lindt annual report 2011 (1)

8/12/2019 Lindt Annual Report 2011 (1)

1/104

MATRE CHOCOLATIER SUISSE DEPUIS 1845

ANNUAL REPORT 2011


2/104

ANNUAL REPORT 2011

For the past 165 years, premium chocolate manufacturer Lindt & Sprnglihas been committed to render top quality. With six production sites in Europe and two

in the USA, 18 subsidiaries as well as numerous independent distribution partners,

LINDT products are in the meantime available nearly all around the globe.

To ensure an impressive presentation of the LINDT product variety and to grant our loyal

chocolate lovers an extraordinary shopping experience, increased investments have been

made in the past years for the expansion of the LINDT retail department.

For this reason, we will take you in this annual report on a journey, starting in New York,with stopovers in Zurich, Tokyo, Sydney and San Francisco where we will show you some

impressions of selected worldwide LINDT Boutiques, Shops and Chocolate Cafs.

We look forward to welcoming you during your next trip in one of our stores.

LINDT & SPRNGLI


3/104

KEY FINANCIAL DATA

ANNUAL RE PORT

INCOME STATEMENT2011 2010 Change

in %

Sales CHF million 2,488.6 2,579.3 3.5

EBITDA CHF million 421.9 423.3 0.3

in % of sales % 17.0 16.4

EBIT CHF million 328.7 325.3 1.0

in % of sales % 13.2 12.6

Net income CHF million 246.5 241.9 1.9

in % of sales % 9.9 9.4

Operating cash flow CHF million 345.4 363.7 5.0

in % of sales % 13.9 14.1

BALANCE SHEET2011 2010 Change

in %

Total assets CHF million 2,516.0 2,524.7 0.3

Current assets CHF million 1,643.5 1,672.7 1.7

in % of total assets % 65.3 66.3

Non-current assets CHF million 872.5 852.0 2.4


Non-current liabilities CHF million 214.2 209.6 2.2


Shareholders equity CHF million 1,619.1 1,672.5 3.2


Investments in PPE / intangible assets CHF million 104.2 88.6 17.6

in % of operating cash flow % 30.2 24.4

EMPLOYEES2011 2010 Change

in %

Average number of employees 7,779 7,572 2.7

Sales per employee TCHF 319.9 340.6 6.1


4/104

LIND T & S PR NG LI


KEYFINANCIAL

D

ATA

DATA PER SHARE2011 2010 Change

in %

Non-diluted earnings per share / 10 PC 1) CHF 1,084 1,061 2.2

Operating cash flow per share / 10 PC CHF 1,485 1,580 6.0

Dividend per share / 10 PC CHF 5002) 450 11.1

Payout ratio % 47.2 42.8

Shareholders equity per share / 10 PC CHF 6,960 7,266 4.2

Price registered share at December 31 CHF 31,390 30,100 4.3

Price participation certificate at December 31 CHF 2,794 2,826 1.1

Market capitalization at December 31 CHF million 6,982.3 6,762.5 3.3

1) Based on weighted average number of registered shares / 10 participation certificates2) Proposal of the Board of Directors

24

89

2

606

2

573

25

25

2

579

SALES

(CHF million)

Organicgrowth: 10.7% 2.3%4.9% 7.3% 6.0%

2007 20092008 2010 2011 2007 20092008 2010 2011

329

351

361

265

325

OPERATING PROFIT (EBIT)

(CHF million)

in %of sales: 13.5% 10.5%14.0% 12.6% 13.2%


5/104

L IN DT & SP RN GL I


2 Chairmans Report 6 Highlights 2011 8 Brand Ambassador Roger Federer 12 Markets

16 Products 22 Corporate Social Responsibility 26 Report LINDT International Retail 32 Corporate Governance

51 Consolidated Financial Statement of the Lindt & Sprngli Group 56 Notes to the Consolidated Financial Statements 87 Report of the Statutory Auditor 88 Financial Statements of Chocoladefabriken Lindt & Sprngli AG 92 Proposal for the Distribution of Net Earnings 93 Report of the Statutory Auditor

94 Five-Year Review 98 Group Addresses Lindt & Sprngli

CONTENTANNUAL REPORT 2011


6/104



DEAR SHAREHOLDERS

I have pleasure in reporting that we met our growth and earnings targets once again in thelast financial year. is achievement is all the more pleasing as global economic conditionsworsened steadily in the second hal o the year. e debt crisis gradually spread to more andmore eurozone countries, creating massive uncertainty, not just or the financial sector but alsoor large parts o the population. As a result, unemployment rates in some countries rose sig-nificantly and consumer sentiment was correspondingly depressed. Practically all the nationaleconomies have had to revise their growth orecasts downwards including countries outside

the European Union. e global debt crisis and the strong ranc also affected the Swiss eco-nomy, especially its important export sector. e USA was the only country in which economicperormance and the situation on the employment market showed a slight improvement, eveni that trend did all short o expectations.

e increasingly rapid stream o worrying news rom the economic and financial sector lef itsmark on the retail trade, too. Again, retailers were more reluctant to place orders and cut backtheir stocks in order to avoid possible cash flow difficulties. Especially in the Christmas busi-ness, which is particularly important or Lindt & Sprngli as a premium supplier, the result ofenwas that some products were already sold out beore Christmas with no subsequent reordering.

Against this difficult economic background, the Lindt & Sprngli Group succeeded once

again in outperorming the market trend with organic growth o + 6%. Converted into Swissrancs this result is equivalent to consolidated sales o CHF 2.489 billion (previous year:

CHAIRMANS REPORTFINANCIAL YEAR 2011

2C H A I R M A N S R E P O R T

ANNUAL REPORT 2011


7/104




ANNUAL REPORT 2011

CHF 2.579 billion); that figure clearly points out the negative impact o the strong national cur-rency resulting in a currency-related decrease o 9.5% against sales expressed in local currencyterms.

With its strong and flexible business model, Lindt & Sprngli was well prepared to ace thechallenges and able to react ast and efficiently to the changed economic situation. Hence, wemanaged once again to achieve above-average growth in most o the European main marketsand to gain new market shares. On the saturated Swiss domestic market where competition isparticularly strong, we improved our position in all the segments month on month or morethan one year, and even achieved the highest market share rate in the companys history in thepralins segment. In the USA, our biggest and most important single market, growth once againexceeded the Group average. Both LINDT and GHIRARDELLI made an equal contribution tothis sustained success. e strong Swiss ranc as well as the prolonged downturn in some mar-kets affected most notably exports rom Switzerland as well as the travel retail business.

is sales perormance, which proved very satisactory on the whole, accompanied by sig-

nificant market share gains, is the outcome o a long-term strategy designed to maintain ourcompetitiveness even in difficult circumstances, and to secure the growth o the company ona sustainable basis. e main actors o our tried-and-tested business model have been clearlydefined and are being implemented consistently. Alongside our uncompromising commitmentto top quality, exclusive positioning in the premium segment and active innovation, geographi-cal expansion plays a key role here with a view to generating profitable growth. We have beenworking or nearly 20 years on the attainment o this objective and have done so with demon-strable success. e premium position o the LINDT brand has been built up all over the worldand placed on a strong basement. As a consequence, the export-oriented amily business hasgrown into a globally operating group o companies with stout Swiss roots.

With external acquisitions in the USA, Italy, and Austria, the incorporation o our own sub-

sidiaries in key markets and the accompanying responsibility or local business, as well as thesuccessul search or new distribution channels, we have advanced our global presence step bystep and are now active with the LINDT brand and our products in over 100 countries roundthe globe. Still more importantly, we have managed over a relatively short period to set upa permanent establishment in the USA, the worlds biggest chocolate market, where we werestill practically unknown just 20 years ago. at is an exceptional achievement in a challengingmarket in which many manuacturers have ailed in the past. Today, the USA makes the biggestcontribution to Lindt & Sprngli Group sales, and is an excellent example o our systematic ap-proach to successully entering new markets.

Emerging markets in Eastern Europe, Asia, and South America have made their entrance ontothis world economic stage in recent years. We needed to make a rapid analysis o the oppor-

tunities and risks presented by these new markets in order to exploit them ully with an eye tothe uture. is was done by developing a range o different concepts with a view to expediting


8/104




ANNUAL REPORT 2011

the geographical expansion o our group o companies. Not only did the ormation o newsubsidiaries prove to be an excellent and efficient approach, so too was the establishment o ourown distribution concept which was adapted to the distinctive requirements o each individualmarket. Experience gained with our LINDT Chocolate Cas in Australia showed how amiliar-

ity with the brand can be permanently established on a market with no traditional chocolateculture, and also how synergies can be achieved with the trade. e idea o opening our ownpoints o sale in the shape o prestigious boutiques in downtown areas, or outlets in shoppingcenters, which do not compete in any way with the important trade partners, soon created theneed or a special organization. In 2009, we thereore set up a separate International Retaildepartment at Group level which is responsible or the attainment o the strategic objectives oour own distribution models.

To respond to these new challenges, the management structure o the Group was strengthenedwith the creation o an Extended Group Management. is team o our people supports theGroup Management and assumes responsibility at the highest level. In this way the manage-ment expertise o the Group o companies is being extended and the path mapped out or the

successul implementation o our strategic objectives in uture.

