, and the installation of an engineered cap, with an estimated cost of CHF 1.4 billion. One PRP agreed in 2016 to conduct thedetailed remediation design, which is expected to take up to four years to complete. The EPA has also selected an expert to work with
the PRP’s on the allocation of the remediation costs, which is expected to take approximately two years to conclude.
The Cooperating Parties Group (‘CPG’), of which Givaudan had been a member, issued a draft Remedial Investigation/Feasibility
Study (‘RI/FS’) in April 2014, which proposed a Sustainable Remedy for the entire lower 17 miles of the River. The CPG is still
responding to EPA comments on the RI/FS, which remains in draft form today.
At this time, there are many uncertainties associated with the final remediation plan and the Company’s share of the costs, if any.
However, in accordance with accounting guidance, the Group has recorded a reserve which it believes can reasonably be expected
to cover the Company’s obligation, if any, given the information currently available.
The other material components of the environmental provisions consist of costs to sufficiently clean and refurbish contaminatedsites and to treat where necessary.
Other provisions
These consist largely of provisions related to long-term deferred compensation plan and to restoring expenses related toleased facilities.

Givaudan – 2018 Integrated Annual Report172 Financial report Notes to the consolidated financial statements

27. Own Equity Instruments

Details of own equity instruments are as follows:
As at 31 December 2018

Settlement

Registered shares

Category

Strike price(CHF)

in equivalentsharesFair value
in millions of Swiss
francs11,90627

2019 1,753.5 - 2,232.0

53,00017

20191,753.5 - 2,192.0

47,0002

Maturity

Strike price(CHF)

in equivalentsharesFair value
in millions of Swiss
francsMaturity

EquityPurchased calls

Gross shares

Written puts

Gross shares Financial liability

As at 31 December 2017

Settlement

Registered shares

EquityCategory

EquityPurchased calls

Gross shares

EquityWritten puts

Gross shares Financial liability

23,838542018 1,786.1 - 1,962.1

50,31218

201850,312–

1,679.5 - 1,959.0

28. Equity
Share capital
As at 31 December 2018, the share capital amounts to CHF 92,335,860, divided into 9,233,586 fully paid-up registered shares,
with a nominal value of CHF 10.00 each. Every share gives the right to one vote.
The Board of Directors has at its disposal conditional capital of a maximum aggregate amount of CHF 7,481,980 that may be issued
through a maximum of 748,198 registered shares, of which a maximum of CHF 1,618,200 can be used for executive share option plans.
At the Annual General Meeting held on 22 March 2018 the distribution of an ordinary dividend of CHF 58.00 per share(2017: CHF 56.00 per share) was approved. The dividend payment has been paid out of available retained earnings.
Movements in own equity instruments are as follows:
Price in Swiss francs
2018

NumberBalance as at 1 January

23,838Purchases at cost
Sales and transfers

Total inmillions of
Swiss francs

High

AverageLow

12,312

1,959.0

1,877.2

1,791.023(24,244)

1,844.0

1,844.0

1,844.0(45)

157(Gains) losses, net recognised in equity
Movement on registered shares, net(22)

Movement on derivatives on own shares, net

7

Income taxes
Balance as at 31 December

11,906

142
Price in Swiss francs

2017

NumberBalance as at 1 January

31,137Purchases at cost
Sales and transfers

Total inmillions of
Swiss francs

High

AverageLow

25,7501,920.2

1,843.6

1,690.047(33,049)

1,491.2

1,491.2

1,491.2(49)

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

Movement on derivatives on own shares, net

50

Income taxes
Balance as at 31 December

Givaudan – 2018 Integrated Annual Report–
23,838157

Financial report Notes to the consolidated financial statements 173

29. Commitments

As at 31 December 2018, the Group had operating lease commitments mainly related to buildings. Future minimum payments
under non-cancellable operating leases are as follows:
2018

2017

Within one year

46

36

Within two to five years

125

85

Thereafter

206

32

Total minimum payments

377

153

in millions of Swiss francs

The total minimum operating lease commitments include the lease back commitment of CHF 184 million of the Zurich Innovation
Centre (ZIC) that was sold in December 2018 (Note 21). This lease commitment has a duration of 30 years.
The charge in the 2018 consolidated income statement for all operating leases was CHF 48 million (2017: CHF 45 million).
The Group has capital commitments for the purchase or construction of property, plant and equipment totalling CHF 111 million(2017: CHF 105 million).

30. Contingent Liabilities

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

Givaudan – 2018 Integrated Annual Report174 Financial report Notes to the consolidated financial statements

31. Related Parties

Transactions between Givaudan SA and its subsidiaries, which are related parties of Givaudan SA, have been eliminated on
consolidation and are not disclosed in this note.
Compensation of key management personnel
The compensation of the Board of Directors and the Executive Committee during the year was as follows:
2018

2017

Salaries and other short-term benefits

11

13

Post-employment benefits

11

Share-based payments

13

11

Total compensation

25

25

in millions of Swiss francs

No other related party transactions have taken place during 2018 (2017: nil) between the Group and the key management
personnel.
Reconciliation table to the Swiss code of obligations
IFRS

Adjustments a

Swiss CO (Art. 663b bis)

2018

2017

2018

2017

2018

Salaries and other short-term benefits

11

13

(4)

(6)

7

7

Post-employment benefits

1

1

1

1

2

2

in millions of Swiss francs

2017

Share-based payments

13

11

(2)

2

11

13

Total compensation

25

25

(5)

(3)

20

22

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 – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 175

32. Board of Directors and Executive Committee Compensation
Compensation of members of the Board of Directors
Compensation of Board members consists of Director fees, Committee fees and Restricted Share Units (RSUs). Fees are paid at theend of each year in office completed. RSUs give participants the right to receive Givaudan shares (or a cash equivalent in countries
where securities laws prevent the offering of Givaudan securities) at the end of a three-year blocking period.
The Chairman of the Board does not receive any additional Board Membership fees. Similarly, a Committee Chairman does notreceive any additional Committee Membership fees. Each Board member receives an additional amount of CHF 10,000 to coverout-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 the table below:
2018
in Swiss francs

CalvinGrieder
Chairman e

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

IngridDeltenre e

ThomasRufer eTotal
2018 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

292

73

73

73

73

73

73

730

582,044

145,511

145,511

145,511

145,511

145,511

145,511

1,455,110

1,047,044

295,511

310,511

270,511

310,511295,511

300,5112,830,110a)	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 2021.
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 are indicated on pages 104 – 105 in the Corporate Governance section of the 2018 Integrated Annual Report.

Estimated social security charges based on 2018 compensation amounted to CHF 203,000 (2017: CHF 205,000).
2017
in Swiss francs

CalvinGrieder
Chairman e

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

IngridDeltenre e

ThomasRufer eDirector fees b

325,000

100,000

100,000

100,000

100,000

100,000

100,000

Committee fees b61,25043,75065,00031,25058,75050,00055,00010,000Total fixed (cash)

386,250

143,750

165,000

131,250

158,750

150,000

155,000

110,000 1,400,000

Dr Jürg
Witmer f

Total
2017 a100,000 1,025,000

360

90

90

90

90

90

90

Value at grant d583,776

145,944

145,944

145,944

145,944

145,944

145,944– 1,459,440

Total compensation

970,026

289,694

310,944

277,194

304,694

295,944

300,944

110,000 2,859,440

Number of RSUs granted c–

375,000
900a)	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 vest on 15 April 2020.
d)	Economic value at grant according to IFRS methodology, with no discount applied for the vesting period.
e)	The function of each member of the Board of Directors are indicated on pages 63-65 in the Corporate Governance section of the 2017 Annual Report.
f)	Retired at the Annual General Meeting in March 2017.

Givaudan – 2018 Integrated Annual Report

176

Financial report Notes to the consolidated financial statements

Other compensation, fees and loans to members or former members of the Board
No additional compensation or fees were paid to any member of the Board.
No Board member or related parties had any loan outstanding as of 31 December 2018.
Special compensation of members of the Board who left the company during the reporting period
No such compensation was incurred during the reporting period.
Compensation of members of the Executive Committee
The compensation of the Executive Committee during the year was as follows:
Executive
Executive
Committee
Committee
members
members
Gilles Andrier (excluding CEO) a (excluding CEO) b
CEO 2017
2018
2017

Total
2018

Total
2017

in Swiss francs

Gilles Andrier
CEO 2018

Base salary

1,058,023

1,045,952

3,194,282

3,970,375

4,252,305

5,016,327

571,766

445,076

947,880

1,048,011

1,519,646

1,493,087

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

139,048

114,688819,837

800,451

958,885

915,139

1,768,837

1,605,716

4,961,999

5,818,837

6,730,836

7,424,553

954,070

977,142

1,824,033

2,513,556

2,778,103

3,490,698

1,446

1,777

3,263

5,549

4,709

7,326

2,882,312

2,881,583

6,504,138

8,998,258

9,386,450

11,879,841

Total variable compensation

3,836,382

3,858,725

8,328,171

11,511,814

12,164,553

15,370,539

Total compensation

5,605,219

5,464,441

13,290,170

17,330,651

18,895,389

22,795,092

453,000

442,000

988,000

1,413,000

1,441,000

1,855,000

Employer social security ha)	Represents (a) full year compensation of five Executive Committee members, (b) partial year compensation of two outgoing members and c) partial year compensation of
the new Flavour Division President.
b)	Represents full year compensation of eight Executive Committee members and partial year compensation of one outgoing Executive Committee member.
c)	Company contributions to broad-based pension and retirement savings plans and annualised expenses accrued for supplementary executive retirement benefit.
d)	Represents annual value of health and welfare plans, international assignment benefits and other benefits in kind.
e)	Annual incentive accrued in reporting period based on performance in the reporting period.
f)	2018 Performance shares vest on 15 April 2021, 2017 Performance shares vest on 15 April 2020.
g)	Value at grant calculated according to IFRS methodology and based on 100% achievement of performance targets.
h)	2018 estimated social security charges based on 2018 compensation; 2017 estimated social security charges based on 2017 compensation.

Other compensation, fees and loans to members or former members of the Executive Committee
No other compensation or fees were accrued for or paid to any member or former member of the Executive Committee during thereporting period. No member or former member of the Executive Committee or related parties had any loan outstanding as of
31 December 2018.
Special compensation of Executive Committee members who left the company during the reporting period
Members of the Executive Committee that stepped down during 2018 did not receive any special compensation as a result of theirdeparture from the Company
Ownership of shares and unvested share rights
Details on the Givaudan share based payment plans are described in Note 9.
As per 31 December 2018, the Chairman and other Board members including persons closely connected to them held
3,906 Givaudan shares in total. For further details, please refer to the following table on the next page showing:–– The shares held individually by each Board member as per 31 December 2018.
–– The RSUs that were granted in 2016 – 2018 and were still owned by members of the Board as per 31 December 2018.

