Rfa 2015 en ch0002497458 PDF

ANNUAL REPORT
WorldReginfo - 9598e104-0c9b-410a-914c-87b9720d1132
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CONTENTS
2015 has been a transitional year

for SGS, with an evolution in our
structure and service offering being
announced to investors in October 2015.
The market is changing in fundamental
ways and SGS is aligning itself
to take full advantage of the
opportunities that this presents.
Without changing the nature of
the core business, which is firmly
rooted in the Testing, Inspection and
Certification (TIC) industry, SGS is
looking to leverage its existing network
in new and exciting ways.
As a result of these changes we have
designed this year’s Annual Report
to provide stakeholders not only with
a retrospective view of our performance
in 2015, but also with a clarification
of the company’s outlook and
structure going forward. More detailed
information on these changes
is also available from the SGS website:
www.sgs.com/management
Finally, you may note a difference
in the format of this year’s Annual
Report as we make our first steps
towards integrated reporting.
This year’s Business Review and
Corporate Sustainability performance
and highlights have been fully
incorporated into this document.
The complete Corporate
Sustainability Report will be
available online from 14 March 2016:
www.sgs.com/cs-report2015
We hope that you find this year’s
Annual Report useful, stimulating
and informative.
1. CHAIRMAN’S AND INNOVATION 58
6. GOVERNANCE 96
CEO’S LETTER TO EXPERTISE 60
SHAREHOLDERS 2 Group Structure and Shareholders 99
INVESTMENT 62 Capital Structure 100
OPERATIONAL EXCELLENCE 64 Board of Directors 100
2. HIGHLIGHTS 4 PROFESSIONAL EXCELLENCE 65 Operations Council 107
Compliance and Integrity 66 Compensation, Shareholdings
Financial Highlights 6 and Loans 111
Revenue and Adjusted Operating Procurement 67
Shareholders’ Participation Rights 112
Income by Business 7 PEOPLE 68
Change of Control and
Revenue by Region 7 Talent Acquisition 69 Defence Measures 112
Group Achievements 8 Employee Retention 70 Auditors 112
Business Highlights 8 Equal Opportunities 71 Information Policy 113
Sustainability Highlights 9 Operational Integrity 72
2020 Sustainability Ambitions 9 ENVIRONMENT 74
7. REMUNERATION
Emissions / Climate Change 75 REPORT 114
3. SGS AT A GLANCE 10 Energy Efficiency 77
Introduction by the Nomination
Waste Management 78
The World Leader 11 and Remuneration Committee 117
Water Management 79
Our Vision 11 Company’s Remuneration Policy
COMMUNITY 80 and Governance 118
Our Values 11
Community Programmes 82 Remuneration Model 121
Our Position in the Value Chain 12
Remuneration Awarded to the
SGS by Industry 14 Board of Directors 127
SGS BUSINESS PRINCIPLES 84
The Business Benefits We Deliver 16 Remuneration Awarded to the CEO,
The Expert Services We Offer 17 Senior Management and Other
SGS ADDED VALUE 86 Members of the Operations Council 128
Our Stakeholders 87
4. SGS BUSINESS
LEADERSHIP 18 What Makes Us Stand Out? 88 8. SGS GROUP RESULTS 132
Market Positioning 88
Group Outlook 20
The TIC Industry Unmasked 88
CASE STUDIES 22 9. SGS SA RESULTS 184
Our Value to Society 89
Mind the Gap 22
The Sense of Sensors 24
5. MARKET RISKS 90 10. DATA 194
Transportation and the Dawn
of the Smart City 26 Risk Management 92
Online-to-Offline: Where We Can
Add Value 28
Sustainability Materiality Matrix 94 11. SHAREHOLDER
INFORMATION 204
SGS BUSINESS MODEL 30
BRAND 32 WorldReginfo - 9598e104-0c9b-410a-914c-87b9720d1132

GROWTH 34
Agricultural Services 36
Minerals Services 38
Oil, Gas and Chemicals Services 40
Life Science Services 42
Consumer Testing Services 44
Systems and Services Certification 46
Industrial Services 48
Environmental Services 50
Automotive Services 52
Governments and Institutions Services 54
Acquisitions 56
Strategic Partnerships 57
1. CHAIRMAN’S AND CEO’S LETTER TO SHAREHOLDERS
seen in Life Science Services at 6.4%, ACQUISITIONS

DEAR Environmental Services at 5.2%
The Group initiated 14 acquisitions in
SHAREHOLDERS, and Consumer Testing Services at
4.9% organic growth.
2015 of which 10 were completed.
These acquisitions further expand the
The restructuring programme that the Group’s footprint into new markets and
Group announced in the first semester create a more diverse service offering.
to align operations with current market Combined, these companies add
conditions is proceeding as planned. CHF 45 million to the Group’s revenue
This measure resulted in one-off and CHF 9 million to the operating
expenses amounting to CHF 64 million income in 2015.
(CHF 47 million net of taxes).
The SGS Group performed well in Examples of this year’s acquisitions
2015 with total revenues reaching Adjusted EBITDA reached CHF 1 191 include: SVA Ltd., a UK-based leading
CHF 5.7 billion. million, up 3.4% at constant currency independent provider of extensive
versus the prior year. Adjusted operating advisory services in the food testing
This represents revenue growth
income was CHF 917 million resulting space, the Chile-based SIGA Ingeniería
of 3.6% (constant currency basis),
in a stable margin versus the prior year y Consultoría SA, a leading project
of which 2.0% was organic and 1.6%
at 16.1%. management, technical inspection
was contributed by recent acquisitions.
Net financial expenses for the year and engineering consulting company,
Trading conditions remained difficult
increased to CHF 43 million. The overall and Quality Compliance Laboratories
during the year with the fall in
effective tax rate for the period was Inc. in Canada, a provider of analytical
commodity prices, primarily impacting
25%, slightly below the prior year. testing to the pharmaceutical, nutrition
Oil, Gas and Chemicals, Minerals and
and cosmetic industries.
Industrial Services. Group revenue Profit for the period reached CHF 584
declined 2.9% in comparison with the million, down 6.7% at constant currency The Group has also begun to
reported figures for December 2014 due versus the prior year, mainly due to complement its traditional approach
to the strengthening of the Swiss Franc the one-off effect of the restructuring to acquisitions by finding opportunities
against the majority of other currencies. expenses of CHF 64 million in 2015 and to take smaller equity stakes in certain
Achieving growth during this challenging the one-off benefit in 2014 resulting strategic technology companies to
year underlines the strength of the from the settlement of a long-standing form partnerships. An example of this
Group’s strategy and the depth and dispute with the Republic of Paraguay is the recent partnership with SAVI,
balance of its portfolio. amounting to CHF 32 million. the US-based sensor technology
company in which SGS now holds
Organic revenue growth was most Operating cash flow improved
a 17.65% stake.
apparent in Governments and significantly over the year. For the
Institutions Services (12.0%), with first time in the history of SGS, the
Product Conformity Assessments DISTRIBUTION TO SHAREHOLDERS
core operating cash flow exceeded
experiencing impressive double-digit CHF 1 billion. The SGS Board of Directors will
growth. Automotive Services saw recommend to the Annual General
The Group invested in acquisitions
8.5% organic growth resulting from Meeting, to be held on 14 March 2016,
during the year for a total cash
the expansion of Vehicle Inspection the approval of a dividend of CHF 68 per
consideration of CHF 103 million.
Services. Systems and Services share, unchanged from the prior year.
It also paid a dividend of CHF 522 million,
Certification delivered 7.2% organic
leading to a Group net debt position
growth from high adoption of new 2015 MANAGEMENT
as at 31 December 2015 of CHF 482
standards and good performance in
million compared to CHF 340 million The Board would like to take this
food activities. Solid results were also
in December 2014. opportunity to thank former CEO
Christopher Kirk for his commitment
and leadership during his time at SGS.
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Mr. Kirk, who left his position as CEO in SUSTAINABILITY in Paris. SGS convened with participants
March 2015 after ten successful years across multiple business sectors to
2015 delivered another year of solid
at the helm of the Group, was replaced exchange thinking on how companies
sustainability performance. For the
by Frankie Ng who has been with the can work together to drive business
second consecutive year, SGS was
Group since 1994 and most recently led innovation and bring scale to the
named Industry Leader in the Dow
the Industrial Services and Consumer emerging green economy. Decisive
Jones Sustainability Indices (DJSI)
Testing businesses. action such as this underscores our
for both Europe and World regions.
In the course of 2015, Michael Belton, vision for SGS to be the trusted partner
The Carbon Disclosure Project (CDP)
EVP Minerals Services, resigned from in building a more sustainable economy.
also named SGS as Industrials Sector
his position. Ladislav Papik, COO South Leader and Country Leader in the DACH
East Europe left the Operations Council (Germany, Austria and Switzerland) OUTLOOK
to assume a regional role within the region for our high level of transparency In response to a constantly changing
Group. Anthony Hall, COO South East on the measures we have taken to global marketplace and new demand
Asia Pacific stepped down from the combat and adapt to climate change. patterns from our existing customer
Operations Council to take the global We maintained our status as a carbon base, SGS is evolving both structurally
leadership of the Innovation initiative neutral company and also improved our and technically.
for the Group. diversity and equal opportunities ratio.
The organisational realignment that was
The Nomination and Remuneration Sustainability is core to what we do and announced last Autumn will not only
Committee approved the internal is integral to our strategy and long-term underpin our ability to service clients
promotion and appointment at the commercial success. Our sustainability following the emergence of new product
Operations Council of Derick Govender approach focuses on delivering categories (such as pharma-nutritional
as EVP Minerals Services, Richard programmes linked to the most material products), but it will also help us to
Shentu as EVP Consumer Testing issues for our business: upholding high broaden our services, pool expertise
Services and Kimmo Fuller as COO standards of ethical conduct, supporting and create synergies across business
North America. economic performance, ensuring health lines to drive innovation.
and safety, acquiring and developing
Another important development in
SIGNIFICANT SHAREHOLDERS talent, managing energy and climate
the Group will be the work we are
change impacts, protecting human rights
As at 31 December 2015, Mr. August beginning to do in the exciting and
and delivering sustainability services
von Finck and members of his family rapidly changing fields of e-commerce
to our clients. It is through these
acting in concert held 15.03%, Groupe and data analytics. In decisively
programmes that SGS generates value
Bruxelles Lambert acting through embracing the increasing digitalisation
to society, both directly and through our
Serena SARL held 15.00%, the Bank of global supply chains with our strategic
customers. We employ pioneering tools,
of New York Mellon Corporation held Testing Inspection and Certification (TIC)
such as our Green Book and our Value
3.35%, BlackRock Inc. held 3.03% and 4.0 initiative, we can take advantage of a
to Society Estimation Model, to estimate
MFS Investment Management held number of new business opportunities.
the impact of our actions on the natural
3.01% of the share capital and voting
environment, employees, customers,
rights of the Company. GUIDANCE 2016
stakeholder networks and wider society.
At the same date, SGS Group
Actions on climate change mitigation The Group expects to deliver an
held 2.77% of the share capital of organic revenue growth in the range
remained the focus of our efforts in
the Company. of 2.5% to 3.5%, with stable margins
2015, culminating in SGS actively
participating in the United Nations compared to the prior year and solid
Climate Change Conference, COP21, cash flow generation.
20 January 2016
Sergio Marchionne Frankie Ng

Chairman of the Board Chief Executive Officer
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2. HIGHLIGHTS
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5
2. HIGHLIGHTS
FINANCIAL
HIGHLIGHTS
CHF 5.7 BN
CHF 917 MIO
5.5 5.7 889 917
+3.6% 1 +3.2% 1
2014 2015 2014 2015
REVENUE ADJUSTED OPERATING INCOME
16.1 % CHF 584 MIO

1
16.1 16.1
626
-6.7% 1 584
2014 2015 2014 2015
ADJUSTED OPERATING MARGIN PROFIT FOR THE PERIOD
CHF 81.95 CHF 68

68 68
-0.9% 82.69 81.95
2014 2015 2014 2015

ADJUSTED BASIC
EARNINGS PER SHARE PROPOSED DIVIDEND
19.7 % CHF 1.1 BN

20.4 19.7
1 062
+150 MIO 912
2014 2015 2014 2015
RETURN ON INVESTED CAPITAL 2

CORE OPERATING CASH FLOW
10 10 10
2014 2015
ACQUISITIONS
COMPLETED IN 2015
1. At constant currency.
2. Net Income / (Non-current assets + Net Working Capital).
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REVENUE AND REVENUE
ADJUSTED 4.6% 6.4%
OPERATING INCOME GIS AGRI
BY BUSINESS
5.6% 11.1%
AUTO MIN
6.4% 19.6%
ENVI OGC
15.5% 3.7%
IND LIFE
7.3% 19.8%
SSC CTS
ADJUSTED OPERATING INCOME 1
6.8% 7.0%
GIS AGRI
6.7% 9.8%
AUTO MIN
5.1% 14.1%
ENVI OGC
10.9% 2.5%
IND LIFE
7.7% 29.4%
SSC CTS
1. Before amortisation of acquisition intangibles, restructuring, transaction and integration-related costs

and other non-recurring items.
REVENUE
BY REGION 30.2%
Asia / Pacific
44.7%
Europe / Africa /
Middle East
25.1%
Americas
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2. HIGHLIGHTS
GROUP BUSINESS
ACHIEVEMENTS HIGHLIGHTS
AGRICULTURAL SERVICES
NEW STRATEGIC FIRST REDUCTION SGS created the first ever
PLAN IN A DECADE non-governmental seed quarantine

facility in Brazil
MINERAL SERVICES
Strategic alliance with Corescan
Services expanded in Canada
INITIATED TO MEET EVOLVING
MARKET DEMANDS OF NET WORKING CAPITAL with mobile unit
550
OIL AND GAS SERVICES
Innovation award from
CHF FIRST TIC the Energy Institute (UK)
MIO COMPANY LIFE SCIENCE SERVICES
Double-digit growth in China
and India
BONDS ISSUED AT HISTORICALLY CONSUMER TESTING SERVICES

LOW INTEREST RATE WITH A LONG-TERM CREDIT RATING Geographical expansion
and increased work with
e-commerce sites
10 ACQUISITIONS FURTHER ALIGNED SYSTEMS AND SERVICES

INTERESTS Centralised back offices for
Europe in Poland
BETWEEN SHAREHOLDERS INDUSTRIAL SERVICES
AND MANAGEMENT WITH Double-digit growth in China
COMPLETED IN 2015 REMUNERATION MODEL
(see Acquisitions section page 56) ADJUSTMENTS
ENVIRONMENTAL SERVICES
Growth in Health and Safety
and Industrial Hygiene Services
AUTOMOTIVE SERVICES
Exclusive ten-year inspection
concession signed with
Ugandan Government
GOVERNMENTS AND
INSTITUTIONS SERVICES
New E-Valuator border services
product successfully launched
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SUSTAINABILITY 2020
HIGHLIGHTS SUSTAINABILITY
AMBITIONS
PROFESSIONAL EXCELLENCE
SGS
SAFETY • Link management incentive
MONTH
plan to sustainability
SGS SA RECEIVED INDUSTRY • Deliver measurable sustainable
LEADER, GOLD CLASS value to society
SUSTAINABILITY AWARD 2016 FOR
ITS EXCELLENT SUSTAINABILITY
PERFORMANCE AND QUALIFIED TOTAL RECORDABLE INCIDENT PEOPLE
FOR INCLUSION IN ROBECOSAM’S RATE (TRIR) DECREASED BY MORE
2016 SUSTAINABILITY YEARBOOK. THAN 40%. • Maintain a natural turnover rate
of no more than 10%
• 30% of leadership positions will
be held by women
• Reduce our TRIR and
LTIR by 50%*
SGS NAMED INDUSTRIALS SECTOR
LEADER AND COUNTRY LEADER
IN THE GERMAN, AUSTRIAN ENVIRONMENT
DIVERSITY AND EQUAL AND SWISS region by the Carbon
Disclosure Project for our high • Reduce our annual CO2
EMPLOYMENT OPPORTUNITIES
RATIO INCREASED OVER level of transparency on climate emissions (per FTE) by 20%*
THE LAST 4 YEARS BY 14%. change mitigation. • Reduce our annual CO2
emissions (by revenue) by 20%*
COMMUNITY
• Increase our investment in
communities around the world
by 30%*. Focus on volunteering
* Against 2014 baseline
SGS ACHIEVED A GOLD RATING
SGS REDUCED ITS NATURAL IN 2015 FROM ECOVADIS FOR ITS
TURNOVER BY 6.5%. SUSTAINABILITY PERFORMANCE.
77% OF EMPLOYEES ARE

AWARE OF THE ROLE THAT
SUSTAINABILITY PLAYS IN SGS MAINTAINED ITS STATUS
SUPPORTING BUSINESS GROWTH. AS A CARBON NEUTRAL COMPANY.
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3. SGS AT A GLANCE
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85 000 1 800 1
EMPLOYEES OFFICES AND LABORATORIES GLOBAL NETWORK
THE WORLD LEADER OUR VISION OUR VALUES
We provide competitive advantage, drive We aim to be the most competitive and We seek to be characterised by our
sustainability and deliver trust. At SGS, the most productive service organisation passion, integrity, entrepreneurialism and
we are continually pushing ourselves to in the world. Our core competencies our innovative spirit, as we continually
deliver innovative services and solutions in inspection, verification, testing and strive to fulfil our vision. These values
that help our customers move their certification are being continuously guide us in all that we do and are the
businesses forward. improved to be best in class. They are bedrock upon which our organisation
At SGS, our sustainability approach is at the heart of what we are. Our chosen is built.
about more than just reducing carbon markets are and will be determined by
emissions. We maintain the highest our ability to be the most competitive
professional standards and ensure our and to consistently deliver unequalled
employees are able to lead fulfilling service to our customers.
working lives. We also seek to maximise
the positive impacts our business has
on society.
SGS IS THE WORLD’S LEADING INSPECTION, WorldReginfo - 9598e104-0c9b-410a-914c-87b9720d1132

VERIFICATION, TESTING AND CERTIFICATION
COMPANY. SGS IS RECOGNISED AS THE GLOBAL
BENCHMARK FOR QUALITY AND INTEGRITY.
WITH MORE THAN 85 000 EMPLOYEES, SGS
OPERATES A NETWORK OF OVER 1 800 OFFICES
AND LABORATORIES AROUND THE WORLD.
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3. SGS AT A GLANCE
OUR POSITION
IN THE VALUE CHAIN LIFE SCIENCES
We provide services throughout Protecting safety and costs in
all stages in the value chain, from product development
extraction and primary production to
manufacturing, transportation and retail. INDUSTRIAL MANUFACTURING
Making manufacturing more productive and profitable
CONSTRUCTION
Ensuring safety and performance where we live
MINING
Improving speed-to-market, optimising recoveries
CHEMICAL
Innovation, safety and efficiency in
everything from perfumes to paints
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PUBLIC SECTOR TRANSPORTATION
Facilitating international trade and Enhancing safety, quality,
sustainable development reliability and trust
ENERGY
Powering processes from renewables
to conventional energy
CONSUMER GOODS AND RETAIL

Generating trust throughout the supply chain AGRICULTURE AND FOOD
Ensuring safe, sustainable and high-quality products
OIL AND GAS

Enriching quality and value in
exploration, extraction and distribution
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3. SGS AT A GLANCE
OUR SPECIALIST SGS BY

CONSTRUCTION
TEAMS DELIVER INDUSTRY

Safe, efficient and trusted processes are
essential when constructing buildings or
TRUSTED RESULTS infrastructure. Our construction industry
IN WORLD-LEADING experience means our customers can
SERVICES, COVERING minimise environmental impact and

public inconvenience. We support our
VIRTUALLY ALL customers in implementing effective
INDUSTRIES. scheduling, budgeting, site safety and
logistics, plus assist in sourcing quality
We audit across the entire value chain,
materials and personnel. We conduct
providing benefits to all business AGRICULTURE AND FOOD
studies in construction feasibility, risk
sectors. We ensure our customers’
Consumers want assurance of safety assessment and management. Our
projects, products, processes and
and quality at every stage of the food services ensure quality in global supply
operations meet and exceed regulations
production process. Our services build chains by performing chemical and
and standards, and we provide the
trust, reduce risk and maintain efficiency physical testing of materials. Our asset
verification and certification needed
across diverse agriculture and food management system tracks machines
to trade in target markets around the
supply chains. We offer solutions for and equipment, while our inspection
world. Our consultancy services inform
agrochemicals, seed, biofuels, fertilisers, services provide facility, waste and
organisations on market demands,
food and forestry. Our services protect energy audits.
while our outsourcing solutions
the integrity of our customers’ brands
provide the expertise, experience
by assessing quality, adding value and CONSUMER GOODS AND RETAIL
and resources that enable our
securing safe and sustainable global
customers to meet their goals. Our services enable manufacturers,
supply chains. From primary production
We use state-of-the-art examination importers, exporters and retailers to gain
to the point of processing or custody
methodologies with unsurpassed a competitive edge. We ensure trusted,
transfer, we assist with legislation
accuracy to perform inspections that ethical and environmentally conscious
compliance, correct storage, shipping,
reduce risk and control quality and goods such as food, electronics, textiles,
packing and distribution as well as
quantity. At the same time we conduct toys, footwear and housewares, reach
import and export product inspection.
testing of raw materials, components consumers. Our laboratories conduct
and products in our global network material and functionality testing to verify
CHEMICAL
of facilities. Our industry experts also and certify that products perform as our
deliver world-class training, specifically The chemicals industry converts customers claim. We inspect processes
designed for the precise needs of our raw materials into literally tens of at every stage of production and
customers, providing the right skills thousands of consumer products every undertake retail store audits to ensure
and knowledge to maximise efficiency day. Industrial chemicals companies our customers’ brands are represented
and improve productivity. trust our services to reduce risk and correctly. We help our customers develop
eliminate potential health hazards. We products, processes and supply chains
Through our unique global network
ensure quality in chemical components that consumers trust every day.
we deliver independent results tailored
and the safety and compliance of
to the precise needs of the industry
finished products. Our consultancy ENERGY
or sector. Our customers trust our
services deliver turnkey laboratory
expertise, experience and resources to Across all operations, the energy sector
design, commissioning and operations
support them. We help our customers has to meet regulations, consider
assistance in dealing with intricate
achieve outstanding performance in safety and limit environmental impact.
equipment or logistics. We support our
everything they do. We support the energy sector with a
customers in improving productivity
and efficiency through our asset comprehensive range of independent
integrity management services, inspections and audits across the
optimisation programmes and project petroleum, gas, electrical power,
lifecycle services. coal and renewable energy industries.
We reduce risk in all operations from
exploration to decommissioning for
the oil, gas and coal industries. In
renewables, we consult on sustainability
across hydroelectric, wind and solar
power. Our expertise maximises
productivity and increases efficiency
in sales and distribution processes.
Our solutions help the energy sector
innovate to find tomorrow's energy today.
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INDUSTRIAL MANUFACTURING OIL AND GAS TRANSPORTATION
Our expertise allows manufacturers Access to independent expertise in For governments, manufacturers
to improve productivity, follow best both the upstream and downstream and financial institutions, improving
practices and streamline operational sectors is key to maximising the value performance and reducing risk in the
processes or logistics. Industrial chain in this sector. Our customers transportation industry is essential.
manufacturers, from pharmaceuticals in the oil and gas industry trust our From the automotive industry, through
to farm machinery and aerospace to dedication to quality and safety. We rail and shipping to the aerospace
automotive, trust in our independent provide tailored solutions for exploring, industry, we guide quality improvements
testing and conformity services. extracting, refining, transporting and and verify that efficiency is maximised.
Our advice on the fabrication of marketing oil, oil sands, gas and other We support our customers in achieving
components along with our finished hydrocarbons. Our specialist advice shorter delivery times, safer products
product assessments enable our and knowledge supports upstream and reduced costs. Our experts help our
customers to achieve performance activities such as applied mineralogy, customers minimise the environmental
standards throughout manufacturing. metering, measuring and hydrocarbons impact of their products and ensure their
We support manufacturers in meeting allocation. Our downstream services conformity and compliance to standards
all national and international quality, support distribution and retail as well as and regulations. We also ensure that
health and safety legislation, at the same the design and execution of optimisation brand guidelines are met throughout
time as providing advice on minimising processes and global trade inspection. aftermarket and distribution operations.
environmental impact. Our global network of offices,
PUBLIC SECTOR laboratories and testing centres offers
LIFE SCIENCES a truly unique and independent service.
Public sector organisations require
In the pharmaceuticals, solutions designed to work in harmony
biopharmaceuticals and medical devices with the processes and policies they
industries, products must conform to already have in place. Our unrivalled
all national and international regulations, border control services for scanner
as well as industry best practices. installation, transit monitoring and
Our services enable high-quality, risk profiling support the public
safe and compliant products to reach sector in reducing risk worldwide.
the market in the shortest possible Our e-government solutions enhance
timescales. We provide vital support international trade and revenue
and expertise for medicines and medical processing. We improve public
devices throughout every stage of infrastructure through independent
development, testing, production and road safety services that increase the
distribution. With the largest network efficiency of transportation systems.
of contract analytical laboratories in Our customers trust our knowledge of
the world and state-of-the-art clinical quality, health, safety and environmental
trials facilities, our customers trust issues to comply with complex
in our expert knowledge to support regulations. We improve quality
them with reliable results. and maximise productivity across
the public sector.
MINING
We act as a strategic partner in
the mining industry, providing testing,
technology and trade solutions.
Our services promote growth and
deliver efficiencies across exploration,
production, industrial applications,
decommissioning and closure. We offer
technical advice in steel manufacturing
processes and act as a strategic partner
in coal and coke trading. We also
help to maximise profits in precious
or base metal mining and extraction.
Our consultancy services deliver
transparent and unbiased support
in new technologies and accurate data
to track the progress of projects.
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3. SGS AT A GLANCE
THE BUSINESS QUALITY SAFETY
BENEFITS WE Our customers rely on our We help organisations develop

independent third party inspection,
DELIVER testing and auditing solutions to
effective health and safety systems
to protect employees, generate
ensure products, services and consumer confidence and enhance
processes comply with the latest trust in business operations.
quality standards. Our global We support our customers in
network of state-of-the-art facilities adhering to best practices and
provides information to certify complying with local, national
and verify quality worldwide. and international regulations.
WE DELIVER REDUCED RISK EFFICIENCY
BUSINESS We provide our customers with Our tailored business solutions

independent and impartial services help our customers implement
BENEFITS ACROSS that enable them to identify, manage processes and systems that make
THE 11 DIFFERENT and reduce risk. Our experts deliver business operations faster, simpler
INDUSTRIES risk management solutions, drawing and more efficient. We deliver
WE SERVICE on our testing and inspection unrivalled efficiency results from
capabilities, to verify risk prevention our local experts, who draw on
measures are in place. We assist the global experience of the entire
with compliance to international SGS network.
risk management standards across
a wide range of industries.
PRODUCTIVITY SPEED TO MARKET

Our training and outsourcing Compliance with the requirements
solutions ensure productivity keeps of target markets is key to
pace with developments in our increasing speed to market.
customers’ organisations. In the Our consultancy, testing and
short-term, we offer the knowledge certification services help our
of our world-class productivity customers overcome the complex
experts. In the long-term, we challenges of understanding
deliver focused training to develop and meeting market demands
specialist skills in our customers’ anywhere in the world, whatever
existing personnel. the industry or sector.
TRUST SUSTAINABILITY
Our global reputation for We help our customers take
independence and integrity ownership of building a more
enables us to build trust wherever responsible and sustainable future.
needed. We provide transparent We encourage environmental
and unbiased inspection, testing, responsibility and reduce the risk
verification and certification of corruption in our customers’
solutions so our customers can projects. Our services assist in
give assurance in their products, developing sustainable facilities
processes, systems and services. and production, as well as better
working and social environments.
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THE EXPERT INSPECTION TESTING
SERVICES All organisations need trusted We provide the broadest range

of product testing to customers
WE OFFER independent inspection to ensure
that legal obligations and high around the world. Our global
standards are met at every stage. network of testing facilities, staffed
Our comprehensive range of by knowledgeable and experienced
world-leading inspection services personnel, helps reduce risks,
helps to reduce risk, control quality shorten time to market and
and quantity, and meet all relevant demonstrate the quality and safety
regulatory requirements across of raw materials, components
different regions and markets. and products.
VERIFICATION CERTIFICATION
Whatever industry, compliance We enable our customers
with the latest regulations and to demonstrate that products,
standards is mandatory. We can processes, systems and services
help ensure that products, services are compliant with national
and processes follow the latest and international regulations
national and international standards and standards.
– wherever our customers are
in the world.
TRAINING CONSULTANCY
Providing a workforce with To ensure full market access, goods
skills and knowledge enhances must comply with the requirements
organisational agility, maximises of target markets. Identifying those
efficiency, motivates employees, requirements and meeting them is a
improves productivity and complex challenge. Our consultancy
boosts the bottom line. We offer services help our customers to
world-class training and courses understand and meet market
from industry experts that address demands anywhere in the world,
the precise needs of organisations whatever industry or sector.
and industry.
OUTSOURCING ANALYTICS
We offer unrivalled expertise, Our data analytics services ensure
experience, resources and a unique the quality of automated data inputs
global network. As a result, we can and its subsequent analysis.
provide the specialised skills our In managing streams of big data,
customers need to achieve their we are able to subsequently
goals, for any industry, anywhere propose innovations to our
in the world. customers, including the creation
of cutting-edge predictive
operations tools across all
the industries we operate in.
17
4. SGS BUSINESS LEADERSHIP
Our business leadership comes

from our unique global network, our SGS BUSINESS HOW WE BUILD
expertise and our attitude towards MODEL OUR BUSINESS
innovation and development. PAGE 30
DYNAMICALLY
AND SUSTAINABLY
It comes from our financial strength
and our ability to invest wisely.
It comes from our agility and

creativity, and our integrity as
an independent third party.
SGS BUSINESS HOW WE MAINTAIN OUR
It comes from our uncompromising
PRINCIPLES POSITION AS A WORLD
approach to sustainability and health
PAGE 84
LEADER AND MAKE SGS
and safety.
A GREAT PLACE TO WORK
It comes from our ability to provide
our customers with a competitive
advantage and offer our investors
a strong return on investment.
That is what we mean when we

SGS ADDED HOW WE ENSURE
talk about business leadership.
VALUE THE SUCCESS OF
PAGE 86
OUR STAKEHOLDERS
18
THE FOLLOWING SECTION ON SGS BUSINESS
LEADERSHIP REPORTS ON EACH COMPONENT OF
OUR BUSINESS MODEL, HIGHLIGHTS OUR BUSINESS
PRINCIPLES AND EXPLAINS HOW WE ADD VALUE
TO ALL OF OUR STAKEHOLDERS.
DDED VALUE
SG S A
OUR
IE S EM
TR PLO
ND
US
S SS
INE PRINCI YE
I BU P L
ES
OU
R S ES
SG HIP INTE
GR
RS ITY
E
E
IN SS MO
BU S
AD
LE
S NAL DE
G
S RATILOENCE BRA
ND
L
E EL
C
EX P
O
HEA
OUR CU
LTH AND SAFETY
AINABILITY
OUR PARTNERS
STMENT
GROWTH
STOMERS
INVE
SUST
IN
NO
ISE VA
RT TIO
EXPE N
PR
O
FE
SS
CT ION
PE ALI
RES SM
OU
RI
TY NV
UNI ES
M TOR
R COM S
OU
19
4. BUSINESS LEADERSHIP
STRUCTURE Central Europe will be incorporated into

GROUP SGS’ core skills and organisational
Northern and Central Europe and Central
OUTLOOK structure are evolving to adapt to
America will be incorporated into a new
South and Central America Region.
new market conditions and customer
demands. The consolidation of our
business lines from 2016 (which will
"SGS’ core skills and structure are
be reduced in number from ten to
evolving to adapt to new market
nine) will result in more organisational
efficiency, improved customer service conditions and customer demands".
and greater agility.
The restructuring will include the FINANCE
MARKET
incorporation of aspects of Life Science The Group will continue to focus on both
SGS expects market conditions Services as well as Food Testing into organic and inorganic growth as a key
to remain constrained in 2016 but Agricultural Services to generate objective for the year ahead, along with
nonetheless anticipates organic growth additional synergies to new product solid cash flow and stable profitability.
in the range of 2.5% to 3.5%, along categories. As a result of its expanded
with solid cash flow generation and SGS will also continue to place strong
scope, the business line will become
stable margins compared to 2015. emphasis on structural improvements
Agriculture, Food and Life.
Over the longer term (2016 – 2020), to its Net Working Capital (NWC) as
SGS anticipates mid-single digit organic Automotive Services will expand a priority during 2016. This will include
growth on average, which will be its remit to become Transportation. the standardisation and optimisation
supported by the new structure and Environmental Services will likewise of NWC for each activity within the
strategic initiatives. We also expect expand to become Environment, SGS portfolio.
accelerating merger and acquisition Health and Safety. Systems and
Our Procurement function will continue
activities, CHF 1bn of revenues over Services Certification will also broaden
to add value to the organisation through
the period, an adjusted operating income its horizons to become Certification
optimising strategic sourcing, enhancing
margin of at least 18% by the end and Business Enhancement. Consumer
supply chain management and
of the period, strong cash conversion Testing Services meanwhile will become
optimising our real estate portfolio.
and solid returns on capital. Consumer and Retail.
Another important aspect going forward
Our geographical organisation will also
will be the deployment of our Global
change, with the number of our Regions
Business Services Strategy. This will
being consolidated from ten to nine.
seek to simplify, streamline and optimise
As part of this process, Southern
the organisation, processes and systems
REALIGNMENT IN 2016
SGS REGIONS 2015 SGS REGIONS 2016
SGS SA, registered in Geneva, WESTERN EUROPE WESTERN EUROPE
controls all companies worldwide NORTHERN AND CENTRAL EUROPE NORTHERN, CENTRAL
SOUTHERN AND CENTRAL EUROPE AND SOUTHERN EUROPE
belonging to the SGS Group. EASTERN EUROPE AND MIDDLE EAST EASTERN EUROPE AND MIDDLE EAST
AFRICA AFRICA
Our operations are divided into NORTH AMERICA NORTH AMERICA
ten regions, each led by a Chief SOUTH AMERICA SOUTH AND CENTRAL AMERICA
CHINA AND HONG KONG CHINA AND HONG KONG
Operating Officer who is a EASTERN ASIA EASTERN ASIA
member of the Operations Council SOUTH EASTERN ASIA AND PACIFIC SOUTH EASTERN ASIA AND PACIFIC
and is responsible for the SGS

SGS LINES OF BUSINESS 2015 SGS LINES OF BUSINESS 2016
businesses in that region and for
AGRICULTURAL SERVICES
the local implementation of Group AGRICULTURE, FOOD AND LIFE
LIFE SCIENCES SERVICES
policies and strategies. AUTOMOTIVE SERVICES TRANSPORTATION
CONSUMER TESTING SERVICES CONSUMER AND RETAIL
From 2016 there will be a ENVIRONMENTAL SERVICES ENVIRONMENT, HEALTH AND SAFETY
GOVERNMENTS AND INSTITUTIONS SERVICES GOVERNMENTS AND INSTITUTIONS
realignment of regions and
SYSTEMS AND SERVICES CERTIFICATION CERTIFICATION AND BUSINESS ENHANCEMENT
business lines. INDUSTRIAL SERVICES INDUSTRIAL
MINERAL SERVICES MINERALS
OIL, GAS AND CHEMICALS SERVICES OIL, GAS AND CHEMICALS
20
of our back office functions as well as OVER THE LONGER
leveraging best practices across our
TERM (2016 – 2020), SGS THINKING FORWARD:
internal business services. One of
the main aspects of this will be to ANTICIPATES MID-SINGLE FORWARD THINKING
create three major Shared Service DIGIT ORGANIC GROWTH
Centres to handle the back office ON AVERAGE, WHICH WILL
processes that are currently managed BE SUPPORTED BY THE
in 35 different countries. NEW STRUCTURE AND
STRATEGIC INITIATIVES.
STRATEGIC INITIATIVES
SGS will be moving assertively The following case studies
301
further into the digital space with outline some of the new sectors
our TIC 4.0 initiative which will see
in which SGS is leading the way.
us focusing on two key areas for
potential future growth.
CAPEX
Firstly, as is outlined in more depth (CHF MIO, % OF SALES)
FOOD AND PHARMA
in the case study on page 25, we
are exploring ways in which we can
leverage our unparalleled global footprint 386 ANALYTICS
357
to move into offering analytics services. 345
Secondly (as per the case study on 305 301
page 29), we are finding that customers 261 TRANSPORTATION

increasingly value our services in the
world of e-commerce.
E-COMMERCE
In both these areas our traditional 7.2% 6.9%
6.1%
core skills can be used to offer 5.5% 5.2%
5.3%
offline-to-online services that ensure
our customers can be confident in 2010 2011 2012 2013 2014 2015
the products that they are offering.
INVEST IN ORGANIC GROWTH

PROJECTS AND TECHNOLOGY-
DRIVEN PARTNERSHIPS
103
ACQUISITION CASH CONSIDERATION
68
DIVIDEND PER SHARE (CHF) AND PAYOUT RATIO 1 (%)
750
SHARE BUY-BACK PROGRAM (CHF MIO) WorldReginfo - 9598e104-0c9b-410a-914c-87b9720d1132
(CHF MIO: # OF TRANSACTIONS)
Jan. 14: new dividend policy setting CHF 250 Mio for employee
CHF 65 as a dividend floor for 2013 – 16 68 68 equity participation plans
and / or utilisable as underlying
securities for debt-like issuance
94.5%
CHF 500 Mio
750
65 for shares cancellation
22 82.9%
250
302 82.9%
18
79.5%
176 12
10 10 10 1. Payout ratio:
Dividend per share / 58
104 103 108 103 Basic earnings per share
500
2. Dividend per share

including ordinary
and special dividends
2010 2011 2012 2013 2014 2015 2012 2 2013 2014 2015 JAN 15
TO DEC 16
DELIVER BOLT-ON ACQUISITIONS

WITH ATTRACTIVE BUSINESS DELIVER A SOLID RETURN MAINTAIN AN ATTRACTIVE
SYNERGIES ON INVESTMENT SHAREHOLDER RETURN POLICY
21
22
MIND
A new genre of
medical product is
emerging in what
THE GAP
is being called the
pharma-nutritional field.
“Let food be thy medicine and medicine For instance, on occasion it is not
be thy food,” said the father of Western clear when a product first comes to
medicine, Hippocrates around the 4th market whether it should be regulated
century B.C. and seemingly, Western under medical or nutritional rules.
medicine is now embracing this This becomes yet more complicated as
philosophy with renewed vigour. different countries are adopting different
A new genre of medical products approaches to the problem, resulting in a
is emerging in what is being called complex global regulatory environment.
the pharma-nutritional field. These Such ambiguity filters into advertising
quasi-medicinal products acknowledge regulations, requirements around clinical
the fact that many modern ailments trials and even product labelling. Yet
stem from dietary problems. the patient benefits and relative speed
For instance, a remarkably large number to market of these products compared
of people suffer from micronutrient to traditional drugs still make them
deficiencies, with the World Health attractive to the industry irrespective
Organisation (WHO) stating that of whether they are viewed as a food
over 30% of the world’s population product or a medical one.
are anaemic, due to iron deficiency 1. SGS has always been agile enough
This, as the WHO explains, is a public to ensure that products like this have
health issue of epidemic proportions. not slipped into the cracks between
Micronutrient deficiencies in this and business lines. By combining the
other areas (e.g. vitamin A or zinc expertise we have in multiple areas,
deficiency), not only damage public we have been able to offer a single
health but can also reduce the economic customer-facing team to our clients.
productivity of entire populations. Yet it is partly in response to the rapid
This is one of the instances where growth of this kind of product that SGS
pharma-nutritional products can will now be permanently merging its
potentially help. Unlike pure drugs, Life Science, Food Testing and
which are chemical structures with Agricultural Services, to form a new
a single target, medical-nutritional Agricultural, Food and Life business
products may be a mixture of many line. Whilst we have been working with
different ingredients with multiple this kind of product for a while, creating
objectives. They more closely resemble greater internal synergies will only
ordinary food and thus patients may be improve the quality of service we can
more likely to comply with their doctor’s offer to our customers. And by having
recommended dosage. a comprehensive service offering,
Despite being an exciting development we can ensure there are no gaps in
for patients and medical practitioners our service offering.
alike, on many levels these products
have sat awkwardly in the space 1. www.who.int/nutrition/topics/ida/en/
between nutritional and pharmaceutical
products.
23
THE
24
SENSORS
SENSE OF
The market is evolving. What we have found at SGS is that
by using this technology, farmers
Some of the manual often discover that they start to use
significantly less fertiliser than they were
measurements that previously, which saves them money in
addition to any environmental benefits
companies like SGS that this may bring.
used to carry out for This kind of development isn’t just

limited to precision farming. Working
our clients are now with our strategic partner SAVI, we are
able to provide companies with supply
being performed chain visibility and logistics support,
by increasingly such as real-time route data (traffic jams,
floods, etc.) and route optimisation.
sophisticated Elsewhere, we are working on the
automatic sensors. calibration of automatic sensors for oil

refineries. The huge amount of data we
are generating and managing is allowing
These can often generate a continual us to move from a preventative use of
flow of data – far outstripping the these sensors, to a predictive one. As
coverage that could be achieved by a result we are now able to significantly
hand. To an industry outsider this might reduce the risks associated with entire
appear to be an infringement upon some systems and pinpoint areas that will need
of SGS traditional verification activities, maintenance before it becomes urgent.
but that is not how we view these
However, in all of these cases someone
developments. In fact we see them
still needs to physically test the quality
as a major opportunity.
of the data at the initial input stage.
Imagine a sensor buried in a farmer's Otherwise the entire subsequent
soil. Such a sensor could provide a set of data generated could be next
farmer with various data, such as soil to meaningless. Decisions based on
PH levels, salinity, acidity, fertiliser levels inaccurate data could lead to less
and current water retention. Moreover, than optimal results, and in some
it can do this whilst drawing on the circumstances could be outright
latest weather forecasts, relative to its dangerous. This means that companies
exact location (using GPS technology), will need businesses with SGS’
to advise the farmer as to whether he capabilities more than ever – and there
needs to apply more water or fertiliser is no one else in the industry with the
to his or her crops. kind of physical global presence that
At a first glance, it may appear as SGS has. As this technology becomes
though this sensor is replacing an more widespread our unparalleled global
SGS agricultural expert, who would footprint will be both a unique sales
traditionally take these samples by hand point and a key competitive advantage
(the sensor can provide a continual for us.
flow of data rather than a periodic one). That is why we are excited by
However, someone still needs to install the opportunities created by big
the sensor, to verify the quality of its data analytics.
data output and to handle the analysis
of the data that the sensor provides to
advise the farmer on how to strategically
use, ration and purchase both water
and fertilisers.
25
26
TRANSPORTATION In the future new data
systems will mean
AND THE DAWN OF a more integrated

transport network
THE SMART CITY in the world’s

major cities.
The way we move is changing. In the These developments are taking place
era of the internet of things, objects of worldwide, spanning both developed
all descriptions are already able to send and emerging markets and cities that
and receive specific data to and from are home to major transport frameworks
each other. For example, your weighing and travel hubs. Each city will have
scales can automatically send your different demands of these new
morning weigh-in results to your mobile capabilities. The technology will have
phone fitness app to track changes to meet each set of requirements for
over time. Your alarm clock can tell improving mobility and assuring safety
your coffee machine to start brewing on road and rail networks.
five minutes after you wake up. When Such changes in the way we move will
scaled up to a city level, the advances inevitably create new areas of public
in technology are the stuff of the best and private concern, particularly in
science fiction writing. the cyber security space. That includes
For example, car-to-car communication not only the privacy expectations that
technology already exists and is on come with having a detailed digital
the way to becoming commercially footprint of an individual’s transportation
viable. Cars will be able to build a behaviour across various service
picture of what’s happening around providers, but also the need for
them – position, speed and other data trusted and secure data exchange
– anticipating risks that even the best and systems’ management.
drivers couldn’t and improving safety. Therefore, as interaction between
In addition, car-to-building vehicles increases and this technology
communication and smarter navigation becomes better established, there
systems will soon allow drivers not will be a greater need for integrated
only to pick the fastest route but the independent oversight. SGS plans to
greenest, or the cheapest. City traffic be at the heart of it. That’s why from
management systems will be able 2016 we will be offering our customers
to detect temporary increases in air a single point of contact to deal with all
pollution along certain routes and their transportation needs.
redirect the traffic flow. Intelligent
transport management solutions will
also improve the fluidity of use and
interface between trains, trams and
buses. Driverless cars on demand may
begin to take care of the last mile.
27
28
ONLINE-TO-OFFLINE:
WHERE WE CAN ADD VALUE
The rapidly growing e-commerce model is entirely built around trust.
Consumers need to know that the products they are buying online are
legitimate, safe, correctly sourced and compliant with the law.
E-commerce is a trillion dollar industry SGS can provide e-commerce sites

and is growing fast, led by a shift in with audited reports of manufacturers,
consumer buying habits in the UK, which can be placed alongside the
the US, Germany and China. Online products they sell on these sites.
shopping is accounting for a larger and This information functions in a similar
larger slice of the overall retail market way to a traditional peer review rating,
pie. At present, the e-commerce model a well-established global format whose
is entirely built around trust. role in the consumer decision-making
Consumers need to know that the process is pivotal. Yet our reports have
products they are buying online are the additional benefit of coming from a
legitimate, safe, correctly sourced and globally recognised independent auditor.
compliant with the law. However, a These reports can provide consumers
December 2014 MarkMonitor1 survey and retailers with information about a
suggested that up to one in every six product’s source, a factory's production
online bargain hunters were duped by capacity and other pertinent details.
sites selling counterfeit goods. This type This helps to assure site operators
of adverse retail experience damages that their supplier's products meet
the brand integrity of e-commerce sites. local regulations. With e-commerce
In response, major e-commerce sites sites increasingly operating on an
are determined to assure the quality international scale this is critical.
of the products on their sites in order The reports therefore help improve
to protect both their customers and supplier transparency and assure
their brand reputation. In a marketplace consumers of product quality.
where competition is becoming This assurance-focused progress in the
increasingly fierce and adverse reports e-commerce model will see consumers
are increasingly visible and permanent, making use of SGS data to inform their
this reach for assurance is a critical online purchases. This marks not only
phase in the evolution of the global a key moment in the development of
e-commerce market and one that is this industry, but also in the evolution
worth trillions of dollars to retailers of SGS. By adapting in this way, our
and manufacturers. business is moving into another space
Working with a major player in the and connecting with the B2C realm.
fast-growing multi-billion-dollar Chinese
e-commerce market, SGS has designed 1. www.markmonitor.com/pressreleases/2014/pr141119
systems for checking the quality
of products posted on the site by
manufacturers. We carry out physical
product tests, verify the legitimacy
(and in some cases existence) of the
manufacturers themselves and assure
the integrity of the e-supply chain.
29
U S INESS MO
S B DE
G AL
S RATILOENCE
N BRAN
D
L
E EL
C
EX P
O
STMENT
GROWTH
THE SGS BUSINESS
MODEL IS BUILT ON
INVE
THE SIX CORE PILLARS

OF BRAND, GROWTH,
INNOVATION, EXPERTISE,
N
XP
IO
T
E
ER
TISE VA INVESTMENT AND
I NNO OPERATIONAL
EXCELLENCE.
THESE ARE THE
BASIC INGREDIENTS
FOR OUR BUSINESS
SUCCESS AND IT IS
THROUGH OUR FOCUS
ON CONTINUALLY
IMPROVING THESE
FUNDAMENTALS
THAT WE ARE
LEADERS IN
OUR FIELD.
30
BRAND GROWTH INNOVATION
A brand not only differentiates a Growth is a fundamental aspect The world changes. Markets move.
company, it unites it. The SGS brand in the success of any business People move on. A world-class
offers our customers the peace of and SGS is no exception. For us business like SGS needs to stay
mind that comes from knowing they however, the continued growth ahead of these changes and
are working with the market leaders. of our global network and its to continuously stretch the
It means our employees are rallying unrivaled physical footprint is a key boundaries of the TIC industry,
behind the same cause and pulling competitive advantage. in order to retain our position
in the same direction. Finally, it as market leaders.
means that we are bound by a shared
commitment to provide the highest
quality services.
EXPERTISE INVESTMENT OPERATIONAL

