ANNUAL REPORT 2019

CONNECT.
COMFORTRELIABILITY
FORBO – IN EVERYDAY LIFE

COMFORT.

Our floor coverings provide comfort in everyday life. They not
only stand out for their superior quality and tough resilience,but they also go a long way to creating the desired atmospherein spaces. We offer a broad range of designs and sustainable
materials that lend every room a comfortable ambience andpleasant acoustics. And laying our floor coverings is also com­
fortable: they make it easy to create modern spaces in no time.

RELIABILITY.

Our belts fulfill a wide range of functions and are a match foreven complex processes. This also applies to the cleaning ofgoods that are reused every day. What is crucial here is that our
diverse belts function reliably and work together smoothly –­especially when a product has to pass through any number ofprocess steps. Our belts ensure the highest level of efficiency
with minimal energy consumption.

4This E. Schneider

Stephan Bauer

Executive Chairman

CEO‘The increasingly challenging economic environment
coupled with operational challenges took their toll in­several areas in the year under review and put a damperon our sales growth. The measures initiated so far have
not yet shown the expected results.
Despite the negative currency effects and moderate sales,
we managed to increase earnings slightly.
The situation will remain demanding. With our attractive
product portfolio, our know-how, and our global market
presence, we have what it takes to be successful in fastchanging markets.’

FORBO ANNUAL REPORT 2019 – LETTER TO SHAREHOLDERS5

TO OURSHAREHOLDERS
Dear Madam, dear Sir,
Forbo posted slightly lower sales, adjusted for currency effects, amid a more challenging global economic
environment. Nevertheless, it lifted earnings slightly, despite the negative currency effects, owing to
the investments made in recent years to improve efficiency and thanks to lower purchase prices for raw
materials.
Generally speaking, we felt a greater reluctance to invest in the reporting year. Substantial projects were either
postponed indefinitely or reduced in scale. On the whole, both divisions faced very mixed conditions intheir different markets and customer segments. We expanded our product portfolios with a large number of
new products and invested in projects to drive growth at both Flooring Systems and Movement Systems.
We succeeded in slightly increasing Group profit through ongoing investments in new technologies andmeasures to enhance efficiency, through improved purchasing terms, as well as by acting with foresight inline with business performance.
The impact of the stronger Swiss franc versus the previous year led to a decrease of CHF 34 million in sales
and of CHF 6 million in operating profit (EBIT) when local results were converted into the corporate currency.
This was due mainly to the weaker euro. The currency effect had more of an impact on Flooring Systems
than on Movement Systems owing to the geographic distribution of their businesses.

Sales growth curbed
Sales impacted by growing reluctance to invest
In the year under review, Forbo generated net sales of CHF 1,282.2 million (previous year: CHF 1,327.0 million),a slight decrease of 0.8% in local currencies; this equated to a decline in sales of 3.4% in the corporate currency
owing to negative currency effects.
The sales of Flooring Systems declined by 1.5% in local currency terms to CHF 870.5 million (previous year:
CHF 913.2 million). In the corporate currency, this corresponded to a decrease of 4.7%. Increasingly challenging
markets put a damper on demand in a highly competitive market environment. The measures taken so far
in organization and in the areas of production, logistics, and distribution have not yet produced the expected
results.
Movement Systems generated net sales of CHF 411.7 million (previous year: CHF 413.8 million), this represents
a marginal gain of 0.6% in local currencies, but a slight decrease of 0.5% in the corporate currency. The impact of
the strained economic climate was also felt in this division; nevertheless, the Americas and the Asia/Pacificregions posted a good sales plus, primarily as a result of projects with specialized products in the food andindustrial production segments.

6

FORBO ANNUAL REPORT 2019 – LETTER TO SHAREHOLDERS

Margins increased again
Slight improvement in profit and margins
Forbo slightly increased operating profit owing to better purchasing terms and other measures to improve
efficiency despite sales that were marginally lower on the whole. Margins improved once again on the back of
our high-quality and innovative products with their unique selling propositions.
The application of the new IFRS 16 accounting standard in 2019 had a positive impact of about CHF 17 million
on operating profit before depreciation and amortization (EBITDA). The effect on operating profit (EBIT),
however, was marginally positive.
Operating profit before depreciation and amortization (EBITDA) was up by CHF 16.9 million, or 7.8%, to CHF
233.7 million (previous year: CHF 216.8 million). Group operating profit (EBIT) rose by CHF 1.0 million, or 0.6%,
to CHF 176.3 million (previous year: CHF 175.3 million).
The EBITDA margin improved from 16.3% to 18.2% and the EBIT margin from 13.2% to 13.7%.

Group profit slightly higher year-on-year
Net earnings stable
The higher operating profit (EBIT) and a slightly lower tax rate of 21.1% (previous year: 21.7%) resulted,
despite lower financial earnings mainly owing to IFRS 16, in a Group profit of CHF 138.3 million (previous year:
CHF 137.6 million), representing an increase of 0.5% or CHF 0.7 million.

Balance sheet remains robust
Strong equity ratio as well as high net cash
Net cash at year-end 2019 came to CHF 217.5 million (previous year: CHF 127.4 million); this was due to anotherstrong operating cash flow result on a par with the previous year. In addition, as at December 31, 2019, Forbo
held 48,685 of its own shares valued at CHF 80.2 million at year-end share price. Another share buyback programfor 2019 – 2022 was approved by the Ordinary General Meeting in April 2019 but has not yet been launched.
The equity ratio increased to 61.7% (previous year: 60.4%).
Undiluted earnings per share rose by 4.8% to CHF 86.33 (previous year: CHF 82.38), since fewer shares were in
circulation in the year under review owing to the share buyback program the previous year.

7

Proposals to the Ordinary General Meeting
Re-elections to the Board of Directors
All the current members of the Board of Directors will stand for re-election for a further one-year term of office.
Increase in the dividend
In view of the solid cash flow, the strong equity ratio, and the increase in earnings per share, the Board of
Directors will propose to the Ordinary General Meeting that the dividend for the 2019 business year should be
increased by about 10 percent versus the previous year to CHF 23 per share (previous year: CHF 21 per share).

Outlook for 2020
Strategy confirmed in challenging times
Our global presence, leading market positions, a broad, innovative and sustainable product portfolio plus ourhealthy financial situation will enable us to continue implementing our strategy. We will focus on developmentin growth markets, targeted strengthening of our distribution organizations, selective capacity expansion in
product lines with better-than-average growth, promoting of innovations coupled with digitization advancesand capitalizing on external growth opportunities. However, we will still make acquisitions only if we canthereby create added value for our shareholders.
Market environment remains demanding and tasks even more challenging
It is very difficult at present to make a forecast for global economic trends in 2020. The political and economic
conditions can, as we know, change very rapidly. Currencies and trends on the raw material markets are also
very volatile.
We anticipate a difficult economic situation for the year and forecast a slight decrease in sales in local currencies
and a somewhat higher one in Group profit versus the previous year.

8

FORBO ANNUAL REPORT 2019 – LETTER TO SHAREHOLDERS

Thank youThanks to employees, business partners, and shareholders
To successfully meet the various challenges facing Forbo in the current market situation, the commitmentof our people has to be even more intensive, even more flexible and even more professional. We extend ourheartfelt thanks to them for their dedication and their identification with Forbo.
We also wish to thank our customers, business partners, and suppliers for their close cooperation and theconfidence they have placed in our company.
On behalf of the Board of Directors and the Executive Board, we thank you too, our shareholders, for yourongoing loyalty and the trust you place in Forbo.

Baar, March 2020

This E. Schneider
Executive Chairman

Stephan Bauer
CEO

Financial calendar
Ordinary General MeetingPublication of 2020 Half-Year Report
Publication of 2020 Annual Report

Friday, April 3, 2020
Tuesday, July 28, 2020
Thursday, March 4, 2021

9

CONTENTS
At a glance
Forbo in figures
Challenging economic developmentSustainable engagement

Activity report
Two divisions with leading market positions
Flooring Systems: The economic slowdown is a challenge
Movement Systems:
Food segment is a reliable merit

12
13
18
22

27
28
30
36

Organization43
Executive BoardGroup structure 
Board of Directors

44
46
48

The Forbo share

51

Corporate governance report

55

Remuneration report

73

Forbo Group financial report

91

Consolidated balance sheet
92
Consolidated income statement
93
Consolidated comprehensive income statement
94
Consolidated statement of changes in equity
95
Consolidated cash flow statement
96
Notes – accounting principles
97
Notes107
Group companies
134
Report of the statutory auditor
138
Consolidated balance sheets 2015 – 2019
144
Consolidated income statements 2015 – 2019
145

Financial statements for Forbo Holding LtdBalance sheet
Income statementNotes to the financial statements
Proposal for appropriation of available earnings
Report of the statutory auditor

147
148
149
150
155
156

10

11

AT A GLANCE
Forbo in figures
Challenging economic developmentSustainable engagement

13
18
22

12

2019 AT A GLANCE

13

FORBO IS A LEADINGPRODUCER OF
FLOOR COVERINGS,BUILDING AND­CONSTRUCTIONADHESIVES, AS WELL
AS POWER TRANSMISSION AND
CONVEYOR BELT­S OLUTIONS.
The company employs more than 5,600 people
and has an international network of 26 production
and distribution ­companies, 6 assembly oper­ations and 48 pure sales organizations in a total of
38 countries. Forbo is headquartered in Baar in
the canton of Zug, Switzerland.

14

FORBO ANNUAL REPORT 2019 – AT A GLANCEFORBO IN FIGURES
Forbo is a global player, and its two div­­
isions supply a wide range of industries.
The Group’s global reach means that
it is close to dynamic markets, making
Forbo the first choice as a local partner
for customers that have similar global
requirements. The quality, longevity, andperfor­mance of our products and sys­
tems reflect the quality and stability of
our relations with our business partners.

Flooring Systems
16 production facilities in 7 countries and distribution
companies in 26 countries. Sales offices in Europe,
North, Central, and South America as well as Asia/
Pacific.
Floor coverings
Building and construction adhesives
Movement Systems
10 production sites and 6 assembly operations in 9
countries and distribution companies in 32 countries.
Over 300 sales and service offices worldwide.
 Production facilities andassembly operations

15

Net sales 	 CHF 1,282.2 million
EBIT 		 CHF 176.3 million
EBIT margin	
13.7%
Group profit	 CHF 138.3 million
Earnings per share	
CHF 86.33
undiluted

16

FORBO ANNUAL REPORT 2019 – AT A GLANCE

Net sales by division
Change on previous year
CHF m 2019
870.5
411.7
1,282.2

Flooring Systems
Movement Systems
Total

in %
– 4.7
– 0.5
– 3.4

in localcurrencies in %
– 1.5
0.6
– 0.8

In % of total
67.9
32.1
100.0

32.1%

Movement Systems

67.9%
Flooring Systems

Employees by division

Number 2019
3,130
2,441
43
5,614

Flooring Systems
Movement Systems
Corporate Functions
Total

2,441

Movement Systems

3,130

Flooring Systems

43

Corporate Functions

Change onprevious year in %
– 2.0
– 2.5
2.4
– 2.2

In % of total
55.8
43.5
0.7
100.0

FORBO ANNUAL REPORT 2019 – AT A GLANCE

17

Financial overview Forbo Group
2019

2018

2019

2018

Income statement
Net sales
Flooring Systems
Movement Systems
Operating profit before depreciation andamortization (EBITDA)

CHF m
1,282.2
870.5
411.7
233.7

CHF m
1,327.0
913.2
413.8
216.8

EUR m1)
1,152.4
782.4
370.0
210.0

EUR m1)
1,148.7
790.5
358.2
187.7

Operating profit (EBIT)Group profit

176.3
138.3

175.3
137.6

158.5
124.3

151.7
119.1

Balance sheet
Total assets
Operating assets
Shareholders’ equity
Net cash2)

CHF m
1,097.4
834.1
676.6
217.5

CHF m
980.0
812.4
591.6
127.4

EUR m1)
986.3
749.7
608.1
195.5

EUR m1)
848.3
703.3
512.1
110.3

Cash flow statement
Cash flow from operating activities
Cash flow from investing activities
Free cash flow

CHF m
185.1
– 34.5
150.6

CHF m
171.2
– 39.1132.1

EUR m1)166.4– 31.0135.4

EUR m1)148.2– 33.8114.4

Key ratios
ROS (EBITDA/net sales)
Equity ratio (shareholders’ equity/total assets)
Gearing (net debt/shareholders’ equity)

%
18.2
61.7
– 32.1%
16.3
60.4– 21.5

Employees (as at December 31)
Total employees

Number
5,614

Number5,739

Ratios per share
Earnings per share (undiluted)3)
Equity (undiluted)
Dividend

CHF
86.33
422.3623.004)CHF
82.38
354.1821.005)

EUR1)
77.59
379.6220.674)

EUR1)
71.31
306.5918.185)

Stock market capitalization (as at December 31)
Stock market capitalization6)

CHF m
2,719.2

CHF m
2,485.8

EUR m1)
2,444.0

EUR m1)
2,151.8

1) Euro values translated at the average annual exchange rate of
CHF 1.1126/1 EUR (2019) and CHF 1.1552/1 EUR (2018).
2) Liquidity plus financial assets less financial liabilities, excluding
leasing liabilities.
3) See note 11 ‘Earnings per share’ on page 114 of the financial­report.

4) The Board of Directors proposes to the Ordinary General Meetingof April 3, 2020, the distribution of a dividend in the amount of
CHF 23.00 per registered share.
5) Approval of a dividend of CHF 21.00 per registered share at theOrdinary General Meeting of April 5, 2019.
6) Total number of shares multiplied by year-end share price.

18

FORBO ANNUAL REPORT 2019 –AT A GLANCECHALLENGINGECONOMICDEVELOPMENT
Forbo posted slightly lower sales in 2019
than the previous year amid global eco­nomic conditions that were increasingly
challenging. Reluctance to invest was
felt to varying degrees across the board
in all our customer segments, and thisput a damper on sales growth in ourcore markets. On the other hand, anddespite negative currency effects, oper­
ating profit rose on the basis of invest­
ments to enhance efficiency as well as
lower raw material prices.

Both divisions expanded their productportfolio with innovative offerings for
specific customer segments; they select­ively broadened distribution and service
structures that were reinforced with IT
systems providing optimum support;
and they invested in operational mod­ernizations.
The current market climate is making
challenging demands on us in many ar­eas. It is all the more important to con­vince in the highly competitive market
with our high-quality products and cus­
tomer-specific services that rest on
strong know-how and a solid financial
foundation.

Net sales by geographic area
Change on previous year

FranceGermany
Benelux
Scandinavia
Great Britain/Ireland
Switzerland
Other countries Europe
EuropeUSA
Other countries Americas
AmericasAsia/Pacific and Africa
Total

%
12.3
12.1
10.2
7.7
7.0
2.2
12.5
64.0
17.3
4.0
21.3
14.7
100.0

in %
– 4.5
– 6.9
– 2.8
– 4.9
– 2.9
– 2.8
– 3.3
– 4.3
– 0.9
0.2
– 0.7
– 3.2
– 3.4

in local currencies in %
– 0.8
– 3.4
1.0
0.9
0.0
– 2.8
0.2
– 0.6
– 2.3
1.3
– 1.6
– 0.7
– 0.8

2019
CHF m
158.2
155.4
130.5
98.6
90.0
27.6
160.6
820.9
221.2
52.1
273.3
188.0
1,282.2

25

50

75

100

125

150

175

200

225

250

275

19

Weakening demand hampered sales growth
In the year under review, Forbo generated net salesof CHF 1,282.2 million (previous year: CHF 1,327.0 mil­lion), a slight decrease of 0.8% in local currencies; thisequated to a decline in sales of 3.4% in the corporate
currency owing to negative currency effects. Both divi­
sions felt a fall-off in demand in their core markets,
which was due to a general reluctance to invest andthe postponement of major projects. On the upside,
many of our growth markets that are in the midst of
expansion made a positive contribution to sales.

The Flooring Systems division generated net sales of
CHF 870.5 million in the 2019 business year (previous
year: CHF 913.2 million), which reflects a decrease of
1.5% in local currencies (– 4.7% in the corporate curren­cy). All three regions reported a decline in sales to vary­ing degrees, mainly in the Americas and Asia/Pacific.
The Movement Systems division generated net sales of
CHF 411.7 million in the year under review (previous
year: CHF 413.8 million), which reflects marginal yearon-year growth of 0.6% in local currencies (– 0.5%
in the corporate currency). This increase in sales was
driven by the Asia/Pacific and Americas regions, while
Europe was down slightly.

EBITDA by division

Flooring Systems
Movement Systems
Corporate

2019
CHF m
172.6
69.3
– 8.2

Change onpre­vious year in % – 25 0
4.0
14.4– 16.3Operating profit and margins improved
despite headwinds
Operating profit was also dragged down by negative
currency effects. The Group partly offset the fewer
sales and the impact of the currency fluctuations
by obtaining lower raw material prices, making oper­
ational processes more efficient through investments
in technology, and by acting with foresight in line withbusiness development.
The application of the new IFRS 16 accounting stan­
dard in 2019 had a positive impact of about CHF 17
million on operating profit before depreciation andamortization (EBITDA). The effect on operating profit(EBIT), however, was marginally positive.
The Group increased operating profit before depreci­
ation and amortization (EBITDA) by 7.8% to CHF 233.7
million (previous year: CHF 216.8 million). EBITDA at
Flooring Systems rose by 4.0% to CHF 172.6 million(previous year: CHF 166.0 million). EBITDA at Move­ment Systems increased by 14.4% to CHF 69.3 million(previous year: CHF 60.6 million).
Despite a number of different challenges, the Groupwidened its margins further thanks to its high-quality
products with unique selling propositions. The GroupEBITDA margin rose from 16.3% to 18.2%. At Flooring
Systems, the EBITDA margin increased from 18.2% theprevious year to 19.8% in the year under review, whileat Movement Systems the EBITDA margin rose by 2.2
percentage points to 16.8% (previous year: 14.6%).

25

50

75

100

125

150

175

The Group’s operating profit (EBIT) increased by 0.6%
to CHF 176.3 million (previous year: CHF 175.3 million).
The Group EBIT margin improved from 13.2% the pre­vious year to 13.7% in the year under review.
The higher operating profit (EBIT) and a slightly lower
tax rate resulted, despite lower financial earnings
mainly owing to IFRS 16, in a Group profit of CHF 138.3
million (previous year: CHF 137.6 million), representing
an increase of 0.5% or CHF 0.7 million.
Taxes and financial income
The tax rate in the year under review was 21.1% (previ­
ous year: 21.7%), in line with the long-term average.
Financial expense in 2019 came to CHF 1.8 million (pre­vious year: CHF 0.6 million), including interest expenseof CHF 1.0 million for leasing in accordance with IFRS
16. Factoring out this effect, financial expenditure wason a par with the previous year owing to minor foreignexchange losses. Offsetting this was financial income,comparable with the previous year, of CHF 0.8 million(previous year: CHF 0.9 million), which consisted of in­terest income. On balance, the financial result came to
CHF – 1.0 million (previous year: CHF 0.3 million).

20

FORBO ANNUAL REPORT 2019 – AT A GLANCE

Free cash flow
2019
CHF m
185.1
– 34.5
150.6

Cash flow from operating activities
Cash flow from investing activities
Free cash flow

Solid cash flow performance
In 2019, the Group generated cash flow from operating
activities of CHF 185.1 million (previous year: CHF 171.2
million), which reflects an increase of CHF 13.9 million.
Cash flow from investing activities increased by CHF 4.6
million and came to CHF – 34.5 million (previous year:
CHF – 39.1 million). Free cash flow thus totaled CHF
150.6 million (previous year: CHF 132.1 million). This
increase was due mainly to the effect of IFRS 16.

2018
CHF m
171.2
– 39.1
132.1

– 50

0

50

100

150

200

50

60

Balance sheet remains robust
Total assets at December 31, 2019, rose to CHF 1,097.4
million (previous year: CHF 980.0 million); the year-onyear increase of CHF 117.4 million was due mainly tothe positive cash flow. Net cash rose by CHF 90.1 mil­lion and now stands at a good level of CHF 217.5 mil­lion (previous year: CHF 127.4 million). Equity rose inline with Group profit, less dividend payments andcurrency losses, and came to CHF 676.6 million at theend of December 2019 (previous year: CHF 591.6 mil­lion) – this represents an increase of CHF 85.0 million.
The equity ratio still remains at a high 61.7% (previous
year: 60.4%).

Investments 2015 – 2019

2019
2018
2017
2016
2015

Flooring
Systems
CHF m

Movement
Systems
CHF m

Corporate
CHF m

Total
CHF m

23
25
22
20
31

13
13
36
17
9

0
0
0
3
0

36
39
58
40
40

Efficiency-enhancing and sustainable investments
Forbo’s investments are wide-ranging, combining thedemands of sustainability with efficiency gains in oper­
ational processes. In the reporting year, Forbo concen­
trated its resources in both divisions on key activities
and strategic projects in the areas of product portfolio,
technology, market expansion, and targeted capacity
expansion. Total Group investments in property, plant,
and equipment and intangible assets in 2019 cameto CHF 36.0 million, which was CHF 2.7 million, or 7.0%,
lower than the previous year (previous year: CHF 38.7
million).

10

20

30

40

Flooring Systems invested CHF 22.8 million in the re­porting period (previous year: CHF 25.4 million). The
investments included various cutting machine faci­lities for the manufacture of modular vinyl and textile
flooring, expansion of the cross-dock warehouse formodular flooring in the Netherlands, new capacity forbuilding and construction adhesives in Russia, refur­
bishment of the process control center for linoleum
production, edge-cutting machines for vinyl flooring,tanks and silos for more efficient processing of incom­
ing raw materials, new laboratory test stations, and up­
graded and expanded digital printing technologies
along with digital sales-support platforms.

21

Investments in property, plant, and equipment at
Movement Systems were unchanged year-on-year at
CHF 13.2 million. In the year under review, a plant that
manufactures the substrate material for producing thebelts of the Extremultus flat belt product line was refur­
bished completely and retrofitted with various acces­
sories. For the Prolink plastic modular belt product line,

various injection molding machines were outfittedwith special devices that make it possible to develop
and produce the new series being planned. The reel
warehouse at the production plant in Germany wasmodernized so as to streamline the flow of goods. New
service points and fabrication sites were established invarious markets to strengthen regional customer care.

Employees by geographic area
Benelux
Germany
Great Britain/Ireland
FranceScandinavia
Switzerland
Other countries Europe
EuropeAsia/Pacific and Africa
USA
Other countries Americas
Americas
Total

%
21.9
12.6
9.9
7.4
3.2
3.2
12.8
71.0
14.7
10.9
3.4
14.3
100

Change onpre­vious year in %
– 1.3
– 2.1
– 7.2
– 0.5
– 2.2
– 1.7
0.7
– 1.9
– 4.3
– 1.0
– 2.1
– 1.2
– 2.2

2019
1,229
709
557
416
179
177
717
3,984
830
611
189
800
5,614

Prudent personnel management
The Forbo Group employed 5,614 people at year-end
2019. This is a total of 125 fewer people than at the endof the previous year. The minor individual percentagechanges in employee levels by and large reflect market
developments in the different countries and regions
and mirror the situation on the balance-sheet date at
the end of the year. In view of the anticipated global
downturn in demand, we are practicing prudent per­sonnel management in new hiring to take account ofbusiness trends.

200

400

600

800

1,000

1,200

1,400

The somewhat larger decrease in the UK reflects theongoing difficult conditions in the local market plus
uncertainties in connection with Brexit, along withthe downturn in the construction industry, which has
made itself felt particularly at Flooring Systems. The
higher-than-average decrease in Asia/Pacific reflects
the situation at the Pinghu plant in China. Following
an intensive build-up phase, staff were selectively em­
ployed on fixed-term contracts during the start of op­
erations, and headcount has therefore now stabilized
at a lower level.

22

FORBO ANNUAL REPORT 2019 – AT A GLANCESUSTAINABLE
ENGAGEMENT
The responsible use of resources of ev­
ery kind is a guiding principle at Forbo.
We are committed to the protection of
the environment and we invest in con­cepts that contribute to a sustainable
future for us and for the society. As a re­sponsible manufacturer and employer,
Forbo sets benchmarks for health andsafety, the environment, and quality.
Social dimension
Forbo promotes a high-performance culture in order tomeet the high demands of our customers and business
partners as well as the requirements we impose on
ourselves. This is why we promote the necessary capa­
bilities and competences at all organizational levels,and support this internally with seminars and further
training activities.
This means that the divisions provide internal training
in a wide range of areas regarding products and appli­
cations, sales and marketing, finance, operations, pro­
ject management, strategy implementation, and For­bo’s values. Continuous intensive training in the areaof health and safety includes measures on the topics ofaccident prevention, risk awareness, and occupational
health and safety, as well as general ongoing preven­tive measures.
At the Group level, Forbo has established an internalmanagement training program in collaboration with
the University of St. Gallen as well as other external
partners and internal experts. This practice-oriented
advanced training program for senior managers andpersons in key positions consists of a first training weekthat includes various modules in areas ranging frommanagement and sales to marketing and operations.
A second training week expands on this and includes
leadership modules, focusing on strategic implemen­tation and leadership topics such as dealing with or­
ganizational and team changes as well as performance
management. A third training week, building on thisfoundation, deals mainly with leadership topics regard­
ing the implementation of strategy across various or­
ganizational levels. This is combined with relevant tools
for communication challenges and cooperation in in­
ternational, cross-cultural teams.

23

Ecological dimension
Protection of the environment and the generation of
ecological added value are important factors in all of
Forbo’s development and investment decisions. Our
customers also demand efficient and sustainable prod­
ucts and services. Both divisions are meeting these­demands by offering purely natural products in theirproduct portfolio.
With linoleum, Flooring Systems offers a floor covering
made of 97% renewable raw materials of which 72%
are renewable within ten years. Linoleum is made fromthe natural raw materials linseed oil, natural resin, woodflour and limestone as well as jute and pigments. A nat­ural product through and through, which, in view of
its long service life and positive ecological balance, isregarded as the most environmentally friendly resilient
floor covering available. At the end of its long service
life it can be composted, as it is 100% biodegradable. In
addition to this, linoleum is made from about 45% re­cycled material, which lowers the consumption of pri­mary raw materials accordingly.
Vinyl floor coverings receive their elasticity, pliability,and flexibility from plasticizers. Flooring Systems is theleader in the use of phthalate-free plasticizers of thelatest generation. Vinyl floor coverings also contain up
to 45% recycled material in the substrate layer. Within
the framework of our ‘back to the floor’ program, wecollect off-cuts of our vinyl coverings as well as wastematerial from our own production and put these backinto the production of new coverings, for example
for the substrate layer of carpet tiles and Flotex – thewashable textile flooring. Flooring Systems gets 100%of the electricity used at its production locations fromrenewable en­ergy sources.
With the BioBelt, Movement Systems is the first-everconveyor belt manufacturer to develop a biodegrad­able conveyor belt whose physical and dynamic prop­
erties are equal to standard belts. The same applies to
its performance and long service life. In BioBelt prod­ucts, oil-based raw materials and synthetic-technicalmaterials have been largely substituted by materials
made from renewable, plant-based raw materials.
In order to maximize environmental compatibility andat the same time increase the product advantages,
Movement Systems has patented some years ago aspecial coating that significantly reduces the friction
between the underside of the belt and the slider bed
compared with conventional conveyor belts.

24

FORBO ANNUAL REPORT 2019 – AT A GLANCESUSTAINABLE
ENGAGEMENT

In the meantime, Movement Systems launched newgenerations of these energy-saving conveyor belts thatare even more efficient. These AmpMiser conveyor belts
display their advantages most clearly where goods arebeing continuously conveyed and many belts are inuse, for example at airports or in logistics and distribu­
tion centers. For this type of application, energy savingsof up to 50% are achieved for the overall systems.
We have also made it our aim to continually make ourown activities more sustainable and efficient. We do
this by using less material and energy to realize equi­va­
lent or even better solutions. Both divisions are work­
ing constantly on the optimization of production pro­
cesses in terms of water and energy consumption,
reduction of emissions, reuse of heat generated in the
production process, and the reduction and efficient re­cycling of waste material in order to reduce the burden
on the environment. A wide range of certifications con­firm these efforts. At the same time, we are working
on innovative ideas regarding the materials used in the
production process as well as new application tech­niques.

FLOORING SYSTEMS
Floor coverings are part of our everyday lives and de­fine our living, leisure, and working spaces. Whether as
a direct end customer, builder of a major project, archi­
tect or installer, for every stakeholder group the topic
of sustainability plays an important role in the deci­sion-making process. This is why it is important for
Flooring Systems to differentiate itself from its com­
petitors with comprehensible and convincing argu­
ments, including in terms of sustainability.
With the approach ‘committed to the health of one’Flooring Systems wants, alongside a fully transparent
product declaration, to highlight the sustainability fea­tures more clearly than it has done up to now and placethem in correlation to each individual. In creating ahealthy interior space, we concentrate on all aspects of
our installations that contribute positively to safety, hy­giene, and well-being. These include avoiding asthma
triggers and allergens, focusing on light-reflecting andacoustic properties, facilitating cleaning and mainten­
ance, and ensuring the overall quality of the interior.

25

MOVEMENT SYSTEMS
Movement Systems’ resource management is basedon the continuous improvement of consumption effi­
ciency through the development and the targeted­implementation of measures for the optimization ofelectricity, gas, oil, and water consumption. Alongsideongoing energy-saving measures, energy recovery is
an important factor, i.e. the use of energy released in
the downstream incineration plant for the purposesof heating. In order to reduce water consumption andavoid unnecessary waste, Movement Systems is in­creasingly using closed water circulation systems.
Some of the waste water can be used in another pro­duction step in order to minimize water requirements.
The reduction and productive reuse of waste material
is increasingly the focus of Kaizen and sustainability
initiatives. Cut-offs from the belts we produce in cer­tain countries are sold to other companies to be re­used in their production. The locations in North Amer­ica collect sanding dust in filters which is thenprocessed as material by external partners in their pro­duction. Some of the waste from plastic modular belts
as well as polyurethane and polyamide cut-offs fromflat belts is recycled back into our own production.

Economic dimension
As a listed company, Forbo also engages intensively
with the economic dimension of sustainability. Com­
pliance is enormously important for the reputationand positioning of a company. We are successful as acompany when we meet the expectations of custom­ers, when employees are enthusiastic and committed,
and when we create added value in the long term forour shareholders.
Also in the year under review, we constantly main­tained our efforts to ensure responsible conduct: wecontinued to strengthen awareness especially of theCode of Conduct through e-learning modules and todeepen understanding of competition law, anticorrup­
tion guidelines and IT security; and we systematically
implemented risk management processes while ad­dressing new topics in the field of data protection.

26

27

ACTIVITYREPORT
Two divisions with leading market positions

28

Flooring Systems:
The economic slowdown is a challenge

30

Movement Systems:
Food segment is a reliable merit

36

28

FORBO ANNUAL REPORT 2019 – ACTIVITY REPORTTWO DIVISIONSWITH LEADING
MARKET POSITIONSForbo aims to operate primarily in bu­si­
ness areas in which it has or can achievea leading global market po­sition – some­thing it has achieved for both Flooring
Systems and Movement Systems.

Strategic directions
To be successful in the market place as a Group withdifferently aligned operations, the individual divisions
act independently and flexibly, but always along thestrategic directions defined for the Group as a whole:–– Based on a pronounced customer focus, a high levelof service, innovation, digital transformation, anda strong global brand, we are creating global leader­
ship positions in clearly defined market segments.
–– Due to a strong market orientation, we shapemarkets and drive profitable growth.
–– We are developing significant positions ingrowth markets.
–– We are acquiring companies to extend our productrange, to consolidate and/or reinforce market
access.
–– We are developing a high-performance culture
and providing the relevant skills and competences
at all levels.

