Ladies and gentlemen, I would like to welcome you to the presentation of our 2021 annual results. We will also give you an outlook into the current year, the company's 150th fiscal year. My name is Peter Gehler, and I look forward to guiding you through this event. As usual, the presentation will be made by our Chief Executive Officer, Wolfgang Wienand, and our Chief Financial Officer, Reto Suter, whom I would also like to welcome. After the presentation, we will open the various opportunities for questions. You can ask questions in writing using the appropriate box already during the presentation, or you can press the audio button and ask your question verbally when I then release the window for it. I will try to moderate that accordingly.
Whatever it takes. In 2021, there have been quite a number of such whatever it takes moments for quite a number of people at Siegfried. The acquisition and the start of the integration of the two new Spanish manufacturing sites from Novartis, and also the vaccine projects on our German manufacturing site in Hameln, of which you just saw some visual on-site real-life impressions in the video before. As always, for our annual reporting, we try to provide a meaningful, comprehensive headline for our presentation, and I actually particularly like this year's headline because it very much summarizes how I also individually perceive Siegfried as a company. It is investing in our global network. Siegfried creates opportunities for long-term growth. My short summary, Siegfried is a place of opportunity.
Let's get down to work and kick off the presentation, which I will do with showing the safe harbor statement to you. Unavoidable. Please read carefully, take note, and feel bound to it. The agenda slide. Even though it actually looks very different as compared to the prior years, the overall structure of our presentation did not change. It's gonna be me first providing my executive summary on what we as a global team have achieved in 2021, and also briefly looking ahead to what is going on in 2022 and beyond. I will actually hand over to Reto Suter, our CFO, who will guide you through the set of numbers of 2021. Before then, I will talk about strategy and what we are planning to do with the company in the future.
For a start, risen to the next level. For the first time in our history, Siegfried achieved sales beyond CHF 1 billion, and at the same time has been able to further expand profitability. Strong growth. Net sales up to CHF 1.102 billion, which is more than 30% as compared to the previous year in both Swiss franc and also local currency. All that despite a temporary setback by a cyberattack in May 2021. Our core EBITDA has achieved CHF 207 million, which is an over proportional growth as compared to the prior year and leads to an expanded margin of close to 19% as compared to the 17.7% in 2020.
Core net profit is up to CHF 95 million, and we have delivered a strong operating cash flow again of close to CHF 120 million. Based on that, the board will propose at our Annual General Meeting in April 2022, a cash distribution to our shareholders of CHF 3.20 per share, which is up CHF 0.20 per share.
Let's briefly look at some actions, events, things that happened in the past year, and what we at Siegfried, as a global team, once more have been able to seize opportunities and to withstand challenges as well. First and foremost, the integration and the transformation of the two new Spanish sites is well on track.
That's actually great to report because integrations, especially such one, which is adding 40% of people to our workforce, are never easy, are always disruptive to a team. Based on our past experience with four acquisitions in eight years, we have the track record. We have the ability, we have the cohesion in our teams to be able to also absorb such a significant step. Integration well on track. We also started the commercial manufacturing aseptic fill & finish of BioNTech's coronavirus vaccine in Hameln. The team is now prepared and ready to take on the manufacturing of the second vaccine, Novavax's Nuvaxovid, also on our Hameln site. We continued to actually invest throughout the network to support our long-term growth, and of course, we continue to have appetite for M&A also in the future.
On the financing side, we as a company had a successful debut with the issuance of listed senior bonds of a total of CHF 200 million. Last but not least, Siegfried continued on its successful ESG journey, and we publicly announced during our half-year reporting last August our commitment to reduce our CO2 equivalent reduction footprint by 50% by 2030, and also committed to net zero greenhouse gas emissions by 2050. Our past ESG performance has once more been rewarded and recognized, in this case, just recently, by the inclusion of the company in the Dow Jones Sustainability Index Europe. All that converges to the first statement on 2022 and beyond, when Siegfried actually expects continued profitable growth and will also continue to create opportunities through investments in our people and in our network.