A business’ ability to attract Inertia is not an option for a
EXCELLENCE
and retain the best talent is market leader like SGS. We need How do businesses ensure
a cornerstone of its success. to anticipate changes in market world-class performance?
At SGS we believe in our people conditions and customer demand in Through assuring genuine
and we are serious in supporting order to seize opportunities as they operational excellence across
their long-term development. arise. This means that investment business functions and through
in research, innovation, talent and utilising the best possible
technology has to be at the core sustainable business practices.
of our business model.
31
BRAND
The fact that we have New acquisitions need to be given
international reach and a global access to and educated about the
international capabilities of the Group
network with world-class whilst retaining their local expertise.
facilities and expert personnel Knowledge needs to flow seamlessly
in key locations across the between acquired businesses and
world, is something that has the Group (in both directions) to
ensure the expertise of all parties
become increasingly valued are at the very cutting edge of
by our customers. the industry in question.
This is particularly the case as global This integration process takes place
supply chains become ever more at multiple levels and across multiple
complex. Expanding our global departments and functions.
footprint has become a major driver Over time, SGS has developed unique
of our growth, which has in turn guidelines and methodology to drive
made strategic acquisitions a core a smooth and complete integration
component of our success. process across all activities.
Finding and making the right Integration managers are coached
acquisitions is a challenging strategic and benefit from a unique platform
task and integrating acquisitions to drive and monitor this process.
is important to strengthening our Migrating and leveraging acquired
brand equity. brand equity is a key area of focus
as ultimately the acquired capabilities
Integrating competencies, expertise,
help strengthen the SGS brand.
systems and solutions are an obvious
Meanwhile, the acquisitions
but pivotal part of this. However,
themselves benefit from having
for integration to fully occur, thought
access to the full service portfolio
must be given to ensuring that
of the SGS network. But the unifying
SGS’ values, vision, business
factor across all these elements is
principles and culture are adopted
the strength of the SGS brand.
by the acquired company.
The SGS brand strengthens the
The above is part of a formalised
acquired businesses and acquired
methodology and integration process
capabilities strengthen the SGS brand.
applied to each acquisition.
32
ONE
GLOBAL NETWORK
GLOBAL BRAND
A BRAND NOT ONLY

DIFFERENTIATES
A COMPANY,
IT UNITES IT.
33
34
GROWTH
WHETHER THROUGH
ACQUISITIONS,
STRATEGIC
PARTNERSHIPS
OR BY ORGANIC
EXPANSION, THE
CONTINUED GROWTH
OF OUR GLOBAL
NETWORK AND ITS
UNRIVALED PHYSICAL
FOOTPRINT IS A
KEY COMPETITIVE
ADVANTAGE.
35
36
AGRICULTURAL
SERVICES 367.6 4.0 %
2014 2015
REVENUE GROWTH
IN CHF MILLION IN 2015
Agricultural Services maintained The adjusted operating margin improved

organic revenue growth of 4.0% to to 17.3% from 16.2% in the prior year
CHF 368 million for the year, despite (constant currency basis) driven by
the fishing ban in Peru and the full-year the high trade volumes in Europe
impact of the curtailment in collateral and profit improvement initiatives in
management activities, without which North America launched in late 2014,
organic growth would have been 6.6%. which are already delivering results.
Both Seed & Crop and Laboratory Seed & Crop investments in the
services delivered strong growth, southern hemisphere came on-line in
supported by recent investments the second semester and are expected
across the network. Trade and to gain traction in 2016. Considerable
related activities delivered moderate efforts have also been made to realign
growth. In the second half of the the business organisation with the
year, growth increased in line recently announced Group strategy.
with traditional seasonality of the
business in greater Europe and the
Americas, while operations in South
East Asia Pacific were hampered by
low agricultural export volumes.
2014
(CHF million) 2015 2014
PRO-FORMA 2
REVENUE 367.6 353.6 387.1

Change in % 4.0 (5.0)
63.7 57.3 63.8
Change in % 11.2 (0.2)
MARGIN % 1
17.3 16.2 16.5
1. Before amortisation of acquisition intangibles, restructuring, transaction and integration-related costs, and other
non-recurring items.
2. Constant currency basis.
37
38
MINERALS
SERVICES 632.8 -1.8 %
2014 2015
REVENUE GROWTH
Minerals Services delivered revenue of Despite the downturn in the market,

CHF 633 million, down 1.8% versus the Minerals business in Chile was
prior year. This was mainly attributable successful in securing key contracts
to reduced exploration funding in the from the major global copper producers,
mining sector, which resulted in flat which will drive performance in 2016.
sample volumes at commercial facilities The Minerals service portfolio in
in most regions and also impacted 2015 included the new hyperspectral
metallurgical testing programmes. scanning services which have already
The onsite laboratories continued experienced some success in the
to perform solidly with four new North American market. There are
sites commencing operation in 2015 opportunities to further grow this
and four new contract wins that will using the SGS global footprint.
come into operation during 2016. The adjusted operating margin for the
Energy Minerals performed well, period increased to 14.2% from 13.8%
mainly in Russia, South Africa and in the prior year (constant currency
China, but this was partially offset basis). Efforts to improve cost alignment
by the market contraction in the and efficiency initiatives, including
USA, Australia and Indonesia. further network consolidation in the USA
Trade services for fertiliser and and Australia, helped to offset strong
non-ferrous activities continued pricing pressure.
to perform well, while steel and raw During the year, the Group initiated
materials volumes were impacted the acquisition of Bateman Projects,
by a reduction in demand for iron specialists in process plant design
ore and associated steel products. and site engineering services. This is
expected to be concluded in early 2016
and will be integrated into the SGS site
services portfolio, further strengthening
the Group’s position as the leading
one-stop-shop service provider.
2014
PRO-FORMA 2
REVENUE 632.8 644.2 702.7

Change in % (1.8) (9.9)
89.6 88.6 98.8
Change in % 1.1 (9.3)
MARGIN % 1
14.2 13.8 14.1
39
40
OIL, GAS AND
CHEMICALS SERVICES 1 119.5 -2.2 %
2014 2015
REVENUE GROWTH
Oil, Gas and Chemicals Services organic Plant and Terminal Operations started
revenue declined by 2.2% to CHF 1 119 the year with low double-digit growth
million for the period, primarily impacted but slowed to flat growth by the
by the double-digit decline in Upstream end of the year, particularly in North
services. This was partially offset America. The Oil Condition Monitoring
by growth in Trade-related services segment continued to see mid double-
and Plant and Terminal Operations. digit growth with operating margin
Falling oil prices continued to cripple improvement due to better utilisation
exploration affecting Well-side of the laboratories.
services and Subsurface Consultancy. The Non-Inspection Related Testing/
To minimise the impact, efforts were Laboratory Outsourcing segment
made to re-allocate resources towards grew in high single-digits over the
the more resilient Production segment year improving margin in the testing
which achieved solid wins in Eastern business, while experiencing a drop
Europe, Middle East and North Africa. in laboratory commissioning projects.
During the first three quarters of the The adjusted operating margin for the
year, Trade-related services experienced period declined from 11.6% in the prior
strong growth in Russia and the year to 11.5% (constant currency basis),
Middle East due to high volatility in mainly due to the contraction in
the market. However, activity slowed high-margin Upstream services.
down in the last quarter, particularly Oil, Gas and Chemicals continues to
in the Americas and in some parts of reconfigure its business mix to align
Asia due to a deficit in storage capacity with evolving market conditions.
compounded by flat demand in Europe.
2014
PRO-FORMA 2
REVENUE 1 119.5 1 144.3 1 201.0

Change in % (2.2) (6.8)
129.2 132.7 144.5
Change in % (2.6) (10.6)
MARGIN % 1
11.5 11.6 12.0
41
42
LIFE SCIENCE
SERVICES 211.2 6.8 %
2014 2015
REVENUE GROWTH
Life Science Services delivered The business continued its drive towards
revenue growth of 6.8% (of which operational excellence with a strong
6.4% was organic) to CHF 211 million focus on quality and cost efficiency.
for the period, with strong performance During the year, the Group completed
in Laboratory services. Laboratory the acquisition of Quality Compliance
services delivered double-digit growth Laboratories Inc. in Canada, a provider of
driven by strong performance in analytical testing to the pharmaceutical,
North America, Asia and Europe. nutrition and cosmetic industries.
Clinical Research in Antwerp Several investments were also initiated
experienced a slow start to the year including a new quality control laboratory
due to projects postponed by clients. in France and significant expansion
This impact was partially offset of capabilities in India. The business
by strong performance in Biometry. continues to optimise the laboratory
In addition, new initiatives have been network which is expected to improve
implemented to increase presence performance in 2016 with a focus
in North America and Europe. on the UK and the USA. Operational
The adjusted operating margin for the excellence, quality improvement and
period increased to 10.8% from 9.1% in customer focus remain the Group’s key
the prior year (constant currency basis), objectives to drive business growth.
driven by strong results in laboratory
testing which were partially offset
by the slow start in Clinical Research.
2014
PRO-FORMA 2
REVENUE 211.2 197.8 212.7

Change in % 6.8 (0.7)
22.8 18.0 19.9
Change in % 26.7 14.6
MARGIN % 1
10.8 9.1 9.4
43
44
CONSUMER
TESTING SERVICES 1 132.9 6.3 %
2014 2015
REVENUE GROWTH
Consumer Testing Services delivered Despite strong growth in new sourcing

revenue growth of 6.3% (of which countries, Softlines faced difficult
4.9% organic) to CHF 1 133 million market conditions as retail industry and
for the period with strong growth in brand owners continue to consolidate
Western Europe, the Americas, Eastern their supply chains. The performance
Europe & Middle East and East Asia. of Hardlines remained stable thanks
Food Testing activities achieved double- to new inspection and testing
digit growth fuelled by increased food programmes with e-retailers.
safety concerns in Asia and the recent The adjusted operating margin for
acquisition of SVA Ltd. in the UK. the period decreased from 25.2% in
Automotive Parts testing continued the prior year (constant currency basis)
to exceed expectations with a to 23.8% as a result of difficult market
strong contribution from operations conditions for Softlines and Toys testing,
in Germany, China and India. as well as a change in the portfolio mix.
Electrical and Electronics experienced During 2015, the Group acquired SVA
stable growth, benefiting from solid Ltd., a leading UK-based independent
results in Restricted Substances Testing provider of advisory, testing and
and Electromagnetic Compatibility IT services to retailers and food
and Safety Testing, despite delays manufacturers. This acquisition adds
in some Wireless and Mobile Testing new testing capabilities and expands
projects. The Cosmetics, Personal the Group’s geographical footprint.
Care & Household segment remained
strong throughout the year, especially
in Germany and China.
2014
PRO-FORMA 2
REVENUE 1 132.9 1 066.0 1 093.1

Change in % 6.3 3.6
269.9 268.7 269.7
Change in % 0.4 0.1
MARGIN % 1
23.8 25.2 24.7
45
46
SYSTEMS AND
SERVICES
CERTIFICATION
419.0 7.2 %
2014 2015
REVENUE GROWTH
Systems and Services Certification by margin erosion in some regions.

delivered solid organic revenue growth In particular, China continues to be
of 7.2% to CHF 419 million for the period impacted by high labour costs, East
with all regions reporting growth. Asia by strong competition and Western
Management System Certification Europe by additional personnel cost
delivered strong growth driven by high mainly related to strengthening of
adoption of the new 2015 standards the medical device team in the UK.
and good performance in food Going forward, growth is expected
activities. Training activities achieved to remain healthy driven by Training,
double-digit growth boosted by solid as well as recent contract wins in
demand from our clients for the new Hospitality, Automotive and Hart
ISO 9001:2015 standard training. Aviation and further transition to
The adjusted operating margin for the new ISO 9001:2015 standard.
the period decreased from 18.1% New product launches in industry
in the prior year (constant currency sectors will start to feed the product
basis) to 16.9%, mainly impacted mix supporting future growth.
2014
PRO-FORMA 2
REVENUE 419.0 390.9 414.6

Change in % 7.2 1.1
71.0 70.7 73.9
Change in % 0.4 (3.9)
MARGIN % 1
16.9 18.1 17.8
47
48
INDUSTRIAL
SERVICES 884.3 -0.6 %
2014 2015
REVENUE GROWTH
Industrial Services reported a decline The adjusted operating income margin

in revenue of 0.6%, with an organic for the year decreased from 12.8%
decline of 3.0%, largely offset by in the prior year (constant currency
acquisitive growth of 2.4%, to CHF 884 basis) to 11.3%, impacted by margin
million for the year. Organic growth erosion related to the difficult market
was heavily impacted by declining oil conditions in North America, South East
and gas prices on activities in North Asia Pacific and Africa. Other regions
America, South East Asia Pacific performed in-line with the prior year.
and to a lesser extent in Africa.
During the year, the Group acquired
North America reported reduced
Le Brigand in France, specialised in
supply chain inspections and asset
non-destructive testing for the aviation
integrity services in the USA and lower
industry. The Group also acquired
volumes in geotechnical services in
a majority stake in SIGA in Chile,
the Canadian Oil Sands. Australia,
an engineering consulting company;
Singapore and Malaysia were impacted
initiated a majority stake in FirstRank,
by lower volumes and pricing due to
reduced investments in the Mining and specialised in quality and safety
Energy sector. Despite difficult market assurance and Safety-Tech, specialised
conditions in Brazil and Colombia, South in valve maintenance, repair and
America posted stable revenue through overhaul services, both in China.
the development of new activities in The acquisition of Matrolab Group in
Argentina and expanding its reach into South Africa, specialising in engineering
new markets such as maintenance- and construction materials testing, is
related activities. China reported being concluded. A minority stake was
double-digit growth driven by the acquired in SAVI Technology, Inc. in the
continued increase in volume in testing USA, a leader in sensor-based solutions.
activities. Globally, the implementation
of key account management helped the
business to secure new accounts which
are expected to drive revenue growth.
2014
PRO-FORMA 2
REVENUE 884.3 889.7 977.0

Change in % (0.6) (9.5)
100.0 113.8 122.6
Change in % (12.1) (18.4)
MARGIN % 1
11.3 12.8 12.5
49
50
ENVIRONMENTAL
SERVICES 367.1 16.9 %
2014 2015
REVENUE GROWTH
Environmental Services delivered robust Industrial Hygiene services continued

revenue growth of 16.9% (of which to expand globally, supported by
5.2% organic) to CHF 367 million for a strengthened international sales and
the year, by increasing market share. key account management structure.
Strong performance in Europe was The adjusted operating margin for the
driven by the optimisation of the period increased to 12.8% from 10.0%
laboratory network and cost control in the prior year (constant currency
measures. In South America, the basis), benefiting from an efficiency
business successfully developed drive across the entire network and
a strong market position through successful cost control measures.
increased field and testing services, During the year, the Group acquired
with the exception of Brazil which is Western Radiation Services Pty Ltd.
experiencing an economic slowdown, and Radiation Safety Services Pty Ltd.
partially offset by the synergies from in Australia; and AirServices Estudos
acquisitions made in the first semester. e Avaliaçôes Ambientais Ltda. and
China delivered top and bottom line Cronolab Referência em Análises
improvements due to the development Químicas e Ambientais Ltda. in Brazil.
of key product lines in addition to
restructuring in the first half of the year.
The market in Australia continues
to face strong pricing pressure in
the mining sector.
2014
PRO-FORMA 2
REVENUE 367.1 314.1 342.4

Change in % 16.9 7.2
46.9 31.3 34.3
Change in % 49.8 36.7
MARGIN % 1
12.8 10.0 10.0
51
52
AUTOMOTIVE
SERVICES 317.5 13.8 %
2014 2015
REVENUE GROWTH
Automotive Services delivered strong to extend the next generation electronic

growth of 13.8% (of which 8.5% transmission data management service
organic) to CHF 318 million for the period contract for the California Smog Check
with solid results from all activities. programme. In Argentina, SGS was
The statutory inspection business awarded a contract for the design,
strengthened in the Americas, Europe build and management of vehicle
and Africa, with particularly solid inspection stations in Buenos Aires.
growth in Homologation and Vehicle The adjusted operating margin for
Inspection services. Commercial the period decreased from 20.0% in
inspection activities and Testing the prior year (constant currency basis)
services also delivered solid results, to 19.5%, impacted by the liberalisation
supported by growth from recent of the statutory inspection market in
acquisitions and increased inspection Spain, investments in the development
volumes in the USA and Europe. of testing activities and start-up costs for
Several long-term contracts were the motor vehicle programme in Uganda.
awarded to SGS during the year. During the period, the Group acquired
In Africa, an exclusive motor vehicle two operations: Testing Services
inspection programme was secured Group LLC, a leading provider of fuel
with the Ministry of Works & Transport testing systems in North America
in Uganda and an existing motor vehicle and DLH-VIS, a specialist in vehicle
inspection concession was extended in inspection services in Lyon, France.
Ivory Coast. In the USA, an amendment These acquisitions enable the Group to
was signed with the State of California diversify and expand its global footprint.
2014
PRO-FORMA 2
REVENUE 317.5 279.1 302.8

61.8 55.9 62.0
Change in % 10.6 (0.3)
MARGIN % 1
19.5 20.0 20.5
53
54
GOVERNMENTS
AND INSTITUTIONS
SERVICES
260.0 12.0 %
2014 2015
REVENUE GROWTH
Governments and Institutions Services Customs Organisation and World Trade

delivered solid organic growth of Organisation. A new national Timber
12.0% to CHF 260 million for the Legality and Traceability solution was
year, led by strong contract volumes deployed in the Republic of Congo and
in Product Conformity Assessments TransitNet gained new markets in Europe.
(PCA) and Single Window solutions. The adjusted operating margin for the
PCA achieved double-digit growth in period increased to 24.0% from 22.3%
Asia, Europe and the Middle East, along in the prior year (constant currency
with three new mandates signed in basis), as a result of the new service
Africa. Single Window solutions delivered mix and economies of scale, despite
excellent performance in Ghana and higher royalties incurred on renewed
Mozambique thanks to high import PCA programmes.
volumes, as well as the successful launch During the year, improved cost control
of new consulting services in Nepal. The measures allowed the business to
new valuation solution, SGS E-Valuator™, invest more in innovation. The continued
was also launched, replacing the introduction of new solutions is
traditional Pre-Shipment Inspection opening into new markets supporting
in Benin and thus complying with the the business diversification strategy.
recent recommendations of the World
2014
PRO-FORMA 2
REVENUE 260.0 232.1 249.5

62.3 51.8 57.9
MARGIN % 1
24.0 22.3 23.2
55
ACQUISITIONS ACQUISITIONS
AND STRATEGIC
PARTNERSHIPS
SECURED IN 2015
QUALITY COMPLIANCE
LABORATORIES
Canada
In addition to growing organically, SGS
has long benefited from making strategic MATROLAB GROUP
acquisitions to help us achieve our goals. South Africa
This is particularly true for geographical
areas where we have service gaps, or SAVI TECHNOLOGY
where we want to acquire leading skills, (17.65% Stake)
capabilities and technological capacities. USA
On other occasions it also makes sense
for us to acquire targets that offer similar SAFETY-TECH
services to SGS and by joining forces, (51% Stake)
we can benefit from economies of scale China
and technical synergies.
ASSETS OF BATEMAN
Careful thought is given to every PROJECTS
acquisition. For example, our purchase South Africa
of AirServices Estudos e Avaliaçôes
Ambientais Ltda. in Sao Paulo, Brazil, LE BRIGAND NDT
built upon our existing industrial France
hygiene capabilities in the country.
The subsequent acquisition of Cronolab SIGA
Referência em Análises Químicas e (70% Stake)
Ambientais Ltda., a soil and air testing Chile
lab in Rio de Janeiro, added specialised
dioxin and furan testing capabilities to FIRSTRANK
our Brazilian footprint. (75% Stake)
When taken together the two China
acquisitions have added significant
depth to our environmental service DLH-VIS CENTERS
France
offering in the country – allowing us to
work with a much wider customer base.
SVA LTD.
The above example also provides
United Kingdom
a good overview of our acquisition
strategy. We do not see much value in TESTING SERVICES GROUP LLC
acquiring isolated businesses that are USA
disconnected from the activities of the
remainder of the Group, irrespective of WESTERN RADIATION
the price point. We prefer to strategically SERVICES PTY LTD.
enter a market only after having Australia
considered the matter deeply.
Ultimately, the decision of whether or RADIATION SAFETY SERVICES
not to make an acquisition comes down Australia
to experience. And our experience in
the field of acquisitions is one of the CRONOLAB
main reasons behind our successful Brazil
growth over the last 137 years.
AIRSERVICES
Brazil
56
STRATEGIC
PARTNERSHIPS
We are enriching our acquisitions

strategy as we adapt to new market
conditions and customer demands.
We are complementing our existing
acquisition strategy, which traditionally
saw us focusing our efforts on an
outright purchase of another company
to complete networks or supply chains.
Adding to this existing strategy is
what we call strategic partnerships.
These are the purchase of minority
stakes (5 – 25%) in businesses that
operate in areas in which we are not
generally active.
Particularly, we are looking to increase
our footprint in the technology sector
as we act to secure and enhance our
position in the face of the disruption of
the traditional service-based industry
marketplace. An example of this is our
strategic partnership with SAVI, the
US-based sensor technology company
in which we own a 17.65% stake.
In this case, the partnership enabled us
to develop a groundbreaking, integrated
logistics and tracking service that
offers real-time asset-tracking and
comprehensive journey monitoring.
As our partnership with the company
continues we expect that we will be
able to replicate that success through
other services thanks to SAVI’s
technological capabilities.
This is how we leverage our strategic
partnerships to drive innovation and
improve our service offering.
57
58
INNOVATION
THE WORLD For us, innovation is the platform on
which tomorrow is built. Tomorrow is
Another important part of achieving
leadership in tomorrow’s world is
CHANGES. PEOPLE everything to a company and its the involving tomorrow’s workforce,
MOVE ON. MARKETS innovation process that underpins our tomorrow’s thinkers and tomorrow’s
MOVE. AND WORLD- future. We adapt, realign and evolve to decision makers. We are talking about
CLASS BUSINESSES continue to succeed and to keep taking
the next step up.
creating links with universities and other
places of learning and engaging the
LIKE SGS NEED TO brightest minds and raising awareness
Creativity is said to be at the heart
STAY AHEAD OF of innovation. But creativity without of what can be achieved.
THESE CHANGES IN a structure for implementation is of Sources of serious innovation can be
ORDER TO RETAIN no use to anyone. That’s why we have found in unexpected places. One of the
THEIR POSITIONS a formalised process for managing best examples of this in action within
innovation which is headed by our CEO. SGS is the fact that we are successfully
AS MARKET LEADERS driving innovation through our
INTO THE FUTURE. This process brings together internal and
external communities to share ideas. procurement function. We are doing this
through our Supplier Innovation Club,
It is needed because as markets change which features some of the world’s
SGS must remain agile enough to adapt biggest companies, who are helping us
to new circumstances. It means that become more efficient and effective by
with our ingrained entrepreneurial spirit maximising the use of their resources.
we are quick to spot and offer relevant
new services and solutions to meet our And to the question of funding?
customers’ emerging needs. Innovation generates its own return
on investment. Internal and external
Technology of course plays a natural incentives, carried out with the right
role in innovation, but that is not the structure and focus, produce the
only place we look for improvements. results and innovation that drive
By being smarter in the way that we performance and swell the bottom line.
conduct our business (for example This is how we work today to ensure
through optimisation and searching we are leaders tomorrow.
for ways to increase individual
and collective productivity), we can
find other methods to stay ahead
of the curve.
59
EXPERTISE Trusted all over the world, SGS is The fact that we ensure our customers
a market leader because we put get first-rate, top-quality advice is one of
the reasons that our business continues
passion and pride into everything to grow. But such successes can only
we do. Our business touches happen in an environment where our
nearly every part of the world and employees are given the freedom to
reaches across a huge range exercise their judgment and make
decisions. Crucially though, they also
of industries. have the skills and ability to work in that
Our international experts help customers way. Brimming with passion and energy,
operate in more efficient and sustainable they know what we do is important
ways by streamlining processes, and that our work has a real impact
improving quality and productivity, on people's lives.
reducing risk, verifying compliance and Consequently, we are mindful of the
increasing speed to market. fact that recruiting and retaining the best
Therefore, having specialists with talent is important for us (see pages
access to state-of-the-art technology 69 and 70) because new and bold
and infrastructure is not only a benefit thinking is the lifeblood of our business.
for SGS – it is essential. It is part of what keeps us ahead of
the competition.
For example, thanks to our experts, we
were nominated for prizes of excellence
in 2015 (winning two Gulf Coast Safety
Council awards) and our customers also
won awards of their own.
60
THE ABILITY TO
ATTRACT AND RETAIN
THE BEST TALENT
IS A CORNERSTONE
OF ANY SUCCESSFUL
BUSINESS MODEL.
61
INVESTMENT INERTIA IS NOT

AN OPTION FOR
BUSINESSES LIKE
SGS THAT MUST
CONSTANTLY ADAPT
TO CHANGING
CUSTOMER
DEMANDS
AND MARKET
CONDITIONS.
THIS MEANS
THAT INVESTMENT
HAS TO BE AT
THE HEART OF OUR
BUSINESS MODEL.
62
Investment is vital. Having the Thus, as discussed on page 69,
right talent, assets, technology investing in our people and their
on-boarding, retention and continual
and R&D in place are fundamental development is important. So too is
to the long-term success and investment in high-quality IT platforms,
profitability of any organisation. laboratory capabilities and best-in-class
This is particularly true for SGS, technological capacity. Our growth
has in many places been driven by
which must not only stay ahead acquisitions or by buying equity in key
of developments within the TIC technology providers to allow us to form
industry, but must also keep strategic partnerships. As discussed on
abreast of the technologies, page 59, investment in innovation is also
a company priority, with an emphasis
markets, regulations and dynamics on supporting new business areas with
of the extremely diverse industries long-term growth potential.
we service. Naturally, despite being in a strong
financial position, SGS will only invest
in areas where we feel we will see
significant returns on that investment.
Thus, capital expenditure (capex)
investments are focused on the
strongest areas of the business,
and those with the best growth record
or long-term growth potential.
Standing still is not an option for
a business that intends to retain its
status as an industry leader, and SGS
has no intention of doing so.
63
OPERATIONAL
EXCELLENCE
HOW DO BUSINESSES
ENSURE WORLD-CLASS
PERFORMANCE?
BY ASSURING WorldReginfo - 9598e104-0c9b-410a-914c-87b9720d1132
GENUINE OPERATIONAL
EXCELLENCE ACROSS
BUSINESS FUNCTIONS
AND THROUGH
UTILISING THE BEST
POSSIBLE SUSTAINABLE
BUSINESS PRACTICES.
64
PROFESSIONAL Trust lies at the heart of
the value we deliver to our
EXCELLENCE customers and society.
We have a responsibility
to maintain the highest levels
of professional integrity.
65
The SGS Code of Integrity defines the The content of our Annual Integrity
COMPLIANCE main principles of professional integrity Training is updated each year using
AND INTEGRITY for the SGS Group and is an expression
of the values that are shared throughout
real-life case studies drawn from the
business. Training is typically conducted
our organisation, our businesses and our face to face and in teams by trained
affiliates. The Code applies to all of our managers using scenarios adapted
employees, officers and directors, our to employees’ areas of work. New
affiliated companies, our contractors, employees must sign the Code at the
our joint-venture partners, our agents, start of their employment with SGS and
our subcontractors and anyone acting are expected to complete an integrity
on behalf of or representing SGS. e-learning module within three months
It addresses issues such as conflicts of joining.
PERFORMANCE of interest, bribery and corruption,
A Professional Conduct Committee
facilitation payments and the use
ensures implementation of the Code
of intermediaries and consultants.
100
within our organisation and advises
% Violations of the Code result in
management on all issues of business
disciplinary action, including termination
ethics. The Committee consists of five
of employment and criminal
members: the Chairman of the Board
prosecution for serious violations.
% OF EMPLOYEES SIGNING THE CODE OF INTEGRITY
of Directors, two other Board members,
1. Implementation of new Code of Integrity in 2012.
TRAINING FORMS PART the Chief Executive Officer and the
Chief Compliance Officer.
OF A CONTINUOUS
PROCESS OF LEARNING
100 100 100 100 AND REINFORCEMENT,
WHICH INCLUDES
EMPLOYEES SIGNING
THE CODE, COMPLETING
INTEGRITY E-LEARNING
AS PART OF THEIR ON-
2011 1 2012 2013 2014 2015
BOARDING PROGRAMME,
AND ATTENDING
EMPLOYEES SIGNING
THE CODE OF INTEGRITY
ANNUAL INTEGRITY
TRAINING.
31
TOTAL NUMBER OF BREACHES OF THE CODE OF INTEGRITY
245
TOTAL NUMBER OF INTEGRITY ISSUES REPORTED THROUGH
169
TOTAL NUMBER OF VALID REPORTS INVESTIGATED
IDENTIFIED THROUGH CORPORATE INTEGRITY HELPLINES 1 CORPORATE INTEGRITY HELPLINES 1 CONCLUDING IN NO BREACHES
1. “Helplines” means channels used by employees and external parties 1. “Helplines” means channels used by employees and external parties
to report suspected violations of the Code of integrity and submitted to report suspected violations of the Code of integrity and submitted
online, by phone call, sent via fax, email or post. online, by phone call, sent via fax, email or post. 169
46 141
42 241 245
36 198 200 109
31 168 91
22
52
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
CODE OF INTEGRITY CODE OF INTEGRITY

NON-COMPLIANCES CODE OF INTEGRITY REPORTS INVESTIGATIONS
66
PROCUREMENT
SGS’ Procurement operations can point

to a number of major achievements
in 2015. The function reported
CHF 40 million in savings for the year
as part of a 3-years savings programme
for 2015-2017.
The year was also marked by the
ongoing success of our supplier
incentive programme, which we
developed to focus our procurement
volume on strategic partners. We are
also targeting further savings through
greater transactional efficiency. In
2015, we reduced our number of
suppliers significantly worldwide,
brought rationalisation to our invoicing,
delivery and transaction volumes,
increased the use of our internal
catalogues and created a streamlined
procurement community. In 2016, we
will begin a shift to electronic invoicing
and payment systems. In addition,
we have negotiated better payment
terms, reduced our inventory levels
and contributed to the significant
improvement of the company’s Net
Working Capital.
Sustainability and innovation-based
initiatives remain an integral part of
our strategic development. We are
implementing a code of conduct for
our suppliers, relating to responsible
sourcing. We are also discussing issues
such as CO2 emissions and energy
efficiency with them. We continue to set
an example through initiatives relating
to supply chain management and
resources use.
We have consolidated the SGS
Innovation Club initiative, a community
made up of strategic suppliers with
the goal of improving our operations
and driving innovation that will
generate notable efficiencies and
competitive advantages.
67
PEOPLE Our people are our most

important asset. We must
ensure that our employees
are safe and healthy at work,
treated fairly and with
respect and are able to fulfil
their potential.
68
than half of these positions are newly
TALENT created positions. Our approach to talent
ACQUISITION acquisition is characterised through
programmes linked to e-recruitment,
employer branding, internally and
externally benchmarking our talent
acquisition against peers and world
class companies, establishing networks
with selected universities, and efficient
on-boarding.
ACHIEVEMENTS A HIGHLIGHT IN 2015

Our strength lies in our people. In a WAS OUR ONGOING
competitive business environment,
our global reach and breadth of activities
PARTNERSHIP WITH
offer many possibilities for talented LINKEDIN, WHERE WE
individuals to pursue a career at SGS. SAW SIGNIFICANT
Our ability to acquire, manage, develop INCREASE IN THE
and retain talent is essential, as we NUMBER OF FOLLOWERS
need highly skilled employees to deliver
ON OUR COMPANY PAGE
outstanding services to our customers.
Our global spread, variety of business
(FROM 14 000 IN 2012
lines and approach to sourcing talent TO MORE THAN 220 000
locally wherever possible means we IN 2015).
need to attract exceptional people
from diverse backgrounds, cultures On this page, potential recruits can
and geographies. learn about career opportunities and
find out about life at SGS. Our industry
Competition for talent is growing,
stakeholders can also stay up to date
with companies, industry sectors and
with company news and the latest
markets seeking to attract the same
thought leadership from their industries.
pool of highly skilled people. A feature
of this is the increased mobility of highly
skilled workers, particularly in science OUTLOOK 2016
and technology-based industries. Building on the success of our
The migration of talent plays an e-recruitment strategy, we will
important role in shaping skilled labour continue to deploy our digital and
forces throughout developing countries, mobile responsive solutions for talent
diffusing knowledge, boosting acquisition. We also plan to optimise
innovation and enhancing career our HR, Finance and IT support
opportunities locally. functions to ensure we have an agile,
sustainable operating model that can
Meeting these challenges demands a effectively support our growing global
dynamic recruitment strategy, as well as organisation through enhanced analytics
the successful integration of employees and reporting, talent growth and
from business acquisitions. During leveraged technology aimed at improving
2015, more than 16 000 positions were transactional productivity and enabling
filled either by internal candidates or efficient access to information.
external people joining SGS. More
69
ACHIEVEMENTS survey indicated, once again, a high level

EMPLOYEE The continuous improvement of our
of engagement from employees with
RETENTION business depends on our employees.
our sustainability agenda, with 77%
of respondents being aware of the role
We strive to give our people varied
that sustainability plays in supporting
and stimulating experiences that come
business growth.
from changing roles, working across
different businesses and geographies
and, where possible, gaining client OUTLOOK 2016
exposure. With our lean organisational Our efforts will be focused on working
structure, employees enjoy visibility towards the achievement of our 2020
and recognition. Our aim is to help Ambition to maintain employee natural
68
our people to reach their full potential, turnover at 10% or less. To this end,
% through working in different parts of we will reinforce talent management
the organisation and through creating programmes across the Group.
opportunities to work abroad, gaining Engagement will continue to be at the
access to our global portfolio of heart of our team activities, at local
customers, and being exposed to and global level, to ensure that our
different cultures and thinking. employees have a voice in making SGS
In a dynamic employment market, an even better place to work. We will
ENGAGEMENT INDEX
employee turnover is a challenge also deploy our new annual incentive
and managing it remains a priority at plan which formally links business and
SGS. In this respect, we have a targeted team performance to reward.
71 % approach to improve retention.

Highlights in 2015 centred on the
roll-out of our performance management
initiative and related training in 34
countries; and expanding our employee
engagement programme, CATALYST,
which is now active in 31 countries and
PERFORMANCE EXCELLENCE INDEX directly targets our employee natural
turnover and the underlying issues
affecting people’s motivation to pursue
careers within SGS. Feedback from
employees through our annual employee
PERFORMANCE
11.93 %
PEOPLE LEAVING BY THEIR OWN WILL

2.22 %
TRAINING COST INCLUDING HOURS/EMPLOYMENT COST
14.20
12.39 12.25 12.77 2.52
11.93 2.38
2.21 2.22
2.08
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
NATURAL TURNOVER TRAINING RATIO
70
ACHIEVEMENTS We will do more to create opportunities
EQUAL Around the world, talented, ambitious
for women to succeed. To be effective
OPPORTUNITIES women are held back from achieving
in addressing it, we will need to consider
a range of approaches.
their potential at the top of organisations
by a range of cultural, social, educational
and emotional barriers. This, in turn, OUTLOOK 2016
hampers progress in organisations’ In support of our 2020 Ambition to
abilities to innovate and solve complex have women represent 30% of our
problems, and adequately respond to senior management team, we will
the needs of their customers through be specifically reinforcing women's
a lack of insight and empathy for the leadership development, which will
26
female population who make up half fast track the career development and
% of the customer base. Progressive advancement of women across our
governments and organisations have global network.
introduced well-meaning policies, but
change is occurring at a slow speed.
SGS is a diverse and inclusive business
where ambitious people at every
WOMEN IN LEADERSHIP POSITIONS level have the opportunity to realise
their true potential. The SGS Code of
Integrity and our Employment Policy
underline our commitment to diversity
and equal opportunity, and all of our
employees and managers are trained
in the principles of non-discrimination
as part of our mandatory annual
integrity training. As a part of this, SGS
recognises the significant contributions
that women make to business success.
In November 2014, we appointed Carla
De Geyseleer as Chief Financial Officer.
Our Operations Council now includes
three female members.
PERFORMANCE
0.87
(FEMALE MANAGERS/FEMALE EMPLOYEES)/(MALE
MANAGERS/MALE EMPLOYEES)
0.84 0.87
0.76 0.76 0.75
2011 2012 2013 2014 2015
EQUAL OPPORTUNITY RATIO
71
Another key component of our OI is to the WASH Pledge, we are working to

OPERATIONAL the Top-Page cascading and deployment ensure appropriate access to safe water,
INTEGRITY process, as per the EFQM model, sanitation and hygiene for all employees
which allows our global OI objectives to in all premises under company control.
be shared throughout the organisation, We are sad to report that there were
regions and countries (before a deeper two fatalities (one employee and one
deployment to cities in 2016). This process subcontractor) in 2015. These resulted
also allows us to put focus on specific in investigations being conducted and
key programmes, such as incident awareness about the SGS Rules for Life
investigations, training, hazard being reinforced across our network
identification and correction, leadership through field-based examples.
ACHIEVEMENTS visits and best practices.
Operational Integrity (OI) is the term we Alongside the focus on safety, we need OUTLOOK 2016
use to describe our health, safety and to manage the impacts of working
Our 2020 Ambition for OI is to reduce
environmental management approach. in industrial environments, which can
our Total Recordable Incident Rate
With more than 85 000 people working present potential hazards, such as the
(TRIR) and our Lost Time Incident
for us, we are committed to keeping exposure to carcinogens or damage
Rate (LTIR) by 50%, based on a 2014
them safe and healthy, and to supporting to hearing. Our global industrial hygiene
baseline. As such, we will continue
their wellbeing. (IH) programme uses a standardised
our focus on integrating safety culture
The OI team reports directly to the CEO approach to managing IH aimed at
through the company using the seven
and our strategy is clear; to be best in protecting the health and wellbeing of
pillars of our OI strategy. Alongside
class on safety. Striving for zero incidents our people through disease and fatality
this, we will further develop our IH
demands a global safety culture that prevention, increased quality of life,
management system and continue
is based on a continuous commitment improved health and promoting healthy
to implement our waste management
to making personal and co-worker and safe living. The Global OI Industrial
system to ensure appropriate and
safety an integral part of everyday Hygiene and Occupational Health
coordinated controls are in place to
working lives. We are building this Function provides active management
minimise and manage our impacts and
culture through a redefined OI strategy of emerging health issues, which
provide more detailed performance
based on seven pillars (see page 73) focuses especially on communicable
reporting via our sustainability report.
and underpinned by a Group-wide diseases, such as cholera and Middle
Operational Integrity Management East Respiratory Syndrome Corona Virus
System (OIMS) which is aligned to (MERS-CoV). We added this element 1. Standards include: Quality (ISO 9001), Health
internationally recognised standards following an outbreak of cholera in and Safety (OHSAS 18001), Environmental (ISO
of health, safety and environment1. Kenya in May 2015 and of MERS-CoV in 14001), Inspection Management (ISO/IEC 17020),
South Korea in June 2015. As a signatory Testing and Calibration Laboratory (ISO/IEC
17025), and Sustainability (ISO 26000).
PERFORMANCE
0.38 0.65
1.43
0.71
1.27
0.63
0.58 0.60 1.10 1.11
0.38
0.65
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
LOST TIME INCIDENT RATE (LTIR) TOTAL RECORDABLE INCIDENT

(200 000 HOURS) RATE (TRIR) (200 000 HOURS)
72
OUR SEVEN
OI PILLARS
is overseen by a quarterly Executive OI Steering Committee, which includes 50% of

Operations Council members. Furthermore, our extended OI Steering Committee brings
managers, regional businesses and corporate functions together bi-annually to collaborate
on managing OI across the network. Our Chief Operating Officers, Managing Directors and
site and laboratory managers provide active leadership on OI across our global network.
In 2015, more than 12 leadership visits were conducted per hundred employees compared
LEADERSHIP to nine in the previous year.
is managed via a Top-Page initiative which ensures that information is consistently

cascaded through the network and actions are systematically tracked. We raise awareness
of safety issues in a variety of ways, such as through our Rules for Life which are
15 non-negotiable rules that help save lives. These include new rules on the dangers
of engulfment and suffocation, the control of work around mobile equipment, and getting
out of the line of fire. The SGS Rules for Life apply to all employees, contractors and others
COMMUNICATION working on behalf of SGS and are incorporated in all our safety-related communication.
is targeted at all levels of the organisation and includes briefings for Chief Operating
Officers and Executive Vice Presidents on leadership site visits, as well as dedicated
safety seminars for MDs in addition to generic and specific training of employees across
all functional operations and corporate sites. Road safety remains a critical risk associated
with the territories and driving cultures in which our employees and subcontractors are
required to work, as well as driver behaviour and driving habits. Over the past two years,
TRAINING AND we have run numerous campaigns focused on in-vehicle monitoring. These have resulted
AWARENESS in a reduction in our vehicle incident rate of 11% in 2015.
have been strengthened at the global OI team level as well as at regional and affiliate
levels. These included the appointment of an OI communications manager in our global
RESOURCES headquarters and the establishment of an industrial hygiene (IH) team which operates
AND SKILLS globally and comprises experts in clinical health and hygiene.
are captured via our reporting tool, Crystal, which provides a standardised, multilingual
and data-driven incident management and reporting interface to expedite regulatory and
client-mandated incident reporting. Crystal ensures that all data collected meets our high
standards, while encouraging greater use of data analysis to identify trends. Following
its implementation and the simplification of the reporting functionality, we have detected
a significant increase in the reporting of near misses and hazards. Alongside Crystal,
our Safety Data Sheet Management System, ChemWatch, provides consolidated and
KEY PERFORMANCE up-to-date information on potential hazards associated with the chemicals used in our
INDICATORS laboratories, and how to manage these.
reviews cover health risks, environmental and chemical impacts, and safety risks.
AUDITS AND The audits are conducted by an internal team of 19 certified HSE auditors and the findings
COMPLIANCE are reported to the executive management team.
will be conducted annually using a specially designed online tool which provides a
HEALTH, SAFETY AND comprehensive overview of potential risks per site and the controls in place for managing
ENVIRONMENTAL (HSE) them. This tool was piloted in 44 sites during 2015 and will be rolled-out across
SELF-ASSESSMENTS our sites during 2016. Performance will be benchmarked across SGS sites globally.
73
ENVIRONMENT We are committed to achieving

sustainable growth while
managing our impact on the
environment, under our aim to
“Do More With Less”. We also
recognise our role in helping
our customers to improve
their own environmental
performance. We also commit
to measuring and reducing
our carbon footprint.
74
through offsets and Guarantees of Origin contribution by helping our customers
EMISSIONS/ solutions (investments in renewable to respond to climate change challenges
CLIMATE CHANGE energy projects), energy efficient

measures and green electricity supply
through our services linked to energy
efficiency and alternative energy.
in some of our affiliates. We have over These include energy management
90 projects and investigations underway services and multiple services related to
worldwide to optimise operational energy efficiency of buildings, including
efficiency in our laboratories and offices. renewable energy, feasibility studies,
Since 2014, we have offset our CO2 energy audits, energy performance
emissions through projects located in certificates and ISO 50001 certification.
the regions SGS operates in, thus making We also offer a range of specialist
a positive contribution in areas where advisory services and engineering
ACHIEVEMENTS
we have impact. We annually offset expertise on sustainable buildings
As a global company, we are concerned any residual CO2 emissions associated through SGS Search, based in the
about the potential impacts of climate with our operations in major countries. Netherlands. These services include
change on the regions and communities in To mitigate our 2014 emissions, this year cradle-to-cradle product certifications
which we operate. Although our industry we purchased 56 GWh of guaranteed for companies committed to the
is not a major emitter of greenhouse origin renewable energy certificates development of a circular economy.
gases, our employees, customers and from Norwegian company, ECOHZ. We
other stakeholders expect SGS to show also purchased 88 GWh of International Over the past two years, we have
leadership on climate change, both in Renewable Energy Certificates (I-RECs) conducted a study to examine our role
terms of our own energy consumption in China, Hong Kong and Taiwan, and we in helping our customers to reduce their
and by helping our customers and purchased 58 GWh of Renewable Energy carbon intensity. We began by estimating
suppliers to reduce their emissions. Certificates in North America. Since the CO2 emissions of our customers in
In 2012, we issued The Green Book, December 2014, when SGS became one our Industrial and Agriculture business
a bi-annual environmental Profit & Loss of the first companies globally to sign the lines and considered how much our
account intended for senior managers, RE100 initiative, we have pledged to use customers had reduced their emissions.
which helps to assess and monitor 100% power from renewable sources We then calculated the extent to which
the financial impact of our sustainability by 2020. Led by The Climate Group and our services had contributed to these
performance, including our carbon in partnership with Carbon Disclosure reductions in CO2. The study estimated
footprint. This innovative model helps Project, RE100 is collaborating with the that the activities of our customers on
us to understand how sustainability can International Renewable Energy Agency fertilisers usage and fuel distribution
detect operational efficiencies in order to (IRENA) and others to get 100 of the through pipelines emit 3.7 million tonnes
achieve our 2020 Ambitions and ultimately world’s largest companies committing of CO2. With our Pipeline Integrity and
to reduce our environmental impact. to 100% renewable power by 2020. Precision Farming services in 2015 we
We are on a journey to reduce our Alongside these initiatives, we realise helped our customers to reduce their CO2
carbon emissions and, since 2014, that SGS can make a greater emissions by 17%.
we have achieved carbon neutral status
PERFORMANCE
200
Historical data restated. Introduction of renewable energy accounting.
34.95
2.32
287 58.70
266 3.78
255 53.73 54.94
3.46 3.57
211
200
38.36 2.53
34.95 2.32
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
TOTAL GHG EMISSIONS CARBON INTENSITY BY REVENUE CARBON INTENSITY BY EMPLOYEE

(THOUSAND TONNES CO 2 e) (TONNES CO 2 e / MILLION CHF) (TONNES CO2e / FTE)
75
For the second year running, SGS

was recognised in the CDP Climate
Performance Leadership Index, a global
ranking of listed companies on their
approach to climate change mitigation.
We are committed to being part of
the solution, using our scale and our
expertise to enable a more responsible,
balanced and sustainable future. We
recognise that ambitious action on
climate change is necessary and that
companies must play an active role in
bringing solutions to the table which
support the global economy and the
global climate agenda. As part of our
commitment to climate action, SGS
was involved in several key collaborative
processes as part of the United Nations
Conference on Climate Change2 that
was held in Paris in December 2015 and
was aimed at helping to inform progress
toward a universal, ambitious and
balanced climate agreement.
OUTLOOK 2016
By 2020, we plan to have reduced our
annual CO2 emissions (by revenue and
by headcount) by 20%, against our
2014 baseline. We aim to achieve this
through improved energy efficiency and
by switching to low-carbon options,
including renewable energy sources
and the introduction of mandatory
low-emission fleet cars. In addition,
we will continue to work across our
business lines and functions to show
the tangible value of our services and
our people in contributing to society
and its impacts on climate change. In
particular, we will continue to maximise
our contribution by ensuring the integrity
and safety of existing energy supply
and storage systems, and ensuring
that our customers have accurate and
reliable data to manage their reduction
strategies. In addition, new lower-carbon
technologies will challenge us to think
about how we combine our skills and
competencies and test our technologies
and services to generate new ideas and
insights that will enable us to actively
contribute to a lower-carbon future.
2. United Nations Framework Convention on Climate