A special highlight o the past financial year was the inauguration o the LINDT Chocolateriain Kilchberg on November 14 by our brand ambassador Roger Federer. With this new ormatwhich attests to our passion and expertise in the chocolate sector, we intend to bring the asci-nating world o our Master Chocolatiers closer to a broad public audience through courses andexperience workshops. e open days held until the end o the year proved an overwhelmingsuccess which will be continued with a regular program o activities.

e operating profit (EBIT) rose by 1.0% to CHF 328.7 million, equalling an improvemento the EBIT-margin o 60 basis points as compared to the previous year (CHF 325.3 million).e same goes or our net profit which increased by 1.9% to CHF 246.5 million (previous

year: CHF 241.9 million) with a yield on sales o 9.9%. Hence, profit growth in 2011 exceededthe longterm target previously announced. e companys capital structure remains perectlysound. At the end o 2011, cash flow stood at CHF 345.4 million. e current share buybackprogram, amounting to a maximum o 5% o the registered capital, was used to buy back reg-istered shares and participation certificates with a total value o CHF 220 million by the end o2011. is had a correspondingly positive impact on the average return on equity.

e price trend o Lindt & Sprngli papers also proved avorable. ey stood out as stable secu-rities in a stock market environment which was conronted with uncertainty, especially in thesecond hal o the year. With a value gain o 4.3% the Lindt & Sprngli registered share clearlyoutperormed the SMI on the year ( 7.8%), reflecting the companys strong asset value.


9/104




ANNUAL REPORT 2011

At the Annual Shareholders Meeting scheduled or April 26, 2012, the Board o Directors willbe proposing a dividend o CHF 500. per registered share and CHF 50. per participation cer-tificate in the orm o withholding-tax-ree distribution rom the capital contributions reserve.is is equivalent to a increase o 11.1% on the dividend distribution o the previous year.

Good results are also always the outcome o shared efforts and the commitment o all our per-sonnel, especially in challenging times. I thereore owe a debt o gratitude to the more than7,700 highly motivated employees at every level whose perormance is also recognized by theGroup Management and Board o Directors. We also wish to thank all our business partners,customers and suppliers or their close and valued cooperation, and o course our shareholderswho place their trust in the company .

OUTLOOK

e debt crisis is spreading more and more widely and increasingly influencing the global,financial and economic scene. e lasting consequences o this trend are hard to assess and reli-able orecasts o any kind are practically impossible to make. is situation is compounded by

volatility on the commodity markets and the uncertainty elt by consumers because o the wors-ening employment market. Overall, the economy must be ready to ace exceptional challengeswhich may possibly be ollowed by major changes. We in the Group Management are convincedthat, with our sound and reliable income and financial situation and a orward-looking corpo-rate strategy which has proved its merit even in difficult times, we remain well placed to acceptthese challenges and achieve lasting success. We are thereore confirming our long-term growthand earnings targets and continuing to aim or sales growth o 6 to 8% and an increase in ouroperating profit margin o 20 to 40 basis points per year.

Ernst Tanner

Chairman and Chie Executive Officer


10/104



6HIGHLIGHTS

ANNUAL REPORT 2011

HIGHLIGHTS

WORLD CHOCOLATE WONDERLAND

EXTRAORDINARY CREATIONS

LINDT BEAR AND CREDIT SUISSE

GOLD BUNNY HELPS GOOD CAUSES

Te chocolate market in China grows continuously. At the

World Chocolate Wonderland in Shanghai the LIND Mas-

ter Chocolatiers presented their crafsmanship. Te reshlymade pralins were handed out or tasting to an excited

audience o more than 400,000 visitors.

Lindt & Sprngli is one o the first clients in the ounding

year o Credit Suisse in 1856. In 2011, Lindt & Sprngli

becomes part o a global image campaign o Credit Suisseand gets a prominent placement with the LIND BEAR

which causes a worldwide stir.

In 2011, the LIND Master Chocolatiers devoted them-selves to the development o an especially innovative choco-

late creation. Dark chocolate combined with Wasabi tackles

all senses and complements perectly the already existing

variants with sea salt and chili.

In a large-scale PR campaign under the auspices o singeroni Braxton, Hollywood stars rom the film and music in-

dustry signed LIND GOLD BUNNIES made o porcelain.

Te GOLD BUNNIES were subsequently auctioned in avor

o the charity organization Autism Speaks.

REVIEW OF 2011


11/104



7HIGHLIGHTS

ANNUAL REPORT 2011

SPICY CHOCOLATE FOR HALLOWEEN

PLANT EXPANSION IN GERMANY

SUCCESSFUL LAUNCH OF LINDT BEAR

ANNIVERSARY: 80 YEARS OF BATONS

Te popular GHIRARDELLI SQUARES were launched

just in time or Halloween in a matching seasonal flavor

with pumpkin, spices, and sof melting caramel. Tesesquares are available only or a limited time period and

irresistibly good!

Autumn saw the ground-breaking ceremony o the extensiveplant expansion at the German production site in Aachen,

where around EUR 15 million has been invested in building a

new logistics center, providing space or around 15,000 pallets

in an area o 7,400 m2.

When something comes rom the heart, say it in style with

the new LIND BEAR. Lovingly created by the LIND Mas-

ter Chocolatiers, it turns every message into a sweet littlegif. Te new LIND BEAR sets gourmets hearts racing.

Te fine combination o select Swiss cherry brandy and thebest LIND chocolate has been a LIND classic or 80 years.

Tis quality product is made with the utmost care using

traditional methods. Pure pleasure or chocolate lovers and

connoisseurs!


12/104



8B R A ND A M B A S S A DO R

ANNUAL REPORT 2011

ROGER FEDERER

NOVEMBER 2011

GRAND OPENING OF THE NEW LINDT CHOCOLATERIA

Brand ambassador Roger Federer opened the LIND

Chocolateria in Kilchberg with Ernst anner, CEO o

Lindt & Sprngli. Chocolate lovers will be able to watch theLIND Master Chocolatiers behind the scenes, and make

their own chocolate creations here in uture.

During the opening ceremony, Roger Federer signed five

copies o the new LIND BEAR made o fine porcelain.

Tese were auctioned at the Swiss online platorm Ricardoin support o the Swiss winter relie charity Winterhile

Schweiz, which celebrated its 75thanniversary in 2011.

AUGUST 2011

SWEET BIRTHDAY GREETINGS

Te LIND Master Chocolatiers warmly congratulatedRoger Federer on his 30 thbirthday, and sent him their sweet-

est greetings in the orm o a hand-decorated chocolate box

ull o exquisite LIND pralins.

In addition, the LIND Master Chocolatiers gave hima lovingly crafed card with birthday wishes rom numerous

LIND chocolate lovers who contacted us rom all over the

world via Facebook.

BRAND AMBASSADOR


13/104



9B R A ND A M B A S S A DO R

ANNUAL REPORT 2011

NOVEMBER 2011

GRAND OPENING OF THE NEW LINDT CHOCOLATERIA


14/104


15/104


16/104



With eight production sites in Europe and the USA, 18 sub-sidiary companies and many independent distribution part-ners, Lindt & Sprngli is the leading supplier in the globalpremium chocolate segment. e ollowing summary gives

a comprehensive overview o the main sales markets.

SALES BY REGIONS

in percentages

Italy11.0%

North America27.8%

France12.8%

Germany17.5%

Switzerland13.1%

Great Britain4.8%

Rest of Europe7.3%

Rest of World5.7%

SWITZERLAND

In 2011 Chocoladeabriken Lindt&Sprngli (Schweiz) AGreported sales worth around CHF 324.4 million. Because o

currency actors in our export business, this was equivalent

to a slight downturn o 1.2%.

Because o the bad news rom the international financial world,consumer sentiment on the Swiss market worsened more andmore as the year progressed. e exceptional strength o theranc brought weaker export activities, declining tourist num-bers and a greater tendency or Swiss residents to do theirshopping across the national borders. e chocolate marketas a whole was not spared by these prevailing conditions, andconsequently became less dynamic. Although exports to over-seas markets proved just as difficult or LINDT as they did orothers in this challenging environment, Lindt & Sprngli didsucceed in gaining market shares and achieving overall growth

on the domestic market, thanks to the consistent pursuit oits premium brand strategy and intensified marketing activi-ties. e opening ceremony o the new LINDT Chocolateria

in Kilchberg on November 14 by brand ambassador RogerFederer proved an unorgettable event. In the uture, visi-tors will have the opportunity to get to know the ascinatingworld o the LINDT Master Chocolatiers and create their own

chocolate masterpieces with their help.

GERMANY

In the year under review, Chocoladefabriken Lindt&SprngliGmbH achieved sales growth of 7.0% to EUR 350.8 million

(previous year: EUR 327.7 million) and won further market

shares in all categories.

e German economy benefited primarily rom greaterdemand rom the emerging countries and accompanyingexport growth. Because o higher disposable incomes anda decline in the number o unemployed persons, private

consumption rose again or the first time in years. Despitethe avorable prevailing conditions, the trend on the choc-olate market as a whole remained flat. is is explained byongoing intensive price promotions and the growth o lowcost private labels, which ampliy the price sensitivity o con-sumers. In this not altogether easy environment, the act thatLINDT succeeded in achieving strong growth in all productsegments in Germany is thereore all the more welcome. Asa result, urther substantial market shares were gained onceagain. One special highlight was the product launch o theLINDT TEDDY, the new star o the Christmas assortment.To satisy rising demand or LINDT premium chocolate the

oundation stone was laid in 2011 or the construction oa new logistic center as part o a major investment project.