This is when I hand over to Reto Suter so that he actually takes all of us through the set of numbers of 2021.
Also a warm welcome from my side, dear ladies and gentlemen. It is indeed a true pleasure to be here and to present a good set of numbers to you. Let's start with the top-line perspective. As mentioned, Siegfried, for the first time in its corporate history, has recorded more than CHF 1 billion in sales, representing a growth of 30.5% in Swiss francs compared to 2020. On the Drug Products side, sales have more than doubled. This number includes the revenues of our two new sites in Spain, as well as the vaccines business. The Drug Substances business contributed to the group's growth too, as indicated. It was this business, with its longer production cycles and the more complex supply chains, that has been affected to a larger degree by the cyberattack.
On the currency side, we saw only a minor tailwind in 2021, with the euro appreciating and the dollar depreciating against the Swiss franc. Following this acquisition and an increased euro sales volume, we now have quite a good natural hedge. As a consequence of the substantial growth in the Drug Products business, we now record 40.5% of the sales there and 59.5% in Drug Substances. This shift towards Drug Products had and will continue to have benefits to the group's net working capital consumption. As regards customer and product diversification in the last year, we have seen a pattern very similar to the one in 2020. On the product side, the largest 10 products account for 27% of revenues, even more diversified than a year ago.
On the customer side, as a part of the transaction, we had entered into a long-term manufacturing and supply agreement with Novartis. Novartis is now a significant client of ours, which is great. For the rest of the top 10 clients, the situation is unchanged against 2020.
This is the usual bridge between reported EBITDA under the framework of Swiss GAAP and our core numbers. We have introduced the core numbers in 2019, and they are a good measure for the group's performance as they transparently split out certain effects. We also use them for our internal performance assessment. This year, we have condensed this overview slide a bit, but as always, you'll find the full details at the back of our financial report. You will see that the adjustment to core EBITDA was negative this year, with the reported EBITDA being larger than core EBITDA.
You see the respective adjustments on the right-hand side of this slide, and I will briefly walk you through. The technical interest rate used to value the pension fund liabilities has increased, decreasing that liability, which leads on the Swiss GAAP FER to a reduction in personnel expenses, quite large, CHF 13.6 million. We have fully reversed this reduction. In addition, we have seen the reclassification of the interest on that liability, CHF 0.6 million, as well as adjustments for integration cost, about CHF 4 million, and restructuring cost, about CHF 1 million. On the adjustments to the core net profit, we see the same adjustments as in the years before, with the tax effect of the adjustments this year being positive as core EBITDA is lower than the Swiss GAAP FER numbers.
On this slide, you see the development of net sales and the profit aggregates from 2020 to 2021, as well as the respective margin developments. Now, despite some challenges during this year, which resulted in a higher cost of doing business, we've been able to significantly expand sales and profit in absolute terms and have also been able to increase the corresponding margin across all levels. We are particularly proud to having been able to increase core gross profit margin to 21.7%, up from 21%, and the core EBITDA margin to 18.8%, up from 17.7%. The two new Spanish sites have been accretive to the group core EBITDA margin. Next to this, we have also created scale effects with SG&A growing slower on a relative basis.
As an example, we see tangible benefits now from the pooling of certain cross-divisional functions in one location, leading to a higher service quality with controlled cost levels. This set of numbers is a strong confirmation of the resilience of our business model and our ability to run the network also during very challenging times. This is the core income statement. Again, core gross profit, Core EBIT, and core net profit have increased substantially versus 2020. On the cost of goods sold, this P&L fully includes all the effects from the cyberattack, as laid out when we presented the half-year numbers. Now switching to SG&A. These numbers also include the full effect from the fraudulent payments with a high single-digit Swiss franc million charge to admin cost. This isolated event is now behind us, and we do not expect any future P&L impact.
Also in SG&A, R&D costs trend a shade below 4% just as expected. Worth noting is also the financial result, which despite much higher utilization, has only slightly increased. It looks even better on a cash basis, which includes the interest payment to the hybrid instruments which are accounted for as equity. The cash funding cost and the bank charges have been reduced by CHF 2.3 million this year. We will find all these numbers in the cash flow statement. Lastly, as you, I'm sure, have seen, we record a much higher depreciation number, as we have taken over quite a bit of fixed assets in Spain. Now on to the cash flow statement.