Change, 21st Conference of the Parties (or COP21).
76
Progress against our EEB targets is Across our network, we increasingly use
ENERGY EFFICIENCY tracked via the SGS Energy Rating video, audio and web conferencing to
Tool for Offices and Laboratories, and reduce travel costs, cut CO2 emissions,
reported to the WBCSD. As part of and improve work-life balance. During
our target to reduce CO2 emissions 2015, we placed 85 191 conference calls
intensity by 20%, we conducted 58 and 19 956 video calls that helped us
energy audits and self-assessments on save more than 5 200 flights.
buildings as part of our EEB Programme
in 2015 and we have around 30 projects OUTLOOK 2016
ongoing across our affiliates. Extending
In addition to our 2020 Ambition to
our commitment to energy efficiency in
reduce annual CO2 emissions by 20% on
ACHIEVEMENTS buildings, SGS is leading the WBCSD
a 2014 baseline, we also plan to reduce
EEB 2.0 project in India which aims
SGS is not an energy intensive company. CO2 emissions from all company-owned
to unlock financially viable energy
However, with over 85 000 employees offices and laboratories above 2 000
efficiency investments that are currently
working in more than 1 800 offices and square metres by 20% within the same
not being realised because of financial,
laboratories and with a building floor timeframe. We plan to achieve this
regulatory or organisational barriers.
area of approximately 2 million square through our EEB programme and Spot
metres, targeting energy consumption Recognising that energy efficiency the Orange Dot campaign. We also plan
at our offices and laboratories is the is driven by behaviour as much as by to hold a Lower Carbon Day in 2016
most direct and effective way we can technological intervention, our Spot the to focus employee efforts on energy
contribute to tackling climate change. Orange Dot behaviour change campaign reduction linked to lowering our carbon
The electricity used in our buildings uses strategically positioned orange impact. We will report on progress
accounts for almost 55% of our global stickers to remind employees to take against these initiatives through our
carbon emissions. concerted action to improve energy online sustainability report.
and resource efficiency. To date, at
SGS is a signatory to the World Business
least 34 000 employees in 21 affiliates
Council for Sustainable Development
across our network have participated
(WBCSD) Energy Efficiency in Buildings
in the campaign, resulting in tangible
(EEB) Manifesto. Under this manifesto,
improvements in their energy efficiency
we have committed to a 20% reduction
and waste management impacts.
in CO2 emissions for all offices and
laboratories we own that are larger Examples of case studies linked to EEB
than 2 000 m2 by 2020, against a and Spot the Orange Dot can be found in
2010 baseline. our Corporate Sustainability Report which
will be available online from 14 March
2016: www.sgs.com/cs-report2015
PERFORMANCE
846
RENEWABLE ENERGY
354 492
RENEWABLE ENERGY
846 354
795 809 335 332 477 492
772
316 456 460
683 288
394
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
ELECTRICITY AND
TOTAL ENERGY (GWH) VEHICLES FUELS (GWH) NON-TRANSPORT FUELS (GWH)
77
OUR MOST SIGNIFICANT We provide certification as proof that

WASTE IMPACT ON WASTE waste has been processed in a manner
MANAGEMENT MANAGEMENT IS ACHIEVED compliant with the regulations for
THROUGH OUR SERVICES. each specific industry. For materials
OUR WASTE MANAGEMENT that are not reusable, we investigate
SERVICES HELP OUR options for environmentally sound
CUSTOMERS TO RECYCLE, intermediate storage or waste disposal.
TREAT AND DISPOSE OF Our technicians are licensed to
WASTE IN A COST-EFFECTIVE collect, transport and treat hazardous
AND EFFICIENT MANNER. waste. Understanding that profitable
TO REDUCE WASTE DISPOSAL, landfill management involves many
ACHIEVEMENTS WE ARE CONSTANTLY environmental considerations and
As with the rest of the services industry, INVESTIGATING WAYS maintaining a safe site can be complex
SGS is responsible for generating TO RECYCLE AND REUSE and constant work, SGS also provides
relatively small quantities of hazardous MATERIALS TO AVOID integrated landfill management solutions.
and non-hazardous (e.g. mixed paper CONTRIBUTING TO LANDFILL.
mixed plastics, mixed organic) waste. OUTLOOK 2016
A standard operating procedure for Our comprehensive waste services
We will continue to develop services
waste management and minimisation include the pre-treatment, intermediate
linked to waste reduction, treatment,
is established as part of the SGS storage and reconditioning of dangerous
storage and reconditioning and
Operational Integrity Management industrial waste products, while our
responsible disposal in response to
System (OIMS). Audits are conducted audit services benchmark public
our customers changing needs around
regularly by the Operational Integrity standards such as the Recycling
complying with increased legislation,
team, which assesses conformity to Industry Operating Standard (RIOS) and
and finding innovative solutions
the procedure to ensure best practices the Responsible Recycling © Standard
linked to the introduction of new
are applied. In 2015, the generation of (R2) as well as customers’ own criteria.
products, materials, technologies
hazardous waste from our operations We investigate ways to reduce the
and manufacturing methods.
increased by approximately 13% and volume of waste, treatments to make
non-hazardous waste decreased by 5% waste more stable and suitable for
against a 2014 baseline. packaging, and long-term storage
if needed. Processing is carried out
at our licensed treatment plants by our
accredited technicians. All our work
complies with the latest national and
international environmental principles.
PERFORMANCE
43.2
49.2
42.6 43.5 43.2
27.3
2011 2012 2013 2014 2015
TOTAL WASTE GENERATED

(THOUSAND TONNES)
78
plant at our textile testing laboratories • Precision farming and precision
WATER in Tirupur and Chennai, which have irrigation services which provide
MANAGEMENT more than halved the volume of water

purchased; the collection and processing
farmers, agronomists and agricultural
investors with full support on
of condensation from air conditioning water management;
units that is recycled as laboratory • Hydrogeological studies where our
grade water; and a collaboration with team of hydrogeologists provide
the Port of Antwerp in the Netherlands expert guidance to customers on
to re-use water from the nearby anticipating groundwater challenges
dock in our cooling system. Beyond and develop solutions that suit
managing our water consumption, we particular industries.
are also concerned about water quality.
ACHIEVEMENTS In addition, SGS provides Water Benefit
In December 2014, SGS signed the
As a service company, our water WASH Pledge which commits signatory Certificates which give confidence
consumption is relatively low. We companies to ensuring appropriate to donors and investors that real
use water in our laboratories, and for access to safe water, sanitation and water benefits are being delivered to
drinking, food preparation, cleaning and hygiene for all employees in all premises communities who need them most.
sanitation. While water may not be a under company control within three These services help our customers to
material issue for us, we recognise that years of signing the pledge. preserve and manage water resources
it is increasingly important in a wider efficiently and in a cost-effective way
Alongside our operational programmes, and in changing environments.
sustainability context, as the potential
SGS provides a diverse range of services
impacts of climate change and other
linked to water, from comprehensive
factors on water supplies become OUTLOOK 2016
field sampling and laboratory analyses
more apparent. As a global business,
to data management services that During 2016, we will continue to
we are also concerned that some of
enable us to monitor and interpret our manage our water impacts through
our operations are in water-stressed
customers’ water impacts. Some of our our EEB programme (which includes
regions. Water efficiency is managed
specialist water services include: monitoring our water performance using
through the SGS Energy Efficiency in
• Ballast water services aimed at our new building rating tool, Stellar),
Buildings programme (EEB). Our Green
helping customers to stop the spread as well as other specific projects
Building Checklist, which is deployed for
of invasive species through ballast managed at affiliate level. In addition,
new buildings and major renovations,
water on ships; we will continue to evolve our services
sets out our standards on water usage,
linked to water, as more companies
reduction, monitoring and re-use. • Groundwater and hydrogeological come under scrutiny to disclose details
Notable examples of EEB projects studies aimed at preserving and of their water management approach
in recent years that have resulted in managing water resources efficiently and their commitments to protecting
significant reductions in water usage and in a cost-effective way, as well as valuable water supplies.
include the use of waste water that has in changing environments;
been processed in an effluent treatment
PERFORMANCE
1.9
2.0
1.9
1.8 1.8
1.6
2011 2012 2013 2014 2015
TOTAL WATER PURCHASED

(MILLION M 3)
79
80
COMMUNITY We welcome local talent and
knowledge to our business.
We want to give back to
the communities in which
we operate and live.
81
CAUSES SUPPORTED BY SGS COMMUNITY PROJECTS

COMMUNITY
PROGRAMMES DISASTER
RELIEF
ECONOMIC
DEVELOPMENT
MDG 1:
PROGRAMMES POVERTY
Our community programme is led by

our affiliates through collaborations with MDG 2:
local community organisations. Across UNIVERSAL
our global network, we support around EDUCATION
200 community initiatives that are
initiated by employees and leadership MDG 4:
teams in our affiliates in response to REDUCED CHILD
local challenges. Many of the projects MORTALITY
are aligned with the United Nations
Millennium Development Goals (MDGs). MDG 5:
MATERNAL
HEALTH
MDG 7:
ENVIRONMENTAL
SUSTAINABILITY
COMBAT MAJOR
DISEASES/OTHER
HEALTH ISSUES
0 10 20 30
PERFORMANCE
842 222
818 842
809
360 352
688
303
532
217 222
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
INVESTMENT IN COMMUNITY
(THOUSAND CHF) COMMUNITY PROJECTS
82
ACHIEVEMENTS Environmental sustainability projects
are aimed at reducing or eliminating
SGS is committed to supporting projects
the reliance on non-renewable or scarce
that have the potential to change lives
resources such as fossil fuels and water.
in communities where SGS employees
live and work. SGS offers support to communities
through cash donations, community-led
THE SGS GLOBAL sponsorship, employee volunteering,
pro bono services and in-kind support.
COMMUNITY We also provide immediate support to
PROGRAMME communities in the aftermath of major
IS ORGANISED disasters. The majority of community
AROUND THREE CORE programmes are identified and managed
locally in line with the Group Community
THEMES: EDUCATION, Policy and Guidelines.
EMPOWERMENT,
AND ENVIRONMENTAL OUTLOOK 2016
SUSTAINABILITY. In line with our 2020 Ambition to
increase community investment by
Education projects are aimed at 30% using a 2014 baseline, we will
improving access to elementary, focus effort on encouraging more
primary, secondary, higher and further active involvement of employees
education, as well as informal education through community volunteering.
in the form of employment training We will implement guidelines on
schemes and skills workshops. employee volunteering to our affiliates,
Empowerment projects are aimed at which includes sections on measuring
promoting the physical, emotional, the social outcomes from volunteering,
intellectual and economic empowerment and we will report on our progress
of women and men through access against our 2020 Ambition in our annual
to healthcare, counselling, mentoring, sustainability report, available online.
enterprise schemes and micro credit.
83
US INESS PRINCI
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AINABILITY
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PRINCIPLES ARE THE
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THEY ARE HELD TO
BE FUNDAMENTAL,
OVERARCHING BELIEFS
AND BEHAVIOURS THAT
GUIDE OUR DECISIONS
AND ALLOW US TO
EMBODY THE SGS BRAND
IN EVERYTHING WE DO.
84
INTEGRITY HEALTH AND SAFETY QUALITY AND
MAKING SURE WE BUILD TRUST MAKING SURE WE ESTABLISH PROFESSIONALISM
SAFE AND HEALTHY WORKPLACES MAKING SURE WE ACT AND
We act with integrity and behave
responsibly. We abide by the rules, We fully protect all SGS employees, COMMUNICATE RESPONSIBLY
laws and regulations of the countries contractors, visitors, stakeholders,
We embody the SGS brand and
we are operating in. We speak up: physical assets and the environment
its independence in our everyday
we are confident enough to raise from any work-related incident,
behaviour and attitude. We are
concerns and smart enough to exposure, and any kind of damage.
customer-focused and committed
consider any that are brought to us.
to excellence. We are always
clear, concise and accurate.
We strive to continually improve
quality and promote transparency.
We respect client confidentiality
and individual privacy.
RESPECT SUSTAINABILITY LEADERSHIP

MAKING SURE WE TREAT MAKING SURE WE ADD MAKING SURE WE WORK
ALL PEOPLE FAIRLY LONG-TERM VALUE TO SOCIETY TOGETHER AND THINK AHEAD
We respect human rights. We We use our scale and expertise We are passionate entrepreneurial
all take responsibility for creating to enable a more sustainable future. people with a relentless desire
a working environment that We ensure that we minimise to learn and innovate. We work in
is grounded in dignity, equal our impact on the environment an open culture, where smart work
opportunities and mutual respect. throughout the value chain. is recognised and rewarded. We
We promote diversity in our We are good corporate citizens foster teamwork and commitment.
workforce and do not tolerate and invest in the communities
discrimination of any kind. in which we operate.
85
DDED VALUE
SG S A
OUR
ES EM
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OU
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S
OU O
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THROUGH OUR
EMPLOYEES,
CUSTOMERS, INVESTORS,
COMMUNITY AND
INDUSTRIES, WE ADD A
TREMENDOUS AMOUNT
OF VALUE TO SOCIETY.
PERHAPS MORE
IMPORTANTLY, THANKS
TO THE SERVICES WE
PROVIDE, WE EMPOWER
AND INSPIRE OTHERS
TO DO SO TOO.
86
OUR STAKEHOLDERS
OUR EMPLOYEES OUR CUSTOMERS OUR INVESTORS

We add value to our employees by We add value to our customers We add value to our investors
offering them training, nurturing their by providing them with leading by being a robust, sustainable
potential and encouraging them to services, which helps make their business with a 137-year track
work across multiple functions and businesses more efficient, profitable record. Our transparency, strong
geographies during their careers. and sustainable. This value is leadership and commitment
We offer flexible working conditions passed on to society in the form to long-term sustainability make
and equal opportunities to all. of job security for employees, us a sound investment.
Existing higher quality products and better Shareholders
environmental management.
Potential Financial community
Sub contractors Existing
Socially responsible investors
Potential
OUR COMMUNITY OUR PARTNERS OUR INDUSTRIES

We currently support around 200 We provide value to our partners by We help advance the industries
community initiatives in response sharing our expertise and support we operate in through the services
to local challenges. Many of these and by helping them to refine their we offer. We help our customers
are aligned the United Nations’ product offerings. In this way we improve the safety and quality of
Millennium Development Goals. help them develop their businesses. global supply chains and to drive
We also support disaster relief and Suppliers innovation. This in turn establishes
environmental sustainability by new industry benchmarks for
Business partners
sharing our expertise and network efficiency, sustainability and
Consultants
with non-profit organisations. operational best practices.
People Industry peers, trade bodies
Environment and associations
Community programmes Authorities, governments
and regulators
Special interest groups
Unions and work councils
NGOs and academics
87
The market has two main driving

WHAT MAKES US THE TIC INDUSTRY mechanisms. The first is the ever
STAND OUT? UNMASKED more demanding regulatory and legal
environment faced by many firms,
who not only need to understand
and conform to their respective
market regulations but also need to
demonstrate to their customers and the
relevant authorities that the necessary
steps have been taken to ensure
compliance. Moreover, the increasingly
As an independent service provider, BY GROUP REVENUE AND MARKET complex nature of global supply chains
we offer our customers an impartial SHARE, SGS IS THE LARGEST have made it even harder for firms
view through service offerings that INSPECTION, VERIFICATION, TESTING to ensure conformity (or even quality)
span all industries and encompass full AND CERTIFICATION COMPANY for all the component parts in any
supply chains. Our services enable IN THE WORLD. given product.
our customers to operate in a more
The Testing, Inspection and Certification This can have quite serious consequences
sustainable manner, by reducing their
(TIC) Industry is not widely understood if left unchecked. For example, there
impact on the environment, ensuring
by the general public, yet our activities as have been instances where firms have
product safety, safeguarding trade
members of that industry interweave with inadvertently breached international
and helping to bring new technologies
almost everything that a consumer touches. sanctions because they failed to
to market.
The breadth and reach of the industry consider the place of manufacture
is perhaps unrivalled. Look around you. of a particular component part. As a
The furniture that you are using, the result of this, companies (and indeed
clothes that you are wearing, even the governments) have often found it
paper you are holding have most likely preferable to outsource these services
all been touched at some stage by to an expert and independent third party
MARKET the TIC industry. firm in the TIC industry; indeed firms
POSITIONING From verifying that the olive oil in your
are often required to do so. In reality,
pressure is often passed down the
cupboards is unadulterated extra virgin supply chain by larger companies,
to ensuring that the paint on a toy will who need to gain greater control over
not be harmful to your children’s health, the actions of their own suppliers.
the TIC industry is involved in assuring
safety, quality and sustainability in a way The second market mechanism is often
most people have never considered. simply financial, with firms finding
that specialist companies such as
But individuals are far from being SGS are able to offer more efficient
Our market position is: the only entities that rely on the and effective services than they are
TIC industry to provide assurance
THE WORLD’S LEADING INSPECTION, capable of reproducing in-house. This
VERIFICATION, TESTING AND services. Governments and businesses is because businesses like SGS benefit
CERTIFICATION COMPANY need companies like SGS to provide from having a global network, a deep
assurance services for everything pool of expertise, and the necessary
THE LEADING PROVIDER OF from precision farming to offshore technological capabilities to draw upon.
COMPETITIVE ADVANTAGE, oil rig management. Our services thus become a cornerstone
DRIVING SUSTAINABILITY
of innovation and operational excellence
AND DELIVERING TRUST
for our clients, as well as giving them
THE GLOBALLY RECOGNISED greater control over their risk.
BENCHMARK FOR QUALITY
AND INTEGRITY
At SGS, we are continually pushing
ourselves to deliver innovative services
and solutions that help our customers
move their businesses forward.
88
FINANCIAL CAPITAL
OUR VALUE The medium for exchange, a store of
TO SOCIETY economic value and as a unit of account.
NATURAL CAPITAL
The economic functions
of the natural environment.
HUMAN CAPITAL
The economic functions
of the labour force.
SGS has started a process to understand INTELLECTUAL CAPITAL

our value to society. Value to society is The economic functions of knowledge.
based on the premise that all business
activities take place within a field SOCIAL CAPITAL
of social capital, which is contained The economic functions of trust within
stakeholder networks.
within the natural environment.
Social capital allows the development MANUFACTURED (OR BUILT) CAPITAL
of interpersonal relationships that in
The economic functions of property,
turn enable the combination of human plant, equipment, inventory and
capital, natural capital and intellectual intermediate inputs.
capital to produce goods and services
(i.e. manufactured capital). A key
In future, we will start reporting around
component of the value to society
the six capitals. A significant amount
framework is determining the economic
of work has already been completed,
values for respective capital stocks
which indicates that the business
and flows. This process of economic
activities of SGS are net positive (which
evaluation, often termed monetisation,
means that we contribute more value
is necessary to enable integration of the
than we derive). There is further work
full factors of production (i.e. the natural
to be done to adapt the concept to our
capital, human capital, manufactured
business model using auditable data, but
capital, etc.) into a core financial-based
we expect to be in a position to report
business decision-making system.
on this in detail in 2016. We are also
The first stage in the process has
focusing on aligning our future reporting
involved the quantification and economic
to the IRRC framework. As such,
valuation of the various capital stocks
2016 will be a decisive year involving
and flows that comprehensively
high-level stakeholder dialogue and
represent the necessary inputs and
consultation on our evolved reporting
outputs of our business activities.
approach. More details on how we
First, we identified the entire asset
are measuring our value to society
base that underpins SGS’ operations.
can be found on our website:
Conceptually supported by the
www.sgs.com/cs-report2015
International Integrated Reporting
Council’s [IRRC] guidelines, operations
require (directly and indirectly)
a complement of:
89
90
5. MARKET RISKS
RISKS AND UNCERTAINTIES The risks identified and monitored by
the Board fall broadly into four categories:
On a yearly basis the SGS Board
conducts an assessment of the risks • Governance and Integrity Risks – arise
facing the Group. This process is when corporate governance structure
conducted with the active participation and controls are inadequate and when
and input of the Management. Once ethical culture and procedures are weak.
identified, risks are assessed according • Strategy and Planning Risks – arise
to their likelihood, severity and mitigation. when the company’s strategy selection
The Board deliberates on the adequacy and execution is inadequate and when
of measures in place to mitigate there are external factors that can
and manage risks and assigns affect the company’s performance.
responsibility to designated managers • Global Support Risks – arise when core
for implementation of such measures. functions of the company do not operate
As part of this process, the ownership effectively and do not support the
and accountability for identified risks business performance.
are approved by the Board. The
implementation of such actions is
• Operations Risks – arise when
business processes do not achieve
audited by Internal Audit. These findings
the objectives they were designed to
are communicated to the Board of
achieve in supporting the company’s
Directors so that progress and identified
business model.
risks can be monitored objectively and
independently from Management.
91
5. MARKET RISKS
RISK MANAGEMENT
RISK AREA RISK DESCRIPTION MEASURES IN PLACE
STRATEGY AND PLANNING
EXTERNAL FACTORS / The SGS Group operates in volatile • Customer insights

COMPETITION markets and needs to sustain and/or • Competitor intelligence (periodic reviews of
develop market share through innovation activities of major competitors in the TIC industry)
and technical developments.
• Innovation team
• Organic growth initiatives
MERGER AND ACQUISITIONS Part of the SGS Group’s strategy relies • Specific policy ruling mergers and acquisitions
on acquisitions of new companies is in place
allowing access to new markets. • Operations Council reviews/approves projects
Inefficient integration of new companies meeting admissible criteria
may lead to sub-optimal synergies.
• Integration guidelines and system to report upon
adequate integration of acquisitions
POLITICAL ACTIVITIES Political instability is a risk in some of • Collaboration with experts to maintain knowledge
the countries in which SGS operates. and alignment with local, legal and fiscal changes
• Diversification of activities and countries to
compensate higher risks in some geographical areas
GOVERNANCE AND INTEGRITY
LOSS OF REPUTATION Loss of reputation through poor • Health and safety standards and performance WorldReginfo - 9598e104-0c9b-410a-914c-87b9720d1132
or inconsistent delivery and poor • Client relationship management
client relationship management or
inappropriate health and safety practice. • Business operating procedures
ETHICS SGS operates in countries recognised to • SGS Code of Integrity

have higher bribery and corruption risks. • Integrity rules (from integrity of services
to compliance with laws)
• Training course for all employees
LEGAL CLAIMS The SGS Group is exposed to litigation • Claim reporting system
proceedings in connection with • Insurance coverage and policies
services provided. Litigations could
lead to payment of damages and affect
the reputation of the Group.
92
RISK AREA RISK DESCRIPTION MEASURES IN PLACE
GLOBAL SUPPORT
IT SYSTEMS Information systems and the technology • Information Technology Service Delivery Model
infrastructure are key to supporting SGS’ • Security systems and applications
strategy and growth. The IT architecture
and the new technologies chosen could • Identification and prioritisation of strategic projects
expose SGS to new threats. through IT Committee
• Internal and external audit testing
FINANCE The SGS Group could suffer from failing • Independent external audit of the Group’s annual
to present reliable financial statements. financial statements
• Financial and management controls are in place
to ensure Group’s assets are safeguarded from
major financial risks
TALENT MANAGEMENT / The SGS group relies on key personnel • Succession planning to ensure effective
RECRUITMENT from operations to executive level. Skilled continuation of leadership and expertise
employees may not be attracted and • Geographic mobility to ensure continuity
know-how and information of value for
SGS may be lost. • Employer branding initiative to attract talent
OPERATIONS
CYCLICAL DOWNTURN The cyclical nature of certain businesses • Monitoring of operational KPIs to allow rapid
may lead to over-capacity and surplus up/down-scaling of variable costs
resources in certain geographies. • Diversified service offering to a wide range
of industries and geographies
CUSTOMER SERVICES A lack of focus on customer needs • Customer satisfaction survey

may lead to customer dissatisfaction • Key account management structure and dedicated
and customer loss. sales people
• Tracking on-time delivery through laboratory excellence
• Customer care shared services
As a step towards adopting a fully integrated reporting structure in the future, for the first time we have also included
our sustainability risks in this section of the report.
CORPORATE SUSTAINABILITY
SGS is concerned about the potential • Sustainability Management System and external
impacts of climate change and resource parties’ verification of sustainability data
depletion. Energy consumption and • Energy Efficiency in Building Programme
greenhouse gas emissions, as well as
water consumption and waste, if not • Carbon Neutral Strategy
adequately managed, could lead to • Green Procurement Strategies
increased costs, interrupted supply and • Employees Awareness Campaigns
regulatory fines. The resulting impact
could cause disruption to services • Signature of the WASH Pledge and World Business
as well as risks to people and assets. Council for Sustainable Development’s Manifesto
for Energy Efficiency in Buildings
93
5. MARKET RISKS
SUSTAINABILITY ETHICAL CONDUCT
VERY HIGH
MATERIALITY ECONOMIC PERFORMANCE
MATRIX HEALTH AND SAFETY
TALENT ACQUISITION
AND DEVELOPMENT
STAKEHOLDER CONCERN
ENERGY AND CLIMATE CHANGE
SUSTAINABILITY SERVICES
As an industry leader, we are committed DIVERSITY AND EQUAL HUMAN RIGHTS
to upholding the highest standards OPPORTUNITIES
to ensure our business operates in LOCAL COMMUNITIES
a sustainable way. RESPONSIBLE SUPPLY CHAIN
Our Materiality Matrix sets out the EFFLUENTS
issues that are deemed most important AND WASTE
to our stakeholders and our business. WATER
HIGH
MANAGEMENT
We have identified the material aspects
HIGH VERY HIGH
for SGS and our stakeholders and
IMPORTANCE TO SGS
in the coming years we will merge
both processes.
Our online sustainability report
describes the processes we use to
identify our most important issues in
detail (see Materiality Process), and
it explains how we manage each of
these important issues through our
sustainability management system.
94
ASSURANCE STATEMENT
REPORT ON THE INTERNAL ASSURANCE OF THE SUSTAINABILITY CONTENT

IN THE 2015 SGS ANNUAL REPORT
NATURE AND SCOPE OF THE ASSURANCE
The scope of this assurance was performance data, report text supporting performance data and a review of the management
of this data.
This Sustainability Content in the 2015 SGS Annual Report has been assured using SGS’ own protocols to ensure consistency with
the service offered to customers. The assurance comprised a combination of documentation review and face-to-face interviews
with relevant employees at the Head Office in Geneva and at affiliate level. Audit reviews of data samples and management were
also carried out in selected sites.
For the period 2011 to 2014, the assurance procedures on the sustainability performance had been carried out on SGS trend
countries, which represent three-quarters of revenue and two-thirds of headcount. For the year 2015, the sustainability
performance assurance procedures covered the full SGS Group.
Financial data drawn directly from independently audited financial accounts has not been checked back to source as part of this
assurance process.
The assurance team was assembled based on their knowledge, experience and qualifications for this assignment, and comprised
auditors with the following qualifications: Lead Quality, Health and Safety, Environmental and SA8000 Auditor and assurance practitioner.
The responsibility of the assurance team is to express an opinion on the text, data, graphs and statements within the scope
of verification, with the intention to inform all SGS stakeholders and to inform improvements in the process for future reporting.
This report has been assured at a moderate level of scrutiny using our protocols for:
• Evaluation of veracity of the reported text, graphs and statements and performance data (including data on the web) with a focus
on text, graphs and statements and performance data related to the identified material issues
ASSURANCE OPINION
On the basis of the methodology described and the verification work performed, we are satisfied that the information and
data contained within the Sustainability Content in the 2015 SGS Annual Report is reliable and provides a fair and balanced
representation of SGS activities in 2015 within the limitations of the stated reporting scope.
The apparent discrepancies in the previous years CO2 emission statistics have been noted by the assurors who are satisfied that
they actually reflect the extension of the CO2 emission scope to the full SGS Group and the change of methodology to calculate
the Scope 2 CO2 emissions with the integration of renewable energy accounting.
RECOMMENDATIONS
Further opportunities were identified during the assurance for consideration to ensure continual improvement, including the following:
• Currently the reported environmental data is based on financial evidence. When such evidence is not available, the data is not
systematically estimated. Although estimated as non-material and thus not biasing the stakeholders’ opinion, it is recommended
that a methodology is implemented to estimate such data based on the location surface area or/and the number of employees.
A report has been prepared for SGS management which includes a detailed set of recommendations to help identify areas for
future improvement.
Rita Godfrey Michel Mooser

Lead SRA Assuror SRA Assuror
Geneva, 8 February 2016
95
6. GOVERNANCE
6. GOVERNANCE
This Corporate Governance Report 1. GROUP STRUCTURE 5. COMPENSATION,

informs shareholders, prospective AND SHAREHOLDERS SHAREHOLDINGS
investors and the public at large AND LOANS
on SGS policies in matters of 1.1. Group Structure
corporate governance such 1.2. Significant Shareholders 5.1. Content and Method of
as: the structure of the Group, Determining the Compensation
1.3. Cross-Shareholdings
and the Shareholding Programmes
shareholders' rights, composition,
5.1.1. Rules on Performance-Related
roles and duties of the Board of
2. CAPITAL STRUCTURE Pay and Allocation of
Directors and its Committees and Equity-Linked Instruments
Management, internal controls 2.1. Issued Share Capital 5.1.2. Rules on Loans, Credit
and audits. This report has been 2.2. Authorised and Conditional Facilities and
prepared in compliance with the Share Capital Post-Employment Benefits
Swiss Exchange (SIX) Directive on 2.3. Changes in Capital 5.1.3. Rules on Vote on Pay
Information Relating to Corporate 2.4. Shares and Participation Certificates
Governance of 1 September 2014 2.5. Profit Sharing Certificates 6. SHAREHOLDERS’
and with the Swiss Code of Best
2.6. Limitations on Transferability and PARTICIPATION RIGHTS
Practice for Corporate Governance. Admissibility of Nominee Registrations
2.7. Convertible Bonds and 6.1. Voting Rights and
The SGS Corporate Governance Representation Restrictions
Warrants/Options
framework aims to achieve an
6.2. Statutory Quorums
efficient allocation of resources,
clear mechanisms for setting 3. BOARD OF DIRECTORS 6.3. Convocation of General Meetings
of Shareholders
strategies and targets in order to 6.4. Agenda
3.1. Members of the Board of Directors
maximise and protect shareholder
3.2. Cross Involvement 6.5. Registration in the Share Register
value. SGS strives to attain this
3.3. Elections and Terms of Office
goal by defining clear and efficient
decision-making processes, 3.4. Limits on External Mandates 7. CHANGE OF CONTROL
fostering a climate of performance 3.5. Internal Organisational Structure AND DEFENCE
and accountability among 3.5.1. Allocation of Tasks within MEASURES
the Board of Directors
managers and employees alike
3.5.2. Committees 7.1. Duty to Make an Offer
and aligning employees’
3.5.3. Working Methods of the 7.2. Clauses on Change of Control
remuneration with the long-term
Board and its Committees
interests of shareholders.
3.6. Definition of Areas of Responsibility 8. AUDITORS
3.7. Information and Control Instruments
vis-à-vis the Management 8.1. Duration of the Mandate
and Term of Office
4. OPERATIONS COUNCIL 8.2. Audit Fees

8.3. Additional Fees
4.1. Members of the Operations Council 8.4. Supervisory and Control
4.2. Other Activities and Functions Instruments vis-à-vis
the Auditors
4.3. Limits on External Mandates
4.4. Management Contracts
9. INFORMATION POLICY
98
1. GROUP STRUCTURE At 31 December 2015, geographic
operations were organised as follows:
1.2. SIGNIFICANT SHAREHOLDERS
AND SHAREHOLDERS As at 31 December 2015, Mr. August

von Finck and members of his family
Europe, Africa, Middle East acting in concert held 15.03% (2014:
1.1. GROUP STRUCTURE
• Western Europe 14.97%), Groupe Bruxelles Lambert
SGS SA, registered in Geneva (CH), acting through Serena SARL held
• Northern and Central Europe
also referred to as the “Company”, 15.00% (2014: 15.00%), the Bank of
controls directly or indirectly all entities • Southern Central Europe New York Mellon Corporation held
worldwide belonging to the SGS Group, • Eastern Europe and Middle East 3.35% (2014: 3.43%), BlackRock Inc.
which provides independent inspection, held 3.03% (2014: 3.00%) and MFS
• Africa
verification, testing, certification and Investment Management held 3.01%
quality assurance services. The shares (2014: 0.00%) of the share capital and
Americas
of SGS SA are listed on the SIX Swiss voting rights of the Company.
Exchange and are traded on SIX Europe • North America
At the same date, SGS Group held
(Swiss Security Number: 249745; • South America 2.77% of the share capital of the
ISIN: CH0002497458).
Company (2014: 1.88%).
On 31 December 2015, the market Asia Pacific During 2015, the Company published
capitalisation of SGS SA was
• East Asia regularly on the electronic platform of
CHF 14 949 million.
the Disclosure Office of the SIX Swiss
• China and Hong Kong
None of the companies under the direct Exchange Ltd. all disclosure notifications
or indirect control of SGS SA has listed • South Eastern Asia and Pacific received from shareholders of transactions
its shares or other securities on any subject to the disclosure obligations
stock exchange. of Article 20 SESTA. Such disclosure
The Group is also structured into 10
The principal legal entities consolidated notifications can be accessed at
lines of business. Each business line is
within the Group are listed on pages 200 www.six-swiss-exchange.com/
responsible for the global development
to 203 of the Annual Report, with details shares/companies/
of Group activities within its own sphere
of the share capital, the percentage of of specialisation and for the execution
shares controlled directly or indirectly of strategies with the support of the 1.3 CROSS-SHAREHOLDINGS
by SGS SA and the registered office or Chief Operating Officers. Neither SGS SA nor its direct and indirect
principal place of business.
At 31 December 2015, the business subsidiaries has any cross-shareholding
Details of acquisitions made by the lines were organised as follows: in any other entity, whether publicly
SGS Group during 2015 are provided traded or privately held.
• Agriculture
in note 3 to the consolidated financial
statements included in the section • Minerals
SGS Group Results (pages 144 to 145) • Oil, Gas and Chemicals
of this Annual Report.
• Life Science
The operations of the Group are divided
• Consumer Testing
into 10 regions, each led by a Chief
Operating Officer who is responsible for • Systems and Services Certification
the SGS businesses in that region and • Industrial
for the local implementation of Group
• Environmental
policies and strategies.
• Automotive
• Governments and Institutions
Each line of business is led by an
Executive Vice President. Chief
Operating Officers and Executive
Vice Presidents are members of the
Operations Council, the Group's most
senior management body.
With effect as from 1 January 2016,
the geographic operations and
business lines are realigned, with the
consequence that, from 2016 onwards,
the Group is structured into 9 lines
of business and 9 regions.
99
6. GOVERNANCE
2. CAPITAL STRUCTURE The right to subscribe to such conditional

capital is reserved to beneficiaries of
2.7. CONVERTIBLE BONDS
AND WARRANTS/OPTIONS
employee share option plans and holders
2.1. ISSUED SHARE CAPITAL No convertible bonds have been
of convertible bonds or similar debt
issued by the Company or by any entity
The share capital of SGS SA is instruments and therefore excludes
under its direct or indirect control.
CHF 7 822 436 and comprises shareholders’ preferential rights of
Options and other share-based
7 822 436 fully paid-in, registered subscription. The Board is authorised
remuneration granted to senior
shares of a par value of CHF 1. to determine the timing and conditions
managers of the Group are detailed in
of such issues, provided that they
On 31 December 2015, SGS SA held the SGS Remuneration Report. Details
reflect prevailing market conditions.
216 976 treasury shares (2014: 146 930). of all options and shares outstanding are
The term of exercise of the options
In 2015, 54 636 treasury shares were provided in note 31 to the consolidated
or conversion rights may not exceed
sold or released to cover option rights. financial statements of the Group.
10 years from the date of issuance
These shares were sold at an average No other options or similar instruments
of the equity-linked instruments.
price of CHF 1 483. During the year, have been issued by the Company nor
45 778 treasury shares were purchased by any of the Group’s subsidiaries.
2.3. CHANGES IN CAPITAL
for cancellation and 78 904 treasury
There have been no changes to the
shares were purchased to support
future share incentive programmes in
Company’s share capital in the last 3. BOARD OF DIRECTORS
eight years.
application of a CHF 750 million Share
Buy-Back programme valid from The Board of Directors is the highest
29 January 2015 to 31 December 2016. 2.4. SHARES AND governing body within the Group. It is the
PARTICIPATION CERTIFICATES ultimate decision-making authority except
2.2. AUTHORISED AND CONDITIONAL for those decisions reserved by law to
All shares, other than treasury shares
the General Meeting of Shareholders.
SHARE CAPITAL held by SGS SA, have equal rights to
the dividends declared by the Company
The Board of Directors has the authority 3.1. MEMBERS OF THE BOARD
and have equal voting rights.
to increase the share capital of the
OF DIRECTORS
Company by a maximum of 500 000 The Company has not issued any
registered shares with a par value of participation certificates (bons de This section presents the Members
CHF 1 each, corresponding to a participation/Partizipationsscheine). of the Board of Directors of the
maximum increase of CHF 500 000 in Company, with their functions in the
share capital. The Board is authorised 2.5. PROFIT SHARING CERTIFICATES Group, their professional background
to issue the new shares at the market and all their material positions in
The Company has not issued any profit
conditions prevailing at the time governing and supervisory boards,
sharing certificates.
of issue. In the event that the new management positions and consultancy
shares are issued for the purpose of functions, official tenures and political
an acquisition, the Board is authorised 2.6. LIMITATIONS ON commitments, both in Switzerland
to waive the shareholders’ preferential TRANSFERABILITY AND ADMISSIBILITY and abroad, as at 31 December 2015
right of subscription or to allocate such OF NOMINEE REGISTRATIONS (an * denotes a listed company).
subscription rights to third parties. The Each Board member brings particular
SGS SA does not limit the transferability
authority delegated by the shareholders skills, leadership and experience,
of its shares. The registration of shares
to the Board of Directors to increase the acquired through their respective careers
held by nominees is not permitted by
share capital is valid until 12 March 2017. spanning many industries. Together they
the Company’s Articles of Association,
The shareholders have conditionally enable the Board to provide leadership,
except by special resolution of the Board
approved an increase of share capital strategic overview and guidance, which
of Directors. By decision of the Board,
by an amount of CHF 1 100 000 divided contribute to setting ambitious targets
the Company’s shares can be registered
into 1 100 000 registered shares with a to the Group and meeting long-term
in the name of a nominee acting in a
par value of CHF 1 each. This conditional value-creation objectives.
fiduciary capacity for an undisclosed
share capital increase is intended to
principal, provided however that shares
obtain the shares necessary to meet the
registered in the names of nominees or
Company’s obligations with respect to
fiduciaries may not exercise voting rights
employee share option plans and option
above a limit of 5% of the aggregate
or conversion rights of convertible bonds
share capital of the Company. This rule
or similar equity-linked instruments that
was made public on 23 March 2005.
the Board is authorised to issue.
The Company has a single class of
shares and no preferential rights,
statutory or otherwise, have been
granted to any shareholder.
100
SERGIO MARCHIONNE (1952) PAUL DESMARAIS, JR (1954) Other Activities and Functions
Canadian/Italian Canadian *Groupe Bruxelles Lambert,
Brussels (BE), Vice-Chairman of
Function in SGS Function in SGS the Board of Directors
Chairman: Member: *Great-West Lifeco Inc., Winnipeg
• Board of Directors • Board of Directors (Can), Member of the Board (including
those of its major subsidiaries)
• Audit Committee
Initial appointment to the Board *IGM Financial Inc., Winnipeg (Can),
• Professional Conduct Committee Member of the Board (including those
July 2013
of its major subsidiaries)
Initial appointment to the Board
Professional Background *LafargeHolcim, Zürich (CH),
May 2001
Chairman and Co-Chief Executive Board Member
Officer, * Power Corporation of Canada. *Pargesa Holding SA, Geneva (CH),
Professional Background
Paul Desmarais, Jr. has a Bachelor Board Member since 1992, Chairman
Chief Executive Officer of *Fiat Chrysler
of Commerce Degree from McGill of the Board since 2013
Automobiles N.V., since 2014
University, Montréal and an MBA from *Total SA, Paris (F), Board Member
Sergio Marchionne holds a BA in the Institut Européen d'Administration
Philosophy from the University of Member of the Advisory Council of
des Affaires (INSEAD), France.
Toronto, and an LLB degree from the European Institute of Business
He has received honorary doctorates Administration (INSEAD)
Osgoode Hall Law School, York
from various Canadian universities.
University, and Toronto. He also has Trustee of the Brookings Institution and
an MBA and B.Com from the University He joined Power Corporation of Canada a Co-Chair of the Brookings International
of Windsor, in Canada. in 1981 and assumed the position of Advisory Council (USA)
Vice-President the following year. Chairman of the Canadian Council
A barrister, solicitor and chartered
In 1984, he led the creation of Power of Chief Executives (Can)
accountant, Mr. Marchionne began
Financial Corporation to consolidate
his career in Canada in 1983.
Power’s major financial holdings, as well
In 2004, he became CEO of Fiat S.p.A., as Pargesa Holding SA, under a single
headquartered in Turin. In addition, in corporate entity. Mr. Desmarais served AUGUST VON FINCK (1930)
June 2009, he was appointed CEO of as Vice-President from 1984 to 1986, German
Chrysler Group LLC and, in September as President and Chief Operating Officer
2011, also assumed the role of of Power Financial from 1986 to 1989, Function in SGS
Chairman. In October 2014, he became as Executive Vice Chairman from 1989 Member:
Chairman of Ferrari S.p.A. and CEO of to 1990, as Executive Chairman from
*Fiat Chrysler Automobiles N.V. (FCA), • Board of Directors
1990 to 2005, as Chairman of the
the company resulting from the merger Executive Committee from 2006 to • Nomination and
of Fiat S.p.A. and Chrysler Group LLC. 2008 and as Executive Co Chairman Remuneration Committee
He served as Chairman of CNH Global from 2008 until today. He was named
N.V. from 2006 and Fiat Industrial S.p.A. Chairman and Co-CEO with Power
from 2011, becoming Chairman of *CNH Corporation in 1996. After Power October 1998
Industrial N.V., the company resulting Financial and the Frère Group of Belgium
from the merger of CNH Global N.V. and took control of Pargesa in 1990, Professional Background
Fiat Industrial S.p.A. in 2013. Mr. Desmarais moved to Europe August von Finck is an Industrialist.
from 1990 to 1994, to develop the He descends from the banking family
Other Activities and Functions
partnership with the Frère Group and von Finck. His grandfather, Wilhelm von
*Philip Morris International SA, to restructure the Pargesa group. Finck, founded Merck, Finck & Co. in
Lausanne (CH), Member of the Board 1870, the private bank which was at the
From 1982 to 1990, he was a member
*Exor S.p.A., Turin (IT), Member of of the Management Committee of origin of companies including Munich
the Board Pargesa, in 1991, Executive Vice Re, Allianz insurance and the Löwenbräu
breweries, among others.
Peterson Institute for International Chairman and then Executive Chairman
Economics, Member of the of the Committee, in 2003, he was Based in Munich, the member of the
BoardCouncil for the United States appointed Co-Chief Executive Officer third generation of the von Finck family
and in 2013 named Chairman of the holds interests in a number of German,
and Italy, Chairman
Board. He is a Director of many Power Swiss and Austrian companies as well
European Automobile Manufacturers’ as in groups from other countries.
Group companies in North America.
Association (ACEA), Brussels (BE), In Switzerland, August von Finck's
Member of the Board participations include Mövenpick
Holding A.G. and Von Roll Holding A.G.
101
6. GOVERNANCE
AUGUST FRANÇOIS VON FINCK (1968) He began his career in 1992 in Spain packaging industry and specialised in
as co-founder of a sales company. the production of aluminum aerosol
Swiss
From 1995 to 1997, he managed a cans, aluminum tubes and plastic tubes
Function in SGS consulting firm, specialising in turning and of CAG Holding GmbH, Lilienfeld,
around businesses in France. Austria, active in the field of aluminum,
Member:
glass and fibers.
• Board of Directors From 1998 to 2005, he was Manager
of the private equity funds Rhône Capital Other Activities and Functions
• Audit Committee
LLC in New York and London.
Schoellerbank AG, Vienna (AT),
Initial appointment to the Board In 2005 to 2012, he founded the private Member of the Board since 1999
equity funds Ergon Capital Partners in
May 2002 Stölzle Oberglas, Koeflach (AT),
Brussels and was Managing Director
Member of the Board since 1989
Professional Background of such funds until 2012.
Honorary Consul of Austria to
François Von Finck holds a Master In 2012, he became Managing Director of
the Land of Baden-Württemberg
of Business Administration from *Groupe Bruxelles Lambert of which he
Georgetown University, Washington had been a Board Member since 2009.
D.C. He has a banking background
and is currently Managing Director
Other Activities and Functions PETER KALANTZIS (1945)
of Carlton Holding in Basel. *Imerys, Paris (F), Member of the Board Swiss/Greek
and Chairman of the Strategic Committee,
Other Activities and Functions Member of the Compensation and Function in SGS
*Custodia Holding, Munich (DE), Nomination Committee Member:
Member of the Board since 1999 Lafarge, Paris (F), Member of the Board • Board of Directors
Carlton Holding, Allschwil (CH), Member *Pernod Ricard SA, Paris (F), Member • Audit Committee
of the Board since 2001 of the Board, Member of the Strategic
*Staatl. Mineralbrunnen AG, Bad Committee and Member of the Initial appointment to the Board
Brückenau (DE), Member of the Board Remuneration Committee March 2009
since 2001 Erbe SA (BE), Member of the Board
Bank von Roll, Zürich (CH), Vice-President Professional Background
Ergon Capital SA (BE), Member of
of the Board since 2009 the Board Peter Kalantzis holds a Ph.D. in
*Von Roll Holding AG, Breitenbach (CH), Economics and Political Sciences from
Ergon Capital II SARL (LU), Manager
Member of the Board since 2010 the University of Basel and engaged in
* Umicore NV, (BE), Member of research as a member of the Institute
the Board for Applied Economics Research at
the University of Basel between 1969
IAN GALLIENNE (1971) and 1971.
French CORNELIUS GRUPP (1947) Prior to 2000, Peter Kalantzis was
Austrian responsible for Alusuisse-Lonza Group's
Function in SGS
corporate development and actively
Member: Function in SGS involved in the de-merger and stock
• Board of Directors Member: market launch of Lonza, as well as the
merger process of Alusuisse and Alcan.
• Nomination and • Board of Directors Dr. Kalantzis served as head of the
Remuneration Committee
• Professional Conduct Committee Chemicals Division of Alusuisse-Lonza
(since March 2015) Group from 1991 until 1996. In 1991,
Dr. Kalantzis was appointed Executive
July 2013 Initial appointment to the Board Vice-President and Member of the
March 2011 Executive Committee of the Alusuisse-
Professional Background
Lonza Group.
Managing Director of *Groupe Bruxelles Professional Background Dr. Kalantzis has worked as an
Lambert, since 2012. Ian Gallienne
Dr. Grupp holds a Doctorate in law and independent consultant since 2000.
has a degree in Management and
a Master in Business Administration.
Administration, with a specialisation Other Activities and Functions
in Finance; from Ecole Supérieure He is the owner and general manager
of Tubex Holding GmbH, Stuttgart, Mövenpick/Holding AG, Baar (CH),
des Dirigeants d'Entreprises (ESDE)
Germany, a company active in the Chairman of the Board from 2000 to
in Paris and an MBA from INSEAD
2014, Member since 2014
in Fontainebleau.
102
Clair AG, Cham (CH), Chairman of Chris was Chief Executive Officer for and CFO. He was appointed CFO
the Board since 2004 SGS between 2006 and 2015 before of the Suez Group in 2003.
*CNH Industrial NV, Amsterdam (NL), being elected to the Board of Directors He has been a Director of *Groupe
Member of the Board since 2013 at the 2015 Annual Shareholders Bruxelles Lambert since 2011 and
Meeting. He brings to the Board his Managing Director since 2012.
Degussa Sonne/Mond Goldhandel AG, unparalleled experience in the industry
Cham (CH), Chairman of the Board and in-depth knowledge of the Group. Other Activities and Functions
since 2012
Other Activities and Functions *LafargeHolcim, Zurich (CH),
Consolidated Lamda Holdings Ltd.,
Member of the Board, Member
Luxembourg (LU), Member of the Board Compass Limited, Hamilton, Bermuda, of the Strategy and Sustainability
since 2002 Member of the Board since 2011 Committee, Member of the Finance
Paneuropean Oil and Industrial Holdings and Audit Committee
SA, Luxembourg (LU), Member of
Lafarge, Paris (F), Member of the Board
the Board since 2001 GÉRARD LAMARCHE (1961)
*Legrand, Limoges (F), Member
*Von Roll Holding AG, Breitenbach Belgian of the Board and Member of the
(CH), Chairman of the Board since 2010,
Audit Committee
Member of the Board since 2007 Function in SGS
*Total SA, Paris (F), Member of
Hardstone Services SA, Geneva (CH), Member:
the Board, Member of the Audit
Chairman of the Board since 2014, • Board of Directors Committee and Chairman of
Member since 2009
• Audit Committee the Remuneration Committee
Gnosis Foundation, Vaduz (FL), President
of the Foundation Board since 2008 Initial appointment to the Board
John S. Latsis Public Benefit Foundation, July 2013 SHELBY R. DU PASQUIER (1960)
Vaduz (FL), President of the Executive
Swiss
Board since 2015 Professional Background
Managing Director of *Groupe Bruxelles Function in SGS
Lambert, since 2012. Member:
CHRISTOPHER KIRK (1956) Gérard Lamarche holds a bachelor • Board of Directors
English of Economics from the University of
Louvain-la-Neuve with a specialisation • Professional Conduct Committee
Function in SGS in Business Administration and • Nomination and Remuneration
Member Management. He also completed the Committee, Chairman
Advanced Management Program for
• Board of Directors Initial appointment to the Board
Suez Group Executives at INSEAD
Initial appointment to the Board Business School and took part in the March 2006
1998-99 Wharton International Forum,
March 2015 Global Leadership Series. Professional Background
Professional Background He began his professional career in 1983 Attorney at law, Partner Lenz &
with Deloitte Haskins & Sells in Belgium, Staehelin law firm, Geneva.
Chris Kirk holds a BSc (Hons) degree
and became a M&A Consultant in Shelby R. du Pasquier holds degrees
in Zoology. He began his career at
the Netherlands in 1987. In 1988, he from Geneva University Business
SGS in 1981 in New Zeeland. From
joined Société Générale de Belgique as School and School of Law as well as
1981 to 1987 he undertook a range
Investment Manager. He was promoted from Columbia University School of Law
of different roles in the company,
to Controller in 1989, and was appointed (LLM). He was admitted to the Geneva
including Operations Manager, Business
in 1992 Advisor to the Director of Bar in 1984 and to the New York Bar
Development Manager and General
Strategic Planning. in 1989. He became a partner of Lenz &
Manager for SGS New Zealand.
He became Secretary of the Suez Staehelin in 1994.
Between 1987 and 1999, Chris held a
Executive Committee (1995-1997);
number of senior positions in Thailand, Other Activities and Functions
he was later appointed Senior Vice
Ghana, Singapore and Australia. He
President in charge of Planning, Control *Swiss National Bank, Member of
was appointed as Chief Operating
and Accounting. the Board since 2012
Officer of the South East Asia/Pacific
region in 2002 and was then appointed In 2000, Gérard Lamarche joined Stonehage Trust Holdings (Jersey)
Vice President for Minerals and NALCO (US subsidiary of the Suez Limited, Member of the Board since 2012
Environmental Services, a role he held Group and world leader in industrial
Pictet & Cie Group SCA, Chairman
for three years. water treatment) as Member of the
of the Supervisory Board since 2013
Board, Senior Executive Vice President
103
6. GOVERNANCE
The Directors bring a wide range of 3.2. CROSS INVOLVEMENT out all matters for which a decision
experience and skills to the Board. by the Board of Directors is required.
No member of the Board of Directors
They participate fully in decisions on key In addition to the decisions required
or of the Operations Council is also a
issues facing the Group. Their combined by Swiss company law, the Board
member of the executive bodies of
expertise in the areas of finance, of Directors approves the Group’s
entities or organisations with which
commercial law, strategy, and their strategies and key business policies,
the Group has material business or
respective positions of leadership in investments, acquisitions, disposals
commercial relations.
various industrial sectors are important and commitments in excess of
contributing factors to the successful delegated limits.
3.3. ELECTIONS AND TERMS OF OFFICE
governance of an organisation of the size
and complexity of SGS. The Articles of Association of SGS SA 3.5.1. Allocation of Tasks within
provide that each Member of the
The Board undertakes a periodic review the Board of Directors
Board of Directors, and among them
of the Directors’ interests in which The Chairman of the Board is elected
the Chairman of the Board of Directors
all potential or perceived conflicts of by the Annual Meeting of Shareholders.
and the Members of the Nomination
interests and issues relevant to their He plans and chairs the Board meetings,
Remuneration Committee, is elected
independence are considered. Based each year by the shareholders for a defines the agenda of the meetings and
on this review, the Board has concluded period ending at the next Annual General conducts the deliberations of the Board
that, with the exception of Christopher Meeting. Each Member of the Board of Directors. All Members of the Board
Kirk who was Group CEO immediately is individually elected. There is no limit of Directors participate in deliberations
before his nomination to the Board, all to the number of terms a Director may of the Board and participate equally
Directors (including the Chairman) are serve. The initial date of appointment in its decisions. Within the limits
independent from management and free of each Board Member is indicated in permitted by law or by the Articles of
of any relationship that could materially section 3.1. Association, the Board of Directors can
interfere with the exercise of their decide to delegate certain of its tasks
independent judgement. to standing or ad-hoc committees.
3.4. LIMITS ON EXTERNAL MANDATES
With the exception of the members
Other than Sergio Marchionne
At the 2015 Annual General Meeting, of the Nomination and Remuneration
(Group Chief Executive Officer between
the Shareholders modified the Articles Committee who are elected by the
February 2002 and June 2004) and
of Association of the Company in Shareholders, the members of other
Christopher Kirk (Group Chief Executive
compliance with the Ordinance against Committees are appointed by the Board.
Officer between November 2006
Excessive Compensation at Listed
and March 2015), none of the Directors Joint-Stock Companies (OaEC), for the
or their close relatives has or had any 3.5.2. Committees
purpose of introducing limits on the
management responsibility within number of mandates permissible to The following Committees have
the SGS Group. Board members. The new rules limit been established within the Board
None of the Members of the Board of the number of mandates which board of Directors:
Directors or their close relatives has or members can accept to no more than • Nomination and Remuneration
had any material business connections ten board memberships in entities
• Audit
with the Company or its affiliated outside the Group, out of which a
• Professional Conduct
companies. The remuneration of the maximum of five memberships in
Members of the Board of Directors is board of companies whose shares are Each Committee acts within terms
detailed in the Remuneration Report. traded on a stock exchange. Mandates of reference established by the Board
assumed at the request of a controlling of Directors and set out in the internal
The Chairman of the Board, jointly with
entity do not count towards the maxima regulations of the Company. The
members of the Board of Directors,
defined in the Articles of Association. minutes of their meetings are available
reviews periodically the performance of
In addition, the Articles of Association to all Directors.
the Board as a whole, of its Committees
set similar limits to participations in
and of each of its individual members.
board of associations and other non for Nomination and
On the basis of this periodic profit organisations. All Board members Remuneration Committee
assessment, changes to the have confirmed that they comply with
The Committee acts in part in an
composition of the Board membership these rules.
advisory capacity to the Board, and
are regularly proposed to the
in part as a decision-making body on
Company's Annual General Meeting 3.5. INTERNAL matters that the Board has delegated to
of Shareholders.
ORGANISATIONAL STRUCTURE the Committee. The Committee advises
This periodic performance evaluation The duties of the Board of Directors the Board of Directors on matters
is designed to ensure that the Board and its Committees are defined in the regarding the remuneration of the
is always in a position to provide an Company’s Articles of Association Members of the Board of Directors and
effective oversight and leadership role and in its internal regulations which management and on general policies
to the Group. are reviewed periodically. They set relating to remuneration applicable to
104
the Group. The Committee defines the Professional Conduct Committee request the attendance of members
conditions of share-based remuneration The Professional Conduct Committee of the management of the Group. The
plans or other plans for the allocation Board and each of the Committees are
assists the Board of Directors and
of shares, issued from time to time by authorised to hire external professional
Management in establishing policies
the Company. The Committee reviews advisors to assist them in matters within
relating to professional conduct
and approves the contractual terms of their sphere of responsibility.
and oversees their implementation.
the employment of the Chief Executive
The Group’s professional conduct To be adopted, resolutions need a
Officer and the other members of the
policies are embodied in the Code of majority vote of the members of the
management. The Committee reviews
Integrity which sets out the principles Board or Committee, with the Chairman
regularly, at least once a year, the
governing business conduct, which are having a casting vote.
compensation of each member of the
applied across the whole SGS Group. The Board of Directors held five physical
Operations Council. The Committee
These principles reflect the Business meetings in 2015 and one meeting
drafts the SGS Remuneration Report.
Principles for Countering Bribery issued by phone conference. Meetings of
In 2015, the following Directors by Transparency International and the Board of Directors had an average
served on the Nomination and Social Accountability International and duration of two and half hours. All
Remuneration Committee: incorporate the rules adopted by the members of the Board of Directions
• Shelby du Pasquier (Chairman) International Federation of Inspection attended every meeting of the Board in
Agencies (IFIA), the professional 2015, with the exception of one board
• August von Finck
association for the inspection industry. member being excused for one meeting.
• Ian Gallienne
In 2015, the following Directors served
on the Professional Conduct Committee: 3.6. DEFINITION OF AREAS
In 2015, the Committee held three
• Sergio Marchionne (Chairman) OF RESPONSIBILITY
meetings and passed three resolutions
in writing. Meetings of the Nomination • Shelby du Pasquier The Board of Directors is responsible
and Remuneration Committee were • Cornelius Grupp (since March 2015) for the ultimate direction of the Group.
attended by all members and had an In addition to the Board Members, The Board discharges all duties and
average duration of 1 hour. the Professional Conduct Committee responsibilities which are attributed
also comprises the Chief Executive to it by law. In particular, the Board:
Audit Committee Officer and the General Counsel & Chief • Leads and oversees the conduct,
The Audit Committee supports the Compliance Officer (General Counsel). management and supervision
Board of Directors in discharging its The head of Internal Audit attends all of the Group
duties in relation to financial reporting meetings of the Professional Conduct
• Determines the organisation
and internal control. Such duties include Committee. The Committee met
of the Group
consideration of the appropriateness three times in 2015, with an average
of accounting policies, the adequacy of duration of one hour and passed several • Assesses risks facing the business
internal controls and risk management resolutions in writing. All meetings were and reviews risk management and
and regulatory compliance. It is also attended by all members. mitigation policies
responsible for the supervision of the • Appoints and removes the Group’s
internal and external auditors of the 3.5.3. Working Methods of Chief Executive Officer and other
Group, each of which provides regular the Board and its Committees members of Management
reports to the Committee on findings
The Board of Directors and each • Defines the Group’s accounting
arising from their work. The Committee
Committee convene regularly scheduled and control principles
reports regularly to the Board of
meetings with additional meetings held • Decides on major acquisitions,
Directors on its findings.
as and when required, in person or by investments and disposals
In 2015, the following Directors served phone conference. The Board and the
on the Audit Committee: • Discusses and approves the Group’s
Committees may pass resolutions by
strategy, financial statements and
• Sergio Marchionne (Chairman) written consent.
annual budgets
• August François von Finck Each Board Member has the right to
• Prepares the General Meetings
request that a meeting be held or that
• Gérard Lamarche of Shareholders and implements
an item for discussion and decision be
• Peter Kalantzis. the shareholders’ resolutions
included in the agenda of a meeting.
In 2015, the Audit Committee held four Board and Committee members receive • Notifies the judicial authorities in the
meetings, with an average duration of supporting documentation in advance event of insolvency of the Company,
one and a half hours. Meetings were of the meetings and are entitled to as required by Swiss law
attended by all members, with one request further information from the In accordance with the Company’s
member being excused for one meeting. Management in order to assist them internal regulations, operational
to prepare for the meetings. The Board management of the Group, a function
and each of the Committees can which the Board of Directors has
105
6. GOVERNANCE
delegated, is the responsibility B. Governance Framework under their direct responsibility.