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 177

2018
in numbers

SharesCalvin Grieder, Chairman

Unvested
RSUs

210

737

Victor Balli

248

Prof. Dr-Ing. Werner Bauer

1,180

248

587

248

Michael Carlos

1,012

248

Ingrid Deltenre

117

248

Thomas Rufer

800

248

Total 2018

3,906

2,225

Total 2017

3,360

2,041

Lilian Biner

The company is not aware of any other ownership of shares, share options/option rights, RSUs or performance shares as per
31 December 2018 by persons closely connected to members of the Board.
The Chief Executive Officer and other members of the Executive Committee, including persons closely connected to them,held 5,097 Givaudan shares. For further details, please refer to the table below showing:–– The shares held individually by each member of the Executive Committee as per 31 December 2018.
–– The unvested performance shares that were granted in 2016-2018 and were still owned by members of the Executive
Committee as per 31 December 2018.
2018
in numbers

Unvested
performance
SharessharesGilles Andrier, CEO

2,400

4,909

438

1,304

Tom Hallam
Louie D'Amico

193

1,131

Maurizio Volpi

1,257

2,350

Simon Halle-Smith

260

1,403

Willem Mutsaerts

440

1,418

Anne Tayac

109

1,261

Total 2018

5,097

13,776

Total 2017

6,154

15,945

No member of the Executive Committee held any share options or option rights as at 31 December 2018(31 December 2017: no member of the Executive Committee held any share options or option rights).
One person closely connected to a member of the Executive Committee owned 279 unvested Performance Shares as at
31 December 2018.
The company is not aware of any other ownership of shares, share options/option rights, RSUs or performance shares as
per 31 December 2018 by persons closely connected to members of the Executive Committee.

Givaudan – 2018 Integrated Annual Report178 Financial report Notes to the consolidated financial statements

33. List of Principal Group Companies

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

Givaudan SA

CHF

92,336

Givaudan Suisse SA

CHF

4,500

Givaudan Finance SA

CHF

100,000

Givaudan International SA

CHF

100

Vamara Holding SA

CHF

100

Givaudan Treasury International SA

CHF

1,000

Naturex AG

CHF

15,288

Fondation Givaudan--

Givaudan Argentina SA

ARS

20,000Givaudan Argentina Servicios SA

ARS

8,000

Givaudan Australia Pty Ltd

AUD

35,812Naturex Australia Pty Ltd

AUD

0.003

Austria

Givaudan Austria GmbH

EUR

40

BelgiumNaturex SPRL

EUR

1,000

BermudaFF Holdings (Bermuda) Ltd

USD

12

Givaudan International Ltd

USD

12

FF Insurance Ltd

CHF

170

Givaudan do Brasil Ltda

BRL

345,381

G Nutra Ind Com Prod Alim e Nutricionais Ltda

BRL

31,219Naturex Ingredientes Naturais Ltda

BRL

7,035

Givaudan Canada Co

CAD

12,901Naturex Inc (Canada)

CAD

500

Givaudan Chile Ltda

CLP

5,000

Chile Botanics SA

CLP

1,837,205

Naturex Chile SA

CLP

1,731,600

Givaudan Fragrances (Shanghai) Ltd

USD

7,750

Givaudan Flavors (Shanghai) Ltd

USD

10,783

Givaudan Specialty Products (Shanghai) Ltd

USD

12,000Givaudan Hong Kong Ltd

HKD

7,374

Givaudan Flavors (Nantong) Ltd

USD

39,000Naturex Trading Shanghai Co Ltd

CNY

5,608

Colombia

Givaudan Colombia SA

COP

6,965,925

Czech Republic

Givaudan CR, s.r.o.

CZK

200

Egypt

Givaudan Egypt SAE

USD

21,360Givaudan Egypt Fragrances LLC

EGP

50

Givaudan France SAS

EUR

5,006

Espressions Parfurmées SAS

EUR

3,794

Oressences SAS

EUR

30,000Naturex SA

EUR

14,435SCI Les Broquetons

EUR

495

SAS SGD

EUR

13,523

Givaudan Deutschland GmbH

EUR

4,100

Naturex GmbH

EUR

150

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

Indonesia

P.T. Givaudan Indonesia

IDR

2,608,000

Italy

Givaudan Italia SpA

EUR

520

Expressions Parfumées SRLA

EUR

10

Naturex SpA

EUR

1,200

Naturex Ivory Coast Abidjan Purchasing

XOF

6,000

Argentina
Australia

BrazilCanada
Chile

China

FranceGermany
Hungary
India

Ivory Coast

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 179

Japan

Givaudan Japan K.K.

JPY

1,000,000

Naturex K.K.

JPY

5,000

Givaudan Korea Ltd

KRW

550,020Naturex Korea Seoul sales officeKRW

284,000

Givaudan Business Solutions Asia Pacific Sdn.Bhd

MYR

2,000

Givaudan Flavours & Fragrances Malaysia Sdn.Bhd

MYR

3,981

MoroccoNaturex Morocco Casablanca

MAD

24,640

MexicoGivaudan de Mexico SA de CV

MXN

53,611Naturex Ingredientes Naturales SA de CV

MXN

34,000Givaudan Nederland B.V.

EUR

402

Vika B.V.

EUR

20

Virgula B.V.

EUR

20

Naturex Coöperatief UA

EUR

1

New ZealandGivaudan NZ Ltd

NZD

71

Nigeria

Givaudan (Nigeria) Ltd

NGN

10,000Peru

Givaudan Peru SAC

PEN

1,303

Activ International SAC

PEN

14,043

Givaudan Polska Sp. Z.o.o.

PLN

50

Naturex Polska Sp. Z.o.o.

PLN

2,000

Givaudan Rus LLC

RUB

9,000

Naturex LLC

RUB

1,500

Givaudan Singapore Pte Ltd

SGD

24,000Naturex Holdings Singapore Private Ltd

SGD

160

South Africa

Givaudan South Africa (Pty) Ltd

ZAR

360,002

Spain

Givaudan Iberica, SA

EUR

8,020

Naturex Iberian Partners, SL

EUR

3,497

Givaudan North Europe AB

SEK

120

Swedish Oat Fiber AB

SEK

1,000

ThailandGivaudan (Thailand) Ltd

THB

100,000

TurkeyGivaudan Aroma Ve Esans Sanayi Ve Ticaret Limited Sirketi

TRY

34

United Kingdom

Givaudan UK Ltd

GBP

70

Major International Ltd

GBP

50

Givaudan Holdings UK Ltd

GBP

317,348Naturex Ltd

GBP

1,006

Givaudan Middle East & Africa FZE

AED

1,000

Expression Parfumées LLC

AED

300

Givaudan United States, Inc.

USD

0.05

Givaudan Flavors Corporation

USD

0.1

Givaudan Fragrances Corporation

USD

0.1

Givaudan Flavors and Fragrances, Inc.

USD

0.1

Naturex Holdings, Inc.

USD

0.1

Naturex, Inc.

USD

1Vegetable Juices, Inc.

USD-

Givaudan Venezuela SA

VES

4.5

Korea
Malaysia

Netherlands

PolandRussiaSingapore

SwedenUnited Arab Emirates
United States of America

Venezuela

Disclosure 102 – 45, pages 178 – 179

Givaudan – 2018 Integrated Annual Report180 Financial report Notes to the consolidated financial statements

34. Disclosure of the Process of Risk Assessment

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

35. Other information

On 14 December 2018, as part of its 2020 strategy to expand the capabilities of its fragrance business, Givaudan announced thatit has entered into exclusive negotiations to acquire Albert Vieille SAS, a French natural ingredients company specialised innatural ingredients used in the fragrance and aromatherapy markets. With its origins dating back to 1920, and with more than
50 employees, Albert Vieille is based close to Grasse, in France, and has a manufacturing facility in Spain, with its products soldglobally through a network of distributors.
As the closing of the acquisition is expected for 2019, these negotiations have no impact on the 2018 financial statements.

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181

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

Statutory Auditor’s Report
To the General Meeting of GIVAUDAN SA, Vernier
Report on the Audit of the Consolidated Financial Statements
OpinionWe have audited the consolidated financial statements of Givaudan SA and its subsidiaries (the Group), which comprise theconsolidated income statement, consolidated statement of comprehensive income, consolidated statement of financial position,
consolidated statement of changes in equity, consolidated statement of cash flows for the year ended 31 December 2018, andnotes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion the accompanying consolidated financial statements, presented on pages 120 to 180, give a true and fair view of theconsolidated financial position of the Group as at 31 December 2018, its consolidated financial performance and its consolidated cash
flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.
Basis for Opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Auditing Standards.
Our responsibilities under those provisions and standards are further described in the Auditor’s Responsibilities for the audit of theconsolidated financial statements section of our report. We are independent of the Group in accordance with the provisions of
Swiss law and the requirements of the Swiss audit profession, as well as the IESBA Code of Ethics for Professional Accountants, andwe have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our Audit Approach
Summary
Key audit matters

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

Materiality

Based on our professional judgment we determined materiality for the Group
as a whole to be CHF 55 million.

Scoping

Based on our understanding of Givaudan’s operations, we have defined 17 component operationsin 11 countries that are 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. Coverages as a ratio of group sales, operating income and 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 the consolidated
financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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

Acquisition accounting
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 in determining the fair value ofthe identifiable assets acquired, particularly intangibles, and theliabilities assumed. Such judgments require estimates that are not only
based on available information but as well on assumptions withrespect to the timing and amount of future revenues and expenses
associated with an asset and a liability. In addition, the purchase price isallocated to the underlying acquired assets and liabilities based on theirestimated fair value at the time of acquisition which adds to thecomplexity.

We obtained offering documents and sale and purchase agreements toevaluate the key terms and conditions, and confirming our understandingof the transactions by conducting inquiries with management.

As described in Note 6 to the consolidated financial statements, theGroup completed the following acquisitions during 2018:–– Acquisition of 100% of the share capital of Centroflora Nutraon 14 May 2018 for a total purchase price of CHF 55 million.
The acquisition resulted in the recognition of a goodwill of
CHF 39 million.
–– Acquisition of 100% of the share capital of Expressions Parfumées
on 4 June 2018 for a total purchase price of CHF 199 million.
The acquisition resulted in the recognition of a goodwill of
CHF 145 million.
–– Acquisition of 40.5% of the shares of Naturex for EUR 135 pershare and a total consideration of CHF 606 million on 5 June 2018.
On 9 August 2018, Givaudan acquired the full control of Naturex.
At that time, the non-controlling interests consisted of 2.76% of theshares of Naturex that have been fully acquired until 18 September
2018. The total purchase price of this acquisition amounts to
CHF 1’489 million. The Group acquired cash for CHF 20 million,
working capital valued at CHF 215 million, fixed assets valued at
CHF 203 million, intangibles valued at CHF 498 million and otherliabilities valued at CHF 350 million. The acquisition resulted in
the recognition of a goodwill of CHF 916 million.
These transactions are considered as business combinations as definedby IFRS 3 Business Combinations which requires management toperform a purchase price allocation to fair value the assets acquired
and liabilities assumed. This requires exercise of judgments over theaccounting and disclosure for the transactions.
The accounting for the acquisition of assets and liabilities of these
entities including the valuation of non-controlling interests, required anumber of complex accounting judgments sensitive to key assumptions
such as the discount rate, growth rate and other assumptions used in
the business plan, internal rate of return, attrition rate.
In addition, the amortisation period retained for intangibles acquiredalso requires judgment and constitutes a significant estimate that
affects current and future financial periods.
We focused on this area because of the complexity of acquisition
accounting and the level of judgment relating to the identification of
intangible assets and the purchase price allocation to the assets andliabilities acquired.