FRANCE

Lindt&Sprngli SAS sales rose by 10.3% to EUR 257.6 mil-lion (previous year: EUR 233.5 million). LIND was able to

further extend its leading position once again.

Because o the bad weather prevailing in the summer months,the French chocolate market as a whole grew continuouslythroughout the year. LINDT was able to strengthen its po-sition and win new market shares in all segments. In the

chocolate tablet segment, LINDT remained the strongnumber one and was a dependable growth driver yet again.Seven new products were acknowledged among the top ten

12M A R KE T S

ANNUAL REPORT 2011

MARKETS


17/104



13M A R KE T S

ANNUAL REPORT 2011

innovations. is not only reflects the strength o the brandin its own right but also proves once again that LINDT isa leader in new product launches. e universally popularCHAMPS-ELYSEES pralins were restyled in the year under

review by the French star designer Ora-to and produced ina limited edition. A highlight o the year was the appearanceo the LINDT Master Chocolatiers at the Salon du Chocolatin Paris, where they were able to give an impressive demon-stration o their exceptional creativity and perect craf skillsto a big audience.

ITALY

Lindt&Sprngli SpA and Caffarel SpA reported consolidatedsales of EUR 221.4 million (previous year: EUR 215 million).

Tis represents an improvement of 3.0% on the previous

year.

Because o the euro crisis and the high level o Italian Statedebt, the government came under increasing pressure as theyear advanced. is was accompanied by depressed consum-er sentiment. Despite these circumstances, LINDT succeedednot only in maintaining its leadership in all segments buteven gained urther market shares. In the year under review,five new LINDT stores were also opened in big premium out-lets. Because o our extensive presence in both the modernand traditional trade and our own LINDT shops, LINDTproducts are now available in almost every retail channel. eimpressive appearance o the LINDT Master Chocolatiers

at Eurochocolate in Perugia, by ar the biggest chocolatetrade air in Italy with over two million visitors, was particu-larly noteworthy. is year attention ocused especially on thelaunch o the LINDT BEAR which was prominently staged onthe central Piazza in Perugia with a three-meter high sculp-ture made o LINDT chocolate. All the big shops in Perugiawere decorated with the LINDT BEAR and LINDOR truffles,so creating millions o points o contact with consumers.

CAFFARELspecialties continue to be available through thetraditional retail channels only which ound it hard to main-tain their position alongside the modern trade. Despite these

not altogether easy conditions, CAFFAREL was able to de-end its position. Its products were admired and presentedin over 10,000 specialty stores. e typical GIANDUIOTTI

pralins remain the most popular product admired or itsoutstanding quality.

NORTH AMERICA

With the LIND and GHIRARDELLI brands in the USA andLIND in Canada, Lindt & Sprngli increased its cumulative

sales in this region by 8.5% to USD 775.1 million (previous

year: USD 714.2 million). LIND and GHIRARDELLI once

again enjoyed a leading position and proved to be the fastest-

growing chocolate brands.

e sluggish economy and downgrading o the US credit rat-ing were reflected in a high rate o unemployment and infla-tion, resulting in an extremely weak consumer sentiment.

Lindt&Sprngli (USA) Inc.e American chocolate market

as a whole grew by around 6%, which was largely attributableto price increases. On the other hand, the volume trend re-mained flat. With rising raw-material costs, Lindt & Sprngliound itsel obliged to make price adjustments. en therewas the act that many trade partners made only very cau-tious advance purchases o seasonal products. e act thatLINDT again succeeded in maintaining the growth trend oprevious years with growth amounting to 8.7% was all themore pleasing, thus enabling LINDT to remain the uncon-tested market leader in the US premium chocolate segment.

Ghirardelli Chocolate Companyachieved growth o 10.5%

and was thereore able to urther expand its market leadership.e popular SQUARES reported particularly strong growthbut also the chocolate specialty Intense Dark is showing anincreasing appeal to chocolate lovers. An extensive marketingpackage as well as national TV spots and numerous other ac-tivities ensure that GHIRARDELLI is ever-present and enjoysa firmly established place in consumer awareness. Business inown retail outlets also continue to show substantial growth.is pleasing development will be promoted urther with theinauguration o new units.

Lindt&Sprngli (Canada) Inc.In Canada, too, LINDT re-

mains the leading premium chocolate brand and with 3.9%grew aster than the chocolate market as a whole again. iswas reflected anew in substantial market share gains. In the


18/104



course o the year under review, two new LINDT outlets wereopened in Montreal and Quebec. Familiarity with the LINDTbrand was urther enhanced by its presence at selected eventssuch as the International Toronto Film Festival or the Stars

on Ice show.

GREAT BRITAIN

Lindt&Sprngli (UK) Ltd. achieved sales growth o 3.2%in an extremely challenging economic environment markedby tax increases and the accompanying somewhat depressedconsumer sentiment. Great Britain is Europes biggest choco-late market, making it vitally important or our group ocompanies to bring home to local consumers the traditionalexpertise o the LINDT Master Chocolatiers and the highquality o LINDT products. e premium brand values werethereore impressively demonstrated by requent appearances

o the LINDT Master Chocolatiers at seasonal events such asValentines Day and Mothers Day or at the Chocolate Weekin London in mid-October 2011. Also worth mentioning isthe act that Lindt & Sprngli (UK) Ltd. managed to achievean outstanding perormance in an overall declining marketduring the important Christmas period.

REST OF EUROPE

Lindt&Sprngli (Austria) Ges.m.b.H. reported an above-average growth with 7.2%. e LINDT brand gained a re-cord achievement in terms o market shares and is the ast-est growing brand in Austria. Lindt&Sprngli (Espaa)

SA managed to grow 2.0% under very difficult economicbackground conditions thus consolidating its position in asluggish to declining market environment. Lindt&Sprngli(Sweden) AB also serves the markets in Finland and Nor-way. Despite a flat chocolate market, welcome sales growthrunning into double digits was achieved in all three ar-eas. In Sweden, LINDT has now become one o the leadingbrands in the premium chocolate segment. Lindt&Sprngli(Czechia) s.r.o. ended the year successully with high dou-ble-digit growth. is avorable trend is backed primarilyby a strengthened brand presence and the expansion o dis-tribution. ese measures enabled our company to perorm

well above the trend o the chocolate market as a whole. Ina price-sensitive market, Lindt&Sprngli (Poland) Sp. z o.o.managed to win market shares.

In Russia, the chocolate market as a whole began to expandagain or the first time in years whereby LINDT grew asterthan the general market average. To bring the brand home toconsumers, more television advertising was used in the big

cities o Moscow and St Petersburg.

REST OF WORLD

In the year under review, Lindt&Sprngli (Australia) Pty.Ltd.achieved growth o 2.4% against the previous year andwas thereore able to maintain its leading position. Two ur-ther LINDT Chocolate Cas were established during theyear in Melbourne. Both got off to a strong start and gener-ate positive eedback rom consumers. Lindt & Sprngli nowhas a total o our LINDT Chocolate Cas in Melbourneand another our in Sydney. In the year under review, a newsubsidiary company Lindt&Sprngli (South Africa) Pty.

Ltd. was incorporated in Cape Town, South Arica. To createconsumer awareness o the brand, the craf expertise o theLINDT Master Chocolatiers was put on display at numerousshows in Johannesburg, Cape Town, and Durban. Chocolatecourses are also regularly organized in the LINDT ChocolateStudios in Cape Town and Johannesburg.

Political unrest in several countries o the Middle EastandNorth Africa had a corresponding impact on the progresso local business. We note with pleasure the act that LINDTwas able to maintain its leading position in the tablet segmentin the United Arab Emirates, Israel, Lebanon, and Qatar and

is the leading brand in the dark chocolate section in thosecountries. In many Asian countries, the premium chocolatesegment is going rom strength to strength with the resultthat LINDT was able to win substantial market shares. Par-ticular importance attaches here to China where double-digit growth was achieved and the presence o LINDT prod-ucts greatly expanded. e exhibition held in the WorldChocolate Wonderland 2011 in Shanghai proved a perectplatorm to celebrate typically Swiss chocolate culture and tolet the Chinese discover the taste o LINDT chocolates. Inthe year under review another LINDT boutique was inaugu-rated at Omotesando in Tokyo. is will urther encourage

amiliarity with the brand in Japan. LINDTs market posi-tion was also greatly strengthened in Hong Kong, Taiwan,and Singapore.