of the Operations Council. The The Board of Directors meets regularly
The Group has an established
Operations Council has the authority with the members of the Operations
governance framework which is
and responsibility to decide on all Council. During Board Meetings or
designed to oversee its operations
issues which are not attributed to Committee Meetings, Board members
and assist the Company in achieving
the Board of Directors. In the event can require any information concerning
its objectives. The main principles of
of uncertainty on a particular issue the Group. The Board reviews and
this framework include the definition
regarding the separation of responsibility monitors regularly and formally previous
of the role of the Board and its
between the Board of Directors and acquisitions and large investments as
Committees, an organisational structure
the Management, the final decision is well as the implementation of related
with documented delegated authority
taken by the Chairman of the Board. Group strategies.
from the Board to Management and
The Chairman is regularly informed of
procedures for the approval of major The Group has a dedicated Internal
the activities of the Operations Council
by the Chief Executive Officer, Chief investments, acquisitions and other Audit function, reporting to the
Financial Officer and General Counsel. capital allocations. Chairman of the Board and the Audit
Committee, which assesses the
The Operations Council is chaired by The Chief Executive Officer and the
effectiveness and appropriateness of
the Chief Executive Officer and consists Chief Financial Officer participate in
the Group’s risk management, internal
of those individuals entrusted with the the meetings of the Board of Directors
controls and governance processes
operational management of the Group’s and of the Audit Committee.
as well as the reliability of internal
activities, as follows: The Group Controller and the Head financial and operational information
• The Chief Operating Officers (COOs) of the Internal Audit Function and ensures that the standards and
are responsible for operations in the participate in the meetings of the policies of the Group are respected.
Group’s 10 regions (see section 1.1.) Audit Committee. The Head of Human Internal Audit reviews and identifies
Resources participates in the meetings areas of potential risk associated with
• The Executive Vice Presidents (EVPs)
of the Nomination and Remuneration the key business activities performed
are entrusted with the management
and development of the Group’s Committee and the General Counsel by a particular office, highlights
10 business lines (see section 1.1.) & Chief Compliance Officer attends all opportunities for improvement and
meetings of the Board of Directors and proposes constructive control solutions
• The Senior Vice Presidents (SVPs)
its Committees. The other members to reduce any exposures. All key
represent the principal Group support
of the Operations Council and other observations are communicated
functions (Finance, Human Resources,
members of management only to the Operations Council and the
IT, Communications & Investor
participate in the Board and Committee Chairman of the Board through formal
Relations, Corporate Development,
meetings by invitation. and informal reports.
Legal & Compliance and Strategic
Transformation). The Audit Committee is regularly
C. Information to the Board
The composition, role and organisation informed about audits performed and
of the Operations Council are detailed The Board of Directors is constantly important findings, as well as the
in section 4.1. informed about the operational and progress in implementing the agreed
financial results of the Group by way actions by management.
of detailed monthly management
3.7. INFORMATION AND CONTROL
reports which describe the performance D. General Counsel and
INSTRUMENTS VIS-À-VIS of the Group and its divisions. Chief Compliance Officer
THE MANAGEMENT
During each Board meeting, the Chief Furthermore, the Group has a
A. Responsibility of the Board Executive Officer and the Chief Financial Compliance Function, headed by the
Officer present a report to the Board General Counsel & Chief Compliance
The Board of Directors has ultimate
of Directors on the operations and Officer, who is a member of the
responsibility for the system
financial results, with an analysis of Professional Conduct Committee and
of internal controls established
and maintained by the Group deviations from the prior year and from has direct access to the Chairman of
and for periodically reviewing its current financial targets. the Board. The Compliance Function
effectiveness. Internal controls During Board Meetings, the Board is supports the implementation of a
are intended to provide reasonable updated on important issues facing compliance programme based on
assurance against financial the Group. The Chief Executive the SGS Code of Integrity, available
misstatement and/or loss, and include Officer, the Chief Financial Officer in 30 languages. The goal of the
the safeguarding of assets, the and the General Counsel & Chief programme is to ensure that the highest
maintenance of proper accounting Compliance Officer (hereafter “Senior standards of integrity are applied to
records, the reliability of financial Management”) attend all of the Board all of the Group’s activities worldwide
information and the compliance with of Directors meetings, while other in accordance with international best
relevant legislation, regulation and Operations Council members attend practices. The General Counsel &
industry practice. from time to time to discuss matters Chief Compliance Officer reports
106
violations of compliance rules every
semester to the Professional Conduct
4. OPERATIONS COUNCIL CARLA DE GEYSELEER (1968)
Belgian
Committee. The Committee monitors
The Operations Council (as defined
disciplinary actions taken and monitors Chief Financial Officer
in section 1.1.) meets on a regular
implementation of corrective actions.
basis, in principle at least six times EMBA, Executive Master in
a year. Between meetings, it holds Administration IMD, 2005
E. Other
regular phone conferences and may Master in Economics and Finance, 1991
In addition, the main business lines have make decisions on such calls or by
specialised technical governance units, Joined SGS in 2014
electronic voting.
which ensure compliance with internally
Previous work experience
set quality standards and industry
4.1. MEMBERS OF
best practices. Formal procedures are 2012 – 2014: Chief Financial Officer,
THE OPERATIONS COUNCIL
in place for both internal and external Vodafone Libertel, BV, The Netherlands
auditors to report their findings and Members of the Operations Council
2010 – 2012: Director Financial
recommendations independently to bring to the Group years of experience
Controlling, Vodafone GmbH, Germany
the Board’s Audit Committee. in their respective field and area of
expertise. They come from a diversity 2007 – 2010: Chief Financial Officer
of backgrounds which reflects the DHL Express Benelux, The Netherlands
F. Risk Assessment
multiple aspects of the Group. The 1995 – 2007: Various finance positions
The Board conducts on a yearly basis
Group strives to promote talents DHL Express
an assessment of the risks facing the
internally and encourages women to
Group. This process is conducted with 1991 – 1995: Senior Auditor, Ernst &
assume senior leadership positions.
the active participation and input of the Young, Belgium
The members of the Operations
Management. Once identified, risks are
Council at 31 December 2015 were
assessed according to their likelihood,
as follows:
severity and mitigation. OLIVIER MERKT (1962)
The Board deliberates on the adequacy Swiss
of measures in place to mitigate
FRANKIE NG (1966)
and manage risks and assigns General Counsel and
Swiss/Chinese
responsibility to designated managers Chief Compliance Officer
for implementation of such measures. Chief Executive Officer Doctorate in Law, admitted to the bar
As part of this process, the ownership (since March 2015) in Switzerland
and accountability for identified risks are
EVP Life Science, ad interim Joined SGS in 2001
approved by the Board.
BA in Economics and Electronics
The implementation of such actions Previous responsibilities
Engineering
is audited by Internal Audit. These
2006 – 2008: VP, Corporate Development
findings are communicated to the Joined SGS in 1994
Board of Directors so that progress 2001 – 2006: Senior Counsel
and identified risks can be monitored Previous responsibilities
objectively and independently from Other work experience
2011 – 2015: EVP, Industrial Services
Management. The risks identified and 1993 – 2001: Senior Manager Legal,
2005 – 2011: EVP, Consumer Testing
monitored by the Board fall broadly into Ernst & Young, Geneva
Services
three categories: first, environment risk
which includes circumstances outside 2002 – 2004: Managing Director,
the Group's direct sphere of influence, US Testing
such as competition and economic or 2000 – 2002: Director, Consumer
political landscape; second, process Testing Services, China and Global
risks which include risks linked to Hardlines
the operations of the business, the
1997 – 2000: Operations Manager,
management of the Group and the
Consumer Testing Services, China
integrity of its reputation in the market
place; and thirdly, risks associated with
information and decision-making.
107
6. GOVERNANCE
TEYMUR ABASOV (1972) JEAN-LUC DE BUMAN (1953) PAULINE EARL (1961)

Azerbaijani Swiss British
COO, Eastern Europe and Middle East SVP, Corporate Communications, COO, Western Europe
Degree in Electrical Engineering Investor Relations and Corporate BSc in Food Science
Development
Joined SGS in 1994 Joined SGS in 1995
Legal studies
Previous responsibilities Joined SGS in 1998 Previous responsibilities
2006 – 2007: Managing Director, 2007 – 2010: Managing Director,
Kazakhstan & Caspian Sub-Region Other work experience United Kingdom
2004 – 2006: Managing Director, 1978 – 1998: Country Head Switzerland, 2004 – 2007: SSC Business Manager,
Azerbaijan and Georgia Sales Fixed Income, UBS United Kingdom
2003 – 2004: Managing Director,
Georgia
HELMUT CHIK (1966) ALEJANDRO
2001 – 2003: Operations Manager, Oil
Gas and Chemicals Services, Azerbaijan Chinese GOMEZ DE LA TORRE (1959)
Peruvian
COO, China and Hong Kong
Master in Business Administration COO, South America
DOMINIQUE BEN DHAOU (1965)
Joined SGS in 1991 Degree in Business Administration,
Swiss
Postgraduate Specialisation in
Previous responsibilities International Commerce
SVP, Human Resources
2003: Managing Director, Hong Kong Joined SGS in 1986
Degree in Hotel Industry Management
2002: Global Business Manager,
Joined SGS in 2001 Previous responsibilities
Softline, Consumer Testing Services
Previous responsibilities 2000 – 2001: Director Greater China, 1996 – 2001: National Chief Executive,
SBU Softline, Consumer Testing Services Peru and Manager Central Sub-Region,
2008 – 2010: Vice President,
Latin America (1998 – 2001)
Human Resources 1999: Director, Hong Kong, Consumer
2003 – 2005: additional role as Africa Testing Services
Regional Human Resources Manager
DERICK GOVENDER (1970)
2003 – 2008: Assistant Vice President
OLIVIER COPPEY (1972) South African
Human Resources
2001 – 2003: International Compensation Swiss EVP, Minerals Services
and Benefits and HQ HR Manager (since October 2015)
EVP, Agricultural Services
Diploma in Analytical Chemistry
Other work experience MSc Economics
Post graduate in Business Management
International Human Resources positions: Joined SGS in 1994
Joined SGS in 2002
2000 – 2001: Firmenich
Previous responsibilities
1999 – 2000: Novartis Consumer Health Previous responsibilities
2009 – 2013: Vice President Seed &
1991 – 1998: Levi Strauss Crop, Agricultural Services 2014 – 2015: Minerals Manager, Chile
2006 – 2008: Vice President North 2010 – 2014: VP Minerals Africa

America, Agricultural Services, USA 2007 – 2010: Regional Minerals
1994 – 2006: Managerial positions, Manager SGS Southern Africa
Agricultural Services, Switzerland/
India/Cameroon
108
KIMMO FULLER (1967) 1999 – 2003: Head of Global Marketing, FRANCOIS MARTI (1968)
Trade Assurance Services (now
American Swiss
Governments and Institutions Services)
COO, North America EVP, Industrial Services
Other work experience
(since October 2015) (since October 2015)
1995 – 1998: CEO, Unilabs International
Bachelor of Science degree in Civil Degree in International Relations
Engineering; Masters in Business Initially joined SGS in 2003, rejoined
Administration in 2011
Joined SGS in 2014 ROGER KAMGAING (1966)
Swiss Previous responsibilities
Previous responsibilities 2012 – 2015: EVP Systems and
2014 – 2015: Managing Director, USA EVP, Governments and Services Certification
Institutions Services
2011 – 2015: SVP, Strategic Transformation
Other work experience Master in Commercial Law and Tax
2003 – 2005: VP Continuous Improvement
2013 – 2014: Regional Director, Master in Auditing and Consulting
Rolls Royce Plc Other work experience
Initially joined SGS in 1997, rejoined
2011 – 2013: Regional Director, in 2014 2005 – 2011: CEO Fiat Services
Elliott Group Senior Manager PWC and IBM
2007 – 2011: Business Unit Director, Previous responsibilities
Wood Group 2000 – 2012: Governments and
Institutions Services, Global Head
1999 – 2007: General Manager, JEFFREY MCDONALD (1964)
General Electric. Business Development
Australian
1997 – 2000: Governments and
Institutions Services, Sales Manager EVP, Systems and Services Certification
DIRK HELLEMANS (1958) (since October 2015)
Other work experience
Belgian Postgraduate Diploma in Education
2012 – 2014: Kamgaing Associates
(Consulting) and Time (African Business Joined SGS in 1995
COO, Northern and Central Europe /
Incubator)
Southern Central Europe ad interim Previous responsibilities
Degree in Chemical Engineering and 2007 – 2015: COO, North America
Master in Business Administration
THOMAS KLUKAS (1965) 2004 – 2007: EVP, Systems and
Joined SGS in 1988 Services Certification
German
Previous responsibilities 2003: Global Project Manager,
EVP, Automotive Services Systems and Services Certification
2004 – 2012: COO, Central & North
West Europe PhD Engineering Science, 1995 – 2003: Systems and Services
Master Business Administration Certification, South Eastern Asia and
2002 – 2004: COO, North West Europe Pacific, Regional Manager (Bangkok)
Joined SGS in 2006
1997 – 2002: Managing Director, Belgium
2008 – 2010: VP Automotive Services
FRÉDÉRIC HERREN (1955)
2006 – 2008: Automotive Services
Swiss Regional Manager, North America
COO, Africa Other work experience

Master in Economics 2000 – 2006: Senior Manager DEKRA SE
Initially joined SGS in 1986, rejoined (Germany and USA)
in 1999
2006 – 2014: EVP, Governments and
Institutions Services
2003 – 2006: EVP, Automotive Services
109
6. GOVERNANCE
PETER POSSEMIERS (1962) 2004: COO, North America and respectively EVP Minerals Services
Managing Director, Canada and EVP Consumer Testing Services,
Australian and Belgian
2001 – 2004: Managing Director, and in October 2015, the appointment
EVP, Environmental Services Kazakhstan & Manager Caspian Region of Kimmo Fuller as COO North America.
BSc Chemistry and Microbiology

4.2. OTHER ACTIVITIES AND FUNCTIONS
Joined SGS in 1983
RICHARD SHENTU (1968) The following list presents all material
Previous responsibilities activities in governing and supervisory
Chinese
boards, management positions and
2007 – 2012: Global Sales, OGC
consultancy functions, official tenures
2005 – 2007: Managing Director, Korea EVP Consumer Testing Services
and political positions held by each
(since September 2015)
2003 – 2005: OGC Business member of the Operations Council
Development Manager Asia Pacific, China Textile Engineer, Masters in outside the Group, both in Switzerland
Business Administration, and abroad.
2001 – 2003: OGC Business Development PhD in Management Science
Manager Asia Pacific, Australia
Joined SGS in 1990 CARLA DE GEYSELEER
1998 – 2000: OGC Manager, Singapore
Previous responsibilities Macintosh Retail Group (NL), Member
of the Supervisory Board and Chair
2010 – 2015: Managing Director, China
of the Audit Committee
MALCOLM REID (1963) 2005 – 2011: Vice President CTS, CTS
British Director and Executive Director China JEAN-LUC DE BUMAN
2012 – 2015: Vice President Association pour le Développement des
COO South East Asia and Pacific
Industrial Services Compétences Bancaires, Geneva (CH),
(since October 2015)
2002 – 2004: CTS Hardline SBU director Member of the Board since 1999
BSc Chemistry
China and Hong Kong Hyposwiss Private Bank Genève SA,
Joined SGS in 1987 Geneva (CH), Member of the Board
since 2006
DENNIS YANG (1949) Federal Accreditation Commission,
2012 – 2015: EVP, Consumer Bern (CH), Member since 2012
Testing Services Taiwanese
2008 – 2011: EVP, Systems and COO, East Asia OLIVIER COPPEY
Services Certification Swiss Trading and Shipping Association,
Master in Business Administration
2005 – 2007: Managing Director, Australia Geneva (CH), Member of the Executive
Joined SGS in 1975
Board (since 2015)
2000 – 2005: Managing Director, Thailand
1997 – 2000: Managing Director, Previous responsibilities
ALEJANDRO GOMEZ DE LA TORRE
Philippines 2000 – 2002: Managing Director, Taiwan
Swiss-Peruvian Chamber of Commerce,
1992 – 2000: Assistant General Lima (Peru), Director
Manager, Taiwan
ALIM SAIDOV (1964) THOMAS KLUKAS
Azerbaijani and Canadian In the course of 2015, Michael Belton, CITA, International Motor Vehicle
EVP Minerals Services resigned from Inspection Committee, Brussels (BE),
EVP, Oil, Gas and Chemicals Services
his position and left the Group. Ladislav Member of the Bureau Permanent
PhD in Science Papik, COO South East Europe left the since 2011
Joined SGS in 1993 Operations Council to assume a regional
role within the Group. Anthony Hall, COO FRANÇOIS MARTI
Previous responsibilities South East Asia & Pacific stepped down Swiss Philanthropy Foundation,
from the Operations Council to assume Member of the Board since 2013
2007 – 2013: EVP, Oil, Gas and Chemicals
other responsibilities in the Group.
Services and Environmental Services
The Nomination and Remuneration
2005 – 2007: COO, Eastern Europe & Committee approved in July 2015 the
Middle East internal promotion and appointment of
Derick Govender and Richard Shentu,
110
4.3. LIMITS ON EXTERNAL MANDATES
5. COMPENSATION, 5.1.1. Rules on Performance-Related
Pay and Allocation of Equity-Linked
At the 2015 Annual General Meeting, SHAREHOLDINGS Instruments
the Shareholders modified the Articles
of Association of the Company in
AND LOANS At the 2015 Annual General Meeting,
compliance with the Ordinance against the principles of the variable
Excessive Compensation at Listed 5.1. CONTENT AND METHOD OF remuneration and the allocation of
Joint-Stock Companies (OaEC), DETERMINING THE COMPENSATION shares or equity-linked instruments to
for the purpose of introducing limits AND THE SHAREHOLDING the members of the Operations Council
on the number of mandates permissible PROGRAMMES were introduced in the Company's
to members of the Operations Council. Articles of Association (please refer
The Group’s overriding compensation
The new rules limit the number of to the Remuneration Report for a
policies are defined by the Board of
mandates which members of the description of the Company’s rules
Directors. The objectives of these
Operations Council can accept, with in the matter).
policies are twofold: a) to attract and
the prior consent of the Board of retain the best talent available in the
Directors, to no more than four board 5.1.2. Rules on Loans, Credit Facilities
industry and b) to motivate employees
memberships in entities outside the and Post-Employment Benefits
and managers to create and protect value
Group, out of which a maximum of one for shareholders by generating long-term Loans granted to members of the
membership in board of companies sustainable financial achievements. governing bodies of the Company may
whose shares are traded on a stock not exceed one year of remuneration
In line with these principles, Board
exchange. Mandates assumed at the and must be granted at market
members are entitled to a fixed fee
request of a controlling entity do not conditions. As of 31 December 2015,
which takes into account their level
count towards the maxima defined in no such loan or credit facility had been
of responsibility. Members of the
the Articles of Association. In addition, granted to any member of the Board
Operations Council receive a fixed
the Articles of Association set limits to or management.
remuneration and are entitled to a
participations in board of associations
performance-related annual bonus
and other non-profit organisations to 5.1.3. Rules on Vote on Pay
and Long-Term Incentive plans.
no more than ten such memberships.
The Annual General meeting approves
In compliance with the requirements
the following matters related to
4.4. MANAGEMENT CONTRACTS of the Ordinance against Excessive
the compensation of the Board and
Compensation at Listed Joint-Stock
The Company is not party to any Operations Council:
Companies (OaEC), the Annual General
management contract delegating • It approves the fixed fees payable to
Meeting approves the compensation
management tasks to companies the Board of Directors until the next
payable to the Board and to the
or individuals outside the Group. Annual General meeting;
Operations Council. The rules on vote
on pay applicable in the Group are • It approves in advance the fixed
explained below. remuneration payable to the
The ultimate responsibility for Operations Council during the next
defining remuneration policies and financial year;
deciding on all matters relating to • It approves the total aggregate
remuneration rests with the Board of amount payable to the Operations
Directors, subject to decisions which Council for the performance-related
require binding resolutions of the annual bonus related to the prior year;
Annual General Meeting. The Board
• It approves the maximum amount
of Directors is assisted in its work
payable under Long-Term Incentive
by a Nomination and Remuneration
Committee, which is elected by plans to be introduced by the Company.
the Annual General Meeting. Resolutions of such matters are binding
on the Board of Directors. In addition,
the Annual General Meeting is invited
to cast a non-binding vote on the
Remuneration Report which describes
the Company’s remunerations policies.
111
6. GOVERNANCE
6. SHAREHOLDERS’ 6.4. AGENDA 8. AUDITORS

PARTICIPATION The Agenda of the General Meeting
of Shareholders is issued by the Board
RIGHTS of Directors. Shareholders representing
8.1. DURATION OF THE MANDATE
AND TERM OF OFFICE
shares with a minimum par value of
All registered shareholders receive a CHF 50 thousand may request the Following a competitive process in 2000,
copy of the half-year and full-year results inclusion of an item on the agenda of Deloitte SA was appointed auditor of the
upon the publication of such results by the General Meetings, provided that such Company and of the SGS Group by the
the Company. They can request a copy a request reaches the Company at least Annual General Meeting of Shareholders
of the Company’s Annual Report and are 40 days prior to the General Meeting. upon recommendation of the Board of
personally invited to attend the Annual Directors. The auditors of the Company
General Meeting of Shareholders. are subject to re-election at the Annual
6.5. REGISTRATION
General Meeting every year. The current
IN THE SHARE REGISTER
6.1. VOTING RIGHTS AND lead auditor, James Baird, has acted in
The Company does not impose any this capacity since 2012. He assumed
REPRESENTATION RESTRICTIONS
deadline for registering shares prior to this position after agreement by the
All registered shareholders can a General Meeting. However, a technical Company's Audit Committee
attend the General Meetings of notice of two business days is required
Shareholders and exercise their right to process the registration. 8.2. AUDIT FEES
to vote. A shareholder may also elect
to grant power of attorney to an Total audit fees paid to Deloitte for the
independent proxy appointed by the audit of the Company and the Group
Company or to any other registered
7. CHANGE OF financial statements in 2015 amounted to
shareholder. There are no voting CONTROL AND CHF 5.3 million (2014: CHF 6.0 million).
restrictions, subject to the exclusion DEFENCE MEASURES
of nominee shareholders representing 8.3. ADDITIONAL FEES
undisclosed principals, as detailed No restriction on changes in control An aggregate amount of CHF 1.3 million
in section 2.6. Shareholders have is included in the Company’s Articles (2014 CHF 1.3 million) was paid to
the opportunity to give general of Association. Deloitte for other professional services,
or specific voting instructions to
unrelated to the statutory audit
the independent proxy. The voting
7.1. DUTY TO MAKE AN OFFER activity. This amount includes CHF 0.7
of resolutions by electronic votes
In the absence of any specific rules in million (2014: CHF 0.7 million) for tax
is authorised by the Articles of
the Company’s Articles of Association, compliance services and CHF 0.6 million
Association, within the modalities
any investor or group of investors (2014: CHF 0.6 million) for non-statutory
defined by the Board of Directors.
acquiring more than 33.3% of the reporting and assurance services.
shares and voting rights of the Company
6.2. STATUTORY QUORUMS
has the duty to make a public offer in 8.4. SUPERVISORY AND CONTROL
The General Meeting of Shareholders compliance with the applicable Swiss INSTRUMENTS VIS-A-VIS THE AUDITORS
can validly deliberate regardless of takeover rules.
The Audit Committee is responsible for
the number of shares represented
evaluating the external auditor on behalf
at the meeting. Resolutions are adopted
7.2. CLAUSES ON CHANGE OF CONTROL of the Board of Directors, and conducts
by the absolute majority of votes cast.
There are no general plans or standard assessments of the audit services
If a second ballot is necessary,
agreements offering specific protection provided to the Group during its regular
a relative majority is sufficient,
to Board Members, Senior Management meetings. It meets with the auditor at
unless Swiss company law mandates
or employees of the Group in the event least three times per year (four times
a special majority.
of a change of control, subject to the in 2015), including private sessions
standard rules regarding termination without the presence of management.
6.3. CONVOCATION OF GENERAL
of employment. The duties of the Committee include
MEETINGS OF SHAREHOLDERS consideration of the audit plan, regular
The rules regarding the convocation of assessment of the performance of
General Meetings of Shareholders are the auditor and approval of audit fees on
in accordance with Swiss company law. the basis of the amount of work required
in order to perform the audit.
112
The auditor regularly presents his
findings, both during the deliberations
of the Audit Committee and in written
reports, to the attention of the Board
of Directors which summarise key
findings. The Group strives to safeguard
and support the independence of the
auditor by avoiding conflicts of interests.
In applying this policy, the attribution
of other consultancy assignments is
carefully reviewed to ensure that such
assignments do not endanger the
auditor’s independence.
9. INFORMATION POLICY
The policy of the Group is to provide
individual and institutional investors,
directly or through financial analysts,
business journalists or investment
consultants (financial community)
and the employees with financial and
business information in a consistent,
broad, timely and transparent manner.
The Group website has a section fully
dedicated to investor relations,
www.sgs.com/ir where all financial
information and presentations are
available. This includes an updated
version of the articles of association,
current information on share buy-back
programmes and minutes of
shareholders’ meetings. SGS meets
regularly with institutional investors,
holds results presentations, roadshows,
presentations at broker-sponsored
country or industry conferences as
well as one-on-one meetings.
The group publishes consolidated
half-year unaudited and yearly audited
results in print and on-line formats.
The annual report is published in English
and is available upon order on the
internet. The current list of publication
dates is available on the internet.
The group acknowledges the directives
on the independence of financial
research issued by the Swiss bankers
association, particularly articles 26 and
29-32. In addition, the Group complies
with rules regarding information and
reporting of the federal act on stock
exchange and securities trading, and
the ordinance on stock exchanges and
securities trading.
113
7. SGS REMUNERATION REPORT
The SGS Remuneration Report 1. INTRODUCTION 4. REMUNERATION

provides an overview of the SGS BY THE NOMINATION AWARDED TO THE
remuneration model, its principles AND REMUNERATION BOARD OF DIRECTORS
and programs and the related COMMITTEE
governance framework. The
report also includes details on 5. REMUNERATION
the remuneration of the Board of 2. COMPANY’S AWARDED TO
Directors and of the Operations REMUNERATION THE CEO, SENIOR
Council related to the 2015 POLICY AND MANAGEMENT
business year. GOVERNANCE AND OTHER MEMBERS
The SGS Remuneration Report OF THE OPERATIONS
has been prepared in compliance
2.1. Remuneration Policy COUNCIL
and Principles
with the Ordinance against 2.2. Remuneration Governance 5.1. Performance in 2015
Excessive Compensation in Stock
2.2.1. Nomination and 5.2. Cash Compensation
Exchange listed Companies ("the Remuneration Committee
5.3. Share-Based Compensation
Ordinance"), the Swiss Exchange 2.2.2. Shareholders' Engagement
5.3.1. Restricted Shares
(SIX) Directive on Information 2.2.3. Method of Determination
5.3.2. Long-Term Incentive Plan
relating to Corporate Governance of Compensation –
of 1 September 2014 and the Benchmarking 5.3.3. Discontinued Share
Option Plans
principles of the Swiss Code
5.4. Total Compensation to
of Best Practice for Corporate
3. REMUNERATION the Operations Council,
Governance of economiesuisse.
MODEL Senior Management and
Chief Executive Officer
3.1. Structure of Remuneration 5.5. Other Compensation
of the Board of Directors 5.5.1. Severance Payments
3.2. Structure of Remuneration 5.5.2. Loans to Members
of the Operations Council of Governing Bodies
3.2.1. Base Salary
3.2.2. Short-Term Incentive
3.2.3. Long-Term Incentive
3.2.4. Shareholding Ownership
Guideline
3.2.5. Benefits
3.2.6. Employment Contracts
3.2.7. Timeline of Remuneration
116
1. INTRODUCTION More detailed information on the
remuneration model is provided in
BY THE NOMINATION section 3 of this report.
AND REMUNERATION Furthermore, following the provisions
COMMITTEE of the Ordinance issued by the Swiss
Federal Council, we have implemented
The Nomination and Remuneration the binding vote on compensation
Committee is pleased to present its amounts at the Annual General Meeting
2015 Remuneration Report to you. in 2015. At the forthcoming Annual
General Meeting, we will continue with
During the year, the Committee
the same "say-on-pay" vote structure:
has concentrated its efforts on
the implementation of the new • Consultative vote on the
remuneration system developed as a Remuneration Report;
result of a thorough review conducted • Binding vote on the prospective
in 2014. The new remuneration model remuneration amount of the Board
is strongly aligned to the business of Directors until the next Annual
strategy of profitable growth and to General Meeting;
the expectations of our shareholders.
The following changes are effective
• Binding vote on the retrospective
variable remuneration of the
from 2015 onwards:
Operations Council members
of the previous business year;
• Introduction of:
• Binding vote on the prospective
Grant of shares for both
fixed remuneration amount of the
Short-Term and Long-Term
Operations Council members for 2017.
Incentive plans;
The Articles of Association of SGS have
Balanced mix of performance
been revised accordingly and outline
conditions in the Short-Term
the remuneration framework as well
and Long-Term Incentive
as the structure of the binding votes
plans, including revenue goals,
on remuneration. The revised Articles
profitability objectives, cash flow
of Association were approved at the
and share price performance;
Annual General Meeting in 2015.
Relative performance
On the following pages, you will find
measurement against peer
detailed information about our new
companies in the Long-Term
remuneration model, its principles and
Incentive plan;
programs and the remuneration awarded
Share ownership guideline to the Board of Directors and to the
for the members of the Operations Council related to business
Operations Council. year 2015. We hope that you find this
• Discontinuation of: report informative and are confident
that our approach to executive pay is
Any stock options program;
fully aligned with the strategy, the wider
Discretionary bonus; competitive market benchmarks, the
Incentive scheme for the Chairman performance of the Company and with
of the Board of Directors. the interests of our shareholders.
Shelby du Pasquier
Chairman
117
2. COMPANY’S towards the executive management,

the members of the Board of Directors
and to motivate them to create and
protect value for our shareholders by
REMUNERATION receive a fixed remuneration only. driving long-term sustainable financial
POLICY AND success. The remuneration policy is
GOVERNANCE Remuneration of the built on core principles that are aligned
Executive Management to the Company’s business strategy of
profitable growth and that aim to drive
2.1. REMUNERATION POLICY The Company's remuneration policy and support the Company’s core values
AND PRINCIPLES applicable to the executive management of passion, integrity, entrepreneurship
(Operations Council) is defined by and innovative spirit.
Remuneration of the Board
the Board of Directors with two main
of Directors objectives: to attract and retain the best Our remuneration system operates
In order to guarantee their independence talents available in the industry, according to four principles
in exercising their supervisory duties described below.
Y • PA
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118
2.2. REMUNERATION GOVERNANCE plans, as well as the financial targets all matters relating to the remuneration
relevant to any incentive plan. of these executives.
2.2.1. Nomination and
Remuneration Committee The Board of Directors is assisted in its The following charts summarise
work by a Nomination and Remuneration the authorisation levels for the main
The Board of Directors is responsible
Committee (“the Committee”), which decisions relating to the compensation
for determining the remuneration
consists of independent non-executive of the Board and the Operations
of the Chairman and the Directors.
Directors. The Committee acts in part in Council members. When reviewing
It also decides on the remuneration
an advisory capacity to the Board, and and deciding on executive remuneration
and terms of employment of the Chief
in part as a decision-making body on policies, the Committee and the Board
Executive Officer, based upon the
matters that the Board has delegated have access to Group Human Resources
recommendations of the Nomination
to the Committee. The Committee staff and may use third party consultants
and Remuneration Committee. In
reviews regularly, at least once a year, specialising in compensation matters.
addition, the Board of Directors defines
the compensation of each member of In 2015, neither the Committee
general executive remuneration policies,
the Operations Council (including the nor the Board had recourse to such
including the implementation and terms
Chief Executive Officer), and decides on external advisors.
and conditions of Long-Term Incentive
Authorisation levels:
SUBJECT MATTER RECOMMENDATION APPROVAL
Aggregate remuneration amount of the Board of Directors Board of Directors AGM (binding vote)
Individual remuneration of the members of the Board of Directors
Remuneration Committee Board of Directors
including the Chairman of the Board
Aggregate fixed remuneration amount of the Operations Council Board of Directors AGM (binding vote)
Individual remuneration of the CEO Remuneration Committee Board of Directors
Individual remuneration of the Operations Council members CEO Remuneration Committee
Establishment of Long-Term Incentive plans Remuneration Committee Board of Directors
Aggregate value of the grants awarded under the Long-Term
Board of Directors AGM (binding vote)
Incentive plan for Operations Council members
Setting of annual financial targets for variable remuneration
CEO Board of Directors
of Operations Council members
Remuneration report Board of Directors AGM (consultative vote)
The following Directors served on Council, the CEO and the Senior VP opportunity to express their opinion
the Committee in 2015: for HR, may be asked to attend the about our remuneration model.
• Shelby du Pasquier (Chairman) meetings in an advisory capacity. In addition, as required by the
They do not attend the meeting Ordinance, the aggregate amounts of
• Ian Gallienne when their own compensation and/or the remuneration to be paid to members
• August von Finck performance are being discussed. of the Board of Directors and to the
In 2015, the Committee met three Operations Council are subject to the
times and settled two resolutions by 2.2.2. Shareholders’ Engagement approval of the shareholders in form
teleconference during the year. All In the last two years, based on the of a binding vote on remuneration.
members attended all meetings and feedback received from our shareholders The procedure on the vote is defined
teleconference calls. The Chairman and their representatives, we have in the Articles of Association that
of the Nomination and Remuneration made significant efforts to improve the were approved at the 2015 Annual
Committee reports to the Board of disclosure of remuneration in terms of General Meeting and foresees separate
Directors after each meeting on the transparency and level of detail provided votes on (i) the Board remuneration for
activities of the Committee. The about the remuneration principles the period until the next Annual General
minutes of the Committee meetings and programs. The positive outcome Meeting (ii) the fixed remuneration of the
are available to the members of the of the consultative vote on the 2014 Operations Council for the next calendar
Board of Directors. As a general rule, Remuneration Report indicates that year (iii) the variable compensation
the Chairman of the Board of Directors shareholders welcome the progresses awarded to the Operations Council in
attends the meetings of the Committee, made. We will continue to submit the respect to the previous calendar year
except when matters pertaining to his Remuneration Report to a consultative and (iv) any award to be granted to the
own compensation are being discussed. shareholders’ vote at the Annual General Operations Council under the Long-Term
Selected members of the Operations Meeting, so that shareholders have an Incentive plan.
119
SHAREHOLDER VOTE 2015 2016 2017

AT THE 2016 AGM
Consultative vote on 2015 Remuneration policy
Remuneration Report and principles
Binding vote on remuneration
Remuneration
of Board
Binding vote on fixed
Fixed remuneration
remuneration of OC
Binding vote on variable
Variable remuneration
remuneration of OC
Vote at AGM 2016
The binding votes on the aggregate In addition, the Board of Directors 2.2.3. Method of Determination
compensation amounts combined with may implement Long-Term Incentive of Compensation – Benchmarking
a consultative vote on the remuneration plans in order to motivate executives
As a global business in a broad range of
report reflect our true commitment to reach strategic objectives for a
sectors, SGS’ business success is driven
to provide our shareholders with period which exceeds one year. Such
by the commitment and engagement of
a far-reaching “say-on-pay”. plans may provide for the allotment
its employees. Our remuneration policy
As required by the Ordinance, the of shares or conversion rights or
must take account of both global and
Articles of Association of SGS have other equity instruments, which are
local practices. We therefore compare
been revised and approved by the contingent upon the objectives set by
our practices with those of other similar
shareholders at the Annual General the Board of Directors being reached.
global organisations. The Group performs
Meeting in 2015. The Articles of Terms and conditions of such plans are
periodic benchmarks against companies
Association include the following determined by the Board of Directors.
which satisfy the following criteria:
provisions on remuneration (details • Additional amount for payments
• Competitors in the testing, inspection
available on www.sgs.com/governance: to members of the Operations
and certification industry, such as
• Principles of remuneration: The Council appointed after the vote on
Bureau Veritas, Intertek, DNV-GL
members of the Board of Directors remuneration at the Annual General
and TÜVs.
receive a fixed remuneration. The Meeting: for the remuneration
of members of the Operations • All SMI listed companies
amount of the remuneration depends
on the tasks performed within the Council who have been appointed • Internationally active companies within
Board of Directors and in particular after the approval of the aggregate and outside Switzerland which operate
the participation in the committees remuneration amount by the Annual in one or more of the industry sectors
of the Board of Directors. The General Meeting, an amount of up in which SGS is active, including the
remuneration may be paid in cash to 25% of the maximum aggregate energy, mining, industrial, chemical,
or in shares of the Company. remuneration amount approved for medical goods, pharmaceutical,
the Operations Council is available durable and non-durable goods,
• The members of the Operations
without further approval of the Annual and food sectors, such as Alstom,
Council may receive a fixed and General Meeting. Glencore-Xstrata, Siemens, DuPont,
a variable remuneration. The fixed
• Loans, credit facilities and post- Baxter, Actelion, Schindler and Amcor.
remuneration includes the annual
base salary, submitted for approval employment benefits for members The elements of executive remuneration
to shareholder vote as per table of the Board of Directors and of the benchmarked include annual base salary,
above, the employer’s contributions Operations Council: loans and credits allowances, short-term and long-term
to pension fund and/or health and to a member of the Board of Directors incentive compensation and benefits.
life insurance, benefits in kind or executive management may only be To ensure proper benchmarking, we use
and seniority bonuses, as required granted at market conditions and may a proprietary job sizing methodology.
by law and company policies. not, when they are granted, exceed the Since more than one-third of our
The variable remuneration is linked most recent total annual remuneration Operations Council members are
to the achievement of financial or of the member in question. based outside Switzerland, we utilise
non-financial performance objectives information published by reputable
set by the Board of Directors. Variable data providers, including Mercer
compensation may be paid in cash and Towers Watson, who are able
or in shares or conversion rights or to supply information on both a local
other equity instruments, at conditions and a global basis.
determined by the Board of Directors.
120
3. REMUNERATION MODEL
3.1. STRUCTURE OF REMUNERATION OF THE BOARD OF DIRECTORS
In order to guarantee their independence in exercising their supervisory duties towards the executive management, the members
of the Board of Directors receive a fixed remuneration only. They are entitled to a fixed annual board membership fee and additional
annual fees for the participation in board committees. They do not receive additional compensation for attending meetings and do
not receive any variable remuneration, options or shares.
The Chairman receives a fixed annual fee and additional fixed fees for chairing the Audit Committee and the Professional
Conduct Committee.
REMUNERATION OF THE BOARD OF DIRECTORS
COMMITTEE FEE
FIXED ANNUAL FEE
(PER COMMITTEE)
300 000 30 000 Chairman

+
150 000 30 000 Board members
Directors receive an annual fixed fee 3.2. STRUCTURE OF REMUNERATION goals. Each year, an annual business
of CHF 150 000 whilst the Chairman OF THE OPERATIONS COUNCIL plan is derived from the long-term
receives CHF 300 000. In addition strategic plan and sets the business
The remuneration earned by the Chief
members of a board committee receive objectives to be achieved during the
Executive Officer and by members of
CHF 30 000 for each committee. year. The annual Short-Term Incentive is
the Operations Council comprises:
The remuneration is paid in cash in two used to reward the annual achievements
(i) a fixed base salary, (ii) an annual
instalments, in June and in December against the business plan while the
Short-Term Incentive, settled partly
for the calendar year. Social charges Long-Term Incentive is used to drive
in cash and partly in restricted shares,
are applied to the above amounts. sustained performance aligned with
(iii) a Long-Term Incentive, and (iv) other
Members of the Board of Directors do the Group’s long-term strategic plan.
benefits such as retirement, insurances
not hold service contracts and are not and perquisites. The Company considers that the
entitled to any termination or severance payment of variable remuneration in the
The Group’s long-term strategic plan
payments. They do not participate in form of shares subject to restriction and/
drives all the activities in the business
the Company’s benefit schemes and or vesting period is a key mechanism to
and is reflected in the remuneration
the Company does not make any align the management’s incentives to
strategy that will assist the Group in
pension contributions on their behalf. the long-term interests of shareholders.
achieving its financial and other business
121
The table below summarises the various components of the compensation of Operations Council members, including
the Chief Executive Officer:
REMUNERATION REMUNERATION PERFORMANCE

ELEMENT VEHICLE DRIVERS MEASURES PURPOSE PLAN PERIOD
Base Salary Monthly Position and n/a Attract and retain Continuous
cash salary experience, key executives
market practice
(benchmarking)
Short-Term 50% cash Annual financial Group Revenue, Group Pay for 1 year
Incentive 50% restricted performance, NPAT, Group ROIC1, performance performance
shares individual performance business profit, Regional period
against leadership CertiVVa2, Leadership 3-years
behavioural model multiplier deferral period
Long-Term Performance Long-term financial Relative organic Reward for long- 3-year
Incentive Share Units (PSU) performance revenue growth, term performance, performance
relative NPAT align compensation period
improvement, relative with the interests
TSR3, absolute free of the shareholders
cash flow
Benefits Retirement Market practice n/a Protect executive Continuous
benefits and against risks,
insurances, attract and retain
perquisites
1. NPAT : Net Profit After Tax, ROIC : Return On Invested Capital.