Givaudan – 2018 Integrated Annual Report

We challenged management on the identification and valuation of
tangible and intangible assets acquired and liabilities identified in theacquisition accounting against the terms of the sale and purchaseagreements.
We reviewed and assessed the work performed by management’s
external valuation experts including valuation methodology for eachcategory of assets and liabilities, along with the key judgments made in
determining the fair values including any fair value adjustments.
We performed procedures to assess the methods used by the
management’s valuation expert and compliance with IFRS 3 Business
Combinations.
We considered and challenged the reasonableness of the assumptions,finding them to be within an acceptable range. In particular, we
challenged sales forecasts with historical data and market trends, webenchmarked assumptions used in determining the discount and theattrition rates.
We also challenged the duration estimated by management foramortisation of the intangibles assets acquired, comparing them tocurrent Group accounting policies and other recent acquisitions.
We validated the appropriateness and completeness of the related
disclosures in Note 3 and Note 6 to the consolidated financial statements.
Based on the procedures performed above, we consider the assumptions
and estimates used in the measurement of the acquired assets andliabilities to be appropriate.

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

183

PensionKey Audit Matter

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

As described in the Summary of Significant Accounting Policies inNote 2 and in Note 3 on Critical Accounting Estimates and Judgments,
significant judgment is required in determining the calculation of thepresent value of defined benefit obligations requiring financial anddemographic assumptions. In addition, changes to the postemployment benefit liability may be accounted through the income
statement or through other comprehensive income which adds tothe complexity.

We assessed the design and implementation of controls in respect ofpension accounting.

The Group operates a number of defined benefit and defined
contribution plans throughout the world. As disclosed in Note 8
to the consolidated financial statements, total plan assets amountto CHF 1’618 million, total post-employment funded obligations to
CHF 2’011 million and post-employment unfunded obligations to
CHF 82 million.
The defined benefit obligations recognised in the consolidated
statement of financial position represent the present value of defined
benefit obligations calculated annually by independent actuaries. Theseactuarial valuations are sensitive to key assumptions such as discountrates. Changes in a number of the key assumptions can have a material
impact on the position as disclosed in the Note 8 to the consolidated
financial statements.
During 2018, the Group has reviewed financial assumptions of certain
pension plans in order to align them with local regulations. Thesetransactions resulted in past service cost of CHF 1 million in the United
Kingdom pension schemes.
We focused on this area because of the complexity of accounting
treatment of each plan amendment, the level of judgment required todetermine the valuation of both pension assets and pension obligations
and the significance of the balances to the consolidated financial
statements as a whole.

We evaluated management’s implementation of Group policies andcontrols regarding the asset valuation and the pension obligation
valuation.
With support from our pension specialists, we held discussions withGroup’s actuaries and challenged key assumptions underpinning thevaluation of the pension plans at the end of 2018.
Specifically we challenged the discount rate, inflation and mortality
assumptions applied in the calculation and benchmarked theassumptions applied against comparable third party data and assessed
the appropriateness of the assumptions in the context of the Group’s
own position. We found them to be within an acceptable range.
We tested the data used in the valuation of the pension plans, such as
employee data and we obtained statements from financial institutions
to verify the completeness and accuracy of the pension plan assets.
We validated the compliance of the accounting treatment oftransactions impacting pension plans with IAS 19 Employee Benefits.
We validated the appropriateness and completeness of the related
disclosures in Note 2, Note 3 and Note 8 to the consolidated financial
statements.
Based on our audit procedures performed, we obtained sufficientappropriate audit evidence to corroborate management’s estimates
regarding the valuation of both pension assets and pension obligations.

Givaudan – 2018 Integrated Annual Report184 Financial report Statutory auditor’s report on the consolidated financial statements

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 andis therefore subject to many tax regimes with differing rules andregulations. As described in the Summary of Significant Accounting
Policies in Note 2 and in Note 3 on Critical Accounting Estimatesand Judgments, significant judgment is required in determining
provision for income taxes, both current and deferred, as well as theassessment of provisions for uncertain tax positions including
estimates of interest and penalties where appropriate.

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

The effective tax rate of the group increased from 9% in 2017 to 14% in
2018. The consolidated statement of financial position includes current
tax assets of CHF 41 million, current tax liabilities of CHF 95 million,
together with deferred tax assets of CHF 208 million and deferred tax
liabilities of CHF 238 million. The tax expense recognised in the
consolidated income statement amounts to CHF 109 million. Detailsof all current and deferred tax balances are disclosed in Note 16 to theconsolidated financial statements.
Due to their significance to the financial statements as a whole,combined with the level of judgment and estimation required todetermine their values, the evaluation of current and deferred tax
balances including the assessment of provisions for uncertain tax
positions is considered to be a key audit matter.

We assessed the design and implementation of controls in respect toprovisions for current tax and the recognition and recoverability ofdeferred tax assets.
We examined the procedures in place for the current and deferred tax
calculations for completeness and valuation and audited the related
tax computations and estimates in the light of our knowledge of thetax circumstances. Our work was conducted with the support of our
tax specialists at group level.
We performed an assessment of the material components impacting
the Group’s tax expense, balances and exposures. We reviewed andchallenged the information reported by components with the supportof our own local tax specialists, where appropriate. With the support ofour tax specialists at group level, we verified the consolidation andanalysis of tax balances.
We considered management’s assessment of the validity and adequacyof provisions for uncertain tax positions, evaluating the basis ofassessment and reviewing relevant correspondence and legal advice
where available including any information regarding similar cases withthe relevant tax authorities.
For the deferred tax assets and liabilities, we assessed theappropriateness of management’s assumptions and estimates.
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 sufficientappropriate audit evidence to corroborate management’s judgement
and estimates regarding current and deferred tax balances including
provisions for uncertain tax positions.

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185

Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of
our audit work and in evaluating the results of our work.
Based on our professional judgment we determined materiality for the Group as a whole to be CHF 55 million, based on a
calculation of 7% of Group income before taxes, adjusted for non-recurring transactions. We selected Group income before taxes
as the basis for determining our materiality because, in our view, this measure represents the performance of the Group and is oneof the indicators against which Givaudan is commonly assessed and is a generally accepted benchmark. The materiality applied by
the component auditors ranged from CHF 41.2 million to CHF 13.8 million depending on the scale of the component’s operations,the component’s contribution to Group sales, Group income before taxes, Group total assets and our assessment of risks specificto each location.
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of CHF 2.7 million, as
well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit
Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.
An overview of the scope of our audit
We designed our audit by obtaining an understanding of the Group and its environment, including Group-wide controls,
determining materiality and assessing the risks of material misstatement in the consolidated financial statements.
Based on our understanding of Givaudan’s operations, we have defined 17 component operations in 11 countries that are in scope
for the group reporting purposes. We have requested these countries to perform audit procedures to address the risks identified inour risk assessment phase.
These countries are spread across all regions, reflecting Givaudan’s operations. We obtain assurance over these countries througha combination of audit procedures performed locally, within the Givaudan shared service centres and centrally at the Head office.
In aggregate, these components represented scope coverage of:
Revenue

Gross profit

79%

88%
21%

Audits for group reporting purposes

Net assets

86%
12%

14%

Review at group level

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

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

Other Information in the Annual Report
The Board of Directors is responsible for the other information in the annual report. The other information comprises all
information included in the annual report, but does not include the consolidated financial statements, the stand-alone financial
statements of the Company and our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information in the annual report and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information in theannual report and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work wehave performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibility of the Board of Directors for the Consolidated Financial Statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fair view inaccordance with IFRS and the provisions of Swiss law, and for such internal control as the Board of Directors determines isnecessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative
but to do so.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonableassurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law, ISAs and Swiss
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the website of EXPERTsuisse:
http://expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our auditor’s report.

Report on Other Legal and Regulatory Requirements

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

Karine Szegedi Pingoud

Laetitia Cejudo

Licensed Audit Expert
Auditor in Charge

Licensed Audit Expert

Geneva, 23 January 2019

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 187

Givaudan – 2018 Integrated Annual Report

188

Financial report Statutory financial statements of Givaudan SA

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

For the year ended 31 Decemberin millions of Swiss francs

Income from investments in Group companies

Note

2018

2017

3

205

145

973

1,002

Royalties from Group companies
Other operating income

1

1

Total Operating income

1,179

1,148

Research and development expenses to Group companies

(331)

(305)

Other operating expenses

(62)

(46)

Amortisation and impairment of intangible assets

(60)

(64)

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

5

3

–

(450)

(415)

Operating income

729

733

Financial expenses

(257)

(155)

Financial income

196

107

Non-operating expenses

(91)

(84)

Extraordinary, non-recurring expenses–

Income before taxes

577

601

Income taxes

(31)

(10)

Net income

546

591

Givaudan – 2018 Integrated Annual ReportFinancial report Statutory financial statements of Givaudan SA

189

Statement of Financial Positionin millions of Swiss francs

Cash and cash equivalents

Note

4

31 December
2018

31 December
2017

143

250

Accounts receivable from Group companies

218

186

Other current assets

20

24

Accrued income and prepaid expenses

1

13

Current assets

382

473

Loans to Group companies

150

150

Other long-term assets

121

Investments in Group companies

3

4,666

2,849

Jointly controlled entities

5

32

32

Other financial assets

1010Intangible assets

230

241

Non-current assets

5,100

3,283

Total assets

5,482

3,756

Short-term debt

6300

Accounts payable to Group companies

99

96

Other current liabilities

51

19

Deferred income and accrued expenses

15

2

Current liabilities

165

417

3,010

1,049

Long-term debt

6

Other non-current liabilities
Non-current liabilities
Total liabilities

44

60

3,054

1,109

3,219

1,526

Share capital

8

92

92

Statutory retained earnings

8

18

18

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

8

3

3

Voluntary retained earnings

8

1,542

1,542

8, 9

(22)

(43)

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

84

27

- Net (loss) income for the year

546

591

Equity

2,263

2,230

Total liabilities and equity

5,482

3,756

Givaudan – 2018 Integrated Annual Report

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Financial report Notes to the statutory financial statements

Notes to the statutory financial statements
1. General Information
1.1. Structure and description of the activity
Givaudan SA is a holding company based in Vernier, near Geneva, whose main goal is to manage its investments in subsidiaries.
More specifically Givaudan SA invests in companies whose aim is to manufacture and commercialise natural and synthetic
aromatic or fragrance raw materials as well as other related products. In addition, Givaudan SA invests in research anddevelopment and supplies services for the use of these products. Givaudan SA develops, registers and makes use of all trademarks,
patents, licenses, manufacturing processes and formulas.
1.2. Employees
The average number of employees during the year was less than ten (2017: less than ten).