The raw cash generation increased significantly, and we have also seen substantial improvements in net working capital relative to sales, where we are now only a shade away from the 40% mark, down from almost 50% in prior years. The 2021 net working capital developments have been subject to a few special items. On the positive side, we have been able to improve the accounts payable and the accounts receivable quite well. This, however, has been more than offset by larger capital allocations to inventories, mostly for safety stock and less prepayments by customer compared to 2020. We have spent CHF 113.3 million on CapEx, in line with expectations at around 10% of sales. The cash flow from financing includes the redemption of the expensive hybrid bond and the placement of more efficient senior bonds.
It also includes the distribution to shareholders in the form, again this year, of a tax-efficient capital reduction. At the bottom of this page, you will see in line with prior practice what the board will propose to the AGM. It's a moderate increase of the payout by CHF 0.20 to CHF 3.20 per share. This is our capital allocation framework, which is closely linked to the delivery of our strategy, Wolf. The investments into growth create the scale and the opportunity set for future value creation for our shareholders by strongly growing top line and expanding the margin and also the cash generation. In order to be able to do this, we need to constantly work on the optimization of our cash generation and also our funding structure. Excess cash will always be used to reduce our revolving credit facility, which further enhances our debt capacity.
This is one of the reasons why we limit ourselves to a growing but still very disciplined payout to our shareholders. With that, I will now hand back to Wolfgang.
Thank you very much, Reto. Let's now take a look at the open tiles here, creating opportunities, driving organic investments, M&A being always on, building the strongest team, and also focusing on sustainability as a company - walking the talk. Before we actually turn our eyes into the future, let's briefly look back on the 10 or 11 years Siegfried journey that we have delivered since 2010.
We walked our talk and delivered on our strategy and growth aspirations. Actually, we collected a few key metrics here to actually make clear what we are talking about. First of all, net sales. In 2010, slightly above CHF 300 million, up to CHF 1.1 billion, so more than three times.
EBITDA, at the same time expanding in terms of relative profitability, up from CHF 33 million - CHF 207 million in 2021. 700 people working for Siegfried, colleagues, most of them in Zofingen, and others in Malta and Pennsville. After the organic growth over the past decade and the different acquisitions, there are now more than 3,500 associates. More than five times as compared to 2010 working for Siegfried in our shared cause. That is happening now in a truly global network of 11 manufacturing sites in Europe, in Asia, and also in the U.S. as compared to the three manufacturing sites that we have been running in 2010.
Over that period of time, we have also worked on our sales split. In 2010, something like 80% of our total revenues came from the Drug Substances part, and by organic growth, by organic investments, by acquisitions, we actually have built out the amount of Drug Products business, the share of Drug Products business, up to now more than 40% of our total revenue.
All that actually has been recognized also by our stakeholders and shareholders. The stock price, which actually has been somewhere around CHF 90 in 2010, significantly increased over that period of time, up to, I think, peak value well above CHF 900 . After the somewhat turbulent times with high volatility in recent weeks, now to something below CHF 700 , which in itself is still a pretty strong equity story.
As said before, this was actually contributed by the company as it has been 2010, by organically investing, but also by bringing new people, new assets, new businesses on board. Altogether, four acquisitions. The first one, AMP in 2012. The second one in 2014, the Hameln site, which is now manufacturing coronavirus vaccines. Just six months later, the acquisition of the BASF CDMO business in May 2015. In 2020, with closing on January 1, 2021, the acquisition of the two manufacturing sites from Novartis. Based on that legacy, based on that track record, we of course turn our head to the future and think about what specifically are we going to do going forward.
Here it's clear. Our ambition, our commitment, actually is to continue to strengthen our core by organically investing continuously, and also to use M&A to enter into adjacencies and beyond, and further build out and make use of the many opportunities available in the CDMO market to a leading company like Siegfried.