2. SGS Internal Economic Value Added.
3. TSR: Total Shareholder Return.
3.2.1. Base Salary and its businesses, as well as for the in a balanced manner. Those financial
demonstration of leadership behaviours metrics are cascaded consistently
The base salaries of the Chief Executive
in line with the SGS competency model. throughout the organisation in order to
Officer and of each Operations Council
The target incentive is expressed as a ensure collective alignment. The CEO
member are reviewed annually on the
percentage of the annual base salary and the heads of corporate functions
basis of market data for similar positions
and varies depending on the role. For (SVPs) are measured on the financial
in those companies and geographies
performance of the Group, while the
against which the Group benchmarks the CEO, the target incentive amounts
to 100% of annual base salary, while the other members of the Operations Council
itself. In addition to individual
target incentive for the other members of are measured 50% on the financial
performance and contribution, business
the Operations Council varies between performance of the Group and 50% on
performance and results, the deciding
55% and 65% of annual base salary. the financial performance of their own
body takes into account the scope and
business line (EVPs) or region (COOs).
complexity of the areas of responsibility
of the position, skill sets and experience Financial Performance
required to perform the role, and relevant
The key performance indicators
market practice in the industry.
used to measure the annual financial
performance of the Group and its
3.2.2. Short-Term Incentive businesses have been amended in 2015
Members of the Operations Council in order to be fully aligned with the
including the Chief Executive Officer are business strategy of profitable growth.
entitled to a performance-related annual They include a measurement of growth
incentive (the “Short-Term Incentive”). (top-line contribution), profitability
The Short-Term Incentive is designed (bottom-line contribution) and efficient
to reward the executives for the annual use of capital and thus reflect the
financial performance of the Group financial performance of the Company
122
GROUP'S FINANCIAL PERFORMANCE ROLE SPECIFIC FINANCIAL PERFORMANCE
PROFITABILITY GROWTH EFFICIENT USE PROFITABILITY EFFICIENT USE
(BOTTOM-LINE) (TOP-LINE) OF CAPITAL (BOTTOM-LINE) OF CAPITAL
CEO Group NPAT Group Revenue Group ROIC - -

25% 25% 50%
SVPs Group NPAT Group Revenue Group ROIC - -
65% 25% 10%
EVPs Group NPAT Group Revenue - Business-line profit Group ROIC
25% 25% 40% 10%
COOs Group NPAT Group Revenue - Regional profit Regional CertiVVa
25% 25% 40% 10%
At the beginning of the performance year, the objective for each financial metric is set by the Board of Directors on the basis
of a recommendation by the CEO and in line with the annual budget. For each financial metric, the payout curve is predetermined
as follows: a target (expected level of performance), a threshold (minimum level of performance to trigger a payout) and a cap
(maximum level of performance above which the payout factor is capped at 200%). The Financial Performance Payout factor
between the threshold, the target and the maximum is calculated by linear interpolation.
200%
CAP
TARGET
100%
PAYOUT %
THRESHOLD
0%
80% 100% 133.3%
ACHIEVEMENT %
The payout curve is structured on a leverage of one to three for over-achievement and one to five for under-achievement:
• Every percentage achievement above 100% of the objective (budget) increases the payout factor by 3%. The payout factor is
capped at 200%.
• Every percentage achievement below 100% of the objective (budget) reduces the payout factor by 5%. Therefore a performance
below 80% achievement level (threshold) provides a 0% payout factor.
At the end of the performance period, the results for each objective are assessed against the pre-defined targets and the payout
curve to determine a payout factor. The weighted average of the payout factors of each objective corresponds to the overall
Financial Performance Payout factor. Below you will find an example of calculation for an Executive Vice President
GROUP GROUP BUSINESS GROUP FINANCIAL

REVENUE NPAT PROFIT ROIC PERFORMANCE
WEIGHT 25% WEIGHT 25% WEIGHT 40% WEIGHT 10% PAYOUT
100% 80% 150% 150% =

+ + + 120%
x 0.25 x 0.25 x 0.40 x 0.10
123
Leadership Multiplier
To determine the final bonus amount to be paid, the financial performance payout factor is multiplied by a leadership multiplier.
This combination of financial objectives and leadership multiplier has been chosen in order to balance between rewarding
the financial performance of the Group and its businesses and rewarding wider leadership behaviours of the executives.
The leadership multiplier is determined for each executive on the basis of an assessment of their behaviours against sixteen
pre-defined dimensions of the competency model of SGS in the areas of change management and people management.
The assessment of the members of the Operations Council is conducted at year end by the CEO. The assessment leads
to an overall leadership performance rating that is directly linked to the leadership multiplier as follows:
• “Needs improvement” rating corresponds to a leadership multiplier of 70%
• “Meets expectations” rating corresponds to a leadership multiplier of 100%
• “Exceeds expectations” rating corresponds to a leadership multiplier of 125%
FINANCIAL
LEADERSHIP
TARGET INCENTIVE PERFORMANCE ACTUAL PAYOUT
MULTIPLIER
PAYOUT FACTOR
X X =
100 000 120% 125% 150 000
Short-Term Incentive Calculation Settlement of the Short-Term Incentive 3.2.3. Long-Term Incentive
The final payout and the corresponding Once the Short-Term Incentive amount In 2015, the Board of Directors
Short-Term Incentive amount for the CEO is determined, it is settled 50% in cash implemented a new Long-Term
and the other members of the Operations and 50% in restricted shares, in order Incentive plan designed to motivate
Council are confirmed by the Nomination to strengthen the link between the the leadership team to realise the
and Remuneration Committee and compensation of the executives and the long-term objectives of the Group.
approved by the Board of Directors. future company share price performance. The plan consists of Performance Share
They are subject to a binding vote at Units (PSUs) granted in Q4 2015 to a
The cash component and the shares
the Annual General Meeting. selected number of senior executives
are paid out after the shareholders’
of the Group, including the members
approval at the Annual General Meeting
Specific Short-Term Incentive Rules of the Operations Council. The PSU
of the following year. The shares are
for the CEO vest after a performance period of
allocated at the value defined as the
three years (2015-2017) conditionally
While determining the compensation average closing share price during the
upon the achievement of pre-defined
package of the new CEO, the Board 20-day period following the payment
performance objectives and the
of Directors decided to adapt the rules of the dividends after the Annual
executive being employed by the Group
General Meeting. They are restricted
of the Short-Term Incentive plan to the
at the vesting date (31 December 2017).
specific position of CEO, as follows: for a period of three years during which
they may not be sold, transferred In order to balance with the Short-Term
• The CEO performance assessment Incentive which is based on absolute
or pledged. In case of change of
is purely based on the financial financial performance and on Leadership
control or liquidation or termination
performance of the company and behaviours, a relative performance
of employment following retirement,
the leadership multiplier does not measurement has been introduced in the
death or disability, the restriction period
apply to the CEO; PSU plan, combining absolute performance
of the shares lapses. The shares remain
• Because of the absence of leadership blocked in all other instances. of the SGS Group and relative performance
multiplier, the payout curve for the compared to a peer group of companies:
The shares are subject to forfeiture
CEO was adjusted: for the threshold in cases where the executives act • Relative total shareholder return
level of performance, the payout in violation of the law or the internal (TSR, value delivered to shareholders),
starts at 25% (instead of 0%) and regulations of the SGS Group, such as 40% weight
the 200% payout cap for financial the code of integrity, or are in breach • Relative organic revenue growth
performance does not apply. of their obligations to the SGS Group. (top-line performance), 20% weight
Furthermore there is no accelerator
• Relative NPAT improvement
for performance above target.
(bottom-line performance), 20% weight
• Free cash flow (absolute measure
against SGS annual budget),
20% weight.
124
The relative performance on revenue growth, NPAT and TSR is measured by an independent consulting company, Obermatt.
Obermatt compares and ranks SGS amongst the performance of a selected peer group of companies which have been approved
by the Board of Directors because they have a comparable range of services, technology, customers, suppliers or investors and
thus, are exposed to similar market cycles. The intention of indexing performance against a peer group of companies is to reward
the relative performance of the company, where market factors that are outside the control of the executives are neutralised.
For each relative objective, the target is to reach at least the median performance of the peer group, which corresponds to 100%
vesting level. There is no vesting for a performance below the median of the peer group and the vesting level is capped at 150%
for performance at the upper quartile of the peer group. Any vesting level in between is interpolated linearly.
PEER GROUP
Adecco ALS Applus+ Bureau Veritas Eurofins
Exova Intertek ISS Mistras Rentokil
SAI Global Securitas Sodexo Team
For the free cash flow objective, the vesting level is predetermined as follows: for every percentage point of underachievement
below the target, the vesting level is reduced by 5%; for every percentage point of overachievement above target, the vesting level
is increased by 3%, to a maximum of 150%.
The overall vesting level of the PSUs granted will be calculated as a weighted average of each of the respective vesting levels for
relative TSR (40%), relative NPAT improvement (20%), relative organic revenue growth (20%) and free cash flow against budget
(20%) and ranges between 0% and 150%.
Number of Shares Allocated Number of PSUs originally granted

= X Overall vesting level (0-150%)
at vesting to the Participant
In case of termination of employment, • In the event of a corporate transaction • CEO: three times the annual
all unvested PSUs are immediately or liquidation, unvested PSUs vest base salary
forfeited without value and without immediately. The vesting level is based • Other members of the Operations
any compensation, except in the on an estimation of performance by Council: two times the annual
following cases: the Board of Directors. base salary
• In case of termination of employment The PSUs are subject to forfeiture In the event of a substantial drop in
as a result of disability or retirement, in cases where the executives act the share price, the Board of Directors
unvested PSUs vest on a pro rata in violation of the law or the internal has the discretion to modify the SOG.
basis, based on the number of full regulations of the SGS Group, such as The determination of equity amounts
months of the performance period the code of integrity, or are in breach of against the SOG is defined to include
that have expired until the termination their obligations to the SGS Group. vested shares allocated under the
date. The shares are allocated after The grants awarded under the Short-Term and Long-Term Incentive
the regular vesting date and the Long-Term Incentive plan take place plans, shares underlying vested and
vesting level is determined based on every three years (no annual grants). unvested warrants granted under the
the performance during the entire discontinued warrants plans and other
regular performance period. There is 3.2.4. Shareholding Ownership shares that are owned by the Operations
no early allocation of the shares. Council member directly or indirectly
Guideline
• Upon termination of employment as (by “closely related persons”).
A shareholding ownership guideline
a result of death, unvested PSUs will
(SOG) has been introduced in 2015,
vest immediately on a pro rata basis,
requiring the members of the
based on the number of full months Operations Council to own at least
of the performance period that have a certain multiple of their annual base
expired until the termination date. salary in SGS shares as follows:
The vesting level is based on an
estimation of performance by the
Board of Directors.
125
The Nomination and Remuneration salary and the Company contributes an 3.2.7. Timeline of Remuneration
Committee reviews compliance with amount equal to one and a half times
The following outlines the timeline of
the SOG on an annual basis. Until the the contributions paid by all employees
payment of each remuneration element
minimum requirement is met, 25% to the scheme. Employees have the
that has been earned in 2015:
of the shares allocated under the possibility to voluntarily increase their
Short-Term Incentive plan and all shares contribution rate by 2% above the • The annual base salary is paid
allocated upon vesting of the PSUs standard rate. More flexibility has also during 2015
under the Long-Term Incentive plan been granted to employees who wish • The cash portion of the Short-Term
will be blocked. to fund a potential retirement before the Incentive is paid in March 2016, shortly
normal age, or for those who wish to after the Annual General Meeting
3.2.5. Benefits continue working after the age of 65.
• The share portion of the Short-Term
Additional employment benefits Incentive is allocated in April 2016 and
such as allowances or memberships 3.2.6. Employment Contracts will be unblocked in April 2019
may be awarded in accordance with Employment contracts of Operations
• The PSUs granted under the Long-Term
prevailing practice in the locations of Council members have no fixed term
Incentive in 2015 will be earned over
employment of individual Operations and can be terminated at any time by
the performance period from 2015
Council members. They also include either party, provided a standard notice
to 2017 and will vest on 31 December
the employer's contributions to period of six months is respected. For
2017. Until that date, there is
social benefits as per the applicable the Chief Executive Officer the notice
no vesting under the Long-Term
legislation in the country of employment. period is twelve months. As of 2015,
Incentive plan.
Retirement benefits are set out on the executive contracts do not provide
page 129 in this Report. Swiss-based for any severance payments, and are
Operations Council members subject to applicable legislation in the
participate, on the same basis as country of employment. More than
other Swiss employees of the Group, one-third of the Operations
in the Company’s pension scheme. Council members are not employed
Employees contribute 8% of their base in Switzerland.
TIMELINE (PERFORMANCE PERIOD, TIME OF PAYMENT PERFORMANCE OBJECTIVES

Vesting 31.12.2017
Relative organic revenue growth (20%)

Shares allocation
LONG-TERM Relative NPAT improvement (20%)

INCENTIVE 2015
GRANT Relative TSR (40%)
Absolute free cash flow (20%)
blocking
Group revenue (25%)

50% in
shares
Un-
SHORT-TERM Group NPAT (25%)
INCENTIVE Role specific P&L (50%)
50% in
cash
Multiplied by leadership multiplier
ANNUAL BASE
SALARY AND Fixed remuneration
BENEFITS
2015 2016 2017 2018 2019
SHARE OWNERSHIP GUIDELINE
126
4. REMUNERATION AWARDED TO THE BOARD OF DIRECTORS
In 2015, the annual Board membership fee was CHF 150 thousand for all Board members, unchanged from the prior year.
Members of the Board of Directors serving on a committee were entitled to an additional fee of CHF 30 thousand per committee,
unchanged from last year. The annual fee payable to the Chairman was CHF 300 thousand, unchanged from the prior year.
The remuneration is disclosed on a fiscal year basis and the actual amounts paid correspond to pre-approved amounts
at the last Annual General Meeting.
The following chart details the fees and other cash benefits granted to each of the Directors for their tenure in 2015:
BOARD COMMITTEE OTHER TOTAL CASH TOTAL 2015

(CHF thousand) FEE FEE BENEFITS COMPENSATION 2015 COMPENSATION
S. Marchionne 300 60 56 416 416

P. Desmarais 150 - 13 163 163
A. von Finck 150 30 14 194 194
A.F. von Finck 150 30 16 196 196
I. Gallienne 150 30 16 196 196
C. Grupp 150 23 13 186 186
P. Kalantzis 150 30 14 194 194
G. Lamarche 150 30 16 196 196
S.R. du Pasquier 150 60 18 228 228
C. Kirk 113 - 9 122 122
TOTAL 1 613 293 185 2 091 2 091
The following chart details the fees, other cash benefits and share options granted to each of the Directors for their tenure in 2014:
BOARD COMMITTEE OTHER TOTAL CASH TOTAL 2014

(CHF thousand) FEE FEE BENEFITS COMPENSATION 2014 COMPENSATION
S. Marchionne 300 68 54 422 422

P. Desmarais 150 - 13 163 163
A. von Finck 150 30 14 194 194
A.F. von Finck 150 30 16 196 196
I. Gallienne 150 30 16 196 196
C. Grupp 150 - 11 161 161
P. Kalantzis 150 30 14 194 194
G. Lamarche 150 30 16 196 196
S.R. du Pasquier 150 53 18 221 221
TOTAL 1 500 271 172 1 943 1 943
The overall compensation paid to the Board of Directors in 2015 increased compared to 2014 because of the appointment of a new
member, the former CEO Chris Kirk, on 13 March 2015.
The following table shows the details of the options ¹ granted to the Chairman of the Board under the discontinued Annual Share
Option Plans and Long-Term Incentive plans. Note: options have no longer been granted to the Chairman since 2014 year-end.
TOTAL NUMBER OF MARKET VALUE

TYPE OF OPTIONS STRIKE PRICE 2 OPTIONS GRANTED AT GRANT NUMBER VESTED NUMBER VESTED
(YEAR OF ISSUE) (CHF) UNDER EACH PLAN (CHF THOUSAND) ON 31 DECEMBER 2015 ON 31 DECEMBER 2014
SGSMF (2011) 1 617 50 000 142 50 000 50 000

SGSKF (2012) 1 497 50 000 133 50 000 33 333
SGSWS (2013) 2 013 40 000 89 26 667 26 667
SGSPF (2014) 2 059 75 000 189 50 000 25 000
SGSMF-2011 LTI (2011) 1 617 200 000 570 100 000 -
1. One hundred options give the right to acquire one share.

2. Before adjustment for capital reductions and special dividends.
127
5. REMUNERATION AWARDED TO THE CEO, SENIOR MANAGEMENT

AND OTHER MEMBERS OF THE OPERATIONS COUNCIL
This section sets out the remuneration which was paid to the Operations Council as a whole, to the three Operations Council
members who make up Senior Management and to the Chief Executive Officer for 2015. All amounts disclosed in this section
include the Short-Term Incentive cash amount and restricted shares that will be granted in April 2016 with respect to performance
in 2015 (disclosure according to the accrual principle).
5.1. PERFORMANCE IN 2015

The table below summarises the financial performance of SGS Group and its businesses in 2015 on the financial objectives
(revenue, profitability, capital efficiency):
PERFORMANCE ASSESSMENT
GROUP REVENUE achieved
GROUP NPAT achieved
GROUP ROIC outperformed
REGION AND BUSINESS LINE PROFIT achieved
REGIONAL CERTIVVA outperformed
5.2. CASH COMPENSATION

(CHF thousand) 2015 2014
To the Operations Council (including Senior Management) 13 305 11 607

To Senior Management (including Chief Executive Officer) 3 143 2 559
To the Chief Executive Officer 1 943 1 649
Former Incumbent (pro rata) 852 1 649
Current Incumbent (pro rata) 1 091 -
The total cash compensation paid to the Operations Council includes the annual base salaries, the cash portion of the
Short-Term Incentive, and any other cash allowances, including allowances paid to individual members in respect of vehicle,
housing and schooling. Post-employment benefits of CHF 1 081 thousand are not included (2014: CHF 1 046 thousand).
Employer's contributions to social benefits are excluded as well. The overall higher cash compensation is explained by the overlap
of incumbents on the CEO position and one EVP position.
The achievement of financial targets at Group level, in the businesses and in the regions ranges from 79.3% to 138.2% (2014: 77.2%
to 107.7%). The overall Short-Term Incentive payout amounts to 107.1% for the CEO (2014: 123.6%) and ranges from 53.9% to
158.9% for the members of the Operations Council (2014: 42.6% to 148%). For the purpose of the Short-Term Incentive, targets
and performance achievement are measured at constant currency exchange rates.
5.3. SHARE-BASED COMPENSATION

5.3.1. Restricted Shares
In settlement of 2015 Short-Term Incentive, SGS restricted shares will be allocated to the Operations Council (including Senior
Management) in April 2016 (2014: 1 319 249 SGSPF share options were granted in February 2015). The shares are allocated
at their fair market value, being defined as the average closing price of the share during a 20-day period following the payment
of the dividends after the Annual General Meeting, and are restricted for a period of three-years.
5.3.2. Long-Term Incentive Plan

Under the 2015 LTI Plan, a total of 14 570 PSUs were granted to the Operations Council members (including Senior Management)
in 2015. The Senior Management was awarded a total of 3 772 PSUs, which includes 2 346 PSUs awarded to the Chief Executive
Officer. The vesting date of such PSU is 31 December 2017. The vesting is conditional upon the Group achieving or exceeding
its financial targets over the three-year performance period (2015-2017) of relative organic revenue growth, relative NPAT
improvement, relative TSR and absolute free cash flow.
The value of the PSUs granted in 2015 measured at the grant date fair value does not exceed the maximum amount of CHF 30 million
approved at the Annual General Meeting 2015.
128
5.3.3. Discontinued Share Option Plans
The following table presents details of the share options awarded to members of the Operations Council, Senior Management and
the CEO, active at 31 December 2015, and shows those options which have been granted, vested and/or became exercisable in 2015.
TOTAL NUMBER OF MARKET VALUE

TYPE OF OPTIONS 1 STRIKE PRICE OPTIONS GRANTED AT GRANT NUMBER VESTED ON NUMBER VESTED ON
(YEAR OF ISSUE) (CHF) 2 UNDER EACH PLAN (CHF THOUSAND) 31 DECEMBER 2015 31 DECEMBER 2014
OPERATIONS COUNCIL (INCLUDING SENIOR MANAGEMENT AND CHIEF EXECUTIVE OFFICER)

SGSMF (2011) 1 617 573 909 1 636 572 241 572 241
SGSKF (2012) 1 497 651 925 1 734 651 925 434 617
SGSWS (2013) 2 013 807 068 1 800 538 045 538 045
SGSPF (2014) 2 059 612 341 1 543 408 227 204 114
SGSMF-2011 LTI 1 617 2 840 000 8 094 1 405 000 -
SGSBB (2015) 1 798 921 319 2 045 307 106 -
SENIOR MANAGEMENT (INCLUDING CHIEF EXECUTIVE OFFICER)

SGSMF (2011) 1 617 80 149 228 80 149 80 149
SGSKF (2012) 1 497 102 676 273 102 676 68 451
SGSWS (2013) 2 013 89 895 200 59 930 59 930
SGSPF (2014) 2 059 89 928 227 59 952 29 976
SGSMF-2011 LTI 1 617 320 000 912 160 000 -
SGSBB (2015) 1 798 145 545 323 48 515 -
CHIEF EXECUTIVE OFFICER

SGSMF (2011) 1 617 46 227 132 46 227 46 227
SGSKF (2012) 1 497 61 621 164 61 621 41 081
SGSWS (2013) 2 013 46 632 104 31 088 31 088
SGSPF (2014) 2 059 23 464 59 15 643 7 821
SGSMF-2011 LTI 1 617 200 000 570 100 000 -
SGSBB (2015) 1 798 82 727 184 27 576 -
1. One hundred options give the right to acquire one share.

2. Before adjustment for capital reductions and special dividends.
5.4. TOTAL COMPENSATION TO THE OPERATIONS COUNCIL, SENIOR MANAGEMENT AND CHIEF EXECUTIVE OFFICER
The tables below present all components of the remuneration earned in 2014 and 2015 by the Operations Council, by the Senior
Management and by the Chief Executive Officer.
Total compensation for 2015:
CONTRIBUTION OTHER ANNUAL ANNUAL GRANT LONG-TERM TOTAL 2015 COMPENSATION
BASE TO PENSION EMPLOYMENT CASH OF RESTRICTED INCENTIVE (INCLUDING RESTRICTED
(CHF thousand) SALARY BENEFITS BENEFITS BONUS SHARES 1 PSUs GRANT 2 SHARES AND PSU)
To the Operations Council

8 205 1 081 3 508 2 944 2 680 13 468 31 886
(including Senior Management) 3
To Senior Management
1 950 260 841 731 731 3 487 8 000
(including Chief Executive Officer) 4
To the Chief Executive Officer 1 140 148 614 438 438 2 169 4 947
Former Incumbent (pro rata) 496 50 404 93 93 - 1 136
Current Incumbent (pro rata) 644 98 210 345 345 2 169 3 811
1. Restricted Shares that will be granted in April 2016.

2. Valuation of the Performance Share Units (PSUs) granted under the 2015-2017 Long-Term Incentive plan (LTI) according to IFRS2. PSUs vesting is subject to company
performance conditions. As per Swiss law requirements, the total valuation of the 3-year period has to be disclosed when PSUs are granted contrary to IFRS
(valuation disclosed over the LTIP 3-year period).
3. 24 FTE (Full Time Equivalent).
4. 3 FTE.
129
Total compensation for 2014:

ANNUAL TOTAL 2014
CONTRIBUTION OTHER ANNUAL GRANT COMPENSATION
BASE TO PENSION EMPLOYMENT CASH OF SHARE DISCRETIONARY (INCLUDING
(CHF thousand) SALARY BENEFITS BENEFITS BONUS OPTIONS CASH BONUS OPTIONS)
To the Operations Council

7 680 1 046 2 198 2 603 2 929 75 16 531
(including Senior Management) 1
To Senior Management
1 576 271 344 814 828 75 3 908
(including Chief Executive Officer) 2
To the Chief Executive Officer 1 000 172 216 577 689 - 2 654
1. 24 FTE (Full Time Equivalent).

2. 3 FTE.
In the year under review, the highest compensation paid by the Group was awarded to the Chief Executive Officer.
The following charts illustrate the ratio between fixed and variable remuneration for the CEO and for the other members of
the Operations Council on average (without CEO). The ratio depends on the extent to which pre-defined objectives have been
achieved and is being shown at target (assuming performance at the required level), at minimum (no payout under the Short-Term
Incentive due to underperformance), at maximum (maximum payout under the Short-Term Incentive plan) and at actual levels
achieved in 2015. The charts exclude Long-Term Incentive grants.
OPERATION COUNCIL (EXCLUDING CEO)

CEO REMUNERATION MIX REMUNERATION MIX (ON AVERAGE)
(CHF thousand) (CHF thousand)
3 500 800
3 000 700
2 500 600
500
2 000
400
1 500
300
1 000
200
500 100
0 0
Target Minimum Maximum Actuals Target Minimum Maximum Actuals
2015 2015
Annual Base Salary Annual Bonus (cash) Annual Bonus (shares) Annual Base Salary Annual Bonus (cash) Annual Bonus (shares)
In 2015, the variable actual remuneration of the Chief Executive Officer represented 44% of the total actual compensation (2014:
56%), split in cash (22%) and restricted shares (22%). For the Operations Council, including Senior Management, the variable
remuneration amounted to 41% of the total compensation on average (2014: 42%), split in cash (21%) and options (20%). Total
compensation includes the fixed remuneration (base salary) and the variable remuneration paid out for 2015 (Short-Term Incentive
in cash and restricted shares). It excludes fringe and social benefits.
5.5. OTHER COMPENSATION

5.5.1. Severance Payments
All employment contracts for current Operations Council members have been amended in 2015, aligning with the timing and
requirements under the Minder Ordinance. There was an exception for one member of the Operations Council, who stepped
down on 30 September 2015 according to the terms of his pre-existing contractual arrangements. His compensation reflected
in the separation agreement for the financial year amounts to CHF 350 000 (2014: CHF 0).
5.5.2. Loans to Members of Governing Bodies

As at 31 December 2015, no loan, credit or outstanding advance was due to the Group from members of its governing bodies
(unchanged from prior year).
130
REPORT OF THE STATUTORY AUDITOR
To the General Meeting of

SGS SA, GENEVA
REPORT OF THE STATUTORY AUDITOR IN RELATION TO SECTIONS 4 AND 5 OF THE REMUNERATION REPORT IN ACCORDANCE
WITH THE ORDINANCE AGAINST EXCESSIVE COMPENSATION IN STOCK EXCHANGE LISTED COMPANIES (ORDINANCE)
We have audited sections 4 and 5 of the Remuneration Report of SGS SA for the year ended 31 December 2015, presented
on pages 127 to 130.
Board of Directors’ Responsibility

The Board of Directors is responsible for the preparation and overall fair presentation of the Remuneration Report in accordance
with Swiss law and the Ordinance against Excessive compensation in Stock Exchange Listed Companies (Ordinance). The Board
of Directors is also responsible for designing the remuneration system and defining individual remuneration packages.
Auditor’s Responsibility
Our responsibility is to express an opinion on the Remuneration Report. We conducted our audit in accordance with Swiss
Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether sections 4 and 5 of the Remuneration Report comply 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 Remuneration Report with regard
to compensation, loans and credits in accordance with articles 14 – 16 of the Ordinance. The procedures selected depend
on the auditor’s judgment, including the assessment of the risks of material misstatements in the Remuneration Report, whether
due to fraud or error. This audit also includes evaluating the reasonableness of the methods applied to value components of
remuneration, as well as assessing the overall presentation of the Remuneration Report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, sections 4 and 5 of the Remuneration Report of SGS SA for the year ended 31 December 2015 comply with Swiss
law and articles 14 – 16 of the Ordinance.
DELOITTE SA
James Baird Fabien Bryois

Licensed Audit Expert Licensed Audit Expert
Auditor in Charge
131
8. SGS GROUP RESULTS
CONSOLIDATED INCOME STATEMENT

FOR THE YEARS ENDED 31 DECEMBER
(CHF million) NOTES 2015 2014
REVENUE 5 712 5 883

Salaries and wages (2 849) (2 891)
Subcontractors' expenses (345) (361)
Depreciation, amortisation and impairment 10 and 12 (322) (304)
Other operating expenses 5 (1 374) (1 386)
OPERATING INCOME (EBIT) 822 941
Analysis of operating income

Adjusted operating income 917 947
Restructuring costs (64) (11)
Amortisation of acquisition intangibles (21) (20)
Transaction and integration-related costs (10) (7)
Other non-recurring items - 32
Operating income 822 941
Financial income 6 13 17
Financial expenses 7 (56) (58)
PROFIT BEFORE TAXES 779 900
Taxes 8 (195) (234)
PROFIT FOR THE YEAR 584 666
Profit attributable to:

Equity holders of SGS SA 549 629
Non-controlling interests 35 37
BASIC EARNINGS PER SHARE (IN CHF) 9 71.99 81.99
DILUTED EARNINGS PER SHARE (IN CHF) 9 71.95 81.65
DIVIDEND PER SHARE (IN CHF) 68.00 1 68.00
1. As proposed by the Board of Directors.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Actuarial (losses)/gains on defined benefits plans (40) (100)

Income tax on actuarial (losses)/gains taken directly to equity 9 26
Items that will not be subsequently reclassified to income statement (31) (74)
Exchange differences and other 1 (254) 82
Items that may be subsequently reclassified to income statement (254) 82
OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR (285) 8
Profit for the year 584 666
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 299 674
Attributable to:
Equity holders of SGS SA 266 643
1. In 2015, exchange differences included net exchange gain of CHF 40 million on long-term loans treated as net investment in a foreign entity according to International
Accounting Standard (IAS) 21 (2014: gain of CHF 14 million).
In 2015, this amount included less than CHF 1 million of adjustments due to the marketable securities recognised as financial instrument available for sale (2014: nil).
134
CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER (BEFORE APPROPRIATION OF AVAILABLE RETAINED EARNINGS)
ASSETS
NON-CURRENT ASSETS
Land, buildings and equipment 10 964 1 043
Goodwill 11 1 088 1 105
Other intangible assets 12 218 232
Investments in associated and other companies 32 24
Deferred tax assets 8 173 195
Other non-current assets 13 and 24 142 49
TOTAL NON-CURRENT ASSETS 2 617 2 648
CURRENT ASSETS
Unbilled revenues and inventories 14 288 330
Trade accounts and notes receivable 15 917 1 068
Other receivables and prepayments 16 338 371
Marketable securities 17 244 9
Cash and cash equivalents 18 1 490 1 341
TOTAL CURRENT ASSETS 3 277 3 119
TOTAL ASSETS 5 894 5 767
EQUITY AND LIABILITIES

CAPITAL AND RESERVES
Share capital 22 8 8
Reserves 2 222 2 473
Treasury shares 22 (324) (154)
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF SGS SA 1 906 2 327
TOTAL EQUITY 1 981 2 403
NON-CURRENT LIABILITIES
Loans and obligations under finance leases 23 2 214 1 672
Deferred tax liabilities 8 60 74
Retirement benefit obligations 24 181 176
Provisions 25 97 97
TOTAL NON-CURRENT LIABILITIES 2 552 2 019
CURRENT LIABILITIES
Loans and obligations under finance leases 23 3 18
Trade and other payables 26 526 511
Provisions 25 19 19
Current tax liabilities 159 175
Other creditors and accruals 27 654 622
TOTAL CURRENT LIABILITIES 1 361 1 345
TOTAL LIABILITIES 3 913 3 364
TOTAL EQUITY AND LIABILITIES 5 894 5 767
135
CONSOLIDATED STATEMENT OF CASH FLOWS

Profit for the year 584 666

Other non-cash items 19 541 559
Decrease/(Increase) in working capital 19 160 (109)
Taxes paid (223) (204)
Core operating cash flow 1 062 912
Pension funds special contribution 1
(103) -
CASH FLOW FROM OPERATING ACTIVITIES 959 912
Purchase of land, buildings, equipment and other intangible assets 10 and 12 (301) (305)
Net (acquisition) of businesses 3 and 19 (104) (114)
(Increase)/decrease in other non-current assets - (4)
(Increase)/decrease in marketable securities and other (248) 1
Interest and dividends received 13 9
Sales of land, buildings and equipment 15 13
CASH FLOW FROM INVESTING ACTIVITIES (625) (400)
Dividends paid to equity holders of SGS SA (522) (499)
Dividends paid to non-controlling interests (34) (24)
Transaction with non-controlling interests (2) 1
Cash received on treasury shares 81 31
Cash (paid) on treasury shares (228) -
Proceeds of corporate bonds 549 362
Interest paid (55) (43)
Net flows related to Interest Rate Swaps 16 2
(Decrease)/Increase in borrowings (15) 2
CASH FLOW FROM FINANCING ACTIVITIES (210) (168)
Currency translations 25 33
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 149 377
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1 341 964
Increase/(decrease) in cash and cash equivalents 149 377
CASH AND CASH EQUIVALENTS AT END OF YEAR 18 1 490 1 341
1. See note 24.
136
STATEMENT OF CHANGES IN CONSOLIDATED EQUITY
ATTRIBUTABLE TO
CUMULATIVE RETAINED
CUMULATIVE GAINS/(LOSSES) ON EARNINGS EQUITY NON-
SHARE TREASURY CAPITAL TRANSLATION DEFINED BENEFIT AND GROUP HOLDERS CONTROLLING TOTAL
(CHF million) CAPITAL SHARES RESERVE ADJUSTMENTS PLANS 1 RESERVES OF SGS SA INTERESTS EQUITY
BALANCE AT
8 (179) 111 (758) (133) 3 094 2 143 69 2 212
1 JANUARY 2014
Profit for the year - - - - - 629 629 37 666
Other comprehensive income
- - - 88 (74) - 14 (6) 8
for the year
Total comprehensive income
- - - 88 (74) 629 643 31 674
for the year
Dividends paid - - - - - (499) 2 (499) (24) (523)
Share-based payments - - 10 - - - 10 - 10
Movement in
- - - - - (1) (1) - (1)
non-controlling interests
Movement on treasury shares - 25 - - - 6 31 - 31
BALANCE AT 8 (154) 121 (670) (207) 3 229 2 327 76 2 403
31 DECEMBER 2014
BALANCE AT
8 (154) 121 (670) (207) 3 229 2 327 76 2 403
1 JANUARY 2015
Profit for the year - - - - - 549 549 35 584
Other comprehensive income
- - - (252) (31) - (283) (2) (285)
for the year
Total comprehensive income
- - - (252) (31) 549 266 33 299
for the year
Dividends paid - - - - - (522) 2 (522) (34) (556)
Share-based payments - - 9 - - - 9 - 9
Movement in
- - - - - (1) (1) - (1)
non-controlling interests
Deferred tax on pension
- - - - - (24) (24) - (24)
funds special contribution
Movement on treasury shares - (170) - - - 21 149 - (149)
BALANCE AT
8 (324) 130 (922) (238) 3 252 1 906 75 1 981
31 DECEMBER 2015
1. Net of tax.
2. The amounts available for dividends are based on SGS SA’s statutory standalone shareholders’ equity, determined in accordance with the legal provisions of
the Swiss Code of Obligations.
137
NOTES ADOPTION OF NEW AND REVISED IN-

TERNATIONAL FINANCIAL REPORTING
BASIS OF CONSOLIDATION
Subsidiaries
STANDARDS
The consolidated financial statements
In the current year, the Group has
1. ACTIVITIES OF adopted the following Amendments,
incorporate the financial statements of
the Company and the entities controlled
THE GROUP Improvements and Interpretations: by the Group. Control is achieved when
Current year adoption the Group:
SGS SA and its subsidiaries (the
• Amendments to IAS 19: Defined • has power over the investee;
“Group”) operate around the world under
the name SGS. The head office of the Benefit Plans - Employee • is exposed, or has right, to variable
Group is located in Geneva, Switzerland. Contributions return from its involvement with
• Annual Improvements to IFRSs the investee; and
SGS is the global leader and innovator
in inspection, verification, testing Issued but not yet effective • has the ability to use its power
and certification services supporting to affect its return.
• IFRS 9 Financial Instruments
international trade in agriculture, minerals, The Company reassesses whether or
petroleum and consumer products. It also (as revised in 2014)
not the Group controls an investee if
provides these services to governments, • IFRS 15 Revenue from Contracts facts and circumstances indicate that
international institutions and to with Customers there are changes to one or more of the
customers engaged in the industrial,
• IFRS 16 Leases three elements of control listed above.
environmental and life science sectors.
• Annual Improvements to IFRSs Consolidation of a subsidiary begins
• Amendments to IAS 16 and IAS 38: when the Group obtains control over
the subsidiary and ceases when the
2. SIGNIFICANT Clarification of Acceptable Methods
Group loses control of the subsidiary.
ACCOUNTING of Depreciation and Amortisation
The principal operating companies of the
POLICIES AND • Amendments to IAS 16 and IAS 41:
Group are listed on pages 200 to 203.
Agriculture: Bearer Plants
EXCHANGE RATES
• Amendments to IFRS 10 and IAS 28:
Associates
Sale or Contribution of Assets
BASIS OF PREPARATION OF Associates are entities over which the
between an Investor and its Associate
THE FINANCIAL STATEMENTS or Joint Venture Group has significant influence but no
The consolidated financial statements control or joint control over the financial
• Amendments to IFRS 11:
of the Group are stated in millions of and operating policies. The consolidated
Accounting for Acquisitions of
Swiss Francs. They are prepared from financial statements include the Group’s
Interests in Joint Operations
the financial statements of the individual share of the earnings of associates on
• Amendments to IAS 27: an equity accounting basis from the date
companies within the Group with all
Equity Method in Separate that significant influence commences until
significant companies having a year-end
of 31 December 2015. The consolidated Financial Statements the date that significant influence ceases.
financial statements comply with the • IFRS 14 Regulatory Deferral Accounts
accounting and reporting requirements
• Amendments to IAS 1:
of the International Financial Reporting
Disclosure Initiative
Standards (IFRS) as issued by the
International Accounting Standards • Amendments to IFRS 10, IFRS 12
Board (IASB). and IAS 28: Investment Entities:
Applying the Consolidation Exception
The accounting conventions and
accounting policies are the same as The directors are assessing the future
those applied in the 2014 consolidated impacts resulting of the adoption of
financial statements, except for the these new Standards, Improvements,
Group’s adoption of new IFRS effective Amendments and Interpretations on
1 January 2015. the consolidated financial statements.
The financial statements are prepared

on an accrual basis and under the
historical cost convention, modified
as required for the revaluation of certain
financial instruments.
138
Joint Ventures Transactions Eliminated recognised when the service has been
on Consolidation completed. In certain circumstances,
A joint venture is a jointly controlled
revenue is recognised in proportion
entity or operation where the parties All intra-group balances and transactions,
to the stage of completion, normally
have joint rights to the net assets. and any unrealised gains and losses
determined by reference to costs
The consolidated financial statements arising from intra-group transactions, are
incurred to date in comparison with the
include the Group’s share of the eliminated in preparing the consolidated
total estimated costs of the transaction
earnings and net assets on an equity financial statements. Unrealised gains
at the balance sheet date. No margin
accounting basis of joint ventures and losses arising from transactions with
is recognised on work-in-progress.
that it does not control, effective from associates and jointly controlled entities
Completed, but unbilled, services are
the date that joint control commences are eliminated to the extent of the
recorded at net selling prices.
until the date that joint control ceases. Group’s interest in those entities.
Joint Operations SEGMENT INFORMATION