2. Summary of accounting principles adopted

The financial statements at 31 December 2018 are prepared in accordance with Swiss law.
The company is classified as a large entity as it meets the criteria to present group accounts under the definition of art. 961d al. 1of the Swiss Code of Obligations. As Givaudan prepares and reports comprehensive consolidated financial statements underInternational Financial Reporting Standards (IFRS) including a cash flow statement, accompanying notes and a management
report, Givaudan SA is exempt from preparing this information.
Valuation Methods and Translation of Foreign Currencies
Investments in, and loans to, Group companies are stated at cost less appropriate write-downs. Marketable securities are shownat the lower of cost and market value. Derivatives are recorded at fair value.
The currency in which Givaudan SA operates is Swiss francs (CHF) and the accounts are presented in Swiss francs. In the statementof financial position, foreign currency assets and liabilities are remeasured at year-end exchange rates with the exception of
investments in Group companies which are valued at historical exchange rates. In the income statement, expenses and income inforeign currencies are converted in Swiss francs using the daily exchange rate of the transaction date. Foreign currency gains andlosses are recognised in the income statement as they occur with the exception of unrealised gains which are deferred.

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191

3. Subsidiaries

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

Givaudan Suisse SA
Givaudan Finance SA
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

CanadaGivaudan Canada Co

Chile

Givaudan Chile Ltda

China

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

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
Oressences SAS
Naturex SA
SAS SGD

Germany

Givaudan Deutschland GmbH

GuatemalaGivaudan Guatemala SA

Hungary

Givaudan Hungary Kft
Givaudan 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.
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

United Arab Emirates

Givaudan Middle East & Africa FZE

United States of America

Givaudan United States, Inc.

Venezuela

Givaudan Venezuela SA
Givaudan – 2018 Integrated Annual Report192 Financial report Notes to the statutory financial statements

In 2018 Givaudan SA increased its investments in Givaudan Argentina SA, Givaudan Argentina Servicios SA, Givaudan Egypt SAE,
Givaudan Management Consulting (Shanghai) Ltd, Givaudan Flavors (Nantong) Ltd, Givaudan Fragrances (Changzhou) Ltd, Givaudan
Peru SAC and incorporated Naturex SA, SAS SGD, Oressences SAS, Givaudan Flavours & Fragrances Malaysia Sdn.Bhd and Induchem
AG. Active International SA, Select-Ingredient SA and Induchem have been merged into Givaudan Suisse SA during 2018.

4. Cash and cash equivalents

As at 31 December 2018, cash and cash equivalents include an amount of CHF 133 million related to the cash pooling agreementswith a Group company.
As at 31 December 2017, an amount of CHF 236 million related to the cash pooling agreements with a Group company was includedin the cash and cash equivalents.

5. Jointly Controlled Entities
Principal activity

Country of incorporation

Ownership interest /Voting rights

Production of fragrance ingredients

China

49%

Innovative natural ingredients

USA

49%

Natural Extracts International Ltd

Natural ingredient derivatives production

Mauritius

49%

Vanilla International Ltd

Natural ingredient collection and extract

Mauritius

49%

Name of joint ventures

Jiangsu Xinrui Aromatics Ltd
BGN Tech LLC

6. Debt

On 15 June 2011 Givaudan SA issued a 2.5% seven year public bond with a nominal value of CHF 300 million, which was redeemed inJune 2018.
On 7 December 2011 Givaudan SA issued a dual tranche public bond transaction of CHF 150 million each, totalling CHF 300 million,
respectively of 1.250% for five years and of 2.125% for ten years. The first tranche was redeemed in December 2016.
On 19 March 2014 Givaudan SA issued a 1.00% six and a half year public bond with a nominal value of CHF 100 million and a 1.75%
ten year public bond with a nominal value of CHF 150 million.
In December 2016 Givaudan SA issued a 0.00% six year public bond with a nominal value of CHF 100 million and a 0.625%
fifteen year public bond with a nominal value of CHF 200 million.
On 20 December 2017 Givaudan SA entered into a five year floating rate private placement (Schuldschein) with a nominal valueof EUR 100 million (CHF 117 million) and a seven year 1.331% fixed rate private placement (Schuldschein) with a nominal value of
EUR 200 million (CHF 233 million). The proceeds of EUR 300 million were used mainly to repay the short-term borrowings
withdrawn during the year 2017.
Givaudan SA issued a two year floating rate public bond with a nominal value of CHF 150 million and a seven year 0.375% fixed rate
public bond with a nominal value of CHF 200 million on 9 April 2018. The proceeds of CHF 350 million were used mainly to repay
the 2.5% seven year public bond with a nominal value of CHF 300 million, which was redeemed on 15 June 2018.
In September 2018 Givaudan SA issued a dual tranche placement of senior debt notes (the ‘Notes’) totalling EUR 1,300 million(CHF 1,455 million), respectively of EUR 500 million (CHF 559 million) at a fixed rate of 1.125% for seven years and EUR 800 million(CHF 896 million) at a fixed rate of 2.000% for twelve years. The proceeds were used for the acquisition of Naturex.
As at 31 December 2018 Givandan SA had borrowings of EUR 150 million (CHF 169 million) under the Group bank credit facility.

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193

7. Indirect Taxes

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

8. Equity

As at 31 December 2018, the share capital amounts to CHF 92,335,860, divided into 9,233,586 fully paid-up registered shares,
with a nominal value of CHF 10.00 each. Every share gives the right to one vote.
The Board of Directors has at its disposal conditional capital of a maximum aggregate amount of CHF 7,481,980 that may be
issued through a maximum of 748,198 registered shares, of which a maximum of CHF 1,618,200 can be used for executive shareoption plans.
At the Annual General Meeting held on 22 March 2018 the distribution of an ordinary dividend of CHF 58.00 per share(2017: CHF 56.00 per share) was approved. The dividend payment has been made out of available retained earnings.
The movements in equity are as follows:2018
in millions of Swiss francs

Balance as at 1 January

Share
CapitalStatutoryretainedearnings

Additional
paid-in
capitalVoluntary
retainedearnings

92

18

3

1,542

Available
retainedearnings Own shares

618

Total

(43)

2,230

21

21

Registered shares
Issuance of shares
Movement of shares
Appropriation of available earnings
Distribution to the shareholders paid relating to 2017(534)

Net profit for the year

546

Balance as at 31 December

2017
in millions of Swiss francs

Balance as at 1 January

92

18

3

1,542

Share
CapitalStatutoryretainedearnings

Additional
paid-in
capitalVoluntary
retainedearnings

92

18

3

1,542

630

(534)
546
(22)

Available
retainedearnings Own shares

542

2,263

Total

(45)

2,152

2

2

Registered shares
Issuance of shares
Movement of shares
Appropriation of available earnings
Distribution to the shareholders paid relating to 2016

(515)

Net profit for the year

591

Balance as at 31 December

92

18

3

1,542

618

(515)
591
(43)

2,230

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

Givaudan – 2018 Integrated Annual Report194 Financial report Notes to the statutory financial statements

9. Own Shares

The movements in own shares are as follows:
Price in Swiss francs
2018

NumberBalance as at 1 January

23,838Purchases at cost

Total inmillions of
Swiss francs

High

AverageLow

12,312

1,959.0

1,909.0

1,791.0

24

Sales and transfers at cost

(24,244)

1,843.5

1,843.5

1,843.5(45)

Balance as at 31 December

11,9062017

NumberBalance as at 1 January

31,137Purchases at cost

43

22
Price in Swiss francs

Total inmillions of
Swiss francs

High

AverageLow

25,7501,920.2

1,843.6

1,690.0

47

Sales and transfers at cost

(33,049)

1,488.6

1,488.6

1,488.6(49)

Balance as at 31 December

23,83845

43

As at 31 December 2017 and 2018, there were no other companies controlled by Givaudan SA that held Givaudan SA shares.
As at 31 December 2018, William H. Gates III (13.86%), BlackRock Inc. (5.02%), MFS Investment Management (5.04%), Nortrust
Nominees Ltd (nominee; 15.04%), Chase Nominees Ltd (nominee; 6.36%) and Messieurs Pictet & Cie (nominee; 4.54%) were the only
shareholders holding more than 3% of total voting rights.

10. Board of Directors and Executive Committee Compensation

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

11. Other information

On 14 December 2018, as part of its 2020 strategy to expand the capabilities of its fragrance business, Givaudan announced thatit has entered into exclusive negotiations to acquire Albert Vieille SAS, a French natural ingredients company specialised innatural ingredients used in the fragrance and aromatherapy markets. With its origins dating back to 1920, and with more than
50 employees, Albert Vieille is based close to Grasse, in France, and has a manufacturing facility in Spain, with its products soldglobally through a network of distributors.
As the closing of the acquisition is expected for 2019, these negotiations have no impact on the financial statements to
December 2018.

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the statutory financial statements

195

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

Available earnings
in Swiss francs

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

2018

2017

545,997,253

590,763,886

84,113,920

27,149,322

630,111,173

617,913,208

2017 distribution proposal of CHF 58.00 gross per share

535,547,988

2018 distribution proposal of CHF 60.00 gross per share

554,015,160

Total appropriation of available earnings

554,015,160

535,547,988

76,096,013

84,113,920

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

1,748,700

Statutory capital reserves from capital contributions – additional paid-in capital
2018

2017

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 – 2018 Integrated Annual Report196 Financial report Statutory auditor’s report on the financial statements

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

Statutory Auditor’s Report
To the General Meeting of GIVAUDAN SA, Vernier
Report on the Audit of the Financial Statements
OpinionWe have audited the financial statements of Givaudan SA, which comprise the income statement, the statement of financial
position for the year ended 31 December 2018, and notes, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements as at 31 December 2018, presented on pages 188 to 195, 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 ourreport. We are independent of the entity in accordance with the provisions of Swiss law and the requirements of the Swiss audit
profession and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Report on Key Audit Matters based on the circular 1/2015 of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole,and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Givaudan – 2018 Integrated Annual ReportFinancial report Statutory auditor’s report on the financial statements 197

Valuation of Investments in Group companies
Key Audit Matter

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

As described in Note 3 to the financial statements, theCompany holds investments in Givaudan Group companies
with a carrying value of CHF 4,666 million as of 31 December
2018, representing 85% of total assets.

We evaluated management’s implementation of accounting
policies and controls regarding the valuation of investments inGroup companies.

In accordance with Article 960 CO, each investment held isvalued individually and reviewed annually for impairment
indicators. 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 amount.
The impairment test performed by Givaudan management issubject to judgment 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
judgement and estimates applied by Management on thevaluation of these investments as representing a key audit
matter.

We evaluated the design and implementation of controls
around the valuation of investments to determine whether
appropriate controls are in place.
We challenged the assessment of impairment indicators by
the Company.
We tested the valuations by critically assessing themethodology applied and the reasonableness of theunderlying assumptions and judgments. We assessed the
impairment testing models and calculations by:–– checking the arithmetic accuracy of the impairment
models and the extraction of inputs from source
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 togenerate positive cash flows in the future.
We validated the appropriateness and completeness of therelated disclosures in Note 3 to the financial statements.
Based on the procedures performed, we consider judgement
and estimates applied by Management on the valuation of
investments in Group companies to be reasonable.