Flooring Systems
The Flooring Systems division offers a broad and attrac­
tive range of environmentally friendly natural linoleum,high-quality vinyl floors, entrance flooring systems forcleaning and drying shoes, carpet tiles, needle felt, and­Flotex, the washable high-tech textile flooring. Thanks
to their ­excellent technical properties and attractive
designs, these flooring products are invariably the first
choice for public buildings, department stores, hos­pitals, and other healthcare facilities, schools, libraries,
commercial and office spaces, leisure centers, shops,
hotels, restaurants, and cafeterias as well as for applica­
tions in the residential market. With a market share ofabout 70 percent, Forbo is the world leader in linoleum.
Flooring Systems also provides ready-made adhesives
for floor covering installations, parquet flooring, andceramic tiles, leveling compounds for the constructionindustry as well as liquid floors under the trade nameEurocol.

Movement Systems
Movement Systems is a global industry leader for so­phisticated con­veyor and processing belts, plastic
modular belts, top-quality power transmission belts,
as well as timing and flat belts made of synthetic ma­te­rials. These products are known under the brandname Siegling. They are used in a wide range of ap­
plications in industry, trade, and the service sector,­including conveyor and processing belts in the food­industry, treadmill belts in fitness studios, and flat belts
in mail distribution centers.

COMFORT.

RELIABILITY.

FLOORINGSYSTEMSCOMFORTSUSTAINABLY
BEAUTIFUL
Offices frequently have different areas that call for var­ious requirements. Our entrance flooring systems also
act as a dirt barrier, while carpet tiles in working spaces
combine excellent walking comfort with noise-reduc­ing properties, ensuring that the floor in every office
is just as comfortable as it is visually attractive. Our
floor coverings are capable of withstanding significant
strains and heavy use and they are durably resilient.

32

FORBO ANNUAL REPORT 2019 – ACTIVITY REPORTFLOORING SYSTEMS:THE ECONOMIC SLOWDOWN
IS A CHALLENGE‘Weaker demand in many markets cou­
pled with operational strains challenged
us in a number of areas in the year underreview. The adjustments made and themeasures taken to date both in organi­zation and in production, logistics, anddistribution have not yet shown the ex­pected results. We cushioned the impactof the lower sales on earnings to someextent by enhancing efficiency throughJean-Michel Wins
technological improvements, by exercis­ Executive Vice President
ing prudent personnel management in Flooring Systems
new hiring, and by obtaining lower raw
material prices. With attractive new col­an uptrend that was driven by a new, locally produced
lections in all product groups we have luxury
vinyl tiles collection and an expanded distribu­
prepared a good basis for the coming tion network in the CIS countries.
year.’The Flooring Systems division generated net sales of
CHF 870.5 million in the 2019 business year (previous
year: CHF 913.2 million), which reflects a decrease of
1.5% in local currencies (– 4.7% in the corporate curren­cy). The division’s share of Group sales was 67.9%. Eco­nomic conditions have become increasingly volatile.
This impacted sales growth in most of the markets andcustomer segments in our three regions, with theAmericas and Asia/Pacific being impacted the most.
Operating profit (EBIT) declined only slightly by 0.5% to
CHF 135.8 million (previous year: CHF 136.5 million) on
the back of improved raw material prices and despite
negative currency effects. The EBIT margin rose by 0.7
percentage points to 15.6% (previous year: 14.9%).
Sales impacted by growing reluctance to invest
The European markets showed a mixed trend but on
the whole were somewhat weaker. Our core markets –France, the Netherlands, Germany, and Great Britain –remained practically flat year-on-year or trendedslightly downwards. Against a backdrop of increasing
reluctance to invest, substantial projects were post­
poned, reduced in scale, or else awarded on the crite­
rion of price in a fiercely competitive market. Demandin northern and southern Europe weakened on thewhole, despite firm growth in Denmark and Italy. Swit­zerland, too, saw sales decline. The trend in Eastern­Europe was positive, especially in Poland, which was astrong growth driver. Russia also reported higher sales,

The mood was rather subdued in the Americas region,
especially in the USA. Demand for projects in the retailsector weakened noticeably, while at the same time
major projects and school renovations were either re­duced in scale or postponed altogether. Canada report­
ed positive growth owing to new distribution channels
for vinyl floor coverings and textile installations in officepremises. Brazil and other smaller markets in SouthAmerica were restrained.
Most markets in the Asia/Pacific region, with the excep­
tion of the main market, China, reported gratifying
growth. The sales decline in China was due to a numberof factors such as the trade dispute with the USA, aslowdown in the construction industry, and a significant
downturn in investment spending in both the private
and the public sectors. Japan enjoyed double-digit
growth in the wake of Olympic fever. Australia reported
solid growth, while South Korea is making steady pro­
gress thanks to the expansion of its distribution networkand the acquisition of new key accounts.
The building and construction adhesives activity report­
ed good sales growth on the whole. This was due in par­ticular to the expansion of the do-it-yourself businessin Russia, penetration into the market in Uzbekistan, andvarious new building and construction adhesives andleveling compounds for renovations developed in the
Netherlands. Germany reported a decline in sales owing
to range rationalization and organizational changes.

33

Versatile innovations in all product groups
In the year under review, we launched attractive andhigh-end collections in all product groups, combining
trendy designs, varied color palettes and floor-laying
options along with new production technologies andspecial effects that employ sustainable materials.
A new global linoleum collection for broadloom mate­rial is being offered in five modernized design types
and varied, natural color shades featuring different
thicknesses and sound-absorbing properties. The divi­
sion is offering another linoleum collection speciallydesigned for trains that meets the latest fire and smoke
regulations.
In the vinyl range, we launched a new global broad­loom collection, whose varied colors, designs, and nov­el wood and stone effects are produced on a recently
installed, high-quality digital printing unit.
In the textile range, the new Flotex collection ‘color’,a high-tech washable flooring, convinced customers.
Many of the 90 colors, featuring various designs andnew effects, are also available in tile formats or withstronger sound-absorbing qualities. The new carpet tile
‘Tessera chroma’ is manufactured with a novel, more
thickly twined yarn; this makes the colors appear softer,
while the much higher fiber weight enhances walking
comfort. A new needlefelt collection, designed espe­
cially for the walls and ceilings of rail coaches, lends it­
self to very easy installation owing to its self-adhesive
back. Flexible printable entrance flooring systems allow
railway companies more options in terms of colors anddesigns.
We have been working on the development of attrac­
tive new vinyl and textile collections that have beenlaunched in early 2020 at various trade fairs.
Some product lines are holding theirown amid fiercer competition
The individual product lines performed in line with theoverall sales trend. Linoleum floorings were more or lessflat year-on-year. Most product lines of the versatile andapplication-specific vinyl flooring collections performed
slightly below average. Especially positive to mention
are the antistatic high-tech floorings for special industri­al or hospital applications and the homogenous vinyl
floorings, which have enjoyed steady growth since be­
ing launched in 2017. Textile floorings for the most partalso remained flat year-on-year; in some cases they reg­istered a decline. Flotex reported marginal growth.

Investments to support growth
In addition to numerous initiatives to enhance the prod­
uct portfolio, we invested in upgrades at various pro­duction plants with the aim of developing new prod­
ucts and promoting innovations but also of streamlining
production processes. This invariably also involved eco­logical improvements.
Noteworthy developments included the update of theprocess control center for linoleum production, newedge-cutting machines for vinyl flooring, additionaltanks and silos for more efficient processing of incom­
ing raw materials, new laboratory test stations and ex­
panded laboratory facilities, as well as renewed and­expanded digital printing technologies. In addition, we
installed various cutting machine facilities for the man­ufacture of modular flooring in the vinyl and textile
floor coverings. In the Netherlands we made a signifi­
cant expansion to the cross-dock warehouse for mod­ular flooring, while in Russia we created additional ca­
pacity for building and construction adhesives.
We also invested in digital platforms. The new global
online web shop enables existing customers to makereal-time searches regarding stock levels, availability,and delivery times and provides a full service combin­
ing everything from quote to invoicing, coupled withadditional marketing and customer service features.
A new customer relationship management system isabout to be rolled out globally.
2020 – in the light of stabilization
and return to growth
We have an attractive, high-quality and very diverse
product range with a wide assortment of floor-install­ing options and specifications for individual customer
segments. We will be able to successfully meet the chal­lenges of a market slowdown thanks to targeted mar­ket activities, increased delivery capability, and a morereliable service level. Our goal is to deliver convincing
and professional performance over the entire productrange, in all organizational units, and in all markets.

34

FORBO ANNUAL REPORT 2019 – ACTIVITY REPORTDIVERSITY IN DESIGNAND TYPE OF
INSTALLATION
Floor coverings from Forbo combinefunctionality and high product quality
with innovative designs, thus ensuring
the sustainable enhancement of interi­or rooms designed to accommodate
the needs of the users. With every new
development we are constantly making
our products and production processes
more environmentally friendly while ful­
filling the highest functional require­ments. Due to the lively exchange withdesigners, architects, builders and sup­pliers, we have our finger on the pulse oftechnical innovation and design trends.

‘CORAL MOVE’ TEXTILE FLOORING FOR TRAINS

Many of our new developments are aimed at the pri­vate sector commercial segment, and combine in all
product lines trendy designs, diverse ranges of colors
as well as new production technologies and embossed
structures from sustainable materials, and are available
in different installation options.
Infinite design diversity with digital print
State-of-the-art digital printing processes we invested
in over recent years are contributing towards attractive
new collections. The new ‘Coral move vision’ textile
flooring from the product group of the entrance floor­
ing systems offer railway companies unique properties
combined in a single product: especially developedfor being used in highly frequented areas, they are
long-lasting, comfortable, noise-absorbent, anti-slip,
dirt-repellant and flame-retarding. Our diverse and in­dividual digital print design options allow railway com­panies to have a floor covering made as required in thecolors and design of their own corporate identity.

‘ETERNAL’ VINYL FLOOR COVERINGS

35‘ALLURA’ LUXURY VINYL TILES‘MARMOLEUM MARBLED’ LINOLEUM FLOOR COVERINGS

Within the framework of an advanced digital print
technology, the new heterogenous ‘Eternal’ vinyl
floor collection combines the latest trend colors withimpressive wood, stone and concrete designs withmodern embossed structures, all finished with a new,­sustainable surface seal. On request, our design service
can also realize further customized digitally printed
designs.
Sustainability and installation
options are in demand
The new global linoleum collection for sheet material,‘Marmoleum marbled’, is a natural product that is­produced on a CO2-neutral basis. It appears in five re­freshed design directions and diverse natural color
tones with various thicknesses and noise-absorbent‘NATURAL TONES AND COLORACCENTS IN TREND’properties. These natural tones are ideal for combina­
tion with natural materials such as wood, stone andtextiles, and, as well as the well-known applicationsin the education and healthcare sectors, are setting
accents in retail stores, in leisure-time facilities as wellas in the hotel industry.
The collection of the luxury vinyl tiles ‘Allura’ which waslaunched on the market at the start of 2020, was com­pletely renewed and extended by different installation
options. Alongside the trendy designs, as well as an­additional noise-absorbent version, the development
focused on providing a range of installation options.
The tiles can be installed with adhesive, by a click sys­
tem or loosely laid using various techniques. These new
solutions are especially suitable for mobile installations
such as trade fair stands or pop-up stores. ‘Allura’ luxury
vinyl tiles are used for a wide range of applications
in high traffic areas in offices, retail outlets, leisure-timefacilities, in the hotel and restaurant industry as well as
in healthcare and nursing homes.

MOVEMENTSYSTEMSRELIABILITYSEAMLESSLY
CLEANED
Some containers such as those used for vegetables arecleaned around the clock in a complex cycle. Our belts
have to cope with a large range of process steps in thiscycle, from sorting to washing and drying. By guaran­
teeing that the process operates seamlessly and by
ensuring that all hygiene requirements are met, ourbelts are instrumental in keeping the food cycle run­ning – from the harvest to the market or the super­market. This means that consumers can enjoy freshand hygienically safe products on a daily base.

38

FORBO ANNUAL REPORT 2019 – ACTIVITY REPORTMOVEMENT SYSTEMS:

FOOD SEGMENT IS ARELIABLE MERIT‘We got off to a relatively strong start inour anniversary year “100 years of Move­ment Systems” but then increasingly felt
the impact of the downturn in various
customer segments and markets. We in­vested in a wide range of modernizations
with the aim of developing new prod­
ucts and promoting innovation but also
for the purpose of streamlining produc­tion processes and material flows. The
Marc Deimling
now firmly established production facili­ Executive Vice President
ty in Pinghu, China, is smoothly embed­ Movement Systems
ded in the operations of the production
and fabrication network. We launchedplant manufacturers in Germany, coupled with in­innovative products in all product lines andtensified actions of our customers to optimize their in­
aimed at a variety of customer segments ventories. Most countries were more or less flat yearand continued investing in the expan­ on-year. Highlights were France and most markets insion of distribution and service loca­ northern Europe.
tions in growth markets, thereby further Growth in the Americas region was driven primarily bystrengthening our market position.’
the strong performance in Canada and Mexico, which
The Movement Systems division generated net sales of
CHF 411.7 million in the year under review (previous
year: CHF 413.8 million), which reflects year-on-year
growth of 0.6% in local currencies (– 0.5% in the corpo­
rate currency). The division’s share of Group sales was
32.1%. The marginal increase in sales in local currencies
was driven by the Asia/Pacific and Americas regions,while Europe was down slightly. Operating profit (EBIT)
rose by 0.8% to CHF 49.8 million (previous year: CHF
49.4 million), with lower raw material prices a positive
factor and currency effects weighing in on the negativeside. The EBIT margin rose by 0.2 percentage points to
12.1% (previous year: 11.9%).
Growth slowdown towards year-end
The strong sales growth from the previous year persist­ed until mid-2019 in Asia/Pacific and the Americas, but
as of early fall demand weakened appreciably in theseregions too.
Sales trends in Europe were very mixed. Key markets
such as Germany and southern Europe, which have tra­ditionally been strong, reported a downturn in sales.
The decline is caused by significantly weaker demand
along with the postponement of major orders by OEMs

both reported a good increase in sales. The main mar­ket, USA, following a robust first half in 2019, reported
weakening demand as of the fall in the traditionally sol­
id customer segments logistics and sports treadmills.
The overall result was a marginal growth for the full re­
porting year.
The sales uptrend in Asia/Pacific likewise tailed off inthe second half of the year. The mood in our main mar­ket, China, was also subdued, owing to the impact
on most customer segments of the trade dispute with
the USA, which had the effect of dragging down sales.
Japan along with growth markets such as Indonesia,
Thailand, India and Turkey made a better-than-averagecontribution to growth in this region.
Food segment is a reliable merit
The individual trend in strategic customer segments isshaped in many cases by major projects and by the ser­vice and replacement business. Specialized know-how
and application expertise play a key role here. In theyear under review, we registered above-average growthin the food processing customer segment. This segment
is the one most resistant to economic fluctuations andit benefited from innovative product developments for
specific applications that give our customers a compet­

39

itive edge and increase their efficiency in production
and processing.
Although demand in the automotive industry weak­ened worldwide, the industrial production segment re­ported firm growth, due mainly to major projects in theAmericas and Asia/Pacific. These were primarily appli­
cations in the manufacture of electronic components,
industrial sliding doors, plus tires and other rubber-­related applications.
Demand in the logistics segment cooled off after anumber of boom years because the completed projects
contained capacity for the coming years. Nevertheless,
we managed to maintain the previous year’s sales level
here and in the raw material processing segment.
Tobacco, textiles and sports treadmills along with thepaper and printing industry reported lower sales in linewith the general market trend.
Application-specific innovations
We launched new products in all product groups for awide variety of customer segments that give customers
a competitive edge and help them enhance efficiency
on the back of our application know-how in production
and processing.
Three new or expanded series of Prolink plastic modu­
lar belts serve different applications in the food-pro­
cessing industry: an air-permeable belt for long coolinglines at the cooling and drying stage in the productionof tortillas, baked goods and unbaked pastry dough; anespecially hygienic and easy-to-clean belt for packag­
ing plants where dough is processed; and a belt with a
special surface coating for plants where fruit, vegeta­
bles, meat and pizzas are packaged.
We have also come out with some impressive new­developments in the product group of Transilon andTranstex conveyor belts: for special logistics applica­
tions; for the processing of freshly harvested vegeta­
bles; for complete process lines in industrial-scale laun­dries in hospitals, hotels and on cruise ships; and forindustrial digital printers, especially large-format print­
ers and tile printers.
As regards the Extremultus flat belts, special to mention
is an elastic belt type that has a number of advantages,
for instance in e-commerce distribution centers, owing
to its particularly smooth runnability and the low coef­
ficient of friction.

Investments in technological innovationand new developments
While continuing to invest in development and expan­
sion in growth markets and in digital advances, we also
invested in new technologies and efficiency-enhancing
measures in various fabrication and production facilities.
For the Extremultus flat belt product group, the ma­chine that manufactures the substrate material for pro­ducing these belts was refurbished completely and ret­
rofitted with various accessories. For the Prolink plastic
modular belt product line, the injection molding ma­chines were outfitted with special devices that make itpossible to develop and produce the new series thatare being planned. The reel warehouse at the produc­tion plant in Germany was modernized so as to stream­line the flow of goods. The main production plant in
the USA, which has grown strongly in recent years, wascompletely refurbished to ensure a more efficient flowof goods in accordance with lean manufacturing prin­ciples. A new service and fabrication center has been
established in Wisconsin that will come on stream inearly 2020 in order to optimize service to the local dairy
industry.
Targeted adjustment to market conditions
The steadily declining demand towards the end of thereporting year necessitates even greater agility andflexibility in our market approach. The recently estab­lished global customer relationship management sys­
tem enables us to better coordinate sales, service,
management and marketing so as to make them all
more efficient. We anticipate that the new companies
in Poland and Colombia, founded at the end of the re­porting year and expected to be fully operative frommid-2020, will contribute to overall sales; as well as the
newly established service centers in China, Indonesia,
northern Germany and Turkey.
In addition to optimizing global planning for the supply
chain, we will continue to make targeted investments
in production and service as well. The aim is to increasecustomer focus and service quality but also to enhance
our attractiveness in customer segments and productlines that are growing faster-than-average.

40

FORBO ANNUAL REPORT 2019 – ACTIVITY REPORTINDUSTRY-SPECIFICINNOVATIONS
Wherever drive forces are being transmit­
ted, and automated production and con­veyance processes are running smooth­ly, Movement Systems is usually not far
away. Our solutions for various constella­tions and requirements in a wide rangeof different industries have a reputation
for innovation, precision, reliability andefficiency. With our know-how, we haveestablished ourselves as a competent
partner in the development of indus­
try-specific and individual solutions.

‘PROLINK’ PLASTIC MODULAR BELT SERIES 10

Inspired by the diverse range of challenges in installa­
tions and applications at customer sites, in the report­
ing year we launched innovations in all product groups
for a wide range of different customer segments.
Innovations for the food-processing industry
The huge diversity of the foods conveyed on belts for
manufacturing, processing and packaging requires
equally specific belt solutions and surface coatings tomeet these requirements and ensure efficiency, quality,
hygiene and the gentle conveyance of the products.
Our innovations combine these advantages over thevarious product lines:
Three new or extended series of Prolink plastic modu­
lar belts serve various applications in the food-process­ing industry. The Series 10 was extended by a special‘friction top’ surface whose flat, rubber-like elements
guarantee an improved grip on the goods to be con­veyed. They are ideal for packaging systems with in­clined conveying in bakeries for bread and rolls. The
Series 14 was extended by a similar surface property
for packaging systems for various foods where a strong
belt with especially good grip properties is required.

‘PROLINK’ PLASTIC MODULAR BELT SERIES 14

41‘TRANSTEX’ CONVEYOR BELT FOR LOGISTICS APPLICATIONS‘TRANSILON’ CONVEYOR BELT FOR INDUSTRIAL LAUNDRIESWith a 25% permeable surface, this version ensures
good air circulation and drainage. The new Series 15 issuitable for long cooling lines for the production of tor­
tillas, pastries and dough pieces in the cooling and dry­ing process, and can be used at temperatures as low as– 40°C.
A new Transilon belt is used in high-speed cutting sys­
tems to cut and portion vegetables, and offers espe­
cially hygienic properties in terms of the resulting veg­
etable juices.

‘BELT PROPERTIES THAT
OFFER ADDED VALUE’

Belt for industrial laundry technology
A special Transilon belt type was developed for systems
with complete process lines in industrial laundry tech­
nology such as used in hospitals, cruise ships or large
hotels. With its new special surface texture it offers re­liable grip properties, also for inclined conveyance offolded washing such as towels, bedclothes or dressing
gowns.
Various special belts for logistics applications
We have developed special belts in various productgroups for different areas in logistics plants. An elastic
Transilon belt for automated guided vehicle systems
which, thanks to its anti-slip texture, allows reliable
conveyance at inclinations of up to 15°. A new elastic
Extremultus belt is proving itself in applications for dis­tribution centers that require a low coefficient of fric­tion and are especially adapted for systems with drive
rollers. A robust and especially low-noise Transtex belt
was developed for large cross belt sorter systems.

42

43

ORGANIZATION
Executive BoardGroup structure
Board of Directors

44
46
48

44

FORBO ANNUAL REPORT 2019 – ORGANIZATIONEXECUTIVE BOARD

Marc Deimling, Stephan Bauer, Urs Uehlinger, Jean-Michel Wins

45

Stephan Bauer

Urs Uehlinger

Stephan Bauer was born in 1961 and is a German citi­
zen. He took a degree in Engineering and Manage­
ment at the Munich University of Applied Sciences(FH) and began his professional career at BMW in
Munich in 1987 as a project manager for the launchof new ve­hicle models. From 1991 to 2008 he worked
for Siemens VDO Automotive AG (which became Con­tinental Automotive in 2007) in various regional andglobal management positions in the field of sales andmarketing and general management. In 2004 he wasappointed CEO of Diesel Systems. From 2008 to 2013
Stephan Bauer was CEO and President Control Prod­
ucts & Systems at the Siemens Building Technologies
division, where he was responsible for the entire prod­
uct spectrum. He joined our company in September
2013 and took over the position of Chief Executive
Officer and Chairman of the Executive Board of the
Forbo Group as of Jan­uary 2014.

Urs Uehlinger was born in 1966 and is a Swiss citizen.
He completed his studies in economics at the Universi­
ty of Zurich with the degree lic. oec. publ. From 1994
to 2001, he worked for ABB Brown Boveri, where he wasin audit and finance functions for almost three years
before being appointed CFO in two Group companies,
one for three years, the other for a year. From 2001
to 2004, he was self-employed as the owner of Ueh­linger & Partner, with mandates relating to CFO tasks.
From 2004 to 2016, he held various positions at Sie­mens Building Technologies: for four years he was headof Risk Management, in the three following years CFOof the HVP Heating & Ventilation Products business
unit, and then for five years CFO of the CPS Control
Products & Systems business unit. Urs Uehlinger joined
the Forbo Group in January 2017 and, after an intro­
duction period, took over the function of Chief Finan­cial Officer and was appointed to the Executive Board
effective May 2017.

Jean-Michel Wins

Marc Deimling

Jean-Michel Wins was born in 1967 and is a Belgian aswell as German citizen. He studied business administra­tion and languages at the IPET in Nivelles, Belgium, andbegan his professional career in Germany at Calberson
GmbH, where he held various specialist functions. He
then moved to S­ imut Sicherheit GmbH for two years,
where he was in charge of sales and marketing. From1992 to 1996 he was Export Manager at Brabus GmbHand from 1996 to 2002 he held various sales and man­agerial functions at Hirschmann Electronics. In 2002 heswitched to Grammer AG, headquartered in Germany,
where he held a number of international sales and­se­nior management positions; in 2009 he was appoint­
ed Vice President responsible for the Offroad Seating­Business Unit. As a member of the Executive Board,
Jean-Michel Wins took over management of theMovement Systems division in January 2013. He wasappointed as Head of the Flooring Systems division in
January 2018.

Marc Deimling was born in 1970 and is a German citi­
zen. He holds a degree in economics from the West­phalian Wilhelm University in Münster, Germany, andlaunched his professional career as assistant to the
management of M-Tec Textilmaschinenbau GmbH. In
1999 he moved to Dörries Scharmann TechnologieGmbH for six years, where he was head of the Service
Division. From 2005 to 2008 he was a member of man­agement at Gehring GmbH, where he was responsible
for the areas of distribution, project planning, project
management, production, after sales and marketing.
He was then Chief Executive Officer at TMS Turnkey
Manufacturing Solutions GmbH in Austria until the endof 2017, where he was responsible for finance/con­trolling, IT, procurement, design, production, quality,
after sales and marketing. Marc Deimling was appoint­
ed to head the Movement Systems division as a mem­ber of the Executive Board in January 2018.

Chief Executive Officer

Executive Vice President Flooring Systems

Chief Financial Officer

Executive Vice President Movement Systems

46

FORBO ANNUAL REPORT 2019 – ORGANIZATIONGROUP STRUCTURE
Forbo has performed better than
average in the last years comparedwith other exchange-listed ­com­panies.
With its two focused divisions, theGroup today is a world leader in its
markets, free of debt, and in possessionof considerable resources for further
strategic development. In line with
its strategy, Forbo is tasked with main­taining its successful performance ofrecent years, on the one hand, and –with the means available – of reinforc­
ing and expanding its positions in
the global market through strongorganic growth and acquisitions, on
the other hand.

Tasks of the Executive
Chairman of the Boardof Directors– Leading the Board of Directors– Preparing the decisions of the Board of Directors
and ensuring they are executed– Representing and positioning theGroup in the public– Overall management of strategy ­development and involvement in realizing
key strategic projects– Management of relationships with key
accounts and business as well as sector andcapital market partners

T asks of the Chief
Executive Officer– Operational management of the Group– Leading the Executive Board– Development and operational implementationof the strategies– Implementation and monitoring of multi-yearplanning and budgets– Supporting the Executive Chairman of theBoard of Directors in preparing important
projects relating to strategy as well as personnel
and finances for discussion and decision-taking
by the Board of Directors

47

BOD / HRNC / RC / AFC

BOD Board of Directors
HRNC Human Resources and Nomination Committee
RC Remuneration Committee
AFC Audit and Finance Committee

Executive Chairmanof the Board of Directors

Board of Directors Office
Investor Relations
Corporate Communications
Internal Audit
CEOStrategy and M & A
Corporate Development
Corporate HR

Executive Vice President
Flooring Systems

Executive Vice President
Movement Systems

CFO

Northern/Central/Eastern
EuropeEurope/Middle East/Africa

Corporate Controlling
and Reporting

Southern Europe/
Middle East/Africa

AmericasAsia/Pacific

Americas

Plastic Modular Belts

Asia/PacificFlat Belts

Linoleum Floor Coverings

Operational Areas

Vinyl Floor Coverings

Business andProduct Development

Textile Floor Coverings
Building and Construction
Adhesives

MarketingCorporate Treasury
Corporate Tax
Risk Management
Corporate Legal Services
Corporate IT
F & A Managers
Group Companies

Finance

Operational Areas

IT

Business Development andMarketing

Human Resources

Finance and IT
Human Resources

Member of the Executive Board

48

FORBO ANNUAL REPORT 2019 – ORGANIZATIONBOARD OF DIRECTORS

Dr. Reto Müller, Dr. Peter Altorfer, This E. Schneider, Claudia Coninx-Kaczynski, Michael Pieper, Vincent Studer

49This E. Schneider
Executive Chairman

Member of the Board of Directors of Rieter Holding AG, Winterthur
Member of the Board of Directors of Autoneum Holding AG, Winterthur

Michael Pieper
Vice Chairman

Owner of the Artemis Holding AG, Hergiswil
Chairman of the Management Board of Artemis Group, Hergiswil
Member of the Board of Directors of various Artemis and Franke subsidiaries worldwide
Member of the Board of Directors of Arbonia AG, Arbon
Member of the Board of Directors of Bergos Berenberg AG, Zurich
Member of the Board of Directors of Rieter Holding AG, Winterthur
Member of the Board of Directors of Autoneum Holding AG, Winterthur
Member of the Board of Directors of Reppisch-Werke AG, Dietikon

Dr. Peter Altorfer
Vice Chairman

Partner at the law firm Wenger & Vieli AG, Zurich
Member of the Board of Directors of agta record ag, Fehraltorf
Member of the Board of Directors of BIH SA, Rapperswil-JonaMember of the Board of Directors of Privatbank Bellerive AG, Zurich
Member of the Board of Directors of Nomura Bank (Schweiz) AG, Zurich
Further mandates with non-listed investment and real-estate companies
as well as charitable foundations in Switzerland

Claudia Coninx-Kaczynski
MemberMember of the Board of Directors of Swisscontent AG, Zurich
Member of other Boards of Trustees

Dr. Reto Müller
MemberPartner at BLR & Partners AG, Thalwil
Chairman of the Board of Directors of Utz Holding AG, Bremgarten
Member of other Boards of Directors and Advisory Boards

Vincent Studer
MemberPartner, member of the Board of Directors and of the management of T + R AG, Gümligen/Berne
Member of the Board of Directors of Bank EEK AG, Berne
Member of other Boards of Directors or Boards of Trustees

50

51

THE FORBO
SHARE

52

FORBO ANNUAL REPORT 2019 – THE FORBO SHARETHE FORBO SHARE
It was clear early on in the year under review that the main central banks would react to the weakness in the
global economy by again pursuing a more expansionary monetary policy. Price gains on the international stock
markets were therefore less a result of good news from companies than the consequence of monetary policy
decisions by certain central banks. The indices on various stock markets thus reached new highs despite theglobal economic slowdown.
The Swiss Performance Index (SPI) posted steady gains in 2019. Although there were more and more uncertain­
ties, especially in early and late summer, the fluctuations were only brief and the markets staged a rapid recovery
each time. The SPI climbed from 9,830.06 points at end-2018 to close at 12,837.50 by the end of 2019.
For most of the year under review, the Forbo share price tracked the SPI trend by and large. Following a down­turn in the summer, the Forbo share again developed very positively and closed the year at CHF 1,648.00. This
marks a gain of + 19.3% in 2019.
For a number of years now the Forbo share has been steadily performing better-than-average. It has outper­
formed the SPI on an annual basis in more than two out of three years since 2005. In the same period, it has
gained about four times as much in value as the SPI.

The Forbo share in comparison to the SPIForbo share
SPI
90%

2,000
1,800

60%
1,600
30%

1,400
1,200

0%
1,000
– 30%

800
31.12.2015

31.12.2016

31.12.201731.12.2018

31.12.2019

53

Share capital
Issued registered shares1)
Thereof:
Shares outstanding
Share buyback programs
Other treasury shares
Reserve shares (without dividend rights)

2019
number
1,650,000

2018
number1,800,000

2017
number1,800,000

2016
number1,800,000

2015
number
1,990,000

1,601,315
027,266
21,4191,601,718
150,000
26,863
21,4191,704,444
63,105
11,032
21,4191,709,844
068,737
21,4191,708,458
190,000
70,123
21,419CHF
165,000

CHF
180,000

CHF
180,000

CHF
180,000

CHF
199,000

160,132
0
2,727
2,142

160,172
15,0002,686
2,142

170,444
6,311
1,103
2,142

170,984
0
6,874
2,142

170,846
19,000
7,012
2,142

CHF
422
86.3
23.04)
1.34)
1.74)
27

CHF
354
82.4
21.00
1.35)
1.65)
25

CHF
383
22.4
19.00
1.15)
1.45)
85

CHF
364
74.7
19.00
1.45)
2.05)
25

CHF
300
62.1
17.00
1.45)
2.15)
27

CHF
1,799
1,353
1,648
2,968
2,232
2,719

CHF
1,620
1,302
1,381
2,916
2,344
2,486

CHF
1,669
1,313
1,505
3,004
2,383
2,709

CHF
1,367
960
1,313
2,461
1,728
2,363

CHF
1,255
811
1,182
2,497
1,613
2,352

Issued nominal capital
Total
Thereof:
Shares outstanding
Share buyback programs
Other treasury shares
Reserve shares (without dividend rights)

Data per share
Group shareholders’ equity per share2)
Group profit per share (undiluted)2) 3)
Gross dividend and cash distribution
Gross dividend yield (in %)4) 5)

High
Low

Payout ratio6) (in %)Stock market statistics
Share priceMarket capitalization (m)7)

High
Low
Year-end
High
Low
Year-end

1) Par value per share in 2019, 2018, 2017, 2016 and 2015: CHF 0.10.
2) Based on the weighted average of the number of shares as set out innote 11 ‘Earnings per share’ on page 114 of the financial report.
3) See note 11 ‘Earnings per share‘ on page 114 of the financial report.
4) Proposal of the Board of Directors to the 2020 Ordinary General Meeting.
5) Calculated on the basis of a cash distribution in the form of a dividend.
6) Gross cash distribution as a percentage of Group profit.
7) Total number of shares multiplied by the corresponding share price.