14M A R KE T S

ANNUAL REPORT 2011


19/104



DUTY FREE/TRAVEL RETAIL

Lindt & Sprnglis travel retail business reported pleasinggrowth in 2011, although it did suffer rom the strength othe Swiss ranc. In this area particular significance is to be

attached to the new presence o LINDT at Zurich Airport.A unique selection o the finest LINDT products is pre-sented here in the new LINDT boutique. e product rangeis suitably completed by chocolate beverages and ice creamspecialties. Arriving passengers in terminal 1 are now alsowelcomed by LINDT in the Duty Free arrival store. At theelegant LINDT counter, every traveler can find an ideal gifto take back to people at home. In 2011, LINDT successullylaunched small-ormat premium tablets and hot chocolategif packages. In addition, the proven SWISS PREMIUMNAPOLITAINS and the big gold and silver bars managedonce again to enhance their best-selling position.

PROCUREMENT

In the year under review raw material procurement againproved highly volatile. is trend was attributable not only toundamental actors, such as prevailing climatic conditions,production volumes and supply and demand, but continuedalso to be heavily influenced by speculation. On the cocoabean utures market in London, prices once again fluctuatedwidely, largely under the influence o political unrest in theIvory Coast. Afer an export ban had been imposed by theIvory Coast on cocoa beans in early 2011, prices rose strong-ly. e situation did not ease until April when the export ban

was lifed and the price per ton o cocoa went on to settleat around GBP 2,000. Because o the continuing avorableweather conditions in the growing areas, the price per tono cocoa had allen to GPB 1,700 by the end o October andeven declined to GBP 1,304 at the end o 2011. e high price

volatility observed on the sugar market in the past two yearscontinued. e reduction o the area under cultivation asa consequence o the EU sugar market regulation resulted ina supply shortage in Europe; sugar prices thereore remained

very high. Moreover strong world market prices were ob-served because o unexpected changes in harvest orecasts bythe worlds biggest growing countries. In 2011 the situation

on the milk market remained tense. is is explained by ris-ing global demand or milk products at a time o alling pro-duction. In the dried ruit segment, the price demanded or

hazel nuts was once again unusually high. Prices charged oralmonds and coconuts also remained high. On the packag-ing material side, because o structural changes made by themanuacturers and accompanying capacity shortages, prices

o aluminum, paper and cardboard rose urther.

15M A R KE T S

ANNUAL REPORT 2011


20/104



Lindt & Sprngli is the worldwide leader in the premiumchocolate segment and one o the ew manuacturers withcomplete control over the production process. is startswith the selection o the most exquisite cocoa beans and ends

with the elegant packaging. To guarantee top product qual-ity, our uncompromising quality commitment is rigorouslymaintained throughout the entire manuacturing chain. Aswell as requiring that all incoming raw materials meet thestrictest possible standards, we also carry out regular qualitychecks through all stages o cocoa processing and chocolaterefinement.

In product development, the LINDT Master Chocolatierscan draw on over 165 years worth o experience. ey areconstantly developing innovative flavors, optimizing existingrecipes and making a valuable contribution to the extraordi-

nary design and decoration o the individual products withtheir creativity. When developing new chocolate specialties,it can ofen take several years rom the initial idea to the fin-ished product. Nothing is lef to chance here. Extensive prepa-ration includes consideration o detailed market research re-sults, as well as in-depth eedback rom internal specialistsand numerous test consumers, which are ed in throughoutthe entire development phase. is ensures that the producton the market ultimately meets consumers requirements. Itis no coincidence that Lindt & Sprngli has always had a suc-cessul innovation rate. Many o our products go on to lastor generations and gain in popularity with our customers

year afer year.

It is hard to say exactly how many different products theLINDT Master Chocolatiers create worldwide, as the range isadapted to the various tastes in each country. A ew selectedmain products are presented in more detail below with reer-ence to the year under review 2011.

CHOCOLATE TABLETS

CREATION

A new line o tablets called CREATIONwas launched in 2010. e delicious tablets

are available in numerous extraordinaryvariants, and are particularly aimed at con-sumers who have a taste or filled tablets.is connoisseurs product line was firstlaunched on the French market, whereLindt is the undisputed number one in thefilled tablet segment. e line has since

gone on to become established in Europe. e range o fla-vors varies rom country to country, even though some reci-pes, such as Crme Brule, Noir Orange, and RocherLait, have international appeal. For lovers o dark chocolate,selected CREATION recipes are also available in dark choco-

late. However, this range also includes the widely known andhugely successul trio o classic Mousse au Chocolat tabletsmade o white, milk and dark chocolate. With double-digitgrowth in France, the CREATION line is also helping to re-inorce LINDTs leading position in the filled-tablet segmentin other markets.

EXCELLENCE

Lindt & Sprngli has played a key role inshaping the trend towards dark chocolaterom the outset. e first tablets with a veryhigh cocoa content were produced by the

French subsidiary back in the late 1980s.e Group thus proved its flair or innova-tive products once again. Since then, theEXCELLENCE line has become firmly es-tablished worldwide and is now the Groups

main sales driver in the tablet range. As the number o fla-vors has been constantly increased over the years, the rightproduct or every consumer is now available. e most pop-ular variety in the world is the variant with 70% cocoa con-tent. However, Swiss consumers are particularly ond oOrange Intense, as shown by an extensive survey o ourshareholders in 2010. In the 70% to 99% cocoa content cate-

gories, EXCELLENCE tablets are mainly o interest to par-ticularly discerning chocolate lovers who appreciate a raretaste experience. To open up the world o dark chocolate to

16PRODUCTS

ANNUAL REPORT 2011

PRODUCTS


21/104



these discerning gourmets, numerous tasting events are heldeach year in various ormats such as EXCELLENCE & wine,EXCELLENCE & whiskey and EXCELLENCE & cigars.

PASSION CHOCOLATTo give consumers an impressive illustra-tion o the handiwork o the LINDT Mas-ter Chocolatiers, an all-new premium tab-let called PASSION CHOCOLAT waslaunched in 2010. At first, the productrange only consisted o two selected reci-pes, Orange & Pistache and Caramel& Fleur de Sel. ese thinner-than-normaltablets are made o delicately melting

chocolate that is a treat or all the senses, with scatteringso special ingredients such as crispy caramel pieces and

crunchy slivers o sea salt. e high-quality packaging witha window gives a small glimpse o the fine contents inside.e product launch was extremely successul worldwide.Consequently, the Amandes & Vanille Bourbon variant wasadded to the line in the year under review. is tablet alsobecame an instant best seller and has inspired the LINDTMaster Chocolatiers to aim even higher in uture. ey arealready working on a new PASSION CHOCOLAT tabletthat is set to appear in 2012. Exciting news or our loyalconsumers!

GHIRARDELLI SQUARES

e SQUARES are made by our sub-sidiary Ghirardelli Chocolate Com-pany and are only available in theUSA. e all-year-round range isavailable in many different flavors. Itis also complemented by special sea-sonal limited editions. For example,

the Dark Chocolate & Strawberry SQUARES are particu-larly popular on Valentines Day, the Pumpkin & SpiceSQUARES in all and at Halloween, and the SQUARES withadvocaat or peppermint flavor in the Christmas period.Around 800 million individual SQUARES were produced in

the year under review, making this successul product one oGHIRARDELLIs key sales drivers. e best seller in this ex-tensive range is the Milk & Caramel flavor.

SEASONAL

GOLD BUNNY

e LINDT GOLD BUNNY is around60 years old. Over the years, it has be-

come a real Easter icon as a result oconsiderable and continuous market-ing investment. In its various sizes andguises, it hopped over the countermore than 100 million times world-

wide in the year under review. To urther increase the popu-larity o the GOLD BUNNY, large sums o money are invest-ed in its presence during the crucial Easter period year aferyear. is includes the much-noticed GOLD BUNNY Smartcars, which have been on the road in many countries or sev-eral years dispensing small chocolate bunnies, as well as largeinflatable GOLD BUNNIES in various sizes, which are put

up in department stores, railway stations and airports, andon the roos o gas stations. ere are also numerous treasurehunts in various orms, ranging rom online puzzles throughiPhone apps to conventional competitions. e highlight othe year under review was the auction o porcelain GOLDBUNNIES in the USA. ese were signed in advance bya host o amous Hollywood stars rom the world o musicand film and then auctioned or charity. All proceeds romthe auction were donated to the aid organization AutismSpeaks, which supports autistic children. e patron o thecampaign was the singer Toni Braxton, whose own child su-ers rom autism.

LINDT BEAR

To build on the triumph o the GOLDBUNNY during the Easter period, theLINDT BEAR was launched as part othe global Christmas range in 2011.With its estive packaging and pleatedred bow, the LINDT BEAR is theperect companion or the successul

GOLD BUNNY. e small red heart charm represents theattention to detail that is the hallmark o the LINDT MasterChocolatiers. e LINDT BEAR is available in various or-

mats, and quickly became the best seller during the Christ-mas season. To mark the launch, brand ambassador RogerFederer signed five LINDT BEARS, which were sold via an

17PRODUCTS

ANNUAL REPORT 2011


22/104



auction Web site. All the proceeds went to the Swiss winterrelie charity Winterhile Schweiz, which celebrated its 75thanniversary in 2011. e appearance o the LINDT BEAR,which chiefly appeals to consumers at the emotional level

with its estive presentation, was publicized on a large scalethrough eye-catching displays at point o sale, attractive Sayit with the LINDT BEAR online promotions and impressiveprint campaigns in popular general-interest magazines. Oneparticular highlight in the year under review was the show-casing o the LINDT BEAR in an image campaign o CreditSuisse, which gained significant exposure worldwide.