Givaudan – 2018 Integrated Annual Report

198

Financial report Statutory auditor’s report on the financial statements

Responsibility of the Board of Directors for the Financial Statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisions of Swisslaw and the company’s articles of incorporation, and for such internal control as the Board of Directors determines is necessary toenable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability to continue as agoing concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is ahigh level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and Swiss Auditing Standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users takenon the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the website of EXPERTsuisse:
http://expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our auditor’s report.

Report on Other Legal and Regulatory Requirements

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

Karine Szegedi Pingoud

Laetitia Cejudo

Licensed Audit Expert
Auditor in Charge

Licensed Audit Expert

Geneva, 23 January 2019

Givaudan – 2018 Integrated Annual ReportFinancial report Notes to the consolidated financial statements 199

Givaudan – 2018 Integrated
integrated Annual Report

200

Givaudan – 2018 Integrated Annual Report

201

Appendix

In this section
202

GRI disclosures

206

The Sustainable Development Goals

207

The principles of the UN Global Compact

208

Givaudan registered offices

212

Givaudan sites worldwide218

Our reporting suite

Givaudan – 2018 Integrated Annual Report202 Appendix

GRI disclosures

GRI disclosures
Location of the GRI Disclosures

This table provides an overview of the locations of GRI
Disclosures in Givaudan’s 2018 reporting suite.
Strategic information about Givaudan’s sustainability approach,stakeholder engagement and the material topics can be found in
Our Sustainability Approach. GRI 103: Management Approach,Disclosures 103-1 (Explanation of the material topic and its
Boundary) and 103-2 (The management approach and its
components) for all material topics are included in this document.

GRI 103: Management Approach, Disclowsure 103-3 (Evaluationof the management approach) and all other Topic Specific
Disclosures related to actual performance are included either inthe 2018 Integrated Annual Report or the 2018 Sustainability
Progress Review.
Full GRI Content Index with the complete set of informationand page references can be found in the 2018 Sustainability
Progress Review which will be published in March 2019.

AR = 2018 Integrated Annual Report
SPR = 2018 Sustainability Progress Review
SA = Our Sustainability Approach

GRI General Disclosures 2016

Location

Organisational profile

GRI 102 – 1: Name of the organisation

AR: pages 100 – 101

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

AR: pages 100 – 101

GRI 102 – 3: Location of headquarters

AR: pages 100 – 101

GRI 102 – 4: Location of operations

AR: pages 212 – 217

GRI 102 – 5: Ownership and legal form

AR: pages 100 – 101

GRI 102 – 6: Markets served
GRI 102 – 7: Scale of the organisation
GRI 102 – 8: Information on employees and other workers
GRI 102 – 9: Supply chain
GRI 102 – 10: S ignificant changes to the organisation and its supply chain
GRI 102 – 11: Precautionary principle or approach

AR: Cover flap
AR Cover flap; page 122
AR: page 205
AR: pages 62 – 64
AR: pages 4 – 9
AR: pages 72 – 75

GRI 102 – 12: External initiatives

SA: pages 35 – 37

GRI 102 – 13: Membership of associations

SA: pages 37 – 38

Strategy

GRI 102 – 14: Statement from senior decision-makerGRI 102 – 15: Key impacts, risks and opportunities

AR: pages 6 – 9
AR: pages 15, 36 – 37; SPR

Ethics and integrity

GRI 102 – 16: Values, principles, standards, and norms of behaviour

AR: pages 76 – 78, 81 – 82

Governance

GRI 102 – 18: Governance structure

AR: pages 103 – 115; SA: page 7

Stakeholder engagement

GRI 102 – 40: List of stakeholder groups
GRI 102 – 41: Collective bargaining agreements
GRI 102 – 42: Identifying and selecting stakeholders
GRI 102 – 43: Approach to stakeholder engagement
GRI 102 – 44: Key topics and concerns raised

Givaudan – 2018 Integrated Annual Report

AR: page 13; SA: pages 42 – 43
AR: page 57
SA: pages 42 – 43
SA: page 43
SA: pages 42 – 43

Appendix

GRI General Disclosures 2016

GRI disclosures 203

Location

Reporting practiceGRI 102 – 45: Entities included in the consolidated financial statements
GRI 102 – 46: Defining report content and topic Boundaries
GRI 102 – 47: List of material topics
GRI 102 – 48: Restatements of information
GRI 102 – 49: Changes in reporting

AR: pages 100 – 101, 179 – 180
SA: page 44
SA: pages 46 – 47
SPR
SPR; SA: page 44

GRI 102 – 50: Reporting period

SPR

GRI 102 – 51: Date of most recent report

SPR

GRI 102 – 52: Reporting cycle

SPR

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

SPR

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

SPR

GRI 102 – 55: GRI content index

SPR

GRI 102 – 56: External assurance
GRI Topic Specific Disclosures 2016

SPR
Location

GRI 200: Economic

GRI 201: Economic performanceGRI 202: Market presenceGRI 203: Indirect economic impacts

AR: pages 40 – 43, 74, 153 – 158; SA: pages 4 – 6, 49
AR: pages 55 – 56; SPR; SA: pages 26 – 27, 53
AR: page 82; SA: pages 11, 51

GRI 204: Procurement practices

AR: page 64; SPR, SA: pages 8 – 14, 49, 52

GRI 205: Anti-corruption

AR: pages 77 – 78; SA: pages 32 – 33, 52

GRI 300: Environmental

GRI 301: Materials

AR: pages 62 – 63, 69; SPR, SA: pages 24 – 25, 49, 51 – 52

GRI 302: Energy

AR: pages 67 – 68; SPR, SA: pages 22 – 23, 48, 51

GRI 303: Water

AR: pages 67 – 69; SPR; SA: pages 23 – 24, 53

GRI 304: Biodiversity
GRI 305: Emissions
GRI 306: Effluents and waste
GRI 308: Supplier environmental assessment

SPR, SA: pages 14, 48
AR: pages 67 – 68; SPR, SA: pages 22 – 23, 48, 51
AR: pages 67 – 69; SPR, SA: pages 23 – 24, 53
SPR, SA: pages 8 – 10, 49, 52 – 53

GRI 400: Social

GRI 401: Employment
GRI 402: Labour/management relations
GRI 403: Occupational health & safety
GRI 404: Training and education

AR: pages 54 – 55, 205; SA: pages 26 – 29, 52
AR: page 57; SA: pages 28, 50
AR: pages 58 – 59, 204; SA: pages 29, 50
AR: pages 55 – 56; SA: pages 26 – 27, 52

GRI 405: Diversity and equal opportunity

AR: pages 56 – 57; SA: pages 26 – 27, 49, 52 – 53

GRI 406: Non-discrimination

AR: page 56; SPR; SA: pages 26 – 27, 49 – 50, 53

GRI 407: Freedom of association and collective bargaining

AR: page 57; SPR, SA: pages 8 – 10, 28, 50

GRI 408: Child labour

AR: pages 76 – 77, 81; SPR, SA: pages 8 – 10, 27, 50

GRI 409: Forced or compulsory labour

AR: pages 76 – 77, 81; SPR, SA: pages 8 – 10, 27, 50

GRI 412: Human rights assessment
GRI 413: Local communities

AR: pages 76 – 77, 81; SPR, SA: pages 27, 50
AR: pages 30, 82; SA: pages 11, 51

GRI 414: Supplier social assessment

SPR, SA: pages 8 – 10, 50, 52

GRI 416: Customer health and safety

AR: page 80; SA: pages 33 – 34, 48, 51

GRI 417: Marketing and labelling

AR: page 80; SA: pages 34, 51

Givaudan – 2018 Integrated Annual Report

204

Appendix

GRI disclosures

Additional social GRI disclosures

Health and safety indicators

The basis for the calculation of the social indicators on the next
two pages is the head count of Givaudan employees, internal
temporary workers. It excludes acquisitions except Activ
International.
The following table shows gives an overview to help interprete
the disclosures.

Givaudan employees
2018

2017

Total number of full time employees1

13,598

11,170Total number of employees (headcount)²

11,725

11,313

1. T his is defined as the equivalent full time employees and includes aquisitions. In
2017 employees from Activ International are included. In 2018 the number includes
employees from Activ International, Vika B.V., Centroflora Nutra, Expressions
Parfumées and Naturex.
2.	T his is defined as the number of physical people and Includes internal temporary
employees, and employees from the acquisition of Activ International.

Health and safety data
2018

2009

2017

Fatalities

0

0

0

Number of LTIs

79

32

24

LTI rate

1.03

0.33

0.25

Lost day rate 1
Number of Restricted Work
Cases (RWC)
Number of Medical
Treatment Cases (MTC)
Number of Total Recordable
Cases (TRC)

N/A

6.73

6.61

28

45

56

28

61

50

135

138

130

Total Recordable Case Rate 2
Number of lost days ³

1.76
N/A

1.43
647

1.33
645

15,341,093 19,239,626

19,503,663

Number of hours worked ⁴
Absenteeism ⁵

N/A

2.5%

2.7%

1. Number of lost work days resulting from work-related accidents per 200,000
working hours. Calculation based on scheduled work days lost from the day after
the accident.
2. LTI and TRC are both according to the official OSHA definitions.
3. 2017 includes one day carried over from previous year. 2018 includes 128 days
carried over from previous year.
4. 10.5% of these represent external contractors for whom the Company is liable.
5. Compared to the number of normal available working days, includes correction for
employees working on a part-time basis.
Total recordable cases by region and gender
RegionWomen

Men

Asia Pacific014Europe, Africa & Middle East

3

48

Latin America

1

4North America

11

49

Total

15

115

Absenteeism

LTI rate, lost day rate, absenteeism – by region
RegionLTI rate

Lost day rate

Asia Pacific

0.13

4.71

1.0%

Europe, Africa & Middle East

0.31

7.83

4.0%

Latin America

0.22

8.83

1.7%

North America

0.27

4.67

2.9%

Disclosure 403 – 2Givaudan – 2018 Integrated Annual ReportAppendix

GRI disclosures 205

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

Age range
30–50

Asia Pacific16%

Europe, Africa and Middle East

16%

Latin America

16%

Male

Total

12%

13%

12%

13%

10%

11%

13%

12%

13%

Age range>50

Female

11%

17%

9%

13%

12%

12%

North America

20%

12%

11%

14%

12%

12%

Total 2018

16%

10%

12%

13%

11%

12%

Total 2017

16%

9%

11%

10%

10%

10%

Age range<30

Age range
30–50

Age range>50

Female

Male

Total

225

250

8

190

293

483

Europe, Africa and Middle East

336

404

23

344

419

763

Latin America

184

150

5

134

205

339

Disclosure 401 – 1

New employee hires by age group, gender and region

Asia PacificNorth America

105

103

22

77

153

230

Total 2018

850

907

58

745

1,070

1,815

Total 2017

678

798

77

634

919

1,553

Disclosure 401 – 1

Employees by employment type
Full-time – women

Full-time – men

Part-time – womenPart-time – men

Total – women

Total – men

Asia Pacific

1,206

1,595

14

1

1,220

1,596

Europe, Africa and Middle East

1,784

3,160

129

33

1,913

3,193

Latin America

560

1,041

6

0

566

1,041

North America

769

1,420

6

1

775

1,421

Total 2018

4,319

7,216

155

35

4,474

7,251

Total 2017

4,157

6,969

156

31

4,313

7,000

Permanent –women

Permanent –men

Temporary –women

Temporary –menTotal –
women

Total –
men

Asia Pacific

1,199

1,576

21

20

1,220

1,596

Europe, Africa and Middle East

1,850

3,103

63

90

1,913

3,193

559

1,032

7

9

566

1,041
1,421

Employees by employment contract

Latin America

775

1,421

0

0

775

Total 2018

4,383

7,132

91

119

4,474

7,251

Total 2017

4,233

6,872

80

128

4,313

7,000

North America

Disclosure 102 – 8Givaudan – 2018 Integrated Annual Report

206

Appendix

The Sustainable Development Goals

The Sustainable Development Goals
Sustainable development calls forconcerted efforts towards building
an inclusive and sustainable
future for people and planet.