CORPORATE
GOVERNANCEREPORT

56

FORBO ANNUAL REPORT 2019 – CORPORATE GOVERNANCE REPORTCORPORATEGOVERNANCEREPORTAt Forbo, the concept of corporate governance encompasses the entire set of prin­ciples and rules on organization, conduct, and transparency that are designed toprotect the company’s long-term interests. Forbo’s aim is to strike a careful balance
between management and control. The central rules are contained in the Articles
of Association, the Organizational Regulations, and the Regulations of the Commit­
tees of the Board of Directors. The following information is set out in line with the
Directive on Information relating to Corporate Governance (‘DCG’) and the relevantpublications of SIX Swiss Exchange.

Group structure and shareholders
Group structure
Forbo Holding Ltd, domiciled at Lindenstrasse 8, 6340 Baar, is a limited company under Swiss law. The holding
company holds all subsidiaries, directly or indirectly, that belong to the Forbo Group. The shares of Forbo Holding
Ltd (security number 000354151/ISIN CH0003541510) are listed on SIX Swiss Exchange. A financial overview of
the Forbo Group (including market capitalization) can be found on page 17. The operational structure of theGroup is shown in the organizational chart on page 47. The scope of consolidation of Forbo Holding Ltd does
not include any listed companies. The non-listed companies within the scope of consolidation of Forbo Holding
Ltd are listed in the section ‘Group companies’ starting on page 134 in the financial report section. The company
name and domicile, share capital, and percentage of participation, along with information relating to the alloca­
tion of the Group company to the Group’s businesses, can also be found in that section of this Annual Report.
Significant shareholders
As of December 31, 2019, 3,963 shareholders were listed in the share register of Forbo Holding Ltd, or 166 (4%)
fewer than in the previous year. As of December 31, 2019, Forbo Holding Ltd knew of the following significant
shareholders with a holding of more than 3%:
31.12.2019as a percentage
Michael Pieper1)
UBS Fund Management (Switzerland) AG
BlackRock, Inc.
Credit Suisse Funds AG

29.50
3–5
3–5
3–5

1) Michael Pieper holds his interest directly and indirectly through Artemis Beteiligungen I AG.

Disclosure of significant shareholders and significant shareholder groups and their holdings is effected in accor­
dance with the disclosure notices made in the year under review pursuant to Article 120 of the Financial Market
Infrastructure Act (FMIA) and the provisions of the Ordinance of the Swiss Financial Market Supervisory Authority
on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (FMIO-FINMA).
Below is a summary of the current notified shareholdings published in the year under review:
On March 22, 2019, This E. Schneider reported that he had fallen below the 3% threshold and that he held 53,894
shares, corresponding to 2.994% of the voting rights.

57

On June 28, 2019, Forbo Holding Ltd reported that it had fallen below the threshold of 3% and that it held 46,956
of its own shares, corresponding to 2.85% of the voting rights, directly or indirectly via Forbo International SA, Baar,
Switzerland, and Forbo Finanz AG, Baar, Switzerland.
On July 3, 2019, BlackRock, Inc. reported that it had exceeded the 3% threshold and that it held 52,825 shares and748 voting rights for exercise at its own discretion, corresponding to 3.25% of the voting rights.
On December 31, 2019, Credit Suisse Funds AG reported that it had exceeded the 3% threshold and that it held
49,617 shares, corresponding to 3.01% of the voting rights.
Full disclosure reports and all further published disclosure notices can be consulted on the publication platformof the disclosure office of the SIX Swiss Exchange (www.six-exchange-regulation.com � Publications � Signif­
icant shareholders).
For further information on significant shareholders or shareholder groups, we refer the reader to the table on page
56 and to page 152 of the financial report (duty of disclosure pursuant to Article 663c of the Swiss Code of­Obligations (CO)).
Cross-shareholdings
Forbo Holding Ltd has not entered into any cross-shareholdings with mutual capital shareholdings or voting
rights.

Capital structure
Share capital
As of December 31, 2019, Forbo Holding Ltd had a fully paid up share capital of CHF 165,000, divided into
1,650,000 listed registered shares, each with a par value of CHF 0.10. Of this amount:–– 70.52% were registered in the name of 3,936 shareholders with voting rights–– 26.19% were shares of banks or of SIX SIS AG pending registration of transfer–– 3.29% were registered in the share register without voting rights
There are no different categories of shares. Each share entitles the owner to one vote. Further information on the
Forbo share can be found on pages 52 and 53. Further information on the rights of participation associated with
the Forbo share can be found on pages 67 and 68 of this Annual Report.
The 2017 – 2020 share buyback program, which was based on the authorization of the Ordinary General Meet­ing of Forbo Holding Ltd on April 6, 2017, was terminated prematurely on March 5, 2019. In the framework ofthis share buyback program, a total of 63,105 shares were repurchased at a fixed price, plus a further 86,895
shares via a second trading line, between November 16, 2017 and March 5, 2019. The Ordinary General Meetingof Forbo Holding Ltd on April 5, 2019 decided to cancel the 150,000 shares (8.33%) purchased as part of thisshare buyback program; it further resolved to reduce the share capital and amend the Articles of Associationaccordingly.
By resolution of the Ordinary General Meeting of Forbo Holding Ltd on April 5, 2019, the Board of Directors was
furthermore authorized to buy back 10% of the share capital over a period of three years either via a second trad­
ing line on SIX Swiss Exchange or by another means. These shares will be definitively canceled. Until December
31, 2019, the Board of Directors had not made use of this authorization.

58

FORBO ANNUAL REPORT 2019 – CORPORATE GOVERNANCE REPORT

Conditional and authorized capital
Pursuant to Clause 4 of the Articles of Association (www.forbo.com � Investors � Ordinary General Meeting),
Forbo Holding Ltd has a maximum conditional capital of CHF 16,645, corresponding to 166,450 registeredshares to be paid up in full with a par value of CHF 0.10 each. If the conditional capital were drawn on in full,the share capital would increase by CHF 16,645, or 10.09%, from the current level of CHF 165,000 to CHF 181,645.
The capital increase takes place in accordance with the Articles of Association through the exercise of option
and convertible rights granted in connection with the bonds issued by the company or one of its subsidiaries,or through the exercise of option rights granted to shareholders. Except for shareholder options, shareholders
have no right of subscription. Holders of option or convertible rights are entitled to subscribe to new share­issues. The registration of new shares is subject to the general restriction set out in Clause 6 of the Articles of
Association (www.forbo.com � Investors � Ordinary General Meeting), which stipulates that shareholders
are entered in the share register with voting rights only if they declare expressly that they have acquired theshares in their own name and for their own account.
There is no authorized capital.
Changes in capital
The Ordinary General Meeting of Forbo Holding Ltd on April 5, 2019, decided, based on the audit report of a­licensed audit expert, to reduce the ordinary share capital of the company by CHF 15,000 from CHF 180,000 to
CHF 165,000 by canceling 150,000 shares with a par value each of CHF 0.10. It was further resolved to amend the
Articles of Association accordingly. The capital reduction was effected, and the new share capital of CHF 165,000
was entered in the Commercial Register on June 27, 2019.
No changes to the capital of Forbo Holding Ltd were made either in 2017 or in 2018.
Participation certificates and non-voting equity securities (‘Genussscheine’)
Forbo Holding Ltd has issued neither participation certificates nor non-voting equity securities.
Limitations on transferability and nominee registrations
Forbo Holding Ltd does not have any percentage limitations on voting rights. The Board of Directors may only
refuse to register shares in the share register if the purchaser of the shares does not expressly declare that he/she
has acquired the shares in his/her own name and for his/her own account.
Pursuant to Clause 6 of the Articles of Association (www.forbo.com � Investors � Ordinary General Meeting),
nominees may be entered in the share register with voting rights for up to a maximum of 0.3% of the registeredshare capital entered in the Commercial Register. Over and above this limit, nominees are only entered provided
the name, address, and shareholding of those persons are disclosed for whose account the nominee holds a totalof 0.3% or more of the registered share capital entered in the Commercial Register.
No statutory privileges exist and there is no restriction on the transferability of the shares of Forbo Holding Ltd.
Convertible bonds and warrants/options
Forbo Holding Ltd has no outstanding convertible bonds nor has it issued any marketable warrants/options.
­Details on the long-term incentive plan for the Executive Board, introduced in 2017, under which future subscrip­tion rights are outstanding, can be found on pages 82 to 86 as well as on pages 124 and 125 of this Annual Report.

59

Board of Directors
Members of the Board of Directors
The cut-off date for the following information is December 31, 2019.
The Board of Directors brings together expertise and competencies in all the relevant areas (in particular entre­
preneurial skills and leadership, industry and technology, sales and distribution, international markets, sustain­
ability, innovation, digitization, risk management, audit and financial know-how).
With the exception of This E. Schneider, Executive Chairman of the Board of Directors, none of the membersof the Board of Directors listed below holds or has held any operational management positions for Forbo Hold­
ing Ltd or its Group companies. In the three business years preceding the reporting period, no member ofthe Board of Directors was a member of the Executive Board of Forbo Holding Ltd and, with the exception ofThis E. Schneider, no Board of Directors member sat on the Executive Board of any of its subsidiaries. There areno significant business relationships between the members of the Board of Directors and Forbo Holding Ltd or
its Group companies. The tasks of the Executive Chairman of the Board are described on page 46 of the Annual
Report.
This E. Schneider, Executive Chairman
This E. Schneider, born in 1952, is a Swiss citizen. He studied economics at the University of St. Gallen (lic. oec. HSG)
and at the Graduate School of Business, Stanford University, California, USA. After holding various management
functions in Europe and the USA, he joined the Executive Board of Schmidt Agence AG, where he was responsible
for strategic planning, operations and logistics from 1984 to 1990. From 1991 to 1993, he was Chairman and CEOof the publicly listed company SAFAA, Paris. In 1994, he became a member of the Executive Board of Valora, withresponsibility for the canteen and catering division. From 1997 to 2002, he was Delegate and Vice President of
the Board of Directors of Selecta Group. From March 2004 to December 2013, This E. Schneider was Delegate of
the Board of Directors and CEO, and from January to April 2014 Delegate of the Board of Directors of the ForboGroup. He has been the Executive Chairman of the Board of Directors since the Ordinary General Meeting of 2014.
This E. Schneider is also a member of the Board of Directors of Rieter Holding AG in Winterthur and Autoneum
Holding Ltd in Winterthur.
Michael Pieper, Vice Chairman
Michael Pieper, born in 1946, is a Swiss citizen. He studied economics (lic. oec. HSG) at the University of St. Gallen.
He has been with the Artemis Group (formerly the Franke Group) since 1988 and has been its owner and CEO
since 1989. Among others, he is a member of the Boards of Directors of Arbonia AG in Arbon, Bergos Berenberg
AG in Zurich, Rieter Holding AG in Winterthur, Autoneum Holding AG in Winterthur and Reppisch-Werke AG in
Dietikon. He was first elected to the Board of Directors of Forbo Holding Ltd in 2000.
Dr. Peter Altorfer, Vice Chairman
Peter Altorfer, born in 1953, is a Swiss citizen. He studied law at the University of Zurich, where he took his doctor­
ate in law (Dr. iur.). He was admitted to the bar as attorney-at-law in 1982. He attended the PED program at the
IMD, Lausanne. Until 1988, he worked at Bank Leu AG. He subsequently joined the law firm Wenger & Vieli in Zurich,where he is now a partner, specializing in bank and company law as well as estate planning. Peter Altorfer sits on
the Boards of Directors of several companies, including agta record ag in Fehraltorf, BIH SA in Rapperswil-Jona,
Privatbank Bellerive AG in Zurich and Nomura Bank (Schweiz) AG in Zurich, and further non-listed investment andreal estate companies as well as charitable foundations in Switzerland. He has been a member of the Board of
Directors of Forbo Holding Ltd since March 2005.

60

FORBO ANNUAL REPORT 2019 – CORPORATE GOVERNANCE REPORTClaudia Coninx-Kaczynski
Claudia Coninx-Kaczynski, born in 1973, is a Swiss citizen. She took a degree in law at the University of Zurich(lic. iur.) and earned her Master of Law (LL. M.) at the London School of Economics and Political Sciences. From2006 to 2011, she managed the business of Faerbi Immobilien AG (subsequently Rietpark Immobilien AG) in­Zurich as a member of the Board of Directors. Subsequently, until 2014, she implemented various projects for
P. A. Media AG and Swisscontent AG in Zurich (M & A among others). Between 2013 and 2016, she was a memberof the Board of Directors of Tamedia AG, where in 2017 she was appointed Chairwoman of the Pool of Majority
Shareholders. She is a member of the Board of Directors of Swisscontent AG in Zurich and sits on other Boards ofTrustees. She has been a member of the Board of Directors of Forbo Holding Ltd since April 2014.
Dr. Reto Müller
Reto Müller, born in 1951, is a Swiss citizen. He took a first degree in economics and completed his doctorate(Dr. oec. HSG) at the University of St. Gallen. He also completed the Stanford Executive Program and additional
training at IMD, INSEAD and the Harvard Business School. He is a founding partner of the Helbling group of com­panies, for which he worked from 1984 to 2016. From 2000 to 2011, he was the CEO and Chairman of the Boardand from 2011 to 2016 the full-time Chairman of the Board of Helbling Holding AG. Between 2002 and 2010, Reto
Müller was either a member or Chairman of the Regional Economic Advisory Board (Zurich) of the Swiss National
Bank. He was a member of the Council of SWISSMEM between 2008 and 2016. He is partner at BLR & Partners AG
in Thalwil as well as Chairman of the Board of Directors of Utz Group in Bremgarten and is on other Boards of­Directors and Advisory Boards. He has been a member of the Board of Directors of Forbo Holding Ltd since April
2011.
Vincent Studer
Vincent Studer, born in 1962, is a Swiss citizen. He graduated from the University of Applied Sciences, Berne, andtrained as a Swiss certified public accountant. In addition, he has completed various national and international
training courses. From 1991 to 2008, Vincent Studer worked at Ernst & Young AG as an external auditor and washead auditor responsible for auditing the statements of national and international companies in various indus­
tries. In 2001, he was appointed a partner in the area of Auditing. Since 2008, he has been a partner and memberof the management and since 2015 a member of the Board of the accountancy and auditing firm T + R AG,­Gümligen/Berne, where he heads the Auditing business unit. Vincent Studer is a member of the Board of Direc­
tors of Bank EEK AG in Berne. He holds further directorships in other companies and foundations. He has been amember of the Board of Directors of Forbo Holding Ltd since April 2009.

61

Board of Directors of Forbo Holding Ltd
as per December 31, 2019
Executive Chairman
THIS E. SCHNEIDER
Executive Director
Vice Chairmen
MICHAEL PIEPER
Non-executive Director
DR. PETER ALTORFER
Non-executive Director
Members
CLAUDIA CONINX-KACZYNSKI
Non-executive Director
DR. RETO MÜLLER
Non-executive Director
VINCENT STUDER
Non-executive Director
Secretary of the Board of Directors
NICOLE GRAF
Non-member

OGM:
AFC:
HRNC:
RC:		
C: 		
M: 		

Ordinary General Meeting
Audit and Finance Committee
Human Resources and Nomination Committee
Remuneration Committee
Chair
MemberFirst elected
at OGM

AFC

HRNC

RC

2004

–

–

–

2000

–

M

M

2005

M

C

C

2014

–

M

M

2011

M

–

–

2009

C

–

–

62

FORBO ANNUAL REPORT 2019 – CORPORATE GOVERNANCE REPORT

Statutory regulations governing the number of permissible activities
pursuant to Article 12 Paragraph 1 Section 1 OaER
In accordance with Clause 22 of the Articles of Association (www.forbo.com � Investors � Ordinary General
Meeting), members of the Board of Directors may hold no more than five mandates in listed and twenty mandates
in non-listed legal entities. A mandate is defined as any activity on the senior managerial or supervisory bodies
of legal entities that are entered in the Swiss Commercial Register or comparable foreign registers and do notbelong to the Forbo Group. Mandates with associated companies outside the Forbo Group are deemed to be asingle mandate.
Election and term of office
The members of the Board of Directors are elected in individual votes for a one-year term of office, in accordancewith the Ordinance against Excessive Remuneration in Listed Public Companies (OaER). A year is defined as theperiod between two Ordinary General Meetings. In accordance with the Organizational Regulations of Forbo
Holding Ltd, members who have reached the age of 70 resign from the Board of Directors at the Ordinary Gen­
eral Meeting of the following year. The Board of Directors may, however, approve exceptions. In determining thecomposition of the Board of Directors, importance is attached to the election of independent individuals withinternational experience in industrial companies as well as in the financial and consultancy sectors.
The Articles of Association of Forbo Holding Ltd do not contain any regulations that deviate from the statutory
provisions for the appointment of the Chairman, the members of the Remuneration Committee, and the inde­
pendent proxy.
Internal organizational structure
The allocation of tasks within the Board of Directors and the composition of the Board committees are shown in
the table on page 61.
Decisions are as a general rule taken by the full Board of Directors. The Board constitutes three standing commit­
tees from its own ranks – the Audit and Finance Committee (AFC), the Human Resources and Nomination Com­mittee (HRNC), and the Remuneration Committee (RC) – to deal with clearly defined subject areas of overriding
importance. These three committees have mainly advisory and control functions. The members of the AFC and
HRNC are elected by the Board of Directors on an annual basis and can be dismissed at any time. The membersof the RC are elected annually by the Ordinary General Meeting.
As a rule, the Executive Chairman of the Board of Directors chairs the meetings of the Board and the General
Meeting. He plans and conducts the meetings of the Board and the General Meeting. The meetings of the Boardand the relevant items on the agenda are prepared by the Executive Chairman. He monitors the execution of
the measures adopted by the Board. He is the direct superior of the CEO, is in regular contact with him, and hasan advisory and supervisory function. In addition, the Executive Chairman represents the Board and the ForboGroup vis-à-vis the public, the authorities, and the shareholders. The tasks of the Executive Chairman of the Boardand the demarcation of responsibilities from those of the CEO are set out in the section ‘Areas of responsibility’on pages 63 and 64.
The Vice Chairmen are tasked with deputizing for the Executive Chairman should the latter be prevented from
attending for any reason. In accordance with the Organizational Regulations and actual practice, the Vice Chair­men have no further duties.
The Vice Chairmen are elected by the Board of Directors.

63

The Board of Directors meets on being convened by the Executive Chairman as often as business requires but
at least four times a year. The items on the agenda must be announced at least five working days before the dayof the meeting. This notification period may be shortened in urgent cases. In 2019, the Board of Directors met
five times, with meetings lasting between half a day and a whole day. Every Board member participated in all
meetings.
The Executive Chairman may invite members of the Executive Board or other senior employees to attend Board
meetings for individual items. In the 2019 business year, members of the Executive Board and other senior em­
ployees participated in all meetings of the Board of Directors for the vast majority of the agenda items. External
consultants may participate in the meetings of the Board of Directors, the AFC, the RC or the HRNC only in excep­
tional circumstances to deal with particular items. In the 2019 business year, no external consultants participatedin the meetings of the Board of Directors. Participation of external consultants in meetings of the AFC, RC and
HRNC are listed in the chapters on the AFC, RC and HRNC on pages 63, 74, 75 and 76.
Audit and Finance Committee
The AFC advises the Board of Directors in respect of its duties on behalf of the Group in the areas of financial
reporting, the accounting standards and systems used, and decisions with significant financial implications. The
AFC monitors the activities of the internal auditors and the external auditors. Moreover, it establishes the audit
program of the internal auditors and proposes to the Board of Directors the choice of the external auditors forthe attention of the General Meeting. The CEO and the CFO are regularly requested to attend meetings in anadvisory capacity, while representatives of the internal and external auditors may attend on special invitation.
The AFC convenes as often as business requires, but at least twice a year. In the 2019 business year, two meetings
were held, each lasting about half a day. All members of the AFC were present at both meetings. The external
auditors were present for selected items on the agenda of the AFC’s meeting on the financial statements and at
the meeting to discuss the scope of the audit and the audit fee. The Ernst & Young representatives responsiblefor internal audit attended the discussions of the internal audit reports at both meetings. No external consultants
participated in the meetings of the AFC in the year under review.
The AFC brings together expertise and competencies in the areas relevant for the committee on the basis of
executive functions in other companies, current directorships in other firms, and previous responsibilities/
mandates. The relevant information can be found on pages 59 and 60 of this Annual Report.
Human Resources and Nomination Committee
We refer to the explanations in the remuneration report on pages 74 and 75.
Remuneration Committee
We refer to the explanations in the remuneration report on pages 75 and 76.
Areas of responsibility
The Board of Directors bears ultimate responsibility for the management of Forbo Holding Ltd. The main dutiesof the Board of Directors are the following non-transferable and inalienable tasks pursuant to the Swiss Code ofObligations and the Articles of Association:–– overall management of the company and issuing of the necessary directives–– definition of the organizational structure–– determination of accounting, financial controlling, and financial planning principles–– appointment and dismissal of persons entrusted with the management of the company–– overall supervision of the persons entrusted with managing the company, particularly with respect tocompliance with the law, Articles of Association, regulations, and directives

64

FORBO ANNUAL REPORT 2019 – CORPORATE GOVERNANCE REPORT–– preparation of the Annual Report as well as of the General Meeting and implementation of its resolutions–– preparation of the remuneration report–– notification of the court in the event of over-indebtedness
The Board of Directors bears ultimate responsibility for supervising and monitoring the management of thecompany and is responsible for the corporate strategy. It issues guidelines for business policy and is regularly
briefed on the current state of business.
Business to be dealt with by the Board of Directors is regularly submitted in advance to the AFC, HRNC, and RC,
ad hoc committees or individual members, depending on the subject, for review or an opinion. With the excep­
tion of its non-transferable and inalienable tasks, the Board of Directors may transfer tasks and responsibilities infull or in part to individual members of the Board or to third parties.
The Board of Directors is empowered to take decisions on all matters which are not reserved or transferred to
the General Meeting or another body of Forbo by law, the Articles of Association, or regulations.
Tasks of the Executive Chairman of the Board of Directors:–– chairing of the Board of Directors–– preparation and monitoring of the execution of the decisions of the Board of Directors–– representation and positioning of the Group in the public–– overall management of strategy development and involvement in realizing key strategic projects–– management of relationships with key accounts and with business, sector and capital market partners
Tasks of the Chief Executive Officer:–– operational management of the Group–– chairing of the Executive Board–– development and operational implementation of strategies–– implementation and monitoring of multi-year planning and budgets–– supporting of the Executive Chairman of the Board of Directors in preparing important projects relating tostrategy, personnel, and finances for discussion and decision-taking by the Board of Directors
The CEO reports to the Executive Chairman of the Board of Directors and as a rule participates in all Board meet­ings dealing with topics that are relevant for the exercise of his function. He is not a member of the Board of
Directors, though. All business management tasks that are not allocated to the Board of Directors or the Executive
Chairman of the Board and that do not require the approval of the Board of Directors are delegated to the CEO
and are carried out by him on his own responsibility. The CEO is responsible for ensuring compliance with theprovisions of the law, the Articles of Association, and regulations throughout the Forbo Group.
In carrying out his tasks, the CEO is supported by the members of the Executive Board, who report to him. The
Executive Board comprises the CEO, CFO, and the Executive Vice Presidents of both divisions; it is responsible forthe long-term success and market-driven management of the Forbo Group.
The members of the Executive Board are responsible for their particular area of activity and also bear joint respon­
sibility for safeguarding the interests of the Group and achieving the financial Group result.

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Information and control instruments vis-à-vis the Executive Board
At the meetings of the Board of Directors, any member may request information about any matter concerning theForbo Group. Outside the meetings, such requests for information are to be addressed to the Executive Chairman.
The CEO and the other members of the Executive Board inform the Board of Directors at each regular meeting
about the current state of business, important business events, and significant deviations from the budget.
The Chairmen of the AFC, the HRNC, and the RC report at the Board of Directors meetings on the activities of theircommittees and express the opinions and recommendations of the AFC, HRNC or RC on the business items on
which decisions are to be taken. Each member of the Board of Directors has the right to inspect the minutes of theAFC, HRNC, and RC meetings. The Executive Board reports to the AFC through the CFO in consultation with theCEO; it reports to the HRNC and RC through the CEO.
The Board is also regularly briefed outside meetings about events and challenges the Group is facing and thegeneral performance of the divisions. In addition, the Executive Chairman and the two Vice Chairmen are in­regular contact when essential policy issues are involved. For important, particularly urgent events, the CEO­informs the Executive Chairman of the Board of Directors immediately.
The Executive Board meets as often as business requires, normally once a month. In the 2019 business year, elevenmeetings were held, with the meetings usually lasting half a day.
The CEO chairs the meetings of the Executive Board. For details concerning the participation of members of the
Executive Board in meetings of the Board of Directors and its committees, refer to the sections on internal organi­zation and on the AFC, HRNC, and RC on pages 62 and 63, as well as 74 to 76.
The Board of Directors fulfills its supervisory and monitoring obligations also by means of financial reporting and
its role in the planning cycle. The internal and external auditors may assist the Board in this task. However, neither
the external auditors nor the internal auditors were invited to any meetings of the Board of Directors in 2019 as
there were no special incidents or topics for discussion.
As part of financial reporting, the Board of Directors is informed as a rule once a month in writing about the com­pany’s current business performance and earnings situation by means of annotated income statements, key
ratios, and deviation analyses.
The Board of Directors is, moreover, involved in the company’s planning cycle. As a rule, the existing strategy is
subjected to a thorough review by the Board of Directors in the first half of the year. The revised strategy is quan­tified in the three-year medium-term plan, which is normally approved at mid-year by the Board of Directors. Basedon the medium-term plan, the Board of Directors sets the budget objectives for the coming business year. Thesebudget objectives form the basis of the detailed budget, which is discussed and adopted by the Board of Directors
in the fourth quarter.
The current business year is assessed in a first estimate always at the end of May and a second estimate in
mid-October. On completion of the business year, the extent to which the budget has been met is checked anddeviations are analyzed. This analysis is used to derive appropriate measures, which are then implemented in thenext planning cycle.
Internal audit is effected by Ernst & Young, which has been commissioned for this purpose. Internal audit is­administratively subordinated to the Executive Chairman of the Board of Directors, is functionally independent,
and reports directly to the AFC.

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FORBO ANNUAL REPORT 2019 – CORPORATE GOVERNANCE REPORTThe audits are conducted in accordance with an annual plan approved by the AFC. A distinction is made between
ordinary and special engagement audits. The latter consist of limited reviews, follow-up reviews, compliance­audits, and other special engagements. Where necessary, the risks and weaknesses identified in these audits areminimized or eliminated by measures adopted by management and are constantly monitored.
In 2019, eleven Group companies were audited by Ernst & Young on the occasion of six internal audits. The internal
audits included, among others, the audit of control points defined in the framework of the internal control system(ICS) as well as various compliance reviews related to the audited business processes. Lastly, additional risks andcontrols in connection with the audited business processes were analyzed. Ten companies in Forbo Flooring
Systems and one company in Forbo Movement Systems were audited in the course of the internal audits.
By means of self-assessments and management controls by division management, the implementation and reli­ability of the controls introduced with the ICS were examined to ensure that deviations were identified and thatappropriate corrective measures were implemented.
Risk management
The ongoing and systematic evaluation of current and future risks invariably involves identifying and capitalizingon opportunities. Forbo regards risk management as a managerial and working tool designed, among otherthings, to safeguard the tangible and intangible assets of the company.
Forbo has a risk-based insurance coverage in line with industry practice and has appropriately insured in partic­
ular operational risks such as property damage, business interruption and liability. The risks specifically in the areasof property damage and business interruption are examined in the context of periodic risk engineering reportsby external experts. For this purpose, production companies are visited at regular intervals, and comprehensive
surveys are worked through with local management. Action plans are drawn up and implemented based on therisks identified. These risk engineering audits have been prepared since 1990.
As regards business risks, Forbo addresses strategic risks as well as market and financial risks. In the area of market
risks, interest and currency risks are centrally monitored and hedged in certain cases. The liquidity and financing
of subsidiaries are also monitored centrally. For more information on this subject, refer to pages 129 to 132 of theAnnual Report.
With regard to the risk management process, refer to the relevant explanations on pages 129 to 132 (note 23‘Risk assessment and financial risk management’) of the Financial Report section of the Annual Report.

67

Executive Board
Members of the Executive Board, other activities, and vested interests
The members of the Executive Board, their nationality, function, training, and professional career, as well as otheractivities and vested interests, are set out on page 45 of this Annual Report.
Statutory regulations governing the number of permissible activities
pursuant to Article 12 Paragraph 1 Section 1 OaER
In accordance with Clause 22 of the Articles of Association (www.forbo.com � Investors � Ordinary General
Meeting), members of the Executive Board may hold no more than two mandates in listed and seven mandates
in non-listed legal entities. The acceptance of mandates by members of the Executive Board is subject to priorapproval by the Board of Directors. A mandate is defined as any activity on the senior managerial or ­supervisory
bodies of legal entities that are entered in the Swiss Commercial Register or comparable foreign registers and do
not belong to the Forbo Group. Mandates with associated companies outside the Forbo Group are deemed to
be a single mandate.
Management contracts
Forbo Holding Ltd has concluded no management contracts with third parties.

Compensation, shareholdings, and loans
For information on this subject, refer to the remuneration report from page 74.

Shareholders’ participation rights
Voting right restriction and representation
The registration of shares with voting rights in the share register requires the consent of the Board of Directors.
Such consent may be withheld if the purchaser does not expressly declare that he/she has acquired and is hold­ing the shares in his/her own name and for his/her own account. Pursuant to the Articles of Association, nominees
may be entered in the share register with voting rights for up to a maximum of 0.3% of the registered sharecapital entered in the Commercial Register. The restriction also applies to shares that are subscribed or acquired
through the exercise of a subscription, option or convertible right. Resolutions on the amendment or abrogationof the clause on the registration of registered shares require a majority of two-thirds of the votes represented at
the General Meeting and the absolute majority of the par value of the shares represented.
Deviating from Article 689 Paragraph 2 Swiss Code of Obligations, shareholders who are unable to attend theGeneral Meeting in person may not be represented by any third party of their choosing. They may only be repre­
sented by the legal representative, the independent proxy, or another shareholder who is registered in the shareregister.
Electronic participation in the General Meeting
Clause 12 of the Articles of Association (www.forbo.com � Investors � Ordinary General Meeting) defines therules for electronic issuing of instructions to the independent proxy; the precise modalities for this are definedby the Board of Directors. In accordance with Clause 14 of the Articles of Association (www.forbo.com � Inves­
tors � Ordinary General Meeting), voting and elections at the General Meeting are in principle conducted elec­
tronically, unless the General Meeting decides that the ballot should be in writing or by a show of hands or the
Chairman orders such a ballot procedure.

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FORBO ANNUAL REPORT 2019 – CORPORATE GOVERNANCE REPORT

Statutory quorums
The Articles of Association of Forbo Holding Ltd do not provide for quorums that are larger than those stipulated
by law for decisions of the General Meeting.
Convening of the General Meeting
The General Meeting is convened in accordance with the statutory provisions.
AgendaShareholders who represent at least 1% of the share capital may request that an item be placed on the agenda.
This request must be communicated to the Board of Directors in writing, indicating the proposals, at least 45 days
before the date of the General Meeting.
Entry in the share register
In accordance with Clause 12 of the Articles of Association (www.forbo.com � Investors � Ordinary General
Meeting), the Board of Directors, in its invitation to the General Meeting, announces the cut-off date for entries inthe share register authorizing shareholder participation and voting.