Foreign Currency Transactions
A joint operation is an arrangement Transactions in foreign currencies are The Group reports its operations
whereby the parties that have joint recorded at the foreign exchange rate by business segment, according to
control have separable specific rights prevailing at the date of the transaction. the nature of the services provided.
to the assets and the liabilities within Monetary assets and liabilities The Group operates in ten business
the arrangement. When a Group entity denominated in foreign currencies at segments. The Chief Operating Decision
undertakes its activities under joint the balance sheet date are translated at Maker evaluates segment performance
operations, the Group as a joint operator the foreign exchange rate prevailing at and allocates resources based on several
recognises in relation to its interest in that date. Exchange differences arising factors, of which revenue, adjusted
a joint operation: on the settlement of monetary items operating income and return on capital
• its assets, including its share of any or on reporting monetary items at rates are the main criteria.
assets held jointly; different from those at which they were For the Group, the Chief Operating
initially recorded during the period or Decision Maker is the Senior
• its liabilities, including its share of any
in previous financial statements, are Management composed of: the Chief
liabilities incurred jointly;
recognised in the income statement. Executive Officer, the Chief Financial
• its revenue from the sale of its
Officer and the General Counsel.
share of the output arising from Consolidation of Foreign Companies
the joint operation; All segment revenues reported are from
All assets and liabilities of foreign external customers. Segment revenue
• its share of the revenue from the sale companies that are consolidated are and operating income are attributed to
of the output by the joint operation; and translated using the exchange rates countries based on the location in which
• its expenses, including its share in effect at the balance sheet date. the services are rendered.
of any expenses incurred jointly. Income and expenses are translated
Segment assets and liabilities comprise
at the average exchange rate for the
all assets and all liabilities held by
Investments in Companies not year. Translation differences resulting
the Group’s operating affiliates after
Accounted for as Subsidiaries, from the application of this method are
elimination of inter-company balances.
classified as equity until the disposal of
Associates or Jointly Controlled Entities Capital additions represent the total
the investment.
Investments in companies not accounted cost incurred to acquire land, buildings
Average exchange rates are used
for as subsidiaries, associates or jointly and equipment as well as other
to translate the cash flows of
controlled entities (normally below 20% intangible assets.
foreign subsidiaries in preparing the
shareholding levels) are stated at cost Depreciation and amortisation of
consolidated statement of cash flows.
less any provision for impairment. The segment assets include depreciation
fair value of these investments cannot of buildings and equipment as well as
be reliably measured. Dividends received REVENUE RECOGNITION
other intangible assets. Impairment of
from these investments are included in Revenue is recognised to the extent that segment assets includes impairment
financial income. it is probable that the economic benefits related to land, buildings and equipment,
will flow to the Group and the revenue goodwill and other intangible assets
can be reliably measured. when incurred.
Revenues represent fees for services
rendered to third parties after the
deduction of discounts and are
139
LAND, BUILDINGS AND EQUIPMENT If the initial accounting for a business Expected changes in selling prices and
combination is incomplete by the end direct costs are based on past practices
Land is stated at historical cost and
of the reporting period in which the and expectations of future changes in
is not depreciated. Buildings and
combination occurs, the Group reports the market.
equipment are stated at historical
provisional amounts for the items for For all CGUs, a value-in-use calculation
cost less accumulated depreciation.
which the accounting is incomplete. is performed using cash flow projections
Subsequent expenditures are capitalised
Those provisional amounts are adjusted covering the next 10 years. The cash
only if they increase the future economic
during the measurement period, flows for the first five years take into
benefits embodied in the related item
or additional assets or liabilities are account the most recent financial
of property and equipment. All other
recognised, to reflect new information results and outlook approved by
expenditures are expensed as incurred.
obtained about facts and circumstances management, while the subsequent
Depreciation is calculated on a
that existed at the acquisition date that, five years are extrapolated based on
straight-line basis over the estimated
if known, would have affected amounts the estimated long-term growth rate
useful life of the assets as follows:
recognised at that date. for the relevant activity.
• Buildings 12 – 40 years
Goodwill arising on the acquisition of a If the recoverable amount of the CGU
• Machinery and equipment 3 – 10 years foreign entity is recorded in the relevant is less than the carrying amount of the
• Other tangible assets 3 – 10 years foreign currency and is translated using unit, the impairment loss is allocated
the end of period exchange rate. first to reduce the carrying amount of
LEASES On disposal of part or all of a business any goodwill allocated to the unit and
which was previously acquired and which then to the other assets of the unit. An
Assets acquired under finance lease
gave rise to the recording of acquisition impairment loss recognised for goodwill
agreements, which provide the Group
goodwill, the relevant amount of residual is not reversed in a subsequent period.
with substantially all the risks and
goodwill is included in the determination Even if the initial accounting for an
rewards of ownership, are capitalised
of the gain or loss on disposal. intangible asset acquired in the reporting
at fair value or, if lower, at amounts
equivalent to the estimated present Goodwill and other intangible assets period is only provisional, this asset is
value of the underlying minimum with indefinite useful lives acquired tested for impairment.
lease payments. The corresponding as part of business combinations are
liabilities are included in long and tested for possible impairment annually OTHER INTANGIBLE ASSETS
short-term loans. These leased assets and whenever events or changes in
circumstances indicate their value may Intangible assets, including software,
are depreciated over the lease period or
not be fully recoverable. licences, trademarks and customer
their estimated useful lives, whichever
relationships are capitalised and
is shorter. For the purpose of impairment testing, amortised on a straight-line basis over
Leases where the lessor retains the Group has adopted a uniform their estimated useful lives, normally
substantially all the risks and rewards of method for assessing goodwill and not exceeding 20 years. Indefinite life
ownership of the assets are classified other intangibles recognised under intangible assets are not amortised but
as operating leases. Operating lease the acquisition method of accounting. are subject to an annual impairment test.
expenditures are expensed on a These assets are allocated to the Cash The following useful lives are used in
straight-line basis over the lease terms. Generating Unit (CGU) or group of CGUs the calculation of amortisation:
that are expected to benefit from the
business combination. The recoverable • Trademarks 5 – 20 years
GOODWILL
amount of a CGU is determined • Customer relationships 5 – 20 years
In the case of acquisitions of businesses, through a value-in-use calculation. The • Computer software 1 – 4 years
the acquired identifiable assets, liabilities key assumptions for the value-in-use
and contingent liabilities are recorded calculations are those regarding the Other intangible assets acquired as
at fair value. The difference between discount rates, growth rates, operating part of an acquisition of a business are
the purchase price and the fair value is margins and expected changes to selling capitalised separately from goodwill if
classified as goodwill and recorded in prices or direct costs during the period. their fair value can be measured reliably.
the balance sheet as an intangible asset. Pre-tax discount rates used are based Internally generated intangible assets
on the Group’s weighted average cost are recognised if the asset created can
Goodwill arising from business
of capital, adjusted for specific risks be identified, it is probable that future
combinations is measured at cost less
associated with the CGU’s cash flow economic benefits will be generated
any accumulated impairment losses.
projections. The growth rates are based from it, the related development costs
on industry growth forecasts. can be measured reliably and sufficient
financial resources are available to
140
complete the development. These RECEIVABLES The fair value of forward exchange
assets are amortised on a straight-line contracts is determined with reference to
Trade receivables are recognised and
basis over their useful lives, which market prices at the balance sheet date.
carried at original invoice amount less an
usually do not exceed four years. The Group designates and documents
allowance for any uncollectible amounts.
All other development costs are certain derivatives as hedging
An allowance for doubtful debts is made
expensed as incurred. instruments against changes in fair value
when collection of the full amount is no
longer probable. Bad debts are written of recognised assets and liabilities. The
IMPAIRMENT OF ASSETS off when identified. effectiveness of such hedges is assessed
EXCLUDING GOODWILL at inception and verified at regular
intervals, at least each semester, using
At each balance sheet date, or whenever MARKETABLE SECURITIES
prospective and retrospective testing.
there is an indication that an asset may
Marketable securities are recorded
be impaired, the Group reviews the
in the balance sheet at fair value.
carrying amounts of its tangible and CORPORATE BONDS
Movements in the fair value of
intangible assets to determine whether The corporate bonds issued by the
marketable securities are reported in the
they have suffered an impairment loss. Group are measured at amortised cost
income statement as financial income/
If indications of impairment are present, using the effective interest method,
expenses. For marketable securities
the assets are tested for impairment. with interest expense recognised on
designated as being available for sale,
If impaired, the carrying value of the an effective yield basis.
the movements in fair value are recorded
asset is reduced to its recoverable
as a component of shareholders’ equity The effective interest method is a
value. Where it is not possible to
and recognised in the income statement method of calculating the amortised cost
estimate the recoverable amount of an
at the time of disposal. Marketable of a financial liability and of allocating
individual asset, the Group estimates the
securities designated as available for interest expense over the relevant period.
recoverable amount of the CGU to which
sale are those that are not classified as The effective interest rate is the rate that
the asset belongs.
at fair value through profit and loss. exactly discounts estimated future cash
The recoverable amount of an asset is payments through the expected life of
the greater of the net realisable value CASH AND CASH EQUIVALENTS the financial liability to the net carrying
and its value-in-use. In assessing its amount on initial recognition.
value-in-use, the pre-tax estimated Cash and cash equivalents comprise
cash, deposits held with banks The Group uses fair value hedges to
future cash flows are discounted to
and investments in money market mitigate interest rate risks relating to its
their present value using a pre-tax
instruments with an original maturity of corporate bonds. The changes in fair value
discount rate that reflects current market
three months or less. Bank overdrafts of hedging instruments are recognised in
assessments of the time value of money
are included within current loans. the income statement. Hedge accounting
and the risks specific to the asset.
was discontinued in 2015 with the
termination of Interest Rate Swap.
REVERSAL OF IMPAIRMENT LOSSES DERIVATIVE FINANCIAL
INSTRUMENTS AND HEDGING
Where an impairment loss on assets EMPLOYEE BENEFITS
other than goodwill subsequently The Group uses derivative financial
instruments to hedge its exposure to Pension Plans
reverses, the carrying amount of the
asset or CGU is increased to the revised foreign exchange and interest rate risks The Group maintains several defined
estimate of its recoverable amount, arising from operational, financing and benefit and defined contribution pension
but not in excess of the carrying amount investment activities. In accordance plans in accordance with local conditions
that would have been recorded had with its treasury policy, the Group does and practices in the countries in which it
no impairment loss been recognised. not hold or issue derivative financial operates. Defined benefit pension plans
A reversal of an impairment loss is instruments for trading purposes. are based on an employee’s years of
recognised as income immediately. Derivatives are accounted for on a service and remuneration earned during
mark-to-market basis. a pre-determined period. Contributions
UNBILLED REVENUES Derivative financial instruments are to these plans are normally paid into
AND INVENTORIES initially recognised at fair value and funds which are managed independently
subsequently re-measured at fair value of the Group, except in rare cases where
Completed but unbilled services are there is no legal obligation to fund.
at each balance sheet date. The gains
recorded at net selling prices.
and losses resulting from the fair In such cases, the liability is recorded in
Work-in-progress is measured at the value re-measurement are recognised the Group’s consolidated balance sheet.
lower of the costs incurred in providing in the income statement.
the service and its ultimate invoice price
less costs to complete.
141
The Group’s obligations towards defined PROVISIONS CAPITAL MANAGEMENT

benefit pension plans and the annual
The Group records provisions when: Capital comprises equity attributable
cost recognised in the income statement
it has an obligation, legal or constructive, to equity holders, loans and obligations
are determined by independent
to satisfy a claim; it is probable that under finance leases and cash and
actuaries using the projected unit credit
an outflow of Group resources will be cash equivalents.
method. Remeasurement gains and
required to satisfy the obligation; The Board of Directors’ policy is to
losses are immediately recognised
and a reliable estimate of the amount maintain a strong capital base in order
in the consolidated balance sheet with
can be made. to maintain investor, creditor and market
the corresponding movement being
recorded in the consolidated statement In the case of litigation and claims confidence and to sustain the future
of comprehensive income. relating to services rendered, the development of the business. The
amount that is ultimately recorded Board also recommends the level of
Past service costs are immediately
is the result of a complex process of dividends to be distributed to ordinary
recognised as an expense. Net interest
assessment of a number of variables, shareholders on an annual basis.
expense is calculated by applying
and relies on management’s informed The Group maintains sufficient liquidity
the discount rate at the beginning
judgement about the circumstances at the Group and subsidiary level to
of the period to the net defined benefit
surrounding the past provision of meet its working capital requirements,
liability or asset.
services. It also relies on expert legal fund capital purchases and small and
The retirement benefit obligation advice and actuarial assessments. medium-sized acquisitions.
recognised in the balance sheet Changes in estimates are reflected
represents the present value of the in the income statement in the period Cash and cash equivalents as well as
defined benefit obligation reduced by in which the change occurs. loans and obligations under finance
the fair value of plan assets. Any asset leases are disclosed in notes 18 and 23.
resulting from this calculation is limited In 2015, the Board of Directors of SGS
BORROWING COSTS
to the present value of available SA authorised a new share buyback
refunds and reductions in future Borrowing costs directly attributable program of up to CHF 750 million. Up to
contributions to the plan. to the acquisition, construction or CHF 500 million is designated for capital
production of qualifying assets, which reduction through cancellation of the
Payments to defined contribution plans
are assets that necessarily take a repurchased shares and up to CHF 250
are recognised as an expense in
substantial period of time to get ready million for employee equity participation
the income statement as incurred.
for their intended use or sale, are added plans and/or utilisable as underlying
to the cost of those assets, until such securities for potential issuances of
Post-employment Plans Other time as the assets are substantially convertible bonds. The program started
than Pensions ready for their intended use or sale. on 29 January 2015 and will close on
The Group operates some non-pension Investment income earned on the 30 December 2016 at the latest.
post-employment defined benefit temporary investment of specific Treasury shares are intended primarily
schemes, mainly healthcare plans. borrowings pending their expenditure on to be used to cover the Group’s
The method of accounting and qualifying assets is deducted from the employee equity participation plan
the frequency of valuations are similar borrowing costs eligible for capitalisation. and/or convertible bonds that may be
to those used for defined benefit
All other borrowing costs are recognised issued. Decisions to buy or sell are
pension plans.
in the income statement in the period made on an individual transaction basis
in which they are incurred. by management.
Equity Compensation Plans
There were no changes in the Group’s
The Group provides additional benefits to approach to capital management
certain senior executives and employees RESTRUCTURING COSTS
during the year.
through equity compensation plans The Group recognises costs of
The Group is not subject to any externally
(see note 31). An expense is recognised restructuring against operating income
imposed capital requirements.
in the income statement for shares in the period in which management has
and equity-linked instruments granted committed to a formal plan, the costs
to senior executives and employees of which can be reliably estimated,
under these plans. and has raised a valid expectation
in those affected that the plan will
be implemented and the related
TRADE PAYABLES costs incurred. Where appropriate,
Trade payables are recognised at nominal restructuring costs include impairment
value that approximates the fair value. charges arising from implementation
of the formal plan.
142
TAXES EARNINGS PER SHARE Use of Estimates
Income taxes include all taxes based Basic earnings per share are calculated The key assumptions concerning
upon the taxable profits of the Group by dividing the Group’s profit by the the future, and other key sources of
including withholding taxes payable weighted average number of shares estimation at the balance sheet date
on the transfer of income from Group outstanding during the year, excluding that have a risk of causing a material
companies and tax adjustments from treasury shares. For diluted earnings per adjustment to the carrying amount
prior years. Taxes on income are share, the weighted average number of of assets and liabilities within the next
recognised in the income statement shares outstanding is adjusted assuming financial year, are discussed below.
except to the extent that they relate to conversion of all potential dilutive shares.
items directly charged or credited to Group profit is also adjusted to reflect Recoverability of Trade Accounts
equity or other comprehensive income, the after-tax impact of conversion. and Notes Receivable
in which case the related income tax
Trade accounts and notes receivable
effect is recognised in equity or other DIVIDENDS are reflected net of an estimated
comprehensive income. Provisions of
Dividends are reported as a movement allowance for doubtful accounts
income and withholding taxes that could
in equity in the period in which they are (see note 15). These allowances for
arise on the remittance of subsidiary
approved by the shareholders. potential uncollectible amounts are
retained earnings are only made where
estimated based primarily on the Group’s
there is a current intention to remit
ageing policy guidelines, individual client
such earnings. Other taxes not based TREASURY SHARES
analysis and an analysis of the underlying
on income, such as property taxes
Treasury shares are reported as a risk profile of each major revenue stream
and capital taxes, are included within
deduction to equity. The original cost by business and geography.
operating expenses.
of treasury shares and the proceeds of
Deferred taxes are provided using the any subsequent sale are recorded as
Impairment of Goodwill
full liability method. They are calculated movements in equity.
on all temporary differences that arise The Group determines whether goodwill
between the tax base of an asset or is impaired at a minimum on an annual
SIGNIFICANT ACCOUNTING
liability and the carrying values in the basis. This requires an estimation of
JUDGEMENTS AND ESTIMATES the value-in-use of the CGUs to which
consolidated financial statements except
for non tax-deductible goodwill and for Judgements the goodwill is allocated. Estimating
those differences related to investments the value-in-use requires the Group to
In the process of applying the entity’s
in subsidiaries where their reversal will make an estimate of the expected future
accounting policies described above,
not take place in the foreseeable future. cash flows from the CGU that holds the
management has made the following
Deferred income tax assets relating to goodwill at a determined discount rate
judgements that have a significant
the carry-forward of unused tax losses in order to calculate the present value
effect on the amounts recognised
and tax credits are recognised to of those cash flows.
in the financial statements.
the extent that it is probable that future
taxable profits will be available against Estimations of Employee Post-
Legal and Warranty Claims
which they can be utilised. employment Benefits Obligations
on Services Rendered
Current income tax assets and liabilities The Group maintains several defined
are offset when the income taxes are The Group is subject to litigation and other
benefit pension plans in accordance
levied by the same taxing authority and claims as described in note 25.
with local conditions and practices
where there is a legally enforceable Management bases its judgements on in the countries in which it operates.
right of offset. Deferred tax assets the circumstances relating to each specific The related obligations recognised
and liabilities are determined based event, internal and external legal advice, in the balance sheet represent the
on enacted or substantively enacted knowledge of the industries and markets, present value of the defined benefit
tax rates in the respective jurisdictions prevailing commercial terms and legal obligations calculated annually by
in which the Group operates that are precedent and evaluation of applicable independent actuaries. These actuarial
expected to apply to taxable income insurance cover where appropriate. valuations include assumptions such as
in the years in which those temporary The Group’s legal and warranty claims discount rates, salary progression rates
differences are expected to be are reviewed, at a minimum, on a quarterly and mortality rates. These actuarial
recovered or settled. basis by a cross-functional representation assumptions vary according to the
of management. local prevailing economic and social
conditions. Details of the assumptions
used are provided in note 24.
143
SGS
8. SGS
GROUP
GROUP
RESULTS
RESULTS
Income Taxes calculations for which the ultimate tax final tax outcome of these matters is
determination is uncertain. The Group different from the amounts that were
The Group is subject to income taxes
recognises liabilities for anticipated initially recorded, such differences will
in numerous jurisdictions. Significant
tax audit issues based on estimates impact the current and deferred income
judgement is required in determining
of whether additional taxes will be tax assets and liabilities in the period in
the worldwide provision for income
due, including estimated interest and which such determination is made.
taxes. There are many transactions and
penalties where appropriate. Where the
EXCHANGE RATES
The most significant currencies for the Group were translated at the following exchange rates into Swiss Francs:
YEAR-END RATES ANNUAL AVERAGE RATES

2015 2014 2015 2014
Australia AUD 100 72.24 80.59 72.44 82.49

Brazil BRL 100 25.64 36.54 29.37 38.96
Canada CAD 100 71.54 84.92 75.45 82.86
Chile CLP 100 0.14 0.16 0.15 0.16
China CNY 100 15.28 15.92 15.32 14.85
Eurozone EUR 100 108.42 120.22 106.91 121.47
United Kindgom GBP 100 146.91 153.47 147.19 150.69
Korea KRW 100 0.08 0.09 0.09 0.09
India INR 100 1.49 1.55 1.50 1.50
Taiwan TWD 100 3.01 3.11 3.03 3.02
USA USD 100 99.15 98.76 96.26 91.48
3. BUSINESS SIGA • 100% of Radiation Safety Services

Pty Ltd. (RSS), providing transport
COMBINATIONS Effective 1 October 2015, SGS acquired
and disposal of radioactive sources,
for a purchase price of CHF 43 million,
compliance, calibration, audit and
70% of SIGA Ingeniera Consultoria SA,
The following business combinations
survey, radiation officer training and
a leading project management, technical
and occurred during 2015 and 2014: other training and consulting services
inspection and engineering consulting
related to radiation, headquartered
company in Chile.
ACQUISITIONS 2015 in Mackay, Australia (effective
1 March 2015);
In 2015, the Group completed 10 Other
acquisitions for a total purchase price • 100% of Western Radiation Services
In 2015, other acquisitions included:
of CHF 128 million (note 20). Pty Ltd. (WRS), specialising in the
• 100% of AirServices Estudos analysis of water, soils, sediment
e Avaliaçôes Ambientais Ltda., and food for radioactive materials
SVA Ltd.
performing air emission monitoring operating out of Perth, Australia
Effective 15 May 2015, SGS acquired for and testing, as well as environmental (effective 1 March 2015);
a purchase price of CHF 39 million, 100% studies, based in Sao Paulo, Brazil
• 100% of Testing Services Group LLC
of SVA Ltd., an independent provider of (effective 1 February 2015);
(TSG), a provider of fuel systems
advisory, testing and regulatory services
• 100% of Cronolab Referência em testing for global customers in the
for the food and consumer products
Análises Químicas e Ambientais automotive, small engine, marine,
industry, based in United Kingdom.
Ltda., providing water, soil and portable fuel container and US
air testing, with a special focus on government markets, based in
dioxins and furans, based in Michigan, USA (effective 1 May 2015);
Rio de Janeiro, Brazil (effective
1 February 2015);
144
• 100% of DLH, a provider of vehicle Other These companies were acquired for
inspections services, headquartered in an equivalent of CHF 74 million and
In 2014, other acquisitions included:
Lyon, France (effective 1 June 2015); the total goodwill generated on
• 100% of Nemko Oy, the company these transactions amounted to
• 100% of Le Brigand NDT, a provider
provides testing, calibration and CHF 48 million.
of non-destructive testing services on
expert services to the domestic
composite and metallic structures for
and international communication,
the aviation industry, based in Nantes, Total
electronical and electronics
France (effective 2 October 2015); All the above transactions contributed
industry, based in Finland (effective
• 100% of Quality Compliance 1 January 2014); in total CHF 36 million in revenues and
Laboratories Inc (QCL), a GMP CHF 7 million in operating income.
• 100% of RF Technologies Ltd.,
compliant laboratory providing Had all acquisitions been effective
a certification body authorised
analytical testing to the pharmaceutical, 1 January 2014, the revenues for
by the Ministry of Internal Affairs
nutraceutical and cosmeceutical the period would have increased by
and Communications (MIC) of
industries, based in Toronto, Canada CHF 43 million and the Group operating
Japan, based in Yokohama, Japan
(effective 8 December 2015). income for the period would have been
(effective 1 February 2014);
These companies were acquired for increased by CHF 8 million. None of the
• 100% of Advanced Testing and goodwill arising on these acquisitions is
an equivalent of CHF 46 million and
Engineering Inc., a company expected to be tax deductible.
the total goodwill generated on these
specialised in fatigue durability testing
transactions amounted to CHF 35 million
laboratory, based in Michigan, USA
(note 20). DIVESTMENTS 2014
(effective 1 June 2014);
There were no significant disposals
Total • 100% of Commercial Aging Services
in 2014.
LLC, a company specialised in catalyst
All the above transactions contributed aging testing, based in Michigan, USA
in total CHF 45 million in revenues and (effective 1 June 2014);
CHF 9 million in operating income. Had
all acquisitions been effective 1 January • 100% of Courtray Consulting SARL,
2015, the revenues for the period would a leading provider of performance
have increased by CHF 110 million and testing, validation and expertise
the Group operating income for the services in the global hygiene
period would have been increased by disposable industry, based in France
CHF 16 million. None of the goodwill (effective 1 July 2014);
arising on these acquisitions is expected • 100% of Galson Laboratories Inc.,
to be tax deductible. a global leader in industrial hygiene
analysis and monitoring solutions,
DIVESTMENTS 2015 based in Syracuse, USA (effective
1 August 2014);
There were no significant disposals
in 2015. • 100% of Röntgen Technische Dienst
NV, a global leader in non-destructive
testing services based in Belgium
ACQUISITIONS 2014
(effective 1 October 2014);
In 2014, the Group completed 10 • 100% of Gonzalo de Miguel
acquisitions for a total purchase price Redondo S.L.U (GMR), specialised
of CHF 119 million. in technical support services to the
automotive industry for homologation
Search Group and approval of new vehicles and
Effective 1 July 2014, SGS acquired for automotive part, based in Spain
a purchase price of CHF 45 million, (effective 1 November 2014);
100% of Search Group, a leading • 100% of Labtox, a leader in asbestos,
engineering and sustainability advisory polychlorobipheryl and formaldehyde
group, laboratory and training institute, testing services, based in Switzerland
based in the Netherlands. (effective 11 December 2014).
145
4. INFORMATION BY BUSINESS AND GEOGRAPHICAL SEGMENT
OTHER
ADJUSTED AMORTISATION NON- OPERATING
OPERATING OF ACQUISITION RESTRUCTURING RECURRING INCOME
(CHF million) REVENUE INCOME INTANGIBLES COSTS ITEMS BY BUSINESS
2015
Agricultural Services 368 64 - (5) - 59
Minerals Services 633 89 (1) (24) - 64
Oil, Gas and Chemicals Services 1 119 129 (3) (8) - 118
Life Science Services 211 23 (2) (1) - 20
Consumer Testing Services 1 133 270 (2) (7) - 261
Systems and Services Certification 419 71 - (6) - 65
Industrial Services 884 100 (5) (9) - 86
Environmental Services 367 47 (2) (1) - 44
Automotive Services 318 62 (6) (2) - 54
Governments and Institutions Services 260 62 - (1) - 61
TOTAL 5 712 917 (21) (64) - 832
Unallocated costs (10)

GROUP OPERATING INCOME 822
OTHER
ADJUSTED AMORTISATION NON- OPERATING
OPERATING OF ACQUISITION RESTRUCTURING RECURRING INCOME
(CHF million) REVENUE INCOME INTANGIBLES COSTS ITEMS 1 BY BUSINESS
2014
Agricultural Services 387 64 - - - 64
Minerals Services 703 99 (1) (10) - 88
Oil, Gas and Chemicals Services 1 201 144 (3) - - 141
Life Science Services 213 20 (2) - - 18
Consumer Testing Services 1 093 270 (1) - - 269
Systems and Services Certification 414 74 - - - 74
Industrial Services 977 122 (5) - - 117
Environmental Services 342 34 (2) (1) - 31
Automotive Services 303 62 (6) - - 56
Governments and Institutions Services 250 58 - - 32 90
TOTAL 5 883 947 (20) (11) 32 948
Unallocated costs (7)

GROUP OPERATING INCOME 941
1. This amount represents the amicable settlement between SGS and the Republic of Paraguay of a long standing dispute associated with unpaid inspection services.
146
The revenues reported represent revenue generated from external customers.
UNALLOCATED COSTS 2015

In 2015, the Group incurred CHF 10 million of integration-related costs and transaction-related costs that have been expensed
in accordance with IFRS 3 (revised).
RESTRUCTURING COSTS 2015

At the same time, the Group incurred a pre-tax restructuring charge of CHF 64 million, largely as a result of personnel
reorganisation due to the decline in market conditions in certain businesses and geographies (CHF 30 million) as well as fixed asset
impairment and other charges (CHF 34 million).
UNALLOCATED COSTS 2014

In 2014, the Group incurred CHF 7 million of integration-related costs and transaction-related costs that were expensed in
accordance with IFRS 3 (revised).
RESTRUCTURING COSTS 2014

At the same time, the Group incurred a pre-tax restructuring charge of CHF 11 million, largely as a result of personnel reorganisation
due to the decline in market conditions in certain businesses and geographies (CHF 3 million) as well as fixed asset impairment and
other charges (CHF 8 million).
(CHF million) 2015 % 2014 %
REVENUE FROM EXTERNAL CUSTOMERS BY GEOGRAPHICAL SEGMENT

Europe/Africa/Middle East 2 553 44.7 2 709 46.0
Americas 1 432 25.1 1 433 24.4
Asia Pacific 1 727 30.2 1 741 29.6
TOTAL 5 712 100.0 5 883 100.0
Revenue in Switzerland from external customers for 2015 amounted to CHF 227 million (2014: CHF 232 million). No country
represented more than 15% of revenues from external customers in 2015 or 2014.
MAJOR CUSTOMER INFORMATION
In 2015 and in 2014, no external customer represented 10% or more of the Group’s total revenue.
(CHF million) 2015 % 2014 %
OPERATING ASSETS BY BUSINESS SEGMENT

Agricultural Services 246 5.4 242 5.0
Minerals Services 549 11.9 626 13.1
Oil, Gas and Chemicals Services 912 19.8 951 19.8
Life Science Services 239 5.2 264 5.5
Consumer Testing Services 735 16.0 714 14.9
Systems and Services Certification 243 5.3 199 4.1
Industrial Services 699 15.2 805 16.8
Environmental Services 350 7.6 356 7.4
Automotive Services 415 9.0 422 8.8
Governments and Institutions Services 209 4.6 219 4.6
TOTAL 4 597 100.0 4 798 100.0
147
RECONCILIATION OF OPERATING ASSETS BY BUSINESS SEGMENT TO THE BALANCE SHEET

Assets by business segment as above 4 597 4 798
Non-operating assets 1 297 969
TOTAL ASSETS PER BALANCE SHEET 5 894 5 767
Assets by business segment comprise all assets held by the Group’s operating affiliates after elimination of inter-company balances.
SPECIFIC NON-CURRENT ASSETS BY MATERIAL COUNTRIES

Specific non-current assets by material countries:
(CHF million) 2015 % 2014 %
Switzerland 206 8.5 114 4.6

Other countries 2 230 91.5 2 337 95.4
TOTAL SPECIFIC NON-CURRENT ASSETS 2 436 100.0 2 451 100.0
No country represented more than 15% of the specific non-current assets in 2015 or 2014.
RECONCILIATION WITH TOTAL NON-CURRENT ASSETS

Specific non-current assets as above 2 436 2 451
Deferred tax assets 173 195
Non-current loans to third parties 8 2
TOTAL 2 617 2 648
(CHF million) 2015 % 2014 %
OPERATING LIABILITIES BY BUSINESS SEGMENT

TOTAL 1 998 100.0 2 034 100.0
RECONCILIATION OF OPERATING LIABILITIES BY BUSINESS SEGMENT TO THE BALANCE SHEET

Liabilities by business segment as above 1 998 2 034
Non-operating liabilities 1 915 1 330
TOTAL LIABILITIES PER BALANCE SHEET 3 913 3 364
148
(CHF million) 2015 % 2014 %
CAPITAL ADDITIONS BY BUSINESS SEGMENT

TOTAL 307 100.0 312 100.0
(CHF million) 2015 % 2014 %
DEPRECIATION AND AMORTISATION BY BUSINESS SEGMENT

TOTAL 295 100.0 298 100.0
(CHF million) 2015 % 2014 %
IMPAIRMENT BY BUSINESS SEGMENT
Agricultural Services 3 11.1 - 0.0
Oil, Gas and Chemicals Services - - - 0.0
Life Science Services - - - 0.0
Systems and Services Certification 5 18.5 - 0.0
Industrial Services 2 7.4 - 0.0
Environmental Services - - - 0.0
Automotive Services - - - 0.0
Governments and Institutions Services - - - 0.0
TOTAL 27 100.0 6 100.0
149
2015 2014
AVERAGE NUMBER OF EMPLOYEES BY GEOGRAPHICAL SEGMENT

Europe/Africa/Middle East 34 721 33 542
Americas 19 873 19 191
Asia Pacific 31 309 30 782
TOTAL 85 903 83 515
Number of employees at year-end 87 962 84 246
5. OTHER OPERATING EXPENSES
Rental expense, insurance, utilities and sundry supplies 279 287

Consumables, repairs and maintenance 375 400
Communication costs 98 103
Travel costs 357 377
Miscellaneous operating income and expenses 265 219
TOTAL 1 374 1 386
6. FINANCIAL INCOME
Interest income 11 16
Foreign exchange gains 1 0
Other financial income 1 1
TOTAL 13 17
7. FINANCIAL EXPENSES
Interest expense 36 40
Loss on derivatives at fair value 13 14
Loss/(gain) arising on an Interest Rate Swap 1
15 (20)
(Gain)/loss arising on adjustment for hedged item 1
(15) 20
Other financial expenses 5 2
Net financial expenses on defined benefit plans 2 2
TOTAL 56 58
1. In a designated fair value hedge accounting relationship.
150
8. TAXES
MAJOR COMPONENTS OF TAX EXPENSE

Current taxes 214 223
Deferred tax (credit)/expense relating to the origination and reversal
(19) 11
of temporary differences
TOTAL 195 234
The Group has operations in various countries that have differing tax laws and rates. Consequently, the effective tax rate on
consolidated income varies from year to year. A reconciliation between the reported income tax expense and the amount that would
arise using the weighted average statutory tax rate of the Group is as follows:
RECONCILIATION OF TAX EXPENSE

Profit before taxes 779 900
Tax at the domestic rates applicable to the profits earned
140 173
in the country concerned
Tax effect of non-deductible or non-taxable items 10 8
Tax charge from/(usage of) unrecognised tax losses 1 2
Non-creditable foreign withholding taxes 34 31
Other 10 20
TAX CHARGE 195 234
2015 2014
(CHF million) ASSETS LIABILITIES ASSETS LIABILITIES
COMPONENTS OF DEFERRED INCOME TAX BALANCES

Fixed assets 33 9 30 12
Inventories and receivables 8 18 17 27
Retirement benefit obligations 21 - 36 -
Provisions and other 36 17 66 17
Intangible assets 8 16 8 18
Tax losses carried forward 67 - 38 -
DEFERRED INCOME TAXES 173 60 195 74
151
Net change in deferred tax assets/(liabilities):
(CHF million) TOTAL
NET DEFERRED INCOME TAX ASSET (LIABILITY) AT 1 JANUARY 2014 107

(Charged)/credited to the income statement (11)
Credited/(charged) to the shareholders' equity 1 26
Exchange differences and other (1)
NET DEFERRED INCOME TAX ASSET (LIABILITY) AT 31 DECEMBER 2014 121
Credited/(charged) to the income statement 19
(Charged)/credited to the shareholders' equity 1 (15)
Exchange differences and other (12)
NET DEFERRED INCOME TAX ASSET (LIABILITY) AT 31 DECEMBER 2015 113
1. Relate to remeasurement gains and losses on pensions. (2015: CHF 9 million, 2014: CHF 26 million) and pension funds special contribution [2015: CHF (24) million,
2014: CHF 0 million].
REFLECTED IN THE BALANCE SHEET AS FOLLOWS:

Deferred tax assets 173 195
Deferred tax liabilities (60) (74)
TOTAL 113 121
The Group has unrecognised tax losses carried forward amounting to CHF 46 million (2014: CHF 49 million) of which none will
expire within the next five years. No tax losses carried forward expired in 2015.
At 31 December 2015, the retained earnings of subsidiaries and foreign incorporated joint ventures consolidated by the Group include
approximately CHF 4 125 million (2014: CHF 3 912 million) of undistributed earnings that may be subject to tax if remitted to the
parent company. As a Group policy, no deferred tax is recognised in respect of these amounts until the point at which the distributable
earnings are determined and foreign statutory requirements, allowing the distribution, are fulfilled. Until that time, the Group is able to
control the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.
9. EARNINGS PER SHARE

Basic earnings per share are calculated as follows:
2015 2014
Profit attributable to equity holders of SGS SA (CHF million) 549 629

Weighted average number of shares 7 626 002 7 670 752
BASIC EARNINGS PER SHARE (CHF) 71.99 81.99
Diluted earnings per share are calculated as basic earnings per share except that the weighted average number of shares includes
the dilutive effect of the Group’s share option plans (see note 31):
2015 2014

Diluted weighted average number of shares 7 630 172 7 702 444
DILUTED EARNINGS PER SHARE (CHF) 71.95 81.65
152
Adjusted earnings per share are calculated as follows:
2015 2014

Amortisation of acquisition intangibles (CHF million) 21 20
Restructuring costs net of tax (CHF million) 47 8
Transaction and integration-related costs net of tax (CHF million) 8 5
Other non-recurring items net of tax (CHF million) - (28)
Adjusted profit attributable to equity holders of SGS SA (CHF million) 625 634
ADJUSTED BASIC EARNINGS PER SHARE (CHF) 81.95 82.69
ADJUSTED DILUTED EARNINGS PER SHARE (CHF) 81.91 82.35
10. LAND, BUILDINGS AND EQUIPMENT
LAND AND MACHINERY OTHER TANGIBLE

(CHF million) BUILDINGS AND EQUIPMENT ASSETS TOTAL
2015
COST
At 1 January 477 1 750 660 2 887
Additions 8 165 102 275
Acquisition of subsidiaries - 10 4 14
Disposals (12) (40) (41) (93)
Exchange differences/other (29) (122) (82) (233)
At 31 December 444 1 763 643 2 850
ACCUMULATED DEPRECIATION AND IMPAIRMENTS
At 1 January 229 1 195 420 1 844
Depreciation 16 173 56 245
Impairment 13 4 3 20
Disposals (8) (37) (38) (83)
Exchange differences/other (20) (98) (30) (148)
At 31 December 230 1 243 413 1 886
NET BOOK VALUE AT 31 DECEMBER 2015 214 520 230 964
INCLUDED IN LAND, BUILDINGS AND EQUIPMENT ARE LEASED ASSETS AS FOLLOWS

Purchase cost of leased tangible assets - 2 - 2
Accumulated depreciation - 2 - 2
NET BOOK VALUE AT 31 DECEMBER 2015 - - - -
153
LAND AND MACHINERY OTHER TANGIBLE

(CHF million) BUILDINGS AND EQUIPMENT ASSETS TOTAL
2014
COST
At 1 January 453 1 545 643 2 641
Additions 10 154 109 273
Acquisition of subsidiaries (2) 12 4 14
Disposals (2) (47) (25) (74)
Exchange differences/other 18 86 (71) 33
At 31 December 477 1 750 660 2 887
ACCUMULATED DEPRECIATION AND IMPAIRMENTS
At 1 January 214 1 026 372 1 612
Depreciation 17 170 60 247
Impairment 2 2 2 6
Disposals (2) (39) (22) (63)
Exchange differences/other (2) 27 5 30
At 31 December 229 1 195 420 1 844
NET BOOK VALUE AT 31 DECEMBER 2014 248 555 240 1 043
INCLUDED IN LAND, BUILDINGS AND EQUIPMENT ARE LEASED ASSETS AS FOLLOWS

Purchase cost of leased tangible assets - 4 1 5
Accumulated depreciation - 3 - 3
NET BOOK VALUE AT 31 DECEMBER 2014 - 1 1 2
At 31 December 2015, the Group had commitments of CHF 4 million (2014: CHF 9 million) for the acquisition of land,
buildings and equipment.
Included in the other tangible assets are construction-in-progress assets amounting to CHF 24 million (2014: CHF 12 million).
11. GOODWILL
(CHF million) 2015 2014 WorldReginfo - 9598e104-0c9b-410a-914c-87b9720d1132
COST
At 1 January 1 105 1 009
Additions 85 84
Exchange differences (102) 12
AT 31 DECEMBER 1 088 1 105
Goodwill impairment reviews have been conducted for goodwill balances allocated to more than 60 cash generating units (CGU).
The goodwill balances tested account for 99.4% of the total goodwill net book value reported as at 31 December 2015.
No goodwill impairment was identified and therefore no impairment charge was recorded (2014: nil).
Detailed results of the impairment tests are presented below for larger goodwill balances (representing 42.4% of all goodwill items
tested). These tests have all been performed in accordance with the Group's uniform method described on page 140.
154
AUTOMOTIVE SPAIN AND ARGENTINA The recoverable amount of the CGU, The key sensitivity for the impairment
Goodwill recognised on the acquisition determined based upon a value-in-use test is the growth in sales and operating
calculation, is higher than its carrying margin. Reducing the expected annual
of the vehicle inspection businesses of
amount. Cash flow projections were revenue growth rates for the first five
General de Servicios ITV (Inspección
used in this calculation, discounted at years by 2.0% would not result in
Técnica de Vehículos) SA in Spain and
a pre-tax rate of 6.0%. The cash flows the carrying amount exceeding the
Argentina (2010) has been allocated
for the first five years were based recoverable amount. Reducing the
to the Automotive Services Spain and
upon financial plans approved by Group operating margin by 0.25% would not
Argentina CGU for impairment testing
Management while the subsequent result in the carrying amount exceeding
purposes. The carrying amount of
years assume a long-term growth rate the recoverable amount.
the goodwill allocated to the CGU is
of 1.0% and stable operating margins. An increase of 1.0% in the discount
expressed in EUR for an equivalent of
The overall assumptions used in the rate assumption would not change
CHF 128 million as at 31 December 2015
calculation are consistent with the the conclusions of the impairment test.
(2014: CHF 142 million).
expected average growth rate of the Life
The recoverable amount of the CGU, Science Services business in Europe.
determined based upon a value-in-use MINERALS SERVICES, NORTH AMERICA
The key sensitivity for the impairment
calculation, is higher than its carrying Goodwill recognised on the following
test is the growth in sales and operating
amount. Cash flow projections were main acquisitions has been allocated to
margin. Reducing the expected annual
used in this calculation, discounted at the Minerals Services North America
revenue growth rates for the first five
a pre-tax rate of 8.9%. The cash flows CGU for impairment testing purposes:
years by 2.0% would not result in
for the first five years were based Lakefield group (2002) and Minnovex
the carrying amount exceeding the
upon financial plans approved by Group group (2005), SMPN-CEMI (2008) and
recoverable amount. Reducing the
Management while the subsequent E&S Engineering (2012). The carrying
operating margin by 0.25% would not
years assume a long-term growth rate amounts of the goodwill items allocated
result in the carrying amount exceeding
of 1.0% and stable operating margins. to this CGU are expressed in various
the recoverable amount.
The overall assumptions used in the currencies for an equivalent of
calculation are consistent with the An increase of 1.0% in the discount CHF 56 million as at 31 December 2015
expected average growth rate of the rate assumption would not change the (2014: CHF 65 million).
vehicle inspection business served in conclusions of the impairment test.
The recoverable amount of the CGU,
Europe and South America.
determined based upon a value-in-use
The key sensitivity for the impairment
INDUSTRIAL SERVICES,
calculation, is higher than its carrying
test is the growth in sales and operating NORTH AMERICA amount. Cash flow projections were
margin. Reducing the expected annual Goodwill mainly recognised on the used in this calculation, discounted at
revenue growth rates for the first five years following main acquisition of Pfinde a pre-tax rate of 7.3%. The cash flows
by 2.0% would not result in the carrying (2011), FTS US (2007) and MSI (2013) for the first five years were based
amount exceeding the recoverable amount. has been allocated to the Industrial upon financial plans approved by Group
Reducing the operating margin by 0.25% Services North America CGU for Management while the subsequent
would not result in the carrying amount impairment testing purposes. years assume a long-term growth rate
exceeding the recoverable amount. of 1.0% and stable operating margins.
The carrying amount of the goodwill
An increase of 1.0% in the discount allocated to this CGU is expressed in The overall assumptions used in
rate assumption would not change the USD and CAD for an equivalent of the calculation are consistent with
conclusions of the impairment test. CHF 71 million as at 31 December 2015 the expected average growth rate
(2014: CHF 73 million). of the Minerals Services business
LIFE SCIENCE SERVICES, EUROPE The recoverable amount of the CGU, in North America.
Goodwill recognised on the following determined based upon a value-in-use The key sensitivity for the impairment
main acquisitions has been allocated calculation, is higher than its carrying test is the growth in sales and operating
to the Life Science Services, Europe amount. Cash flow projections were margin. Reducing the expected annual
CGU for impairment testing purposes: used in this calculation, discounted at revenue growth rates for the first five
Medisearch International (2003), Cibest a pre-tax rate of 6.7%. The cash flows years by 2.0% would not result in
(2004), Aster Cephac (2006), M-Scan for the first five years were based the carrying amount exceeding the
Group (2010), Exprimo (2011) and upon financial plans approved by Group recoverable amount. Reducing the
Vitrology (2012). The carrying amounts Management while the subsequent operating margin by 0.25% would not
of the goodwill items allocated to years assume a long-term growth rate result in the carrying amount exceeding
this CGU are expressed in EUR for an of 1.0% and stable operating margins. the recoverable amount.
equivalent of CHF 95 million as at 31 The overall assumptions used in
An increase of 1.0% in the discount
December 2015 (2014: CHF 104 million). the calculation are consistent with
rate assumption would not change
the expected average growth rate
the conclusions of the impairment test.
of the Industrial Services business
in North America.
155
MULTIBUSINESS SERVICES, GERMANY The key sensitivity for the impairment The recoverable amount of the CGU,
Goodwill mainly recognised on test is the growth in sales and operating determined based upon a value-in-use
the following main acquisition of Institut margin. Reducing the expected annual calculation, is higher than its carrying
Fresenius AG (2004) and Merlot revenue growth rates for the first five amount. Cash flow projections were
Nokia Siemens network (2008), years by 2.0% would not result in used in this calculation, discounted at
has been allocated to a specific the carrying amount exceeding the a pre-tax rate of 7.5%. The cash flows
cross-business CGU for impairment recoverable amount. Reducing the for the first five years were based
testing purposes. The carrying amount operating margin by 0.25% would not upon financial plans approved by Group
of the goodwill allocated to this CGU is result in the carrying amount exceeding Management while the subsequent
expressed in EUR for an equivalent of the recoverable amount. years assume a long-term growth rate
CHF 57 million as at 31 December 2015 An increase of 1.0% in the discount of 1.0% and stable operating margins.
(2014: CHF 64 million). rate assumption would not change The overall assumptions used in
the conclusions of the impairment test. the calculation are consistent with
The recoverable amount of the CGU, the expected average growth rate
determined based upon a value-in-use of the Oil, Gas and Chemicals Services,
calculation, is higher than its carrying OIL, GAS AND CHEMICALS SERVICES, Netherlands and Malaysia segment
amount. Cash flow projections were NETHERLANDS AND MALAYSIA served by the Group.
used in this calculation, discounted at
Goodwill recognised on the following The key sensitivity for the impairment
a pre-tax rate of 6.0%. The cash flows
main acquisitions of Horizon Energy test is the growth in sales and operating
for the first five years were based
Partners (2008) and AKZO (2008) has margin. Reducing the expected annual
upon financial plans approved by Group
been allocated to the Oil, Gas and revenue growth rates for the first five
Management while the subsequent
Chemicals Services, Netherlands and years by 2.0% would not result in
years assume a long-term growth rate
Malaysia CGU for impairment testing the carrying amount exceeding the
of 1.0% and stable operating margins.
purposes. The carrying amount of recoverable amount. Reducing the
The overall assumptions used in
the goodwill allocated to the CGU is operating margin by 0.25% would not
the calculation are consistent with
expressed in EUR for an equivalent of result in the carrying amount exceeding
the expected average growth rate
CHF 52 million as at 31 December 2015 the recoverable amount.
in Multibusiness Services in Germany.
An increase of 1.0% in the discount
rate assumption would not change
the conclusions of the impairment test.
12. OTHER INTANGIBLE ASSETS

COMPUTER SOFTWARE
AND OTHER ASSETS
TRADEMARKS CUSTOMER INTERNALLY
(CHF million) AND OTHER RELATIONSHIPS GENERATED PURCHASED TOTAL
2015
COST
At 1 January 81 176 85 283 625
Additions - - 8 24 32
Acquisition of subsidiaries 3 27 - - 30
Disposals - - - (5) (5)
Exchange differences/other (8) (15) 3 (19) (39)
At 31 December 76 188 96 283 643
ACCUMULATED AMORTISATION AND IMPAIRMENT
At 1 January 44 63 72 214 393
Amortisation 7 15 6 22 50
Impairment - 1 1 5 7
Acquisition of subsidiaries - - - - -
Disposals - - - (6) (6)
Exchange differences/other (4) (5) - (10) (19)
At 31 December 47 74 79 225 425
156
COMPUTER SOFTWARE
AND OTHER ASSETS
TRADEMARKS CUSTOMER INTERNALLY
(CHF million) AND OTHER RELATIONSHIPS GENERATED PURCHASED TOTAL
2014
COST
At 1 January 82 153 78 240 553
Additions - - 7 32 39
Acquisition of subsidiaries - 20 - 1 21
Disposals - - - (8) (8)
Exchange differences/other (1) 3 - 18 20
At 31 December 81 176 85 283 625
ACCUMULATED AMORTISATION AND IMPAIRMENT
At 1 January 37 49 67 193 346
Amortisation 7 13 5 26 51
Acquisition of subsidiaries - - - 1 1
Disposals - - - (8) (8)
Exchange differences/other - 1 - 2 3
At 31 December 44 63 72 214 393
SIGNIFICANT INTANGIBLE ASSETS

The Group is improving global management information systems focusing on contract management, finance and sales order
processing. In particular, additions relating to the Group's ERP system amount to CHF 6 million (2014: CHF 5 million) and are being
amortised over a period of four years.
Incremental costs relating to internally generated assets are capitalised when incurred and amortised over a period of four years
from the time of occurrence. Purchased intangible assets mainly consist of purchased computer software and consultancy services
required for implementations.
13. OTHER NON-CURRENT ASSETS

Non-current loans or amounts receivable from third parties 8 1

Retirement benefit assets 87 -
Other non-current assets 47 48
TOTAL 142 49
Depending on the nature of the balances, currency and date of maturity, interest rates on long-term balances or loans to third
parties range between 0% and 16.8%.
In 2015, other non-current assets includes deposits for guarantees and include CHF 28 million (2014: CHF 27 million) of restricted
cash. Typical examples of restricted cash are cash deposits for performance bonds, rentals and other operating obligations.
At 31 December 2015 and 2014, the fair value of the Group's other non-current assets approximates the carrying value.
157
14. UNBILLED REVENUES AND INVENTORIES
Work-in-progress 61 60
Unbilled revenues 187 212
Inventories 40 58
TOTAL 288 330
15. TRADE ACCOUNTS AND NOTES RECEIVABLE