The Sustainable Development Goals (SDGs), adopted by theUnited Nations and entered into force on 1 January 2016, buildon the success of the Millennium Development Goals (MDGs).
The ambitious goals shall be achieved by 2030 througheffective action taken through both the public and private
sector in all countries.

Goal 1: End poverty in allits forms everywhere

Goal 7: Ensure access toaffordable, reliable,
sustainable and modern
energy for all

Goal 13: Take urgent
action to combat climatechange and its impacts

Goal 2: End hunger,
achieve food security andimproved nutrition andpromote sustainableagriculture

Goal 8: Promote inclusive
and sustainable economic
growth, employment anddecent work for all

Goal 14: Conserve andsustainably use theoceans, seas and marine
resources

Goal 3: Ensure healthy
lives and promote
well-being for all at all
ages

Goal 9: Build resilient
infrastructure, promotesustainableindustrialization andfoster innovation

Goal 15: Sustainably
manage forests, combat
desertification, halt andreverse land degradation,
halt biodiversity loss

Goal 4: Ensure inclusive
and quality education for
all and promote lifelong
learning

Goal 10: Reduce
inequality within andamong countries

Goal 16: Promote just,peaceful and inclusive
societies

Goal 5: Achieve genderequality and empower all
women and girls

Goal 11: Make cities
inclusive, safe, resilientand sustainable

Goal 17: Revitalize theglobal partnership forsustainable development

Goal 6: Ensure accessto water and sanitation
for all

Goal 12: Ensuresustainable consumption
and production patterns

	SDGs Givaudan explicitly contributes to according to its mapping of material issues (see Our Sustainability Approach).
www.un.org/sustainabledevelopment

Givaudan – 2018 Integrated Annual ReportAppendix

The principles of the UN Global Compact 207

The principles of the UN Global Compact
The UN Global Compact
asks companies to embrace,
support and enact, within
their sphere of influence, a setof core values in the areas ofhuman rights, labour
standards, the environment
and anti-corruption:

Human rights

Principle 1
Businesses should support and respect the protection ofinternationally proclaimed human rights
Principle 2
Make sure that they are not complicit in human rights abusesLabourPrinciple 3	Businesses should uphold the freedom of association and theeffective recognition of the right to collective bargaining
Principle 4
The elimination of all forms of forced and compulsory labour
Principle 5
The effective abolition of child labour
Principle 6	The elimination of discrimination in respect of employment
and occupation

Environment

Principle 7
Businesses are asked to support a precautionary approach toenvironmental challenges
Principle 8
Undertake initiatives to promote greater
environmental responsibility
Principle 9
Encourage the development and diffusion of environmentallyfriendly technologies

Anti-corruption

Principle 10
Businesses should work against corruption in all its forms,
including extortion and bribery	
w ww.unglobalcompact.org

Givaudan – 2018 Integrated Annual Report

208

Appendix

Givaudan registered offices

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 Zoned’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

Naturex Australia Pty Ltd

9 Garling Road, Kings Park NSW 2148

Austria

Givaudan Austria GmbH

Twin Tower Vienna, Wienerbergstrasse 11, 1109 Vienna

BermudaGivaudan International Ltd

Hamilton

FF Holdings (Bermuda) Ltd

Hamilton

FF Insurance Ltd

Hamilton

Naska Ingredients NV

Lausbedstraat 4, 3630 Maasmechelen

Naturex SPRL

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

Givaudan do Brasil Ltda

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

Naturex Ingredients Nataurais Ltda

Avenida Buriti no. 5.391, Distrito Industrial, city of Manaus, stateof 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 deHuechuraba, Santiago de Chile

Naturex CHILE SPA

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

Chile Botanics SA

Panamericana Sur, Kilómetro 297, Comuna de Linares

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

Naturex Trading Shanghai Co. Ltd

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

BelgiumBrazilCanada
Chile

China

Givaudan – 2018 Integrated Annual ReportAppendix

Givaudan registered offices 209

Country

Legal Entity name

Address

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 SA

55 Rue de la Voie des Bans, CS500024, 95102 Argenteuil Cedex

Expressions Parfumées

136 Chemin de Saint-Marc, 06130 Grasse

Naturex SA

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

Givaudan Deutschland GmbH

Giselherstrasse 11, 44319 Dortmund

Naturex GmbHIm Zollhafen 24, Kranhaus Süd, 50678 Köln

GuatemalaGivaudan Guatemala SA

Boulevar Los Proceres 18, Calle 24 – 69 Zona 10, Empresarial Zona
Pradera, Torre 1, Oficiana 1201-01010

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

Indonesia

PT. Givaudan Indonesia

Jl. Raya Jakarta-Bogor Km 35, Cimanggis Depok, 16951
West Java

Iran

Givaudan International SA, Iran Branch

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

Italy

Givaudan Italia SpA

Via Borgogne 5, 20121 Milano

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

NBC MITA Building 7F, 5-29-18, Shiba, Minato-Ku, Tokyo

Givaudan Flavours & Fragrances Malaysia Sdn. Bhd

48 Jalan Kota Laksamana 2/15, Taman Kota Laksamana, Seksyen
2, 75200 Melaka

Givaudan Business Solutions Asia Pacific Sdn. Bhd

1 First Avenue, Banda Utama, level 12, Bandar Utama, PJU 6,
47800 Petaling Jaya, Selangor

Givaudan de México SA de CV

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

Grupo Givaudan 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

Givaudan MEA FZE Morocco Branch

8 Rue Ibnou Binna Aladdadi, Bourgogne, 20053 Casablanca

Naturex Maroc SA

Technopole ONDA – BP 42 20240 Nouasser, Casablanca

Givaudan Singapore Pte Ltd (Myanmar Branch)

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

India

Ivory CoastJapan
Malaysia

MexicoMoroccoMyanmarGivaudan – 2018 Integrated Annual Report

210

Appendix

Givaudan registered offices

Country

Legal Entity name

Address

Netherlands

Givaudan Nederland B.V.

Huizerstraatweg 28, 1411 GP Naarden

Givaudan Treasury International B.V.
(in liquidation)

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 Rd, Pukekohe 2120

Nigeria

Givaudan (Nigeria) Limited

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

Pakistan

Givaudan International SA Pakistan

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

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

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

Givaudan Singapore Pte Ltd

1 Woodland Avenue 8, Singapore 738972

New ZealandRussianFederation
Singapore

Naturex Holdings Singapore Private Ldt

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

South
AfricaGivaudan 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

South Korea

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

Naturex Iberian Parnters S.L.U

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

Givaudan North Europe AB

Glimmervägen 6, 224 78 Lund

Swedish Oat Fiber ABBåtafjordsvägen 12, 432 63 BUA

Spain

SwedenGivaudan – 2018 Integrated Annual ReportAppendix

Givaudan registered offices 211

Country

Legal Entity name

Address

Switzerland

Givaudan SA

Chemin de la Parfumerie 5, 1214 Vernier

Givaudan Finance SA

Chemin de la Parfumerie 5, 1214 Vernier

Givaudan Suisse SA

Chemin de la Parfumerie 5, 1214 Vernier

Givaudan International SA

Chemin de la Parfumerie 5, 1214 Vernier

Givaudan Treasury International SA

Chemin de la Parfumerie 5, 1214 Vernier

Vamara Holding SA

Mettlenweg 17, 2504 Bienne

Naturex AG

Industriestrasse 8, 9220 Bischofszell

Taiwan,Republic of
China

Givaudan Singapore Pte Ltd,
Taiwan Branch

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

ThailandGivaudan (Thailand) Ltd

719 KPN Tower, 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

UAE

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

Naturex S.A (Middle East)

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

Givaudan UK Ltd

Kennington Road, Ashford, Kent TN24 0LT

Givaudan Holdings UK Ltd

Kennington Road, Ashford, Kent TN24 0LT

Major International Limited

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

Naturex Ltd

Park Road, Overseal, Swadlincote, Derbyshire DE12 6JX

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

UnitedStates 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, Delaware 19901

Naturex Inc

251 Little Falls Drive, Wilmington, DE 19808

Naturex Holdings Inc

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

Vegetalbe Juices Inc

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

UnitedKingdom

Naturex Cooperative LLC

801 Adlai Stevenson Drive – Springfield, IL 62703

Venezuela

Givaudan Venezuela SA

Calle Veracruz con calle Cali Torre, ABA Piso 8, Ofic 8A,
Las Mercedes, Caracas CP 1060

VietnamGivaudan Singapore Pte Ltd,
Vietnam Representative Office

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

Givaudan – 2018 Integrated Annual Report212 Appendix

Givaudan sites worldwide

San Lorenzo 4759, Esquina Ave Mitre, Munro, Prov. Buenos Aires Givaudan Argentina SA
B 1605 EIO
Ruta 9 Panamericana Km 36.5, Partido Malvinas Argentinas,
Buenos Aires B1667KOV

Givaudan Argentina SA

Tronador 4890, 8° piso, Buenos Aires C 1430 DNN CABA

Givaudan Argentina Servicios SA

12 – 14 Britton Street, Smithfield, Sydney NSW 2164

Givaudan Australia Pty Ltd

Unit 36, 5 Inglewood Place, Baulkham Hills, Sydney NSW 2153

Givaudan Australia Pty Ltd

Suite West 11A, ground fl., 215 Bell Street, Preston VIC 3072

Givaudan Australia Pty Ltd

9 Garling Road, Kings Park, NSW2148,
PO Box 4165, Marayong NSW 2148, Sydney

Naturex Australia Pty Ltd.