Changes in control and defense measures
Duty to make an offer
The Articles of Association of Forbo Holding Ltd do not contain an ‘opting-up’ clause or an ‘opting-out’ clausepursuant to Articles 135 and 125 of the Financial Market Infrastructure Act.
Clause on changes of control
As per year-end 2019, no clauses on changes of control existed in agreements or plans involving members of theBoard of Directors, the Executive Board or other members of management.

Auditors
Duration of the mandate and term of office of the Auditor in Charge
KPMG has been the Forbo Group’s auditors since 2015. The auditors are elected every year by the Ordinary­General Meeting on a proposal by the Board of Directors. Rolf Hauenstein has been the Auditor in Charge sinceApril 24, 2015. The term of office of the auditor in charge is limited to seven years.
Auditing fees
The auditing fees levied by the Group’s auditors for auditing the consolidated financial statements, including thestatutory audit of the individual financial statements of the holding company and the consolidated subsidiaries,
amounted to CHF 0.9 million in the year under review.
Additional fees
The additional consultancy fees that were invoiced by the auditing company amounted to CHF 0.1 million in 2019.
These fees were charged mainly for the provision of tax advice.

69

Information instruments of the external auditors
Where required, the external auditors prepare for the Executive Chairman of the Board of Directors, the CEO, andthe CFO an annual management letter reporting on their work and the results of their audit at Group level in theyear under review. The key points are submitted to the Board of Directors in the form of a comprehensive report.
The external auditors also prepare management letters on the subsidiaries they have audited. The AFC assesses
and evaluates the proposals and statements thus received and appraises the corrective measures taken by man­agement. At the AFC’s invitation, representatives of the external auditors attend the AFC meetings in an advisory
capacity. The Chairman of the AFC reports on the activities of the AFC and its assessment of the external auditors
at the meetings of the Board of Directors. Any member of the Board of Directors may inspect the minutes of the
AFC meetings.
At its meetings, the AFC assesses the performance and fees of the external auditors as well as their independence
in both their auditing and their non-auditing capacities. This evaluation is based on the documents prepared by
the external auditors and the discussions held with the external auditors in the meetings. It also draws on theevaluation of the CFO, who, if required, obtains the opinion of local management with regard to the audit workfor the subsidiaries. The criteria for the evaluation of the external auditors include, in particular, their technical andoperational competency, their independence and objectivity, punctual delivery of audit reports, the scope andfocus of the audits, and the ability to provide effective and practical recommendations. The assessment by the
AFC forms the basis of the proposal made by the Board of Directors to the Ordinary General Meeting regarding
the choice of the external auditors.

Information policy
Transparency for investors
Forbo provides objective and periodic communication to its shareholders, the capital market, the media, and the
public by reporting in a timely fashion on business trends and activities relevant to the company. The Executive
Chairman of the Board of Directors can be contacted directly for such information.
Shareholders receive summary reports on the business year as well as half-year reports. The Annual Report, likeall other published documents, is available in printed form as well as online at www.forbo.com � Investors. The
General Meeting is an additional source of information. Periodic publication of media releases, the annual media
and analysts’ conference, and road shows are further information tools for the media and the capital market.

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FORBO ANNUAL REPORT 2019 – CORPORATE GOVERNANCE REPORT

Ad hoc communication
Registration for the automated dissemination of ad hoc releases in accordance with the guideline on ad hoc
publicity of the SIX Swiss Exchange is available at the following address:www.forbo.com � Media � Media releases ‘subscription service’
Notification to shareholders takes place through publication in the company’s official publication provided noother form of information is stipulated by law. Written notification to shareholders takes place through a simple
letter to the addresses listed in the share register.
A financial calendar with the key dates can be found on page 8 of this Annual Report. Further information on the
Forbo share is printed on pages 52 and 53 of this Annual Report.
Publications may be ordered by e-mail, fax, or telephone:
Email communications@forbo.com
Phone + 41 58 787 25 25
Fax + 41 58 787 20 25
The contact address for Investor Relations is:
Forbo International SA
Urs Christen, Head Investor Relations
Lindenstrasse 8
P.O. Box 1339
CH-6341 Baar
Phone + 41 58 787 25 25
The contact address for press information is:
Forbo International SA
Karin Marti, Head Corporate Communications
Lindenstrasse 8
P.O. Box 1339
CH-6341 Baar
Phone + 41 58 787 25 25

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REMUNERATIONREPORT

74

FORBO ANNUAL REPORT 2019 – REMUNERATION REPORTREMUNERATIONREPORT
Introduction
The report meets the provisions of the Ordinance against Excessive Remuneration in Listed Public Companies(OaER), which came into effect on January 1, 2014, and consequently fulfils the requirements of the Swiss Codeof Obligations.
Once a year, in a separate and binding ballot, the Ordinary General Meeting approves the maximum sum for the
total remuneration to be paid to the Board of Directors for the business year following the Ordinary General
Meeting. In addition, a vote is taken on the maximum total amount of fixed remuneration to be paid to the­Executive Board for the business year following the Ordinary General Meeting, the amount of short-term variable
remuneration (bonus/short-term incentive) to be paid to the Executive Board for the business year preceding
the Ordinary General Meeting, as well as the maximum total amount of the long-term participation (long-term
incentive) for the Executive Board for the year of the respective Ordinary General Meeting.
The variable remuneration model for the Executive Board with the short-term incentive was supplemented bya long-term participation (long-term incentive) component, effective as of January 1, 2017. This long-term­incentive consists of a performance share unit plan. Its aim is to link a significant portion of the Executive Board’s
remuneration even more closely with the company’s long-term success and to make it more responsive to share­
holders’ interests. Details on the long-term incentive can be found in the chapter ‘Elements of remuneration of
the Executive Board’ on pages 81 to 83. An amendment to the Articles of Association concerning this matter wasapproved by a large majority at the Ordinary General Meeting on April 6, 2017.
The shareholders will vote separately on the following four compensation motions at the 2020 Ordinary General
Meeting:–– Maximum total remuneration for the Board of Directors for 2021–– Maximum fixed remuneration for the Executive Board for 2021–– Short-term variable remuneration of the Executive Board for 2019 (bonus/short-term incentive)–– Maximum total amount of the long-term participation for the Executive Board for 2020
(long-term incentive plan 2020 – 2022)
The total remuneration was approved by a large majority in a consultative vote on the 2018 remuneration reportat the Ordinary General Meeting of April 5 2019 (agenda item 6.1). Participants in the 2020 Ordinary General
Meeting will also be invited to vote in a consultative ballot on the entire 2019 remuneration report.

Content and methodology for determining
the remuneration
The Human Resources and Nomination Committee (HRNC): task and function
The Human Resources and Nomination Committee (HRNC) advises the Board of Directors in exercising its respon­
sibilities for the Group in matters relating to human resources and nominations both for the Board of Directors
and the most senior level of management. More specifically, the HRNC formulates personnel policy proposals forappointments to the Board of Directors and to the posts of Chairman, CEO, and other Executive Board members
for submission to the Board of Directors. Furthermore, it assesses and approves the proposals of the Executive
Chairman of the Board and the CEO regarding Executive Board appointments and employment contracts. It also
approves the acceptance of mandates by members of the Executive Board in companies that are not part of the
Forbo Group.

75

The Human Resources and Nomination Committee meets as often as business requires, but at least twice a year.
In the 2019 business year, the HRNC held two meetings, each lasting a couple of hours. No external consultants
participated in these meetings.
The Human Resources and Nomination Committee consists of at least two members of the Board of Directors.
The Ordinary General Meeting of April 5, 2019, elected Dr. Peter Altorfer (Chair), Claudia Coninx-Kaczynski andMichael Pieper to the HRNC for the 2019 business year.
The HRNC brings together expertise and competencies in the areas relevant for the committee on the basisof executive functions in other companies, current directorships in other firms, and previous responsibilities/
mandates. The relevant information can be found on pages 59 and 60 of this Annual Report.
The Remuneration Committee (RC): task and function
The Remuneration Committee supports the Board of Directors in defining the principles of remuneration policy
and in determining the remuneration paid to members of the Board of Directors and the Executive Board out of
the total sum of remuneration as approved by the Ordinary General Meeting. It supports the Board of Directors
in drawing up participation programs and in all other tasks related to remuneration. The Remuneration Commit­
tee formulates appropriate recommendations for submission to the Board of Directors. The Board of Directors
may delegate further duties and powers to the Remuneration Committee. The Executive Chairman of the Boardof Directors is regularly invited to its meetings in an advisory capacity, as is the CEO in certain circumstances.
Agenda items and matters directly affecting the function or the person of the Executive Chairman of the Boardof Directors or the CEO are deliberated in their absence.
The Remuneration Committee meets as often as business requires, but at least twice a year. In the 2019 business
year, the Remuneration Committee held two meetings, each lasting a couple of hours. No external consultants
participated in these meetings.
The Remuneration Committee consists of at least two members of the Board of Directors. The Ordinary General
Meeting of April 5, 2019 elected Dr. Peter Altorfer (Chair), Claudia Coninx-Kaczynski and Michael Pieper to theRemuneration Committee for the 2019 business year. The members of the Remuneration Committee are inde­
pendent (non-executive) members of the Board of Directors, i.e. they have never belonged to the managementof Forbo and have no, or only negligible, business relations with the company, though they may be shareholders.
The RC brings together expertise and competencies in the areas relevant for the committee on the basis of
executive functions in other companies, current directorships in other firms, and previous responsibilities/
mandates. The relevant information can be found on pages 59 and 60 of this Annual Report.
Decision-making process of the Remuneration Committee
The maximum amount of the total remuneration paid to the Board of Directors and the maximum fixed remu­
neration paid to the Executive Board are usually determined by the Remuneration Committee once a year in thespring for the following business year and are submitted to the Board of Directors for acceptance at its Marchmeeting. The amount of the short-term variable remuneration (bonus/short-term incentive) and the definitionand objectives of the long-term participation (long-term incentive) for the Executive Board are determined by the
Remuneration Committee once a year in November for the following year.

76

FORBO ANNUAL REPORT 2019 – REMUNERATION REPORTThe Executive Chairman of the Board of Directors is regularly invited to the meetings of the Remuneration Com­mittee in an advisory c­ apacity, as is the CEO in certain circumstances. Agenda items and matters directly affecting
the function or the person of the Executive Chairman of the Board of Directors or the CEO are deliberated in theirabsence. The other members of the Executive Board are not entitled to attend or participate in these meetings.
ProposalAcceptanceApproval

RC
RC
RC

BoD
BoD
BoD

Ordinary General Meeting for the following business year
Ordinary General Meeting for the following business year
Ordinary General Meeting for the preceding business year

RC

BoD

Ordinary General Meeting for the current business year

RC

BoD

Performance targets – Executive Board regarding
long-term participation (long-term incentive)

RC

BoD

Performance targets – CEO

RC

BoD

Remuneration budget
Maximum total remuneration of the Board of Directors
Maximum fixed remuneration of the Executive Board
Short-term variable remuneration of the Executive Board(bonus/short-term incentive)
Maximum total amount of the long-term participation
for the Executive Board (long-term incentive)
Performance targets
Performance targets – Executive Board regarding shortterm variable remuneration (bonus/short-term incentive)

Important changes in 2019
In the business year 2019, no important changes to the remuneration system were made either for the Board of
Directors or for the Executive Board.

Principles of remuneration for the Boardof Directors and the Executive Board
Forbo’s remuneration strategy is geared to long-term and sustainable corporate development. The aim is
to ­remunerate employees appropriately for their achievements, commitment, and performance, and thereby
encourage their long-term loyalty to the company. The purpose of paying part of the remuneration in the formof shares is to link the interests of the managers to those of the shareholders. The portion of the remuneration
paid in shares is derived from a fixed remuneration amount.
The members of the Board of Directors receive a fixed remuneration, the amount of which is determined basedon whether the member is Board Chairman, a simple Board member or also a member of one of the Board com­mittees. The remuneration is paid out to members of the Board of Directors partly in the form of locked-up sharesin Forbo Holding Ltd.
The members of the Executive Board receive a fixed and a variable remuneration. The fixed remuneration is paid
mainly in cash but may also include shares of Forbo Holding Ltd. The portion paid in shares is derived from afixed remuneration amount. The variable remuneration consists of a short-term remuneration (bonus/short-term
incentive) and a long-term participation (long-term incentive).

77

The bonus/short-term incentive is a short-term, performance-related remuneration, at least 50% of which must
be taken in the form of locked-up shares of Forbo Holding Ltd (see the description of the management invest­
ment plan (MIP) on pages 81 and 82 of this Remuneration Report). The portion paid in shares is derived from afixed remuneration amount. The bonus is derived from the achievement of individual (qualitative) targets by each
Executive Board member and of financial (quantitative) targets by the company. Depending on the function andresponsibilities of the Executive Board member in question, these financial targets may be derived from Group
and/or divisional objectives. It may not exceed 200% of the fixed remuneration of the individual Executive Board
member.
The long-term incentive is a long-term participation plan consisting of a performance share unit plan. At the startof the performance period, each member of the Executive Board is granted a given number of future subscrip­tion rights in the form of performance share units (PSUs). One PSU corresponds to a future subscription right toone share. The size of the PSU allocation corresponds to a defined percentage of the fixed remuneration. The
PSUs are subject to a three-year vesting period. They are converted into vested shares only on condition that theGroup’s performance objectives are achieved. At the end of the performance period, the company will determine
whether the objectives set by the Board of Directors at the start of the performance period for the performanceindicators have been reached. Depending on the degree to which the objectives have been reached, a given
percentage of the PSUs will be converted into shares, which are subject to a three-year vesting period.
The relevant statutory provisions governing the principles of performance-related remuneration, the distributionof shares, and the additional sum for remuneration of new members of the Executive Board who are appointed
after the Ordinary General Meeting are set out in Chapter IV, pages 9 and 10 of the Articles of Association of Forbo
Holding Ltd. These can be found at:www.forbo.com � Investors � Ordinary General Meeting

Determining the remuneration of the Board of Directors
In order to determine the remuneration of the Board of Directors, the compensation paid to Board members ofForbo Holding Ltd is compared periodically with that paid to Board members of comparable industrial companies
based on information that is available from publicly accessible sources and from respected market data providers
or is known to Board members from their experience of office in similar companies. Industrial companies are­regarded as comparable if they are globally active and domiciled in Switzerland, report sales of between CHF 0.5
and 2.5 billion, have a market capitalization of CHF 1 to 4 billion and employ 2,000 to 10,000 people or if they areglobally active, publicly listed corporations operating in the same business areas as Forbo. The remuneration for
the Executive Chairman of the Board of Directors takes into account that the remuneration is predominantly
in blocked shares with a vesting period for three years to ensure a long-term orientation for the company. As ageneral rule, no external consultants are co-opted for determining the remuneration.
The relevant statutory provisions governing the principles of performance-driven remuneration and the distri­bution of shares are set out in Chapter IV, pages 9 and 10 of the Articles of Association of Forbo Holding Ltd.
These can be found at:www.forbo.com � Investors � Ordinary General Meeting

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FORBO ANNUAL REPORT 2019 – REMUNERATION REPORT

Elements of remuneration for the Board of Directors
Non-executive members of the Board of Directors
The non-executive members of the Board of Directors receive a fixed remuneration, the amount of which is­determined based on whether the member is Board Chairman, a simple Board member, or also a member of the
Audit and Finance Committee (AFC), the Remuneration Committee (RC) or the Human Resources and Nomina­tion Committee (HRNC). Of the remuneration, 40% is paid to the Board of Directors in shares of Forbo Holding
Ltd. The portion paid in shares is derived from a fixed remuneration amount. These shares have a lock-up periodof three years. The number of shares issued is determined on the basis of the average price in the ten stock mar­ket days after distribution of a dividend or repayment of par value. If no dividend is distributed or no par value
repayment made, the average price during the first ten stock market days starting on June 1 of the relevantbusiness year applies. The settlement or payment of the shares usually takes place in November.
For the purpose of reporting the remuneration, the shares issued are valued at fair value on the date of allocation.
The total compensation for the non-executive members of the Board of Directors also includes a lump sum for
expenses plus employer contributions to the usual social insurances.
The non-executive Board members do not participate in the management investment plan (MIP).
Executive Chairman of the Board of Directors
The compensation for the Executive Chairman of the Board of Directors is disclosed separately and included
under total remuneration to the Board of Directors.
The remuneration is mainly paid in locked-up shares, which have a lock-up period of three years. The annual cash
payment for the year under review of CHF 310,000 (previous year: CHF 310,000) is used largely for employee
contributions to the pension fund and social security (AHV and IV) and for other levies. The underlying share priceused to calculate the number of shares is the weighted average price of the first ten days on which Forbo Hold­
ing Ltd shares were traded on the stock market in 2019, less the reduced value as a result of locking-up the shares(tax value 2019: CHF 1,189.90 per share; previous year: CHF 1,313.08 per share). The share package corresponds
to annual compensation at fair value (excluding the reduction for the lock-up period) of CHF 2,263,250 (1,597
shares); previous year: CHF 2,262,960 (1,447 shares).
With this share package and this cash remuneration, all compensations such as bonuses, inflation, salary adjust­ments, options, etc. are settled. This share package may not be either pledged or assigned and can be sold inthree years at the earliest. This compensation model is thus also geared to long-term and sustainable corporate
development and is fully consistent with the interests of the company and its shareholders.
The total compensation for the Executive Chairman of the Board of Directors came to CHF 3,005,300 for the year
under review (previous year: CHF 2,999,902). Contained in this amount and reported in the column ‘Other pay­ments’ are employer contributions to the pension fund, other usual social insurances, private use of the company
car, contributions for accident and health insurance, and location expenses. The Executive Chairman of the Boardof Directors is not a party to the management investment plan (MIP) or the share-based compensation programof the Board of Directors.
Remuneration paid
For the remuneration paid to the Board of Directors in the year under review and the details concerning valuationof the shares, the reader is referred to pages 84 to 86 of this remuneration report.

79

Determining the remuneration of the Executive Board
Basic principles
In order to determine the remuneration of the Executive Board, criteria such as function, responsibility and expe­
rience are taken into account and the remuneration paid to Forbo Executive Board members is compared withthat paid to Executive Board members in comparable industrial companies. This is based on information that isavailable from publicly accessible sources and from respected market data providers or is known to the membersof the Remuneration Committee from their experience of office in similar companies. Industrial companies are
regarded as comparable if they are globally active and domiciled in Switzerland, report sales of between CHF 0.5
and 2.5 billion, have a market capitalization of CHF 1 to 4 billion and employ 2,000 to 10,000 people or if they areglobally active, publicly listed corporations operating in the same business areas as Forbo. As a general rule, no
external consultants are co-opted for determining the remuneration.
Alignment of performance-based remuneration with the corporate strategy
The remuneration strategy of Forbo is geared to its current corporate strategy and linked to the relevant key ratios.
This is reflected in the choice of performance criteria that are derived from Group and/or divisional objectives
depending on the function of the individual Executive Board member; these include net sales, organic growth,
EBIT, net working capital, return on net assets, and growth in earnings per share. The criteria for determining the
remuneration paid to Executive Board members are thus transparent.
The Board of Directors is closely involved in the company’s planning cycle. As a rule, the current corporate strat­
egy is subjected to an in-depth review by the Board in the first half of the year. Once it has been confirmed orrevised, the strategy is quantified in the three-year medium-term plan, which is approved at mid-year by the Boardof Directors. Based on the medium-term plan, the Board of Directors sets the budget objectives for the coming
business year. These budget objectives are the basis for the detailed budget, which is examined and adopted by
the Board of Directors in the fourth quarter.
The Board of Directors assesses the current business year by means of an initial estimate at the end of May anda second estimate in mid-October. On completion of the business year, the extent to which the budget has beenreached is checked and deviations are analyzed. The actual amount of the variable remuneration paid out to the
Executive Board is determined on the basis of the achievement of these individual targets. The Board of Directors
defines the relation between budget target achievement and payment ratio.
The short-term, variable remuneration (bonus/short-term incentive) for the previous year is paid out on comple­
tion of the business year and after approval by the shareholders. In the case of the long-term participation (longterm incentive), the performance share units are allocated after approval by the Ordinary General Meeting; any
entitlement arising therefrom is determined in March on completion of the three-year performance period andconverted into vested shares.
The contributing factors/performance criteria determining the amount of the payout/share allocation of thevariable remuneration components are linked directly to the company’s success.
The chart below provides a detailed breakdown of the timeline and the interdependence of the corporate targets
and the remuneration.

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FORBO ANNUAL REPORT 2019 – REMUNERATION REPORT

Planning cycle
1st quarter
Ordinary General Meeting
Corporate strategy
Reviewing/amending strategy
Establishing mid-term plan
Establishing budget
Working out remuneration
Defining maximum total remunerationof Board of Directors
Defining maximum total remunerationof Executive Board
Approving total remuneration of Board of Directors andof fixed remuneration of Executive Board for following
business year by the Ordinary General Meeting
Setting targets for Executive Board
Assessing target achievement and proposal forvariable remuneration elements of Executive Board
Approving short-term, variable remuneration of
Executive Board for previous business year
(bonus/short-term incentive)
Approving maximum total amount of long-term
participation of Executive Board for current business year
(long-term incentive)
Decision period

2nd quarter3rd quarter

4th quarter

81

Elements of remuneration of the Executive Board
Remuneration of the members of the Executive Board consists of a fixed base salary and two variable compen­
sation components, the bonus/short-term incentive and the long-term incentive.
Fixed remuneration
The fixed base remuneration paid to the Executive Board in the reporting year consists of the gross base salary,
private company car use, and social security payments made by the company. The Remuneration Committee may
also decide that part of the remuneration will be paid in the form of shares in Forbo Holding Ltd (lock-up periodof five years).
Short-term variable remuneration (bonus/short-term incentive)
The bonus/short-term incentive is derived from qualitative (individual) and quantitative (financial) targets, which
are defined in accordance with the operational responsibility of the Executive Board member in question. The
Board of Directors defines and weights the individual and financial targets.
The qualitative targets are geared to the company’s long-term sustainable development and may account for 10%of the bonus/short-term incentive. The remaining 90% depend on the achievement of the financial (quantitative)
targets. The main targets for members of the Executive Board are: net sales of the Group and/or a division (25 to
40% of the variable remuneration), EBIT of the Group and/or a division (50 to 55% of the variable remuneration),and net working capital of the Group and/or a division (5 to 10% of the variable remuneration).
Whereas achievement of the financial (quantitative) objectives (90%) can be objectively measured, assessing
whether some qualitative objectives (10%) have been met may in certain cases involve discretionary decisions. In
future, the qualitative objectives will contain a larger proportion of sustainability elements.
The defined objectives of the short-term variable remuneration are equivalent to 100% target achievement. The
maximum target achievement is 150%. If a given threshold for a particular target is not reached, no bonus for thattarget is paid. Depending on the function, the variable remuneration may be as much as 140% of the fixed remu­
neration if targets are fully met. If the targets are exceeded, the variable remuneration may be as much as 200%of the fixed remuneration.
The amount of the short-term variable remuneration, which is based on achievement of the individual and Grouptargets, is set in March after completion of the business year and is submitted to shareholders for approval at theOrdinary General Meeting.
Conversion of remuneration into shares in the management investment plan (MIP)
The bonus payment from the bonus/short-term incentive is linked to the management investment plan (MIP),
which was introduced in 2006 and amended in 2012. According to this plan, at least 50% of the annual short-term
variable remuneration of Executive Board members must be paid into the MIP. The portion paid in shares is derived
from a fixed remuneration amount.
As for the remaining 50% of the annual short-term variable remuneration, the Executive Board members mayeither draw all or part of it in cash or pay it into the MIP. The Executive Board members may redefine the alloca­
tion of this remaining 50% every year. The portion paid in shares is derived from a fixed remuneration amount.

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FORBO ANNUAL REPORT 2019 – REMUNERATION REPORT

Following the amendment of the MIP, all the sums paid into it will be invested solely in shares of Forbo Holding
Ltd as of January 1, 2013. As a first step, the amount invested in the MIP will be increased by 25%, partly in orderto take account of the three-year lock-up period. In addition, this amount will be multiplied by a factor that tracks
the share price movement. This factor is calculated as follows:((SPA – SPP)/SPP) + 1, where ‘SPA’ stands for the share price applicable for the allocation of shares in the year of
allocation and ‘SPP’ for the applicable share price in the previous year. The upper limit for this factor is 1.1 and thelower limit is 0.95.
The relevant share price for the allocation of shares is calculated based on the unweighted average of the closing
prices of the Forbo share in the first 14 trading days in January of the allocation year. The shares are locked-up fora period of three years. They cannot be sold or pledged during this time.

portion in cash
maximum 50%

in cashBonus

portion MIP investment
minimum 50% –maximum 100%

× 1.25× factor 0.95 – 1.1
depending on shareprice development

in shares
three-year lock-up

Foreign members of the Executive Board may acquire stock awards instead of shares. The stock in question willbe transferred after three years.
Long-term participation plan (long-term incentive)
The previous variable model for remuneration of the Executive Board, consisting of a short-term performance-­
related remuneration (bonus/short-term incentive) was supplemented by a long-term participation plan (longterm incentive), effective from January 1, 2017. The amendment was approved by the Ordinary General Meetingof April 6, 2017.
The aim of the long-term incentive is to link part of the remuneration of the Executive Board even more closelywith the company’s long-term success.
The long-term incentive consists of a performance share unit plan. At the start of the performance period, eachmember of the Executive Board is granted a given number of future subscription rights in the form of performance
share units (PSUs). One PSU corresponds to a future subscription right to one share. The size of the PSU allocation
corresponds to a defined percentage of the Executive Board member’s fixed remuneration; the percentage mayvary from 10 to 30 percent. The PSUs are subject to a three-year vesting period. They are converted into vested
shares only on condition that the Group’s performance objectives are achieved. At the end of the performance
period, the company will determine whether the objectives set by the Board of Directors at the start of the per­formance period for the performance indicators have been reached. Depending on the degree to which the ob­jectives are reached, a given percentage of the PSUs will be converted into shares after the three-year vesting
period. Converted shares are locked-up for a period of three years. They cannot be sold or pledged during thistime. Immediately on termination of the plan participant’s employment contract, regardless of whether the plan

83

participant has terminated the contract or the company has terminated the contract with the plan participant, all
PSUs are forfeited.
The relevant share price for the allocation of PSUs at the start of the performance period is calculated based on
the unweighted average of the closing prices of the Forbo share in the first 14 trading days in January of the rele­vant year.
The performance indicators of the long-term incentive are geared to the long-term and sustainable developmentof the company and consist of three evenly weighted objectives. These are organic growth, the return on net
assets (RONA), and growth in earnings per share (EPS) adjusted for the share buybacks.
The long-term incentive objectives are based on a target achievement of 100%. It is not possible to exceed the
maximum target achievement level of 100%. If a member fails to reach a given threshold for an objective, no PSUs
are converted into shares for this indicator.
Foreign members of the Executive Board may draw stock awards rather than shares when the PSUs are converted.
The relevant shares are transferred after three years.
The degree to which objectives have been achieved is determined in March after conclusion of the three-year
performance period.
Actual bonus payments
Readers are referred to pages 84 to 86 of this remuneration report for the amount of the actual short-term variable
remuneration (bonus/short-term incentive) paid to the Executive Board in the year under review and for details
on the valuation and allocation of shares. The number of future subscription rights in the form of performance
share units for the Executive Board as part of the long-term incentive can also be found on these pages.
There are no option plans.

Employment contracts of the Executive Board members
The employment contracts of the Executive Board members are concluded for an indefinite duration with a max­
imum period of notice of twelve months.
The Board of Directors can order that lock-up periods stipulated in the employment contracts of Executive Board
members in connection with the MIP or the long-term incentive may be revoked wholly or in part upon the­occurrence of defined events (e.g. change of control, termination of employment, retirement or death).
Should changes in control of the company occur, no additional remuneration or benefits will be paid out.
No severance payments have been agreed with Executive Board members.

84

FORBO ANNUAL REPORT 2019 – REMUNERATION REPORT

Disclosure of remuneration for the Boardof Directors and the Executive Board
Remuneration of the Board of Directors
The total remuneration paid to the non-executive members of the Board of Directors came to CHF 809,444 in theyear under review (previous year: CHF 811,423). This sum consists of the base salary in cash (60% of the remuner­
ation), amounting to CHF 412,175 (previous year: CHF 413,198) and the base remuneration in shares (40% of the
remuneration) of CHF 336,852 (previous year: CHF 335,640). This corresponds to 207 shares (previous year: 241
shares) at a market value of CHF 1,627.30 each (previous year: CHF 1,392.70). The portion paid in shares is derived
from a fixed remuneration amount. This total remuneration includes a lump sum for expenses plus employer con­tributions to the usual social insurances, which are reported separately in the column ‘Other remuneration’.
The remuneration paid to the Executive Chairman of the Board of Directors is explained in detail on page 78 of
this remuneration report.
Remuneration of the Executive Board
The total remuneration paid to the members of the Executive Board came to CHF 2,274,552 in the year underreview (previous year: CHF 2,764,288), subject to approval of the variable portion by the 2020 Ordinary General
Meeting. This sum includes a fixed base salary of CHF 1,529,870 (previous year: CHF 1,541,548) and short-term
variable bonus remuneration (short-term incentive) of CHF 108,412 (previous year: CHF 592,540), a long-term
participation (long-term incentive) of CHF 267,354 (previous year: CHF 222,816) plus the private use of the com­pany car, and employer contributions to the pension fund as well as other usual social insurances, which arereported separately in the column ‘Other remuneration’.
The fixed portion of the base salary paid in shares (lock-up period of five years) came to CHF 326,245 (previous
year: CHF 329,018). The portion paid in shares is derived from a fixed remuneration amount. The portion of thevariable remuneration (short-term incentive plan) paid in shares in connection with the MIP (lock-up period of
three years) came to CHF 92,054 (previous year: CHF 520,562), which is subject to approval by the 2020 Ordinary
General Meeting. The portion paid in shares is derived from a fixed remuneration amount.
For the three actual long-term incentive plans, a total of 448 future subscription rights in the form of performance
share units were issued.