PRALINES

LINDOR

LINDOR has been a closely-guardedrecipe o the LINDT Master Chocola-

tiers or over 60 years, and the trufflewith the firm shell and endlessly deli-cately melting center is always a specialtreat. In all flavors, the LINDOR prod-uct line has gone on to become the key

growth driver worldwide, and is the Groups biggest salesmainstay by ar. Around 2.7 billion truffles in a wide varietyo flavors rolled off the production belt in Switzerland, Italy,and the USA in 2011. As well as making an excellent treat,LINDOR balls are also ideal gifs in high-quality, seasonally-adapted packaging. e most popular LINDOR truffle in theworld is the milk chocolate variety. In its red packaging, it

even enjoys huge popularity in China, where red is consid-ered a lucky color. In the year under review, the entire prod-uct line underwent a slight makeover, giving it a more con-temporary look. e philosophy behind the changes to themuch-loved classic was evolution, instead o revolution,meaning that loyal LINDOR ans will continue to recognizethe packaging on the shelves. is clearly shows that a tradi-tional brand can be urther developed successully over sev-eral years, taking into account all its key values, without itever going out o ashion. To make LINDOR truffles acces-sible to an increasingly wide audience, significant investmentwas again channeled into an extensive global marketing

package in 2011. As well as publicizing the truffles throughconventional advertising channels such as print and TV, this

also included the sampling campaigns o the LINDT MasterChocolatiers at point o sale, or example during theLINDOR Festival in Switzerland, and at selected, prestigiousevents like the International Film Festival in Toronto and the

Salon du Chocolat in Paris.

CONNAISSEURS

e CONNAISSEURS pralins, whichwere relaunched in a large-scale cam-paign in 2010 afer a two-year revamp,perormed extremely well in the yearunder review. Additional marketingactivities generated new impetus andthe brand has become urther estab-

lished in the minds o consumers. Targeted promotional o-ers also led to a large number o extra impulse purchases. As

a result, as well as long-standing consumers, many new onesexperienced the pleasure o the refined recipes, which im-press with their unusual shapes and new flavors. e elegantpackaging, which makes this product line one o the finestchocolate gifs all year round, again went on sale with newormats and packaging in a particularly estive version overChristmas. In Switzerland, the CONNAISSEURS pralinsbecame the leading brand in the pralins segment in 2011.

CHAMPS-ELYSEES

During the extremely important Ftesde fin danne period in France,

LINDT brings out elegant, high-quali-ty pralins gif boxes year afer year.e assorted CHAMPS-ELYSEES se-lection has been particularly popularwith French consumers or several de-

cades, and comes out in a special presentation every year.Renowned French artist Ora-to was commissioned to de-sign the special packaging in 2011. His design, which wasonly available as a limited edition, met with widespread ap-proval. In addition, the entire assortment was revamped andoptimized. e end result was a collection o the best recipes.With this and other pralins ranges, LINDT again consoli-

dated its leading position in the French Christmas marketwith attractive gif offerings.

18PRODUCTS

ANNUAL REPORT 2011


23/104



19PRODUCTS

ANNUAL REPORT 2011

CAFFAREL GIANDUIOTTI

Caffarel SpA was established in 1826 and is based in LusernaSan Giovanni, Italy. Lindt & Sprngli purchased the com-pany in 1997 as part o the geographical expansion o the

Group. Gianduiotti are the best-known product by ar.ey are triangular in shape, and their taste is unmistak-

ably unique. Crunchy Piedmont hazelnutsgive the secret recipe that certain some-thing. Gianduiotti are only available inItaly. Fortunately, however, they can alsobe ound in the regular pick & mix range inLindt & Sprnglis own stores. e actualhistory o the gianduiotto dates back to1852, when Caffarel launched a totally newkind o product or the first time. To make

this specialty, different cocoa varieties were mixed togeth-

er and enriched with sugar as well as the choice Piedmonttonda gentile (round and sweet) hazelnut, which is amousor its fine, exquisite taste. is thick, aromatic mixture re-sulted in a really special pralin unlike any other in everyrespect: it was a true product o the conectioners art, as eachpralin was shaped individually. Its original name was givu,a Piedmont dialect word. Later on, this was changed toGianduiotto, a nickname that was to become hugely a-miliar to chocolate connoisseurs worldwide. e inspiringorce behind it was Gianduja or Gian dla duja (Giovannidel boccale). With his prominent hair peak and tricorn hat,he was one o the best-known Piedmont masks, a symbol

o the fight or reedom and independence in Piedmontin 1799. During the 1865 carnival, these jovial and popu-lar maschera spontaneously handed out the new Caffarelpralins to the people. And so Caffarel has had the greathonor o calling its creation Gianduia 1865 the authenticgianduiotto rom Turin ever since.


24/104


25/104


26/104



22C O R P O R A T E S O C I A L R E S P O NS I B I LI T Y

ANNUAL REPORT 2011

CORPORATE SOCIAL RESPONSIBILITY

Lindt & Sprngli is convinced that sustainable and sociallyresponsible action is an important prerequisite or the com-panys long-term economic success. is issue is thereore

dealt with at the highest management level and additionallymonitored by a committee at Board o Director level (CSRCommittee).

Corporate Governance Chapter, Corporate Social Responsibility Committee, page 39

e group o companies has ormulated clear guidelines onthe subject o sustainability which are reviewed, adjusted andurther extended year on year. ese guidelines and other in-ormation about various memberships and activities can beconsulted by all the stakeholder groups at any time in a sepa-rate chapter on the Lindt & Sprngli Web site.

www.lindt.com/csr

Site policyLindt&Sprngli is strongly committed to itslong-standing Swiss base. Substantial investments have there-ore been made in the past 20 years to expand the sites inKilchberg (chocolate production), Olten (cocoa mass produc-tion) and Altendor (logistics). New jobs have been createdas a result. Lindt&Sprngli (Switzerland) AG is not only thebiggest exporter within the Group which supplies cocoa massto the sister companies in Germany and Italy, and exports fin-ished LINDT products overseas, but also the biggest employeron the lef bank o Lake Zurich. at in turn creates great so-

cial responsibility. To saeguard uture growth, geographicalexpansion plays a particularly important role and is drivenorward by the incorporation o subsidiary companies. egroup o companies currently has a total o 18 independentsubsidiary companies and a number o representation offices.

Personnel In 2011, Lindt&Sprngli employed more than7,700 persons worldwide. To prepare young people to takeover uture responsibilities, the number o training placesor apprentices is being constantly increased and extended toinclude new specializations. In Switzerland, Lindt&Sprnglitrains some 40 apprentices or a number o different posts.

e employees show an above-average level o commitment,excellent proessional expertise and high identification withthe products and with the company itsel. Lindt &Sprngli

promotes employees with a long-term perspective at everylevel o the organization. e Group attaches particular im-portance to core values such as trust, air play, team spirit,and mutual respect, which are firmly anchored in the cor-

porate credo.Company Credowww.lindt.com/int/swf/eng/company/social-responsibility/policies/

Diversity within the workorce is an important actor whichis suitably encouraged. People rom every continent work atLindt&Sprngli. ey are employed in an integrative work-ing atmosphere, regardless o origin, social background, reli-gion, gender, and age. Moreover, Lindt&Sprngli has alwaysprovided adapted workplaces or disabled persons.

Safety at the workplace Saety at the workplace is a toppriority. Careully developed prevention programs and regu-lar training sessions play an important role here. A bindinghealth & saety program was introduced some years ago orall the production companies belonging to the Group. Com-pliance with that program is verified by internal audits. eprogram, which is designed to achieve proactive improve-ment o saety at work within the company, has now becomea firm eature o the corporate culture and is implementedby our staff members in an exemplary ashion. With theseand other measures in all our group member companies, theLindt&Sprngli Group management is committed to its so-

cial responsibility or the saety o all its employees.

Consumers e numerous enquiries received rom con-sumers in all the subsidiary companies worldwide covermany different subjects and range rom general product in-ormation through complaints and suggestions to special is-sues o sustainability. As the number o enquiries has risenstrongly in recent years and consumer care is accorded greatimportance throughout the business, a new customer rela-tionship management system (CRM) has been implementedin the past two years; it enables all enquiries to be recordedcentrally and relevant issues to be identified. is ensures

that enquiries are answered efficiently and in a timely man-ner and that service to consumers is assured even afer theyhave made their purchases.

CORPORATE SOCIALRESPONSIBILITY


27/104




ANNUAL REPORT 2011

Supplier Code of Conduct As a leading global premiumchocolate manuacturer, Lindt&Sprngli is committed toethical and socially responsible company management. esame conduct is expected o our suppliers who make a writ-

ten commitment through the Suppliers Code o Conduct.ey undertake to comply with laws and regulations con-cerning working conditions and the environment. e codeis binding and compliance is verified on a random samplebasis rom time to time. In the year under review, in coopera-tion with an external expert, key emphasis was placed on thesuppliers o packaging materials by means o comprehensivesel-assessments and subsequent on-site audits. e resultsacquired or these audits is now being passed on to the sup-pliers in a next step and its implementation will be reviewedagain in ollow-on audits.