Let's first look at the short to midterm. Grow existing core. This is about enhancing our value proposition to our customers and outgrow the market, in the segments in which we are already active in today, which is small molecule Drug Substances manufacturing, oral and inhalation solid dosage forms, aseptic fill & finish, and integrated Drug Substances and Drug Products development services. We are ready and also contemplating to add adjacency, and we are actually doing it, already. Which is about diversification into new CDMO market segments.
For example, large molecule formulation, which is already taking place on our Hameln site and also in Irvine. Particle technologies, a technology in which we actually invested in 2020 and 2021 and took into operation our highly potent API micronization facility on our manufacturing site in Evionnaz, in Switzerland. Encapsulation and drug delivery, drug delivery systems, which can actually add value for our customers, something we would be interested in going forward as well. Or antibody drug conjugates, something between chemistry and biology, where we actually contribute quite a lot and can contribute quite a lot in the chemical part and would be ready and actually contemplate to also start activities in the future in that area.
A little bit further out, also in terms of timeline, we would also consider to enter new areas within the CDMO business model in order to ensure long-term growth for the company. That could be antibodies. That also, could also be cell and gene therapy, viral vectors or bioengineered vaccines, and all of that supported by advanced data analytics in order to increase our efficiency as an operating company. What does it specifically mean short to midterm? Where we of course want to expand and actually will expand our capabilities and capacities in order to not only see opportunities, but to also be able to translate those opportunities in tangible benefits for Siegfried. Organic investments. This is about expanding development and commercial capacities and adding new technologies, also making better use of digital tools and continuously foster teamwork in our people.
I will talk about two quite significant example later in the presentation. Portfolio management is something which we always did, but which received a special focus in 2021 and will continue to receive a lot of attention, including, myself's attention going forward in the future, because that is about making best use of our available valuable capacity for the best possible products and the best possible service to our customers.
Mergers and acquisitions is a tool that we will use, as we did in the past. To actually strengthen both what we are today and what we are doing today but also in order to enter into new attractive market segments where we at Siegfried believe that we would have a right to play and can add value to the company. Bottom line is we are ready and we will create opportunities for long-term profitable growth for the benefit of our customers, stakeholders, and our shareholders. Some examples. We will, and the decision has been taken last year, establish a new R&D center in Evionnaz, Switzerland, which means we will expand significantly our service capabilities and capacities in the field of small molecule drug substances.
That's gonna be a high-end chemical and analytical R&D facility, also comprising kilo lab capacities in order to support the launch and development activities of our valued customers. We will, by way of that investment, also consolidate all our on-site development activities in one location. Not only that, it's not only about consolidation. We will significantly expand capacities and expand our development teams. As a company being aware of its obligations and being on a good ESG journey already, we will of course include energy efficiency measures in the design of the building and in the operation of the laboratories. The new labs and the new teams will be ready to take on new business as of 2024. Investment of that initiative is expected to amount to up to CHF 25 million.
Also, a great decision that has been taken by the Executive Committee last year and the board of directors last year is that we will invest into a new large-scale Drug Substances manufacturing plant on our German site in Minden. This is about the expansion of our Drug Substances manufacturing capacities. Specifically, that will mean that we will add up to 100 cu m fresh reactor capacity. Not only that, this is not only about adding capacity, which is in itself important and challenging of course, but the design of that facility is supposed to deliver the blueprint for all our investments in the Drug Substances manufacturing space going forward.
That's gonna be a combination of all the best practices available within our global drug substance manufacture network which specifically means, of course, it's gonna be the Minden team taking on most of the workload. The team is cross-functional and also includes engineers and experts from all our other drug substance manufacturing sites to make sure that we are building the best plant possible. It's gonna be a highly flexible modular train, plant, with a lot of standardization in terms of equipment and design which comes along with quite a number of advantages for Siegfried and our customers. First of all, of course, procurement power. Also, spare part management, but at the same time, also in terms of technical transfers between sites. Equal equipment will facilitate the flexibility to allocate products within our network at the most appropriate capacity.