Plan2017 – 20192018 – 20202019 – 2021

Allocationof subscription rights
April 2017
April 2018
April 2019

Performance
period2017 – 20192018 – 20202019 – 2021

Vesting
date (PSUs)
April 2020
April 2021
April 2022

Unlockingof shares
April 2023
April 2024
April 2025

Numberof PSUs
allocated
118
141
189

Value PSUs
in CHF(allocation)
159,794
221,088
267,354

85

Disclosure of remuneration of the Board of Directors and Executive Board
Remuneration
For the year 20191)

Variable
remunerations

Base salary

CashName and function

SharesCash
CHF

Bonus/short-term incentive2)

Long-term incentive3)

Shares

Allocation performance
share units

CHF

Number

CHF

CHF

CHF

310,000

1,597

2,263,250

432,050

3,005,300

Michael Pieper,
Vice Chairman

80,34840

65,092

12,140157,580

Dr. Peter Altorfer,
Vice Chairman

103,952

52

84,62014,894203,466

Claudia Coninx-Kaczynski,
member

70,81336

58,583

13,584142,980

Dr. Reto Müller, member
Vincent Studer, member
Board of Directors total6)
Executive Board7)8)9) total
Of whom highest-paid
member of Executive Board(Stephan Bauer)

70,81386,249722,175
1,203,625
400,000

36
43
1,804
207
128

58,58369,9742,600,102
326,245
201,796

11,107
8,692
492,467
368,916
167,415140,503
164,915
3,814,744
2,274,552
887,441

55
25

CHF

92,054
41,843

Number

189
54

CHF

Total

This E. Schneider,
Executive Chairman5)

16,3580

NumberOther
remunera­tion4)

267,354
76,3871) The remuneration of the Board of Directors and the Executive Board is reported gross before deduction of employee social insurance contri­
butions. The amounts shown in the table are based on the valuation models used and disclosed in the consolidated financial statements.
2) The variable short-term remuneration of the Executive Board (bonus/short-term incentive) corresponds to the actual degree to which targets
were reached in 2019 and will be submitted to the April 2020 Ordinary General Meeting for approval. The criterion for determining the num­
ber of shares issued for the variable remuneration is the unweighted average of the closing prices of the Forbo share in the first 14 trading
days in January of the allocation year in connection with the MIP. The allocation takes place in April (subject to approval by the Ordinary Gen­
eral Meeting) for the period from January to December of the previous year. The value at allocation was CHF 1,673.71. The shares are locked
up for a period of three years.
3) The long-term incentive for the Executive Board corresponds to the long-term participation plan for 2019 (long-term incentive plan 2019 –2021) and to the number of future subscription rights allocated to the plan in the form of performance share units (PSUs). One PSU corre­
sponds to a future subscription right to one share and is subject to a three-year vesting period.
4) ‘Other remuneration’ includes in particular employer contributions to the usual social insurances, private use of the company car, and lumpsum or on-site expenses.
5) Please refer to page 78 of this remuneration report for details on the structure of the remuneration of the Executive Chairman of the Board of
Directors. These details also contain the criterion for determining the number of shares issued and their lock-up periods.
6) The criterion for determining the number of shares issued for the non-executive members of the Board of Directors is the average share pricein the ten trading days after payment of the dividend or repayment of the par value: CHF 1,627.30. The allocation is made at the discounted
tax value of CHF 1,366.30. The shares are locked up for a period of three years and are reported at market value in the table above.
7) Remuneration of the entire Executive Board including the highest-paid Executive Board member.
8) The criterion for determining the number of shares issued for the base salary is the unweighted average of the closing price of the Forbo sharein the first 14 trading days in January of the allocation year. The shares are allocated in April for the period from May of the previous year to
April of the year of allocation. The shares are locked up for a period of five years. The value of the shares allocated was CHF 1,414.57 in 2019
and CHF 1,673.71 for 2020.
9) The criterion for determining the number of shares issued for the variable remuneration is the unweighted average of the closing price of the
Forbo share in the first 14 trading days in January of the allocation year. The shares for the bonus for the business year 2019 will be allocatedin April 2020, subject to approval by the 2020 Ordinary General Meeting. The shares are locked up for a period of three years. The value atallocation was CHF 1,673.71. Foreign members of the Executive Board may acquire stock awards instead of shares. The stock in question willbe transferred after three years.

86

FORBO ANNUAL REPORT 2019 – REMUNERATION REPORT

Remuneration
For the year 20181)

Variable
remunerations

Base salary

CashName and function

SharesCash
CHF

Bonus/short-term incentive2)

Long-term incentive3)

Shares

Allocation performance
share units

CHF

Number

CHF

CHF

CHF

310,000

1,447

2,262,960

426,9422,999,902

Michael Pieper,
Vice Chairman

80,04347

65,457

12,140157,640

Dr. Peter Altorfer,
Vice Chairman

104,842

60

83,562

17,085

205,489

Claudia Coninx-Kaczynski,
member

70,88942

58,493

13,584142,966

Dr. Reto Müller, member
Vincent Studer, member
Board of Directors total6)
Executive Board7)8)9) total
Of whom highest-paid
member of Executive Board(Stephan Bauer)

70,88986,535723,198
1,212,530
400,000

42
50
1,688
225
138

58,493
69,6352,598,600
329,018
201,808

11,107
8,669
489,527
407,384
189,166

140,489
164,839
3,811,325
2,764,288
1,148,034

368
210

CHF

520,562
297,060

Number

141
38

CHF

Total

This E. Schneider,
Executive Chairman5)

71,9780

NumberOther
remunera­tion4)

222,816
60,0001) The remuneration of the Board of Directors and the Executive Board is reported gross before deduction of employee social insurance contri­
butions. The amounts shown in the table are based on the valuation models used and disclosed in the consolidated financial statements.
2) The variable short-term remuneration of the Executive Board (bonus/short-term incentive) corresponds to the actual degree to whichtargets were reached in 2018 and will be submitted to the April 2019 Ordinary General Meeting for approval. The criterion for determining
the number of shares issued for the variable remuneration is the unweighted average of the closing prices of the Forbo share in the first
14 trading days in January of the allocation year in connection with the MIP. The allocation takes place in April (subject to approval by theOrdinary General Meeting) for the period from January to December of the previous year. The value at allocation was CHF 1,414.57. The
shares are locked up for a period of three years.
3) The long-term incentive for the Executive Board corresponds to the long-term participation plan for 2018 (long-term incentive plan 2018 –2020) and to the number of future subscription rights allocated to the plan in the form of performance share units (PSUs). One PSU corre­
sponds to a future subscription right to one share and is subject to a three-year vesting period.
4) ‘Other remuneration’ includes in particular employer contributions to the usual social insurances, private use of the company car, and lumpsum or on-site expenses.
5) Please refer to page 78 of this remuneration report for details on the structure of the remuneration of the Executive Chairman of the Board of
Directors. These details also contain the criterion for determining the number of shares issued and their lock-up periods.
6) The criterion for determining the number of shares issued for the non-executive members of the Board of Directors is the average share pricein the ten trading days after payment of the dividend or repayment of the par value: CHF 1,392.70. The allocation is made at the discounted
tax value of CHF 1,169.30. The shares are locked up for a period of three years and are reported at market value in the table above.
7) Remuneration of the entire Executive Board including the highest-paid Executive Board member.
8) The criterion for determining the number of shares issued for the base salary is the unweighted average of the closing price of the Forbo sharein the first 14 trading days in January of the allocation year. The shares are allocated in April for the period from May of the previous year to
April of the year of allocation. The shares are locked up for a period of five years. The value of the shares allocated was CHF 1,568.00 in 2018
and CHF 1,414,57 for 2019.
9) The criterion for determining the number of shares issued for the variable remuneration is the unweighted average of the closing price of the
Forbo share in the first 14 trading days in January of the allocation year. The shares for the bonus for the business year 2018 will be allocatedin April 2019, subject to approval by the 2019 Ordinary General Meeting. The shares are locked up for a period of three years. The value atallocation was CHF 1,414.57. Foreign members of the Executive Board may acquire stock awards instead of shares. The stock in question willbe transferred after three years.

87

Advances and loans
As of December 31, 2019, no advances or loans to members of the Board of Directors or the Executive Board were
outstanding.
The relevant statutory provisions concerning advances, loans and employee benefits for members of the Boardof Directors and the Executive Board are set out in Chapter IV, pages 9 and 10 of the Articles of Association ofForbo Holding Ltd, which can be downloaded at:www.forbo.com � Investors � Ordinary General Meeting

Disclosure of shareholdings pursuant to Article 663c CO2019 business year
As at December 31, 2019, the individual members of the Board of Directors and the Executive Board (including
related parties) held the following number of shares in Forbo Holding Ltd:
Shareholdings 2019
SharesName and function
This E. Schneider, Executive Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Executive Officer
Marc Deimling, Executive Vice President Movement Systems
Urs Uehlinger, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Flooring Systems
Total Executive Board

38,648486,804
1,339
248
668
964
528,671
2,671
40
188
134
3,033

88

FORBO ANNUAL REPORT 2019 – REMUNERATION REPORTAs at December 31, 2018, the individual members of the Board of Directors and the Executive Board (including
related parties) held the following number of shares in Forbo Holding Ltd:
Shareholdings 2018
SharesName and function
This E. Schneider, Executive Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Executive Officer
Marc Deimling, Executive Vice President Movement Systems
Urs Uehlinger, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Flooring Systems
Total Executive Board

54,611
486,764
1,287
212
632
916
544,422
2,969
3
104
104
3,180

89

Report of the statutory auditor

Report of the Statutory Auditor
To the General Meeting of Shareholders of Forbo Holding Ltd, Baar

We have audited the accompanying remuneration report of Forbo Holding Ltd for the year ended 31 December
2019. The audit was limited to the information according to articles 14 – 16 of the Ordinance against Excessivecompensation in Stock Exchange Listed Companies (Ordinance) on pages 85 to 88 of the remuneration report.
Responsibility of the Board of Directors
The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration reportin 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 anddefining individual remuneration packages.
Auditor's Responsibility
Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit inaccordance 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 the remuneration report complies
with Swiss law and articles 14 – 16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the 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 thereasonableness 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.
OpinionIn our opinion, the remuneration report for the year ended 31 December 2019, of Forbo Holding Ltd complies with
Swiss law and articles 14 – 16 of the Ordinance.
KPMG AG

Rolf Hauenstein
Licensed Audit Expert
Auditor in Charge

Regula Tobler
Licensed Audit Expert

Zurich, 26 February 2020

KPMG AG, Räffelstrasse 28, PO Box, CH-8036 Zurich
KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss legal entity. All rights reserved

90

FINANCIAL REPORT
Forbo Group financial report
91
Consolidated balance sheet
92
Consolidated income statement
93
Consolidated comprehensive income statement
94
Consolidated statement of changes in equity
95
Consolidated cash flow statement
96
Notes – accounting principles
97
Notes107
Group companies
134
Report of the statutory auditor
138
Consolidated balance sheets 2015 – 2019
144
Consolidated income statements 2015 – 2019
145
Financial statements for Forbo Holding LtdBalance sheet
Income statementNotes to the financial statements
Proposal for appropriation of available earnings
Report of the statutory auditor

147
148
149
150
155
156

92

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheet

AssetsCHF mCurrent assets
Cash and cash equivalents
Current financial assets
Trade receivables
Other receivables
Accrued income and deferred expenses
Inventories
Non-current assets
Non-current financial assets
Deferred tax assets
Property, plant, and equipment
Intangible assets and goodwill
Total assets
Shareholders’ equity and liabilities
CHF mCurrent liabilities
Current financial liabilities
Trade payables
Other current liabilities
Current tax liabilities
Accrued expenses and deferred income
Current provisions
Non-current liabilities
Non-current financial liabilities
Deferred tax liabilities
Non-current provisions
Employee benefit obligations
Total liabilities
Shareholders’ equity
Share capital
Treasury shares
Reserves and retained earnings
Total shareholders’ equity and liabilities

The accompanying notes are an integral part of the consolidated financial statements.

31.12.2019

31.12.2018

652.1
217.7
0.0
160.4
23.7
14.8
235.5
445.3
0.2
45.4
291.8
107.9
1,097.4

567.3
127.4
0.1
168.9
26.0
14.8
230.1
412.7
0.3
39.9
259.4
113.1
980.0

257.3
13.4
98.1
28.2
19.0
78.2
20.4
163.5
26.8
11.2
46.9
78.6
420.8
676.6
0.2
– 0.1
676.5
1,097.4

261.9
0.1
109.2
28.7
16.2
87.7
20.0
126.5
0.0
12.1
40.7
73.7
388.4
591.6
0.2
– 0.1
591.5
980.0

Note

22
12

13
22
10
14/21
15

Note

22/23
22
10
16
17
22/23
10
17
18

20
20

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

93

Consolidated income statement

CHF m
Net sales
Cost of goods sold
Gross profit
Development costs
Marketing and distribution costs
Administrative costs
Other operating expenses
Other operating income
Operating profit
Financial income
Financial expenses
Group profit before taxes
Income taxes
Group profit for the year
Group profit attributable to shareholders of Forbo Holding Ltd
Earnings per share, total
CHF
Basic earnings per share
Diluted earnings per share

The accompanying notes are an integral part of the consolidated financial statements.

2019

2018

1,282.2– 788.6493.6– 16.0– 191.4– 92.8– 26.2
9.1
176.3
0.8
– 1.8
175.3
– 37.0138.3
138.3

1,327.0– 824.9
502.1– 16.6– 198.1– 96.1– 23.5
7.5
175.3
0.9
– 0.6
175.6
– 38.0
137.6
137.6

86.33
86.33

82.38
82.38

Note

5

6

7
8

10

Note

11
11

94

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated comprehensive
income statement
CHF mGroup profit for the year
Items that will not be reclassified to the income statement:
Remeasurements of employee benefit obligations, net of taxes
Items that are or may be subsequently reclassified to the income statement:
Translation differences
Other comprehensive income for the year, net of tax
Total comprehensive income
Total comprehensive income attributable to the shareholdersof Forbo Holding Ltd

The accompanying notes are an integral part of the consolidated financial statements.

2019

2018

138.3

137.6

– 4.8

11.5

– 12.5– 17.3121.0
121.0– 29.6– 18.1
119.5
119.5

Note

10

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

95

Consolidated statementof changes in equity
2019

CHF m
December 31, 2018 (before application of IFRS 16)
Effect of application of IFRS 16 (net of tax)
January 1, 2019 restatedGroup profit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income
Share-based payments
Treasury shares
Dividend payment
December 31, 2019

SharecapitalTreasuryshares

0.2

– 0.1

0.2

– 0.1

Reserves

0.2

– 0.1

905.1
– 1.4
903.7
138.3
– 4.8
133.5
3.2
– 4.1
– 33.7
1,002.6

SharecapitalTreasurysharesReserves

0.2

– 0.1

0.2

– 0.1

0.0

Translationdifferences– 313.6– 313.6– 12.5– 12.5– 326.1

Translationdifferences

Total

591.6
– 1.4
590.2
138.3
– 17.3
121.0
3.2
– 4.1
– 33.7
676.6

2018

CHF m
December 31, 2017 (before application of IFRS 9)
Effect of application of IFRS 9 (net of tax)
January 1, 2018 restatedGroup profit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income
Share-based payments
Treasury shares
Dividend payment
December 31, 2018

0.0
0.2

The accompanying notes are an integral part of the consolidated financial statements.

– 0.1

945.1
– 0.4
944.7
137.6
11.5
149.1
4.6
– 160.9– 32.4905.1– 284.0– 284.0– 29.6– 29.6– 313.6

Total

661.2
– 0.4
660.8
137.6
– 18.1119.5
4.6– 160.9– 32.4
591.6

96

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated cash flow statement

Cash flow from operating activities
CHF mGroup profit for the year
Tax expense
Financial result
Depreciation of property, plant, and equipment and right-of-use assets
Amortization of intangible assets
Profit (–)/Loss from the sale of non-current assets
Share-based payments
Income tax paid
Increase in provisions and employee benefit obligations
Increase in net operating working capital1)
Increase in other current assets
Net cash flow from operating activities
Cash flow from investing activities
CHF m
Purchase of business operations net of cash acquired
Purchase of non-current assets
Proceeds from the disposal of non-current assets
Interest received
Net cash flow from investing activities
Cash flow from financing activities
CHF m
Payment of lease liabilities
Interest paid
Purchase of treasury shares
Proceeds from sale of treasury shares
Dividend payment
Net cash flow from financing activities
Change in cash and cash equivalents
CHF m
Increase/decrease (–) in cash and cash equivalents
Translation differences on cash and cash equivalents
Total cash and cash equivalents at beginning of year
Total cash and cash equivalents at year-end

1) Net operating working capital includes the items ‘Trade receivables’, ‘Inventories’, and ‘Trade payables’.

The accompanying notes are an integral part of the consolidated financial statements.

2019

2018

138.3
37.0
1.0
52.4
5.1
– 0.5
3.2
– 39.07.7– 14.1
– 6.0
185.1

137.6
38.0
– 0.3
35.3
6.2
0.3
4.8
– 39.510.8– 9.8– 12.2171.2– 36.10.8
0.8– 34.5– 1.3– 38.70.1
0.8– 39.1– 18.4
– 1.0
– 4.3
0.0
– 33.7– 57.4– 0.3
0.0– 161.0
1.1– 32.4– 192.6

93.2
– 2.9
127.4
217.7

– 60.5
– 7.5
195.4
127.4

Note

10
14
15
9

Note

Note

21
21

Note

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

97

Notes –
accounting principles
1 General information
Forbo Holding Ltd and its subsidiaries (together consti­
tuting the ‘Group’) manufacture floorings, construction
adhesives, and drive and conveyor technology. The
Group has a global network of locations with produc­tion and distribution as well as pure sales companies.
Forbo Holding Ltd is a public limited company under
Swiss law, domiciled in Baar, Switzerland. It is listed on
the SIX Swiss Exchange (FORN).
These financial statements were approved by the
Board of Directors on February 26, 2020, and released
for publication on March 3, 2020. This financial report
is subject to approval by the Ordinary General Meetingof April 3, 2020.

2 Summary of significant
accounting policies
The principal accounting policies applied in the prepa­
ration of these consolidated financial statements are
set out below. These policies have been consistently
applied to all the years presented, unless otherwise
stated.
Basis of preparation
The consolidated financial statements of Forbo Hold­
ing Ltd were prepared in accordance with the Interna­
tional Financial Reporting Standards (IFRS) and in com­pliance with Swiss law.
The consolidated financial statements are preparedin Swiss francs. The Swiss franc is both the functional
currency and the reporting currency of the company.
Unless otherwise noted, all sums are stated in millionsof Swiss francs (CHF m) and are generally rounded to
one decimal place.
The consolidation was done on the basis of the audited
financial statements of the subsidiaries prepared ac­
cording to uniform corporate accounting policies. The
reporting date for all Group companies is December 31.

The consolidated financial statements were preparedin accordance with the principle of historical costs, withthe exception of derivatives measured at fair value andpension fund liabilities measured at the net value ofthe discounted defined benefit obligations less the fairvalue of the plan assets.
The preparation of the consolidated financial state­ments requires management to make discretionary
judgements, estimates and assumptions that can affectthe application of accounting methods and reported
revenues, expenses, assets, liabilities, and contingent
assets and liabilities at the date of the financial state­ments. Actual results may differ from these estimatesand assumptions. Estimates and the underlying as­
sumptions are being reviewed continually. Revised ver­sions of estimates and assumptions are recognized pro­
spectively. Information about discretionary judgements
as well as assumptions and uncertainty involved in es­
timates are contained in note 3 ‘Critical judgements,
estimates and appraisals by management’.
Scope and principles of consolidation
Subsidiaries are companies that are controlled by theGroup. The Group exercises control over a company if
it is exposed to variable returns from its involvement in
the company or possesses rights to the returns and isable to influence these returns by means of its discre­tionary control over the company. The financial state­ments of subsidiaries are included in the consolidated
financial statements from the point at which control
begins.
The purchase method of accounting is used to ac­
count for business combinations. The value of thetransferred consideration in a business combinationand the acquired identifiable net assets are recognizedat the fair value on the acquisition date. The consider­ation includes cash payments and the fair value of theassets transferred, liabilities incurred or acquired, andequity instruments issued by the acquirer on the trans­
action date. Liabilities dependent on future events,
which are based on agreements on contingent con­siderations, are accounted for at their fair value in theaccounting treatment of the acquisition. Acquisition
costs are reported as expenditure in the income state­ment. Non-controlling interests are measured at theacquisition date with their proportionate share in theidentifiable net assets of the acquired entity.

98

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Goodwill is the excess of the consideration of the busi­
ness combination and the amount of the non-con­trolling interest over the identifiable net assets as­
sessed at fair value.
Inter-company transactions, balances, and unrealized
gains or losses on transactions between Group com­panies are eliminated.
Associates are all entities over which the Group hassignificant influence but not control, generally accom­
panied by a shareholding of between 20% and 50%of the voting rights. Investments in associates are ac­counted for using the equity method of accounting
and are initially recognized at cost.

Foreign currency translation
Transactions in foreign currencies
The individual companies prepare their financial state­ments in their functional currency. The functional cur­rency is the currency of the primary economic environ­ment in which the company operates and generally
corresponds to the local currency. Foreign currencytransactions are translated into the functional currency
using the exchange rates prevailing at the dates oftransaction. Foreign exchange gains and losses result­ing from the settlement of such transactions and fromthe translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies
are recognized in the income statement.

The Group’s share of its associates’ post-acquisition
profits or losses is recognized in the income statement,
and its share of post-acquisition changes in reserves isrecognized in reserves. The cumulative post-acquisi­tion movements are offset against the carrying amountof the investment. When the Group’s share of losses inan associate equals or exceeds its interest in the asso­
ciate, the Group does not recognize further losses, un­less it has incurred obligations or made payments onbehalf of the associate.

Foreign operations
The annual statements of foreign Group companies
stated in foreign currencies are translated into Swiss
francs as follows: assets and liabilities at year-end ex­change rates; the income statement and cash flow
statement at average exchange rates for the year. Cur­rency translation differences arising from the different
translation of balance sheets and income statements
and from equity capital transactions are recognized inother comprehensive income and taken to profit orloss for the period (reclassified) in the event the foreign
Group company is disposed of.

Changes in the scope of consolidation
In the year under review, two new distribution and ser­vice companies were founded in the Movement Sys­
tems division: Forbo Siegling Poland sp. z o.o. in Łódź,Poland, and Forbo Siegling Colombia S.A.S. in Bogotá,
D.C., Colombia. Forbo Finanz II AG in the Corporate
Segment was liquidated in order to streamline the cor­porate structure.

On consolidation, exchange differences arising fromthe translation of net investments in independent for­eign operations are recognized in other comprehen­sive income. When a foreign operation is disposed of,these exchange differences are transferred to the in­come statement as part of the gain or loss on sale.

In the previous reporting period, Forbo Finanz AG had
acquired 100% of the capital of Transmeca AS in Oslo,
Norway, effective May 2, 2018. Transmeca AS was anexisting customer of Forbo that sells and distributes
fabric conveyor belts. Transmeca AS has now become
an additional distribution and service point for the
Movement Systems division in Norway. Furthermore,
the dormant company Forbo Project Vinyl AB in Go­
thenburg, Sweden, was liquidated in 2018.
The subsidiaries included in the group of consolidated
companies are listed under ‘Group companies’ (frompage 134 of this report).

99

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

The following exchange rates against the Swiss franc
have been applied for the most important currencies
concerned:
Income statement (averageexchange rates for the year)

Exchange rates
Euro zone
USA
Great Britain
Japan
China
Sweden

EUR
USD
GBP
JPY
CNY
SEK

1
1
1
100
100
100

Balance sheet(year-end exchange rates)

2019

2018

2019

2018

1.1126
0.99371.26880.911514.3900
10.5164

1.15520.97861.30580.886014.8000
11.2673

1.08590.9682
1.27220.8912
13.9100
10.3745

1.12750.9853
1.25960.895914.3200
11.0117

Net sales and revenue recognition
Revenue from contracts with customers is recognizedwhen the control of the goods or services is transferredto the customer. The revenue is based on the con­tractually agreed transaction price, in other words, theamount to which the Group can be expected to be en­titled in return for the transfer of the goods or services
to a customer.
Type of productor service
Flooring Systems

Movement Systems

Type and time of the fulfillment of performance obligation, significant terms of payment
The revenue is generated predominantly by the sale of goods that are recorded at a point in time, in accordance with theagreed terms. The sale of goods is based on fixed prices. In some cases, goal-oriented, variable volume discounts are
granted. Volume rebates are deducted from sales in the same amount as expected cash outflows. The payment terms arein line with general business terms and conditions, with payment due dates ranging from 30 to 60 days.
The warranty periods granted for goods are in line with the general business terms and conditions in the sector; in somecases, these may be longer than prescribed by law. Provisions are made on the basis of the expected cash outflow for known
warranty claims and those expected in future.
The type and time of the fulfillment of the performance obligation and the terms of payment are identical with those for
Flooring Systems.
Movement Systems, in addition, provides services in connection with the servicing, maintenance, and seamless connectionof belting products. These services are recognized separately as revenue at the time the service is provided.

100 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Government grants
Government grants are recognized only when there
is reasonable assurance that the related conditions
are met, and the grants will be received. Grants are­deducted when arriving at the carrying amount of
the asset concerned and they are recognized in profit
or loss over the period of the depreciable asset bymeans of a reduced depreciation charge.
Government grants that compensate the company for
expenses incurred are recognized in the income state­ment accounts in the period in which the expenses tobe compensated accrue.
Research and development
All research costs are posted directly to the income
statement in the period in which they are incurred. De­
velopment costs are capitalized only if these costs canbe reliably measured, the product or process is tech­nically feasible and commercially viable, a future eco­nomic benefit is likely, and the Group has sufficient­resources and intends to complete the development
and exploit the asset. Other development expenses
that do not meet these criteria are taken to the income
statement as soon as they are incurred. Capitalized­development costs are measured at the cost of acqui­sition or production less cumulative amortizations andimpairments.
Share-based payments
Equity-settled share-based payments to employees
are valued at the fair value of the equity instrumenton the date on which the instruments are granted. The
fair value determined on granting equity-settled sharebased payments is recognized in the income state­ment over the vesting period and is included in person­nel expenses.

Earnings per share
The number of shares used for calculating earnings per
share is determined on the basis of the weighted aver­
age number of the shares issued less the weighted av­
erage number of treasury shares held. To calculate di­luted earnings per share, an adjusted number of sharesis determined from the total number of shares used to
calculate earnings per share plus the potentially dilu­
tive effects of shares from employee incentive plans. To
take account of the dilutive effect of employee incen­
tive plans, the number of shares is determined that
could have been purchased at the market price on thebasis of the cumulative difference between the market
price and the strike price of the future subscription
rights. The market price used for this purpose corre­
sponds to the average price of the shares in the busi­
ness year under review. The earnings or diluted earn­ings per share is the quotient obtained by dividing
the distributable net profit by the relevant number ofshares.
Income taxes
Income taxes constitute the total of current and de­ferred income taxes.
Current income taxes are determined on the basis oftaxable profits and the applicable tax laws of the indi­vidual countries. They are recognized as an expense in
the accounting period in which the profits are made.
Deferred tax liabilities are recognized for temporary dif­ferences between assets and liabilities in the balance
sheet, and their tax bases if they will result in taxable
income in future. Deferred tax assets are reported
for temporary differences that will result in deductible
amounts in future periods and for tax effects from un­used tax losses and tax credits, but only to the extent
as it is probable that sufficient taxable profits will beavailable against which these differences can be offset.
Deferred tax liabilities are not recognized if temporary
differences arise from the initial recognition of good­will.

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 101

Deferred tax assets and tax liabilities are measured at
the tax rates that are expected to be enacted in the
period in which the asset will be realized or the liability
will be settled. Current and deferred tax assets and lia­
bilities are offset when they arise from the same tax
reporting group, relate to the same tax authority, thelegal right to offset exists, and they are intended to besettled net or realized simultaneously.
Current and deferred income taxes are recognized as
an income tax benefit or expense in the income state­ment, with the exception of items posted directly toequity or recognized in other comprehensive income.
In this case, the corresponding tax effect is also to berecognized directly in shareholders’ equity or in othercomprehensive income.
Property, plant, and equipment
Property is recognized at cost on acquisition. Land is
not depreciated, but allowances are set aside for im­
pairments that have occurred. All other fixed assets
such as machines, vehicles and operational assets arereported at cost on acquisition less accrued deprecia­tion and impairments.
Betterments that increase the useful lives of the assets,
significantly improve the quality of the output or en­able a substantial reduction in operating costs are cap­
italized and depreciated over the remaining useful lives.
Depreciation is calculated according to the straight-line
method over the following estimated useful life:
Land and buildings
Land 
no depreciation
Buildings
20 to 40 years
Modifications and installations
5 to 10 years orduration of rental contract
Machinery and equipment
Machines, equipment and tools
5 to 10 years
Vehicles and other property, plant, and equipmentIT
3 to 5 years
Vehicles
5 years
Other operational assets
3 to 10 years
Assets under construction
Assets under construction
no depreciation

If there are signs of an impairment, the recoverable
amount of the asset is determined. If the carrying
amount exceeds the recoverable value, the carrying
amount of the asset is reduced accordingly and thedifference charged to the income statement.
Intangible assets and goodwill
The goodwill generated in connection with businesscombinations is measured at the cost of acquisition
less cumulative impairment losses.
Goodwill is not amortized but tested for impairment
at least at each reporting date or earlier if there aresigns of a potential impairment.
The acquisition costs of trademarks, licenses, customer
relationships, and technologies acquired in a businesscombination correspond to the fair value at the dateof acquisition.
Trademarks with an indefinite useful life are not sub­ject to amortization but are tested for impairment atleast annually. Any impairment is recognized as an ex­pense in the income statement.
Other intangible assets that are acquired by the Groupand have a finite useful life are carried at acquisition or
production costs less cumulative amortization and im­
pairments. The amortization of other intangible assets
with a finite useful life uses the straight-line method;
the following estimated useful lives are applied:
Customer relations Technologies Software 

5 to 15 years
up to 30 years
3 to 5 years

Amortization methods, useful lives, and residual values
are reviewed annually at the reporting date and adjust­ed where necessary.

102 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Financial instruments
Recognition and initial measurement
Trade receivables are recognized when they occur. Allother financial instruments are recognized when theGroup becomes a contracting party. Financial assets(with the exception of trade receivables with no essen­tial financing component) and financial liabilities arerecognized at fair value the first time. Transaction costs,
which are directly attributable to acquisition or issu­
ance, are added in addition for financial instrumentsthat are not measured at fair value through profit orloss. Trade receivables with no essential financing com­ponents are recognized at the transaction price the firsttime.
Classification and subsequent measurementof financial assets
Financial assets are classified in one of the following
categories:–– ‘Amortized cost’–– ‘Fair value through other comprehensive income’–– ‘Fair value through profit or loss‘A financial asset is measured at amortized cost if thebusiness model provides for the asset to be held in or­
der to receive contractual cash flows on contractuallyagreed dates. The payments consist only of the nomi­
nal value plus interest. Essentially, the financial assets
in the Group consist of cash and cash equivalents andtrade receivables that are reported at amortized costusing the effective interest method less valuation al­
lowances for expected credit losses. Cash and cash
equivalents are stated at nominal value. It includes
cash on hand, bank accounts, and fixed-term deposits
with maturities up to three months from the date ofacquisition.
Derivatives are valued at their fair value. The derivatives
used are accounted for on the day the trade is con­ducted. Derivative financial instruments are recog­
nized in the balance sheet in ‘Current financial assets’or in ‘Current financial liabilities’.

The Group recognizes allowances for expected credit
losses on financial instruments that are reported atamortized cost. The Group employs a permissible, sim­
plified model of valuation allowances (‘provision ma­
trix’) for trade receivables. In this valuation allowance
table, expected losses on receivables are determinedon the balance sheet date on the basis of past experi­ence of default probability and of future-oriented ex­
pectations based on experience with the customers
and market conditions.
The Group considers a financial asset to be in default
if it is unlikely that the borrower can pay his obligation
to the Group in full without the Group having to takerecourse to measures such as the realization of collat­
eral.
Classification and subsequent measurementof financial liabilities
Financial liabilities are classified and recognized atamortized costs or at fair value through profit or loss.
The majority of financial liabilities in the Group are lia­
bilities from leasing contracts. These are recognized
at amortized costs using the effective interest method.
A financial liability is recognized in the income state­ment at fair value if it is a derivative.
Inventories
Inventories are stated at the lower of cost or net realiz­able value. Cost includes direct material and, if appli­
cable, other direct costs and related production over­heads to the extent that they are incurred in bringing
the inventories to their present location and condition.
The net realizable value constitutes the estimated sales
price less all estimated costs up to completion, as wellas the costs of marketing, sales, and distribution.
Inventories are for the greater part measured at averagecost. Adjustments are made for unsaleable inventories
and inventories with insufficient turnover. Inter-compa­
ny profits on intra-Group deliveries are eliminated in theincome statement.

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 103

Shareholders’ equity
Registered shares are classified as share capital at theirpar value. Payments by shareholders above the par val­ue are credited to reserves.
Treasury shares are deducted at their par value fromshare capital. The acquisition costs in excess of par val­ue arising on the acquisition of treasury shares are deb­
ited to reserves. On the sale of treasury shares, gains
or losses compared with the par value are credited ordebited to reserves.
Dividends are debited to equity in the period in which
the resolution on their distribution is adopted.
Employee pension plans
The Group maintains various pension plans designed
as defined contribution and defined benefit plans.
These pension plans are established in accordancewith the local conditions in each country. The plans are
funded either by contributions to legally autonomous
pension funds and insurance plans or by recognition of
the pension plan liabilities in the financial statementsof the respective companies.
For defined contribution plans, the costs incurred in
the relevant period correspond to the agreed employ­er contributions.
For defined benefit plans, the pension costs and lia­
bilities are assessed annually on the basis of various
economic and demographic assumptions by indepen­
dent actuaries according to the ‘projected unit credit
method’. The liabilities correspond to the present valueof the expected future cash flows. The plan assets arestated at market value and deducted from the pension
liabilities. Pension costs, consisting of current service
costs incurred in the relevant period and net interest
expense, less employee contributions, are stated as
personnel expenses in the income statement. Past ser­vice costs or gains resulting from changes in pension
plans are recognized directly in the income statement.
Profits or losses resulting from pension plan curtail­ments or settlements are immediately taken to the in­come statement.