Environment e Groups environmental guidelinesorm the basis or the long-term achievement o our objec-tives, namely the conservation and regeneration o ecologicalresources. rough involvement in international initiativessuch as the Carbon Disclosure Project, Lindt & Sprnglisefforts are measured and compared with those o similarbusinesses. e data acquired in this way provide the basisor the latest and uture efforts by the group o companiesto cut CO2emissions. e annual reports have been printedby a climate-neutral process since 2008. e volume o CO2produced during printing is calculated and neutralized bypurchasing emission reduction certificates. In addition, the

annual report is printed on FSC paper rom a controlledsource. To ensure responsible paper consumption, since 2010the Annual Report is only sent out on special request.

Social Commitment In the year under review, many do-nations and product contributions were made by all subsid-iary companies to local organizations, associations, and socialschemes. Particular importance attaches here to the newlylaunched project partnership between Lindt&Sprngli andthe Roger Federer Foundation or Winter Aid Switzerland.When the new LINDT Chocolateria was inaugurated inmid-November in Kilchberg, a Meet&Greet with Roger

Federer as well as five LINDT BEARS made o porcelain andsigned in his own hand were auctioned at the Swiss onlineauction house Ricardo. e proceeds amounting to a total

o CHF 7,451 were donated in ull to Winter Aid Switzer-land which has benefited or many years rom support byLindt&Sprngli (Switzerland) AG. is action marked thestart o a project partnership between Lindt&Sprngli and

the Roger Federer Foundation in avor o a winter aid as-sistance program or deprived children in Switzerland. earrangement stipulates that both partners will donate equalamounts o CHF 80,000 each year or the next five years,making a total o CHF 400,000. is initiative is designedto remedy the social isolation o children living in poverty.

Janine Hndel, Roger Federer Foundation, Ernst Tanner,Roger Federer and Daniel Frei, Swiss Winter Aid, launcha five-year project partnership.


28/104




ANNUAL REPORT 2011

Sustainable Cocoa Cultivation To guarantee the highquality and unrivalled taste o our product, stringent selec-tion o the finest raw materials is imperative. at is why weonly use the finest cocoa varieties, consisting in large mea-

sure o high-grade cocoa which is mainly cultivated in LatinAmerica, the Caribbean and in a ew other specially selectedgrowing areas which meet stringent climate and soil crite-ria. It accounts or only a small raction o the world cocoaharvest. Lindt & Sprngli covers its need or consumer cocoarom Ghana, where one o the finest varieties is grown.

Selection o the finest quality cocoa beans is thereore o theutmost importance or Lindt&Sprnglis premium products.Equally important, however, is the need to guarantee that co-coa beans are cultivated and harvested under socially accept-able and sustainable conditions. In particular, we condemn any

orm o unlawul child labor, wherever it may occur. at isone o the reasons or which we have been covering our entireconsumer cocoa requirement rom Ghana alone since 2006.

Our corporate credo stipulates that we will act equitably inrelation to all our partners. Compliance with sustainablerules o conduct thereore also assumes great importancein the procurement o our raw materials. is involves re-spect or social and societal issues such as working condi-tions and income o armers in the growing countries, sup-port and promotion o environmentally-riendly productionconditions, and payment o equitable prices or raw materials

which meet our essential quality requirements and or whichwe are willing to pay a reasonable price supplement.

e existing organizations which supply certified cocoa beansare not, in our view, able to guarantee cocoa in the quality andquantities needed by us on a continuous and permanent basis.We thereore do not procure cocoa through such organiza-tions but look or other ways o ensuring responsible and sus-tainable use o our most important raw material, cocoa.As a consequence, Lindt&Sprngli has itsel become active insustainable cocoa procurement and in recent years has played

a determining role in setting up a specific purchasing modelor traceable cocoa rom Ghana. is has been done primar-ily in the conviction that the traceability o cocoa beans is the

key basic requirement to ensure better control o the procure-ment chain and thereore directly ameliorate unacceptablelocal conditions.

Collaboration between Lindt&Sprngli and its local cocoasuppliers in Ghana is a way o guaranteeing adequate avail-ability o the finest-quality cocoa beans and their completetraceability back to the individual villages. For the procure-ment o cocoa beans under this project, Lindt&Sprngli paysa special premium per ton o cocoa. is premium is targetedon local social projects, e.g. via the non-profit organizationSource Trust. Lindt&Sprngli is not only one o the oundingmembers o Source Trust but also, under its aegis, one o thebiggest purchasers o traceable cocoa beans rom Ghana.

Since this partnership began in 2008, several million US dol-

lars have been invested in this way in the development o theregional inrastructure. is not only includes the equipmento villages with wells to provide a sae and clean drinking watersupply but also in the distribution o mosquito nets to preventmalaria.

In addition, this money is used to finance major special proj-ects. For example a new junior high school was inaugurated

in the Dunkwa district in September 2010. Here young peopleaged 12 to 15, in three classes with an average membershipo 40 pupils each, divided up by age groups, receive tuition

SUSTAINABLE COCOA CULTIVATION

Malaria is a widespread disease in Africa. In the LINDT districtsin Ghana, 40,000 moscito nets sponsored by Lindt & Sprnglihave been distributed so far.


29/104




ANNUAL REPORT 2011

in mathematics, English, natural science, agricultural science,and sport, while their parents work in the cocoa plantations.e construction o urther schools in other districts is cur-rently at the planning stage.

Another part o this special premium is or example allocatedto Village Resource Centers (VRC). ese consist o a preab-ricated structure equipped with a number o computers withinternet access. e VRCs are always set up near schools andare used in the daytime by pupils as part o the regular teach-ing syllabus. In the evenings and at the weekends these acili-

ties are available to the armers who thereore gain convenientaccess to all kinds o training units ocused on the subject ococoa growing. In the long term, these lessons have a positiveimpact on the sustainable optimization o cocoa bean qualityand help to increase harvest yields.

e expedient use o resources financed by Lindt&Sprngliis verified at regular intervals by visiting delegations rom thecompany at the highest Group level. In the year under reviewa visit was also organized by the umbrella association Choco-suisse. e results demonstrate that with this unique purchas-ing model Lindt&Sprngli is making a real contribution to

the promotion o socially compatible and economically airconditions or cocoa growers in Ghana.

www.sourcetrust.org

Based on the positive experience gained with the purchasingmodel in Ghana, a similar project was set up or the procure-ment o fine cocoa rom Latin America. Afer initial clarifica-tions with local partners in previous years, in the year underreview some traceable cocoa beans were procured rom Ecua-dor and Madagascar or the first time. e project has got off toa good start and will be urther extended in coming years.

In addition Lindt&Sprngli advocates the sustainable growingo cocoa plants through active membership o various organi-zations such as the World Cocoa Foundation or the AricanCocoa Initiative.

Further reading:www.lindt.com/csr

In 2010, a new Junior High School in Dunkwa, Ghana,has opened, which was built with a part of the donationsby Lindt & Sprngli.

The Village Resource Centers (VRC) consist of a unit constructionwhich provide computer and internet access. In this way, farmersget convenient access to training sessions.


30/104

Rudol Sprngli laid the historic oundations or the modern-

day Group in 1845 at a small conectioners shop in Markt-gasse, Zurich, by making chocolate in solid orm. Over165 years later, Lindt & Sprngli is now the worlds leadingproducer o premium chocolate. is is manuactured at sixproduction acilities in Europe and two in the USA, and soldby 17 o the companys own subsidiaries and a widespreadnetwork o independent distributors worldwide. Conse-quently, LINDT quality chocolate is now available in themajor chocolate markets in standard retail as well as dutyree segment, thus making LINDT a global premium brand.is ensures that loyal consumers can buy their cherishedLINDT chocolate practically anywhere in the world.

e expansion o the worldwide distribution o LINDT

products is probably one o the companys most outstand-ing achievements in the past two decades: when the currentmanagement team took over the reins in the early 1990s, therewere numerous gaps on the global map. e aim o the geo-graphical expansion o the Group was to gradually close thesegaps. For instance, over the last 20 years, large sums have beeninvested in building up a proessional sales team, which haspursued new distribution channels as well as developing ex-isting retail channels. e main long-term aim here was tostrengthen LINDTs presence with its own sales strategy inurban areas, or example in the central retail strips o majorconurbations. At the same time, this approach benefited unit

sales o LINDT products in the conventional retail channels,which can gain rom the extra impetus that greater amiliaritywith the LINDT brand provides.

LINDT INTERNATIONAL RETAIL

26REPORT

ANNUAL REPORT 2011



REPORT

First design concept for the new LINDT Boutique du Chocolat on 5thAvenue in New York, which opens its doors early 2012.