Austria

Twin Tower Vienna, Wienerbergstrasse 11, 1109 Vienna

Givaudan Austria GmbH

BrazilAvenida Engenheiro Billings 2185, Jaguaré, São Paulo, 05321-010 Givaudan do Brasil Ltda

Australia

Avenida Engenheiro Billings 1653 & 1729, Jaguaré, São Paulo,
05321-010

Givaudan do Brasil Ltda

Rodovia Eduardo Zuccari, Km 21,5, Chácara Recreio Vista Alegre, G Nutra (Givaudan)
Botucatu, São Paulo, 18603-970
Av. Buriti, no. 5391, Distrito Industrial, CEP: 69.075-000, Manaus Naturex Ingredientes Naturais Ltda

Belgium

Rua George Ohm, 230, Conj. 22 (Torre B), 04576-020 Brooklin
Novo, São PauloNaturex Ingredientes Naturais Ltda

Lausbedstraat 4, 3630 Maasmechelen

Naska Ingredients NV

Val d’Or, Gulledelle, 96 BE-1200 Woluwe Saint Lambert, Brussels Naturex SPRL
Canada2400 Matheson Blvd. East, Mississauga, Ontario L4W 5G9

Chile

Avda Del Valle 869, oficina 202, Ciudad Empresarial, Comuna de Givaudan Chile Ltda
Huechuraba, Santiago de Chile

Givaudan Canada Co.

Avenida Suecia 0142 – oficina 303, Providencia, Santiago de Chile Chile Botanics SA
Panamericana sur Kilometro 297, Linares

Givaudan – 2018 Integrated Annual Report

Naturex Chile SPA

GBS Centre

ArgentinaP

GRI Scope 1

Givaudan International SA (Suisse)
Bureau de Liaison Algérie

Production

Legal Entity nameTour A – 4ème étage, Business Centre Dar El Madina, Micro Zoned’activité Hydra Lot No. 20, 16035 Algers

Sales or Rep
officeCreation/
Application

Address

Algeria

Flavours

Country

Fragrances

Givaudan sites worldwide

P
PPPPP

P

P  PP
P

P
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PPP
PPPPPPP PP P
P
P
P
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GBS Centre

Address

Legal Entity name

China

15F, Tower 2, Kun Sha Center, no. 16 Xin Yuan Li Road,
Chao Yang District, 100027 Beijing

Givaudan Flavors (Shanghai) Ltd
Beijing Branch

15F, Tower 2, Kun Sha Center, no. 16 Xin Yuan Li Road,
Chao Yang District, 100027 Beijing

Givaudan Fragrances (Shanghai)
Ltd Beijing Branch

668 Jing Ye Road, Jin Qiao Export Area, Pu Dong New Area,
201201 Shanghai

Givaudan Flavors (Shanghai) Ltd

298 Li Shi Zhen Road, Zhangjiang High-Tech Park, Pudong
New Area, 201203 Shanghai

Givaudan Fragrances (Shanghai)LtdNo. 7 Jianghai Road, Nantong Economic and Technological
Development Area, 226017 Nantong, Jiangsu Province

Givaudan Flavours (Nantong) Ltd

Unit 5, 15F Shuion Center, no. 374 – 2 Beijing Road, Yue Xiu
District, 510030 Guangzhou

Givaudan Flavors (Shanghai) Ltd
Guangzhou Branch

Unit 6 – 7, 15F Shuion Center, no. 374 – 2 Beijing Road, Yue Xiu
District, 510030 Guangzhou

Givaudan Fragrances (Shanghai)
Ltd Guangzhou BranchP

222, Jiang Tian East Road, Songjiang Development Zone,
201600 Shanghai

Givaudan Specialty Products(Shanghai) LtdPPRoom 2001, 20F Funian Plaza-2, no. 666 Jitai Road, Gaoxin
District, 610041 Chengdu, Sichuan Province

Givaudan Flavors (Shanghai) Ltd
Chengdu Branch

PP 

Room A1301, Bldg 2, no. 80 Jin Shui Road (East), New Green
City, Zhengzhou, He Nan Province

Givaudan Flavors (Shanghai) Ltd
Zhengzhou Branch

PP

Unit 1001, 10 F Miramar Tower, 132 Nathan Road,
Tsim Sha Tsui

Givaudan Hong Kong Ltd

GRI Scope 1

Sales or Rep
officeCreation/
Application

Country

Production

213

Flavours

Givaudan sites worldwide

Fragrances

Appendix

PP 
P

P
PPPPP

P

PPPP
P

PP

PP 
P
PP

PPP

Shanghai Juke Biotech Park, 6 Floor, Bdg 4, no.333 Guiping Road, Naturex Trading Shanghai Co, Ltd
Xuhui District, 200233 ShanghaithColombia

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

Czech
Republic

Klimentská 10, Praha 110 00

Egypt

Piece 37, Industrial Zone 3, 6th of October City
46 El Thawra st., 3rd floor, Appt 304, Heliopolis

Finland

Niemenkatu 73, 15140 Lahti

France46 avenue Kléber, 75116 Paris
4 rue Lord Byron, 75008 Paris
55 rue de la Voie des Bans, 95102 Argenteuil Cedex
19 – 23 rue de la Voie des Bans, 95102 Argenteuil Cedex
16 rue Henri Becquerel, BP 525 – ZI Mitry Compans,
77295 Mitry Mory
Route de Bazancourt, 51110 Pomacle
Anse du Pors Gelin, 22560 Pleumeur Bodou
3 Rue des Satellites, 31400 Toulouse
136 Chemin de Saint-Marc, 06130 Grasse
250 rue Pierre Bayle – BP 81218 – 84911 Avignon Cedex 9
Actiparc de Pont de Vaux /Les Chapelles Sud –01190 Reyssouze

PP
Givaudan Colombia SAS
PPPPGivaudan CR, s.r.o.
PP
Givaudan Egypt SAE
PPPPP
Givaudan Egypt Fragrances LLC
P P
Givaudan International SA, Branch
PP
in Finland
Givaudan France SAS
P PP
Expressions Parfumées
P P
Givaudan France SAS
P PP P
Givaudan France SAS
PPP P
Activ International SAS
P
PGivaudan France SAS
P P PP
Givaudan France SAS
P
PP
Givaudan France SASPExpressions Parfumées
P P P
Naturex SA
PP P
Naturex SAP
PGivaudan – 2018 Integrated Annual ReportLehmweg 17, 20251 Hamburg

Givaudan Deutschland GmbHIm Zollhafen 24, Kranhaus Süd, 50678 Köln

Naturex GmbH

Guatemala

Boulevar Los Proceres 18, Calle 24 – 69 Zona 10, Empresarial Zona Givaudan Guatemala SA
Pradera, Torre 1, Oficiana 1201-01010

Hungary

Királyhegyesi út 3, 6900 Makó

Givaudan Hungary Kft

Bence utca 1. , Váci Greens B, 1138 Budapest

Givaudan Business Solutions Kft

Plot No. 30, Survey no. 168, Dabhel Industrial Estate,
Daman 396210

Givaudan (India) Pvt Ltd

Survey no. 57/3 (2) & 3, Village Dunetha, Daman 396 210

Givaudan (India) Pvt Ltd

India

Plot no. 26, 2nd Cross Jigani Industrial Area, Anekal Taluk, Jigani, Givaudan (India) Pvt Ltd
Bangalore, Karnataka 560 105
13th Floor Prestige Meridian 1, 29 MG Road, Bangalore, 560001

Givaudan (India) Pvt Ltd

401 Akruti Centre Point, 4th Floor, MIDC Central Road,
MIDC, Andheri (East), Mumbai 400093

Givaudan (India) Pvt Ltd

406 – 410, 4th Floor, JMD Pacific Square, Sector 15, Part II,
Gurgaon 122001, Haryana

Givaudan (India) Pvt Ltd

H-2 Ranjangaon Industrial Area Phase II, Pune 412209

Givaudan (India) Pvt Ltd

Star Hub, Building no. 02, 3rd Floor,302, Sahar Airport Road,
Near ITC Grand Maratha, Andheri (E), 400 059 Mumbai

Naturex India Pty Ltd

Plot no. 15/2, Dhatav, Roha, District, Raigad, 402116 Mumbai

Naturex SA

Jl. Raya Jakarta-Bogor Km 35, Cimanggis Depok, 16951
West Java

PT. Givaudan Indonesia

Capital Place, 9th floor, Jl. Jend. Gatot Subroto Kav. 18,
12710 Jakarta

PT. Givaudan Indonesia

Iran

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

Givaudan International SA, Iran
BranchItaly

Via XI Febbraio 99, 20090 Vimodrone (MI)Givaudan Italia SpA

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

Naturex SpA

Immeuble RMO, 5
Zone 4C, Abidjan

Givaudan International. SA Côte
d’Ivoire

Indonesia

Ivory Coast

Japan

ème

étage, rue du Docteur Blanchard

Abidjan Yopougon, Chaumière du Banco, 04 BP 1682, Abidjan

ITRAD3014 – 1 Shinohara-cho, Yokohama-shi, Kanagawa 222-0026

Givaudan Japan K.K.

3056 Kuno, Fukuroi-shi, Shizuoka 437-0061

Givaudan Japan K.K.

3 – 6 – 6 Tokiwa New Building, Osaki, Sinagawa-Ku, Tokyo
141-0032

Givaudan Japan K.K.

NBC MITA Building 7F, 5 – 29 – 18, Shiba, Minato-ku, Tokyo
108-0014

Naturex KK

Korea
11/F Trust Tower Bldg, 60 Mabang-ro, Seocho-Gu,(Republic of) Seoul 06775
12/F Trust Tower Bldg, 60 Mabang-ro, Seocho-Gu,
Seoul 06775
Room 503, 14, Hwangsaeul-ro 311beon-gil, Bundang-gu,
Seongnam-si, Gyeonggi-do 13590

Givaudan – 2018 Integrated Annual Report

Givaudan Korea Ltd
Givaudan Korea Ltd
Naturex (Korea)

GBS Centre

Givaudan Deutschland GmbHGRI Scope 1

Legal Entity name

Giselherstrasse 11, 44319 Dortmund

Production

Address

Germany

Sales or Rep
officeCreation/
Application

Country

Flavours

Givaudan sites worldwide

Fragrances

214 Appendix

PPPPP
P P
PP
PPP
PP PP
P
P
P
P
PPP
PPPP
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P
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PP
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P PP
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P 
PP 
PP

Givaudan Flavours & Fragrances
Malaysia Sdn. Bhd

PPPP

No. 121, Jalan Usaha 10, Kawasan Perindustrian Ayer Keroh,
75450 Malacca

Givaudan Flavours & Fragrances
Malaysia Sdn. Bhd

PP

1 First Avenue, Banda Utama, level 12, Bandar Utama, PJU 6,
47800 Petaling Jaya, Selangor

Givaudan Business Solutions Asia
Pacific Sdn Bhd

Camino a Quintanares Km. 1.5, Pedro Escobedo,
76700 Querétaro

Givaudan de México SA de CV

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

Givaudan de México SA de CV

Av. Paseo de la Reforma #2620, piso 12 Edificio Reforma Plus,
Col. Lomas Altas, 11950 Mexico, D.F

Givaudan de México SA de CV

Av. Paseo de la Reforma #2620, piso 9 Edificio Reforma Plus,
Col. Lomas Altas, 11950 Mexico, D.F

Givaudan de México SA de CV

Avenida Paseo de la Reforma 483 Piso 21,
2101 Colonia Cuauhtémoc Delegación Cuauhtémoc
Ciudad de México, CP 06500

Naturex Ingredientes Naturales
SA de CV

8 rue Ibnou Binna Aladdadi, Bourgogne, 20053 Casablanca

Givaudan MEA FZE Morocco
BranchTechnopole ONDA – BP 42 – 20240 Nouasser – Casablanca

Naturex Maroc SA

46A – 2C Excellent Condo, Pantra Street, Dagon Township,
YangonGivaudan Singapore Pte Ltd(Myanmar Branch)

MexicoMoroccoMyanmar

Netherlands Huizerstraatweg 28, 1411 GP Naarden

Givaudan Nederland B.V.