Revaluation components include actuarial gains andlosses due to changes in the present value of the pen­sion obligations arising from changes in assumptions
and experience adjustments plus the return on plan
assets less the contributions contained in net interest
expense. Revaluation components are recognized inother comprehensive income, taking deferred taxes
into account, and are never subsequently reclassified
to the income statement.
Provisions
Provisions are recognized if the Group has a current
legal or constructive obligation as a result of a past
event, it is probable that an outflow of resources will
be required to settle the obligation, and a reliable es­
timate of the amount can be made. The provision isthe best estimate on the reporting date of the amountrequired to meet the current obligation, taking into
account the risks and uncertainties underlying the ob­ligation.
Leasing
The Group is the lessee for various property, plant, andequipment; vehicles and buildings constitute the vast
majority of leasing agreements. Until 2018, the Group
had classified a lease as a financial lease in accordancewith IAS 17/IFRIC 4, if it transferred substantially all therisks and rewards incidental to ownership. All otherleases were treated as operating leases and not carriedin the balance sheet.
The Group recognizes a right-of-use asset that rep­resents its right to control the use of the underlying
asset, plus a liability from the lease that represents its
obligation to make lease payments. The lease liability
is recognized initially at the net present value of thelease payments and subsequently at the book value
using the effective interest method. It is restated if the
future lease payments change as a result of changes ininterest rates or a reassessment of purchase, renewal
or termination options. The lease payments are dis­counted at the implicit interest rate of the leasing ar­
rangement or, if this is not available, at the incremental
borrowing rate. Determination of the incremental bor­
rowing rate is based on interest rates of different finan­cial sources and is adjusted to take into account thelease conditions and the type of asset.

104 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

The right-of-use is assessed according to the initial rec­ognition of the lease liability and is amortized over thelease term on a straight-line basis. The lease term forleasing contracts that contain extension options rea­
sonably certain to be exercised or no explicitly statedend date is at the discretion of the company within cer­tain limits. Exceptions are made for short-term leases
and for leases for low-value assets used by the compa­
ny. These lease payments are recognized as expendi­
ture over the lease term.
The Group recognizes right-of-use assets under ‘Prop­erty, plant, and equipment’ and leasing liabilities under‘Financial liabilities’ in the balance sheet. Further infor­
mation is disclosed in note 21 ‘Leasing’.

3 Critical judgements, estimates andappraisals by management
The application of the measurement and accounting
principles requires that circumstances and estimates
be assessed, and assumptions be made with respect
to the carrying amounts of assets and liabilities. The
estimates and the underlying assumptions are basedon past experience and other factors regarded as rel­evant, including expectations of future events that ap­
pear reasonable in the given circumstances. The actu­
al results may, of course, deviate from the estimatesand assumptions of management.
Estimates and the underlying assumptions are re­viewed continuously. Revised estimates are recog­
nized prospectively. The following are the main areasin which a significant risk exists in the coming businessyear involving a significant adjustment of the carrying
value of assets and liabilities.
Impairment tests
Along with the regular periodic review of goodwill andintangible assets with an indefinite useful life, the car­rying amounts of fixed and intangible assets with a­finite useful life are also always reviewed if due tochanged circumstances or other triggering events
these amounts can possibly no longer be realized. Ifsuch a situation occurs, the recoverable amount is­determined based on expected future revenues. This
corresponds to either the discounted expected cash
flows or the expected net sales price.

Important assumptions in the calculations underlying
these impairment tests include growth rates, margins,
estimates and management’s expectations of the fu­
ture development of net working capital, and discountrates. The actual cash flows may deviate from theplanned discounted future values. Likewise, the useful
lives may be shortened, or non-current assets impairedin the event of a change in the use of buildings, ma­chinery and facilities, change or abandonment of loca­
tions, or lower-than-expected revenues over the me­dium term. Further information on this topic can befound in note 14 ‘Property, plant, and equipment’ andnote 15 ‘Intangible assets and goodwill’.
Valuation of pension plan liabilities
Various employee pension plans exist for employees of
the Group. In the valuation of defined benefit plans,
actuarial assumptions are made to estimate future de­velopments. These include assumptions and estimates
relating to the discount rate, the inflation rate as well asassumptions for future wage trends. In their actuarial
calculations for determining employee benefit obliga­
tions, the actuaries also use statistical information suchas mortality tables and staff turnover rates. If these pa­
rameters change owing to a change in the economic
situation or market conditions, the subsequent results
may deviate considerably from the actuarial reports
and calculations. These deviations may have a signifi­
cant medium-term effect on expenses and income
from the employee pension schemes and on the com­prehensive income statement. Further information on
this topic can be found in note 18 ‘Employee benefit
obligations’.
Recognition and measurement of provisions
In the conduct of ordinary business activities, a liabilityof uncertain timing and/or amount may arise. Provi­sions are determined using available information basedon reasonably expected cash outflows. Claims against
the Group may arise that may not be covered, or arecovered only in part, by provisions or insurance bene­fits. Further information on this topic can be found innote 17 ‘Provisions’.

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 105

Income taxes
The Group is obliged to pay income taxes in various
countries. Certain key assumptions are necessary in or­
der to determine income tax in the relevant countries.
There are business events which have an impact on
taxation and taxable profit. Hence, the amount of the
final taxation cannot be determined definitively. The
measurement of current tax liabilities is subject to theinterpretation of tax regulations in the relevant coun­tries. The adequacy of this interpretation is assessed by
the tax authorities in the course of the final assessment
or tax audits. This may result in material changes to tax
expenses. Where the definitive taxation of these busi­
ness events deviates from the previous assumptions,this will have an impact on the current and deferredtaxes in the period in which the taxation is definitively
determined. Furthermore, determining whether tax
losses carried forward can be capitalized requires a crit­
ical estimate of the probability that they can be offset
against future profits. This assessment is based on plan­ning information. Further information on this topic canbe found in note 10 ‘Income taxes’.

4 Application of new or revised
accounting standards
Applied new and revised standards
and interpretations
The following relevant new and revised standards andinterpretations of the International Accounting Stan­dards Board (IASB) were applied for the first time in thebusiness year that began on January 1, 2019:–– IFRS 16 ‘Leases’–– IFRIC 23 ‘Uncertainty over income tax treatments’–– Amendments to IAS 28 ‘Investments in
Associates and Joint Ventures’–– Amendments to IAS 19 ‘Plan Amendment,
Curtailment or Settlement’–– Amendments owing to annual
improvement projects

With the exception of IFRS 16 Leases, the first-time
adoption of the above-mentioned new or revised stan­dards and interpretations had no appreciable impact
on the consolidated financial statements presented
here.
IFRS 16 ‘Leases’
With IFRS 16 a uniform accounting model was intro­
duced, in which leases are to be recognized in the les­see’s balance sheet. IFRS 16 defines a lease as a con­tract if the contract conveys the right to control theuse of an identified asset for a period of time in ex­change for consideration. A lessee recognizes a rightof-use asset that represents his right to control the useof the underlying asset, plus a liability from the leasethat represents his obligation to make lease payments.
Vehicles and buildings constitute the vast majority ofleasing agreements.
The Group applied the new standard as of January 1,
2019, in accordance with the modified retrospective
approach, recognizing the cumulative restatement ef­
fect at the date of initial application in shareholders’equity. Accordingly, the comparative figures for theprevious periods were not restated.
When first applied, the lease liabilities were recognizedat the present value of the remaining lease payments,
discounted at the implicit interest rate of the lease or,if this was not available, at the incremental borrowing
rate. Right-of-use assets were recognized at book value
as if IFRS 16 had been applied since the commence­ment date. At the date of transition, the right-of-use
assets were tested for impairment and no indications
for impairment were noted. The Group made use of
the recognition exception for low-value assets andshort-term leases and applied the practical expedientof using hindsight when determining the lease term.

106 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

The effect on the consolidated balance sheet from theassessment of the right-of-use assets on the one hand
and the leasing obligation and the cumulative restate­ment effect in shareholders’ equity on the other was asfollows:
CHF m Right-of-use property, plantand equipment
Lease liability
Restatement effect inshareholders’ equity

January 1, 2019
42.1
43.5
– 1.4

Depreciation and hence operating profit before depre­
ciation and amortization (EBITDA) increased by CHF
17.1 million in the reporting period. Financial expendi­
ture consists of interest on lease liabilities of CHF 1.0
million, which correspondingly had a positive impact
on operating profit (EBIT). The effect of the applicationof IFRS 16 on the consolidated cash flow statement was
to reduce cash flow from financing activities and in­crease cash flow from operating activities by each CHF
19.4 million. The effect on the Group profit is negligible.
The table below shows the reconciliation of leasing ob­
ligations under IAS 17 to leasing obligations under IFRS
16 as per January 1, 2019:
Operating leasing obligations (IAS 17) as per December 31, 2018
Effect of discounting at the average incremental borrowing rate
Not recognized leasing obligations with a term of less than 12 months
Not recognized leasing obligations of low-value assets
Extension options reasonably certain to be exercised
Leasing obligations on initial application of IFRS 16 on January 1, 2019

The average incremental borrowing rate for lease liabil­ities initially recognized as of January 1, 2019, came toabout 2.5%.

CHF m
28.3
– 1.9
– 3.6
– 0.9
21.6
43.5

Introduction of new standards
in 2020 and beyond
The following new and revised standards and interpre­
tations that were published by end-2019 but are notyet mandatory were not applied in advance in thepresent consolidated financial statements.

Standards*

Date effective

Plannedapplication

New standards or interpretations:
IFRS 17 – ‘Insurance Contracts’*

January 1, 2021

2021 business year

Revisions and amendments of standards and interpretations:
Amendments to IFRS 3 ‘Definition of a business’
Amendments to IAS 1 und IAS 8 ‘Definition of materiality’
Amendments to ‘References to the conceptual framework in IFRS standards’
Amendments to IFRS 9, IAS 39, and IFRS 7 ‘Interest rate benchmark reform’

*
*
*
*

January 1, 2020
January 1, 2020
January 1, 2020
January 1, 2020

2020 business year
2020 business year
2020 business year
2020 business year

No significant impact on the consolidated financial statements is
expected.

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 107

Notes

5 Segment reporting
The Group is a global producer of Flooring Systems andMovement Systems. The divisions correspond to the­internal management structure and are run separately
because the products they manufacture, distribute,and sell differ fundamentally in terms of production,
distribution, and marketing.
In the Flooring Systems division, the Group develops,
produces, and sells linoleum, vinyl floorings, entrance
flooring systems, carpet tiles, needle felt floor cover­ings, Flotex, the washable textile flooring, and building
and construction adhesives as well as various accessory
products required for laying, processing, cleaning, andcare of flooring. In the Movement Systems division, theGroup develops, produces, and sells high-quality con­veyor and processing belts, as well as plastic modular

belts, and drive, timing and flat belts made of synthetic
materials. Corporate includes the costs of the Group
headquarters and certain items of income and expens­es that are not directly attributable to a specific busi­
ness.
The Flooring Systems and the Movement Systems di­visions are reportable segments. The identification of
the reportable segments is based on internal man­agement reporting to the Executive Chairman of theBoard of Directors and to the Chief Executive Officerof the Group and hence on the financial information
used to review the performance of the operational
units in order to reach a decision on the allocation of
resources.
Segment information on the reportable segments forthe reporting year:

2019
CHF m
Total sales
Inter-segment sales
Net sales to third parties
Operating profit (EBIT)
EBITDA1)
Operating assets
Capital expenditure
Number of employees (December 31)

Flooring
Systems
870.5
0.0
870.5
135.8
172.6
520.8
22.8
3,130

Movement
Systems
411.9
– 0.2
411.7
49.8
69.3
299.5
13.2
2,441

Corporate/
Elimination
– 0.2
0.2

Flooring
Systems
913.2
0.0
913.2
136.5
166.0
523.1
25.4
3,194

Movement
Systems
414.0
– 0.2
413.8
49.4
60.6
275.4
13.2
2,503

Corporate/
Elimination
– 0.2
0.2

– 9.3
– 8.2
13.8
0.0
43

Total
1,282.2
0.0
1,282.2
176.3
233.7
834.1
36.0
5,614

1) Operating profit before depreciation and amortization

Segment information on the reportable segments forthe prior year:
2018
CHF m
Total sales
Inter-segment sales
Net sales to third parties
Operating profit (EBIT)
EBITDA1)
Operating assets
Capital expenditure
Number of employees (December 31)

1) Operating profit before depreciation and amortization– 10.6
– 9.8
13.9
0.1
42

Total
1,327.0
0.0
1,327.0
175.3
216.8
812.4
38.7
5,739

108 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTSManagement reporting is based on the same account­ing principles as external reporting.
The Executive Chairman of the Board of Directors andthe Chief Executive Officer assess the performanceof the reportable segments based on their operating
result (EBIT). The net financial result is not allocatedto the segments since it is Corporate Treasury thatmainly exercises central control over the financial re­sult. Inter-segment sales are transacted at arm’s length.
The segments apply the same accounting principles as
the Group. Sales to third parties, as they are reported to
the Executive Chairman of the Board of Directors andthe Chief Executive Officer, are identical with the sales
reported in the income statement.
Reconciliation of segment information to the income
statement and balance sheet:
2019

2018

176.3
– 1.0
175.3

175.3
0.3
175.6

31.12.2019

31.12.2018

834.1
263.3
1,097.4

812.4
167.6
980.0

CHF m
Total segment result (EBIT)
Financial result
Group profit before taxes

CHF m
Total operating assets
Non-operating assets
Total assets

Operating assets include ‘Trade receivables’, ‘Other­receivables’, ‘Accrued income and deferred expenses’,­‘Inventories’, ‘Property, plant, and equipment’, and ‘In­
tangible assets and goodwill’. Non-operating assets­include ‘Cash and cash equivalents’, ‘Current financial
assets’, ‘Non-current financial assets’ and ‘Deferred tax
assets’.

The following table shows revenue broken down bygeographic region and by the two product groups thatare identical with the reportable segments.

Flooring Systems

CHF mRegions
EuropeAmericasAsia/Pacific and Africa
Total net sales to third parties

Movement Systems

2019
Third-party
sales

2018
Third-party
sales

2019
Third-party
sales

2018
Third-party
sales

664.7
131.4
74.4
870.5

693.8
136.3
83.1
913.2

156.2
141.9
113.6
411.7

163.8
138.9
111.1
413.8

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 109

Third-party net sales by destination were generated in
the following regions:

CHF m
Switzerland (domicile)
FranceGermany
Benelux
Scandinavia
Great Britain and Ireland
Other countries Europe
EuropeUSA
Other countries Americas
AmericasAsia/Pacific and Africa
Total net sales to third parties

In the period under review, sales to no single customer
exceeded 10% of total Group sales.

CHF m
Switzerland (domicile)
FranceGermany
Benelux
Scandinavia
Great Britain and Ireland
Other countries Europe
EuropeUSA
Other countries Americas
AmericasAsia/Pacific and Africa
Total operating assets

6 Development costs‘Development costs’, which mainly comprise productdevelopment, amounted to CHF 16.0 million in the re­porting year (2018: CHF 16.6 million).

2019
Third-party sales

2018
Third-party sales

27.6
158.2
155.4
130.5
98.6
90.0
160.6
820.9
221.2
52.1
273.3
188.0
1,282.2

28.4
165.6
167.0
134.2
103.7
92.7
166.0
857.6
223.2
52.0
275.2
194.2
1,327.0

Operating assets are distributed over the following re­
gions:

31.12.2019
Operating assets

31.12.2018
Operating assets

29.7
69.0
85.7
205.3
31.3
114.9
54.8
590.7
101.2
14.1
115.3
128.1
834.1

25.9
68.4
82.9
207.1
29.5
117.4
48.1
579.3
94.3
11.3
105.6
127.5
812.4

Costs for manufacturing trials, recipe optimization andnew collections are not reported within ‘Development
costs’.
As in the previous year, no development costs were
capitalized.

110 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

7 Other operating expenses

8 Other operating income‘Other operating expenses’ comprise expenses of dif­ferent kinds in connection with structural measures,
legal costs, warranties, taxes on capital, levies based on
local legislation, and allowances for doubtful trade re­ceivables.

‘Other operating income’ comprises a range of income,mainly in connection with the sale of tangible assets,
the release of provisions for legal proceedings, insur­
ance payments, rental income, the sale of material forrecycling purposes, and the release of allowances for
doubtful trade receivables.
In the previous year, government grants in connection
with the construction of the Movement Systems plantin Pinghu, China, amounting to CHF 1.7 million wererecognized in the income statement.

9 Personnel expenses

Personnel expenses
CHF mSalaries and wages
Social security contributions
Employee benefit expenses for defined benefit plans
Total personnel expenses

As at December 31, 2019, the headcount was 5,614(2018: 5,739). The weighted average headcount over
the year was 5,716 (2018: 5,718).
Salaries and wages include share-based payments­expenses of CHF 3.2 million (2018: CHF 4.6 million). A
bonus program is available for around 140 managers,which is linked to achieving financial targets set for theGroup, the divisions, and individual objectives (see also
note 19 ‘Employee participation plan’).

2019

2018

308.5
78.8
5.0
392.3

315.1
78.8
6.0
399.9

The cost of the contributions to defined contributionplans, which is included in personnel expenses,
amounted to CHF 14.8 million (2018: CHF 14.6 million).

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 111

10 Income taxes

Income taxes
CHF mCurrent income taxes
Deferred income taxes
Total income taxes

2019

2018

42.0
– 5.0
37.0

40.1
– 2.1
38.0

2019

2018

175.3
– 43.8175.6– 43.4

– 1.8
3.5
2.1

– 1.9
3.4
0.5
1.3
2.1
– 38.0Analysis of tax expense
The following reconciliation explains the difference
between the expected and the effective tax expense:

CHF mGroup profit before taxes
Tax expense at the expected tax rate
Tax effects of:
Non-tax-deductible expenses
Tax-exempt income
Recognition of previously unrecognized tax losses
Utilization of previously unrecognized tax losses
Previous-year taxes and other positions
Effective income tax expenses

Since the Group operates in various countries with dif­ferent tax laws and rates, the expected and effective tax
expense depends every year on the origin of the profits
or losses in each country. The expected tax expense is
the sum of the expected individual tax income/expense

3.0– 37.0of all subsidiaries. The expected individual tax income/expense in a country is calculated by multiplying theindividual profit/loss by the tax rate applicable in the
country concerned. The expected tax rate in the year
under review was 25.0% (2018: 24.7%).

112 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Capitalized and non-capitalized tax loss carry-for­wards, by expiry date:
2019
CHF m
Expiry after:
1 year
2 years
3 years
4 years
5 years
More than 5 years
Total tax loss carry-forwards

Not capitalized

Capitalized

Total

0.4
2.1
4.6
3.8
22.6
33.5

45.2
45.2

0.4
2.1
4.6
3.8
67.8
78.7

Not capitalized

Capitalized

Total

1.1
2.2
4.5
39.3
47.1

0.0
0.3
0.0
37.3
37.6

1.1
2.5
4.5
76.6
84.7

2018
CHF m
Expiry after:
1 year
2 years
3 years
4 years
5 years
More than 5 years
Total tax loss carry-forwards

As in the previous year, no tax loss carry-forwards ex­
pired in the year under review.
Deferred income tax assets and liabilities are offset
when they relate to the same tax jurisdiction, provided

CHF mDeferred tax assets
Deferred tax liabilities
Deferred tax assets, netthat the legal right to offset exists, and they are intend­
ed either to be settled net or to be realized simultan­
eously.
The following amounts are shown in the balance sheet:
31.12.2019

31.12.2018

45.4– 11.234.2

39.9– 12.1
27.8

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 113

Deferred tax assets and liabilities, tax credits and tax
charges from deferred taxes (gross):
Deferred tax assets

CHF m
As at December 31, 2018
(before application of IFRS 16)

Inventories
7.5

Property,plant, andequipment
1.4

Provisions
10.2

Loss carryforwards
10.8

7.5
1.6

1.4
– 0.4

10.2
3.6

10.8
2.1

– 0.2
8.9

0.0
1.0

– 0.3
13.5

Inventories
2.7

Property,plant, andequipment
3.1

2.7
0.3
– 0.1
2.9

Effect of application of IFRS 16
January 1, 2019 restated
Changes recognized in income statement
Changes recognized in other comprehensive income
Translation differences
As at December 31, 2019
Netting with deferred tax liabilities
As at December 31, 2019, net

Employeebenefit­obligations
14.9

Other
4.8

Total
49.6

0.2
5.0
0.8

0.2
49.8
6.2
1.8
– 1.3
56.5
– 11.1
45.4

– 0.3
12.6

14.9
– 1.5
1.8
– 0.4
14.8

– 0.1
5.7

Provisions
2.1

Intangible
assets
12.2

Employeebenefit­obligations
0.0

Other
1.7

0.1
3.2
1.8

2.1
– 1.9

12.2
– 0.7

0.0

1.7
1.7

– 0.1
4.9

– 0.1
0.1

– 0.4
11.1

0.0
0.0

– 0.1
3.3

Deferred tax liabilities

CHF m
As at December 31, 2018
(before application of IFRS 16)
Effect of application of IFRS 16
January 1, 2019 restated
Changes recognized in income statement
Changes recognized in other comprehensive income
Translation differences
As at December 31, 2019
Netting with deferred tax assets
As at December 31, 2019, net

Increase in deferred tax assets, net

Total
21.8
0.1
21.9
1.2
0.0
– 0.8
22.3
– 11.1
11.2

6.4

As at December 31, 2019, no deferred tax liabilities
on undistributed profits from consolidated companies
have been recognized, since this income is deemed
to have been reinvested for an indefinite period.

Should there be a distribution, withholding and othertaxes might be incurred, which upon decision may beprovided for accordingly.
Tax expense and income recognized directly in theother comprehensive income statement:
2019

CHF m
Actuarial losses (–)/gains on employee benefit obligations
Translation differences
Other comprehensive income

2018

Before tax

Tax expense

After tax

Before tax

Tax expense

After tax

– 6.6
– 12.5– 19.1

1.8
0.0
1.8

– 4.8
– 12.5– 17.314.0– 29.6– 15.6

– 2.5
0.0
– 2.5

11.5
– 29.6– 18.1

114 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

11 Earnings per share
Undiluted earnings per share are calculated by divid­
ing the net profit or loss for the year attributable toshareholders of Forbo Holding Ltd by the weighted
average number of registered shares issued and out­
standing in the year under review.

The figure for diluted earnings per share also takes into
account the potential dilution effects if all issued andin-the-money share entitlements (Long-Term Incen­
tive Plan) were to be exercised.
The calculations are based on the following informa­tion:

Group profit for the year in CHF million
Weighted average number of shares
Amount of shares adjusted for long-term incentive plans (LTI)
Weighted average number of shares used to calculate diluted earnings per share

2019
138.3
1,601,927
42
1,601,969

2018
137.6
1,670,473
96
1,670,569

31.12.2019

31.12.2018

149.7
16.7
– 6.0
160.4

160.0
15.4
– 6.5
168.9

31.12.2019

31.12.2018

47.8
80.1
137.5
– 29.9
235.5

46.4
73.6
138.7
– 28.6230.1

12 Trade receivables

Trade receivables
CHF m
Accounts receivable
Notes receivable
Allowance for doubtful trade receivables
Total trade receivables

The Group’s credit and market risks and allowances for
doubtful receivables are found in note 23 ‘Risk assess­ment and financial risk management’.

13 Inventories

Inventories
CHF m
Raw materials and supplies
Work in progress
Finished goods
Valuation allowance for inventories
Total inventories

Expenses for inventories recognized in the reporting
year came to CHF 495.3 million (2018: CHF 519.6 mil­lion).

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 115

14 Property, plant, and equipment

Cost on acquisition
CHF m
As at January 1, 2018
Changes in scope of consolidation
Additions
Disposals
Transfers
Translation differences
As at December 31, 2018 (before application of IFRS 16)
Effect of application of IFRS 16
January 1, 2019 restated
Additions
Disposals
Transfers
Translation differences
As at December 31, 2019Land andbuildings

128.6

Machineryandequipment

Net carrying amountAs at January 1, 2018
As at December 31, 2018
As at January 1, 2019
As at December 31, 2019

Assetsunderconstruction

117.6

48.4

1.6
– 1.2
2.8
– 4.3
116.5
13.7
130.2
7.9
– 1.7
1.9
– 3.9
134.4

25.5

Total
property,plant, andequipment

1.2
– 0.3
18.6
– 9.4
138.7
26.8
165.5
7.9
– 1.5
3.2
– 8.2
166.9

719.0
0.1
9.9
– 12.231.3– 26.7
721.4
1.6
723.0
8.3
– 5.9
22.6
– 19.7728.3

Land andbuildings

Machineryandequipment

Vehicles andotherproperty,plant, andequipment

110.1
3.5
– 1.2
– 3.8
108.6

0.0

– 5.7
29.3

608.5
24.2
– 12.1– 22.1
598.5

29.3
16.2
– 1.3
– 5.6
38.6

598.5
26.0
– 5.9
– 16.5
602.1

108.6
10.2
– 1.6
– 3.2
114.0

0.0

0.0

746.0
35.3
– 13.3– 31.6
736.4
0.0
736.4
52.4
– 8.8
– 25.3
754.7

101.2
109.4
136.2
128.3

110.5
122.9
124.5
126.2

7.5
7.9
21.6
20.4

48.4
19.2
19.2
16.9

267.6
259.4
301.5
291.8

Accumulated depreciation and impairments
CHF m
As at January 1, 2018
Depreciation
Disposals
Translation differences
As at December 31, 2018 (before application of IFRS 16)
Effect of application of IFRS 16
January 1, 2019 restated
Depreciation
Disposals
Translation differences
As at December 31, 2019

Vehicles andotherproperty,plant, andequipment

27.4
7.6

– 27.9– 0.4
16.9

1,013.6
0.1
38.2– 13.7– 0.8– 41.6995.8
42.1
1,037.9
50.1
– 9.1
– 0.2
– 32.2
1,046.5

Assetsunderconstruction

Total
property,plant, andequipment– 53.5
– 1.2
19.2
19.2
26.0

0.0

Property, plant, and equipment is recognized at amor­
tized cost. As in the previous year, no impairments oc­
curred in the year under review.

included in the items ‘Cost of goods sold’, ‘Develop­
ment costs’, ‘Marketing and distribution costs’, and­‘Administrative costs’.

Included under property, plant, and equipment areright-of-use assets amounting to CHF 41.8 million (seealso note 21 ‘Leasing’).

As at December 31, 2019, there were no assets forwhich interest on borrowed capital was capitalized
during the preparation phase.

Maintenance and repair costs amounted to CHF 23.7
million (2018: CHF 23.1 million). The depreciation ex­pense of CHF 52.4 million (2018: CHF 35.3 million) is

As at December 31, 2019, the Group had outstanding
purchase orders for capital goods amounting to CHF
8.3 million (2018: CHF 3.1 million).

116 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

15 Intangible assets and goodwill

Cost on acquisition
CHF m
As at January 1, 2018
Changes in scope of consolidation
Additions
Transfers
Translation differences
As at December 31, 2018
Additions
Transfers
Translation differences
As at December 31, 2019

Accumulated amortization and impairments
CHF m
As at January 1, 2018
Amortization
Translation differences
As at December 31, 2018
Amortization
Translation differences
As at December 31, 2019
Net carrying amountAs at January 1, 2018
As at December 31, 2018
As at December 31, 2019

The position ‘Trademarks’ consists mainly of the trade­marks acquired in connection with the acquisition of
Bonar Floors in 2008. ‘Other intangible assets’ consists
primarily of the customer relations and technologies,
as well as software, acquired as part of the acquisitionof Bonar Floors.

Other
intangible assets

Total

0.1
32.8

81.4
1.6
0.5
0.8
– 3.5
80.8
0.2
0.2
0.3
81.5

202.9
1.6
0.5
0.8
– 6.5
199.3
0.2
0.2
– 1.1
198.6

Goodwill

Trademarks

Otherintangible assets

Total

9.3
– 0.3
9.0

26.2
0.2
– 0.1
26.3

– 0.2
8.8

0.0
26.3

45.0
6.0
– 0.1
50.9
5.1
– 0.4
55.6

80.5
6.2
– 0.5
86.2
5.1
– 0.6
90.7

79.1
76.8
75.5

6.9
6.4
6.5

36.4
29.9
25.9

122.4
113.1
107.9

Goodwill

Trademarks

88.4

33.1

– 2.6
85.8

– 0.4
32.7

– 1.5
84.3

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 117

Goodwill is distributed among the following groups ofcash-generating units:31.12.2019
71.5
4.0
75.5

Flooring Systems
Movement Systems

The goodwill in Flooring Systems comprises primarily
the goodwill acquired in connection with the acqui­sition of Bonar Floors. The annual impairment test of
goodwill yielded a value in use that was greater thanthe carrying amount.
Intangible assets with an indefinite useful life (goodwill
and trademarks) are subject to an annual impairment
test at cash-generating unit level. The test is carriedout using a standardized method with discounted
cash flow for calculating the value in use. Cash flow for
the first five years is estimated on the basis of the plan
approved by management (detailed planning period).
Cash flows beyond the detailed planning period are
extrapolated to the terminal value by means of using
sustainable earnings. The growth rate underlying theterminal value equals the expected inflation. During
the detailed planning period, relatively constant EBITDA
margins are assumed, which are around 20% (2018:18%) for Flooring Systems and around 17% (2018: 16%)
for Movement Systems.

31.12.2018
72.6
4.2
76.8

The discount rate corresponds to the total weighted
cost of capital before taxes including an average risk
charge estimated by management, and is 8.7% (previ­
ous year: 9.1%). The intangible assets with an indefinite
useful life were subject to impairment testing also in
the form of sensitivity analyses.
No change in the basic assumptions that can be re­garded as reasonably realistic will result in the carrying
amounts exceeding the recoverable amounts.

118 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

16 Accrued expenses anddeferred income

31.12.2019

31.12.2018

38.5
39.7
78.2

41.5
46.2
87.7

Accrued expenses and deferred income
CHF m
Accrued expenses for compensation and employee benefits
Other accrued expenses
Total accrued expenses and deferred income

Accrued expenses for compensation and employee
benefits mainly comprise overtime accruals and com­missions. Other accrued expenses include accrued vol­ume rebates, commissions, premiums, interest andgoods and services received but not yet invoiced.

17 Provisions

Provisions
CHF m
As at January 1, 2019
Additions
Used during the year
Released during the year
Translation differences
As at December 31, 2019
Of which current provisions
Of which non-current provisions

Warranty provisions are linked to product sales and are
based on past experience. The provisions for legal
claims relate in part to product liability claims in which
the Group is involved in the course of its normal busi­
ness. The personnel provisions include in particular
the bonus programs, provisions for paid leave, and po­
tential labor law issues.

Warranty
provisions

Environmental
provisions

5.2
3.2
– 2.4
– 0.9
– 0.1
5.0

8.2

– 0.1
8.1

3.7
1.3

8.1

Provisions
for legal
claims

Personnel
provisions

Other
provisions

Total

– 2.6

13.1
3.3
– 2.1
– 0.7

36.6

13.6

4.4
0.3
– 0.1
– 0.5
– 0.1
4.0

60.7
16.2
– 4.6
– 4.7
– 0.3
67.3

0.6
36.0

13.2
0.4

2.9
1.1

20.4
46.9

29.8
9.4

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 119

18 Employee benefit obligations
The Group has established several pension plans on
the basis of the specific requirements of the countries
in which it operates. Both defined contribution and­defined benefit plans exist in the Group that insure
employees against the risks of death and invalidity andprovide old-age pensions.
The liabilities and assets under the main defined bene­
fit plans are assessed annually by independent actuar­
ies using the ‘projected unit credit method’.
Pension plans in the United Kingdom
The Group has two defined benefit pension plans in
the United Kingdom. The main one is the Forbo Super­annuation Fund (the FSF), which accounts for about
61% of the Group’s total pension liabilities. The FSF isa pension plan whose benefits are based on the final
salary and which pays out a guaranteed pension forlife to its members. The FSF is closed to new entrants.
The composition of the pension liabilities is as follows:
2% to active employees, 31% to deferred members
and 67% to current beneficiaries. New employees in
the United Kingdom who meet certain criteria are
now offered a defined contribution plan.
The FSF operates under trust law and is managed andadministered by the trustees on behalf of the mem­bers in accordance with the terms of the Trust Deed
and Rules and relevant legislation. The FSF’s assets areheld by the trust. Responsibility for governance of the
FSF – including investment decisions and contribu­
tion schedules – lies jointly with the company and thetrustees. The board of the trustees must be composedof representatives of the company and plan partici­
pants in accordance with the FSF’s regulations andBritish pension law.