31/104

Tapping into the biggest chocolate market in the world When Lindt & Sprngli took its first steps into the USA inthe early 1990s in order to establish the LINDT brand onthe North American market, a network o LINDT-owned

boutiques was opened afer extensive market analyses. Ini-tially, the aim was to amiliarize American consumers withthe LINDT brand by impressively highlighting the diversityo the product range whilst emphasizing its premiumness,quality commitment, and Swiss tradition. Afer around tenyears, LINDT products were available almost everywhere inthe American retail sector, meaning that the own shops hadserved their original purpose. e number o shops was con-sequently reduced to around 35 units in selected locations.

e long-established Ghirardelli Chocolate Company oSan Francisco, Caliornia, which Lindt & Sprngli acquired

in 1998, earned an outstanding reputation in the premiumchocolate segment back in the 1960s with a standalone retailconcept. Some o the shops, which are still mainly ocused onselected locations on the West Coast, also eature an attachedrestaurant. Extravagant ice cream creations and deliciouschocolate drinks can be consumed there. One particularlypopular dish is the hot udge sundae, an ice cream dessertserved with whipped cream and toffee sauce and available in

various flavors. A comprehensive selection o GHIRARDELLIproducts are also on sale in the shops. All this is complement-ed by typical souvenir items rom San Francisco.

With hindsight, the business o LINDT and GHIRARDELLIin North America can thus be seen as paving the way or theexpansion and enhancement o LINDTs own retail concept.Once this sales model in North America began to bear ruit,several LINDT shops were soon opened in other countries.At first, the respective subsidiaries assumed responsibility, byplanning, setting up, and running the retail units themselves.As a result o the decentralized structure o Lindt & Sprngli ingeneral and the resultant relatively autonomous operations othe subsidiaries in particular, a large number o different shopswere set up over time with no overarching design concept.

On to pastures new To ensure better coordination and, inparticular, more homogenous structuring o the expansionstrategy and the staged opening o urther retail stores in uture,

an International Retail department was created and a speci-ic and groupwide LINDT retailing concept was developed twoyears ago. e aim o this concept is to create an additional pil-lar through LINDT-owned chocolate cas, boutiques, outlets,

and actory shops that impressively showcase the entire rangeo products. In addition, this approach perectly complementsthe sale o LINDT products through existing retail channels.e main objective is to strengthen the brand image as a leadingtop-quality chocolate provider and achieve a promotionally-effective impact, thus boosting sales o the product rangethrough conventional retail channels.

Hansjrg Klingler, Group Management member responsibleor International Retail, explains: Right rom the outset,it was clear that we were going down a completely new pathand entering uncharted territory by establishing a standalone

retail department. at is why we decided to centralize thisexpertise at head office in Kilchberg instead o transerring itto the individual subsidiaries, as was previously the case. Withthis strategic objective in mind, the International Retail de-partment was created in 2009.

Derek Tanner, head o the International Retail departmentin Kilchberg, adds: Initially, the aim was to establish a shopconcept that not only supports but also urther entrenches the

values o our brand and our associated positioning as a leadingcompany in the premium chocolate sector. It was also aboutdeveloping a uniorm shop design that has a clear identity and

is thereore recognizable to consumers worldwide.

Carefully selected locations e selection o suitable lo-cations is a crucial actor when opening new shops. Factorysales are always linked with a production company. To findoptimum sites or the cas, boutiques, and outlets, valuablecontacts were cultivated with major shopping center operatorsand real-estate specialists. LINDT boutiques are situated inthe center o major cities, on main retail strips such as Stachusin Munich and 5thAvenue in New York. e same applies tothe chocolate cas in Australia and Japan. LINDT outlets aresituated at careully selected locations in North America and

in all key European chocolate markets. Foot traffic, the envi-ronment and the neighborhood are all top priorities in theselection process. However, the overriding aim is to create

27REPORT

ANNUAL REPORT 2011




32/104



28REPORT

ANNUAL REPORT 2011

a destination where we can present our products to consum-ers and thus gain loyal customers or our shops as well as theestablished retail channels.

Exclusive ambience e main ocus here is to create apleasant and enjoyable atmosphere in the shops in order toshowcase the products and premiumness appropriately.Based on the theme o chocolate and the LINDT logo, warmshades o brown and refined shades o gold are predominant-ly used here, combined in perect harmony to reflect the el-egance o the products. Other eatures are choice urniture,subtle lighting and elaborate decoration in keeping with theseason. On entering the shop, customers step into the world

o the Master Chocolatiers. I they are lucky, they may evenmeet a Master Chocolatier in person, making the finest prali-ns by hand and giving out ree samples to taste.

Extensive advice Forover 165 years, LINDTs core areao expertise has been making specialty chocolate productsin the upper premium segment. e important things hereare presenting this expertise in an attractive retail space witha corresponding product range, and giving individualadvice to customers through attentive, well-trained staff.As well as highlighting the long-standing expertise and pas-sion o the LINDT Master Chocolatiers, direct contact with

consumers also gives an opportunity to present new prod-ucts and provide assistance in choosing the right product.

Impressive rangee entire product range is presented atLINDTs various points o sale. is includes the all-year rangeas well as the seasonal collections. In addition, there are selectedexclusive offers throughout the year that are not available in

this orm in conventional retail, such as a special pick & mixrange where customers can individually put together their ownchocolate selection. Elegant presentation boxes, refined ribbonsand bows as well as high-quality carrier bags reinorce consum-ers belie that they have purchased a wholly exclusive product,which is a key actor in their special shopping experience. Top-class resh products such as chocolate drinks and chocolatecakes, ice creams and macaroons that perectly complement theexisting range are on sale in the LINDT Chocolate Cas and bars.

LINDT Chocolate Cafs A subsidiary was set up in 1997in Australia. To accelerate market entry locally and increase

the recognition o the LINDT brand throughout the country,an innovative, individual experience concept was developedin the orm o a LINDT Chocolate Ca. e first ca wasopened at a prime location on Martin Place in Sydney in 2004.

As it was a great success, urther branches soon ollowed. Forinstance, Sydney and Melbourne now have our LINDT Choco-late Cas each. e ca concept thus proved its worth there,and was subsequently employed to tap into other new chocolate

markets, or example in Tokyo, where the Group opened two oits cas in 2010 to gain a oothold in the promising Asianmarket. Fabian Ubenau, who is responsible or the strategic

LINDT Outlets consist of an elegant interior fittingin warm brown and noble gold colours.

LINDT Chocolate Caf on Chapel Street, a big shopping streetin Melbourne, Australia.


33/104

29REPORT

ANNUAL REPORT 2011

expansion o the shops at International Retail, comments:e examples in Australia and Japan show that the LINDTChocolate Cas have become a pioneering model or estab-lishing the LINDT brand in growth markets. As part o the

Groups ongoing geographical expansion, we are thereoreconstantly looking to open urther cas in additional loca-tions. We are proud to announce that new properties are al-ready in the planning stage.

LINDT Boutique du Chocolat At present, there are bou-tiques in Munich, New York and, most recently, Kloten Air-port in Zurich. An elegant LINDT boutique was opened inJuly 2011 on level 2 o the airports Airside Center, selling pre-mium chocolate products that are mainly tailored to the needso tourists, and are thereore highly suitable as gifs. Airlinepassengers can also relax in the Chocolate Bar with a cup

o drinking chocolate or get in the mood or their trip witha selection o tasty ice creams. ere are plans to open twonew boutiques in Florence and New York in 2012.

Ghirardelli Ice Cream and Chocolate Shops e Ghirar-delli Chocolate Company has been operating its own highlysuccessul network o shops or nearly 50 years. It currentlyhas 14 units that sell a wide range o chocolate and souvenirproducts. e next major opening is scheduled or mid-2012

in Anaheim, Los Angeles, in the popular Disneyland themepark, which was established in 1955 and has since welcomedmore than 600 million visitors. A Ghirardelli Ice Cream and

Chocolate Shop in a prime location will open its doors there,with an official inauguration ceremony marking the start oGHIRARDELLIs 160th anniversary celebrations. A reeGHIRARDELLI SQUARE or each visitor and the opportu-

nity to enjoy one o the legendary hot udge sundaes in therestaurant will make the experience even sweeter or the vis-iting crowds in uture. e shop in Anaheim is set to con-tinue the success story o its predecessor which was opened13 years ago at Disney World, Florida.

ese examples impressively demonstrate the many acetsand the uture potential o the new International Retail de-partment.



GHIRARDELLI Ice Cream and Chocolate Shop in Monterey,San Francisco.


34/104


35/104


36/104

L IN D & SP RN GL I


GROUP STRUCTURE AND SHAREHOLDERS

GROUP STRUCTURE Te Lindt & Sprngli Group isglobally active, developing, producing and selling choco-

late products in the premium quality segment. Te holding

company, Chocoladefabriken Lindt & Sprngli AG, with itsheadquarters in Kilchberg ZH, is listed on the SIX Swiss

Exchange. Te market capitalization based on the 2011 year-

end prices is CHF 7.0 billion.

Security and listing numbers of the securities see page 95

Te companys group structure is very lean. While the

Board of Directors handles management, strategy and su-

pervisory duties at the highest level, the CEO and Group

Management are responsible for operational management

tasks in which they are assisted by the Extended Group

Management.

Board of Directors see page 34Group Management see page 40

Te scope of consolidation of Chocoladefabriken Lindt

& Sprngli AG includes the subsidiaries listed in notes to

the consolidated financial statements. Details about these

companies, such as name, domicile, share capital, partici-

pation, etc. can be found there as well.