Nijverheidsweg 60, 3771 ME Barneveld

Givaudan Nederland B.V.

Nizolaan 4, 6718 ZC Ede

Vika B.V.

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

Givaudan NZ Ltd

15 Crosbie Rd, Pukekohe 2120

Cuisine Resources NZ limited

New
ZealandNigeria

Plot 2 and 4, Block D, Amuwo Odofin Industrial scheme, Apapa/ Givaudan (Nigeria) Limited
Oshodi Expressway, Lagos

Pakistan

25th floor, Ocean Tower, Block 9, Clifton,
Karachi - 75600

Givaudan International SA Pakistan

Peru

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

Givaudan Peru SAC

Ambrosio Vucetich, 200 Parque Industrial Mz K – Lt 3,
Arequipa

Activ International SAC

Philippines

37/F Robinsons Equitable Tower, ADB Avenue corner Poveda
Street, Ortigas Center, Pasig City 1605

Givaudan Singapore Pte Ltd,Regional Operating Headquarter

PolandUl. Puławska 182, IO-1 Building, 02-670 Warszawa

Givaudan Polska Sp. z o.o.

Ul. Postępu 17A, 06-676 Warszawa

Naturex Polska Sp. z o.o Biuro
Handlowe

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

Naturex Polska Sp. z o.o.

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

Givaudan Rus LLC

Delovoy dom B-5, floor 9, Botanicheskiy pereulok 5,
129090 Moscow

Givaudan Rus LLC

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

Naturex LLC

RussianFederation

215

GBS Centre

Legal Entity name

A-901 Menara 1, Kelana Brem Towers, Jalan SS 7/15 (Jalan
Stadium), 47301 Petaling Jaya Selangor Darul Ehsan

GRI Scope 1

Address

Malaysia

Flavours

Country

Production

Sales or Rep
officeCreation/
Application

Givaudan sites worldwide

Fragrances

Appendix

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Givaudan – 2018 Integrated Annual Report

1 Pioneer Turn, Singapore 627576

Givaudan Singapore Pte Ltd

19 Chin Bee Road, Singapore 619833

Givaudan Singapore Pte Ltd

South
Africa9 – 11 Brunel Road, Tulisa Park, Johannesburg 2197

Givaudan South Africa (Pty) Ltd

51A Galaxy Avenue, Linbro Business Park,Frankenwald,
Sandton 2065

Givaudan South Africa (Pty) Ltd

Spain

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

Givaudan Ibérica, SA

Edificio Géminis, Bloque B 1° 2a, Parque de Negocios Mas
Blau, 8820 El Prat de Llobregat, Barcelona

Givaudan Ibérica, SA

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

Naturex Iberian Partners, S.L.U

Hedvig Möllers gata 17, 22355 Lund

Givaudan North Europe AB

SwedenSwitzerland Überlandstrasse 138, 8600 Dübendorf

Givaudan Schweiz AGÜberlandstrasse 138, 8600 Dübendorf

Givaudan International AG

8310 Kemptthal

Givaudan Schweiz AG

8310 Kemptthal

Givaudan International AG

Chemin de la Parfumerie 5, 1214 Vernier

Givaudan Suisse SA

Chemin de la Parfumerie 5, 1214 Vernier

Givaudan International SA

Industriestrasse 8A, 8604 Volketswil

Givaudan Suisse AG

Kirchbergstrasse 211, 3400 Burgdorf

Naturex AG

Industriestrasse 8, 9220 Bischofszell

Naturex AG

Taiwan, PR
China

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

Givaudan Singapore Pte Ltd,
Taiwan Branch

Thailand719 KPN Tower, floor 16 & 25, Rama 9 Road, Bangkapi
Huaykwang, Bangkok 10310

Givaudan (Thailand) Ltd

Bangkok Business Centre Building, 19th floor, Unit 1903, 29
Sukhumvit 63 Road, Klongton Nua,Wattana, Bangkok 10110

Naturex AG

Ebulula Cad. Lale Sok., Park Maya Sitesi Barclay 19A Daire 6 – 7,
Akatlar, Besiktas / Istanbul 34335

Givaudan Aroma ve Esans Sanayi ve
Ticaret Ltd. Sirketi

Büyükdere Cad. Telpa Plaza., no. 195 K.3, Levent,
Istanbul 34394

Givaudan Aroma ve Esans Sanayi ve
Ticaret Ltd. Sirketi

TurkeyUAE

Concord Tower, floor 20 & 36, Media City, Dubai
Free Zone Establishment, Jafza View 19, First floor,
office no. 129, Jebel Ali Free Zone, Dubai
Building P6 – 132, Post Box – 121873, SAIF Zone, Sharjah

UnitedKingdom

Magna House, 76 – 80 Church Street, Staines, Middx.
TW18 4XR
Chippenham Drive, Kingston, Milton Keynes MK10 OAE
Kennington Road, Ashford, Kent TN24 0LT
Higham Business Park, Bury Close, Higham Ferrers,
Rushden NN10 8HQPark Road, Overseal, Swadlincote, Derbyshire DE12 6JX

Givaudan – 2018 Integrated Annual Report

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Givaudan Singapore Pte Ltd

GRI Scope 1

Legal Entity name

1 Woodlands Avenue 8, Singapore 738972

Production

Address

Singapore

Sales or Rep
officeCreation/
Application

Country

Flavours

Givaudan sites worldwide

Fragrances

216 Appendix

GBS Centre

Address

Legal Entity nameUkrainePimonenko Str. 13 6B/18, 04050 Kiev

Givaudan International SA,
Representative Office

UnitedStates ofAmerica

880 West Thorndale Avenue, Itasca, IL 60143

GRI Scope 1

Sales or Rep
officeCreation/
Application

Country

Production

217

Flavours

Givaudan sites worldwide

Fragrances

Appendix

Venezuela

Calle Veracruz con calle Cali Torre, ABA Piso 8, Ofic 8A,
Las Mercedes, Caracas CP 1060

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PPP 

VietnamGiay Viet Plaza 5th floor, 180 – 182 Ly Chinh Thang Street,
District 3, Ho Chi Minh City

Givaudan Singapore Pte Ltd,
Vietnam Representative Office

580 Tollgate Road, Suite A, Elgin, IL 60123
1199 Edison Drive 1 – 2, Cincinnati, OH 45216
245 Merry Lane, East Hanover, NJ 07936
9500 Sam Neace Drive, Florence, KY 41042
4705 U.S. Highway 92 East, Lakeland, FL 33801-3255
100 East 69th Street, Cincinnati, OH 45216
195 Alexandra Way, Carol Stream, IL 60188
6 Santa Fe Way, Cranbury, NJ 08512
256 Lackland Drive East, Middlesex, NJ 08846
808 ConAgra Drive, Omaha, NE 68102
6 Santa Fe Way, Cranbury, NJ 08512
39 Pleasant Street – Sagamore, MA 02561
375 Huyler Street, South Hackensack, NJ 07606
10000 Highway 55, Minneapolis, MN 55441
International Trade Center, 300 Waterloo Valley Road,
Mount Olive, NJ 07828
40 West 57th St. 11th and 17th floors, New York, NY 10019
717 Ridgedale Avenue, East Hanover, NJ 07936

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1.	Locations taken into account for the environment, health and safety performance indicators.

Icons within the category Creation/Application indicate the following: Application onlyr

Creation only

Disclosure 102 – 4, pages 212 – 217

Givaudan – 2018 Integrated Annual ReportAppendix

Our reporting suite 218

Our reporting suite

Readers are advised to consult our entire reporting suite to get a complete overview:2018 Integrated Annual Report
Available in English– PDF and Online HTML from 25 January 2019
– Print from 28 March 2019
– www.givaudan.com – media – publications– w ww.givaudan.com – investors –online annual report2018 Highlights
Available in English, French and German– PDF and print from 28 March 2019
– www.givaudan.com – media – publications

Our Sustainability Approach
Available in English– PDF from 25 January 2019– w ww.givaudan.com – sustainability –publications

2018 Sustainability Progress Review
Available in English– PDF from 28 March 2019– w ww.givaudan.com – sustainability –publications

Content
Offers a holistic explanation of our value
creation, financial and non-financial capitals
and performance, including our Governance,
Compensation and Financial Reports. The
online report offers an succinct overview, easy
access to the various chapters of the reportand a full download centre.

Content
Business and financial highlights in addition to
the Chairman and CEO reviews and thehighlights of the Governance andCompensation reports.

Content
Offers a strategic overview of A Sense ofTomorrow, the approach for each of the threesustainability focus areas, and related issues
such as stakeholder engagement and material
topics.

Content
Offers case studies and progress data for thethree focus areas of our sustainability approach
as well as eco-efficiency targets versus
progress. The GRI Content Index and external
assurance of sustainability data is included inthis document.

To order publications: www.givaudan.com – media – publications

GivaudanFoundation2018 Annual Report
Available in English
PDF from 28 March 2019www.givaudan-foundation.org

The Givaudan Foundation is a non-profit
organisation created in 2013 as a result ofGivaudan’s desire to reinforce its commitment
towards the communities in which it operates.
The foundation’s purpose is to initiate andsupport projects as well as to grant donationsin the areas defined by its vision and mission.
One of the causes supported by thefoundation is to safeguard the future ofcommunities and their fragile environment.
There is a specific focus on three areas inwhich Givaudan as a company is alreadyGivaudan – 2018 Integrated Annual Report

engaged and where its expertise andexperience can be leveraged to make adifference: communities at source, blindness
and nutrition. The Givaudan Foundation works
closely with and relies on resources provided
by Givaudan to conduct and monitor its
projects. The Foundation also operates withlocal partners to ensure the efficient
deployment of projects and their relevance tothose who are intended to benefit from them.

Givaudan SA
Chemin de la Parfumerie 51214 Vernier, Switzerland

General information
T + 41 22 780 91 11

Media and investor relations
T + 41 22 780 90 53

Share registry

Computershare Schweiz AG
Postfach
4601 Olten, Switzerland
T + 41 62 205 77 00

Share information

Symbol: GIVN
Security number: 1064593
ISIN: CH0010645932

Concept, design, consulting and realisation:
PETRANIX Corporate and Financial Communications AG
www.PETRANIX.com
Printing: Neidhart + Schön Print AG, www.nsgroup.ch
The Givaudan 2018 Integrated Annual Report is published in English.
All trademarks mentioned enjoy legal protection.
Printed in Switzerland.
This Integrated Annual and Financial Report may contain forward-looking information.
Such information is subject to a variety of significant uncertainties, including
scientific, business, economic and financial factors. Therefore actual results
may differ significantly from those presented in such forward looking statements.
Investors must not rely on this information for investment decisions.
© Givaudan SA, 2019www.givaudan.com