The pension plan follows an investment strategy that isgeared to the structure of the pension liabilities (‘liabil­
ity-driven investment’ approach).
The use of any ultimate surplus is not subject to any
restriction under the FSF’s articles of incorporation andbe used freely by the Group. These surpluses are there­
fore recognized in the balance sheet as assets in accor­
dance with IAS 19 revised.
Pension plan in Switzerland
The Group pays contributions to an independent pen­sion fund as part of the occupational pension provision(known in Switzerland as the ‘second pillar’). As a min­imum benefit, this independent pension fund must
provide the beneficiary with an old-age pension at thetime of retirement. This pension is paid out of the retire­
ment savings capital at the start of the pension. The
Group meets these liabilities through agreements withpension funds that cover the pension liabilities in full.
The pension liabilities of the Swiss Group companies
account for about 18% of the Group’s entire pension
liabilities. 96% of the liabilities are to active members
and 4% to retired beneficiaries.
The Swiss pension system includes guarantees that ex­pose the company to the risk that it may have to pro­vide additional financing, for instance, if the pension
fund is unable to meet its obligations or decides to end
the insurance relationship. The pension fund guaran­
tees a minimum return and is responsible for the pay­
ment of a pension for life once the insurance benefits
fall due. As a result of these guarantees, Swiss pension
plans are treated as defined benefit plans under IFRS,
even though they contain essential elements of de­fined contribution plans.

120 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

The company cannot participate in any surplus of
the pension plan. According to Swiss pension law, allsurpluses belong to the pension plan and hence to its
members.
Other pension plans
Other notable defined benefit plans exist in France,
Germany, Japan, Sweden, and the USA.
The latest actuarial valuations of the present valuesof defined benefit liabilities and of service costs were
performed as at December 31, 2019, by independentactuaries using the projected unit credit method. The
fair value of the plan assets was determined as at De­
cember 31, 2019, based on the information available
when the annual financial statements were prepared.
The weighted average duration of the pension plans(‘plan duration’) is 13.5 years for the United Kingdom,19.8 years for Switzerland, and 16.5 years for the othercountries.
The principal assumptions underlying the actuarial cal­culations are summarized as follows.

2019

2018

Actuarial assumptions
Switzer­
land

UK

Other

Weighted

Switzer­
land

UK

Other

Weighted

0.3
1.9
1.3

1.8
3.7
3.0

1.1
2.8
1.9

1.4
2.4
2.6

0.9
1.9
1.3

2.7
3.9
3.2

1.8
2.8
1.9

2.2
2.4
2.8

23
25

21
23

20
24

21
23

23
25

21
23

20
24

21
23

24
26

22
24

22
25

22
24

24
26

23
25

22
25

23
25

Discount rate (in %)Future increases in salaries (in %)Inflation rate (in %)Life expectancy at age of 65 (in years)
Year of birth 1954
Men
Women
Year of birth 1969
Men
Women

The pension costs for defined benefit plans recog­
nized in the consolidated income statement can besummarized as follows:
2019

2018

Pension costs
CHF mService cost
Interest costs
Interest income on plan assets
Total actuarial net periodic
pension costs

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

2.0
0.5
– 0.3
2.2

0.6
5.6
– 5.6
0.6

1.4
1.0
– 0.2
2.2

4.0
7.1
– 6.1
5.0

1.9
0.4
– 0.3
2.0

0.6
5.8
– 5.5
0.9

2.2
1.0
– 0.1
3.1

4.7
7.2
– 5.9
6.0

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 121

Changes in pension liabilities under the defined bene­
fit plans:
2019

2018

Benefit obligations
CHF m
As at January 1
Service cost
Employee contributions
Interest costs
Benefits paid
Actuarial losses/gains (–)
Curtailments and settlements
Translation differences
As at December 31

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

57.1
2.0
0.9
0.5
– 1.6
4.5

211.3
0.6

58.2
1.4
0.0
1.0
– 3.3
6.0
– 0.1
– 1.9
61.3

326.6
4.0
0.9
7.1
– 14.6
29.4
– 0.1
0.3
353.6

59.9
1.9
0.9
0.4
– 4.5
– 1.5

250.5
0.6

59.0
2.2
0.0
1.0
– 2.4
0.2
– 0.1
– 1.7
58.2

369.4
4.7
0.9
7.2
– 17.3– 26.0– 0.1– 12.2
326.6

63.4

5.6
– 9.7
18.9
2.2
228.9

57.1

5.8
– 10.4– 24.7– 10.5
211.3

Changes in plan assets of the defined benefit plans atfair value:
2019

2018

Plan assets
CHF m
As at January 1
Interest income on plan assets
Employer contributions
Employee contributions
Return on pension assets (exclud­ing amounts in interest income)
Benefits paid
Curtailments and settlements
Translation differences
As at December 31

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

37.8
0.3
1.6
0.9
5.7

209.5
5.6
0.3

5.6
0.2
3.0
0.0
0.0

252.9
6.1
4.9
0.9
22.8

39.5
0.3
1.6
0.9
0.0

236.3
5.5
0.3

5.9
0.1
2.3
0.0
– 0.1

281.7
5.9
4.2
0.9
– 12.0

– 1.6

– 9.7

– 10.42.1
224.9– 14.6
– 0.1
2.1
275.0

– 4.5

44.7

– 3.3
– 0.1
0.0
5.4

37.8

– 10.3
209.5

– 2.4
– 0.1
– 0.1
5.6

– 17.3– 0.1– 10.4
252.9

17.1

Actuarial gains and losses are recognized in the bal­ance sheet under ‘Pension liabilities’ and accounted for
directly in the other comprehensive income.

– 11.9

Most of the pension plans are financed in full or in partvia outsourced funds. Pension liabilities amounting to
CHF 39.9 million (2018: CHF 40.2 million) out of a totalof CHF 353.6 million (2018: CHF 326.6 million) are un­funded.

122 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Changes in the net liabilities of defined benefit plans
recognized in the balance sheet:
2019

2018

Net liabilities
CHF m
As at January 1
Net pension cost
Employer contributions
Actuarial losses/gains (–)
Translation differences
Net liabilities as at December 31

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

19.3
2.2
– 1.6
– 1.2

1.8
0.6
– 0.3
1.8
0.1
4.0

52.6
2.2
– 3.0
6.0
– 1.9
55.9

73.7
5.0
– 4.9
6.6
– 1.8
78.6

20.4
2.0
– 1.6
– 1.5

14.2
0.9
– 0.3
– 12.8
– 0.2
1.8

53.1
3.1
– 2.3
0.3
– 1.6
52.6

87.7
6.0
– 4.2
– 14.0
– 1.8
73.7

18.7

19.3

Gains and losses of defined benefit pension plans off­
set in the comprehensive income statement for all seg­ments:
2019

2018

Recognized gains and losses in
the comprehensive income
statement
CHF mActuarial losses (–)/gains
in the current period:

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

– 4.5

– 18.9– 6.0– 29.4

1.5

24.7

– 0.2

26.0

Based on adjustment ofdemographic assumptions

2.1

4.1

0.0

6.2

10.2

– 0.3

9.9

Based on adjustment offinancial assumptions– 7.3– 23.3– 6.4– 37.0

1.4

12.2

– 1.2

12.4

Experience adjustment
Return on pension assets (exclud­ing amounts in interest income)

0.7
5.7

0.3
17.1

0.4
0.0

1.4
22.8

0.1
0.0

2.3
– 11.9

1.3
– 0.1

3.7
– 12.0Total losses (–)/gains recognizedin the comprehensive income
statement before taxes

1.2

– 1.8

– 6.0

– 6.6

1.5

12.8

– 0.3

14.0

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 123

Change in the present value of defined benefit liabili­
ties:

Sensitivities + 50bp
CHF m
Discount rate
Increases in salaries
Inflation rate
Interest credits on retirement assets

2019

2018

+ 50bp+ 50bp

Switzerland

UK

Other

Switzerland

UK

Other

– 6.0
1.7
1.3
1.5

– 14.6
0.1
8.6

– 4.7
2.8
4.4

– 5.2
1.6
1.2
1.3

– 13.2
0.1
7.8

– 4.2
2.6
3.7

Sensitivities – 50bp

– 50bp

CHF m
Discount rate
Increases in salaries
Inflation rate
Interest credits on retirement assets– 50bp

Switzerland

UK

Other

Switzerland

UK

Other

6.7
– 1.7
– 1.3
– 1.5

16.2
– 0.1
– 7.9

5.3
– 2.5
– 3.9

5.9
– 1.6
– 1.2
– 1.3

14.7
– 0.1
– 7.2

4.7
– 2.4
– 3.3

The above table describes the effect of the principal
actuarial assumptions on pension liabilities. The tableshows the effect of an isolated change of a single pa­
rameter, assuming that all other parameters remainunchanged. The table illustrates the overall effect foreach region. However, sensitivities may differ for indi­vidual plans within the regions. The sensitivity analysis
aims to visualize the uncertainty in valuating pension
liabilities under market conditions at the date of valu­

ation. The results cannot be extrapolated owing topossible non-linear effects in the event of changes tothe actuarial assumptions. Moreover, the analysis can­not say anything about the likelihood of these changes
occurring, nor can it present the view of the Group re­garding anticipated future changes in pension liabili­ties. Any measures taken by management to reduce
the risks are also not taken into account in the analysis.

124 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Weighted average asset allocation of the defined ben­efit plan assets as at December 31:%
Shares
Bonds
Insurance contracts
Real Estate
Other securities
Cash and cash equivalents
Total plan assets as at December 31‘Shares’, ‘Bonds’, ‘Real Estate’ and ‘Other securities’ were
all quoted investments. ‘Insurance contracts’ reflected
the plan assets of the fully insured companies in Swit­zerland. As of January 1, 2019, all Swiss companies have
moved to a semi-autonomous insurance scheme. The
plan assets did not include any direct shares or othersecurities of the Forbo Group.
Future contributions to defined benefit plans in thefollowing year are estimated on the basis of the period
under review.
Other non-current benefits
The Group does not finance any other non-current
benefits. The plans for long-service bonuses and otherbenefits related to years of service are negligible or do
not qualify as plans for other non-current benefits.

2019

2018

5.3
44.5

1.9
43.8
15.0

3.8
39.1
7.3
100.0

19 Employee participation plan
As of December 31, 2019, there existed the following
share-based remuneration elements:
Remuneration of the Executive Board
Long-term incentive plan
The long-term Incentive consists of a performance
share unit plan. At the start of the performance period,
each member of the Executive Board is granted a given
number of future subscription rights in the form of­performance share units (PSUs). One PSU corresponds
to a future subscription right to one share. The PSUs are
subject to a three-year vesting period, after which they
are converted into vested shares. At the end of the per­formance period, the company will determine whether
the objectives set by the Board of Directors at the startof the performance period for the performance indica­
tors have been reached. Depending on the degree towhich the objectives are reached, a given percentageof the PSUs will be converted into shares after thethree-year vesting period. Converted shares are locked
up for a period of three years. The relevant share pricefor the allocation of PSUs at the start of the perfor­
mance period is calculated from the unweighted aver­age of the closing prices of the Forbo share in the first
14 trading days in January of the year in which the PSUs
were allocated.

37.2
2.1
100.0

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 125

Management investment plan
Short-term variable compensation for the Executive
Board is linked to the Management Investment Plan
(MIP). According to this plan, at least 50% of the annual
short-term variable remuneration of Executive Board
members is paid into the MIP. As for the remaining 50%of the annual short-term variable remuneration, the Ex­
ecutive Board members may either draw all or part of
it in cash or pay it into the MIP. They may redefine theallocation of this remaining 50% every year. The sharesare locked up for a period of three years.
The portion of variable remuneration that is settled in
the form of equity instruments is recognized at fair val­ue and reported as a corresponding increase in equity.
The shares distributed under the MIP are issued at theunweighted average closing price of the Forbo sharefor the first 14 trading days in January of the year inwhich they were issued.
The number of shares of Forbo Holding Ltd issued in
the year under review under the MIP was 472 (2018:437). A further 230 shares (2018: 228) were allocated to
Executive Board members in the reporting year as partof the fix base salary. The share price at measurement
date was CHF 1,414.57 (2018: CHF 1,568.00).

Remuneration of the Board of Directors
The remuneration of the Executive Chairman of theBoard of Directors is mainly in locked-up shares. The
details and figures for this remuneration model are
to be found on page 133 of this Financial Report andon pages 78 and 85 of the Remuneration Report. The
number of shares with a three-year vesting period allo­cated to the non-executive members of the Board of
Directors came to 207 in the reporting year (2018: 241).
The amount charged to the income statement in ap­
plication of IFRS 2 for shares issued came to CHF 3.2
million in the year under review (2018: CHF 4.6 million).

20 Share capital andcapital management
Share capital
As at December 31, 2019, the share capital of Forbo
Holding Ltd stood at CHF 165,000 (2018: CHF 180,000),
divided into 1,650,000 registered shares with a par valueof CHF 0.10 each. Of this amount 21,419 registeredshares without voting or dividend rights are unchanged
at the disposal of the Board of Directors. Consequently,
1,628,581 (2018: 1,778,581) registered shares were eligi­
ble for dividends as at December 31, 2019.
Change of shares issued and outstanding:

Total shares outstanding
Treasury shares
Shares with dividend rights:
Treasury shares
Share buyback programs
Own shares with no dividend rights
Total treasury shares
Total shares issued and outstanding

Capital management
By capital management, the Group means manage­
ment of consolidated shareholders’ equity as well as
optimization of the capital employed. The former in­cludes the fully paid up share capital, the positions‘Treasury shares’, ‘Reserves’, and ‘Translation differences’
and, as per December 31, 2019, it amounted to CHF
676.6 million (2018: CHF 591.6 million).

31.12.2019
Number
1,650,000

ChangeNumber– 150,000

31.12.2018
Number1,800,000

27,266403– 150,000

26,863150,000
21,419198,282
1,601,718

21,41948,685
1,601,315– 149,597– 403

126 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

21 Leasing
The Group is the lessee for various fixed assets, in par­ticular vehicles and buildings. The previous year allleases were classified as operating leases. The intro­
duction of IFRS 16 meant that all leases, except for
those with short terms of less than 12 months andthose for low-value assets, were carried in the balance
sheet.

Information on the effects of the initial applicationof IFRS 16 on January 1, 2019, are contained in note 4­‘Application of new or revised accounting standards’.
The table below shows the right-of-use assets recog­
nized under property, plant, and equipment.

Right-of-use assets
CHF m
As at January 1, 2019
Additions
Derecognition
Depreciation
Translation differences
As at December 31, 2019Land and buildings

Machinery and equip­
ment

Vehicles and otherproperty, plant, andequipment

Total property, plant, andequipment

30.2
6.8
0.0
– 9.4
– 0.6
27.0

1.6
1.0
0.0
– 0.9
0.0
1.7

13.7
6.5
0.0
– 6.8
– 0.3
13.1

45.5
14.3
0.0
– 17.1– 0.9
41.8

The opening balance of the right-of-use assets recog­
nized under ‘Property, plant, and equipment’ includes
capitalized building rights in China amounting to CHF
3.4 million already recognized in the previous year.

The recognized lease liabilities came to CHF 40.0 mil­lion at year-end, stated in the current and non-current
financial liabilities (see note 22 ‘Financial instruments’.
The lease payments for recognized lease liabilities, in­cluding interest, came to CHF 19.4 million in the report­
ing year.

Interest from lease liabilities amounted to CHF 1.0 mil­lion in the year under review. Expenditure for shortterm leases came to CHF 3.6 million and for leases of
low-value assets to CHF 0.9 million. Expenses for oper­
ating leases and rentals charged to the previous year’s
income statement totaled CHF 20.8 million.

The following table shows the minimum lease pay­ments for non-terminable leasing contracts as at De­
cember 31, 2018. The maturity analysis of the leasing
liabilities as at December 31, 2019, is reported in note23 ‘Risk assessment and financial risk management’.
31.12.2018

Leasing
CHF mOperating leasing liabilities:
Up to 1 year
1 – 5 years
More than 5 years
Total liabilities from operating leases

8.0
19.2
1.1
28.3

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 127

22 Financial instruments
Classification and fair values
The table below shows the carrying amounts and fairvalues of financial assets and financial liabilities. It does

not contain any information on the fair value of finan­cial assets and financial liabilities if the book value con­stitutes an appropriate approximate value for their cur­rent fair value.

Classification of financial instruments

CHF m
31.12.2019
Financial assets valued at fair value:
Derivative financial instruments

Carrying amount

Fair value throughprofit or loss

Financial assets valued at amortized costs:
Non-current financial assets
Trade receivables
Other receivables
Cash and cash equivalents
Financial liabilities valued at fair value:
Derivative financial instruments

Fair value through
OCI

Amortized cost

Total

0.2
160.4
4.7
217.7

0.2
160.4
4.7
217.7

0.2

Financial liabilities valued at amortized costs:
Non-current financial liabilities
Trade payables
Current financial liabilities
Other current liabilities

The item ‘Derivative financial instruments’ contains
open foreign exchange hedging and swap transactions
with a contract value at December 31, 2019, totaling
CHF 41.5 million (previous year: CHF 56.9 million). The
foreign exchange rates can be directly observed or

0.2

26.8
98.1
13.2
14.4

26.8
98.1
13.2
14.4

­ etermined. The derivatives are therefore assigneddto hierarchy level 2. ‘Current financial liabilities’ and‘Non-current financial liabilities’ reflect the li­abilities
from leasing.

128 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Classification of financial instruments

CHF m
31.12.2018
Financial assets valued at fair value:
Derivative financial instruments
Financial assets valued at amortized costs:
Non-current financial assets
Trade receivables
Other receivables
Cash and cash equivalents

Carrying amount

Fair value throughprofit or loss

Fair value through
OCI

Amortized cost

0.1

Total

0.1

0.3
168.9
5.2
127.4

0.3
168.9
5.2
127.4

109.2
0.1
15.0

109.2
0.1
15.0

Financial liabilities valued at fair value:
Derivative financial instruments
Financial liabilities valued at amortized costs:
Non-current financial liabilities
Trade payables
Current financial liabilities
Other current liabilities

The carrying amount of the financial assets and finan­cial liabilities valued at amortized cost is a reasonableapproximation for the fair value. The Group did not
hold any significant financial instruments measured atrecurring fair value nor was there any regrouping be­
tween the levels of the fair value hierarchy.

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 129

23 Risk assessment and financial
risk management
The tasks of the Board of Directors include identifying
risks, determining suitable measures, and implement­
ing those measures or having them implemented. The
Board of Directors of Forbo Holding Ltd conducted aGroup-wide risk assessment in the reporting year andalso determined the risks to be managed by particularmanagement levels. The Board of Directors is closely
involved in the assessment of strategic risks and, in
consultation with the Executive Board, ensures that
operational risks are dealt with appropriately and thatthey are duly reported. This approach gives the Board
a complete overview of the key risks and measures.
This broad overview enables the Group to set priorities
and allocate the necessary resources.
The Group is exposed to the following risks arising fromthe use of financial instruments:–– Market risk–– Liquidity risk–– Default risk
Market risk
In its day-to-day operations, the Group uses derivativeand non-derivative financial instruments to manage
the risks and opportunities arising from fluctuations
in exchange rates and interest rates. The various risks
associated with existing assets and liabilities as well asplanned and anticipated transactions are monitored
and managed centrally – with due regard to theGroup’s overall risk exposure. In line with the Group’s
hedging policy, Corporate Treasury constantly moni­
tors both the risk exposure and the effectiveness of thehedging instruments and issues recommendations
with regard to partial or complete hedging of existingrisks.
The Group uses derivative financial instruments solely
to manage financial risks and not for the purpose of
speculation. To hedge its currency risks, the Group uses
mainly currency cash transactions, forward currency
contracts, and currency swap transactions. In order tomanage counterparty risk, derivative financial transac­
tions are concluded only with first-class banks. The
creditworthiness of these institutions is assessed on thebasis of evaluations by leading rating agencies.

No hedge accounting was used in this context in 2019or 2018.
Foreign exchange risk management
Risks arising from short-term currency exposure creat­ed by purchases and sales of goods and services(transaction risks) are identified, and selective hedging
strategies are implemented in line with an ongoing as­
sessment of exchange rate movements. The Group
uses foreign exchange forward and option contracts
with maturities of up to 15 months to hedge against
transaction risk.
Furthermore, risks associated with the translation of­assets and liabilities denominated in foreign currencies(translation risks) are managed by establishing an ap­
propriate financing policy.
A realistic assessment of changes in interest rates for
the US dollar, the euro, the pound sterling and the
Swiss franc has no significant impact on the result andthe equity of the Group from the valuation of transac­
tions with financial instruments.
Interest rate risks
Interest rate risks arise from changes in the fair valueof interest-bearing assets and liabilities caused by fluc­tuations in interest rates. Since these risks may have anegative effect on net financial profit and shareholders’equity, the Group uses derivatives to manage them ona case-by-case basis. A realistic assessment of changes
in interest rates for the US dollar, the euro, the poundsterling and the Swiss franc has no significant impact
on the result and the equity of the Group from the valu­
ation of transactions with financial instruments.
Liquidity risk
Liquidity risk is the risk that the Group may possibly beunable to meet contractually agreed financial obliga­
tions that are settled by delivering cash or other finan­cial assets. Group companies need sufficient cash in or­
der to meet their commitments. Corporate Treasury is
responsible for managing liquidity. The share of the ag­
gregate cash and cash equivalents managed by Corpo­
rate Treasury was around 70% on December 31, 2019.
At present, the Group regards a cash level of roughly
CHF 60 million as sufficient to meet its payment obliga­
tions at all times.

130 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

The maturity structure of the existing financial liabilities
is shown in the following table. These liabilities corre­
spond to contractually agreed maturities and represent

nominal payment outflows. Inflows and outflows offunds from derivative financial instruments are shown
separately.

As at December 31, 2019

CHF m
Interest-free liabilities
Liabilities from leasing
Cash outflow from financial derivatives

Remaining term
to maturity up to
1 year
112.5
15.6
0.2

Remaining term
to maturity
1 – 2 years

Remaining term
to maturity
2 – 5 years

Remaining term
to maturity
over 5 years

13.1

12.2

1.2

Remaining term
to maturity up to
1 year124.3
0.0

Remaining term
to maturity
1 – 2 years

Remaining term
to maturity
2 – 5 years

Remaining term
to maturity
over 5 years

As at December 31, 2018

CHF m
Interest-free liabilities
Liabilities from finance leasing

Default risk
Default risk is the risk of financial losses in the event thata customer or the counterparty in a financial instru­
ment fails to meet his or its obligations. The risk consists
mainly of trade receivables and bank accounts or shortterm deposits with banks. The maximum amount of thedefault risk is the book value of the financial assets.

Cash and cash equivalents
With regard to counterparty risk exposure to banks,Group-wide directives stipulate that financial invest­
ments and other financial transactions are to be madeonly with first-class banks. Given the credit ratings ofthese counterparties, the Group does not anticipate
any defaults.

The Group recognizes allowances for expected credit
losses on financial instruments that are reported atamortized costs. It assesses at the end of each report­
ing period whether there is an objective basis for fur­ther impairment of a financial asset and whether theallowances made are still appropriate.

Trade receivables
The Group’s default risk is affected mainly by the indi­vidual characteristics of its customers. Management,
however, also takes into account the characteristics ofthe customer base as a whole, including the default
risk of the sector and of the countries in which the cus­
tomers operate, since these factors may also affect thedefault risk.

The Group considers a financial asset to be in default if
it is unlikely that the borrower can pay his obligation to
the Group in full without the Group having to take re­course to measures such as the realization of collateral.

To manage this risk adequately, the financial creditwor­
thiness of various customers is constantly monitored.
Credit risks are diversified by the company’s broad cus­
tomer base in various business segments and geo­
graphic regions.

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 131

Carrying amounts of trade receivables by currency:

CHF m
CHF
EUR
USD
JPY
GBP
CNY
SEK
Other
Total trade receivables, before loss allowance

The Group employs a permissible, simplified model ofvaluation allowances (‘provision matrix’) for trade re­ceivables. In this valuation allowance table, expected
losses on receivables are determined on the balance

31.12.2019

31.12.2018

1.2
77.6
24.2
14.7
9.7
5.7
4.0
29.3
166.4

1.3
82.2
26.4
14.2
9.8
8.5
4.4
28.6
175.4

sheet date on the basis of past experience of default
probability and of future-oriented expectations basedon experience with the customers and market condi­
tions.

As at December 31, 2019
CHF m
Not due
Overdue ≤ 30 days
Overdue 31 – 90 days
Overdue 91 – 180 days
Overdue > 180 days
Total

Gross carrying
amount
142.2
12.8
6.3
2.5
2.6
166.4

Loss allowance
2.8
0.1
0.2
0.4
1.8
5.3

Weighted averageloss rate
2.0%
0.8%
3.2%
16.0%
69.2%
3.2%

Credit impaired
0.2
0.1
0.1
0.1
0.2
0.7

Gross carrying
amount
147.8
14.7
6.5
3.6
2.8
175.4

Loss allowance
2.0
0.5
0.3
0.9
1.5
5.2

Weighted averageloss rate
1.4%
3.4%
4.6%
25.0%
53.6%
3.0%

Credit impaired
0.2
0.1
0.1
0.3
0.6
1.3

As at December 31, 2018
CHF m
Not due
Overdue ≤ 30 days
Overdue 31 – 90 days
Overdue 91 – 180 days
Overdue > 180 days
Total

132 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Changes in valuation allowances for doubtful trade re­ceivables during the reporting year:

CHF m
As at January 1 (before application of IFRS 9)
Effect of application of IFRS 9January 1
Additions
ReleaseUse
Translation differences
As at December 31

The creation and release of allowances for doubtful
trade receivables are included in ‘Other operating ex­penses and income’ in the income statement.

2019

2018

– 6.5
– 1.2
1.2
0.4
0.1
– 6.0

– 6.9
– 0.5
– 7.4
– 0.4
0.4
0.8
0.1
– 6.5

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 133

24 Related party transactions
Compensation paid to members of the Board of Direc­
tors and Executive Board:
Executive Board
CHF mRemuneration
Employer contributions to the pension scheme
Share-based payments
Total payments

2019
1.38
0.21
0.47
2.06

2018
1.47
0.22
0.96
2.65

The compensation paid to the Executive Board con­sists of a fixed gross base salary, short-term variable
remuneration in cash, private use of the company car,and social security payments made by the company.
Employer contributions to the pension fund are re­ported separately. The share-based remuneration paid
to the Executive Board consists of the following ele­ments: a fixed base salary portion, which is paid inshares of Forbo Holding Ltd; short-term variable re­muneration under the Management Investment Plan
(MIP) for the reporting year; and the future subscrip­tion rights, awarded in the form of performance share
units for the long-term incentive plans 2017 – 2019,2018 – 2020 and 2019 – 2021 (see note 19 ‘Employee
participation plan’).

25 Events after the balance sheet date
Between the balance sheet date and the date of pub­lication of this annual report no event occurred that
could have a significant effect on the 2019 annual fi­
nancial statements.

Board of Directors
2019
1.03
0.18
2.60
3.81

2018
1.03
0.18
2.60
3.81

Total
2019
2.41
0.39
3.07
5.87

2018
2.50
0.40
3.56
6.46

The remuneration paid to the Board of Directors in­cludes a gross base remuneration in cash, employer
contributions to the usual social insurances, lump sum
and on-site expenses, and private use of the company
car (only for the Executive Chairman).
The share-based remuneration paid to the Board of
Directors includes a gross base remuneration in shares,
consisting on the one hand of a 40% portion of the
remuneration in shares for the non-executive Board
members and, on the other hand, of the share-based
portion of the remuneration for the Executive Chair­man.
As at December 31, 2019 and 2018, the Group had no
significant receivables due from or liabilities to relatedparties.

134 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Group companies(as at December 31, 2019)

Currency

Share capital

Wetherill Park, NSW
Wetherill Park, NSW

AUD
AUD

1,400,000
7,100,000

100%
100%

S

Austria
Forbo Flooring Austria GmbH
Forbo Siegling Austria Ges.m.b.H.

ViennaViennaEUR
EUR

73,000330,000

100%
100%

S

Belgium
Forbo Flooring N.V.

Groot-Bijgaarden

EUR

250,000

100%

S

BrazilForbo Pisos Ltda.
Forbo Siegling Brasil Ltda.

São PauloSão Paulo

BRL
BRL

16,564,200
7,008,746

100%
50%

S

CanadaForbo Flooring Canada Corp.
Forbo Siegling Canada Corp.

Halifax
Halifax

CAD
CAD

500,200
501,000

100%
100%

S

Chile
Forbo Siegling Chile S.A.

Santiago

CLP

313,090,945

50%

S

Colombia
Forbo Siegling Colombia S.A.S.

Bogotá, D.C.

COP

1,000,000,000

100%

S

Czech Republic
Forbo Siegling Česká republika s.r.o.
Forbo s.r.o.

Liberec
PragueCZK
CZK100,000
500,000

100%
100%

Denmark
Forbo Flooring A/SForbo Siegling Danmark A/S

Glostrup
Brøndby

DKK
DKK

500,000
32,300,000

100%
100%

S

Finland
Forbo Flooring Finland Oy

HelsinkiEUR

33,638100%

SFranceForbo Château-Renault S.A.S.
Forbo Participations S.A.S.
Forbo Reims SNC
Forbo Sarlino S.A.S.
Forbo Siegling France S.A.S.

Château-Renault
Reims
Reims
Reims
Lomme

EUR
EUR
EUR
EUR
EUR

1,000,000
5,000,000
3,879,810
6,400,000
819,000

100%
100%
100%
100%
100%

MS

Group company

Registered office

Australia
Forbo Floorcoverings Pty. Ltd.
Forbo Siegling Pty. Ltd.

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2019
D Direct participation of Forbo Holding Ltd

N

N

D

Flooring
Systems

Move­
ment
Systems

Equityinterest

Holding/Services

S

S

MS

S

S
S

MS

H
MS
S
S

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 135

Currency

Share capital

EUR
EUR
EUR
EUR
EUR

15,400,000
2,050,000
500,000
10,230,000
100,000

100%
100%
100%
100%
100%

Derbyshire
Kirkcaldy
Derbyshire
Dukinfield
Derbyshire
Derbyshire

GBP
GBP
GBP
GBP
GBP
GBP

22,000,000
48,000,000
50,77449,500,000
400,000

100%
100%
100%
100%
100%
100%

Hong Kong

HKD

1

100%

Delhi
Pune

INR
INR

15,000,000
26,000,000

100%
100%

Indonesia
PT Forbo Siegling Indonesia

Kabupaten Bandung

IDR

6,344,580,000

100%

Ireland
Forbo Ireland Ltd.

DublinEUR125,000

100%

S

Segrate (Milan)
Paderno Dugnano(Milan)EUR
EUR

60,000120,000

100%
100%

S

Tema S.r.l.

Parma

EUR

50,000

100%

S

Japan
Forbo Siegling Japan Ltd.

Tokyo

JPY

330,000,000

100%

MS

Malaysia
Forbo Siegling SDN. BHD.

Johor Bahru

MYR

2,500,002

100%

S

MexicoForbo Siegling, S.A. de C.V.