Allowance for doubtful accounts (98) (110)
TOTAL 917 1 068
Ageing of trade accounts and notes receivables:

Not overdue 361 446
Past due not more than two months 372 401
Past due more than two months but not more than four months 79 102
Past due more than four months but not more than six months 40 49
Past due more than six months but not more than one year 65 70
Past due more than one year 0 0
TOTAL 917 1 068
The nominal value, less impairment provisions, of trade accounts and notes receivable is considered to approximate their fair value.
The movement of allowance for doubtful accounts is analysed as follows:
(CHF million) 2015 2014 WorldReginfo - 9598e104-0c9b-410a-914c-87b9720d1132
Balance at beginning of the year (110) (159)

Acquisition of subsidiaries (1) (1)
Increase in allowance recognised in the income statement (18) (15)
Utilisations 22 66
Exchange differences 9 (1)
TOTAL (98) (110)
158
Receivables aged less than 360 days are provided when the creditworthiness review indicates that the amounts may
become unrecoverable.
The Group provides fully for all trade accounts and notes receivable over 360 days as historical experience shows that receivables
aged more than 360 days are generally not recoverable.
The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and
customers. Accordingly, management believes that there is no further credit provision required in excess of the allowance
for doubtful debts.
Credit risks arise mainly from the possibility that customers may not be able to settle their obligations as agreed. The Group
periodically assesses the creditworthiness of customers.
The Group’s credit risk is diversified due to the large number of entities that make up the Group’s customer base and the
diversification across many different industries and geographic regions.
The maximum credit risk to which the Group is theoretically exposed at 31 December 2015 is represented by the carrying amounts
of receivables in the balance sheet.
No customer accounts for 5% or more of the Group’s total receivables at balance sheet date.
16. OTHER RECEIVABLES AND PREPAYMENTS
Prepayments 69 76
Derivative assets 22 22
Interest Rate Swap designated in a fair value hedge accounting relationship - 15
Other receivables 247 258
TOTAL 338 371
The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties.
Other receivables consist mainly of sales and other taxes recoverable as well as advances to suppliers and prepaid income tax.
17. MARKETABLE SECURITIES

Available for sale 244 9
TOTAL 244 9
This amount of CHF 244 million includes CHF 235 million of various investments in Exchange Traded Funds (ETF), denominated in USD.
Unrealised gains or losses on marketable securities designated as available for sale and which are recorded in equity amounted
to less than CHF 1 million for 2015 (2014: nil).
159
18. CASH AND CASH EQUIVALENTS
Cash and short-term deposits 955 803

Deposits on demand 535 537
Short-term loans - 1
TOTAL 1 490 1 341
Cash and cash equivalents do not include restricted cash, which is reported within other non-current assets (note 13).
19. CASH FLOW STATEMENT

19.1. OTHER NON-CASH ITEMS
Depreciation of buildings and equipment 10 245 247

Impairment of land, buildings and equipment and other intangible assets 10 and 12 27 6
Amortisation of intangible assets 12 50 51
Net financial expenses 43 41
(Decrease)/increase in provisions and employee benefits (22) (28)
Share-based payment expenses 9 10
(Gain)/loss on disposals of land, buildings and equipment (5) -
Share of results from associates and other entities (1) (2)
Taxes 195 234
OTHER NON-CASH ITEMS 541 559
19.2 INCREASE IN WORKING CAPITAL
Decrease/(increase) in unbilled revenues and inventories 10 (2)
Decrease/(increase) in trade accounts and notes receivable 64 (90)
(Increase)/decrease in other receivables and prepayments (12) (25)
Increase/(decrease) in trade and other payables 36 (4)
Increase/(decrease) in other creditors and accruals 50 29
Increase/(decrease) in other provisions 12 (17)
DECREASE/(INCREASE)IN WORKING CAPITAL 160 (109)
160
19.3. CASH FLOWS ARISING FROM ACQUISITIONS OF BUSINESSES
2015 2014
(CHF million) ACQUISITIONS ACQUISITIONS
Tangible and other long-term assets (8) (6)

Intangible assets (30) (20)
Current assets excluding cash and cash equivalents (38) (21)
Cash and cash equivalents (6) (6)
Current liabilities 21 11
Non-current liabilities 12 7
Non-controlling interests 6 -
NET IDENTIFIABLE ASSETS ACQUIRED OR DIVESTED (43) (35)
Acquired/(divested) cash and cash equivalents 6 6
SUBTOTAL (37) (29)
Goodwill (85) (84)
Consideration payable 22 5
Payments on prior year acquisitions (1) (6)
Prepayment on acquisitions (3) -
NET CASH FLOWS (104) (114)
Note 3 provides further information regarding acquisitions of businesses. All acquisitions were settled in cash.
20. ACQUISITIONS
ASSETS AND LIABILITIES ARISING FROM THE 2015 ACQUISITIONS
SVA SIGA OTHER TOTAL

FAIR VALUE ON FAIR VALUE ON FAIR VALUE ON FAIR VALUE ON
(CHF million) ACQUISITION ACQUISITION ACQUISITION ACQUISITION
Tangible and other long-term assets 3 2 3 8

Intangible assets 11 14 5 30
Cash and cash equivalents 3 2 1 6
Current liabilities (3) (9) (9) (21)
Non-current liabilities (2) (7) (3) (12)
Non-controlling interests - (6) - (6)
NET ASSETS ACQUIRED 15 17 11 43
Goodwill 24 26 35 85
TOTAL PURCHASE PRICE 39 43 46 128
Acquired cash and cash equivalents (3) (2) (1) (6)
Consideration payable (9) (7) (6) (22)
Prepayment on acquisitions - - 3 3
NET CASH OUTFLOW ON ACQUISITIONS 27 34 42 103
The goodwill arising on these acquisitions relates mainly to the value of expected synergies and the value of the qualified workforce
that do not meet the criteria for recognition as separable intangible assets.
Consideration payable relates mainly to environmental and commercial warranty clauses and future earn-out payments.
The Group incurred transaction-related costs of CHF 4 million (2014: CHF 5 million) related to external legal fees, due diligence
expenses as well as the costs of maintaining an internal acquisition department. These expenses are reported within Other
Operating Expenses in the consolidated income statement.
161
21. FINANCIAL RISK MANAGEMENT

RISK MANAGEMENT POLICIES AND OBJECTIVES
The Group’s activities expose it primarily to market, credit and liquidity risk. Market risk includes foreign exchange, interest rate
and equity price risks.
The risk management policies and objectives are governed by the Group’s policies approved by the Board of Directors.
The Group’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls
and to monitor the risk and limits continually by means of reliable and up-to-date administrative and information systems.
The Audit Committee oversees how management monitors compliance with the Group’s risk management policies.
The Audit Committee is assisted in its oversight role by Internal Audit.
RISK MANAGEMENT ACTIVITIES

The Group uses foreign exchange contracts to manage the Group’s exposure to fluctuations in foreign currency exchange rates.
These activities are carried out in accordance with the Group’s risk management policies and objectives in areas such as
counter-party exposure and hedging practices. Counter parties to these agreements are major international financial institutions
with high credit ratings and positions are monitored using market value and sensitivity analyses. The associated credit risk is
therefore limited. These agreements generally include the exchange of one currency for a second currency at a future date.
The following table summarises foreign exchange contracts outstanding at year-end. The notional amount of derivatives
summarised below represents the gross amount of the contracts and includes transactions which have not yet matured.
Therefore the figures do not reflect the Group’s net exposure at year-end. The market value approximates the costs to settle
the outstanding contracts. These market values should not be viewed in isolation but in relation to the market values of the
underlying hedged transactions and the overall reduction in the Group’s exposure to adverse fluctuations in foreign exchange rates.
Currently, the Group has certain exposure to interest and credit risks and no exposure to equity price risk.
NOTIONAL AMOUNT BOOK VALUE MARKET VALUE

(CHF million) 2015 2014 2015 2014 2015 2014
FOREIGN EXCHANGE FORWARD CONTRACTS

Currency:
Australian Dollar (AUD) (54) (45) (1) (1) (1) (1)
Brazilian Real (BRL) (27) (40) 1 (1) 1 (1)
Canadian Dollar (CAD) (19) (14) 1 - 1 -
Chilean Peso (CLP) (23) (26) (1) 1 (1) 1
Chinese Renminbi (CNY) 19 20 1 - 1 -
Colombian Peso (COP) (10) (10) - (1) - (1)
Czech Koruna (CZK) - (2) - - - -
Euro (EUR) (318) (409) - 6 - 6
British Pound Sterling (GBP) 72 31 (2) - (2) -
Hong Kong Dollar (HKD) 15 267 - - - -
Indian Rupee (INR) (4) - - - - -
Japanese Yen (JPY) (7) (4) - - - -
Kenyan Shilling (KES) (2) - - - - -
Korean Won (KRW) 4 3 - - - -
New Zealand Dollar (NZD) (4) - - - - -
Philippines Peso (PHP) (7) (8) - - - -
Polish Zloty (PLN) (5) (6) - - - -
Russian Rubble (RUB) 3 (3) - 1 - 1
Turkish New Lira (TRY) (14) (16) - - - -
US Dollar (USD) (417) (117) 4 (1) 4 (1)
South African Rand (ZAR) (23) (37) 2 - 2 -
Other (2) (2) (1) - (1) -
TOTAL (823) (418) 5 4 5 4
162
FAIR VALUE MEASUREMENT RECOGNISED IN THE BALANCE SHEET
Marketable securities and derivative assets and liabilities are the only financial instruments measured at fair value subsequent
to their initial recognition.
Of marketable securities, CHF 244 million (2014: CHF 9 million) qualify as Level 1, fair value measurement category.
Derivative assets (2015: CHF 22 million; 2014: CHF 37 million) and liabilities (2015: CHF 20 million; 2014: CHF 8 million) qualify as
Level 2 fair value measurement category in accordance with the fair value hierarchy.
Level 1 fair value measurements are those derived from the quoted price in active markets. Level 2 fair value measurements are
those derived from inputs other than quoted prices that are observable for the asset and liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices).
Derivative assets and liabilities consist of foreign currency forward contracts that are measured using quoted forward exchange
rates and yield curves derived from quoted interest rates matching maturities of the contract. In addition, the Interest Rate Swap
was measured using quoted interest rates and yield curves derived from quoted interest rates matching maturities of the contract.
The Interest Rate Swap was terminated during the year.
The fair values of financial assets and financial liabilities included in the level 2 above have been determined in accordance with
generally accepted pricing models.
CREDIT RISK MANAGEMENT

Credit risk arises from the possibility that customers may not be able to settle their obligations as agreed. It arises principally from
the Group’s commercial activities. The Group has dedicated standards, policies and procedures to control and monitor such risks.
As part of financial management activities the Group enters into various types of transactions with international banks, usually with
a credit rating of at least A. Exposure to these risks is closely monitored and kept within predetermined parameters. The Group
does not expect any non-performance by these counter parties.
The maximum credit risk to which the Group is theoretically exposed at 31 December 2015 is the carrying amount of financial
assets including derivatives.
Analysis of financial assets by class and category at 31 December 2015:
AMORTISED FAIR VALUE

COST LOANS AND AVAILABLE FOR SALE AT FAIR VALUE THROUGH P&L TOTAL
RECEIVABLES
CARRYING CARRYING CARRYING CARRYING
(CHF million) AMOUNT FAIR VALUE AMOUNT FAIR VALUE AMOUNT FAIR VALUE AMOUNT FAIR VALUE
Cash and cash equivalents 1 490 1 490 - - - - 1 490 1 490

Trade receivables 917 917 - - - - 917 917
Other receivables 1
140 140 - - - - 140 140
Unbilled revenues 187 187 - - - - 187 187
Receivables from 3 parties rd
8 8 - - - - 8 8
- non-current
Marketable securities - - 244 244 - - 244 244
Derivatives
- - - - 22 22 22 22
TOTAL FINANCIAL ASSETS 2 742 2 742 244 244 22 22 3 008 3 008
1. Excluding VAT and other tax related items.
In the fair value hierarchy, marketable securities qualify as level 1 and the remaining financial assets qualify as level 2.
163
Analysis of financial assets by class and category at 31 December 2014:

COST LOANS AND AVAILABLE FOR SALE AT FAIR VALUE THROUGH P&L TOTAL
RECEIVABLES
CARRYING CARRYING CARRYING CARRYING
(CHF million) AMOUNT FAIR VALUE AMOUNT FAIR VALUE AMOUNT FAIR VALUE AMOUNT FAIR VALUE
Cash and cash equivalents 1 341 1 341 - - - - 1 341 1 341

Trade receivables 1 068 1 068 - - - - 1 068 1 068
Other receivables 1
140 140 - - - - 140 140
Unbilled revenues 212 212 - - - - 212 212
Receivables from 3 parties -
rd
1 1 - - - - 1 1
non-current
Marketable securities - - 9 9 - - 9 9
Derivatives 2
- - - - 37 37 37 37
TOTAL FINANCIAL ASSETS 2 762 2 762 9 9 37 37 2 808 2 808

2. Including an Interest Rate Swap designated in a fair value hedge accounting relationship of CHF 15 million.
In the fair value hierarchy, marketable securities qualify as level 1 and the remaining financial assets qualify as level 2.
LIQUIDITY RISK MANAGEMENT

The objective of the Group liquidity and funding management is to ensure that all its foreseeable financial commitments can be
met when due. Liquidity and funding is primarily managed by Group Treasury in accordance with practices and limits set in the risk
management policies and objectives approved by the Board of Directors.
The nature of the Group’s business requires keeping a significant part of the cash reserves in the operating units.
Due to the significant cash position liquidity risk is limited. The Group has various committed and uncommitted bilateral credit
facilities with its banks.
Analysis of financial liabilities by class and category at 31 December 2015:
COST LOANS AND AT FAIR VALUE THROUGH P&L TOTAL
RECEIVABLES
CARRYING CARRYING CARRYING
(CHF million) AMOUNT FAIR VALUE AMOUNT FAIR VALUE AMOUNT FAIR VALUE
Trade payables 226 226 - - 226 226

Other payables and financial liabilities 1
162 162 - - 162 162
Advances from clients 59 59 - - 59 59
Loans and obligations under finance leases 2 217 2 217 - - 2 217 2 217
Derivatives - - 20 20 20 20
Bank overdrafts 1 1 - - 1 1
TOTAL FINANCIAL LIABILITIES 2 665 2 665 20 20 2 685 2 685
In the fair value hierarchy, all financial liabilities qualify as level 2.
164
Analysis of financial liabilities by class and category at 31 December 2014:

COST LOANS AND AT FAIR VALUE THROUGH P&L TOTAL
RECEIVABLES
CARRYING CARRYING CARRYING
(CHF million) AMOUNT FAIR VALUE AMOUNT FAIR VALUE AMOUNT FAIR VALUE
Trade payables 192 192 - - 192 192

Other payables and financial liabilities 1
159 159 - - 159 159
Advances from clients 41 41 - - 41 41
Loans and obligations under finance leases 1 686 1 686 - - 1 686 1 686
Derivatives - - 8 8 8 8
Bank overdrafts 4 4 - - 4 4
TOTAL FINANCIAL LIABILITIES 2 082 2 082 8 8 2 090 2 090
In the fair value hierarchy, all financial liabilities qualify as level 2.
Contractual maturities of financial liabilities including interest payments at 31 December 2015:
GROSS SETTLED GROSS SETTLED

BANK DERIVATIVE DERIVATIVE
BORROWINGS OVERDRAFTS FINANCIAL FINANCIAL TRADE
3 RD PARTY LT AND OTHER INSTRUMENTS INSTRUMENTS PAYABLES FINANCE
(CHF million) AND ST LIABILITIES OUTFLOWS INFLOWS AND OTHERS LEASES TOTAL
On demand or within one year 531 10 1 472 (1 472) 374 - 915

Within the second year 29 6 - - 1 - 36
Within the third year 30 6 - - - - 36
Within the fourth year 402 - - - 1 - 403
Within the fifth year 19 - - - - - 19
After five years 1 403 - - - - - 1 403
The Group hedges its foreign exchange exposures on a net basis. The net gross settled derivative financial instruments of less than
1 million (2014: 11 million) represents the net nominal value expressed in CHF of the Group’s foreign currency contracts outstanding
at 31 December 2015.
Contractual maturities of financial liabilities including interest payments at 31 December 2014:
GROSS SETTLED GROSS SETTLED

BANK DERIVATIVE DERIVATIVE
BORROWINGS OVERDRAFTS FINANCIAL FINANCIAL TRADE
3 RD PARTY LT AND OTHER INSTRUMENTS INSTRUMENTS PAYABLES FINANCE
(CHF million) AND ST LIABILITIES OUTFLOWS INFLOWS AND OTHERS LEASES TOTAL
On demand or within one year 46 12 1 130 (1 119) 332 1 402

Within the second year 524 4 - - - - 528
Within the third year 26 1 - - - - 27
Within the fourth year 24 - - - - - 24
Within the fifth year 397 - - - - - 397
After five years 852 1 - - - - 853
165
SGS
8. SGS
GROUP
GROUP
RESULTS
RESULTS
SENSITIVITY ANALYSES
The estimated changes in the value of net foreign currency positions are based on an instantaneous 5% weakening of the Swiss
Franc against all other currencies from the level applicable at 31 December 2015 and 2014, with all other variables remaining constant.
Sensitivity analysis at 31 December 2015 and 2014:
2015 2014
INCOME STATEMENT EQUITY IMPACT INCOME STATEMENT EQUITY IMPACT
(CHF million) IMPACT INCOME/(EXPENSE) INCREASE/(DECREASE) IMPACT INCOME/(EXPENSE) INCREASE/(DECREASE)
US Dollar (USD) - 9 (1) 8

Euro (EUR) (2) - (2) -
CFA Franc BEAC (XAF) 2 - 1 -
New Cedi (GHS) - - (1) -
Kwanza Angolais (AOA) 1 - 1 -
British Pound Sterling (GBP) - - - 2
Australian Dollar (AUD) - 2 - 2
Canadian Dollar (CAD) - 4 - 5
New Metical (MZN) - - - -
Brazilian Real (BRL) - 2 - 2
Colombian Peso (COP) - - - 1
Korean Won (KRW) - - - 1
Chilean Peso (CLP) - 3 - 2
INTEREST RATE RISK MANAGEMENT

The Group is exposed to fair value interest rate risk because the Group borrows funds at fixed interest rates. The risk is managed
by the Group by the use of Interest Rate Swap contracts. Hedging activities are evaluated regularly to align with interest rate views
and defined risk appetite, ensuring the most cost-effective hedging strategies are applied.
On 27 May 2011, the Group entered into an Interest Rate Swap agreement, which hedges the 10-year CHF 275 million corporate
bond with a coupon of 3.0% issued at the same date. In this case, the Group designated and documented the Interest Rate Swap
exchanging fixed rate interest for floating interest as a hedging instrument against changes in fair value of recognised liability
(fair value hedge).
On 18 July 2012, the Group received a cash amount of CHF 33 million in relation with the re-setting of the Interest Rate Swap
agreement to market rates.
These cash proceeds were recognised against the carrying amount of the corporate bond and will be amortised within interest
expense over the remaining life of the corporate bond by adjusting the effective interest rate under the effective interest method.
At the same date, the Group has also re-designated the hedge accounting relationship in compliance with fair value hedge
accounting requirements.
In February 2014 the company issued a ten year CHF 250 million straight bond with a coupon of 1.75%. At the same time bond
holders of CHF 133 million accepted to exchange their existing 2016 bonds into new bonds with a term of 8 years amounting
to CHF 138 million and maturing in 2022 with a coupon of 1.375%. Finally, in 2014 the Company re-opened the bond maturing in
2022 and increased the amount by CHF 112 million to a total of CHF 250 million.
On 12 January 2015, the Group received a cash amount of CHF 15 million in relation with the termination of the Interest Rate
Swap agreement to market rates. At the same date, the Group terminated the hedge accounting in compliance with fair value
accounting principles.
In May 2015, the Company issued a 15-year CHF 225 million straight bond with a coupon of 0.875% and a 8-year CHF 325 million
straight bond with a coupon of 0.25%.
These cash proceeds were recognised against the carrying amount of the corporate bond and will be amortised within interest
expense over the remaining life of the corporate bond by adjusting the effective interest rate under the effective interest method.
If interest rates were 50 basis points higher/lower, the profit for the year ended 31 December 2015 would increase/decrease
by CHF nil (2014: nil).
166
22. SHARE CAPITAL AND TREASURY SHARES
TOTAL SHARE CAPITAL
SHARES IN CIRCULATION TREASURY SHARES TOTAL SHARES ISSUED (CHF million)
BALANCE AT 1 JANUARY 2014 7 650 840 171 596 7 822 436 8

Treasury shares released into circulation 24 666 (24 666) - -
Treasury shares purchased - - - -
BALANCE AT 31 DECEMBER 2014 7 675 506 146 930 7 822 436 8
Treasury shares released into circulation 54 636 (54 636) - -
Treasury shares purchased for future
(45 778) 45 778 - -
equity compensation plans
Treasury shares purchased for buyback (78 904) 78 904 - -
ISSUED SHARE CAPITAL

SGS SA has a share capital of CHF 7 822 436 (2014: CHF 7 822 436) fully paid in and divided into 7 822 436 (2014: 7 822 436)
registered shares of a par value of CHF 1. All shares, other than own shares, participate equally in the dividends declared by the
Company and have equal voting rights.
TREASURY SHARES
On 31 December 2015, SGS SA held 216 976 treasury shares. The shares related to the share buyback are directly held by SGS SA,
while the shares to cover the option rights issued in previous periods are held by a subsidiary company.
In 2015, 54 636 treasury shares were sold to cover option rights and 45 778 were purchased for an average price of CHF 1 842.
As part of the share buyback programme, 78 904 shares were purchased this year for an average price of CHF 1 842.
In 2015, the Group Initiated a Share Buy-Back programme for a total of up to CHF 750 million. Up to CHF 500 million is designated
for cancellation and the remainder for employee equity participation plans and/or for utilisation as underlying securities for potential
issuances of convertible bonds. The program started on 20 January 2015 and will close 31 December 2016 at the latest.
AUTHORISED AND CONDITIONAL ISSUE OF SHARE CAPITAL

The Board has the authority to increase the share capital of SGS SA by a maximum of 500 000 registered shares of a par value
of CHF 1 each, corresponding to a maximum increase of CHF 500 000 in share capital. The Board is mandated to issue the new
shares at the market conditions at the time of issue. In the event that the new shares are issued for an acquisition, the Board is
authorised to waive the shareholders’ preferential right of subscription or to allocate such subscription right to third parties.
The authority delegated by the shareholders to the Board of Directors to increase the share capital is valid until 12 March 2017.
The shareholders have conditionally approved an increase of share capital in the amount of CHF 1 100 000, divided into
1 100 000 registered shares of a par value of CHF 1 each. This conditional share capital increase is intended to procure the
necessary shares to satisfy employee equity participation plans and option or conversion rights to be incorporated in convertible
bonds or similar equity-linked instruments that the Board is authorised to issue. The right to subscribe to such conditional capital is
reserved for beneficiaries of employee equity participation plans and holders of convertible bonds or similar debt instruments and
therefore excludes shareholders’ preferential rights of subscription. The Board is authorised to determine the timing and conditions
of such issues, provided that they reflect prevailing market conditions. The term of exercise of the options or conversion rights may
not exceed 10 years from the date of issuance of the equity-linked instruments.
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23. LOANS AND OBLIGATIONS UNDER LEASES
Bank loans 4 16
Bank overdrafts 1 4
Corporate bonds 2 211 1 668
Finance lease obligations 1 2
TOTAL 2 217 1 690
Current 3 18
Non-current 2 214 1 672
Depending on the nature of the loan, currency and date of maturity, interest rates on long-term loans from third parties range
between 0.25% and 15.8% and on short-term loans from third parties range between 0% and 10.9%.
The loans from third parties exposed to fair value interest rate risk amount to CHF 2 215 million (2014: CHF 1 361 million) and
the loans from third parties exposed to cash flow interest rate risk amount to CHF 0.5 million (2014: CHF 328 million).
The fair value of the other corporate bonds was CHF 2 312 million (2014: CHF 1 456 million).
SGS SA issued the following corporate bonds listed on the SIX Swiss Exchange:
FACE VALUE IN YEAR OF ISSUE REDEMPTION

DATE OF ISSUE CHF MILLION COUPON IN % MATURITY PRICE IN % PRICE IN %
19.08.2010 417 1.875 2016 100.346 100.000

08.03.2011 375 2.625 2019 100.832 100.000
27.05.2011 275 3.000 2021 100.480 100.000
27.05.2011 1 75 1.875 2016 99.591 100.000
27.02.2014 138 1.375 2022 100.517 100.000
27.02.2014 250 1.750 2024 101.019 100.000
25.04.2014 112 1.375 2022 101.533 100.000
08.05.2015 325 0.25 2023 100.079 100.000
08.05.2015 225 0.875 2030 100.245 100.000
1. Re-opening of the six-year bond issued on 19 August 2010.
In February 2014, the Company issued a 10-year CHF 250 million straight bond with a coupon of 1.75%. At the same time, bond
holders of CHF 133 million accepted to exchange their existing 2016 bonds into new bonds with a term of 8 years amounting
to CHF 138 million and maturing in 2022 with a coupon of 1.375%.
The Company re-opened the bond maturing in 2022 and increased the amount by CHF 112 million to a total of CHF 250 million.
168
In May 2015, the Company issued a 15-year CHF 225 million straight bond with a coupon of 0.875% and a 8-year CHF 325 million
straight bond with a coupon of 0.25%. The Group has listed all the bonds on the SIX Swiss Exchange.
Loans and finance lease obligations mature as follows:
BANK LOANS, OVERDRAFTS

AND CORPORATE BONDS LEASE OBLIGATIONS
(CHF million) 2015 2014 2015 2014
On demand or within one year 494 16 1 2

Within the second year 1 75 - -
Within the third year 1 2 - -
Within the fourth year 373 - - -
Within the fifth year - 373 - -
After five years 1 348 1 222 - -
TOTAL 2 216 1 688 1 2
The currency composition of loans and finance lease obligations is as follows:
BANK LOANS, OVERDRAFTS

AND CORPORATE BONDS LEASE OBLIGATIONS
(CHF million) 2015 2014 2015 2014
Swiss Franc (CHF) 2 212 1 673 - -

Euro (EUR) 1 - - -
US Dollar (USD) 1 1 - -
Indian Rupee (INR) - 4 - -
Colombian Peso (COP) - - - -
Malagasy Ariary (MGA) 1 2 - -
Brazilian Real (BRL) - 7 - -
Other 1 1 1 2
TOTAL 2 216 1 688 1 2
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24. RETIREMENT BENEFIT OBLIGATIONS

The Group mainly operates defined benefit pension plans in Switzerland, the United States of America, the United Kingdom,
the Netherlands, Germany, Italy, France, Korea and Taiwan. Contributions to most plans are paid to pension funds that are legally
separate entities.
The Group also operates post-employment benefit plans, principally healthcare plans in the United States of America and
in Switzerland. They represent a defined benefit obligation at 31 December 2015 of CHF 14 million (2014: CHF 14 million).
The method of accounting and the frequency of valuation are similar to those used for defined benefit pension plans.
Healthcare cost trend assumptions do not have a significant effect on the amounts recognised in the income statement.
In 2015, following changes in its status, an entity previously recognised as a subsidiary was qualified as a defined benefit plan
(employer fund) in Switzerland. Before the change in status, the Group decided to transfer funds in order to improve the structure
of the assets in the United States of America and the United Kingdom.
The Group's material defined benefit plans are in Switzerland, the United States of America and the United Kingdom.
SWITZERLAND
The Group jointly operates with the employees a retirement foundation in Switzerland. The assets and liabilities of the retirement
foundation are held separately from the Group. The foundation board is equally composed of representatives of the employee
and representatives of the employer. This foundation covers all the employees in Switzerland and provides benefits on a defined
contribution basis.
Each employee has a retirement account to which the employee and the Group contribute at a rate set out in the foundation rules
based on a percentage of salary. Every year, the foundation decides the level of interest, if any, to apply to retirement accounts
based on the agreed policy. At retirement, employees can elect to withdraw all or part of their balances of their retirement account,
failing which the retirement account is converted into annuities at pre-defined conversion rates.
As the foundation board is expected to eventually pay out all of the foundation’s assets as benefits to employees and former
employees, no surplus is deemed to be recoverable by the Group. Similarly, unless the assets are insufficient to cover minimum
benefits, the Group does not expect to make any deficit contribution to the foundation.
According to IFRS, the foundation has to be classified as a defined benefit plan due to underlying benefit guarantees and
has to be accounted for on this basis.
The Group also operates an employer fund. The assets are held separately from the Group. This foundation has unilateral power
to provide benefits and consequently has no obligations. Therefore, this foundation has no pension liabilities.
The weighted average duration of the expected benefit payment is approximately 16 years.
The Group expects to contribute CHF 7 million to this plan in 2016.
UNITED STATES OF AMERICA

The Group operates a non-contributory defined benefit plan which is subject to the provisions of the Employee Retirement
Income Security Act (ERISA).
The assets of the plan are held separately from the Group by the trustee-custodian, and the plan’s third party pension administrator
who disburses payments directly to retirees or beneficiaries under the plan. Both the trustee-custodian and the administrator
ensure adherence to ERISA rules.
Funding valuations are calculated on an actuarial basis and contributions are made as necessary. The funding target is to provide
the plan with sufficient assets to meet future plan obligations.
Effective 16 March 2004, non-exempt participants ceased accruing any additional benefits; only exempt employees of certain
SGS business units in the United States of America are eligible for annual benefit accrual. In addition, the pension benefit was
changed and is defined as percentage of the current year’s pensionable compensation; the cost of additional benefit accrual
is evaluated annually. The Group reserves the right to make future changes to the benefit accrual structure of the plan.
Eligible employees become participants in the plan after the completion of one year of service and after reaching the age of 21.
Participants become fully vested in the plan after five years of service.
The weighted average of duration of the expected benefit payment is approximately 13 years.
170
UNITED KINGDOM
The Group operates two defined benefit plans through a trust. The assets of the plans are held separately from the Group and have
trustees who ensure the plan’s rules are strictly adhered to. One plan has been closed to new entrants since 2002. Since then
new employees have been offered membership of defined contributions plans which have been operated by the Group. The other
plan has no active members. Under the defined benefit plans, each member’s pension at retirement is related to their pensionable
service and final salary.
Funding valuations of the defined benefit plans are carried out and agreed between the Group and the plan trustees at least once
every three years. The funding target is for the plans to hold assets equal in value to the accrued benefits based on projected
salaries. As part of the valuation process, if there is a shortfall against this target, then the Group and trustees will agree on deficit
contributions to meet this deficit over a specified period.
There is a risk to the Group that adverse experience could lead to a requirement for the Group to make additional contributions
to recover any deficit that arises.
The weighted average of duration of the expected benefit payments from the combined plans is approximately 20 years.
OTHER COUNTRIES
The Group sponsors defined retirement benefits plans in other countries where the Group operates. No individual countries other
than those described above are considered material and need to be separately disclosed.
The Group expects to contribute CHF 29 million to those plans in 2016.
The assets and liabilities recognised in the balance sheet at 31 December for defined benefit obligations and for post-employment
benefit plans are as follows:
(CHF million) CH UK USA OTHER TOTAL
2015
Fair value of plan assets 373 241 214 84 912
Present value of funded defined benefit obligation (390) (198) (242) (109) (939)
(UNFUNDED)/FUNDED STATUS (17) 43 (28) (25) (27)
Present value of unfunded defined benefit obligation (10) - (8) (49) (67)
Limit on pension asset - - - - -
NET ASSET/(LIABILITY) AT 31 DECEMBER (27) 43 (36) (74) (94)
The net liability of CHF 94 million includes CHF 87 million of pension fund assets recognised in the item Other Non-Current Assets
in Note 13 and CHF 181 million of pension fund liability recognised in the item Retirement Benefit Obligation in the balance sheet.
2014
Fair value of plan assets 332 235 235 86 888
Present value of funded defined benefit obligation (370) (218) (284) (116) (988)
(UNFUNDED)/FUNDED STATUS (38) 17 (49) (30) (100)
Present value of unfunded defined benefit obligation (9) - (9) (58) (76)
Limit on pension asset - - - - -
171
Amounts recognised in the income statement:
2015
Service cost expense 8 2 (2) 4 12
Net interest/(income) expense on defined benefit plan - (1) 1 2 2
Administrative expenses - 1 1 - 2
TOTAL EXPENSE DUE TO DEFINED BENEFIT OBLIGATION AT 31 DECEMBER 8 2 - 6 16
Expense charged in:

Salaries and wages 8 3 (1) 4 14
Financial expense/(income) - (1) 1 2 2
TOTAL EXPENSE DUE TO DEFINED BENEFIT OBLIGATION AT 31 DECEMBER 8 2 - 6 16
2014
Service cost expense 5 1 2 - 8
Net interest/(income) expense on defined benefit plan - (1) 1 2 2
Administrative expenses - 1 1 - 2
TOTAL EXPENSE DUE TO DEFINED BENEFIT OBLIGATION AT 31 DECEMBER 5 1 4 2 12
Expense charged in:

Salaries and wages 5 2 3 - 10
Financial expense/(income) - (1) 1 2 2
TOTAL EXPENSE DUE TO DEFINED BENEFIT OBLIGATION AT 31 DECEMBER 5 1 4 2 12
Amounts recognised in the statement of other comprehensive income:
2015
Remeasurement on net defined benefit liability
Change in demographic assumptions - - 15 1 16
Change in financial assumptions 11 (13) (7) - (9)
Experience adjustments 6 - (4) - 2
Actual return on plan assets excluding net interest expense 5 9 17 - 31
Change in limit on pension asset - - - - -
TOTAL RECOGNISED IN THE STATEMENT OF OTHER COMPREHENSIVE
22 (4) 21 1 40
INCOME AT 31 DECEMBER
172
2014
Remeasurement on net defined benefit liability
Change in demographic assumptions 8 - - 1 9
Change in financial assumptions 54 34 28 20 136
Experience adjustments 7 (7) 1 1 2
Actual return on plan assets excluding net interest expense (12) (8) (1) (10) (31)
Change in limit on pension asset (16) - - - (16)
TOTAL RECOGNISED IN THE STATEMENT OF OTHER COMPREHENSIVE
41 19 28 12 100
INCOME AT 31 DECEMBER
Movements in the net asset/(liability) during the period:
2015
NET ASSET/(LIABILITY) AT 1 JANUARY (47) 17 (58) (88) (176)
Expense recognised in the income statement (8) (2) - (6) (16)
Remeasurements recognised in other comprehensive income (22) 4 (21) (1) (40)
Contributions paid by the Group 7 5 3 11 26
Pension funds special contribution 43 20 40 - 103
Exchange differences - (1) - 10 9
2014
NET ASSET/(LIABILITY) AT 1 JANUARY (7) 28 (33) (82) (94)
Expense recognised in the income statement (5) (1) (4) (2) (12)
Remeasurements recognised in other comprehensive income (41) (19) (28) (12) (100)
Contributions paid by the Group 7 8 13 8 36
Exchange differences (1) 1 (6) - (6)
173
Change in the defined benefit obligation is as follows:
2015
Opening present value of the defined benefit obligation 379 218 293 174 1 064
Current service cost 8 2 3 4 17
Interest cost 5 7 11 4 27
Plan participants' contributions 5 1 1 (1) 6
Past service cost - - - - -
Settlements - - (47) (1) (48)
Net benefit payments (14) (8) (15) (6) (43)
(Gains)/losses due to changes in demographic assumptions - - 15 1 16
(Gains)/losses due to changes in financial assumptions 11 (13) (7) - (9)
Experience (gains)/losses 6 - (4) - 2
Exchange rate (gains)/losses - (9) - (17) (26)
DEFINED BENEFIT OBLIGATION AT 31 DECEMBER 400 198 250 158 1 006
2014
Opening present value of the defined benefit obligation 307 179 236 150 872
Current service cost 5 1 2 4 12
Interest cost 7 8 12 5 32
Plan participants' contributions 5 - 1 - 6
Past service cost - - - (4) (4)
Settlements - - - - -
Change in scope - - - 4 4
(Gains)/losses due to changes in demographic assumptions 8 - - 1 9
(Gains)/losses due to changes in financial assumptions 54 34 28 20 136
Experience (gains)/losses 7 (7) 1 1 2
Exchange rate (gains)/losses - 9 27 - 36
DEFINED BENEFIT OBLIGATION AT 31 DECEMBER 379 218 293 174 1 064
Change in fair value of plan assets is as follows:
(CHF million) CH UK USA OTHER TOTAL WorldReginfo - 9598e104-0c9b-410a-914c-87b9720d1132

2015
Opening fair value of plan assets 332 235 235 86 888
Interest income on plan assets 5 8 10 2 25
Return on plan assets excluding amounts included in net
(5) (9) (17) - (31)
interest expense
Employer contributions 7 5 3 11 26
Pension funds special contribution 43 20 40 - 103
Plan participants' contributions 5 1 1 (1) 6
Administrative expenses paid - (1) (1) - (2)
Settlements - - (42) (1) (43)
Exchange differences - (10) - (7) (17)
FAIR VALUE OF PLAN ASSETS AT 31 DECEMBER 373 241 214 84 912
174
2014
Opening fair value of plan assets 316 207 203 68 794
Interest income on plan assets 8 10 10 2 30
Return on plan assets excluding amounts included in net
12 8 1 10 31
interest expense
Employer contributions 7 8 13 8 36
Plan participants' contributions 5 - 1 - 6
Administrative expenses paid - (1) (1) - (2)
Settlements - - - - -
Change in scope - - - 4 4
Exchange differences (2) 9 22 1 30
FAIR VALUE OF PLAN ASSETS AT 31 DECEMBER 332 235 235 86 888
There are no reimbursement rights included in plan assets. The actual return on plan assets was a loss of CHF 6 million
(2014: gain of CHF 61 million).
Changes in the amount not recognised due to the asset limit are as follows:
2015
ASSET LIMIT AT 1 JANUARY - - - - -
Other changes in unrecognised asset due to the asset ceiling - - - - -

Exchange differences - - - - -
ASSET LIMIT AT 31 DECEMBER - - - - -
2014
ASSET LIMIT AT 1 JANUARY 16 - - - 16
Other changes in unrecognised asset due to the asset ceiling (16) - - - (16)
Exchange differences - - - - -
ASSET LIMIT AT 31 DECEMBER - - - - -
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The major categories of plan assets at the balance sheet date are as follows:
2015
Cash and cash equivalent 88 4 1 11 104
Equity securities 91 47 71 2 211
Debt securities 58 91 142 1 292
Insurance policies - 17 - 70 87
Property 116 - - - 116
Investment funds 20 81 - - 101
Other - 1 - - 1
TOTAL PLAN ASSETS AT 31 DECEMBER 373 241 214 84 912
2014
Cash and cash equivalent 47 23 1 11 82
Equity securities 84 56 137 2 279
Debt securities 60 94 97 1 252
Insurance policies - - - 72 72
Property 116 - - - 116
Investment funds 25 61 - - 86
Other - - - 1 1
TOTAL PLAN ASSETS AT 31 DECEMBER 332 234 235 87 888
In 2015, SGS did not occupy any property that was included in the plan assets. In 2014, SGS occupied property that was included
in the plan assets with a fair value of CHF 6 million.
The property is rented at fair market rental rates. There are no SGS SA shares or any other financial securities used by
the Group included in plan assets.
The plan assets are primarily held within instruments with quoted market prices in an active market, with the exception of
the property and insurance policy holdings.
The investment strategy in Switzerland is to invest, within the statutory and legal requirements, in a diversified portfolio which
provides a long-term return strategy which will enable the board of the foundation to provide increases to the accounts of
the members of the pension fund, whilst taking on the lowest possible risk in order to do so.
In the United States of America, the Pension Plan Target Policy is determined by both quantitatively and qualitatively assessing
the risk tolerance level and return requirements of the Plan as determined by the Investment Committee. The investment portfolio
asset allocation and structure are developed based on the results of this process.
In the United Kingdom, the Trustees review the investment strategy of the Scheme and the Plan on a regular basis in order
to ensure that they remain appropriate. The last review for both the Scheme and Plan has recently been undertaken and
is in the process of being implemented.
Actuarial assumptions vary according to local prevailing economic and social conditions. The principal weighted average actuarial
assumptions used in determining the cost of benefits for both 2015 and 2014 are as follows:
176
Actuarial assumptions vary according to local prevailing economic and social conditions. The principal weighted average actuarial
assumptions used in determining the cost of benefits for both 2015 and 2014 are as follows:
(Weighted average %) CH UK USA OTHER
2015
Discount rate 0.9 3.9 4.3 2.5
LPP 2010 SNA02 CMI RP 2014
Mortality assumption -
Generational 2015 Scale SSA
Salary progression rate 2.0 3.5 3.3 2.4
Future pension increases 0.3 3.2 - 0.4
Healthcare cost trend assumed for the next year 3.0 2.0 6.9 -
Ultimate trend rate 3.0 - 5.0 -
Year that the rate reaches the ultimate trend rate - - 2 022 -
(Weighted average %) CH UK USA OTHER
2014
Discount rate 1.3 3.6 4.0 2.6
Mortality assumption LPP 2010 Gen S1NA IRS 2015 -
Salary progression rate 2.0 3.6 3.3 2.5
Future pension increases 0.5 3.1/2.1 - 0.5
Healthcare cost trend assumed for the next year - - 7.2 -
Ultimate trend rate - - 5.0 -
Year that the rate reaches the ultimate trend rate - - 2022 -
The weighted average rate for each assumption used to measure the benefits obligation is also shown. The assumptions used
to determine end-of-year benefits obligation are also used to calculate the following year’s cost.
In Switzerland, a decrease in the discount rate of 0.5% per annum would, all other things being equal, increase the obligation
by CHF 33 million; a 0.5% increase in assumed salary increases would increase the obligation by CHF 2 million and a one-year
increase in members’ life expectancy would increase the obligation by approximately CHF 13 million.
In the United States of America a decrease in the discount rate of 0.5% per annum would, all other things being equal, increase
the obligation by CHF 15 million; a 0.5% increase in assumed salary increases would increase the obligation by less than
CHF 1 million and a one-year increase in members’ life expectancy would increase the obligation by approximately CHF 8 million.
In the United Kingdom, a decrease in the discount rate of 0.5% per annum would, all other things being equal, increase the
obligation by CHF 22 million; a 0.5% increase in assumed salary increases would increase the obligation by CHF 3 million and
a one-year increase in members’ life expectancy would increase the obligation by approximately CHF 6 million.
These sensitivities have been calculated to show the movement in the defined benefit obligation in isolation, and assuming no
other changes in market conditions at the accounting date. This is unlikely in practice; for example, a change in discount rate is
unlikely to occur without any movement in the value of the assets held by the plans.
The amount recognised as an expense in respect of defined contribution plans during 2015 was CHF 69 million (2014: CHF 74 million).
177
25. PROVISIONS
LEGAL AND WARRANTY

CLAIMS ON SERVICES DEMOBILISATION AND
(CHF million) RENDERED REORGANISATION OTHER PROVISIONS TOTAL
AT 1 JANUARY 2015 48 38 30 116

Acquisitions of subsidiaries - - 1 1
Charge to income statement 21 44 24 89
Release to income statement (21) (9) (4) (34)
Payments (5) (38) (9) (52)
Exchange differences (1) (1) (2) (4)
AT 31 DECEMBER 2015 42 34 40 116
Analysed as: 2015 2014
Current liabilities 19 19
Non-current liabilities 97 97
TOTAL 116 116
A number of Group companies are subject to litigation and other claims arising out of the normal conduct of their business that
can be best viewed as claims on services rendered. The claim provision represents the sum of estimates of amounts payable
on identified claims and of losses incurred but not yet reported. They therefore reflect estimates of the future payments required
to settle both reported and unreported claims.
The process of estimation is complex, dealing with uncertainty, requiring the use of informed estimates, actuarial assessment,
evaluation of the insurance cover where appropriate and the judgement of management. Any changes in these estimates are
reflected in the income statement in the period in which the estimates change.
The timing of cash outflows from pending litigation and claims is uncertain since it depends, in the majority of cases, on the
outcome of administrative and legal proceedings. The Group does not discount its provisions, as the timing of the cash outflows
cannot be reasonably and reliably determined.
In the opinion of management, based on all currently available information, the provisions adequately reflect exposure to legal and
warranty claims on services rendered. The ultimate outcome of these matters is not expected to materially affect the Group’s
financial position, results of operations or cash flows.
For specific long-term contracts, typically with two to five years’ duration, the Group is required to dismantle infrastructure and
terminate the services of personnel upon completion of the contract. These demobilisation costs are provided for during the life
of the contract. Experience has shown that these contracts may be either extended or terminated earlier than expected. The timing
of these demobilisation outflows is difficult to assess. The amounts are therefore not discounted.
Other provisions relate to various present legal or constructive obligations of the Group toward third parties, such as termination
payment to employees upon leaving the Group, which in some jurisdictions are a legal obligation.
26. TRADE AND OTHER PAYABLES

Trade payables 226 192

Other payables 115 121
Other financial liabilities 185 198
TOTAL 526 511
Trade accounts and other payables principally comprise amounts outstanding for trade purchases and ongoing operating costs.
At 31 December 2015 and 2014, the fair value of the Group’s trade accounts and other payables approximates the carrying value.
178
27. OTHER CREDITORS AND ACCRUALS
Accrued expenses 521 523

Advance billings 54 50
Advances from clients 59 41
Derivative liabilities 20 8
TOTAL 654 622
At 31 December 2015 and 2014, the fair value of the Group’s other creditors and accruals approximates the carrying value.
28. CONTINGENT LIABILITIES

In the normal course of business, the Group and its subsidiaries are parties to various lawsuits and claims. Management does not
expect that the outcome of any of these legal proceedings will have a material adverse effect on the Group’s financial position,
results of operations or cash flows.
29. GUARANTEES
(CHF million) 2015 ISSUED 2014 ISSUED
Guarantees 130 109

Performance bonds 204 159
TOTAL 334 268
The Group has issued unconditional guarantees to certain financial institutions that have provided credit facilities (loans and guaranteed
bonds) to its subsidiaries. In addition, it has issued performance bonds and bid bonds to commercial customers on behalf of its
subsidiaries. Management believes the likelihood that a material payment will be required under these guarantees is remote.
30. OPERATING LEASES
Operating lease rentals are payable as follows:
Less than one year 124 130