Also here, we will of course include energy efficiency measures in the design of what we are building in Minden. Here the capacities and the teams will also be ready to take on new business already in 2024. Investment in Minden is expected to amount to up to CHF 100 million. Portfolio management, quite an important topic, especially when you talk about CapEx because while we generate the funds that we need to support our future growth. It is also our obligation to make sure that the capacity that we already have is used for the benefit actually of our customers and our own company.
And that we make sure that actually the products that we are manufacturing today contribute to the overall profitability of the network and actually the expansion of the overall profitability of the network. Which means we have started to specifically look at individual product profitabilities and continue to work actually on the management of our margins, which also of course includes the question of appropriate pricing, operational excellence. Quite a comprehensive exercise, however, very important in order to actually make best use of our assets.
This is in the end as a tagline about the margin volume trade-off that we continue to optimize towards superior cash flow generation because it is that cash that we generate today, which we need to invest into our future. Investment is also about investing into digital capabilities at Siegfried, where we want to push digital technologies to further leverage the expertise and the quality of our teams. I will not go through all of these examples, just mention a few highlights here.
First of all, SAP S/4 HANA. The rollout actually will start with the cut over in August this year when actually the new Spanish site, Barberà del Vallès, will be the first site to actually switch from the Novartis SAP R/3 system to the new Siegfried SAP S/4 system. Followed by the other 10 sites over a period of 2-3 years, by when we will then be all at the same and actually higher level when it comes to ERP system and having full control of our company. Also, we started to invest into the separation of IT and OT systems.
One learning from the cyber attack, which happened in May last year, where we learned that the very few sites, fortunately, that still didn't have that separation were, of course, those sites most affected by the cyber attack. And also those sites for which it took the longest to actually bring them back up to speed, back on track. Actually, that is something that we are going to change so that very soon, each and every site within the global Siegfried network will have the separation of these two spheres in the IT world. Chemometrics is a technology that we, the colleagues in the labs, apply already since quite a number of years, but where we continue to invest.
Because this is about smartly combining, let's say, biological, brain power with computer power in order to accelerate the development, times for the benefit of Siegfried and our customers. Collaboration tools, another, learning, I guess, for all of us, over the past two years. It is possible to also efficiently communicate in a virtual space as long as you ensure that there is still enough physical interaction. Face-to-face meetings where you create opportunities for people to run into each other, talk to each other about unplanned things. Still, it's important that we continue and further build out that learning to actually communicate in an efficient way, also in the virtual world, and Siegfried is making investments into those technologies as well.
Kind of a similar topic, virtual site tours, have been very important over the past two years because there was no other way to really present our capabilities, our people, our assets to new customers who have never been to a Siegfried site before. We developed that capability during that time, and we will continue to use it going forward, especially for times where traveling might be challenging again. By the way, authorities, when it comes to inspections and audits, also very much appreciate that capability. Much about digital technologies. Let's come to the last part here, which actually is the most important one, building the strongest team, because it is our people, our colleagues on the sites, in the plants, in the labs, who in the end need to turn all those opportunities into reality.
They are actually the core of our operations, which is why we continued to invest into their capabilities in our people. Three pillars here as examples. First of all, the Siegfried Academy, an initiative that we actually kicked off in 2019 which combined all our different training activities throughout the network in one comprehensive set of measures, which we call Siegfried Academy. And which we continuously build out and just recently added a leadership development program for managers, young managers, but also senior managers. But equally important, not for managers only, but also for all our colleagues on the site. We have an on-site leadership program as well, which is accessible for many more colleagues in our global teams.
Value Awards. Our core values, the five core values, which we gave ourselves in 2019 after intense discussions. Our mental framework, which are excellence, passion, integrity, quality, and sustainability. They are important, and we continuously remind ourselves of the importance of those core values.
Actually, we make visible outstanding performance which relate to one of those core values and introduced so-called Site Value Awards already last year, where we actually provide those awards to individuals or teams which have delivered outstanding performance in this regard. We pick out of all these Site Value Awards, the five Global Value Awards for the even more outstanding topics and performances. I'm actually very much looking forward, because tomorrow in our dialogue meeting with 350 people attending, we will actually hand over the five 2021 Global Value Awards to the winners, which is going to be a great event at Siegfried. Last but not least, great workplace.