Tlalnepantla

MXN

24,676,404

100%

MS

Group company

Registered office

Germany
Forbo Beteiligungen GmbH
Forbo Eurocol Deutschland GmbH
Forbo Flooring GmbH
Forbo Siegling GmbH
Realbelt GmbH

LörrachErfurtPaderborn
Hanover
LörrachGreat Britain
Forbo Flooring UK Ltd.
Forbo Floors UK Ltd.
Forbo-Nairn Ltd.
Forbo Siegling (UK) Ltd.
Forbo UK Ltd.
Westbond Ltd.
Hong Kong
Forbo International Hong Kong Ltd.
India
Forbo Flooring India Pvt. Ltd.
Forbo Siegling Movement Systems
India Pvt. Ltd.

Italy
Forbo Resilienti S.r.l.
Forbo Siegling Italia S.p.A.

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2019
D Direct participation of Forbo Holding Ltd

D

D

Flooring
Systems

Move­
ment
Systems

Equityinterest

Holding/Services

H
MS
S
MS
S

MS
H
H
S
H
H

H

S
S

S

S

136 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Currency

Share capital

Equityinterest

Zaanstad
Krommenie
Krommenie
Krommenie
Coevorden
Spankeren

EUR
EUR
EUR
EUR
EUR
EUR

454,000
11,350,000
1,944,500
13,500,000
3,624,000
113,445

100%
100%
100%
100%
100%
100%

New Zealand
Forbo Siegling Ltd.

Auckland

NZD

650,000

100%

NorwayForbo Flooring AS
Transmeca AS

Asker
Oslo

NOK
NOK

1,000,000
100,000

100%
100%

People’s Republic of China
Forbo Movement Systems (China) Co., Ltd.
Forbo Shanghai Co., Ltd.
Forbo Siegling (China) Co., Ltd.

PinghuShanghai
Shenyang

USD
CHF
USD

25,000,000
4,000,000
16,221,000

100%
100%
100%

PolandForbo Siegling Poland sp. z o.o.

Łódź

PLN

100,000

100%

Portugal
Forbo-Revestimentos, S.A.

Maia (Porto)

EUR

74,850100%

Romania
Forbo Siegling Romania S.R.L.

Bucharest

RON

38,000100%

RussiaOOO ‘Forbo Flooring‘
OOO ‘Forbo Kaluga‘
OOO ‘Forbo Siegling CIS‘OOO ‘Forbo Eurocol RUS‘

Moscow
MoscowSaint Petersburg
Stary Oskol

RUB
RUB
RUB
RUB

500,000
158,313,780
400,000
187,181,000

100%
100%
100%
100%

Slovakia
Forbo Siegling s.r.o.

Malacky

EUR

1,000,000

100%

South Korea
Forbo Korea Ltd.

Seoul

KRW

900,000,000

100%Group company

Registered office

Netherlands
Forbo Eurocol Nederland B.V.
Forbo Flooring B.V.
Forbo Flooring Coral N.V.
Forbo NL Holding B.V.
Forbo-Novilon B.V.
Forbo Siegling Nederland B.V.

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2019
D Direct participation of Forbo Holding Ltd

Flooring
Systems

MS
MS
MS

Move­
ment
Systems

Holding/Services

H
MS
S

S

S
S

MS
S
MS

S

S

S

S
MS
S
MS

MS

S

S

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 137

Currency

Share capital

Equityinterest

Barcelona
Montcada i Reixac(Barcelona)

EUR
EUR

60,101
1,532,550

100%
100%

S

SwedenForbo Flooring AB
Forbo Siegling Svenska AB

GothenburgKållered (Gothenburg)

SEK
SEK

8,000,000
1,000,000

100%
100%

S

Switzerland
Forbo Financial Services AG
Forbo Finanz AG
Forbo-Giubiasco SA
Forbo International SA

Baar
Baar
Bellinzona
Baar

D

CHF
CHF
CHF
CHF

100,000
10,000,000
100,000
100,000

100%
100%
100%
100%

Thailand
Forbo Siegling (Thailand) Co. Ltd.

Samut Prakan

D

THB

13,005,000100%

Istanbul

TRY

5,500,000

100%

S

United Arab Emirates
Forbo Flooring Middle East DMCC

Dubai

AED

499,000

100%

S

USA
Forbo America Inc.
Forbo America Services Inc.
Forbo Flooring, Inc.
Forbo Siegling, LLC

Wilmington, DE
Wilmington, DE
Wilmington, DE
Wilmington, DE

USD
USD
USD
USD

19,957,259
50,0003,517,000
15,455,000

100%
100%
100%
100%

Group company

Registered office

Spain
Forbo Pavimentos, S.A.
Forbo Siegling Iberica, S.A.U.

TurkeyForbo Hareket ve Zemin Sistemleri Ticaret
Limited irketi

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2019
D Direct participation of Forbo Holding Ltd

D
D

D

Flooring
Systems

Move­
ment
Systems

Holding/Services

S

S

H
H
MS
MS

H

S

S

H
H
S
MS

138 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Report of the statutory auditor

Statutory Auditor’s Report
To the General Meeting of Forbo Holding Ltd, Baar

Report on the Audit of the Consolidated Financial Statements
OpinionWe have audited the consolidated financial statements of Forbo Holding Ltd and its subsidiaries (the Group),
which comprise the consolidated balance sheet as at 31 December 2019 and the consolidated income statement,
consolidated comprehensive income statement, consolidated statement of changes in equity and consolidated
cash flow statement for the year then ended, and notes to the consolidated financial statements, including asummary of significant accounting policies.
In our opinion the consolidated financial statements (pages 92 to 137) give a true and fair view of the consolidated
financial position of the Group as at 31 December 2019, and its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards(IFRS) and comply with Swiss law.
Basis for Opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss
Auditing Standards. Our responsibilities under those provisions and standards are further described in the
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are
independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit
profession, as well as the IESBA Code of Ethics for Professional Accountants, and we have fulfilled our otherethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.

Key Audit Matters
Revenue recognition

Valuation of inventories

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the consolidated financial statements of the current period. These matters were addressed in the context of ouraudit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do notprovide a separate opinion on these matters.

1

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 139

Revenue recognition

Key Audit Matter

Our response

Total consolidated net sales of the financial year 2019 We mainly performed the following audit procedures:amounted to CHF 1,282.2 million (2018: CHF 1,327.0
million). The segment Flooring Systems contributed— We analyzed the process from the purchase order
CHF 870.5 million (2018: CHF 913.2 million) or 67.9%
to the receipt of payment and assessed whether(2018: 68.8%) to total net sales, while the segment
transactions are completely and accurately
recorded in the accounts.
Movement Systems realized CHF 411.7 million (2018:
CHF 413.8 million), representing 32.1% of total net
sales (2018: 31.2%).
— Considering the diverse design of internal control
and IT systems of individual subsidiaries, weNet sales are a key performance indicator for Forbotested the operating effectiveness of identified key
and therefore in the focus of internal and external
controls relating to the proper recognition ofrevenue.
stakeholders. Consequently, when performing theaudit we had a focus on existence of revenue— Based on a statistical sample of delivery notes
transactions and their recognition in the appropriate
and payments received, we assessed theperiod.
existence of revenues and their recognition in thecorrect period.
Revenue from contracts with customers is recognizedwhen the control of the goods or services istransferred to the customer. This point in timedepends on specific terms of contracts and may vary
between regions and the industry of the buyer. Owing
to the types of products sold by either segment of theGroup, the contractual sales arrangements are notcomplex. Due to the large number of transactions, theproper recognition of revenue nevertheless depends
on a functioning internal control system, adapted to
local circumstances. Furthermore, accurate data on
volumes and prices are central to revenue recognition.

—

We furthermore performed analytical procedures
on a segment level as well as on the level of
specific individual entities. These included
analyses of price and volume deviations, margindevelopment, the largest clients and the mostsold products as well as analyses of the
distribution of sales throughout the year andspecific months.

For further information on revenue recognition refer to the following:— Note 2 – Summary of significant accounting policies: net sales and revenue recognition, page 99— Note 5 – Segment reporting, pages 107 – 1092140 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Report of the statutory auditor

Valuation of inventories

Key Audit Matter

Our response

Inventory as at 31 December 2019 amounted to CHF
235.5 million (31 December 2018: CHF 230.1 million)
and represents one of the most material asset
positions. Valuation of inventories is consequently ofsignificance to an understanding of the financial
statements.

We mainly performed the following audit procedures:

Inventory is recognized at acquisition or manufacturingcosts and periodically assessed in terms ofrecoverability. There is a risk that for work in progress
and finished goods the manufacturing costs exceed
the actual sales price less selling, distribution andadministrative costs (net realizable value).
Furthermore, determining valuation allowances
therefore involves a degree of judgment.

—

We obtained an understanding of the process
related to controls on incoming and outgoinggoods and related to the identification of obsolete
inventories. Based on this we critically assessed
whether transactions are completely andaccurately recorded in the accounts.

—

Considering the diverse design of internal control
and IT systems of individual subsidiaries, wetested the operating effectiveness of identified key
controls relating to existence and valuation of
inventories.

—

We critically assessed the adequacy of theprocesses to identify, as well as the basis and themethod to value, obsolete inventories. We
recalculated the valuation allowance for obsolete
inventories and, based on a sample, reconciled it
to the underlying documentation.

—

Furthermore, in testing the valuation of
inventories at lower of cost or net realizable value,
we compared costs and sales prices. This wasdone on a case-by-case basis based on a sample
or mass data analysis.

For further information on inventories refer to the following:— Note 2 – Summary of significant accounting policies: inventories, page 102— Note 13 – Inventories, page 114

3

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 141

Other Information in the Annual Report
The Board of Directors is responsible for the other information in the annual report. The other information
comprises all information included in the annual report, but does not include the consolidated financial
statements, the stand-alone financial statements of the Company, the remuneration report and our auditor’sreports thereon.
Our opinion on the consolidated financial statements does not cover the other information in the annual report and
we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the otherinformation in the annual report and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to bematerially misstated. If, based on the work we have performed, we conclude that there is a material misstatementof this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibility of the Board of Directors for the Consolidated Financial Statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a trueand fair view in accordance with IFRS and the provisions of Swiss law, and for such internal control as the Boardof Directors determines is necessary to enable the preparation of consolidated financial statements that are freefrom material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using thegoing concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Swiss law, ISAs and Swiss Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Swiss law, ISAs and Swiss Auditing Standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:— Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,forgery, intentional omissions, misrepresentations, or the override of internal control.
— Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theGroup’s internal control.
— Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made.
— Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that amaterial uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosuresin the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.

4142 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Report of the statutory auditor—

Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions andevents in a manner that achieves fair presentation.

—

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We areresponsible for the direction, supervision and performance of the Group audit. We remain solely responsible
for our audit opinion.

We communicate with the Board of Directors or its relevant committee regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors or its relevant committee, we determine thosematters that were of most significance in the audit of the consolidated financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor’s report, unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determinethat a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements
In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that aninternal 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.
KPMG AG

Rolf Hauenstein
Licensed Audit Expert
Auditor in Charge

Regula Tobler
Licensed Audit Expert

Zurich, 26 February 2020

KPMG AG, Räffelstrasse 28, PO Box, CH-8036 Zurich
KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss legal entity. All rights reserved.

5

activities within the Group to express an opinion on the consolidated financial statements. We areresponsible for the direction, supervision and performance of the Group audit. We remain solely responsible
for our audit opinion.
We communicate with the Board of Directors or its relevant
committee
regarding,other matters,
the STATEMENTS 143
FORBO
ANNUAL REPORT2019 –among
CONSOLIDATEDFINANCIAL
planned scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors or its relevant committee, we determine thosematters that were of most significance in the audit of the consolidated financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor’s report, unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determinethat a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
—
Evaluate
the overall
presentation,
structure andRequirements
content of the consolidated financial statements, including
Reporton Other
Legal
and Regulatory
the disclosures, and whether the consolidated financial statements represent the underlying transactions andevents in awith
mannerachieves
presentation.
In accordance
articlethat
728apara. 1fair
item
3 CO and the Swiss Auditing Standard 890, we confirm that aninternal
controlsystemexists, whichhas
been designed
forthethefinancial
preparationof consolidated
financialstatements— Obtainsufficientappropriate
audit
evidence
regardinginformationof the entities
or businessaccordingto theinstructionsof totheexpress
Board ofactivities
withinthe Group
anDirectors.
opinion on the consolidated financial statements. We areresponsible for the direction, supervision and performance of the Group audit. We remain solely responsible
We recommend
the consolidated financial statements submitted to you be approved.
for our auditthat
opinion.

KPMG
AG
We
communicate
with the Board of Directors or its relevant committee regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all relationships and othermattersthat may reasonably be thought to bear on our independence,
Rolf Hauenstein
Regula Toblerand where applicable, related safeguards.
Licensed Audit Expert
Licensed Audit Expert
From
the
Auditorinmatters
Charge communicated with the Board of Directors or its relevant committee, we determine thosematters that were of most significance in the audit of the consolidated financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor’s report, unless law or
regulation
public disclosure about the matter or when, in extremely rare circumstances, we determine
Zurich, 26 precludes
February 2020
that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements
In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that aninternal 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.
KPMG AGKPMG AG, Räffelstrasse 28, PO Box, CH-8036 Zurich
KPMG
AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG networkof independent
Rolf Hauenstein
RegulaToblerfirms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss legal entity. All rights reserved.

Licensed Audit Expert
Auditor in Charge

Licensed Audit Expert

5

Zurich, 26 February 2020

KPMG AG, Räffelstrasse 28, PO Box, CH-8036 Zurich
KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss legal entity. All rights reserved.

5

144 FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheets
2015 – 2019
AssetsCHF mCurrent assets
Cash and cash equivalents
Current financial assets
Trade receivables
Other receivables
Accrued income and deferred expenses
Inventories
Non-current assets
Non-current financial assets
Deferred tax assets
Property, plant, and equipment
Intangible assets and goodwill
Total assets

Shareholders’ equity and liabilities
CHF mCurrent liabilities
Current financial liabilities
Trade payables
Other current liabilities
Current tax liabilities
Current provisions, accrued expenses, and deferred income
Non-current liabilities
Non-current financial liabilities
Deferred tax liabilities
Non-current provisions
Employee benefit obligations
Total liabilities
Shareholders’ equity
Share capital
Treasury shares
Reserves and retained earnings
Total shareholders’ equity and liabilities

31.12.2019

31.12.2018

31.12.201731.12.2016

31.12.2015

652.1
217.7
0.0
160.4
23.7
14.8
235.5
445.3
0.2
45.4
291.8
107.9
1,097.4

567.3
127.4
0.1
168.9
26.0
14.8
230.1
412.7
0.3
39.9
259.4
113.1
980.0

638.2
195.4
0.0
169.2
27.6
19.4
226.6
429.3
0.3
39.0
267.6
122.4
1,067.5

601.2
209.7
0.0
151.4
19.8
13.9
206.4
388.1
0.2
40.5
227.6
119.8
989.3

509.3
116.3
0.0
147.3
18.8
12.4
214.5
402.8
0.3
39.5
227.3
135.7
912.1

31.12.2019

31.12.2018

31.12.201731.12.2016

31.12.2015

257.3
13.4
98.1
28.2
19.0
98.6
163.5
26.8
11.2
46.9
78.6
420.8
676.6
0.2
– 0.1
676.5
1,097.4

261.9
0.1
109.2
28.7
16.2
107.7
126.5
0.0
12.1
40.7
73.7
388.4
591.6
0.2
– 0.1
591.5
980.0

275.3
0.2
105.9
32.4
26.5
110.3
131.0
0.2
10.8
32.3
87.7
406.3
661.2
0.2
– 0.1
661.1
1,067.5

241.8
0.1
95.4
24.2
20.4
101.7
126.1
0.4
10.9
26.1
88.7
367.9
621.4
0.2
– 0.1
621.3
989.3

232.2
0.1
77.4
36.5
20.3
97.9
120.7
0.9
24.0
25.7
70.1
352.9
559.2
0.2
– 0.1
559.1
912.1

FORBO ANNUAL REPORT 2019 – CONSOLIDATED FINANCIAL STATEMENTS 145

Consolidated income statements
2015 – 2019
CHF m
Net sales
Cost of goods sold
Gross profit
Development costs
Marketing and distribution costs
Administrative costs
Other operating expenses
Other operating income
Operating profit
Financial income
Financial expenses
Group profit before taxes
Income taxes
Group profit for the year from continuing operations
Group profit for the year from discontinued operations after taxes
Group profit for the year

2019

2018

2017

2016

2015

1,282.2– 788.6493.6– 16.0– 191.4– 92.8– 26.2
9.1
176.3
0.8
– 1.8
175.3
– 37.0
138.3
0.0
138.3

1,327.0– 824.9
502.1– 16.6– 198.1– 96.1– 23.5
7.5
175.3
0.9
– 0.6
175.6
– 38.0
137.6
0.0
137.6

1,246.4– 764.5
481.9– 15.5– 195.8– 94.7– 106.5
10.5
79.9
0.9
– 0.8
80.0
– 43.5
36.5
2.2
38.7

1,185.5– 715.2
470.3– 15.1– 190.7– 95.0– 16.7
4.4
157.2
2.0
– 0.1
159.1
– 31.5
127.6
0.0
127.6

1,139.1– 698.3
440.8– 15.1– 181.1– 89.8– 16.6
4.6
142.8
2.0
– 0.4
144.4
– 28.7
115.7
0.0
115.7

146

FINANCIAL REPORT
Financial statements for Forbo Holding LtdBalance sheet
Income statementNotes to the financial statements
Proposal for appropriation of available earnings
Report of the statutory auditor

147
148
149
150
155
156

148 FORBO ANNUAL REPORT 2019 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

Balance sheet for Forbo Holding Ltd(before appropriation of available earnings)
AssetsCHF
Current assets
Cash and cash equivalents
Other receivables from Group companies
Current tax receivables
Accrued income and deferred expenses
Non-current assets
Loans to Group companies
Investments in Group companies
Total assets

Shareholders’ equity and liabilities
CHF
Current liabilities
Current liabilities to third parties
Other liabilities to Group companies
Accrued expenses and deferred income
Shareholders’ equity
Share capital
Statutory reserves:
General reserves
Capital contribution reserves
Reserves for treasury shares
Available earnings:
Retained earnings
Net profit for the year
Treasury shares
Total shareholders’ equity and liabilities

31.12.2019

31.12.2018

35,302,652
24,028,419
11,274,233

423,918,675
106,208,299
317,710,376
459,221,327

42,144,461
3,127,948
38,921,310
62,67032,533423,948,017
118,938,014
305,010,003
466,092,478

31.12.2019

31.12.2018

482,103
157,5036

2,726,730
152,4442,297,686
276,600
456,494,597
165,000

324,600
465,610,375
180,000

8

15,600,000
15,3024,811,654

15,600,000
15,302
5,669,005

444,436,650
26,266,218– 34,800,227
459,221,327

475,362,702
225,439,863– 256,656,497
466,092,478

Note

2
5

3
4

Note

2

8

FORBO ANNUAL REPORT 2019 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 149

Income statement for Forbo Holding Ltd

IncomeCHF
Financial income:From investments in and loans to Group companies
From securities and current investments
Total income

Expenses
CHF
Administrative expenses
Financial expenses:
From investments in and loans from Group companies
Taxes
Total expenses
Net profit for the year

2019

2018

31,122,672
31,122,672

231,822,143
252,298
232,074,441

2019

2018

11

4,554,734

5,832,570

12
5

303,255– 1,535
4,856,454
26,266,218

1,097,828– 295,820
6,634,578
225,439,863

Note

9
10

Note

150 FORBO ANNUAL REPORT 2019 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

Notes to the financial statements
for Forbo Holding Ltd
1 Accounting

3 Loans to Group companies

These financial statements have been prepared in ac­
cordance with the provisions on accounting and finan­cial reporting of the Swiss Code of Obligations (32ndtitle of the Swiss Code of Obligations). Forbo Holding
Ltd publishes consolidated financial statements ac­
cording to a generally accepted accounting standard(IFRS). Therefore, in accordance with the provisions on
accounting and financial reporting, the financial state­ments are presented without disclosure notes relating
to audit fees or a cash flow statement.

The loans were valued at the rate prevailing on thebalance sheet date; unrealized exchange losses werebooked, while unrealized exchange gains were notrecognized.

2 Other receivables from andliabilities to Group companies‘Other receivables from Group companies’ contains theclaims and ‘Other liabilities to Group companies’ con­tains the obligation on the cash pool accounts.

The item contained loans at an unchanged level of
EUR 97.8 million. In the previous year, this item con­tained a loan of CHF 12.7 million that was repaid in fullin the year under review.

4 Investments in Group companies‘Investments in Group companies’ are measured at thecost of acquisition less necessary valuation allowances.
These investments did not change in 2019 from theprevious year. As at December 31, 2019, Forbo Holding
Ltd held the following direct investments:

Investments in Group companies
Currency

Share capital(in 1,000)

Equityinterest

Holding/Services
Holding/Services
Services
Holding/Services
Services, Manufacturing,and Sales

USD
EUR
CHF
CHF
CHF

19,957
15,400100
10,000
100

100%
100%
100%
100%
100%

Holding/Services
Manufacturing and Sales
Sales

EUR
MXN
THB

5,000
24,676
13,005100%< 0.1%
69.1%

Company

Registered office

Activity

Forbo America Inc.
Forbo Beteiligungen GmbH
Forbo Financial Services AG
Forbo Finanz AG
Forbo International SA

US-Wilmington, DE
DE-Lörrach
CH-Baar
CH-Baar
CH-BaarForbo Participations S.A.S.
Forbo Siegling, S.A. de C.V.
Forbo Siegling (Thailand) Co. Ltd.

FR-Reims
MX-Tlalnepantla
TH-Samut Prakan

FORBO ANNUAL REPORT 2019 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 151

5 Taxes

7 Conditional capitalIn the year under review, Forbo Holding Ltd was able
to claim the entire participation deduction on dividend
income.

Originally, conditional capital of CHF 8.5 million for the
exercise of shareholder options and warrants in con­nection with a bond issue was created by a resolutionof the Annual General Meeting held on April 27, 1994.
Following the exercise of options in 1994, 1995 and1997 and reductions in the par value by CHF 22 pershare in 2003, CHF 8 per share in 2004, CHF 6 per sharein 2007, CHF 10 per share in 2008, and CHF 3.90 per
share in 2009, the conditional capital on December 31,
2019, remained unchanged against the previous year
at CHF 16,645.

6 Share capital
As at December 31, 2019, the share capital of Forbo
Holding Ltd totaled CHF 165,000 (2018: CHF 180,000),
divided into 1,650,000 registered shares with a par val­ue of CHF 0.10 each. 21,419 registered shares without
voting or dividend rights are at the disposal of theBoard of Directors.
At the Ordinary General Meeting of Forbo Holding Ltd
on April 5, 2019, the shareholders approved a reduc­tion in capital from CHF 180,000 to CHF 165,000 bycancelation of 150,000 shares with a nominal value of
CHF 0.10 each. These shares had been purchased at
the fixed price and via the second trading line of the
SIX Swiss Exchange as part of the 2017 – 2020 sharebuyback program authorized by the Ordinary General
Meeting of April 6, 2017. The shareholders also ap­
proved the corresponding amendment to the Articles
of Association. The capital reduction was completedwith the entry in the Commercial Register of the Can­ton of Zug on June 25, 2019, and was published in the
SHAB on June 27, 2019. The exchange adjustment took
place on June 28, 2019.
Treasury shares
As at January 1, 2019
Additions
Disposals
As at December 31, 20198 Treasury shares
The treasury shares directly held in Forbo Holding Ltd
amounting to CHF 34.8 million on the balance sheet
date correspond to the value of all treasury shares val­ued at cost. The item ‘Reserve for treasury shares’ reflects
the treasury shares held by subsidiaries of Forbo Hold­
ing Ltd, amounting to CHF 4.8 million. Overall, the trea­sury shares held directly and indirectly developed as fol­lows over the period under review:

Cost
CHF
262,630,962
4,289,095
227,306,034
39,614,023

Number ofregistered shares
198,282
3,000– 152,597
48,685

152 FORBO ANNUAL REPORT 2019 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

9 Financial income from investments
in and loans to Group companies

12 Financial expenses from investments
in and loans from Group companies‘Financial income from investments and loans to Group
companies’ amounting to CHF 31.1 million (2018: CHF
231.8 million) consisted mainly of dividend income inboth periods.

‘Financial expenses from investments in and loans fromGroup companies’ contained in particular losses oncurrent loans in foreign currencies of CHF 0.3 million(2018: CHF 0.8 million), and – in the previous year – in­terest expenditure for liabilities to Group companies
amounting to CHF 0.2 million.

10 Financial income from securities
and current investments

13 Contingent liabilities‘Financial income from securities and current invest­
ments’ in the previous year consisted of the net pro­ceeds from the sale of treasury shares.

Guarantees and letters of support to third parties in fa­
vor of Group companies amounted to CHF 6.8 million
at year-end 2019 (2018: CHF 6.1 million), of which as in
the previous year none were utilized.

11 Administrative expenses

The Group companies in Switzerland are treated for
purposes of value-added tax as a single-entity subject
to value-added tax (group taxation regime, Article 13,
Federal Act on Value-Added Tax). If one of the Group
companies is unable to meet its payment obligations
to the Federal Tax Administration, the other Group
companies bear joint and several liability.

Administrative expenses included stewardship costs,
the fees paid to the members of the Board of Directors,
the auditor’s fees, and usual administrative costs, main­
ly for the Ordinary General Meeting, the share register,
insurance and legally required announcements. Forbo
Holding Ltd does not employ any personnel.

14 Significant shareholders
According to information available to the Board of Di­
rectors, the following shareholders or groups of share­
holders with restricted voting rights constituted signi­
ficant shareholders in the company pursuant to Article
663c Swiss Code of Obligations as at the reportingdate:

Michael Pieper, Hergiswil, and Artemis Beteiligungen I AG, Hergiswil

Number of shares
486,804

As percentage
29.50

FORBO ANNUAL REPORT 2019 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 153

Shareholdings
IN 2019
As at December 31, 2019, the individual members of
the Board of Directors and the Executive Board (includ­ing related parties) held the following number of sharesin Forbo Holding Ltd:
Shareholdings 2019
SharesName and function
This E. Schneider, Executive Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Executive Officer
Marc Deimling, Executive Vice President Movement Systems
Urs Uehlinger, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Flooring Systems
Total Executive Board

38,648486,804
1,339
248
668
964
528,671
2,671
40
188
134
3,033

154 FORBO ANNUAL REPORT 2019 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

IN 2018
As at December 31, 2018, the individual members of
the Board of Directors and the Executive Board (includ­ing related parties) held the following number of sharesin Forbo Holding Ltd:
Shareholdings 2018
SharesName and function
This E. Schneider, Executive Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Executive Officer
Marc Deimling, Executive Vice President Movement Systems
Urs Uehlinger, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Flooring Systems
Total Executive Board

15 Events after the balance sheet date
Between the balance sheet date and the date of pub­lication of this annual report no event occurred that
could have a significant effect on the 2019 annual fi­
nancial statements.

54,611
486,764
1,287
212
632
916
544,422
2,969
3
104
104
3,180

FORBO ANNUAL REPORT 2019 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 155

Proposal for appropriation of available
earnings of Forbo Holding Ltd
The Board of Directors proposes to the Ordinary Gen­
eral Meeting that the available retained earnings, con­sisting of:2019
CHF
Net profit
Retained earnings
Treasury shares
Total at the shareholders’ meeting’s disposal1)

26,266,218
444,436,650– 34,800,227
435,902,641

be appropriated as follows:
2019
CHF
Distribution ordinary dividend
To be carried forward
Total at the shareholders’ meeting’s disposal1)

1) At the Ordinary General Meeting of April 3, 2020, the Board of Di­
rectors will propose an ordinary gross dividend of CHF 23.00 per
registered share (2018: CHF 21.00). No distribution will be made fortreasury shares held by Forbo Holding Ltd or any of its subsidiaries
on the record date, which explains why the amount of ordinary
dividends may therefore still change.

36,830,245
399,072,396
435,902,641

156 FORBO ANNUAL REPORT 2019 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

Report of the statutory auditor

Statutory Auditor's Report
To the General Meeting of Forbo Holding Ltd, Baar

Report on the Audit of the Financial Statements
OpinionWe have audited the financial statements of Forbo Holding Ltd, which comprise the balance sheet as at
31 December 2019, and the income statement for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies.
In our opinion the financial statements (pages 148 to 154) for the year ended 31 December 2019 comply with
Swiss law and the company’s articles of incorporation.
Basis for Opinion
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities underthose provisions and standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the entity in accordance with the provisions of Swiss law
and the requirements of the Swiss audit profession and we have fulfilled our other ethical responsibilities inaccordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Report on Key Audit Matters based on the circular 1/2015 of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period. We have determined that there are no key audit matters tocommunicate in our report.
Responsibility of the Board of Directors for the Financial Statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with theprovisions of Swiss law and the company’s articles of incorporation, and for such internal control as the Board of
Directors determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of Directors either intends to liquidate the entity or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with Swiss law and Swiss Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of thesefinancial statements.
As part of an audit in accordance with Swiss law and Swiss Auditing Standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:

FORBO ANNUAL REPORT 2019 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 157- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofinternal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made.
- Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the entity’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in thefinancial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the entity to cease to continue as a going concern.
We communicate with the Board of Directors or its relevant committee regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with
relevant ethical requirements regarding independence, and communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors or its relevant committee, we determine thosematters that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report, unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, we determine that amatter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements
In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that aninternal 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 thecompany’s articles of incorporation. We recommend that the financial statements submitted to you be approved.

KPMG AG

Rolf Hauenstein
Licensed Audit Expert
Auditor in Charge

Regula Tobler
Licensed audit Expert

Zurich, 26 February 2020

KPMG AG, Räffelstrasse 28, PO Box, CH-8036 Zurich
KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMGInternational”), a Swiss legal entity. All rights reserved.

2

uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in thefinancial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the entity to cease to continue as a going concern.

158 FORBO ANNUAL REPORT 2019 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

We communicate with the Board of Directors or its relevant committee regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.

Report of the statutory auditor

We also provide the Board of Directors or its relevant committee with a statement that we have complied with
relevant ethical requirements regarding independence, and communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors or its relevant committee, we determine thosematters that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report, unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, we determine that amatter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
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Rolf Hauenstein
Regula Tobler
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Reporton Other
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article728apara. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that aninternal control system exists, which has been designed for the preparation of financial statements according toWefurther confirm
thatBoardthe proposed
appropriation of available earnings complies with Swiss law and thethe instructionsof theof Directors.
company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and thecompany’s articles of incorporation. We recommend that the financial statements submitted to you be approved.
KPMG AGKPMG AG

Rolf Hauenstein
Licensed Audit Expert
Auditorin Charge
Rolf Hauenstein
Licensed Audit Expert
Auditor in Charge
Zurich, 26 February 2020

Regula Tobler
Licensed audit Expert
Regula Tobler
Licensed audit Expert

Zurich, 26 February 2020
KPMG AG, Räffelstrasse 28, PO Box, CH-8036 Zurich
KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMGInternational”), a Swiss legal entity. All rights reserved.
KPMG AG, Räffelstrasse 28, PO Box, CH-8036 Zurich
KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMGInternational”), a Swiss legal entity. All rights reserved.

22

Publisher: Forbo Holding Ltd, Baar/Concept and design: Hotz Brand Consultants, Steinhausen/Zug
Photos: Luxwerk, Zurich/Layout, lithography, and printing: Neidhart + Schön AG, Zurich
Our Annual Report appears in German language and in English translation and can be downloaded fromour website www.forbo.com. The printed German version is authoritative.
All statements in this report that do not refer to historical facts are forward-looking statements which areno guarantee of future performance. They are based on assumptions and involve risks and uncertainties aswell as other factors beyond the control of the company.

Forbo Holding Ltd
Lindenstrasse 8
CH-6340 Baar
Forbo International SA
Lindenstrasse 8
CH-6340 Baar
Phone + 41 58 787 25 25
Fax + 41 58 787 20 25
info@forbo.com
www.forbo.com