Details of subsidiaries see page 56

Chocoladefabriken Lindt & Sprngli AG holds no interests

in publicly traded companies.

MAJOR SHAREHOLDERS As of December 31, 2011,Chocoladefabriken Lindt & Sprngli AG disclosed the fol-lowing major shareholders which own voting shares of morethan 3%: Fonds fr Pensionsergnzungen (fund for pensionsupplements) of Chocoladefabriken Lindt & Sprngli AG,Kilchberg ZH, held a total of 29,143 registered shares or

20.8% of the share capital and thus 20.8% of the votingrights of the company. Chase Nominee Ltd., London, helda total of 4,664 registered shares or 3.3% of the share capi-tal. As far as the company knows, there are no tied share-holding agreements between these shareholders.

As of December 31, 2011, the company received no dis-

closure reports indicating that further shareholders own

more than 3% of the equity capital or voting rights of thecompany.

Chocoladefabriken Lindt & Sprngli AG does not hold cross

interests.

CAPITAL STRUCTURE

As of December 31, 2011, Chocoladefabriken Lindt & Sprngli

AG presents the following capital structure.

ORDINARY CAPITAL Te ordinary capital is composedof two types of securities:

2011

Registered shares * CHF 14,000,000

Bearer participation certificates ** CHF 9,261,790

Total ordinary capital CHF 23,261,790

* 140,000 registered shares par value of CHF 100. each** 926,179 bearer participation certificates par value of CHF 10. each

Te registered share has a voting right at the General Meet-ing, whereas the bearer participation certificates have novoting rights. Both types of shares have the same rightsto dividends and proceeds of liquidation in proportion totheir par value. All shares are fully paid-in. No bonus cer-tificates (Genussscheine) were issued.

AUTHORIZED AND CONDITIONAL CAPITAL Te

Group possesses a total conditional capital of CHF 6,340,460.Te conditional capital comprises a total of 634,046 bearerparticipation certificates with a par value of CHF 10.each. As of December 31, 2011, of this total, the remaining279,596 are reserved for employee stock option programs;and 354,450 participation certificates are reserved for capitalmarket transactions. Further information about authorizedand conditional capital can be found in the companys Ar-ticles of Association.

http://irpages2.equitystory.com/lindt_relaunch/pdf/ Articles__28012011.pdf

Tere is no other authorized capital apart from the condi-tional capital. For details please refer to article 4bis of theArticles of Association which are available on the Web page

CORPORAE GOVER NANCE

32C O R P O R A T E G O V E R NA NC E

ANNUAL REPOR 2011


37/104

L IN D & SP RN GL I


of Chocoladefabriken Lindt & Sprngli AG.www.lindt.com/int/swf/eng/investors

CHANGES IN CAPITAL During the past three report-

ing years, the following changes have occurred in the ordi-nary and conditional capital:

Ordinary capital

Year Share capitalin CHF

Registeredshares (RS)*

Participationcapital in CHF

No. of bearerparticipation

certificates (PC) **

2009 14,000,000 140,000 8,832,980 883,298

2010 14,000,000 140,000 9,017,990 901,799

2011 14,000,000 140,000 9,261,790 926,179

Conditional capital

No. of bearer participation certificates (PC) **

Year Total Capital market-PC Employee-PC2009 526,927 354,450 172,477

2010 658,426 354,450 303,976

2011 634,046 354,450 279,596

Number of securities, status as at December 31.* Registered shares (RS) par value CHF 100.** Bearer participation certificates (PC), par value CHF 10.

RESTRICTIONS REGARDING ASSIGNABILITY

AND NOMINEE ENTRIES Both registered shares andparticipation certificates can be acquired without restric-tions. According to article 3, subsection 6 of the Articlesof Association, however, the Board of Directors may refuse

full shareholder status to a buyer of registered shares if thenumber of shares held by that buyer exceeds 4% of the

total of registered shares as entered in the commercial

register. Moreover, according to article 685d, subsection2OR (Swiss Code of Obligations), the Board of Directorsmay refuse entry into the share register if upon demand bythe Board the buyer does not formally state that the sharesare purchased on his own behalf and on his own account.

According to article 3, subsection 7 of the Articles of Asso-ciation, corporate bodies and partnerships, who are inter-related to one another through capital ownership, through

voting rights or common management, or who are other-wise linked, as well as natural persons and legal entities orpartnerships who act in concert in regard to a registration

restriction, are considered to be one single shareholder.Based on article 3, subsection 9 of the Articles of Associa-tion, the Board of Directors may make exceptions to theseprovisions in special cases and adopt suitable provisions for

the application of these rules. Te implementing provisionsfor these rules are defined in the regulation of the Board ofDirectors on Registration of registered shares and keepingthe share register of Chocoladefabriken Lindt & SprngliAG.

http://irpages2.equitystory.com/lindt_relaunch/pdf/ Eintragungsreglement_en.pdf

According to these provisions, in particular (1) the in-tention of a shareholder to acquire a long-term interestin the company or (2) the acquisition of shares as part ofa long-term strategic business relationship or a merger,

together with the acquisition or allocation of shares on theoccasion of the acquisition by the company of a particular

asset, are treated as special cases within the meaning ofarticle 3, subsection 9 of the Articles of Association.

In the year under review, no exceptions were granted.Based on the long-term participation and with regard tothe purpose of the Foundation, the Board of Directors al-ready granted such an exception prior to the year underreview for the 20.8% of the voting rights of the Fonds frPensions-ergnzungen (fund for pension supplements) ofChocoladefabriken Lindt & Sprngli AG.

A nominee shareholder will be granted full shareholderstatus for a maximum of 2% of the registered share capitalas entered in the commercial register, if such nominee dis-closes in writing name, address, domicile or seat, national-ity and shareholdings of those persons on whose account heholds the shares. Over the limit of 2%, the Board of Direc-tors will enter the shares of a nominee as voting shares inthe shareholder register if such nominee discloses, in writ-ing, name, address, domicile or seat, nationality and share-holdings of those persons for which accounts he holds 0.5%or more of the then outstanding share capital, whereby

entry per trustor is limited to 4%, respectively to 10% pernominee collectively. Article 3, subsection 7 of the Articlesof Association is applicable to nominees likewise.

33C O R P O R A T E G O V E R NA NC E

ANNUAL REPOR 2011


38/104

L IN D & SP RN GL I


Te regulations to these rules are defined in the Regulationsof the Board of Directors Registration of registered sharesand keeping of the share register of ChocoladefabrikenLindt & Sprngli AG.

http://irpages2.equitystory.com/lindt_relaunch/pdf/ Eintragungsreglement_en.pdf

A revocation of these restrictions regarding the assignabil-ity requires a resolution by the shareholders at the GeneralMeeting with a voting majority of at least three quarters ofthe shares represented.

OUTSTANDING OPTIONS AND CONVERTIBLE

BONDS Options on bearer participation certificates ofChocoladefabriken Lindt & Sprngli AG are only outstand-ing within the scope of the existing employee option plan.

Details concerning the number of options issued and stilloutstanding with the corresponding terms and conditionsare shown in the table below:

Year ofallocation

Number Strike price(CHF)

Term No. ofrights

exercised

No. ofexercisable

rights

2005 27,600 1,607 until 2012 22,696 4,904

2006 23,100 2,251 until 2013 3,637 19,463

2007 26,054 2,983 until 2014 0 26,054

2008 13,479 3,149 until 2015 0 13,479

2009 34,190 1,543 until 2016 0 34,190

2010 36,680 2,200 until 2017 0 36,680

2011 35,880 2,523 until 2018 0 35,880Total 196,983 26,333 170,650

Te options were granted at a ratio of one option to one par-ticipation certificate (1:1). Te options can be exercised fora maximum of seven years aer the grant and are subject toa blocking period of three, four and five years respectively.Te strike price is equivalent to a five-day average of the clos-ing daily prices of the share on the Swiss stock market priorto the date of issue.

In 2011, a total of 24,380 of the above employee options

were exercised (previous year: 18,501). Terefore, the or-dinary participation capital was increased in 2011 byCHF 243,800 by the corresponding reduction in the con-

ditional participation capital reserved for the employeestock option programs. Te 170,650 options outstanding asof December 31, 2011, and not yet exercised are equivalent to7.3% of the total capital. Tere are no outstanding convert-

ible bonds of Chocoladefabriken Lindt & Sprngli AG.

BOARD OF DIRECTORS

ROLE AND FUNCTION Te Board of Directors makesdecisions jointly and, for specific matters, is assisted by Boardcommittees. Te Boards primary function is to provide guid-ance and exercise control over the Group. Te Board makesstrategic decisions and defines the general means for achiev-ing the goals it has set for the company. It sets the agenda forthe General Meeting and approves the annual and interimreports. Decisions regarding the appointment of members tothe Group Management or of Managing Directors of subsid-

iaries as well as the nomination of the statutory auditor forelection at the General Meeting are taken by the full Board.

MEMBERS Te Board of Directors of Chocoladefab-riken Lindt & Sprngli AG consists of at least five and notmore than nine members. If the number of members fallsbelow five, the minimum membership must be restored atthe next ordinary Gen

lindt annual report 2011 (1)

Documents