Between one and five years 254 250
More than five years 72 82
TOTAL 450 462
The Group leases the majority of its office and laboratory space, as well as vehicles and equipment. During the year ended
31 December 2015, CHF 149 million was recognised as an expense in the income statement in respect of operating leases
179
The share option plan has been to as SGSBB), were granted to other
discontinued after the 2015 grant and employees in 2015. These options vest
31. EQUITY replaced by a Restricted Share Plan for or have vested in three stages (one third
COMPENSATION the Operations Council members. in 2015, one third in 2016 and one third
PLANS 50% of the Annual Incentive related to in 2018), and can be exercised or sold
the 2015 performance will be settled between January 2018 and January
Selected employees of the SGS Group in Restricted Shares. The grant of the 2020. The estimated fair value at grant of
are eligible to participate in equity Restricted Shares will be done after the options granted was CHF 420 714.
compensation plans. the 2016 Annual General Meeting; The annual share option plan for other
the total number of Restricted Shares employees has been discontinued after
i) Grants to Members of to be granted will be calculated based the 2015 grant. A Restricted Share Unit
the Operations Council on the Average closing share price of Plan may be introduced in 2016 for
the 20 days period following the payment selected key employees, at the discretion
A total of 1 319 249 options granting the
of the dividends. The Restricted Shares of the Board of Directors.
right to acquire shares of SGS SA at a
are restricted for a period of three years
strike price of CHF 1 798, 100 options
from the time of grant, i.e. until March iii) Long-Term Incentive Plans (LTI)
giving the right to acquire one share and
2019. They fully vest at the time of the
each option expiring in January 2020 A new Long-Term Incentive plan (LTI)
grant in 2016. Shareholding guidelines
(these options hereinafter referred to as has been introduced in 2015, under the
apply to the Restricted Share Plan.
SGSBB), were granted to the members form of a Performance Share Unit Plan,
of the Operations Council in 2015. as described in the SGS Remuneration
ii) Grants to Other Employees Report (pages 124 to 125). A number of
These options vest or have vested in
three stages (one third in 2015, one third A total of 189 511 options granting the 39 186 Performance Share Units have
in 2016 and one third in 2018), and can be right to acquire shares of SGS SA at a been granted in 2015 to members of
exercised or sold between January 2018 strike price of CHF 1 798, 100 options the Operations Council and selected
and January 2020. The estimated fair giving the right to acquire one share employees. Additional information is
value at grant of the options granted was and each option expiring in January disclosed in the SGS Remuneration
CHF 2 928 733. 2020 (these options hereinafter referred Report (pages 116 to 130).
OPTION PLAN
OPTIONS OPTIONS
EXERCISE PERIOD STRIKE OUTSTANDING AT EXERCISED OUTSTANDING AT
DESCRIPTION FROM TO PRICE 1 31 DECEMBER 2014 GRANTED CANCELLED OR ADJUSTED 31 DECEMBER 2015
SGSOP-2010 Jan.13 Jan.15 1 240.70 187 965 - - (187 965) -

SGSMF-2011 Jan.14 Jan.16 1 528.78 1 488 994 - (131 237) (1 151 095) 206 662
SGSMF-2011 LTI Jan.15 Jan.16 1 528.78 7 600 000 - (3 865 000) (3 669 000) 66 000
SGSKF-2012 Jan.15 Jan.17 1 448.85 3 140 068 - (5 336) (1 690 452) 1 444 280
SGSWS-2013 Jan.16 Jan.18 1 989.31 3 109 820 - (46 084) (2 000) 3 061 736
SGSPF-2014 Jan.17 Jan.19 2 059.00 3 027 347 - (36 948) - 2 990 399
SGSBB-2015 Jan.18 Jan.20 1 798.00 - 1 508 760 (26 636) - 1 482 124
TOTAL 18 554 194 1 508 760 (4 111 241) (6 700 512) 9 251 201
Of which exercisable at 31 December 1 562 115 1 606 201
1. The strike price of the options has been adjusted in accordance with market practice for capital reductions and special dividends.
180
PERFORMANCE SHARE UNIT (PSU) PLAN
SHARES SHARES
EXERCISE PERIOD OUTSTANDING AT OUTSTANDING AT
DESCRIPTION FROM 31 DECEMBER 2014 GRANTED CANCELLED 31 DECEMBER 2015
SGS-PSU-15 Jan.18 - 39 186 - 39 186
The fair value of equity compensation plans granted during the year are based on their market value at grant date. All options are
publicly traded. The exercise dates are not known to the Group. Correspondingly, the weighted average share price at the date
of exercise cannot be calculated.
The Group recognised during the year total expense of CHF 9 million (2014: CHF 10 million) in relation with equity compensation plans.
Shares available for future plans:
TOTAL
AT 1 JANUARY 2014 (33 189)

Repurchased shares -
Options granted (SGSPF Plan and adjustments) (35 000)
Options cancelled 47 554
AT 31 DECEMBER 2014 (20 635)
Repurchased shares 45 778
Options granted (SGSBB Plan and adjustments) (16 000)
Options cancelled 6 120
SGS-PSU-15 plan (39 186)
AT 31 DECEMBER 2015 (23 923)
At 31 December, the Group had the following shares available to satisfy various programs:
(CHF million) 2015 TOTAL 2014 TOTAL
Number of unallocated shares held 138 072 146 930
Shares held for 2010 option plans - (6 513)
Shares held for 2011 option plans (21 392) (62 743)
Shares allocated to 2015 option plans (14 821) -
Shares allocated for 2015 PSU plans (39 186) -
SHARES AVAILABLE FOR FUTURE EQUITY COMPENSATION PLANS AT 31 DECEMBER (23 923) (20 635)
For the equity compensation plans, the Group has entered into agreements with various banks, whereby the Group has an
obligation to offer to sell to the banks the shares underlying the option programme at the relevant strike price whenever these
shares become unblocked. The banks are not obliged to purchase these shares.
181
32. RELATED PARTY TRANSACTIONS

Transactions between the Company and its subsidiaries, which are related parties of the Group, have been eliminated
on consolidation and are not disclosed in the note.
COMPENSATION TO DIRECTORS AND MEMBERS OF THE OPERATIONS COUNCIL

The remuneration of Directors and members of the Operations Council during the year was as follows:
Short-term benefits 17 15
Post-employment benefits 1 1
Share-based payments 1 16 3
Severance payments 0 -
TOTAL 34 19
1. Market value of SGSBB options and market value of PSU granted in 2015.
The remuneration of Directors and

members of the Operations Council
TRANSACTIONS WITH OTHER
34. APPROVAL
RELATED PARTIES
is determined by the Nomination and
OF FINANCIAL
Remuneration Committee. Additional
In 2015 and 2014, the Group did not
perform any activity generating revenue
STATEMENTS AND
information is disclosed in the SGS
for the other related parties. During SUBSEQUENT
Remuneration Report (pages 116 to 130).
the same period, neither related trade EVENTS
During 2015 and 2014, no member receivable balances unpaid nor expense
of the Board of Directors or of the in respect of any bad or doubtful The Board of Directors is responsible
Operations Council had a personal debts due from these related parties for the preparation and presentation
interest in any business transactions were recognised. of the financial statements. These
of the Group. financial statements were authorised
The Operations Council (including Senior for issue by the Board of Directors on
Management) participate in the equity 33. SIGNIFICANT 8 February 2016, and will be submitted
compensation plans as disclosed in SHAREHOLDERS for approval by the Annual General
Meeting of Shareholders’ to be held
note 31.
on 14 March 2016.
In 2015, Directors’ fees were As at 31 December 2015, Mr. August
CHF 2 091 000 (2014: CHF 1 943 000). von Finck and members of his family On 4 January 2016, the Group
acting in concert held 15.03% (2014: announced the acquisition of the assets
The total compensation (cash and shares/
14.97%), Groupe Bruxelles Lambert and operations of Acutest Laboratories,
options) received by the Operations
acting through Serena SARL held the fifth largest full service environmental
Council (including Senior Management)
15.00% (2014: 15.00%), the Bank of testing company in the United States
amounted to CHF 31 886 000
New York Mellon Corporation held (effective 1 January 2016).
(2014: CHF 16 531 000).
3.35% (2014: 3.43%), BlackRock Inc. On 5 January 2016, the Group
Disclosure of compensation paid to
held 3.03% (2014: 3.00%) and MFS announced the acquisition of 100% of
the Board of Directors and Senior
Investment Management held 3.01% Cargo Compliance Company (CargoCC),
Management, as required by Swiss law
(2014: 0.00%) of the share capital and based in the Netherlands (effective
is presented in the notes to the accounts
voting rights of the Company. 1 January 2016).
of SGS SA on pages 190 to 192 of
this report. At the same date, SGS Group held On 2 February 2016, the Group
2.77% of the share capital of announced the acquisition of 51% of
LOANS TO MEMBERS OF the Company (2014: 1.88%). The Lab (Asia) Ltd., based in Hong Kong
(effective 1 February 2016).
GOVERNING BODIES
On 4 February 2016, the Group
As at 31 December 2015, no loan, credit
announced the completion of the
or outstanding advance was due to the
acquisition of Matrolabs Group (Pty)
Company from members of its governing
Ltd., based in South Africa (effective
bodies (unchanged from prior year).
1 February 2016).
182
SGS SA, GENEVA
REPORT OF THE STATUTORY AUDITOR ON THE CONSOLIDATED FINANCIAL STATEMENTS

As statutory auditor, we have audited the consolidated financial statements of SGS Group presented on pages 134 to 182,
which comprise the consolidated balance sheet as at 31 December 2015, and the consolidated income statement, consolidated
statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows
and notes to the consolidated financial statements for the year then ended.

The Board of Directors is responsible for the preparation of the consolidated financial statements in accordance with International
Financial Reporting Standards (IFRS) and the requirements of Swiss law. This responsibility includes designing, implementing
and maintaining an internal control system relevant to the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying
appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in
accordance with Swiss law, Swiss Auditing Standards and International Standards on Auditing. Those standards require that we plan and
perform the audit to obtain reasonable assurance as to whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers the internal control system relevant to the entity’s preparation of the consolidated financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the
reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements for the year ended 31 December 2015 give a true and fair view of the financial
position, the results of operations and the cash flows in accordance with IFRS and comply with Swiss law.
REPORT ON OTHER LEGAL REQUIREMENTS
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence
(article 728 Code of Obligations (CO) and article 11 AOA) and that there are no circumstances incompatible with our independence.
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

Auditor in Charge
183
9. SGS SA RESULTS
9. SGS SA RESULTS
INCOME STATEMENT
OPERATING INCOME
Dividends from subsidiaries 1 055 375
Other income 1 1
TOTAL OPERATING INCOME 1 056 376
OPERATING EXPENSES
Other operating and administrative expenses (4) (4)
Depreciation of fixed assets 0 0
Other expenses (3) 0
TOTAL OPERATING EXPENSES (7) (4)
OPERATING RESULT 1 049 372
FINANCIAL INCOME
Financial income 7 68 54
Exchange gain, net - 0
Liquidation of subsidiaries, net - 3
TOTAL FINANCIAL INCOME 68 57
FINANCIAL EXPENSES
Financial expenses 7 (51) (47)
Exchange loss, net (4) -
TOTAL FINANCIAL EXPENSES (55) (47)
FINANCIAL RESULT 13 10
PROFIT BEFORE TAXES 1 062 382
Taxes (5) 2 WorldReginfo - 9598e104-0c9b-410a-914c-87b9720d1132

Withholding taxes (9) (6)
PROFIT FOR THE YEAR 1 048 378
186
BALANCE SHEET AT 31 DECEMBER
(BEFORE APPROPRIATION OF AVAILABLE RETAINED EARNINGS)
ASSETS
CURRENT ASSETS
Cash and cash equivalents 529 790
Other financial assets 195 -
Amounts due from subsidiaries 301 299
Accrued income and prepaid expenses 1 19
TOTAL CURRENT ASSETS 1 026 1 108
NON-CURRENT ASSETS
Financial assets
Investments in subsidiaries 2 1 635 1 107
Loans to subsidiaries 1 289 1 304
Other financial assets 1 1
Fixed assets
Tangible fixed assets 3 3 3
TOTAL NON-CURRENT ASSETS 2 928 2 415
TOTAL ASSETS 3 954 3 523
SHAREHOLDER'S EQUITY AND LIABILITIES

SHORT-TERM LIABILITIES
Other creditors 2 0
Amounts due to subsidiaries 50 28
Deferred income and accrued expenses 56 39
Provisions 34 37
TOTAL SHORT-TERM LIABILITIES 142 104
LONG-TERM LIABILITIES / NON-CURRENT LIABILITIES

Long-Term Liabilities – third party 0 0
Long-Term Liabilities – subsidiaries 275 813
Corporate bonds 4 2 192 1 642
TOTAL LONG-TERM LIABILITIES /
2 467 2 455
NON-CURRENT LIABILITIES
CAPITAL AND RESERVE

Share capital 5 and 6 8 8
Statutory capital reserve 5 and 6 34 34
Statutory retained earnings 5 and 6 1 273 750
Own shares for shares buyback 5 and 6 (145) -
Reserve for own shares held by
5 and 6 175 172
a subsidiary
TOTAL CAPITAL AND RESERVE 1 345 964
TOTAL SHAREHOLDER'S EQUITY AND LIABILITIES 3 954 3 523
187
9. SGS SA RESULTS
SGS SA (“the Company”) is the ultimate parent company of the SGS Group which owns and finances, either directly or indirectly,
its subsidiaries and joint ventures throughout the world. The Headquarter is located in Geneva, Switzerland.
The average number of employees during the year was less than ten.
NOTES
1. SIGNIFICANT FOREIGN CURRENCIES BONDS
ACCOUNTING Balance sheet items denominated in Bonds are recorded at nominal value.
foreign currencies are converted at year
POLICIES end exchange rates with the exception
of investments in subsidiaries which
The financial statements are prepared
in accordance with the new accounting
are valued at the historical exchange
rate. Unrealised gains and losses arising
2. SUBSIDIARIES
principles required by Swiss law. on foreign exchange transactions are
The previous year’s figures have included in the determination of the The list of principal Group subsidiaries
been restated in accordance with the net profit, except long-term unrealised appears in the Annual Report on pages
new requirements of the Swiss Code gains on long-term loans and related 200 to 203.
of Obligations, in order to achieve instruments which are deferred.
a consistent representation and
breakdown of the figures.
DIVIDENDS FROM SUBSIDIARIES
Dividends are treated as an appropriation
3. TANGIBLE
INVESTMENTS IN SUBSIDIARIES
of profit in the year in which they are FIXED ASSETS
Investments in subsidiaries are ratified at the Annual General Meeting
valued individually at acquisition cost and subsequently paid, rather than as The tangible fixed asset is a building
less an adjustment for impairment an appropriation of profit in the year to located at 15, rue des Alpes in Geneva
where appropriate. which they relate or for which they are and is stated at historical cost less
proposed by the Board of Directors. accumulated depreciation.
As a result, dividends are recognised
in income in the year in which they are
received, on cash basis.
4. CORPORATE BONDS
SGS SA made the following bond issuances:
DATE OF ISSUE
FACE VALUE IN
CHF MILLION COUPON IN %
YEAR OF
MATURITY
ISSUE
PRICE IN %
REDEMPTION
PRICE IN % WorldReginfo - 9598e104-0c9b-410a-914c-87b9720d1132
19.08.2010 417 1.875 2016 100.346 100.000

08.03.2011 375 2.625 2019 100.832 100.000
27.05.2011 275 3.000 2021 100.480 100.000
27.05.2011 1 75 1.875 2016 99.591 100.000
27.02.2014 138 1.375 2022 100.517 100.000
27.02.2014 250 1.750 2024 101.019 100.000
25.04.2014 112 1.375 2022 101.533 100.000
08.05.2015 325 0.250 2023 100.079 100.000
08.05.2015 225 0.875 2030 100.245 100.000
1. Re-opening of the six-year bond issued on 19 August 2010.
In May 2015 the Company issued two bonds, one for a period of 8 years, amounting to CHF 325 million with a coupon of 0.25%
and a second one for a period of 15 years, amounting to CHF 225 million with a coupon of 0.875%.
The Group has listed all the bonds on the SIX Swiss Exchange.
188
5. TOTAL EQUITY
RESERVE FOR
STATUTORY OWN SHARES OWN SHARES STATUTORY
SHARE CAPITAL HELD BY A FOR SHARES RETAINED
(CHF million) CAPITAL RESERVE SUBSIDIARY BUYBACK EARNINGS TOTAL
BALANCE AT 1 JANUARY 2014 8 34 204 - 839 1 085

Dividends paid - - - - (499) (499)
Decrease in the reserve for own shares - - (32) - 32 -
Profit for the year - - - - 378 378
BALANCE AT 31 DECEMBER 2014 8 34 172 - 750 964
Dividends paid - - - - (522) (522)
Increase in the reserve for own shares - - 3 - (3) -
Purchase of shares for buyback - - - (145) - (145)
Profit for the year - - - - 1 048 1 048
BALANCE AT 31 DECEMBER 2015 8 34 175 (145) 1 273 1 345
6. SHARE CAPITAL
SHARES IN OWN TOTAL SHARES TOTAL SHARE CAPITAL

CIRCULATION SHARES ISSUED CHF (MILLION)
BALANCE AT 1 JANUARY 2014 7 650 840 171 596 7 822 436 8

Own shares released into circulation 24 666 (24 666) - -
Own shares purchased, net - - - -
Own shares released into circulation 54 636 (54 636) - -
Own shares purchased for future equity
(45 778) 45 778 - -
compensation plans
Own shares purchased for buyback (78 904) 78 904 - -
Issued Share Capital WorldReginfo - 9598e104-0c9b-410a-914c-87b9720d1132

SGS SA has a share capital of CHF 7 822 436 (2014: CHF 7 822 436) fully paid-in and divided into 7 822 436 (2014: 7 822 436)
registered shares of a par value of CHF 1. All shares, other than own shares, participate equally in the dividends declared by
the Company and have equal voting rights.
Own shares
On 31 December 2015, SGS SA held directly and indirectly 216 976 of its own shares. The shares related to the shares buyback
program are directly held by SGS SA, the shares to cover the option rights are held by a subsidiary company.
In 2015, 54 636 own shares were sold to cover option rights and 45 778 were purchased for an average price of CHF 1 840. As part
of the shares buyback program, 78 904 shares were purchased this year for an average price of CHF 1 842.
189
9. SGS SA RESULTS
7. FINANCIAL INCOME AND FINANCIAL EXPENSES
FINANCIAL INCOME
Interest income 3rd party 16 1
Interest income Group 52 53
TOTAL FINANCIAL INCOME 68 54
FINANCIAL EXPENSES
Interest expenses 3rd party (42) (37)
Interest expenses Group (3) (3)
Other financial expenses (6) (7)
TOTAL FINANCIAL EXPENSES (51) (47)
On 12 January 2015, the Group received a cash amount of CHF 15 million in relation to the termination of the Interest Rate Swap
agreement to market rates. These cash proceeds were recognised as interest income in the income statement.
8. GUARANTEES AND COMFORT LETTERS
(CHF million) 2015 ISSUED 2015 UTILISED 2014 ISSUED 2014 UTILISED
Guarantees 243 179 212 159

Performance bonds 44 44 23 23
TOTAL 287 223 235 182
The Company has unconditionally guaranteed or provided comfort to financial institutions providing credit facilities (loans and guarantee
bonds) to its subsidiaries. In addition, it has issued performance bonds to commercial customers on behalf of its subsidiaries.
The Company is part of a VAT Group comprising itself and other Group companies in Switzerland.
9. REMUNERATION
9.1. COMPANY’S REMUNERATION POLICY AND GOVERNANCE
This section appears in the SGS Remuneration Report para 2 in the Annual Report on pages 118 to 120.
9.2. REMUNERATION MODEL

9.3. REMUNERATION AWARDED TO THE BOARD OF DIRECTORS

This section appears in the SGS Remuneration Report para 4 in the Annual Report on page 127.
9.4. REMUNERATION AWARDED TO THE CEO, SENIOR MANAGEMENT AND OTHER MEMBERS OF THE OPERATION COUNCIL
190
10. SHARES AND OPTIONS HELD BY MEMBERS OF GOVERNING BODIES
10.1. SHARES AND OPTIONS HELD BY MEMBERS OF THE BOARD OF DIRECTORS
The following table shows the shares and vested options held by Members of the Board of Directors as at 31 December 2015:
NAME SGSKF SGSWS SGSPF SGSBB SHARES
S. Marchionne - 26 667 50 000 - 1 150

A. von Finck - - - - 19 670
A.F. von Finck - - - - 439 515
C. Grupp - - - - 1
P. Kalantzis - - - - 150
S.R. du Pasquier - - - - 10
P. Desmarais - - - - 10
I. Gallienne - - - - 1
G. Lamarche - - - - 25
C. Kirk 180 225 32 384 188 546 103 403 1 119
The following table shows the shares and vested options held by Members of the Board of Directors as at 31 December 2014:
NAME SGSMF SGSKF SGSWS SGSPF SHARES
S. Marchionne 50 000 33 333 26 667 25 000 700

A. von Finck - - - - 19 670
A.F. von Finck - - - - 439 515
C. Grupp - - - - 1
P. Kalantzis - - - - 150
S.R. du Pasquier - - - - 10
P. Desmarais - - - - 10
I. Gallienne - - - - 1
G. Lamarche - - - - 25
10.2. SHARES AND OPTIONS HELD BY SENIOR MANAGEMENT

The following table shows the shares and vested options held by Senior Management as at 31 December 2015:
NAME CORPORATE RESPONSIBILITY SGSKF SGSWS SGSPF SGSBB SHARES
F. NG Chief Executive Officer 61 621 31 088 15 642 27 576 -

C. De Geyseleer Chief Financial Officer - - 26 667 4 416 70
General Counsel and
O. Merkt 21 055 28 842 17 643 16 524 45
Chief Compliance Officer

191
9. SGS SA RESULTS
The following table shows the shares and vested options held by Senior Management as at 31 December 2014:
NAME CORPORATE RESPONSIBILITY SGSMF SGSKF SGSWS SGSPF SHARES
C. Kirk Chief Executive Officer 174 920 120 150 32 384 94 273 1 199
C. De Geyseleer Chief Financial Officer - - - 40 000 -
General Counsel and
O. Merkt 10 000 27 370 28 842 8 821 45
Chief Compliance Officer
11. SIGNIFICANT SHAREHOLDERS

As at 31 December 2015, Mr. August von Finck and members of his family acting in concert held 15.03% (2014: 14.97%),
Groupe Bruxelles Lambert acting through Serena SARL held 15.00% (2014: 15.00%), the Bank of New York Mellon Corporation
held 3.35% (2014: 3.43%), BlackRock Inc. held 3.03% (2014: 3.00%) and MFS Investment Management held 3.01% (2014: 0.00%)
of the share capital and voting rights of the Company.
At the same date, SGS Group held 2.77% of the share capital of the Company (2014: 1.88%).
PROPOSAL OF THE BOARD OF DIRECTORS FOR THE APPROPRIATION OF AVAILABLE RETAINED EARNINGS
(CHF) 2015 2014
Profit for the year 1 048 128 990 378 165 415
Balance brought forward from previous year 227 785 349 341 877 870
Dividend paid on own shares released into circulation in 2014
- (1 645 215)
prior the Annual General Meeting on 13 March 2014
Dividend not paid on own shares bought in 2015
384 676 -
prior the Annual General Meeting on 12 March 2015
Shares buyback program (145 362 298) -
(Transfer to) / reversal from the reserve for own shares (3 131 617) 31 321 687
TOTAL RETAINED EARNINGS AVAILABLE FOR APPROPRIATION 1 127 805 100 749 719 757
Proposal of the Board of Directors:
Dividends ¹ (517 171 280) (521 934 408)
BALANCE CARRIED FORWARD 610 633 820 227 785 349
Ordinary gross dividend per registered share 68.00 68.00
1. No dividend is paid on own shares held directly or indirectly by SGS SA.
12. APPROVAL OF FINANCIAL STATEMENTS AND SUBSEQUENT EVENTS

The Board of Directors is responsible for the preparation and presentation of the financial statements. These financial statements
were authorised for issue by the Board of Directors on 8 February 2016, and will be submitted for approval by the Annual General
Meeting of Shareholders’ to be held on 14 March 2016.
192
SGS SA, GENEVA
REPORT OF THE STATUTORY AUDITOR ON THE FINANCIAL STATEMENTS

As statutory auditor, we have audited the financial statements of SGS SA presented on pages 186 to 192, which comprise
the balance sheet as at 31 December 2015, and the income statement and notes for the year then ended.

The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss
law and the company’s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal
control system relevant to the preparation of financial statements that are free from material misstatement, whether due to
fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making
accounting estimates that are reasonable in the circumstances.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable
assurance as to whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control
system relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system.
An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting
estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements for the year ended 31 December 2015 comply with Swiss law and the company’s articles
of incorporation.
REPORT ON OTHER LEGAL REQUIREMENTS
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence
(article 728 Code of Obligations (CO) and article 11 AOA) and that there are no circumstances incompatible with our independence.
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
of incorporation. We recommend that the financial statements submitted to you be approved.
Deloitte SA

Auditor in Charge
193
10. DATA
10. DATA
SGS GROUP – FIVE YEAR STATISTICAL DATA CONSOLIDATED INCOME STATEMENTS

(CHF million) 2015 2014 2013 2012 2011
REVENUES 5 712 5 883 5 830 5 569 4 797

Salaries and wages (2 849) (2 891) (2 871) (2 733) (2 304)
Subcontractors' expenses (345) (361) (357) (338) (331)
Depreciation, amortisation and impairment (322) (304) (298) (280) (225)
Other operating expenses (1 374) (1 386) (1 392) (1 384) (1 147)
OPERATING INCOME (EBIT) 822 941 912 834 790
Analysis of operating income

Adjusted operating income 917 947 977 930 815
Restructuring costs (64) (11) (33) (68) -
Amortisation of acquisition intangibles (21) (20) (20) (16) (16)
Transaction and integration-related costs (10) (7) (12) (12) (9)
Other non-recurring items - 32 - - -
Operating income 822 941 912 834 790
Financial income/(expense) (43) (41) (38) (41) (26)

PROFIT BEFORE TAXES 779 900 874 793 764
Taxes (195) (234) (236) (214) (203)
PROFIT FOR THE YEAR 584 666 638 579 561
Profit attributable to:

Equity holders of SGS SA 549 629 600 545 534
Non-controlling interests 35 37 38 34 27
ADJUSTED OPERATING INCOME MARGIN IN % 16.1 16.1 16.8 16.7 17.0
AVERAGE NUMBER OF EMPLOYEES 85 903 83 515 80 510 76 790 67 633
196
SGS GROUP – FIVE YEAR STATISTICAL DATA CONSOLIDATED BALANCE SHEETS
AT 31 DECEMBER
(CHF million) 2015 2014 2013 2012 2011
Land, buildings and equipment 964 1 043 1 029 1 015 888

Goodwill and other intangible assets 1 306 1 337 1 216 1 172 1 044
Investments in associated and other companies 32 24 18 17 1
Deferred tax and other non-current assets 315 244 215 266 247
TOTAL NON-CURRENT ASSETS 2 617 2 648 2 478 2 470 2 180
Unbilled revenues and inventories 288 330 330 302 257
Trade accounts and notes receivable 917 1 068 952 977 868
Other receivables and prepayments 338 371 306 255 244
Cash and marketable securities 1 734 1 350 973 987 1 211
TOTAL CURRENT ASSETS 3 277 3 119 2 561 2 521 2 580
TOTAL ASSETS 5 894 5 767 5 039 4 991 4 760
Share capital 8 8 8 8 8
Reserves 1 898 2 319 2 135 2 052 1 987
Equity attributable to equity holders of SGS SA 1 906 2 327 2 143 2 060 1 995
Non-controlling interests 75 76 69 58 50
TOTAL EQUITY 1 981 2 403 2 212 2 118 2 045
Loans and obligations under finance leases 2 214 1 672 1 293 1 305 1 299
Deferred tax liabilities 60 74 66 72 58
Provisions and retirement benefit obligations 278 273 190 273 275
TOTAL NON-CURRENT LIABILITIES 2 552 2 019 1 549 1 650 1 632
Loans and obligations under finance leases 3 18 15 17 6
Trade and other payables 526 511 502 492 447
Current tax liabilities 159 175 142 103 86
Provisions, other creditors and accruals 673 641 619 611 544
TOTAL CURRENT LIABILITIES 1 361 1 345 1 278 1 223 1 083
TOTAL LIABILITIES 3 913 3 364 2 827 2 873 2 715
TOTAL EQUITY AND LIABILITIES 5 894 5 767 5 039 4 991 4 760
CAPITAL EXPENDITURE
Land, buildings and equipment 301 305 357 386 345
197
10. DATA
SGS GROUP – FIVE YEAR STATISTICAL SHARE DATA

(CHF unless indicated otherwise) 2015 2014 2013 2012 2011
SHARE INFORMATION
REGISTERED SHARES
Number of shares issued 7 822 436 7 822 436 7 822 436 7 822 436 7 822 436
Number of shares with dividend rights 7 605 460 7 675 506 7 650 840 7 632 042 7 596 871
PRICE
High 2 049 2 260 2 450 2 156 1 724
Low 1 577 1 802 1 952 1 559 1 255
Year-end 1 911 2 045 2 052 2 026 1 555
Par value 1 1 1 1 1
KEY FIGURES BY SHARES

Equity attributable to equity holders of SGS
250.56 303.13 280.08 269.95 263.75
SA per share in circulation at 31 December
Basic earnings per share 1 71.99 81.99 78.43 71.52 70.52
Dividend per share ordinary 68.00 2 68.00 65.00 30.00 30.00
Dividend per share special - - - 28.00 35.00
Total dividend per share 68.00 68.00 65.00 58.00 65.00
DIVIDENDS (CHF MILLION)

Ordinary 517 2 522 497 229 228
Special - - - 214 266
Total 517 522 497 443 494
1. Calculation of the basic earnings per share (weighted average for the year) is disclosed in note 9, pages 152 to 153.
2. As proposed by the Board of Directors.
SGS GROUP SHARE INFORMATION
SHARE TRANSFER
SGS SA has no restrictions as to share ownership, except that registered shares acquired in a fiduciary capacity by third parties
may not be registered in the shareholders’ register, unless a special authorisation has been granted by the Board of Directors.
MARKET CAPITALISATION
At the end of 2015, market capitalisation was approximately CHF 14 949 million (2014: CHF 15 997 million). Shares are quoted
on the SIX Swiss Exchange.
198
CLOSING PRICES FOR SGS AND THE SMI 2014 – 2015
SGS SA SMI
2 300 11 500
2 200 11 250
2 100 11 000
2 000 10 750
1 900 10 500
1 800 10 250
1 700 10 000
1 600 9 750
1 500 9 500
1 400 9 250
1 300 9 000
1 200 8 750
1 100 8 500
1 000 8 250
900 8 000
800 7 750
700 7 500
J F M A M J J A S O N D J F M A M J J A S O N D
2014 2015
HIGH PRICE
SGS SA CLOSE SWISS MARKET INDEX (MONTHLY CLOSE)
LOW PRICE
199
10. DATA
SGS GROUP PRINCIPAL OPERATING COMPANIES AND ULTIMATE PARENT

ISSUED CAPITAL ISSUED CAPITAL % HELD BY DIRECT /
COUNTRY NAME AND DOMICILE CURRENCY AMOUNT GROUP INDIRECT
Albania SGS Albania Ltd., Tirana ALL 100 000 100 D

Albania SGS Automotive Albania sh.p.k., Tirana ALL 190 000 100 100 I
Algeria SGS Qualitest Algérie SpA, Alger DZD 50 000 000 100 D
Société de Contrôle Technique Automobile SA,
Algeria DZD 173 600 000 77 D
Rouiba-Alger
Angola SGS Angola Limitada, Luanda AOA 8 000 000 100 D
Argentina SGS Argentina SA, Buenos Aires ARS 4 171 536 100 D
Argentina ITV SA, Buenos Aires ARS 1 500 000 100 I
Australia SGS Australia Pty. Ltd., Perth AUD 200 000 100 I
Australia Gearhart Australia Limited, Perth AUD 5 609 210 100 I
Austria SGS Austria Controll-Co. Ges.m.b.H., Vienna EUR 185 000 100 D
Azerbaijan Société Générale de Surveillance Azeri Ltd., Baku USD 100 000 100 D
Bahamas SGS Bahamas Ltd., Freeport BSD 5 000 100 D
Bangladesh SGS Bangladesh Limited, Dhaka BDT 10 000 000 100 D
Belarus SGS Minsk Ltd., Minsk USD 20 000 100 D
Belgium SGS Belgium N.V., Antwerpen EUR 2 178 200 100 I
Benin SGS Bénin SA, Cotonou XOF 10 000 000 100 D
Bolivia SGS Bolivia SA, La Paz BOB 41 900 100 D
Bosnia-Herzegovina SGS Bosna i Hercegovina (d.o.o.) Ltd., Sarajevo BAM 2 151 100 I
Botswana SGS Botswana (Proprietary) Limited, Gaborone BWP 1 000 100 D
Brazil SGS do Brasil Ltda., São Paulo BRL 170 166 436 100 D
Brazil SGS Enger Engenharia Ltda., Barueri-SP BRL 3 000 000 100 I
Bulgaria SGS Bulgaria Ltd., Sofia BGN 10 000 100 D
Burkina Faso SGS Burkina SA, Ouagadougou XOF 10 000 000 100 D
Cambodge SGS (Cambodia) Ltd., Phnom Penh KHR 400 000 000 100 D
Cameroon SGS Cameroun SA, Douala XAF 10 000 000 100 D
Canada SGS Canada Inc., Missisauga CAD 20 900 000 100 D
Chile SGS Chile Limitada, Santiago de Chile CLP 9 394 781 237 100 D
CIMM Tecnologias y Servicios SA,
Chile CLP 7 570 000 000 100 I
Santiago de Chile
SGS-CSTC Standards Technical
China USD 3 966 667 85 I
Services Ltd., Beijing
Colombia SGS Colombia SA, Bogota COP 59 054 167 360 100 D
Colombia Estudios Técnicos SA, (ETSA), Bogota COP 265 739 000 100 I
Congo SGS Congo SA, Pointe-Noire XAF 1 510 000 000 100 D
Croatia SGS Adriatica, w.l.l., Zagreb HRK 1 300 000 100 I
Czech Republic SGS Czech Republic s.r.o., Praha CZK 7 707 000 100 I
Denmark SGS Danmark A / S, Glostrup Hvidovre DKK 700 000 100 I
Democratic
SGS RDC SPRL, Kinshasa USD 50 000 100 D
Republic of Congo
Dubai (see United Arab Emirates)
200
Ecuador SGS del Ecuador SA, Guayaquil USD 147 680 100 D
Egypt SGS Egypt Ltd., Cairo EGP 1 500 000 100 D
Estonia SGS Estonia Ltd., Tallinn EUR 42 174 100 I
Ethiopia SGS Ethiopia Private Limited, Addis Abeba ETB 15 000 100 D
Finland SGS Inspection Services Oy, Helsingfors EUR 102 000 100 I
Finland SGS Fimko Oy, Helsingfors EUR 260 000 100 I
France SGS Oil, Gas and Chemicals, SAS, Arcueil EUR 2 320 000 100 I
France SGS Qualitest Industrie SAS, Orsay EUR 200 000 100 I
France Securitest SA, Paris EUR 2 745 000 92.31 I
Georgia SGS Georgia Ltd., Batumi USD 80 000 100 D
Germany SGS Germany GmbH, Hamburg EUR 1 210 000 100 I
Germany SGS Institut Fresenius GmbH, Taunusstein EUR 7 490 000 100 I
Germany SGS-TÜV Saar GmbH, Sulzbach EUR 750 000 74.9 I
Ghana SGS Ghana Limited, Accra GHS 4 005 202 100 D
Ghana Community Network
Ghana GHS 1 978 604 60 D
Services Limited, Accra
Great Britain SGS United Kingdom Limited, Ellesmere Port GBP 8 000 000 100 I
Great Britain SGS M-Scan Limited, Ellesmere Port GBP 139 100 I
Greece SGS Greece SA, Peristeri EUR 301 731 100 D
Guam SGS Guam Inc., Guam USD 25 000 100 D
Guatemala SGS Central America SA, Guatemala-City GTQ 1 068 000 100 D
Guinea-Conakry SGS Guinée Conakry SA, Conakry GNF 50 000 000 100 D
Compañia de Inspecciones y
Guinea-Equatorial XAF 10 000 000 51 D
Servicios G.E., Malabo
Hong Kong SGS Hong Kong Limited, Hong Kong HKD 200 000 100 D
Hungary SGS Hungária Kft., Budapest HUF 518 000 000 100 I
India SGS India Private Ltd., Mumbai INR 960 000 100 D
Indonesia P.T. SGS Indonesia, Jakarta USD 200 000 100 D
Iran SGS Iran (Private Joint Stock) Limited, Tehran IRR 50 000 000 100 D
Ireland SGS Ireland (Holdings) Limited, Dublin EUR 62 500 100 I
Italy SGS Italia S.p.A., Milan EUR 2 500 000 100 I
Ivory Coast SGS Côte d’Ivoire SA, Abidjan XOF 300 000 000 100 D
Société Ivoirienne de Contrôles Techniques
Ivory Coast XOF 200 000 000 95 D
Automobiles et Industriels SA, Abidjan
Japan SGS Japan Inc., Yokohama JPY 100 000 000 100 D
SGS (Jordan) Private Shareholding Company,
Jordan JOD 100 000 50 D
Amman
Kazakhstan SGS Kazakhstan Limited, Almaty KZT 146 527 100 D
Kenya SGS Kenya Limited, Mombasa KES 2 000 000 100 D
Korea (Republic of) SGS Korea Co., Ltd., Seoul KRW 15 617 540 000 100 D
Kuwait SGS Kuwait W.L.L., Kuwait KWD 50 000 49 D
201
10. DATA

Latvia SGS Latvija Limited, Riga LVL 118 382 100 I

Lebanon SGS (Liban) S.A.L., Beirut LBP 30 000 000 99.99 D
Liberia SGS Liberia Inc, Monrovia LRD 100 100 D
Lithuania SGS Klaipeda Ltd., Klaipeda LTL 40 000 100 I
Luxembourg SGS Luxembourg SA, Windhof EUR 38 000 100 I
Madagascar SGS Madagascar SARL, Antananarivo MGA 20 000 000 100 I
Malagasy Community Network Services SA,
Madagascar MGA 10 000 000 70 D
Antananarivo
Malawi SGS Malawi Limited, Blantyre MWK 30 000 100 D
Petrotechnical Inspection (Malaysia) Sdn. Bhd.,
Malaysia MYR 500 000 70 D
Kuala Lumpur
Malaysia SGS (Malaysia) Sdn. Bhd., Kuala Lumpur MYR 60 000 100 I
Mali SGS Mali Sàrlu, Kayes XOF 300 000 000 100 D
Mauritius SGS (Mauritius) LTD, Phoenix MUR 100 000 100 D
Mexico SGS de Mexico, SA de C.V., Mexico MXN 7 065 828 100 D
Moldova SGS (Moldova) SA, Chisinau MDL 488 050 100 D
Mongolia SGS Mongolia LLC, Ulaanbaatar USD 10 000 100 D
Morocco SGS Maroc SA, Casablanca MAD 12 000 000 100 D
Morocco SGS Maroc Automotive SA, Casablanca MAD 33 000 000 75 D
Mozambique SGS Mozambique, Limitada, Maputo MZM 100 000 100 D
Myanmar SGS (Myanmar) Limited, Yangon MMK 300 000 100 D
SGS Inspection Services Namibia
Namibia NAD 100 100 I
(Propietary) Limited, Windhoek
Netherlands SGS Nederland B.V., Spijkenisse EUR 250 000 100 I
Netherlands SGS Horizon B.V., Gravenhage EUR 45 000 100 I
New Zealand SGS New Zealand Limited, Auckland-Onehunga NZD 10 522 190 100 D
Nigeria SGS Inspection Services Nigeria Limited, Lagos NGN 200 000 50 D
Norway SGS Norge A / S, Austrheim NOK 804 000 100 I
Oman SGS Gulf Upstream, Oman (Branch office) - - - -
Pakistan SGS Pakistan (Private) Limited, Karachi PKR 2 300 000 100 D
Panama SGS Panama Control Services Inc., Panama USD 850 000 100 D
Papua-New-Guinea SGS PNG Pty. Limited, Port Moresby PGK 2 100 I
Paraguay SGS Paraguay SA, Asunción PYG 1 962 000 000 100 D
Peru SGS del Perú S.A.C., Lima PEN 13 081 182 100 D
Philippines SGS Philippines, Inc., Manila PHP 24 620 000 100 D
Poland SGS Polska Sp.z o.o., Warsaw PLN 10 144 200 100 I
SGS Portugal - Sociedade Geral de
Portugal EUR 500 000 100 I
Superintendência SA, Lisboa
Romania SGS Romania SA, Bucharest RON 100 002 100 I
Russia SGS Vostok Limited, Moscow RUB 18 000 000 100 D
202
SGS Inspection Services Saudi Arabia Ltd.,

Saudi Arabia SAR 1 000 000 75 D
Jeddah
Senegal SGS Sénégal SA, Dakar XAF 35 000 000 100 D
Serbia SGS Beograd d.o.o., Beograd EUR 66 161 100 I
Sierra Leone SGS (SL) Ltd., Freetown SLL 200 000 000 100 D
SGS Testing and Control Services
Singapore SGD 100 000 100 D
Singapore Pte Ltd., Singapore
Slovakia SGS Slovakia spol.s.r.o., Kosice EUR 19 917 100 I
SGS Slovenija d.o.o. - Podjetje za
Slovenia EUR 10 432 100 I
kontrol blaga, Koper
SGS South Africa (Proprietary) Limited,
South Africa ZAR 452 000 500 100 I
Johannesburg
Spain SGS Española de Control SA, Madrid EUR 240 000 100 I
Spain SGS Tecnos, SA, Sociedad Unipersonal, Madrid EUR 92 072 034 100 I
Spain General de Servicios ITV, SA, Madrid EUR 4 559 657 100 I
Sri Lanka SGS Lanka (Private) Limited, Colombo LKR 9 000 000 100 D
Sweden SGS Sweden AB, Göteborg SEK 1 500 000 100 I
SGS Société Générale de Surveillance SA,
Switzerland CHF 10 000 000 100 I
Geneva
Ultimate
Switzerland SGS SA, Geneva CHF 7 822 436 parent
company
Switzerland SGS Group Management SA, Geneva CHF 100 000 100 I
Taiwan SGS Taiwan Limited, Taipei TWD 62 000 000 100 I
SGS Tanzania Superintendence Co. Limited,
Tanzania TZS 250 000 100 D
Dar-es-Salaam
Thailand SGS (Thailand) Limited, Bangkok THB 20 000 000 99.99 D
Togo SGS Togo SA, Lomé XOF 10 000 000 100 D
Tunisia SGS Tunisie SA, Tunis TND 49 500 50 D
SGS Supervise Gözetme Etud Kontrol
Turkey TRY 6 550 000 100 I
Servisleri Anonim Sirketi, Istanbul
Turkmenistan SGS Turkmen Ltd., Ashgabat USD 50 000 100 D
Uganda SGS Uganda Limited, Kampala UGX 5 000 000 100 D
Ukraine SGS Ukraine, Foreign Enterprise, Odessa USD 400 000 100 I
United Arab Emirates SGS Gulf Limited, Abu Dhabi (Branch office) - - - -
United States SGS North America Inc., Wilmington USD 73 701 996 100 I
Uruguay SGS Uruguay Limitada, Montevideo UYU 1 500 100 D
Sociedad Uruguaya de Control Técnico de
Uruguay UYU 24 000 100 I
Automotores Sociedad Anónima, Montevideo
Uzbekistan SGS Tashkent Ltd., Tashkent USD 50 000 100 D
Venezuela SGS Venezuela SA, Caracas VEF 162 980 100 D
Vietnam SGS Vietnam Ltd., Ho Chi Minh City USD 288 000 100 D
Zambia SGS Inspections Services Ltd., Lusaka ZMK 5 000 000 100 I
Zimbabwe SGS Zimbabwe (Private) Limited, Harare ZWD 5 000 100 D
203
11. SHAREHOLDER INFORMATION
11. SHAREHOLDER INFORMATION
SGS SA CORPORATE OFFICE CORPORATE COMMUNICATIONS PROJECT MANAGEMENT

1 place des Alpes AND INVESTOR RELATIONS SGS SA Françoise Rein
P.O. Box 2152 Jean-Luc de Buman
CH – 1211 Geneva 1 1 place des Alpes CONCEPT, DESIGN, PHOTOGRAPHY,

P.O. Box 2152 REALISATION AND PRODUCTION
t +41 (0)22 739 91 11
CH – 1211 Geneva 1 Group Charlescannon SARL
f +41 (0)22 739 98 86
Geneva, Switzerland
e sgs.investor.relations@sgs.com t +41 (0)22 739 93 31
www.sgs.com f +41 (0)22 739 92 00 PRINTED BY

www.sgs.com Hertig Print SA
STOCK EXCHANGE LISTING Lyss, Switzerland
SIX Swiss Exchange, SGSN ANNUAL GENERAL MEETING Printed on 100% recycled BalancePure
OF SHAREHOLDERS offset paper, February 2016
STOCK EXCHANGE TRADING Monday, 14 March 2016
SIX Swiss Exchange Geneva, Switzerland
COMMON STOCK SYMBOLS 2016 HALF YEAR RESULTS
Bloomberg: Registered Share: SGSN.VX Monday, 18 July 2016
Reuters: Registered Share: SGSN.VX

INVESTOR DAYS (IN EUROPE)
Telekurs: Registered Share: SGSN
Thursday – Friday
ISIN: Registered Share: CH0002497458 27 – 28 October 2016
Swiss security number: 249745
DIVIDEND PAYMENT DATE
Ex-Date: 16 March 2016
Record data: 17 March 2016
Payment date: 18 March 2016
206
207
© SGS Group Management SA – 2016 – All rights reserved – SGS is a registered trademark of SGS Group Management SA.
WWW.SGS.COM

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ANNUAL REPORT

2015 has been a transitional year

BRAND 32 WorldReginfo - 9598e104-0c9b-410a-914c-87b9720d1132

seen in Life Science Services at 6.4%, ACQUISITIONS

Sergio Marchionne Frankie Ng

REVENUE ADJUSTED OPERATING INCOME

16.1 % CHF 584 MIO

2014 2015 2014 2015

ADJUSTED OPERATING MARGIN PROFIT FOR THE PERIOD

CHF 81.95 CHF 68

-0.9% 82.69 81.95

2014 2015 2014 2015

19.7 % CHF 1.1 BN

RETURN ON INVESTED CAPITAL 2

ADJUSTED OPERATING INCOME 1

1. Before amortisation of acquisition intangibles, restructuring, transaction and integration-related costs

PLAN IN A DECADE non-governmental seed quarantine

BONDS ISSUED AT HISTORICALLY CONSUMER TESTING SERVICES

10 ACQUISITIONS FURTHER ALIGNED SYSTEMS AND SERVICES

BETWEEN SHAREHOLDERS INDUSTRIAL SERVICES

77% OF EMPLOYEES ARE

THE WORLD LEADER OUR VISION OUR VALUES

SGS IS THE WORLD’S LEADING INSPECTION, WorldReginfo - 9598e104-0c9b-410a-914c-87b9720d1132

CONSUMER GOODS AND RETAIL

OIL AND GAS

OUR SPECIALIST SGS BY

TEAMS DELIVER INDUSTRY

SERVICES, COVERING minimise environmental impact and

THE BUSINESS QUALITY SAFETY

BENEFITS WE Our customers rely on our We help organisations develop

WE DELIVER REDUCED RISK EFFICIENCY

BUSINESS We provide our customers with Our tailored business solutions

PRODUCTIVITY SPEED TO MARKET

SERVICES All organisations need trusted We provide the broadest range

Our business leadership comes

It comes from our agility and

That is what we mean when we

STRUCTURE Central Europe will be incorporated into

and is responsible for the SGS

page 29), we are finding that customers 261 TRANSPORTATION

the products that they are offering.

INVEST IN ORGANIC GROWTH

2. Dividend per share

DELIVER BOLT-ON ACQUISITIONS

used to carry out for This kind of development isn’t just

automatic sensors. calibration of automatic sensors for oil

AND THE DAWN OF a more integrated

THE SMART CITY in the world’s

E-commerce is a trillion dollar industry SGS can provide e-commerce sites

THE SIX CORE PILLARS

EXPERTISE INVESTMENT OPERATIONAL

A BRAND NOT ONLY

Agricultural Services maintained The adjusted operating margin improved

REVENUE 367.6 353.6 387.1

Minerals Services delivered revenue of Despite the downturn in the market,

REVENUE 632.8 644.2 702.7

REVENUE 1 119.5 1 144.3 1 201.0

REVENUE 211.2 197.8 212.7

Consumer Testing Services delivered Despite strong growth in new sourcing

REVENUE 1 132.9 1 066.0 1 093.1

Systems and Services Certification by margin erosion in some regions.

REVENUE 419.0 390.9 414.6

Industrial Services reported a decline The adjusted operating income margin