We need to provide a good work environment where people can actually grow and feel safe. That, of course, is important for the talent that we already have on board, which we need to retain. Of course, important for new talent to take on, to make members of the Siegfried family. Because in the end, the availability of talented people, qualified people, is important in order to support and enable our long-term profitable growth in the future. Sustainability, also one of our core values. With the tech line, which we already used in 2019. We do not only think about tomorrow, but far beyond. I'm happy to be able to report that this is not a new way of thinking. Nothing new to Siegfried, really.
Siegfried started its ESG journey already years ago with the introduction of a Code of Business Conduct. The do's and the don'ts of how we operate and what we expect when working internally or with external partners. The Global Quality Policy, where I'm also happy to be able to report that, like since many years, Siegfried continued to deliver a very good compliance performance based on many audits by customers and inspections by regulatory bodies. Siegfried continues to be a high-end, high quality supplier in the pharmaceutical space.
Resource and waste management is important, of course, in terms of sustainability, but also in terms of economics. Wastewater, buying water, these are expensive cost factors, and it's important in terms of our careful use of natural resources, and they are constantly managed in terms of reducing both the amount of water that we consume and the effluent that we actually put into such water.
Safety initiatives in terms of providing a safe workplace are, of course, important and needs to be continuous effort to ensure a safe working environment at Siegfried. We use, of course, sharing of best practices within our network so that the one side can actually learn from experience, for the good or for the bad, from other sides, which is quite powerful. We also introduced a Supplier Integrity Commitment, based on, I mean, intense discussions with our suppliers and also, of course, audits to make sure that certain standards are actually adhered to.
Which is an attempt and actually, I think, important for us to make sure that not only what is happening within Siegfried, but also in the value chain prior to Siegfried, is under good control and in line with our expectations. We also gave ourselves the commitment to actually reduce Siegfried's carbon footprint by 50%, by the year 2030, as compared to where we have been in 2020. That's something we announced during our half-year reporting last August, and it actually is an ambitious target, I believe. A target behind which we actually have set specific measures. Actions based on which we actually are very optimistic that we will be able to, step-by-step, achieve our goal of a -50% reduction by 2030.
We also, of course, as always, since quite a number of years, include all those activities in our sustainability report 2021, which has been issued today with all the other documents of our annual report. We are actually happy and proud that our past performance has already been recognized by external partners, external institutions. We are a member of the UN Global Compact. ISS awarded us already in 2020 their Prime status and reconfirmed that status just recently in 2022. We have an MSCI ESG A rating, which is important to the company. Also just recently, we have been, as a company, included in the Dow Jones Sustainability Index Europe as one of the leading companies when it comes to ESG in our space. All that actually converges to the last slide of the presentation.
Where we write down and communicate and talk about Siegfried's ambition going forward. Which is to consistently deliver profitable growth by investing in the global network and continue to execute value-adding M&A. What does it specifically mean? Top line growth, at least in line with the CDMO market. An active portfolio management to ensure that we make best use of our limited available capacity and our funds, our cash. Combined with operational and pricing excellence to make sure that we make the best of our product portfolio. Continued investments in our global network, adding technologies, differentiating technologies and capacities. Of course, continue also to execute, based on our strong record, a value-adding M&A, both in core areas, but also beyond in near and further adjacencies.
All that, of course, is supposed to help us to further advance on our mission to become and evolve as a global leader in the CDMO space of being the strongest team, running the most competitive network, and being the most trusted partner of the pharmaceutical industry. Specifically for 2022, we expect a high single-digit to low double-digit growth in local currencies. With our profitability further expanding beyond 20% core EBITDA margin, we confirm our overall positive midterm outlook for the company. All that, of course, as we all know, with some macro uncertainty. This is what we prepared for you and will be happy to discuss about in the Q&A section, for which I will actually hand over again to Peter. Thank you very much.